The Centers for Medicare & Medicaid Services (CMS) recently updated its rule interpreting the Affordable Care Act’s (ACA’s) “60-day Rule.” The changes were published on December 9, 2024, and became effective on January 1, 2025. CMS changed the definition of what it means to “identify” an overpayment and codified the six-month investigation grace period.
Let’s review how these recent changes to the overpayment rules may impact your practice.
What Is the 60-Day Rule?
The 60-day rule says a Medicare provider must report and return any overpayments to CMS within 60 days of identifying the overpayment.
Providers who break overpayment rules can face civil charges under the federal False Claims Act and risk exclusion from Medicare.
What Is A Medicare Overpayment?
An overpayment occurs when a provider receives money from CMS that the provider was not legally entitled to, for any reason. Examples include:
- Billing errors, including duplicate submissions
- Failure to document appropriately
- Billing for excessive or non-covered services
- Coding errors
- Medical necessity errors
- Payment to unqualified providers
Read more about common overpayment scenarios here.
When is an Overpayment “Identified”?
Under the previous rule, providers were required to use “reasonable diligence” in searching for and identifying overpayments. Under the new rule, an overpayment is identified when a person “knowingly receives or retains an overpayment.”
The “knowingly” standard was adopted from the False Claims Act, and means that the person:
- Actually knows about the overpayment;
- Acts with deliberate indifference to whether an overpayment exists; or
- Acts with reckless disregard of a potential overpayment.
How Long Do Providers Have to Report and Return Overpayments?
Under the old rule, a person has identified an overpayment when the person had or should have, through the exercise of reasonable diligence, determined that the person received an overpayment and quantified the amount of the overpayment. In the 2016 final Rule, CMS explains that “reasonable diligence” was demonstrated through timely, good faith investigation of credible information, which is at most six months from receipt of the credible information. Therefore, the old rule provided a total of eight months to identify, quantify, and return overpayments.
The new rules keep the same timeframe with new language.
In cases where a provider or supplier is actively investigating a potential overpayment, the 60-day period for reporting and returning the overpayment begins when the provider or supplier has actual knowledge of the overpayment. The new rule codifies CMS’ prior guidance regarding a timely investigation; the 60-day reporting period may be suspended for up to 180 days to conduct a timely, food faith investigation to determine the existence of related overpayments that may arise from the same or similar cause or reason as the initially identified overpayment. Thus, a provider would have up to 240 days (eight months) to identify, quantify, and return overpayments.
However, in cases where a provider or supplier acts in deliberate ignorance or reckless disregard of the existence of the overpayment, the 60-day period begins on the date that the provider or supplier acted in deliberate ignorance or reckless disregard of the truth or falsity of information regarding the overpayment.
If a provider receives credible information that an overpayment might exist, and the provider fails to begin a good faith investigation within 60 days of receiving the credible information, the provider will risk violation of the 60-day rule and the False Claims Act. Therefore, providers and suppliers have an obligation to investigate the existence and scope of potential overpayments.
Timely, Good-Faith Investigation Into Related Overpayments
If the provider suspects related overpayments exist and conducts a timely, good-faith investigation, the 60-day clock is paused from the day the investigation starts until the earlier of the following:
- The investigation is finished and the amount of all the overpayments is calculated.
- 180 days have passed since the date the investigation began.
Once the pause is over, the 60-day clock starts to run again.
Here’s a sample timeline:
- A provider identifies an overpayment and suspects there may be more related overpayments.
- 10 days after identifying the initial overpayment, the provider begins a timely, good-faith investigation.
- The provider completes its investigation within 180 days.
- Upon completing the investigation, the provider has 50 days remaining to report and return the initial overpayment and any related overpayments.
Is A Timely, Good-Faith Investigation Into Related Overpayments Required?
Providers are required to investigate potentially related overpayments. If providers fail to investigate the existence and scope of potentially related payments, the providers may be acting with deliberate indifference or reckless disregard of the truth or falsity of information regarding potentially related overpayments.
Providers are liable for additional related overpayments that are not investigated.
A Medicare Attorney Can Guide You Through the Overpayment Process
Handling Medicare overpayments is a high-stakes endeavor for any provider. Watching the clock is essential, as is documenting your investigation process to minimize whistleblower risk.
The experienced Medicare attorneys at Hendershot Cowart P.C. can help you conduct an audit into suspected overpayments, control the flow of information internally and externally, manage your communications, and establish a repayment plan with CMS or its contractors to help you avoid False Claims Act violations, penalties, and even revocation.
Contact our offices today to schedule a consultation.
