[Federal Register Volume 77, Number 32 (Thursday, February 16, 2012)]
[Proposed Rules]
[Pages 9179-9187]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-3642]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 401 and 405
[CMS-6037-P]
RIN 0938-AQ58
Medicare Program; Reporting and Returning of Overpayments
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would require providers and suppliers
receiving funds under the Medicare program to report and return
overpayments by the later of the date which is 60 days after the date
on which the overpayment was identified; or any corresponding cost
report is due, if applicable.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on April 16, 2012.
ADDRESSES: In commenting, please refer to file code CMS-6037-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address only: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-6037-P, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address only: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-6037-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier)
[[Page 9180]]
your written comments before the close of the comment period to either
of the following addresses:
a. For delivery in Washington, DC--
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Room 445-G, Hubert H. Humphrey Building, 200
Independence Avenue SW., Washington, DC 20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-1066 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by following the
instructions at the end of the ``Collection of Information
Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Tiana Korley, (410) 786-9702.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
I. Background
The Medicare program (title XVIII of the Social Security Act (the
Act)) is the primary payer of health care for approximately 47 million
enrolled beneficiaries. Providers and suppliers furnishing Medicare
items and services must comply with the Medicare requirements set forth
in the Act and in our regulations. The requirements are meant to ensure
compliance with applicable statutes, promote the furnishing of high
quality care, and to protect the Medicare Trust Funds against fraud and
improper payments. As Medicare spending has grown, we have increased
our efforts to reduce fraud, waste, and abuse in the Medicare program.
As part of these efforts we have twice proposed--but did not
finalize--rules that would have amended our regulations related to
Medicare overpayments. (See the March 25, 1998 (63 FR 14506) and
January 25, 2002 (67 FR 3662) proposed rules.)
On March 23, 2010, the Patient Protection and Affordable Care Act
(Pub. L. 111-148) was enacted. The Health Care Education Reconciliation
Act of 2010 (Pub. L. 111-152) then amended certain provisions of Public
Law 111-148. These public laws are collectively known as the Affordable
Care Act. The Affordable Care Act makes a number of changes to the
Medicare program that enhance our efforts to recover overpayments and
combat fraud, waste and abuse in the Medicare program.
Section 6402(a) of the Affordable Care Act established a new
section 1128J(d) of the Act entitled ``Reporting and Returning of
Overpayments.'' Section 1128J(d)(1) of the Act requires a person who
has received an overpayment to report and return the overpayment to the
Secretary, the State, an intermediary, a carrier, or a contractor, as
appropriate, at the correct address, and to notify the Secretary,
State, intermediary, carrier or contractor to whom the overpayment was
returned in writing of the reason for the overpayment. Section
1128J(d)(2) of the Act requires that an overpayment be reported and
returned by the later of-- (1) the date which is 60 days after the date
on which the overpayment was identified; or (2) the date any
corresponding cost report is due, if applicable. Section 1128J(d)(3) of
the Act specifies that any overpayment retained by a person after the
deadline for reporting and returning an overpayment is an obligation
(as defined in 31 U.S.C. 3729(b)(3)) for purposes of 31 U.S.C. 3729.
Section 1128J(d)(4)(A) defines ``knowing'' and ``knowingly'' as
those terms are defined in 31 U.S.C. 3729(b); the terms ``knowing'' and
``knowingly'' ``mean that a person with respect to information--(i) has
actual knowledge of the information; (ii) acts in deliberate ignorance
of the truth or falsity of the information; or (iii) acts in reckless
disregard of the truth or falsity of the information.'' There need not
be ``proof of specific intent to defraud.'' Section 1128J(d)(4)(B) of
the Act defines the term ``overpayment'' 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. Finally,
section 1128J(d)(4)(C) of the Act defines the term ``person'' as a
provider of services, supplier, Medicaid managed care organization
(MCO) (as defined in section 1903(m)(1)(A) of the Act), Medicare
Advantage organization (MAO) (as defined in section 1859(a)(1) of the
Act) or PDP sponsor (PDP) (as defined in section 1860D-41(a)(13) of the
Act) but the definition does not include a beneficiary.
II. Provisions of the Proposed Regulation
To implement section 6402(a) of the Affordable Care Act, we propose
establishing a new subpart D in Part 401 of our regulations. In this
section, we outline the content of the proposed provisions of this new
subpart D.
A. Scope of Subpart (Proposed Sec. 401.301)
In proposed Sec. 401.301, we state that subpart D sets forth the
policies and procedures for reporting and returning overpayments to the
Medicare program for providers and suppliers of services under Parts A
and B of title XVIII. At this time, we are proposing to implement the
requirements set forth in section 1128J(d) of the Act only as they
relate to Medicare Part A and Part B providers and suppliers. Other
stakeholders, including, without limitation, MAOs, PDPs, and Medicaid
MCOs will be addressed at a later date.
Notwithstanding the foregoing, we remind all stakeholders that even
without a final regulation they are subject to the statutory
requirements
[[Page 9181]]
found in section 1128J(d) of the Act and could face potential False
Claims Act liability, Civil Monetary Penalties Law liability, and
exclusion from Federal health care programs for failure to report and
return an overpayment. Additionally, providers and suppliers continue
to be obliged to comply with our current procedures when we, or our
contractors, determine an overpayment and issue a demand letter.
