60 Shades of Grey: The Meaning of the Word “Identified”

The Deepening Relationship Between You and the False Claims Act

Sixty-Shades-Of-Grey-784x472You pull your boss aside in the hallway and whisper, “We may have a problem in <insert a suspect department name> with how we are documenting certain procedures. I’m looking into it, but we may have a billing issue here.” Your boss replies, “OK, when can I get a report on this?” You answer, “Well… we’re not sure. We haven’t seen any denials, yet, so we need to do some interviews, maybe talk to an outside auditor, too; …and probably get Legal involved.”

Now what? Did you just “identify” some “likely” overpayments? Did a 60-day clock just start ticking pursuant to the provision of the Affordable Care Act (ACA) – aka, the 60-Day Rule — that requires providers to return overpayments to government agencies within 60 days of an overpayment being “identified”?

A Judge Sides with CMS

Recent decision where CMS won the day, in interpreting the meaning of "identified"

Recent decision where CMS won the day, in interpreting the meaning of “identified”

Based upon a recent decision by a District Court Judge, you probably did just start the clock ticking…

There are many more questions than that one, which have yet to be addressed by The Centers for Medicare and Medicaid Services (CMS). In February 2012, CMS issued a proposed rule and stated that “…a provider has ‘identified’ an overpayment for purposes of the 60-day clock when it has ‘actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.’” [See Federal Register, Vol. 77, No. 32, at p. 9182]

For an excellent review of that case and an August 3 decision by Southern District of New York District Judge Edgardo Ramos – See this article or this one.

Other Questions Yet to Be Addressed by CMS

Here’s a partial list of questions that need to be addressed:

  • When does the 60-day clock start ticking?
  • What if the review is limited to just last month’s claims and identifies overpayments? Does a provider now have to then review earlier claims and, if so, how far back?
  • What if some nurses say one thing central to the overpayment determination, but a physician directly contradicts those statements—how do such inconsistencies factor into the analysis? Or what if you have two physicians with contradictory interpretations, does one voiced opinion mean the clock starts now?
  • What if some of the patients were enrolled with Medicare Advantage or Medicaid managed care plans—does the same 60-day rule apply to them?
  • If state Medicaid programs have their own or different reporting rules, which rule “rules”?

Unfortunately, CMS has yet to provider any answers and has yet to finalize their own proposed rule. While the rule is expected to be finalized within the next nine months, the industry did not care for CMS’ proposal that the “look-back period” for Medicare refunds be 10 years.

Do Not Wait, Not Even for CMS



Meanwhile, just in case anyone is bored, whistleblowers and the Department of Justice are not waiting for CMS to finalize the rules: there is at least one False Claims Act action against a hospital for allegedly failing to refund identified Medicare overpayments within 60 days – see United States v. Continuum Health Partners Inc. et al., No. 11 CV 02325 (S.D.N.Y. Aug. 3, 2015).

Wisdom dictates, therefore, to not merely sit around and wait for answers. Below are several practical action items to consider:

  • Establish policies to encourage staff to raise concerns through appropriate channels (reimbursement, compliance, and legal) whenever they have a question regarding practices that might cause overpayments, and avoid ANY hint of retaliation staff who report in good faith.
  • Never ignore credible reports of potential overpayments. Willful delays trigger an FCA claim, per both the statute and the proposed rule. Teach management that any premature conclusions about whether an overpayment actually exists or not could be (probably will be) viewed as starting the 60-day clock ticking.
  • Avoid a “fox watching the henhouse” scenario, even just its appearance. That is, you must create a well-defined review plan to address the scope of review, timeframes involved, contingencies, etc. Reviewers should have some independence, too. Findings should be reported orally before being put into writing, and such reports must be clearly marked as “drafts,” and must refrain from making any premature legal conclusions.
  • Document the steps to be taken by your staff to determine if there is an overpayment.  Be SURE to involve both of your compliance or legal departments. Involving your lawyers, internal or external, insures that communications regarding whether an overpayment exists are protected by attorney-client privilege.
  • If you identify a Medicare or Medicaid overpayment after appropriate analysis, document the date that determination is made and ensure that the refund does not slip through the cracks. Understand who is responsible for processing the refund and the date the refund needs to be made, and then hold the appropriate people accountable for timely follow-through. Sixty days is NOT a long time in reality.
  • In consultation with your legal counsel, try to determine whether the underlying overpayment was systematic or the result of intentional misconduct that may trigger other types of liability risk. Unfortunately, a self-disclosure to law enforcement (e.g., OIG) may be appropriate. Your lawyers will know.

Finally, keep watching for updates and a Final Rule.

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