The 60-Day Rule: Understanding the New Requirements for Overpayments

April 19, 2016 by Antonio Arias, MBA, CHBME

Topics: Practice Management, Medical Billing Company

The Centers for Medicare & Medicaid (CMS) services has done its fair share of confusing people, but a proposed rule issued back in February 2012, under Section 6402 of the Affordable Care Act, may take the cake as its most cryptic communique ever.

The rule required providers and medical billing teams who discover an overpayment to refund it within 60 days, or else be considered to have made a "false claim." In the context of the rule, an "overpayment" referred any funds received or retained under the Medicare or Medicaid programs to which the recipient was not entitled – dollar amounts be damned – even if the claim was not known to be false at the time of submission.

Hypothetically, the proposed rule could put a provider at the mercy of the False Claims Act for accepting just a few dollars too many on a given reimbursement (even if it resulted from Medicaid’s or Medicare’s error). But the what-if-it’s-just-a-few-pennies issue pales in comparison to the larger question posed by the proposed rule: Within 60 days of what, exactly?

The CMS took its time to clarify the answer, finally issuing guidance (as we’ll explain below) in February 2016. But even before the CMS did so, providers were held to full compliance with the requirement – whether they understood it or not.

Now that the Final Rule has (finally) been issued, we’re here to help you understand it. Here’s what you need to know.

A & B, reporting & returning. The Final Rule officially dictates that providers are required to exercise "reasonable diligence" through "timely, good faith investigation of credible information” to report and return Medicare Part A and B overpayments.

Effective ASAP. The finalization of the rule was announced in February, but took effect March 14, 2016.

The burden is on YOU. This isn’t about returning overpayments in response to a Medicare complaint or audit. Providers need to conduct proactive and reactive reviews to find and refund undue payments. (So if you’re not already auditing your medical billing records, now is the time to start.)

The clock starts… The Final Rule clarifies that the 60-day window begins after a “reasonable diligence” period has concluded.

‘Reasonable diligence’ period? Here’s the meat of the rule: The CMS clarified that identifying an overpayment should take “at most [six] months from receipt of credible information” (absent “extraordinary circumstances,” such as complex investigation). The math essentially adds up that a provider has six months to quantify a reimbursed claim, then 60 days to report and refund any related overpayments.

Look back six (not ten). The proposed rule suggested that providers were potentially liable for violations over a “10-year lookback period,” based on the outer limit of the False Claims Act’s statute of limitations. The final rules eased up on that, specifying that the look-back spans just six years.

Need help identifying, quantifying, and refunding overpayments to avoid issues with CMS? Contact us now to learn more about working with a medical billing service.

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