The Facilities for Medicare and Medicaid Providers (“CMS”) has issued a proposed rule which might amend the prevailing rules for reporting and returning recognized overpayments (the “Proposed Rule”). Particularly, with respect to the which means of “identification” of overpayment, CMS proposes to get rid of the “affordable diligence” (or conventional negligence) commonplace and substitute it with the False Claims Act’s (“FCA’s”) commonplace of “figuring out” and “knowingly” (i.e., reckless disregard or deliberate ignorance of a possible overpayment).
Beneath the present Overpayment Rule, an individual who has obtained an overpayment should report and return it inside 60 days of discovery to the Secretary, the State, an middleman, a provider, or a contractor, as applicable, and should additionally notify that entity in writing of the rationale for the overpayment. As presently written, the Overpayment Rule holds that an individual has recognized an overpayment once they have decided, or ought to have decided by the train of affordable diligence, that they’ve obtained an overpayment.
UnitedHealthcare Litigation
UnitedHealthcare challenged the present Overpayment Rule in litigation.[1] One in all its principal arguments was that incorporating a negligence commonplace by the definition of “identification”, i.e., requiring Medicare Benefit Organizations (“MAOs”) to make use of “affordable diligence” in figuring out overpayments, conflicted with the information commonplace within the FCA and improperly created legal responsibility for mere negligence. The district courtroom agreed with UnitedHealthcare and vacated the Overpayment Rule for MAOs. CMS appealed however didn’t problem the courtroom’s findings in regards to the negligence commonplace. The D.C. Courtroom of Appeals reversed and allowed the Overpayment Rule to face, however didn’t change the district courtroom’s holding that the adoption of a brand new negligence commonplace within the Overpayment Rule violated the APA. Thus, MAOs and all different individuals and entities topic to the Overpayment Rule (comparable to healthcare suppliers) have been left unsure as as to whether the Overpayment Rule continued to require them to have interaction in proactive, “affordable diligence” to self-audit or in any other case establish potential overpayments, lest they danger legal responsibility beneath the Overpayment Rule and probably the FCA.
The Proposed Rule
If finalized, the Overpayment Rule can be amended at 42 C.F.R. §§ 401.305(a)(2), 422.326(c) and 423.360(c) to take away references to “affordable diligence” and substitute them with language that offers the phrases “figuring out” and “knowingly” the identical which means given these phrases within the FCA. Due to this fact, if the Proposed Rule is finalized, a supplier, provider, MAO, or Half D sponsor can have recognized an overpayment provided that it has precise information of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.
This proposed change to the Overpayment Rule would supply welcome aid to suppliers, suppliers, MAOs, and Half D sponsors as they might not be held to the subjective “affordable diligence” commonplace when figuring out whether or not an overpayment has been recognized. Quite, legal responsibility stemming from the identification of overpayments would solely be triggered beneath the FCA’s heightened commonplace of precise information, reckless disregard, or deliberate ignorance. Suppliers, suppliers, MAOs, and Half D sponsors are in a position to submit feedback on CMS’ proposal, ought to monitor the ultimate rule carefully, and may start to think about potential modifications to organizational insurance policies and procedures concerning the identification and determination of overpayments accordingly.
FOOTNOTES
[1] See UnitedHealthcare Ins. Co. v. Azar, 330 F. Supp. 3d 173 (D.D.C. 2018), rev’d partially on different grounds sub nom. UnitedHealthcare Ins. Co. v. Becerra, 16 F.4th 867 (D.C. Cir. 2021), cert. denied, 142 S. Ct. 2851 (U.S. June 21, 2022) (No. 21-1140).
