The Centers for Medicare and Medicaid (CMS) have published a proposed rule to implement a provision in the Patient Protection and Affordable Care Act (PPACA) that requires providers and suppliers receiving funds under the Medicare program to report and return most overpayments 60 days after the date on which the overpayment was identified. Medicare Program; Reporting and Returning of Overpayments, Proposed Rule, 77 Fed. Reg. 9179-9187 (Feb. 16, 2012) (to be codified at 42 C.F.R. pt. 401, 405). The penalty for failing to return an overpayment in a timely manner is the same as the penalty for false claims—a civil penalty of not less than $5,000 and not more than $10,000 per overpayment, plus three times the amount of the overpayment.

CMS also proposes to define that an overpayment is “identified” using the same standard applicable to false claims, such as when the provider has “actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.”

The preamble to the proposed rule states in relevant part that:

We believe defining "identification" in this way gives providers and suppliers an incentive to exercise reasonable diligence to determine whether an overpayment exists. Without such a definition, some providers and suppliers might avoid performing activities to determine whether an overpayment exists, such as self-audits, compliance checks, and other additional research.

Thus, under the proposed rule, any overpayments made to a provider that are discovered by a whistleblower or a government contractor instead of by routine self-auditing may subject the provider to false claims penalties.

Click here for a link to the proposed rule.