Fraud and Abuse Requirements

How does the law address fraud and abuse by Medicaid and Medicare providers?

Section 6402(a) of P.L. 111-148 requires any provider, supplier, Medicaid managed care organization, Medicare Advantage organization or prescription drug plan sponsor to report and return an overpayment from the Medicare or Medicaid program to the appropriate authority such as the Secretary of HHS, the state, a contractor or fiscal intermediary and provide written notification of the reason for the overpayment.

How is an overpayment defined?

An overpayment is defined as “any funds received or retained after appropriate reconciliation to which the entity or person is not entitled.” The overpayment must be paid within 60 days after it was identified or the date on which the corresponding cost report is due. The withholding of an overpayment past the 60-day deadline is classified as an “obligation” under the False Claims Act (FCA) and subjects the provider to potential FCA liability. The new law also gives the Office of the inspector General authority to impose civil monetary penalties against a person who withholds repayment beyond 60 days.

There will likely be clarification as to when an overpayment should be considered to have been “identified.” Therefore, providers will have to develop new compliance strategies to ensure that they are not in possession of overpayments beyond the 60-day window. These will include policies for deciding when the 60-day clock should begin to run on an overpayment issue, and responding to situations where the audit work required to identify the specific claims that have been overpaid and the overpayment amounts cannot be completed within the 60-day window.

When did this requirement go into effect?

This requirement went into effect on March 23, 2010.