Final Rule Clarifies Requirements for Reporting and Returning Medicare Overpayments

Medicare Part A and B providers and suppliers should take note of new regulations recently issued by the Centers for Medicare & Medicaid Services that implement the Affordable Care Act’s 60-day rule on reporting and returning overpayments (Section 1128J(d) of the Social Security Act). The new rules take effect on March 14, 2016.


Since the enactment of the Affordable Care Act on March 23, 2010, Medicare and Medicaid providers and suppliers have been required to report and return overpayments by the later of the date that is 60 days after: (1) the date an overpayment was identified; or (2) the due date of any corresponding cost report, if applicable. Providers and suppliers are subject to exclusion from federal health care programs and liability under the federal False Claims Act and Civil Monetary Penalties Law if they fail to report and return an overpayment to the Secretary of Health and Human Services, the state, an intermediary, a carrier or a contractor, as appropriate.

The Final Rule applies to Medicare Parts A and B overpayments only. Regulations addressing overpayments under Medicare Parts C and D became effective on July 22, 2014 (42 CFR §§422.326 and 423.360, respectively). To date, no rules have been published that address Medicaid overpayments.

Bright-Line Standards

The new regulations offer some bright-line standards for providers and suppliers to follow, including:

• A definition of when a payment has been “identified” to mean when a person has, or should have through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment. CMS notes that “reasonable diligence” includes both proactive and reactive activities.

• A lookback period of six years from the date the overpayment was received, a departure from the much-criticized 10-year period suggested in the proposed rule.

• A variety of acceptable ways to report and return an overpayment, including the existing Medicare claims adjustment report and credit balance report. Disclosures under the OIG’s Self-Disclosure Protocol or the CMS Voluntary Self-Referral Disclosure Protocol also satisfy the reporting obligation.

Effective Date

Providers and suppliers must comply with the new requirements beginning on March 14, 2016– even with respect to overpayments received prior to this date. Providers and suppliers who have reported and/or returned overpayments and who have made a good faith effort to comply with the law prior to March 14, 2016 need not take further action in response to the Final Rule.