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60-Day Rule Is Final: Assessing Your Organization’s Safeguards

Follow these tips to ensure compliance in the wake of the new 60-Day Rule.

On February 12, the CMS finalized the 60-Day Overpayment Report and Refund rule (60-Day Rule) for Medicare Parts A and B. This long-awaited rule clarifies the requirements of section 1128J(d) of the Social Security Act (SSA) and requires providers to report and refund overpayments within 60 days of “identification.” View the full text of the final rule.

In the wake of the final rule, many Medicare stakeholders are assessing their compliance and monitoring activities and implementing enhanced processes. Consider the following five tips as your organization seeks to reduce its exposure:

  • Implement a “proactive” approach to auditing and overpayment detection. Among the most far-reaching aspects of the 60-Day Rule is that providers could be liable for failing to exercise “reasonable diligence,” which includes proactive compliance activities. Providers must examine their current processes for overpayment detection (if they exist) and assess whether the government would consider them “reasonable.” Is quarterly auditing of 30 claims for a 500-bed hospital sufficient? What about 100 claims or 500 claims? The 60-Day Rule, despite claims of a bright-line test, is anything but; much of the analysis relies on fact-specific determinations. To that end, choosing self-audit priorities based on risk stratification and other advanced auditing techniques will put your organization in a better position to detect and address overpayments to meet this “reasonable diligence” standard.

  • Develop an organizationwide summary of disputes with various authorities. Most providers regularly interact with various Medicare contractors, whether through cost reconciliation, CERT audits, RAC claims reviews, or questions addressed to the MAC. CMS is clear that these interactions can (and often do) result in “credible information,” which may require your organization to delve further into a particular issue. This includes determining not just if the contractor is correct but also whether the issue affects other claims and time periods. Thus, developing an organizational summary of the various disputes that an organization has had with Medicare contractors will help ensure that the potential areas the organization is on notice of are properly addressed.

  • Train all employees on prompt reporting of potential overpayments. The 60-Day Rule attributes knowledge of overpayments to any person in an organization, regardless of his or her job responsibilities or seniority level. Consequently, CMS perceives the organization to receive “credible information” of an overpayment on the day that any employee or agent receives such information. Training staff, particularly those responsible for billing and revenue management, on reporting mechanisms and monitoring processes will be increasingly important going forward. Providers should also assess whether their current grounds for disciplinary action include failure to promptly report known or potential overpayments to management and whether providers in fact discipline employees on these grounds.

  • Assess what the provider reasonably believes to be “reconciled” on the cost report. SSA 1128J(d) requires reporting and repayment of overpayments within the later of 60 days or the date that the corresponding cost report is due. Thus, it is important from a timing perspective for providers to make a well-reasoned and consistent judgment about which claims are subject to “applicable reconciliation” on the cost report and which are not.

  • Document, document, document. Nearly every feature of healthcare operations now requires diligent and clear supporting documentation. The 60-Day Rule’s requirements are no different. At the broadest level, providers should develop standard operating procedures to guide overpayment monitoring activities and the process for investigation once a potential overpayment has been uncovered. From there, providers should develop and follow audit and investigation protocols. Finally, documenting the steps that a provider has taken, is currently taking, and plans to take to identify and quantify an overpayment will be important to demonstrate “reasonable diligence” for purposes of the 60-Day Rule.

Copyright © 2022 by Morgan, Lewis & Bockius LLP. All Rights Reserved.National Law Review, Volume VI, Number 48
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About this Author

Howard Young, Morgan Lewis, Healthcare lawyer
Partner

A nationally recognized leader in healthcare fraud and abuse and regulatory issues, Howard J. Young leads the Morgan Lewis healthcare practice and co-leads the healthcare industry initiative where he advises a range of healthcare clients on government investigations, regulatory, and transactional matters. Healthcare organizations turn to Howard to address their most critical legal, compliance and strategic business issues and to assist with internal and government investigations and self-disclosures. Howard regularly advises investors, including private equity firms, on...

202-739-5461
Albert Shay, Morgan Lewis, Healthcare attorney
Partner

Albert W. Shay focuses his practice on counseling healthcare companies of all types on regulatory, fraud and abuse, Stark law, Medicare reimbursement, and transactional matters. Al devotes a substantial portion of his practice to corporate compliance issues, including internal and government investigations, and has experience representing clients before regulatory agencies such as the Centers for Medicare and Medicaid Services (CMS), the US Department of Health and Human Services’ Office of Inspector General, and the Provider Reimbursement Review Board.

202-739-5291
Andrew Ruskin, Morgan Lewis, Healthcare and life sciences attorney
Partner

Andrew Ruskin counsels hospitals, pharmaceutical and medical device companies, and Medicare Advantage plans, among others, on a range of Medicare and Medicaid regulatory, litigation, and transactional matters. Andy advises on strategic issues surrounding coverage, reimbursement, and compliance, as well as drug pricing and price reporting. He defends clients in investigations by the US Attorney’s Office and the Department of Health and Human Services Office of Inspector General, and he appears before several regulatory tribunals, such as the Provider Reimbursement Review...

202-739-5960
Jacob Harper, healthcare attorney, Morgan Lewis
Associate

Jacob Harper advises stakeholders across the healthcare industry, including hospitals, health systems, large physician group practices, practice management companies, hospices, chain pharmacies, manufacturers, and private equity clients, on an array of healthcare regulatory, transactional, and litigation matters. His practice focuses on compliance, fraud and abuse, and reimbursement matters, self-disclosures to and negotiations with OIG and CMS, internal investigations, provider mergers and acquisitions, and appeals before the PRRB, OMHA, and the Medicare Appeals Council...

202-739-5260
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