Hospitals fight proposed overpayment rules

Hospitals are strongly protesting proposed federal regulations that could create liabilities going back 10 years when healthcare providers “knowingly” retain Medicare overpayments for longer than 60 days.

In comment letters to the CMS, the American Hospital Association and the Federation of American Hospitals criticized the agency's proposed rules implementing Section 6402(a) of the Patient Protection and Affordable Care Act. The hospital interest groups argue that the rules distort the intent of the repayment rule though punitive enforcement and an unreasonable 10-year retrospective look-back period.

The CMS’ proposed regulations say hospitals have a duty to investigate any potential overpayments, with the potential for heavily punitive False Claims Act liability in cases where a hospital failed to investigate claims of repayment that come to light through claims from employees and whistle-blowers.

The CMS’ statement of the proposed regulations notes that providers already face potential liability under the False Claims Act and Civil Monetary Penalties Law for failing to report Medicare overpayments. The new rule simply adds a 60-day deadline for repayments, the proposal says. The CMS has twice in the past proposed Medicare repayment requirements—in 1998 and 2002—but neither set of regulations was ever implemented.

The FAH, which represents more than 1,000 investor-owned hospitals, said the CMS’ regulations on the rule unfairly convert errors that can result from administrative complexity (PDF) and differing interpretations into violations that would be interpreted using statutory language that mirrors existing fraud and abuse rules.

“We question whether this is a constructive approach to implementing this new authority, as FAH hospitals cannot accept the premise that every improper Medicare hospital payment results from bad acts,” the federation wrote, adding that the CMS should also be required to pay hospitals for Medicare underpayments.

The AHA, which has more than 5,000 hospital members, said the proposed 60-day repayment regulations should be entirely rewritten (PDF) to reflect Congress’ intent to create a “safe and reliable way in which hospitals can return payments mistakenly received from the government.”

“We viewed this provision in the ACA, and Congress intended it, as a means to correct mistakes,” the AHA wrote. “Instead the law is being contorted by this proposed rule to create another confusing, onerous, and legally risky set of expectations for hospitals.”