CMS Proposed Regulations on Overpayments: Are you at Risk?

I always find it fun when we get an extra day in the year. I think you should spend it doing something extraordinary. This year, I had the pleasure of doing just that by attending the Healthcare Provider Executive Roundtable Focusing on Governance, Regulatory, and Risk Management Hot Topics. The event, sponsored by Deloitte and Wolters Kluwer Law & Business, featured a number of experts talking about the future of healthcare delivery in light of regulatory changes including the Healthcare Reform Laws.

The discussion and the brain trust in the room had a meaningful impact on me especially as a former compliance officer. Unlike so many of these events, it was truly a discussion where we shared ideas and utilized our collective thoughts to bring clarity to our ever-changing landscape.

One topic that I thought was important for our customers to know about was the discussion about the recently released CMS proposed regulations regarding the 60 day overpayment provision of Patient Protection and Affordable Care Act. If you have not already reviewed these proposed regulations I urge you to do so as they contain a window into your future as a Compliance Officer and underscore the ever-present need for Compliance staff to review the work of Reimbursement. More importantly, I urge you to take action and comment on these regulations by the closing date of April 16, 2012 at 5 pm.

Why? Well the regulations impose some interesting requirements on Providers. Let’s start at the beginning. The definition of an overpayment includes all the usual suspects, but also includes situations in which payment was made by Medicare when there was some other primary payor. This adds another layer of complexity and urgency to the Medicare Secondary Payor issue that has plagued providers for years.

Another proposed provision is causing providers to take pause: CMS proposes to broaden the look-back period of Medicare overpayments from what is generally four years to up to ten years. The expanded time frame, an article at HealthLeaders Media estimates, could cost as much as $58 million in reporting-related expenses to over 125,000 providers and suppliers. This change, CMS states, is to comport with the False Claims Act. In other words, any overpayments found could also be prosecuted under the False Claims Act.

As one of their examples, CMS states that an overpayment is “identified” within the meaning of the statute whenever the provider/supplier “experiences a significant increase in Medicare revenue and there is no apparent reason” and “the provider or supplier fails to make a reasonable inquiry into whether an overpayment exists.” Carry this scenario just a bit further to an organization who has inadequately prepared for ICD-10 where there are bound to be errors associated with improper payments. Preparing for this inevitability and safeguarding through a review process add to the imperative that is ICD-10 preparation.

Two things are clear, Compliance Officers should collectively comment on these proposed regulations endeavoring to affect a change and they need to make sure they have mechanisms in place to monitor revenue to review increases in Medicare/Medicaid revenue as necessary. This means that Compliance Officers who are already short-staffed and facing a multitude of fiscal challenges must find cost-effective ways to monitor and correct this risk.

Keisha A. Lightbourne, Sr. Product Manager, ComplyTrack

As always this does not constitute legal advice, you should consult your attorney if you want professional assurance that my information, and your interpretation of it, is appropriate to your particular situation.