B. Definitions (Proposed Sec. 401.303)
For purposes of this subpart only, we propose the following
definitions:
1. Overpayment
Section 1128J(d) of the Act provides that an overpayment means ``*
* * any funds that a person receives or retains under title XVIII * * *
to which the person, after applicable reconciliation, is not entitled
under such title.'' In Sec. 401.303, we propose to include this same
definition in our proposed rule. Examples of overpayments under this
proposed definition could include all of the following:
Medicare payments for noncovered services.
Medicare payments in excess of the allowable amount for an
identified covered service.
Errors and nonreimbursable expenditures in cost reports.
Duplicate payments.
Receipt of Medicare payment when another payor had the
primary responsibility for payment.
In certain circumstances, Medicare makes estimated payments for
services with the knowledge that a reconciliation of those payments to
actual costs will be done when the actual costs or related information
becomes available, usually at a later date. Interim payments made to a
provider throughout the cost year are reconciled with covered and
reimbursable costs at the time the cost report is due. The statutory
and proposed regulatory definition of the term overpayment acknowledges
this practice and provides that an overpayment does not exist until
after an applicable reconciliation takes place. When a provider files a
cost report, the provider is attesting to the accuracy of the
information contained on the cost report and must maintain the
appropriate documentation supporting the costs that are claimed on the
cost report. We rely upon the information that providers submit through
the cost report and we believe that providers must accurately report
any overpayments at the time they submit any cost reports to CMS--
whether it is an initial submission of a cost report or an amended one.
2. Medicare Contractor
We propose that the term ``Medicare contractor'' means a fiscal
intermediary, carrier, durable medical equipment Medicare
administrative contractor (DME MAC), or Part A/Part B Medicare
administrative contractor. We believe that this proposed definition
captures the different contractors that would be involved in receiving
reports of overpayments as well as handling the return of overpayments,
consistent with the statutory requirement.
3. Person
We propose that a person means a provider (as defined in Sec.
400.202) or supplier (as defined in Sec. 400.202). This definition
does not include a beneficiary. Our proposal is consistent with the
definition of a ``person'' in section 1128J(d) of the Act.
C. Requirements for Reporting and Returning of Overpayments (Proposed
Sec. 401.305)
1. General
Section 1128J of the Act provides that if a person has received an
overpayment, the person shall ``(i) report and return the overpayment
to the Secretary * * * an intermediary, a carrier, or a contractor, as
appropriate, at the correct address; and (ii) notify the Secretary * *
* intermediary, carrier, or contractor to whom the overpayment was
returned in writing of the reason for the overpayment.''
We propose to implement these requirements by using the existing
voluntary refund process, which will be renamed the ``self-reported
overpayment refund process.'' This process is described in Publication
100-06, Chapter 4 of the Medicare Financial Management Manual. Under
the existing voluntary refund process, providers and suppliers report
overpayments using a form that each Medicare contractor makes available
on its Web site. The form requires that providers and suppliers provide
information to allow CMS to identify the affected claims, such as the
health insurance claim number (HICN); the provider's or supplier's
name, number and tax identification number; and the date of service.
The voluntary refund process also requires providers and suppliers to
summarize why the refund is being made including the following
information: (1) How the error was discovered; (2) a description of the
corrective action plan implemented to ensure the error does not occur
again; (3) the reason for the refund; (4) whether the provider or
supplier has a corporate integrity agreement (CIA) with the OIG or is
under the OIG Self-Disclosure Protocol; (5) the timeframe and the total
amount of refund for the period during which the problem existed that
caused the refund; (6) Medicare claim control number, as appropriate;
(7) Medicare National Provider Identification (NPI) number; (8) a
refund in the amount of the overpayment; and (9) if a statistical
sample was used to determine the overpayment amount, description of the
statistically valid methodology used to determine the overpayment. We
are proposing that providers and suppliers would be required to use the
self-reported overpayment refund process set forth by the applicable
Medicare contractor to report and return overpayments.
Some clarification may be helpful in defining potential reasons for
an overpayment since such information must be reported under section
1128J(d) of the Act. While we cannot provide an exhaustive list of all
potential reasons for the overpayment as required to be reported at
Sec. 401.305(d), we can provide examples. Examples of what a person
may report as the reason for the overpayment include the following: (1)
Incorrect service date; (2) duplicate payment; (3) incorrect CPT code;
(4) insufficient documentation; and (5) lack of medical necessity. We
note that many of the forms currently available from our contractors
provide a ``check the box'' format that allows providers and suppliers
to easily identify the reason for the overpayment. For overpayments
that are not listed on the form that is available from the Medicare
contractor, there is an associated ``other'' box that allows providers
and suppliers to clarify the reason for the overpayment.
We make these proposals because we believe that the information
requested under the existing voluntary refund process, such as the date
of service and the HICN, is necessary to allow CMS to appropriately
match claims information with the information that is reported by the
provider or supplier and to understand the nature of the overpayment.
