New requirements contained in the health care reform legislation increase the pressure on health care providers, suppliers, Medicare Advantage and Part D Plan sponsors, and others to return identified Medicare and Medicaid overpayments in a timely fashion, at risk of being alleged to have violated the False Claims Act.
In 2009, President Obama signed into law the Fraud Enforcement and Recovery Act (FERA), containing amendments to the False Claims Act. Among other things, FERA amended the "reverse false claim" provision of the False Claims Act to provide that an entity violates the False Claims Act if it "knowingly and improperly avoids or decreases an obligation" to pay money to the United States. 31 U.S.C. § 3729(a)(1)(G). Most notably, the previously undefined "obligation" necessary for a violation of the reverse false claim provision is now defined as "an established duty, whether or not fixed,….arising from the retention of any overpayment." 31 U.S.C. § 3729(b)(3).
Though the 2009 amendments to the False Claims Act do not define any new obligations to return overpayments, knowingly and improperly avoiding an obligation to return an overpayment (assuming there is an "established duty" to do so) now forms the basis of reverse false claim liability, subject to treble damages and penalties. Since the passage of FERA, questions arose regarding whether there is an established duty to return Medicare and Medicaid overpayments.
On March 23, 2010, President Obama signed into law H.R. 3590, the Patient Protection and Affordable Care Act (PPACA). The PPACA has expressly required health care providers and others to report and return overpayments. The term overpayment is defined as "any funds that a person receives or retains under title XVIII or XIX to which the person, after applicable reconciliation, is not entitled under such title."
It has also defined the period of time in which an overpayment must be reported and returned to the government. The PPACA provides that "[a]n overpayment must be reported and returned" within "60 days after the date on which the overpayment was identified," or "the date any corresponding cost report is due," whichever is later. While the word "identified" is not defined by the statute, and is likely to be the subject of considerable litigation in the future, the provision explicitly states that if the overpayment is retained beyond the 60-day period, it becomes an "obligation" sufficient for reverse false claim liability under the False Claims Act, and is therefore subject to treble damages and penalties if there is a "knowing and improper" failure to return the overpayment.
Health industry participants that receive reimbursement from government payors should implement policies and procedures for the identification, reporting, and repayment of government overpayments that address the 60-day time limitation contained in the PPACA.
Save the Date: Webinar on May 26, 2010
Topics critical to addressing Medicare overpayments, including Stark law violations, will be the subject of an upcoming McDermott webinar to be held at 1:00 pm EDT on May 26, 2010. Invitations will be e-mailed shortly. If you are not already on our mailing list and would like to receive an invitation, please contact Bob Greenbaum.
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