One of the most challenging compliance changes brought about by the Affordable Care Act (ACA) is the provision mandating the reporting and refunding of Medicare and Medicaid overpayments within 60 days of the date they are identified, or the date that the corresponding cost report is due, if applicable. See ACA Section 6402(a); Section 1128J(d) of the Social Security Act. Sanctions for violating the statute could include False Claims Act liability, civil monetary penalties and exclusion from Federal Health Care Programs. Despite these draconian penalties, in the five years since the ACA was passed, providers continue to have significant confusion and reasonable differences of opinion as to how the statute should be interpreted.

In 2012, the Centers for Medicare & Medicaid Services (“CMS”) issued a Proposed Rule attempting to interpret a number of the provisions of the statute, and suggesting other changes that many viewed as highly controversial (such as a proposed 10-year look back). CMS had three (3) years from the date of the publication of the proposed rule to finalize it. In the February 17, 2015 Federal Register, 80 Fed. Reg. 8247, CMS noted “exceptional circumstances” to extend the date of publishing the final rule by another year. CMS cited the “complexity of the rule and scope of comments” as justification for the exceptional circumstances. Id.

In addition to the public comments as well as feedback from Federal regulators, CMS determined that there are “significant policy and operational issues that need to be resolved in order to address all of the issues raised by the comments…” CMS indicated that its goal is to publish a Final Rule that “provides clear requirements for persons to report and return Medicare overpayments.”

What is a provider or supplier to make of this action? A natural response could be one of sympathy for CMS. Providers and suppliers have been struggling with how to interpret the statute. For example, what does it mean to “identify” an overpayment? Can you identify an overpayment before the amount has been “quantified?” What level of diligence or investigation is reasonable before the conclusion can be made that an overpayment has been identified? What kind of report is required following the identification? If these were easy questions, it might be presumed that CMS would have had no difficulty publishing a final rule to answer them. But since they are, in fact, questions which are very hard to answer, reasonable people could question a False Claims Act case predicated on an alleged violation of the statute prior to the publication of the Final Rule. There is at least one such case which may well be forced to answer this question, which will now be faced with the recognition that the complexity of the rule was at least one factor in the inability to get a Final Rule published on schedule. See United States ex. Rel. Kane v. Continuum Health Partners, Inc. et al, (Civil Action, No. 11-2325(ER)). Providers will be following this case closely.