Furthermore, we recognize that the reporting forms may differ among the
different Medicare contractors and plan to develop a uniform reporting
form that will enable all overpayments to be reported and returned in a
consistent manner across all Medicare contractors. Until such uniform
reporting form is made available, providers and suppliers should
utilize the existing form available from the Web site of the applicable
Medicare contractor as discussed earlier in this proposed rule.
[[Page 9182]]
2. Identified
Section 1128J of the Act provides that the terms `knowing' and
`knowingly' have the meaning given those terms in the False Claims Act
(31 U.S.C. 3729(b)(3)). The statutory text, however, does not use this
phrase other than in the definitions. In Sec. 401.305 (a)(2), we
propose that a person has identified an overpayment if the person has
actual knowledge of the existence of the overpayment or acts in
reckless disregard or deliberate ignorance of the overpayment. We
believe Congress' use of the term ``knowing'' in the ACA was intended
to apply to determining when a provider or supplier has identified an
overpayment. 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.
3. Reporting and Returning Deadlines
Section 1128J of the Act provides that an overpayment must be
reported and returned by the later of--(i) the date which is 60 days
after the date on which the overpayment was identified; or (ii) the
date any corresponding cost report is due, if applicable. Proposed
Sec. 401.305(b) contains an identical requirement. If an overpayment
is claims related, the provider or supplier would be required to report
and return the overpayment within 60 days of identification. However,
for those providers that submit cost reports, if the overpayment is
such that it would generally be reconciled on the cost report by the
provider, the provider would be permitted to report and return the
overpayment either 60 days from the identification of the overpayment
or on the date the cost report is due, whichever is later. For example,
issues involving upcoding must be reported and returned within 60 days
of identification because the upcoded claims for payment are not
submitted to Medicare in the form of cost reports. However, for an
overpayment that would generally be reconciled on the cost report, such
as overpayments related to graduate medical education payments, the
provider must report and return the overpayment either 60 days after it
has been identified or on the date the cost report is due, whichever is
later. We believe that the qualifying language ``if applicable''
supports the proposed approach of only permitting providers to rely
upon the cost report deadline when relevant to the determination of
whether an actual overpayment exists. We make this clarification to
avoid situations in which providers improperly delay reporting and
returning a claims-related, identified overpayment until the date a
cost report is due. We do not believe that Congress intended to create
a loophole that would allow providers to delay reporting and returning
an identified overpayment until a cost report is due if the overpayment
would not ordinarily be reconciled on the cost report.
The proposed 60-day requirement to report and return overpayments
would run from the date on which the person had identified the
overpayment. As previously discussed, an overpayment has been
identified at the time that a person acts with actual knowledge of, in
deliberate ignorance of, or with reckless disregard to the
overpayment's existence. In some cases, a provider or supplier may
receive information concerning a potential overpayment that creates an
obligation to make a reasonable inquiry to determine whether an
overpayment exists. If the reasonable inquiry reveals an overpayment,
the provider then has 60 days to report and return the overpayment. On
the other hand, failure to make a reasonable inquiry, including failure
to conduct such inquiry with all deliberate speed after obtaining the
information, could result in the provider knowingly retaining an
overpayment because it acted in reckless disregard or deliberate
ignorance of whether it received such an overpayment. For example, a
provider that receives an anonymous compliance hotline telephone
complaint about a potential overpayment has incurred an obligation to
timely investigate that matter. If the provider diligently conducts the
investigation, and reports and returns any resulting overpayments
within the 60-day reporting and repayment period, then the provider
would have satisfied its obligations under the proposed rule. If,
however, the provider fails to make any reasonable inquiry into the
complaint, the provider may be found to have acted in reckless
disregard or deliberate ignorance of any overpayment.
In order to assist providers and suppliers with understanding when
an overpayment has been identified, we provide the following examples:
A provider of services or supplier reviews billing or
payment records and learns that it incorrectly coded certain services,
resulting in increased reimbursement.
A provider of services or supplier learns that a patient
death occurred prior to the service date on a claim that has been
submitted for payment.
A provider of services or supplier learns that services
were provided by an unlicensed or excluded individual on its behalf.
A provider of services or supplier performs an internal
audit and discovers that overpayments exist.
A provider of services or supplier is informed by a
government agency of an audit that discovered a potential overpayment,
and the provider or supplier fails to make a reasonable inquiry. (When
a government agency informs a provider or supplier of a potential
overpayment, the provider or supplier has an obligation to accept the
finding or make a reasonable inquiry. If the provider's or supplier's
inquiry verifies the audit results, then it has identified an
overpayment and, assuming there is no applicable cost report, has 60
days to report and return the overpayment. As noted previously, failure
to make a reasonable inquiry, including failure to conduct such inquiry
with all deliberate speed after obtaining the information, could result
in the provider or supplier knowingly retaining an overpayment because
it acted in reckless disregard or deliberate ignorance of whether it
received such an overpayment).
A provider of services or supplier experiences a
significant increase in Medicare revenue and there is no apparent
reason--such as a new partner added to a group practice or a new focus
on a particular area of medicine--for the increase. Nevertheless, the
provider or supplier fails to make a reasonable inquiry into whether an
overpayment exists. (When there is reason to suspect an overpayment,
but a provider or supplier fails to make a reasonable inquiry into
whether an overpayment exists, it may be found to have acted in
reckless disregard or deliberate ignorance of any overpayment.)
