Clinical, Financial and Administrative Insights For Physicians

Medicare Overpayments: 6 Tips to Comply with CMS’ New Rule

Posted by Suzanne Prasad

If you find an overpayment, don’t expect to keep it. That’s because physicians must report and repay Medicare overpayments within 60 days of identifying them, according to a final rule that took effect March 14, 2016. This includes overpayments identified within six years of when the overpayment is received.Medicare_Overpayment.jpg

Do not forget the top 6 tips (given below) that will help physicians identify what could constitute an overpayment and how they should report overpayments as they discover them.

1. Understand to whom the rule applies.

This rule applies to both Medicare Part A and Part B providers and suppliers. Medicare Parts C and D Plans and Prescription Drug Plan sponsors are subject to a separate final rule that was issued on May 23, 2014. CMS has not published a final rule to address Medicaid requirements.

2. Know what CMS does—and doesn’t—consider an overpayment.

According to the agency, an overpayment occurs when an individual “has or should have, through the exercise of reasonable diligence, determined that [he or she] has received an overpayment and quantified the amount of the overpayment.” For example, an overpayment could occur due to a duplicate bill, an EMR glitch, improper modifier use, upcoding, or a variety of other reasons.

Per CMS, reasonable diligence includes “proactive compliance activities to monitor claims and reactive investigative activities undertaken in response to receiving credible information about a potential overpayment.”

Findings that include identified errors without an increase in reimbursement aren’t considered overpayments and thus aren’t reportable or repayable.

3. Review potential overpayments immediately.

Is it truly an overpayment, or does it accurately reflect services documented and performed? The 60-day clock does not start ticking until after the reasonable diligence period has concluded. This period may take “at most 6 months from receipt of credible information, absent extraordinary circumstances,” according to the rule. Complex investigations, such as a Stark Law violation, fall within this “extraordinary circumstances” category.

Although providers technically have six months to investigate the potential overpayment, CMS says that providers and suppliers should prioritize these investigations and recognize that completing the investigations may require the devotion of resources and time.

According to CMS, “Receiving overpayments from Medicare is sufficiently important that providers and suppliers should devote appropriate attention to resolving these matters. A total of 8 months [6 months for timely investigation and 2 months for reporting and returning] is a reasonable amount of time, absent extraordinary circumstances affecting the provider, supplier, or their community.”

4. Report overpayments—don’t ignore them.

Providers can report and return overpayments using one of these methods: an applicable claims adjustment, credit balance, or self-reported refund. Send the overpayment—as well as a written reason why the overpayment occurred—to the Secretary, the state, an intermediary, a carrier, or a contractor. The overpayment amount is the different between what was paid and what should have been paid if the claim had been submitted correctly.


5. Conduct coding and billing audits.

Consider hiring a full-time auditor, coder, or compliance specialist who can conduct ongoing coding audits, review documentation concurrently, spot larger trends of non-compliance, and monitor payments as they occur. The idea is to ensure coding compliance 24/7.

This individual can also help mitigate instances of upcoding. According to CMS, “Providers and suppliers must report and return overpayments identified as a result of upcoding, whether the inappropriate coding was intentional or unintentional.”

6. Consider consulting with external legal counsel.

Having a go-to legal resource can help expedite the overpayment determination process.

Looking Ahead : Act now to ensure compliance

Failure to comply with this rule could result in liability under the False Claims Act as well as monetary penalties and exclusion from federal healthcare programs. Be on the lookout for overpayments, and take proactive steps to ensure compliant documentation and coding.

Click here to learn more about how your EMR vendor can assist with compliance.

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You will find the following posts useful:

  1. Medical Billing - Use Proper Modifiers to Reduce Denials
  2. Coding Compliance Audit - Still a Good Idea for Physicians?
  3. (Updated) Primer on Modifier -25? Use it but don't abuse it.
  4. Seven Ways Outsourcing Medical Billing Boosts Your Bottom Line


RevenueXL Inc. provides best value comprehensive solutions to medical practices. Our solutions include affordable Electronic Medical Records Software (a.k.a. EMR or EHR Software), Patient Portal, and Practice Management or Medical Billing software and revenue cycle services including medical billing, medical coding, coding audits and account receivables management services. RevenueXL offers a free consultation session to review your current challenges and answer open questions revolving around EMR and revenue cycle.

Tags: Coding Compliance, Medical Billing, Medical Coding

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