Internal Investigations are a MUST for Avoiding False Claims Act Liability

Many providers are not familiar with their obligations under the “60 Day Rule,” also known as Reverse False Claims liability, which can cause significant financial harm if providers fail to comply with these obligations.

All providers have an obligation to refund any reimbursements they receive from Medicare to which they are not entitled. Failure to do so can result in false claims act liability. In 2016, CMS issued a final rule to set out provider obligations surrounding this requirement to refund overpayments or be subject to false claims act liability. It is this guidance that is commonly referred to as the 60 Day Rule.  

The 60 Day Rule requires providers to report and refund any overpayment within 60 days of identification of that overpayment. Providers should take care to understand the rule and review the accompanying commentary to truly understand the depth of the obligations imposed on providers. As an initial matter, although the rule does expressly state that a provider must report and refund overpayments within 60 days of identification of an overpayment the 60 day clock does not start to run until an overpayment is identified. Identification is a defined term in the rule, which states that identification of an overpayment does not occur until there has been, or should have been, a determination through reasonable diligence: (a) that an overpayment was received: and (b) the amount of any such overpayment is also quantified.  Providers must conduct an internal investigation to determine if an overpayment was received and if so, to quantify how much is the overpayment. Only after both of those are determined is the 60 day clock triggered.

The 60 Day Rule allows providers up to six months to conduct this internal investigation, and therefore, in practice a provider has up to eight months (6 months to investigate and 2 months to report and refund) to comply with the requirements of the 60 Day Rule. The rule states that receipt of credible information triggers the obligation to conduct an internal investigation. Credible information is fact specific but includes, for example, a Medicare contractor determination of an overpayment, or a hotline call (depending on the relevant facts), among other triggers. The rule defines reasonable diligence to include both proactive compliance activities and investigations conducted in response to obtaining credible information. Providers are obligated to conduct an internal investigation upon credible information of even a single overpayment and are required to identify any overpayments received within the past six years.

Internal investigations should be well documented, and providers should consider whether to engage an attorney to manage the investigation, which has the added benefit of covering the investigation under the attorney-client privilege to the extent available; and to engage other consultants such as billing and coding consultants or statistical extrapolation experts. Attorneys with experience in this area can assist providers in properly scoping the investigation, documenting the process and making the determination of how the provider should report and refund the overpayment.

Don’t forget that a failure to comply with the 60 Day Rule can result in false claims liability which imposes treble damages among other possible sanctions!

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National Law Review, Volumess XII, Number 298