New overpayment rules proposed

The same day that federal officials unveiled record-breaking statistics on healthcare fraud enforcement, regulators announced the publication of new proposed rules designed to force doctors, hospitals and suppliers to voluntarily return overpayments within 60 days of discovering them.

In a Tuesday news conference, HHS Secretary Kathleen Sebelius noted that the rules were intended to cut down on improper payments without the need for criminal or civil investigations.

The proposed rule (PDF) requires healthcare providers to return any overpayments within 60 days of when the erroneous payments were detected.

The proposal, outlined in broad terms in the Patient Protection and Affordable Care Act, has proven controversial with some healthcare legal experts because it could potentially trigger provisions of the False Claims Act if hospitals, doctors, healthcare suppliers and managed-care organizations knowingly withhold funds beyond 60 days.

The proposed rule says the clock would start ticking on the 60-day rule when a person or organization has “actual knowledge” of an overpayment, or when the person acts in deliberate ignorance of the truth or with reckless disregard to it. The rule would not require organizations to find “proof of specific intent to defraud” in order to determine an overpayment and return the money, the proposed rule says.

Public comments on the rule will be accepted for 60 days following official publication in the Federal Register, which is scheduled for Thursday, the proposed rule says.

Meanwhile, in an annual joint report to Congress (PDF), HHS and the Justice Department reported receiving what they said was a record $4.09 billion in fiscal 2011 from recoveries and restitution for fraud and incorrect payments made from federal healthcare programs like Medicare.

Those returns represent about a sevenfold return on investment, since HHS and the Justice Department's 15-year-old joint Health Care Fraud and Abuse Control Program spent roughly $608 million on operations in fiscal 2011, according to calculations in the report.

The return-on-investment figure did not include the $419 million that whistle-blowers were paid out of False Claims Act settlements with healthcare companies during the year, the report said.