We emphasize that these examples are not an exhaustive list of
situations where a person has identified an overpayment.
We recognize that there are also intersections between the
obligation to report and return overpayments under section 6402(a) of
the Affordable Care Act and the existing procedures for providers and
suppliers to self-disclose actual or potential violations of the
physician self-referral statute to CMS through the Medicare Self-
Referral Disclosure Protocol (SRDP). Providers and suppliers self-
disclose violations under the SRDP with the intention of resolving
overpayment liability
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exposure for the identified conduct. The SRDP is available on the CMS
Web site at https://www.cms.gov/PhysicianSelfReferral/Downloads/6409_SRDP_Protocol.pdf. Under the SRDP, we may reduce the amount due and
owing for violations of the physician self-referral statute. We have
suspended the obligation to return overpayments under section 6402(a)
of the Affordable Care Act when we acknowledge receipt of a disclosure
made pursuant to the process established by the SRDP. Because the SRDP
only suspends the running of the 60-day deadline to return a physician
self-referral-related overpayment, the provider or supplier would be
obligated still to report the overpayment using the process that we are
proposing in Sec. 401.305(a)(1). Specifically with regard to the SRDP,
we seek comment on alternative approaches that would allow providers
and suppliers to avoid making multiple reports of identified
overpayments.
We note that there are also intersections between the obligation to
report and return an overpayment under section 6402(a) of the
Affordable Care Act and the existing procedures for reporting self-
discovered evidence of potential fraud to the OIG through the OIG Self-
Disclosure Protocol (OIG SDP). The OIG SDP is available on the OIG Web
site at http://oig.hhs.gov/authorities/docs/selfdisclosure.pdf.
Disclosures resolved through the OIG SDP result in a settlement with
OIG that releases the OIG's applicable Civil Monetary Penalties Law
(CMPL) and permissive exclusion authorities in exchange for a
negotiated monetary payment that includes the overpayment as well as
certain penalties and assessments. In Sec. 401.305(b), we propose to
suspend the obligation to return overpayments under section 6402(a) of
the Affordable Care Act when OIG acknowledges receipt of a submission
to the OIG SDP. The obligation to return overpayments consistent with
the processes established in this proposed rule would be suspended
until a settlement agreement is entered, or the provider or supplier
withdraws or is removed from the OIG SDP. We also propose that once the
provider or supplier notifies OIG of the identified overpayment through
the OIG SDP, such notice would constitute a report for purposes of the
reporting requirement set forth at Sec. 401.305 of this proposed rule.
However, we note that such reports must be made in accordance with the
timeliness requirements set forth at Sec. 401.305.
Providers and suppliers should ensure that they are using the most
appropriate process to report and return overpayments. In the October
30, 1998 Federal Register, (63 FR 58400) the OIG published a notice
stating--
[the SDP] is intended to facilitate the resolution of only matters
that, in the provider's reasonable assessment, are potentially
violative of Federal, criminal, civil or administrative laws.
Matters exclusively involving overpayments or errors that do not
suggest that violations of law have occurred should be brought
directly to the attention of the entity (e.g. a contractor such as a
carrier or an intermediary) that processes claims and issues payment
on behalf of the Government agency responsible for the particular
Federal health care program (e.g., [CMS] for matters involving
Medicare). The program contractors are responsible for processing
the refund and will review the circumstances surrounding the initial
overpayment. If the contractor concludes that the overpayment raises
concerns about the integrity of the provider, the matter may be
referred to the OIG. Accordingly, the provider's initial decision of
where to refer a matter involving non-compliance with program
requirements should be made carefully.
We believe the distinctions drawn previously are relevant because
the process of reporting and returning overpayments pursuant to section
1128J of the Act cannot resolve any potential False Claims Act or OIG
administrative liability associated with the overpayment (even though
returning an overpayment may, among other benefits, limit any FCA or
administrative liability arising from the retention of an overpayment).
Providers and suppliers should be aware that the contractors will
scrutinize overpayments received through this process and may make
referrals to OIG whenever the contractors believe circumstances warrant
such a referral.
We are aware that providers and suppliers may be concerned about
scenarios in which they have identified an overpayment but because of
the magnitude of the overpayment, need additional time to make
repayment. Providers and suppliers may not delay the identification
date in these situations to meet the deadline prescribed for reporting
and returning the overpayment. Instead, if a provider or supplier needs
additional time due to financial constraints, the provider or supplier
must use the existing Extended Repayment Schedule (ERS) \1\ process
that is outlined in Publication 100-06, Chapter 4 of the Financial
Management Manual. Because the statute is clear as to the deadline for
reporting and returning overpayments, we believe that using the
existing ERS process would be the best means of addressing potential
financial limitations associated with the ability to repay the
overpayment. We note that requests for ERS are not automatically
granted and that providers and suppliers seeking to repay an identified
overpayment using the ERS are required to submit significant
documentation to allow CMS to verify that timely repayment of the
overpayment represents a true financial hardship to the provider or
supplier. The ERS is the only means by which extended repayment of an
overpayment will be permitted. We propose to amend the definition of
``hardship'' at Sec. 401.607 to ensure that providers and suppliers
can seek to utilize the ERS to return identified overpayments for
purposes of section 1128J(d) of the Act when financial constraints
suggest that use of the ERS is appropriate.
