Ann K. Breitinger, Esq.

Ann K. Breitinger, Esq., Health Care and Business Law

Medicare’s long awaited final rule regarding the overpayment of Medicare Part A and Part B payments is finally here.  The scope, requirements, and impact of Section 6402(d) of the Affordable Care Act has been in question since its inception.

Section 6402(a) of the Affordable Care Act requires a person who has received an overpayment to report and return the overpayment within 60 days of identification or the date any corresponding cost report is due.  A provider or supplier who retains overpayments beyond that 60-day period risks liability under the reverse false claims provisions of the False Claims Act.

These requirements left many open questions such as, what does it mean to identify and what the look back period was for the overpayments. Relating to the definition of identify, commenters expressed their concern in the ability of providers to investigate potential overpayments without “starting the clock” on the 60-day time frame.  The final rule addressed these concerns in the definition of “identify.”  The Final Rule defines “identification” as when a person “has, or should have through the exercise of reasonable diligence,” determined and quantified the amount of the overpayment.  This definition, through the inclusion of the phrase “quantified” signals that performing the calculations necessary to determine whether an overpayment occurred does not start the 60-day clock.

The look back period 

Via the proposed rules, CMS required a 10-year look back period.  This requirement was relaxed in the final rule to a lower, 6-year look back requirement.

How does this ruling affect providers?

An additional important concept discussed in the final rule is the idea and requirement of “reasonable diligence” as used in the definition of “identification.”  Pursuant to the final rule, ‘‘Reasonable diligence includes both proactive compliance activities conducted in good faith by qualified individuals to monitor for the receipt of overpayments and investigations conducted in good faith and in a timely manner by qualified individuals in response to obtaining credible information of a potential overpayment.”

This concept of “reasonable diligence” is required to be both proactive in working to prevent overpayments and reactive once overpayments are discovered.  A provider’s lack of proactive reasonable diligence may open the provider up for liability.

The final rule states:

We believe that undertaking no or minimal compliance activities to monitor the accuracy and appropriateness of a provider or supplier’s Medicare claims would expose a provider or supplier to liability under the identified standard articulated in this rule based on the failure to exercise reasonable diligence if the provider or supplier received an overpayment.

These reasonable diligence compliance programs are not static or uniform but instead are intended to function differently based on the size and type of provider.

What should providers consider based on the final rule?

• Create policies and procedures for Medicare overpayments

• Systems for reporting and investigating overpayments

• Compliance programs to review billing

Action steps for providers in response to the final rule:

• Document all proactive reasonable diligence steps taken to prevent overpayments

• Have a system and use it to determine if an overpayment occurred once one is suspected

• Act promptly on any credible information suggesting an overpayment

We are here to help:  

For more information regarding how your practice can proactively guard against overpayments and react when they do occur, please contact a member of our health care law team at941.748.0100.  To reach healthcare attorney, Ann Breitinger, email