Definition of a Medicare Overpayment 


A Medicare overpayment is a payment you receive in excess of amounts properly payable under Medicare statutes and regulations. After Medicare identifies an overpayment, the overpayment amount becomes a debt you owe the Federal government. Federal law requires the Centers for Medicare & Medicaid Services (CMS) to try to recover all identified overpayments.


In Medicare, overpayments commonly occur due to:

** Insufficient documentation
** Medical necessity errors
** Administrative and processing errors


Overpayment Notification and Repayment Process


If you or your staff identify the overpayment, you must report it and arrange to return it by the later of either 60 days after the date the overpayment was identified or the date the corresponding cost report is due. For more information about self-identified overpayments, refer to Medicare Reporting and Returning of Self-Identified Overpayments fact sheet. When Medicare identifies an overpayment of $25 or more, the Medicare Administrative Contractor (MAC) initiates the overpayment recovery process by sending an initial demand letter requesting repayment.


Demand Letter


Demand letters from your MAC explain:

** Medicare made an overpayment
** Interest begins to accrue if you do not repay the overpayment in full within 30 days
** Options to request immediate recoupment or an Extended Repayment Schedule (ERS)
** Rebuttal/appeal rights


Payment Options


Immediate Payment


Follow the directions in the demand letter to submit payment. Request Immediate Recoupment Recoupment occurs when Medicare recovers overpayment by withholding interim payments. Withholding interim payments may be partial (for example, a percentage of payments withheld or a set amount) or complete. You can request your MAC to begin recoupment immediately by following the directions in the demand letter. Request Standard Recoupment You do not need to do anything to request standard recoupment. Your MAC automatically begins recoupment according to the schedule in Figure 1. Note that interest may accrue. Request an ERS If you are unable to pay the overpayment in full in the required timeframe, follow the instructions in the demand letter and request an ERS from your MAC. Other Options


Rebuttal


You can submit a rebuttal to your MAC within 15 calendar days from the date of a demand letter. In your rebuttal statement, explain or provide evidence about why the MAC should not initiate recoupment. While the rebuttal process is not considered an appeal and does not stop recoupment activities, MACs promptly evaluate this information.


Appeal


If you disagree with an overpayment decision, you can file an appeal with your MAC to conduct an independent review of the decision. A redetermination is the first level of appeals in which a qualified employee of the MAC conducts an independent review of the decision. Following an unfavorable or partially favorable redetermination decision, you can request a second-level appeal or reconsideration by a Qualified Independent  Contractor (QIC)


Limitation on Recoupment


The Social Security Act Section 1893(f)(2)(a) provides limitations on the recoupment of Medicare overpayments. It requires that when a valid first- or second-level appeal is received on an overpayment, subject to certain limitations, CMS and MACs cannot recoup the overpayment until the decision on the redetermination and/or reconsideration. This affects the timeframes on recoupment. For more information, refer to MLN Matters® Article MM6183.


Timeframes for Debt Collection Process for Provider Overpayments


Figure 1 shows the timeframes for overpayment debt collection activities. It describes how overpayment collection differs for overpayments subject to the Limitation on Recoupment. It also notes when an action may not apply if an overpayment is in an excluded status. Examples of an excluded status include:

** Requested or approved ERS
** Appeal
** Bankruptcy


Overpayment Collection Process


If you do not pay the overpayment in full, you will receive an IRL 60–90 days after the initial demand letter. The IRL advises you that unless you refund the overpayment or take steps to establish an ERS, the MAC will refer the overpayment to the Federal level for collection. To collect the overpayment, CMS refers eligible delinquent debt to the Treasury or a Treasury-designated Debt Collection Center (DCC). Either the Treasury or the DCC works through the Treasury Offset Program (TOP) to collect the overpayment. To effectively collect the debt that agencies refer, the Treasury issues demand letters, conducts telephone follow-up, initiates skip tracing, refers debt for administrative offset, and refers debt to a private collection agency (PCA). Other collection tools may include Federal salary offset and administrative wage garnishment. The PCA could collect the debt with tools such as skip tracing, credit report search, demand letters, and telephone calls.