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\1\ The ``Extended Repayment Schedule'' was formerly referred to
as the ``Extended Repayment Plan.''
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Finally, we note the following with regard to overpayments that
arise due to a violation of the anti-kickback statute (section
1128B(b)(1) and (2) of the Act). Compliance with the anti-kickback
statute is a condition of payment. Claims that include items and
services resulting from a violation of this law are not payable and
constitute false or fraudulent claims for purposes of the False Claims
Act. We recognize that, in many instances, a provider or supplier is
not a party to, and is unaware of the existence of, an arrangement
between third parties that causes the provider or supplier to submit
claims that are the subject of a kickback. For example, a hospital may
be unaware that a device manufacturer has paid a kickback to a
physician on the hospital's medical staff to induce the physician to
implant the manufacturer's device in procedures performed at the
hospital. Moreover, even if a provider or supplier becomes aware of a
potential third party payment arrangement, it would generally not be
able to evaluate whether the payment was an illegal kickback or whether
one or both parties had the requisite intent to violate the anti-
kickback statute.
For this reason, we believe that providers who are not a party to a
kickback arrangement are unlikely in most instances to have
``identified'' the overpayment that has resulted from the kickback
arrangement and would therefore have no duty to report it or, as
discussed later in this section, to repay it. To the extent that a
provider or supplier who is not a party to a kickback arrangement has
sufficient knowledge of the arrangement to have identified the
resulting overpayment, the provider or supplier must report the
overpayment to CMS in accordance with section 1128J(d) of the Act and
corresponding
[[Page 9184]]
regulations. Although the government may always seek repayment of
claims paid that do not satisfy a condition of payment, where a
kickback arrangement exists, HHS's enforcement efforts would most
likely focus on holding accountable the perpetrators of that
arrangement. Accordingly, we would refer the reported overpayment to
OIG for appropriate action and would suspend the repayment obligation
until the government has resolved the kickback matter (either by
determining that no enforcement action is warranted or by obtaining a
judgment, verdict, conviction, guilty plea, or settlement). Thus, if
the provider has not identified the kickback or if it reported it when
it did identify the kickback, our expectation is that only the parties
to the kickback scheme would be required to repay the overpayment that
was received by the innocent provider or supplier, except in the most
extraordinary circumstances.
4. Applicable Reconciliation
As previously noted, the statutory and our proposed regulatory
definition of an overpayment acknowledges that, in some instances, we
make interim payments to a provider through the cost year and that the
provider reconciles these payments with covered and reimbursable costs
at the time the cost report is due. In Sec. 401.305(c), we propose
that ``applicable reconciliation'' will occur with the provider's
submission of a cost report. We believe that this would include an
initial cost report submission or an amended cost report. We expect
providers to accurately report and return overpayments at these points
in time, because we rely upon the information that providers include on
cost reports.
We propose to recognize two exceptions to the general rule that the
applicable reconciliation occurs with the provider's submission of a
cost report. The first exception is related to Supplemental Security
Income (SSI) ratios used in the calculation of disproportionate share
hospital (DSH) payment adjustment. We publish these ratios annually on
our Web site and providers are expected to use the appropriate ratio
when submitting the cost report for that cost year, unless the
published ratios are not available at the time the cost report is due.
In instances where the provider later receives more recent information
regarding its SSI ratio, we propose that the provider would not be
required to amend the cost report or calculate the change in
reimbursement and return the potential overpayment until the final
reconciliation of the provider's cost report occurs. The second
exception is related to the outlier reconciliation. We perform an
outlier reconciliation at the time the cost report is settled if
certain thresholds are exceeded. Prior to this reconciliation the
actual amount of any overpayment is not known. In instances where the
provider is aware it has exceeded the established thresholds and an
outlier reconciliation will be performed, we propose that the provider
would not be required to estimate the change in reimbursement and
return the estimated overpayment until the final settlement of that
cost report.
5. Enforcement
Section 1128J(d) of the Act provides that any overpayment retained
by a person after the deadline for reporting and returning the
overpayment is an obligation for purposes of 31 U.S.C. 3729. Any person
who ``knowingly conceals or knowingly and improperly avoids or
decreases an obligation to pay or transmit money or property to the
Government'' may be found liable under the False Claims Act. (See 31
U.S.C. 3729 et seq.) Proposed Sec. 401.305(f) contains a similar
statement. Additionally, any person who ``knows of an overpayment [as
defined in section 1128J(d)(4) of the Act] and does not report and
return the overpayment in accordance with such section'' may be found
liable under the Civil Monetary Penalties Law (section 1128A(a)(10) of
the Act) and accordingly could be excluded from participation in
Federal health care programs (section 1128A of the Act).
6. Lookback Period and Related Issues
In Sec. 401.305(g), we are proposing that overpayments must be
reported and returned only if a person identifies the overpayment
within 10 years of the date the overpayment was received. We selected
10 years because this is the outer limit of the False Claims Act
statute of limitations. We believe that the proposed 10-year lookback
period is appropriate for several reasons. First, we believe that
providers and suppliers should have certainty after a reasonable period
that they can close their books and not have ongoing liability
associated with an overpayment. We also believe that the length of the
lookback period is long enough to sufficiently further our interest in
ensuring that overpayments are timely returned to the Medicare Trust
Funds.
