The initial article on this subject discussed generally why Medicare providers need to understand the Medicare administrative appeals process, especially in connection with overpayment determinations, Additional Documentation Requests (ADRs), and various types of Medicare payment audits. The current article drills down further into strategies that a provider should consider when dealing with overpayment determinations.

Halting Recoupment of Overpayments

As indicated in the prior article, a provider can halt recoupment of an overpayment at both the first level of the Medicare appeals process – the Request for Redetermination – and again at the second level – the Request for Reconsideration. To stay recoupment, however, the provider must file its appeal in a shorter timeframe than the regular timeframes for requesting a redetermination or reconsideration.  

Ordinarily, the Medicare appeals process gives a provider 120 days to file its appeal of the demand letter from the Medicare Administrative Contractor (MAC) that constitutes the MAC’s initial determination that an overpayment has occurred. However, because recoupment generally begins on the 41st day after the MAC’s initial determination (even though the 120 days to appeal has not passed), the provider must file its Request for Redetermination with the MAC by 30 days from the date of the MAC’s demand letter in order to prevent recoupment of the overpayment. Likewise, if the MAC issues a partly or fully unfavorable redetermination decision, the provider has only 60 days, rather than the full 180-day appeal timeframe, to maintain the stay on recoupment by filing a Request for Reconsideration with the Qualified Independent Contractor (QIC). 

In either case, if the provider misses the shorter, early appeal deadline to stay recoupment (30 days for redeterminations and 60 days for reconsiderations), it may nevertheless halt further recoupment by satisfying the regular appeals deadline (120 days for redeterminations and 180 days for reconsiderations). An appeal within the regular appeals deadlines will stay further recoupment, but the MAC will not have to return already-recouped funds unless the provider later receives a favorable appeals decision.

The stay on recoupment applies only at the redetermination and reconsideration levels of the Medicare appeals process; it does not apply to appeals at the ALJ or higher levels. Also, even if the provider files an appeal early enough to stay recoupment during the first two levels of Medicare appeals, interest will begin to accrue on the 31st day after the MAC’s initial determination and will continue until the provider either fully repays the overpayment or obtains a fully favorable decision in the Medicare appeals process (potentially subject to being applied to other overpayments). Some debts are not eligible for a stay of recoupment, such as most Medicare Secondary Payer recoveries and overpayments arising from cost report determinations set out in the MAC’s Notice of Program Reimbursement. Finally, whether bankruptcy’s automatic stay prohibits recoupment depends on the law of the jurisdiction where the bankruptcy case is being administered (see here).

Informal Ways to Challenge Overpayments

In addition to formally challenging an overpayment determination by filing an appeal, a provider can attempt to oppose it by filing a rebuttal or, in case of an overpayment created by a Recovery Audit Contractor (RAC), through discussions with the RAC.

A provider has an opportunity to file a rebuttal within 15 days from the date of the initial overpayment demand letter to explain why the recoupment should not go forward. Filing a rebuttal can be useful to point out clear fundamental errors in the Medicare contractor’s handling of a claim (e.g., obvious calculation errors, mismatches, etc.) but it is not intended as a vehicle to justify the claim or to challenge the contractor's rationale in adjudicating the claim.

In the case of RAC-determined overpayments, a provider may, within 30 days from the date of the RAC’s Initial Findings letter, request a discussion with the RAC. The discussion period allows the provider to learn the rationale for the RAC’s decision, to explain its position to the RAC, and to provide additional information as to why recoupment should not be initiated.

If successful, either submitting a rebuttal to the MAC or taking advantage of the discussion period with the RAC allows a provider to reverse the initial determination without having to file a Medicare appeal. However, neither avenue will prevent assessment of interest, stay recoupment, change the time to submit a redetermination request, or take the place of an appeal. The provider must comply with the relevant appeals deadlines, whether the regular deadline or the earlier one to stay recoupment.

Other Options Regarding Overpayments

If the provider wishes to avoid accrual of interest, it has the option of repaying the demanded overpayment either by a direct payment to the MAC or else by directing the MAC to do an “immediate recoupment” of funds from the provider’s ongoing claims.

If repayment of the overpayment either directly or through recoupment would constitute a “hardship” for the provider, it may request an Extended Repayment Schedule (ERS) to repay over a period up to 60 months. Along with its ERS request, the provider must submit documentation of hardship that justifies an ERS, the proposed repayment schedule, and the provider’s initial payment under the proposed ERS (which must continue while Medicare considers the ERS request).

A favorable decision on appeal at the three upper levels of the Medicare appeals process (i.e., the ALJ, Medicare Appeals Council, and federal court levels) will entitle the provider to be paid interest on funds that Medicare recouped, so long as the funds are not the result of “voluntary repayments” or payments pursuant to an ERS.

Providers that receive overpayment determinations should be aware of the various available options to be able to make good strategic decisions. And, as discussed in a prior article, providers are under an obligation to report and refund any overpayment it identifies within 60 days.