An overpayment means any funds that a provider or supplier received or retained under the Medicare program to which the person is not entitled under the program. CMS provided the following non-surprising examples of overpayments:


• Medicare payments for noncovered services.
• Medicare payments in excess of the allowable amount for an identifi ed covered service.
• Errors and nonreimbursable expenditures in cost reports.
• Duplicate payments.
• Receipt of Medicare payment when another payor had the primary responsibility for payment.


Refunding “Claims” versus “Cost Report” Overpayments If an overpayment is “claims” related, the overpayment must be reported and returned within 60 days of “identifi cation.” However, for providers that submit cost reports, if the overpayment is such that it would generally be reconciled on the cost report, the provider would be permitted to report and return the overpayment either 60 days from the identifi cation of the overpayment or on the date the cost report is due, whichever is later.


For example, issues involving upcoding must be reported and returned within 60 days of identification because the upcoded claims for payment are not submitted to Medicare in the form of cost reports. However, for an overpayment that would generally be reconciled on the cost report, such as overpayments related to graduate medical education payments, the provider must report and return the overpayment either 60 days aft er it has been identifi ed or on the date the cost report is due, whichever is later.  “Identifi ed” Overpayments


Th e “identification” of an overpayment triggers a provider’s reporting and refunding obligations, including the commencement of the 60-day period. Hence, the meaning of “identifi ed” is critical. A person has “identified” an overpayment if the person has “actual knowledge of the existence of the overpayment.” Apparently, this standard is met in the following situations—even though the exact amount of the overpayment may not yet be determined:


• A provider or supplier reviews billing or payment records and learns that it incorrectly coded certain services, resulting in increased reimbursement.


• A provider or supplier learns that a patient death occurred prior to the service date on a claim that has been submitted for payment.


• A provider or supplier learns that services were provided by an unlicensed or excluded individual on its behalf.


• A provider or supplier performs an internal audit and discovers that overpayments exist. Th rough these examples, CMS seemed to imply that “actual knowledge” is present if the provider knows of an overpayment issue, even if the provider has not determined the amount of the overpayment. CMS needs to clarify this matter in the fi nal rule.


In addition, a person is deemed to have “identified” an overpayment if the person acts in reckless disregard or deliberate ignorance of the existence of the overpayment. CMS has explained this situation as follows: If a provider receives “information concerning a potential overpayment” or has “reason to suspect an overpayment,” the provider is obligated to investigate the matter timely, reasonably, and with all deliberate speed. If the investigation reveals or confi rms an overpayment, then the person has “identifi ed” an overpayment, and must report and return the overpayment within 60 days (assuming no cost report is involved). However, if the provider fails to make any reasonable investigation, the provider may be found to have acted in reckless disregard or deliberate ignorance of any overpayment.


How to Make the Report and Refund


CMS proposes using the existing voluntary refund process, pursuant to which overpayments are reported using a form that each Medicare contractor makes available on its Web site. Th e information reported would contain:


• Provider/supplier’s name.


• Provider/supplier’s tax identifi cation number.


• How the error was discovered.


• Th e reason for the overpayment.


• Th e health insurance claim number, as appropriate.


• Date of service.


• Medicare claim control number, as appropriate.


• Medicare National Provider Identifi cation (NPI) number.


• Description of the corrective action plan to ensure the error does not occur again.


• Whether the person has a corporate integrity agreement with the OIG or is under the OIG SelfDisclosure Protocol.


• Th e timeframe and the total amount of refund for the period during which the problem existed that caused the refund.


• If a statistical sample was used to determine the overpayment amount, a description of the statistically valid methodology used to determine the overpayment.


• A refund in the amount of the overpayment. A person may request an extended repayment schedule as that term is defi ned in § 401.603.