We propose to amend the reopening rules at Sec. 405.980(b) to
provide that overpayments reported in accordance with Sec. 401.305 may
be reopened for a period of 10 years. We make this proposal in order to
ensure that our reopening regulations are consistent with the lookback
period that we are proposing. We seek comment on the proposed 10-year
lookback period. In addition, we seek comment on our proposal to amend
the reopening rules to provide for a 10-year reopening period.
III. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs):
Proposed Sec. 401.305 states that a provider or supplier must
report and return an overpayment to the Secretary, the State, an
intermediary, a carrier or a contractor to the correct address by the
later of 60 days after the overpayment was identified or the date the
corresponding cost report is due and notify the Secretary, the State,
an intermediary, a carrier or a contractor in writing of the reason for
the overpayment. The burden associated with this requirement would be
the time and effort necessary to report and return the overpayment in
the manner described at Sec. 401.305.
For purposes of this section only, we estimate that approximately
125,000 providers and suppliers (or roughly 8.5 percent of the total
number of Medicare providers and suppliers) would report and return
overpayments in a typical year under our proposed provisions. In
addition, we project that each of these providers and suppliers would,
on average, separately report and return approximately 3 to 5
overpayments. We also estimate that it would take a provider or
supplier approximately 2.5
[[Page 9185]]
hours to complete the applicable reporting form and return an
overpayment. Lastly, the two main categories of individuals believed to
complete and submit the applicable reporting form include: (1)
Accountants and auditors (external and in-house); and (2) miscellaneous
in-house administrative personnel. Each provider and supplier's
individual operations is different and, as a result, it is not possible
to break down the percentage of total affected providers of suppliers
that would fall within the two aforementioned categories (for example,
percentage of providers that would use an accountant). Consequently, in
order to determine the burden cost, we utilize the average hourly wage
of these two occupational categories based on the most recent wage data
provided by the Bureau of Labor Statistics (BLS) data for May 2010. The
mean hourly wage for the category of ``accountants and auditors'' is
$33.15 (see http://www.bls.gov/oes/current/oes132011.htm) and the mean
hourly wage for the category of ``bookkeeping, accounting, and auditing
clerks'' is $16.99 (http://www.bls.gov/oes/current/oes433031.htm). The
average of these two figures, including fringe benefits and overhead,
is $37.10. This, in turn, leads to an aggregate annual ICR burden cost,
attributable to the impacted 125,000 providers and suppliers for the
range of 3 to 5 overpayments, of $34.78 million and $57.97 million,
respectively. Again these are rough estimates, as the number of
overpayments reported and returned will vary per provider and supplier.
Therefore, we solicit comment on our burden assumptions and associated
calculations.
Table 1--Annual Burden Requirements and Costs Associated With Reporting and Returning of Overpayments (Sec.
401.305)
----------------------------------------------------------------------------------------------------------------
Number of
Number of overpayments Burden per
impacted processed per overpayment Total annual Hourly labor cost Total cost (in
providers and provider and reported and burden (hours) of reporting millions)
suppliers supplier returned (hours)
----------------------------------------------------------------------------------------------------------------
125,000 3-5 2.5 937,500-1,562,500 $37.10 $34.78-$57.97
----------------------------------------------------------------------------------------------------------------
If you comment on these information collection and recordkeeping
requirements, please do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this proposed rule; or
2. Submit your comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Attention: CMS Desk Officer,
[CMS-6037-P], Fax: (202) 395-5806; or Email: [email protected].
IV. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
V. Regulatory Impact Statement
A. Statement of Need
This proposed rule is necessary to implement section 6402(a) of the
Affordable Care Act, which established a new section 1128J(d) of the
Act entitled ``Reporting and Returning of Overpayments.'' Section
1128J(d)(1) of the Act requires a person who has received an
overpayment to report and return the overpayment to the Secretary, the
State, an intermediary, a carrier, or a contractor, as appropriate, at
the correct address, and to notify the Secretary, State, intermediary,
carrier or contractor to whom the overpayment was returned in writing
of the reason for the overpayment. Section 1128J(d)(2) of the Act
requires that an overpayment must be reported and returned by the later
of--(1) the date which is 60 days after the date on which the
overpayment was identified; or (2) the date any corresponding cost
report is due, if applicable. Section 1128J(d)(3) of the Act specifies
that any overpayment retained by a person after the deadline for
reporting and returning an overpayment is an obligation (as defined in
31 U.S.C. 3729(b)(3)) for purposes of 31 U.S.C. 3729. As a result, this
proposed rule clarifies to providers and suppliers their legal
obligations regarding the reporting and returning of overpayments.
B. Overall Impact
We have examined the impact of this proposed rule as required by
Executive Order 12866 on Regulatory Planning and Review (September
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act,
section 202 of the Unfunded Mandates Reform Act (UMRA) of 1995 (Pub. L.
104-4), Executive Order 13132 on Federalism (August 4, 1999), and the
Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects; distributive impacts and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. A regulation impact analysis (RIA) must be prepared for
major rules with economically significant effects ($100 million or more
in any one year).
