On July 10, 2024, the Centers for Medicare & Medicaid Services (“CMS”) issued a proposed rule (“Proposed Rule”) in which it outlined proposed amendments to the suspension provisions and deadlines for reporting and returning Medicare Part A and Part B overpayments, and stated that it is continuing its review and evaluation of previously proposed changes to existing overpayment regulations.

Continuance of Prior Proposal

As discussed in our prior blog post in December of 2022, CMS previously proposed to amend existing Medicare overpayment regulations by removing the “reasonable diligence” (traditional negligence) standard for an “identified overpayment” and replacing it with the False Claims Act’s “knowing” and “knowingly” standard (i.e., acting with reckless disregard or deliberate ignorance of a potential overpayment). In the Proposed Rule, CMS stipulates that it is continuing to consider these changes, while also allowing more time for public comment. Public comments must be submitted to CMS no later than 5 p.m. on September 9, 2024. CMS stated that it plans to respond to all comments in its corresponding 2025 final rule.

New Proposals

The Proposed Rule also proposes to give providers more time to investigate and calculate overpayments by amending current suspension and deadline provisions for reporting and returning overpayments. Specifically, CMS proposes to suspend the 60-day deadline if:

1. the provider or supplier has identified an overpayment but is continuing to investigate the existence of related overpayments stemming from the same/similar cause as the initial overpayment; and
2. the provider or supplier timely conducts the investigation in good faith.

If these elements are met, the deadline for reporting and returning the initial overpayment, as well as any related overpayments, will remain suspended until the earlier of:

1. the date of conclusion of the investigation and completion of calculating both the initial and related overpayment amounts; or
2. 180 days after the initial overpayment was identified.

Example Suspension of Deadline

CMS provided an example of how the proposed suspension rule would operate. If on Day 1 an overpayment stemming from a physician’s failure to appropriately document the information required to support a claim is identified, and there is “reason to believe” that the physician may have similarly incorrectly documented information required to support other claims, then the provider or supplier would have up to 180 days to (i) complete a good-faith investigation to determine the existence of any related overpayments and (ii) calculate both the initial and related overpayment amounts. If an investigation is not conducted, or if the investigation is not timely or not completed in good faith, then the overpayment would have to be reported and returned by day 60. It is not clear whether this example would remain a viable explanation of how this Proposed Rule would work in practice, should CMS adopt its prior proposal to remove the “reasonable diligence” (traditional negligence) standard and replace it with the False Claims Act’s “reckless disregard or deliberate ignorance” standard. In other words, should that latter proposal be adopted, it is not clear whether a provider or supplier would always act with ‘reckless disregard or deliberate ignorance’ of an overpayment if it did not investigate facts underlying any ‘reason to believe’ that documentation practices did not support claims. Rather, an inquiry into the cause or strength of that ‘reason to believe’ would likely have to be considered. CMS may revisit this example in its corresponding 2025 final rule.

CMS also proposed a clarification to existing regulations that permit the suspension of overpayment obligations in certain circumstances, such as acknowledgment of receipt of a submission to the OIG Self-Disclosure Protocol or CMS Voluntary Self-Referral Disclosure Protocol or in some cases involving a request for extended repayment. CMS’s proposed technical modification would add language explaining that overpayment reporting and return requirements can be further suspended under the circumstances currently listed in the regulations.