Do You Know the 60-Day Rule? You Better…

Ask healthcare providers if they have an obligation under the law to report and repay overpayments made by a government payor like Medicare or Medicaid, and you almost always will receive an enthusiastic “yes.”  However, many providers are not aware that a lesser-known provision in the Affordable Care Act (“ACA”) creates specific liability under the Federal False Claims Act if a provider fails to disclose or refund Medicare and Medicaid overpayments within 60 days after the date the overpayment is identified.  This requirement means exactly what it says.  Once an overpayment is identified, the clock starts ticking, and the provider has 60 days to repay the funds or face False Claims Act liability.

False Claims Act actions can be very costly because they come with a penalty that ranges between $5,500 and $11,000 on each claim for which the provider failed to return funds.  For example, if you discover that you were overpaid for 25 Medicaid claims and failed to report and repay the funds within 60 days, you could be subject to a penalty of 25 times $11,000 or $275,000.  This is true even if those 25 claims only amounted to $500.00.   Providers also can be subject to treble damages, meaning the actual recoupment could be increased by three times the amount paid.  The government has the authority to enforce the False Claims Act, however unlike most laws, the Federal False Claims Act also allows outsiders, such as current or former employees to file a qui tam action on behalf of the government and receive between 15% and 30% of any recovery or settlement.

A key question that a provider should ask when considering the 60-day repayment and reporting requirement:  what does it mean for an overpayment to be “identified”?  In 2012, CMS clarified its interpretation of “identify.”  The proposed regulation defines “identify” to mean the date a person has actual knowledge of the overpayment or acts in reckless disregard or deliberate ignorance of the existence of the overpayment.  CMS commented that, when a provider receives information regarding a possible overpayment, it has an obligation to make a reasonable inquiry with “deliberate speed” to determine whether there was an overpayment.  Thus, under CMS’ interpretation of the law, if the provider conducts an investigation of potential overpayments with deliberate speed, the 60-day time period for reporting and returning any overpayment begins at the conclusion of the provider’s investigation determining there was in fact an overpayment.  In contrast, if the provider receives information that an overpayment may have occurred and fails to make a reasonable inquiry, the 60-day repayment/reporting window starts on the date the provider received the information that the possible overpayment existed.

Because the calculation of the 60-day timeframe hinges on conducting an investigation with deliberate speed, providers should make sure that they have a policy in place that requires their employees to document the steps they are taking to investigate the alleged overpayment.  Providers should also have a clear chain of reporting, so that potential overpayments do not sit on an employee’s desk for weeks or months without inquiry.

Although there is little case law interpreting how this provision will be applied, a False Claim Act lawsuit was recently filed in New York against a large provider that had identified an overpayment and repaid the funds to the federal government.  The basis of the lawsuit is that the provider failed to report and repay the identified overpayment within 60 days. Although this case has not been decided by a court, it is telling that federal prosecutors joined the lawsuit.  This indicates that the government believes that the affirmative duty to repay within 60 days is important and will be enforced through the False Claims Act.

Robb Leandro

Robb Leandro

Robb Leandro assists his client with a broad range of legal issues relating to health care, administrative law and public policy. His legal practice focuses on helping health care providers navigate the minefield of regulations that they face in their practices. Robb routinely assists his clients with issues including Medicaid and Medicare regulations; Medicaid and Medicare audits; Certificate of Need Applications and litigation; licensure, surveys, and certification issues; and HIPAA and privacy laws. Robb also provides counsel to health care providers with complex government contract procurement issues.

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When the Auditors Come Knockin’

Earlier this morning, Renée Montgomery, Sarah Ford, Robb Leandro, and Matt Wolfe, attorneys with Parker Poe, presented at the Association for Home and Hospice Care of North Carolina’s Leadership Conference in Wrightsville Beach.  Parker Poe’s attorneys participated in a panel discussion on a myriad of audits that face healthcare providers.  Parker Poe’s counselors shared their insights on the alphabet soup of audits and provided attendees a compliance “game plan.”  If you were not able to attend, please click here for the handout.  Yesterday at the Leadership Conference, Matt Wolfe presented a federal and State legislative update with the Association’s Vice President of Government Relations, Tracy Colvard, and Community Care of North Carolina’s Chief Operating Officer, Mark Benton.

Parker Poe attorneys regularly present in front of groups of healthcare providers and would be happy to share their experiences and insights with your group.

Matt Wolfe

Matt Wolfe

Matt Wolfe concentrates his practice in the areas of administrative litigation, government relations, and other regulatory matters. Matt formulates comprehensive political and public relations strategies on a broad range of federal and state policies. He drafts and monitors legislation, intervenes directly with legislative, executive, and local officials, and appears before state and federal executive agencies. Within his administrative litigation practice, Matt advises and counsels health care providers subject to federal and state regulatory actions.

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One Potential Way to Dismiss a Petition for Judicial Review…

Contested cases heard at the North Carolina Office of Administrative Hearings (“OAH”), that result in a final agency decision are subject to appeal under a process called “judicial review.”  In most cases, these appeals are filed in Superior Court.  N.C. Gen. Stat. § 150B-145 mandates that a petition for judicial review of an Administrative Law Judge’s (“ALJ”) final decision must be filed in the Superior Court in the county where the “person aggrieved by the administrative decision resides.”

In 2011, the General Assembly determined that an agency can now file petitions for judicial review in the Superior Court appealing the final decision of an ALJ.  When an Agency is appealing a final decision of an ALJ, a question has arisen regarding where the Agency should file its appeal – in Wake County or in the county where the provider resides?

A recent decision by the Wake County Superior Court concluded that, when the State agency files a petition for judicial review, it must file its petition in the county where the provider is located since under the APA a “person aggrieved” by the administrative decision is defined to be the provider challenging the agency’s decision and not the Agency.  (Click here to view)

If you have recently prevailed in a contested case against an Agency and the Agency filed or is planning to file a petition for judicial review, your counsel should be aware that if the Agency files the petition in the wrong county, you may be able to have the appeal dismissed before having to spend exorbitant fees fighting the underlying challenge made by the agency.

Robb Leandro

Robb Leandro

Robb Leandro assists his client with a broad range of legal issues relating to health care, administrative law and public policy. His legal practice focuses on helping health care providers navigate the minefield of regulations that they face in their practices. Robb routinely assists his clients with issues including Medicaid and Medicare regulations; Medicaid and Medicare audits; Certificate of Need Applications and litigation; licensure, surveys, and certification issues; and HIPAA and privacy laws. Robb also provides counsel to health care providers with complex government contract procurement issues.

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