As discussed earlier in the preamble, even without a final
regulation, all stakeholders are subject to the statutory requirements
found in section 1128J(d) of the Act and could face potential False
Claims Act liability, Civil Monetary Penalties Law liability, and
exclusion from Federal health care programs for failure to report and
return an overpayment. This proposed rule would impose a new deadline
on the return of any overpayment that has been identified. We believe
that this change would spur providers to be more diligent in reporting
and returning overpayments. That will likely increase the overpayments
that we collect, but we do not have a basis for estimating the
magnitude of that change, and note the substantial uncertainty
surrounding the magnitude of new collections. The burden costs for
reporting and returning of overpayments, as discussed in section III.
of this proposed rule, are estimated annually between $34.78 million to
$57.97 million. As a result, this
[[Page 9186]]
proposed rule is not an economically significant rule under Executive
Order 12866. We solicit comment on the analysis and conclusions
provided in the RIA.
The RFA requires agencies to analyze options for regulatory relief
for small businesses, if a rule has a significant impact on a
substantial number of small entities. For purposes of the RFA, small
entities include small businesses, nonprofit organizations, and small
governmental jurisdictions. Most hospitals and most other health care
providers and suppliers are small entities, either by being nonprofit
organizations or by meeting the Small Business Administration (SBA)
definition of a small business and having revenues of less than $7
million to $34.5 million in any 1 year. (For details, see the Small
Business Administration's Table of Size Standards at http://www.sba.gov/sites/default/files/Size_Standards_Table.pdf.)
Individuals and States are not included in the definition of a small
entity. We do not believe that the reporting and returning of
overpayments identified by providers and suppliers of services will
have a significant impact on a substantial number of small entities.
The requirements of this rule add another program integrity tool, but
do not replace existing overpayment recovery efforts. We are not
preparing an analysis for the RFA because the Secretary has determined
that this proposed rule will not have a significant impact on a
substantial number of small entities.
Section 1102(b) of the Act requires us to prepare a regulatory
impact analysis if a rule may have a significant impact on the
operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposed of section 1102(b) of the Act, we define a small rural
hospital as a hospital located outside of the Metropolitan Statistical
Area and has fewer than 100 beds. The cost of the required reporting
should be minimal for small rural hospitals because standard business
practices dictate keeping accurate records concerning monies due and/or
payable. We are not preparing an analysis for section 1102(b) of the
Act because the Secretary has determined that this proposed rule will
not have a significant impact on the operations of a substantial number
of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that agencies assess anticipated costs and benefits before issuing any
rule whose mandates require spending in any 1 year by State, local, or
tribal governments, in the aggregate, or by the private sector, of $136
million. This proposed rule would have no effect on the annual
expenditures of any State, local or tribal government, or the private
sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement cost on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this proposed rule does not impose any costs on
State or local governments, the requirements of Executive Order 13132
are not applicable.
C. Alternatives Considered
In light of the statutory mandate in section 6402(a) of the
Affordable Care Act, we did not consider any alternatives to the
implementation of this provision. We did, however, contemplate several
operational mechanisms to alleviate the burden on the provider and
supplier communities.
First, we considered and elected to utilize the existing voluntary
refund process. This would allow providers and suppliers to use a
reporting mechanism with which they are already familiar.
Second, we contemplated the appropriate length of time in which
overpayments must be reported and returned. A time period of less than
10 years was considered, as this would ease the burden on providers and
suppliers. However, and as explained earlier, we selected 10 years
because this is the outer limit of the False Claims Act statute of
limitations. More importantly, we believe that the need to protect the
Medicare Trust Fund was of primary importance. It is not possible for
us to calculate the costs associated with a 10-year period versus, for
instance, a 5-year period. We do, though, solicit comments on this
issue, similar to our earlier solicitation of comments on the propriety
of a 10-year period.
Third, as with the overpayment reporting period, we contemplated a
reopening timeframe of less than 10 years. Yet we selected a 10-year
timeframe in order to ensure that our reopening regulations are
consistent with the 10-year lookback period. The costs of a shorter
lookback period cannot be estimated, though we welcome comments on this
issue.
We solicit comment on the analysis provided in this section.
D. Beneficiary Access
We do not anticipate any impact on beneficiary access to care as a
result of this proposed rule. As mentioned, the only burden associated
with our proposed provisions involves the ICR aspects of reporting and
returning overpayments. We do not believe that this burden--which, in
any event, would only affect a small percentage of providers and
suppliers--would cause a particular provider or supplier to reduce the
services it furnishes to beneficiaries.
List of Subjects
42 CFR Part 401
Claims, Freedom of information, Health facilities, Medicare,
Privacy.
42 CFR Part 405
Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medical devices, Medicare, Reporting and
recordkeeping requirements, Rural areas, X-rays.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend Chapter IV as set forth below:
PART 401--GENERAL ADMINISTRATIVE REQUIREMENTS
1. The authority citation for part 401 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
2. Part 401 is amended by adding subpart D to read as follows:
Subpart D--Reporting and Returning of Overpayments
Sec.
401.301 Basis and scope.
401.303 Definitions.
401.305 Requirements for reporting and returning of overpayments.
Sec. 401.301 Basis and scope.
