The U.S. District of Minnesota has ruled in Peterson v. Unitedhealth Grp. Inc., No. 14-CV-2101 (PJS/BRT), 2017 WL 991043 (D. Minn. Mar. 14, 2017) that ERISA does not permit United Healthcare (“United”) to claw back alleged overpayments related to patients from one plan by reducing or eliminating payments related to patients from different self-insured plans, dealing a potential blow to the use of an effective tool that health insurers have used to recoup alleged overpayments from providers.

In Peterson, the Plaintiffs were healthcare providers who brought suit against United as assignees of patients who were enrolled in United-administered plans. United had allegedly overpaid Plaintiffs for services provided to certain patients, and offset these alleged overpayments by reducing or eliminating payments for services that Plaintiffs provided to other patients, who were members of different United-administered self-insured ERISA plans. This practice is known as cross-plan offsetting. Continue reading…

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.

On August 3, 2015, a federal judge in the Southern District of New York ruled that the United States’ and state of New York’s complaints in intervention can move forward against a group of hospitals, under the federal False Claims Act (“FCA”) and New York’s FCA corollary. The hospitals allegedly failed to report and return Medicaid overpayments that were brought to their general attention over two years before all of the relevant repayments were made.

The judge’s opinion denying the defendants’ motions to dismiss in Kane v. Health First, et al. and U.S. v. Continuum Health Partners Inc. et. al., should be of particular note to providers because it contains extensive discussion and guidance as to how at least one federal judge interprets the Affordable Care Act’s (“ACA”) “60 day rule.” Specifically, the ACA’s rule requires any provider who receives an overpayment from Medicare or Medicaid to repay such overpayment within 60 days of the “date on which the overpayment was identified.” Further, retention of such an overpayment beyond the sixty-day period can result in liability under the FCA.

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A few weeks ago we posted on this Blog an article highlighting the “gathering storm” surrounding HIPAA enforcement and predicted an ominous future for hospitals and other providers who fail to develop and maintain adequate HIPAA compliance policies.  While there is no doubt the future is bleak for those unwilling to abide by HIPAA’s mandate, the forecast for providers who commit healthcare fraud is equally devastating.  This is because, in 2013, the federal government will attack healthcare fraud from two angles. First, the Office of Inspector General (“OIG”), per the terms of its 2013 Work Plan (“Work Plan”), will review many of the government’s anti-fraud efforts to maximize recovery of Medicare and Medicaid overpayments.  Second, many of the new anti-fraud provisions in the Affordable Care Act (“ACA”) will kick into high gear now that the result of the presidential election has guaranteed the law’s survival. Continue reading…