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Going Over the Overpayment Cliff

Stuart M. Langbein

Stuart M. Langbein,

Washington, D.C.

Beth Halpern

Jonathan Diesenhaus

Eliza Andonova

Sheree R. Kanner

08 January 2013
Buried in the American Taxpayer Relief Act of 2012 (“ATRA”), the fiscal cliff legislation President Obama signed into law on January 2, 2013, is a seven-line provision amending the Social Security Act by extending the so-called “statute of limitations” for recovering Medicare overpayments. ATRA Section 638 appears to implement HHS-OIG’s May 2012 recommendation to CMS “to pursue legislation to extend the statute of limitations so that the [overpayment] recovery period exceeds the reopening period for Medicare payments.” The provision extends that period from three to five years, but left the individual claims reopening period at four years.

The responsibility to reopen and recover non-fraudulent overpayments lies with the entity that rendered the final determination to make a Medicare payment, which typically is the Medicare contractor. A contractor may reopen an original payment determination to recover any questionable Medicare payments. Medicare contractors can reopen a payment determination “for good cause” within four years of the date of the original payment determination. See 42 C.F.R. § 405.980(b)(2). However, 42 U.S.C. § 1395gg(b) bars the recovery of overpayments from providers that are “without fault,” and prior to the ATRA amendment, a provider was deemed to be without fault three years after the original payment was made unless there was evidence to the contrary. According to HHS-OIG, the one year difference between the reopening and recovery periods in effect left CMS without the ability to collect overpayments for reopened claims in year four. In accordance with HHS-OIG’s recommendation, ATRA extends the statute of limitations period so that the recovery period, now five years, exceeds the individual claim reopening period, which remains at four years.

The limited legislative history available for this statutory change fails to offer specific insight as to why HHS-OIG thought the recovery period needed to exceed the reopening period rather than simply match it. Moreover, significant uncertainty exists over how this change relates to other overpayment provisions such as cost report overpayments, which have a three-year reopening period, and CMS’s proposed ten-year reopening period for overpayments reported in accordance with PPACA’s amendment of the Social Security Act adding an explicit overpayment reporting and return obligation. Providers are encouraged to pay careful attention to future regulatory developments on this front.

Stuart M. Langbein

Stuart M. Langbein,

Washington, D.C.

Beth Halpern

Jonathan Diesenhaus

Eliza Andonova

Sheree R. Kanner

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