This subpart sets forth the policies and procedures for reporting
and returning overpayments to the Medicare program for providers and
suppliers of services under Parts A and B of title XVIII of the Act as
required by section 1128J of the Act.
Sec. 401.303 Definitions.
For purposes of this subpart--
Medicare contractor means a fiscal intermediary, carrier, durable
medical equipment Medicare administrative contractor (DME MAC), or Part
A/Part B Medicare administrative contractor.
Overpayment means any funds that a person has received or retained
under
[[Page 9187]]
title XVIII of the Act to which the person, after applicable
reconciliation, is not entitled under such title.
Person means a provider (as defined in Sec. 400.202) or a supplier
(as defined in Sec. 400.202).
Sec. 401.305 Requirements for reporting and returning of
overpayments.
(a) General. (1) If a person has identified that it has received an
overpayment the person must report and return the overpayment in the
form and manner set forth in this section.
(2) A person has identified an overpayment if the person has actual
knowledge of the existence of the overpayment or acts in reckless
disregard or deliberate ignorance of the existence of the overpayment.
(b) Deadline for reporting and returning overpayments. (1) A person
with an identified overpayment must report and return the overpayment
by the later of either of the following:
(i) The date which is 60 days after the date on which the
overpayment was identified.
(ii) The date any corresponding cost report is due, if applicable.
(2) The deadline for returning overpayments will be suspended when
either of the following occurs:
(i) OIG acknowledges receipt of a submission to the OIG Self-
Disclosure Protocol until such time as a settlement agreement is
entered, the person withdraws from the OIG Self-Disclosure Protocol, or
the person is removed from the OIG Self-Disclosure Protocol.
(ii) CMS acknowledges receipt of a submission to the Self-Referral
Disclosure Protocol until such time as a settlement agreement is
entered, the person withdraws from the Self-Referral Disclosure
Protocol, or the person is removed from the Self-Referral Disclosure
Protocol.
(c) Applicable reconciliation. (1) The applicable reconciliation
occurs when a cost report is filed; and
(2) In instances when the provider--
(i) Receives more recent CMS information on the SSI ratio, the
provider is not required to return any overpayment resulting from the
updated information until the final reconciliation of the provider's
cost report occurs; or
(ii) Knows that an outlier reconciliation will be performed, the
provider is not required to estimate the change in reimbursement and
return the estimated overpayment until the final reconciliation of that
cost report.
(d) Contents of report. An overpayment required to be reported
under this section to a Medicare contractor must be made in writing and
must contain all of the following:
(1) Person's name.
(2) Person's tax identification number.
(3) How the error was discovered.
(4) The reason for the overpayment.
(5) The health insurance claim number, as appropriate.
(6) Date of service.
(7) Medicare claim control number, as appropriate.
(8) Medicare National Provider Identification (NPI) number.
(9) Description of the corrective action plan to ensure the error
does not occur again.
(10) Whether the person has a corporate integrity agreement with
the OIG or is under the OIG Self-Disclosure Protocol.
(11) The timeframe and the total amount of refund for the period
during which the problem existed that caused the refund.
(12) If a statistical sample was used to determine the overpayment
amount, a description of the statistically valid methodology used to
determine the overpayment.
(13) A refund in the amount of the overpayment. A person may
request an extended repayment schedule as that term is defined in Sec.
401.603.
(e) Reporting. (1) A person must use the self-reported overpayment
refund process set forth by the applicable Medicare contractor to
report and return overpayments except as provided in paragraph (e)(2)
of this section.
(2) A person satisfies the reporting obligations of this section by
making a disclosure under the OIG's Self-Disclosure Protocol resulting
in a settlement agreement using the process described in the OIG Self-
Disclosure Protocol.
(f) Enforcement. Any overpayment retained by a person after the
deadline for reporting and returning the overpayment specified in
paragraph (b) of this section is an obligation for purposes of 31
U.S.C. 3729.
(g) Lookback period. An overpayment must be reported and returned
in accordance with Sec. 401.305 only if a person identifies the
overpayment within 10 years of the date the overpayment was received.
Subpart F--Claims Collection and Compromise
Sec. 401.607 [Amended]
3. In Sec. 401.607(c)(2)(i), the definition of ``Hardship'' is
amended by removing the phrase ``outstanding overpayments (principal
and interest)'' and adding in its place the phrase ``outstanding
overpayments (principal and interest and including overpayments
reported in accordance with Sec. Sec. 401.301 through 401.305.)''
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
4. The authority for part 405 continues to read as follows:
Authority: Secs. 1102, 1862, and 1871 of the Social Security
Act as amended (42 U.S.C.1302, 1395y, and 1395hh).
5. Section 405.980 is amended by adding paragraph (b)(6) to read as
follows:
Sec. 405.980 Reopenings of initial determinations, redeterminations,
and reconsiderations, hearings and reviews.
* * * * *
(b) * * *
(6) Within 10 years from the date of initial determination or
redetermination if the overpayment is reported in accordance with Sec.
401.305.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: August 18, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
Approved: February 10, 2012.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2012-3642 Filed 2-14-12; 8:45 am]
BILLING CODE 4120-01-P