Final Rule

Finally! CMS Publishes the 60-Day Rule for Reporting and Repaying Medicare Overpayments

Posted by Ryan Blaney on February 12, 2016
ACA, Affordable Care Act, False Claims Act, Final Rule, Fraud and Abuse / No Comments

After four years and 200 comments, CMS finalized the much‑awaited “60‑Day Rule” for reporting and repaying Medicare Part A and B overpayments (CMS issued a Final Rule related to Medicare part C and D overpayments in the May 23, 2014 Federal Register, 79 FR 29844, and will address Medicaid overpayments in future rulemaking). The 60-Day Rule is part of CMS’s efforts to reduce fraud, waste, and abuse in the Medicare program.

Section 6402(d) of the Affordable Care Act (ACA), created section 1128J(d) of the Social Security Act (codified at 42 U.S.C. 1320a-7k(d)), requiring a person or entity who has received an overpayment to report and return the overpayment to the appropriate entity by the later of: (1) 60 days after the date on which the overpayment was “identified”; or (2) the date any corresponding cost report is due (if applicable). Importantly, the ACA also made reporting and repaying overpayments within 60 days an “obligation” under the False Claims Act (FCA), and therefore subject to FCA liability. Proof of specific intent to defraud the government is not required for a person or entity to be liable under the 60-Day Rule.

The Final Rule slightly relaxes some of the onerous requirements in the 2012 Proposed Rule:

Six Year Lookback Period: CMS responded to numerous comments and concerns that the proposed 10-year look back period for identifying overpayments was too long. The 60-Day Rule changed the lookback period to 6 years, consistent with the statutory limitations for the FCA.

Definition of Identify: CMS acknowledged the numerous comments submitted on what it means to “identify” an overpayment and said, “We agree and have revised the language … to clarify that part of identification is quantifying the amount, which requires a reasonably diligent investigation.” According to CMS, “[t]he Final Rule clarifies that a person has identified an overpayment when the person has or should have, through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment.” CMS warned Medicare providers and suppliers not to use the “ostrich defense”; reasonable diligence includes both proactive compliance activities conducted in good faith by qualified individuals, and good faith investigation of credible information conducted in a timely manner by qualified individuals. Quantification of the amount of the overpayment may be determined using statistical sampling and extrapolation methodologies.

How to Report and Return Overpayments: The Final Rule states that providers and suppliers must use an applicable claims adjustment, credit balance, self-reported refund, or another appropriate process to satisfy the obligation to report and return overpayments.

The Final 60-Day Rule is available at: https://federalregister.gov/a/2016-02789. By way of comparison, the February 16, 2012 Proposed Rule is available at:  https://www.gpo.gov/fdsys/pkg/FR-2012-02-16/pdf/2012-3642.pdf

To learn more about reporting or making repayments under the Final Rule, please contact Ryan Blaney, Dana Petrillo or any member of Cozen O’Connor’s Health Law team.

Ryan Blaney

Ryan Blaney

Ryan Blaney joined Cozen O'Connor as a member of the firm's Health Law group. Ryan practices in the firm's Washington, D.C., office. He focuses his practice on representing clients in the health care and life sciences industries in a wide range of matters, including health care fraud and abuse, civil and criminal government investigations, qui tam and whistle-blower disputes under the False Claims Act and other federal and state laws and regulations, HIPAA privacy and data security, compliance and transactional services, and antitrust matters.

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CMS’ Long Awaited Final ACO Regulations for 2016 and Beyond: Major New Options and Plenty of Fine Tuning

Posted by Chris Raphaely on June 08, 2015
Accountable Care Organizations, Beneficiaries, CMS, Final Rule, Medicaid, Medicare / 1 Comment

Tomorrow, the Centers for Medicare and Medicaid Services (“CMS”) will publish final regulations (“Final Rule”)  for its flagship pay-for-performance program, the Medicare Shared Savings Program, in the Federal Register. The Final Rule generally applies to performance years 2016 and beyond and the second three year “agreement period” for the over 400 accountable care organizations (“ACO”) currently in the program.

Stakeholders watched very closely the development of the Final Rule, so they can now begin sizing up future opportunities with some certainty and determine the longer term complexion of the program itself. The regulations contained in the Final Rule were published in proposed form in December 2014, and, the Final Rule adopts most, but not all, of what CMS initially proposed.  It continues the pattern of easing CMS’ ultimate push towards the two-sided risk model for most, if not all, ACOs and contains adjustments that many will consider to be favorable to ACOs.

Among the most significant developments is one in which, as proposed, ACOs that are currently in their first three year agreement period with CMS for participation in the program’s “upside only” risk model, Track 1, will be permitted to remain under the same model for another three years. This covers the majority of ACOs currently in the program. Significantly, however, CMS declined to institute the 10% cut (from 50% to 40%) to the Maximum Savings Rate for the second term Track 1 ACOs that it proposed last December.  The Final Rule comes none too soon for the first set of Track 1 ACOs who will have to make a decision whether or not to re-up for another three years in the program before the end of 2015.

In the other major structural change to the program, CMS, as it proposed to do, created a third double-sided risk, Track 3, for more highly developed ACOs desiring to trade greater upside opportunity (up to a 75% share of savings generated) for greater risk (up to 75% of losses) with both savings and losses being subject to a cap of 15% and 20% of benchmark, respectively. The new track includes a prospective beneficiary assignment model as opposed to the retrospective model that will continue to be used in Tracks 1 and 2. CMS also gives ACOs who choose the new track the option to waive Medicare’s three day hospital stay requirement for reimbursement of skilled nursing services. CMS stated that it will be considering additional waivers in areas like tele-health for Track 3 ACOs in the future.

CMS also included many technical adjustments to the program, some of which will have a significant impact on how the program and ACOs operate. Among the more significant are the following:

  • Adjusting the savings benchmark calculation so second term ACOs that generated savings in their first term are not “penalized” by tougher savings targets in the second term as a result;
  • Track 2 and Track 3 ACOs will be given new options for setting Minimum Savings and Loss Rates;
  • Greater emphasis on primary care services provided by non-physician practitioners such as licensed nurse practitioners in the beneficiary assignment process;
  • Enhanced information in the aggregate data reports supplied to ACOs and the inclusion of patients who had one primary care visit with an ACO in the assignment period even if they were not
    preliminarily assigned to the ACO in the aggregate reports supplied to Track 1 and 2 ACOs; and
  • A streamlined data opt-out process in which (i) beneficiaries opt out of data sharing only by notifying CMS directly; and (ii) ACOs no longer have to wait thirty days after notifying beneficiaries of their opt-out rights before requesting detailed claims data on such beneficiaries.

The balance of 2015 and 2016 will be critical to the future of the Medicare Shared Savings Program as ACOs who currently participate in the program and others who are considering participation now have definitive guidance as to what the program will look like at least through 2018.

Chris Raphaely

Chris Raphaely

R. Christopher Raphaely joined Cozen O'Connor's Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Chris joins the firm from Jefferson Health System, where he served as deputy general counsel and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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