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Healthcare Providers Beware: Medicare Billing Can Be Risky Business

When a health care provider or third party billing service submits a claim for services rendered to a Medicare patient, it’s filing a bill with the government that certifies the payment was earned and complies with certain billing requirements.

However, mistakes happen, and when incorrect Medicare billing causes overpayment from the government, the overpayment creates an affirmative obligation by the provider to report and return the overpayment.           

The Affordable Care Act amended the Social Security Act to create the duty to report and return overpayments from Medicare. An overpayment is any money that a health care provider receives or retains under Medicare to which that health care provider is not entitled after applicable reconciliation. Overpayments must be reported and returned by the later of: (a) 60 days after the date on which the overpayment was identified; or (b) the date any corresponding cost report is due, if that is applicable. “Identification” actually has two parts: (1) identification; and (2) quantification.

Overpayment Identification

Identification means that the health care provider has determined, or should have determined through the exercise of reasonable diligence, that it received an overpayment. Reasonable diligence means that a health care provider has billing compliance measures in place and investigates its records in response to credible information showing an overpayment has happened or may have happened. A health care provider is at risk if it lacks the internal controls and processes to catch an overpayment, if it fails to investigate any potential overpayment, and if it indeed collected an overpayment.

The obligation to conduct a reasonable investigation is triggered by credible information. Examples of credible information include:

  • billing or payment records showing incorrectly coded services;
  • the patient died before service date on a submitted claim;
  • hotline complaints of a computer problem that increased reimbursement;
  • services provided by an unlicensed or excluded individual;
  • internal audit finds overpayments; or
  • an increase in Medicare revenue for no apparent reason.

Under some circumstances, a good faith investigation may extend the time limit for reporting an overpayment to six months. Together with the 60-day period, the total time may be extended to eight months. Under some extraordinary circumstances, the time limit may be extended beyond eight months.

Reasonable diligence can be shown by reactive investigative activities in response to the receipt of “credible information” that an overpayment may have occurred or has occurred and by proactive compliance activities to monitor claims submitted for payment.

Overpayment Quantification

The quantification of overpayments does not necessarily need to be payment by payment, but it must be reliable and accurate. Quantification may be by statistical sampling and extrapolation of a population of claims. However, there is no de minimis exception. Even an overpayment of one dollar is still an overpayment. The period of time for past overpayments is referred to as the “look-back period.” Under the Affordable Care Act, the look-back period was changed. Overpayments must now be reported and refunded within six years of the date in which the overpayment was received.           

Any health care provider who receives an overpayment must: (a) report and return the overpayment to the Secretary of the Department of Health and Human Services, the State, an intermediary, or a contractor, as appropriate, at the correct address; and (b) notify the Secretary, State, intermediary, carrier, or contractor, to whom the payment was returned of the reason for the overpayment.

Don’t Ignore Overpayments           

Overpayments should not be ignored because there can be serious ramifications. The failure to report and return overpayments within 60 days of identification creates an obligation under the False Claims Act’s reverse claims provision, which creates liability for knowingly concealing, or knowingly and improperly avoiding or decreasing an obligation to pay money to the government. In addition, the government can impose civil penalties and exclusion from federal health care programs. It is also possible in cases involving criminal intent that the overpayments could lead to criminal prosecution.           

There are some best practices that providers should consider if they believe they have an overpayment. Providers should respond quickly when credible information of real or potential overpayment is received and set a deadline for deciding whether to launch an investigation. Providers that believe they may have received an overpayment should consider retaining legal counsel for legal advice regarding the possible courses to take. By retaining an attorney, the provider creates a “zone of confidentiality” to permit management and legal counsel to fully assess the facts, reach accurate conclusions, and make informed decisions.

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