Q: Is there a definition of an “overpayment”?
A: The Centers for Medicare & Medicaid Services defines an overpayment as money received, usually from a third party payer, based on a claim for reimbursement that should not have been paid. An overpayment may be all or part of the payment received. It may be the result of an unintended mistake or caused by intentional misrepresentation. It may be an isolated occurrence or a recurring problem. Overpayments are clearly wrong. They are not disputed amounts due to differences of opinion.

Q: Are there common causes resulting in overpayments?
A: There are a variety of causes, including:
1. poor chart documentation that does not support the medical necessity for services;
2. upcoding eye exams; and
3. unbundling of services described by one inclusive CPT code.

Q: Is the provider or facility expected to refund an overpayment?
A: If you identify an overpayment then you are required to refund that amount within a specified time frame. By not doing so, there are consequences that could include fines and criminal exposure under federal and/or state law.

Q: What is the time frame for returning an overpayment once discovered?
A: The Patient Protection and Affordable Care Act §6402(a) requires return of an overpayment within 60 days after the date on which the overpayment was identified.
However, on February 11, 2016, CMS published a final rule, CMS 6037-F, requiring providers and suppliers to return overpayments within 60 days of identifying it. The consequences for not returning an overpayment within this time frame could include potential False Claims Act liability, Civil Monetary Penalties Law liability and exclusion from federal health care programs. If CMS or its contractors determine an overpayment exists and issue a demand letter, providers and suppliers are required to adhere to CMS procedures outlined in the demand letter.  

Q: Is an attorney required to make a refund of an overpayment?
A: Not usually. If a significant amount of money is involved (e.g., >$10,000, or >20 percent of annual payments from the payer), it may be advisable to arrange the refund through an attorney with expertise in health law.

Q: What is the process for voluntarily refunding overpayments to Medicare and other payers?
A: Voluntary refunds of overpayments should be directed to the payment correction unit of the Medicare administrative contractor, or to the specific department of a third party payer that handles refunds. Many of the Medicare contractors have a form on their website for completion to accompany the refund check. Some other third party payers may not have an organized mechanism for accepting repayments, even though you are legally obligated to provide them. Do not send money to any payer until you are told exactly where to send it. It is advisable to send refunds via registered mail, return receipt requested or some other method that tracks delivery and signature; keep a copy of all related correspondence.  

Q: What information should be sent along with the refund check?
A: Medicare, and likely other payers as well, need to know:
1. why the voluntary refund was made;
2. how it was identified;
3. what sampling techniques were employed;
4. what steps were taken to assure that the issue leading to the overpayment was corrected;
5. the dates the corrective action was in place;
6. specific claims involved in the inappropriate payments;
7. the methodology used to arrive at the amount of the refund; and
8. whether a full assessment was performed to determine the extent of the refund.

Q: If I make a voluntary refund, will this prompt the payer to conduct an audit?
A: Not necessarily. Sending a check with a clear explanation of the overpayment issue should not lead to further review. However, there is a legitimate concern that reporting a sizeable overpayment might trigger an audit.

Q: Is refunding an overpayment sufficient to address the problem?
A: No, it is only the beginning. The practice or facility should investigate to determine whether the overpayment is part of a larger problem and then educate staff and physicians about the proper way to obtain reimbursement so that the overpayment does not reoccur. New policies may need to be put in place to prevent a recurrence.

Q:  Is there a way to prevent overpayments?
A: An effective compliance program is the best way to prevent these problems. It includes:
• a clear commitment to compliance;
• appointment of a compliance officer;
• effective training and education programs;
• auditing and monitoring;
• a communication system such as a hotline;
• internal investigations and enforcement; and
• response to identified offenses and application of corrective action initiatives.

Q:  Can an overpayment be treated as fraud?
A: Yes, but only if it satisfies the definition of fraud. Fraud is an intentional deception or misrepresentation made for personal gain. It is both a crime and a civil law violation. In some cases, the False Claims Act can be implicated. 

Ms. McCune is vice pres­ident of the Cor­coran Con­sult­ing Group. Con­tact her at DMcCune@corcoranccg.com.