Take overpayments seriously

Thursday, August 26, 2010

A. DME suppliers now must report and return identified Medicare and Medicaid overpayments under the new health reform law. Section 6402 of the health reform law requires anyone receiving a Medicare or Medicaid payment to which they are not entitled to report and return overpayments within 60 days of identifying the overpayment. Cost report providers are allowed 60 days from the date the applicable cost report is due. The new law requires the overpayment to be refunded to the U.S. Department of Health and Human Services (HHS), the state Medicaid agency or a DME contractor, as appropriate, together with a written explanation of the reason for the overpayment.

The knowing failure to return and report an overpayment is now subject to a civil monetary penalty of $10,000 per item or service plus no more than three times the overpayment amount. Overpayments not returned timely also become obligations subject to treble damages and penalties of up to $11,000 per claim under the federal False Claims Act.

This means that DME suppliers must promptly identify the overpayment, the basis for making the refund and the amount of the refund. Suppliers should update their compliance oversight procedures to confirm that once being notified of a suspected overpayment, timely resolution is tracked and confirmed.

When an overpayment is suspected, the supplier should conduct an investigation to consider the necessary legal and factual issues before concluding that a particular payment is an overpayment and then verify the amount of the overpayment. As you investigate, be careful not to hastily characterize a payment as an overpayment before your analysis is complete. On the other hand, it is not prudent to avoid or delay dealing with the need to resolve potential overpayments. A brief but accurate explanation of the circumstances surrounding the overpayment, including the method for determining the amount overpaid, should accompany the refund to assist the affected payer in properly adjusting payments and meet the supplier requirements under the new law.