Providers might want to make sure they act swiftly to return Medicare and Medicaid overpayments to the government following a judge's decision Monday, experts said. The decision came in one of the first court cases to deal with the issue.
U.S. District Judge Edgardo Ramos rejected a request Monday by New York City's Mount Sinai Health System to dismiss the government's case against it, alleging that it failed to return Medicare and Medicaid overpayments within 60 days.
The judge said the clock for returning the money started ticking as soon as the system became aware there might have been an overpayment. The system had argued that the 60-day countdown shouldn't start until a provider is sure there is an overpayment.
Under the Affordable Care Act's so-called 60-day rule, providers that don't return overpayments within that window may be in violation of the False Claims Act, which imposes fines of up to $11,000 per false claim and triple damages. Ramos' decision means the case will now move forward.
The government alleges that two of the system's hospitals submitted improper Medicaid claims to a managed-care insurer in 2009 and 2010 because of electronic coding errors. The system has already returned the overpayments, but it took more than two years to do so.
Attempts to reach Mount Sinai for comment Tuesday morning were not immediately successful.
But the system said in court documents that it did not return the cash within 60 days because it wasn't yet certain by then whether it had truly received overpayments. The 60-day countdown should not start upon mere suspicion of overpayments, but rather only once an overpayment has been solidly determined, the health system said.
“A review of the steps most healthcare providers would take after receiving notice of potential overpayments illustrates why requiring the reporting and returning of overpayments within 60 days of such notice imposes an enormous burden on providers that may often be impossible to meet,” Mount Sinai argued.
The judge, however, disagreed in his decision Monday.
“Under the Defendants' framework, their obligation to pay would not be triggered until after they have done the work necessary to determine conclusively the precise amount owed to the Government, thus creating a perverse incentive to delay learning the amount due and relegating the 60-day period to merely the time within which they would have to cut the check,” Ramos wrote. “This is likely not what Congress intended. Therefore, while the Government's interpretation would impose a stringent—and, in certain cases, potentially unworkable—burden on providers, Defendants' interpretation would produce absurd results.”
The decision marked the first time a court has weighed in on the exact meaning of the word “identify” within the 60-day rule, Ramos wrote.
Attorneys who defend providers say the decision should put providers on high alert, for the time being, when it comes to returning overpayments. It's common for providers to receive overpayments because of the complexity of the healthcare system, said John Joseph, a principal at Post & Schell in Washington and Philadelphia.
“If a hospital, in good faith, tries to determine whether something is an overpayment or not and takes more than 60 days to do it … they could potentially be held liable,” Joseph said. “If they have information that suggests there's a potential overpayment, that is not something they can wait to act on.”
In his decision, however, Ramos wrote that his interpretation of the 60-day rule doesn't necessarily endanger all providers who might have trouble getting to the bottom of suspected overpayments within 60 days.
Prosecutors likely won't go after “well-intentioned healthcare providers working with reasonable haste to address erroneous overpayments,” Ramos wrote. “Such actions would be inconsistent with the spirit of the law and would be unlikely to succeed.”
But Erin Duffy, a partner at law firm Duane Morris in Philadelphia, called that a flawed approach. Some attorneys general might interpret when that 60-day window starts more strictly than others.
“It just leaves everything open to interpretation, and sort of the luck of the draw of who you draw as a prosecutor,” said Duffy, who also represents providers.
Duffy said it can be difficult for hospitals in some situations to fully pinpoint overpayments and repay them within 60 days.
“At the moment I would be nervous until the CMS really issues the rules and clarifies this issue,” Duffy said of providers.
The CMS issued a proposed rule in 2012 that contemplated defining the word “identified” as it related to overpayments to mean when a provider has “actual knowledge of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.” But that rule has not yet been finalized and would apply to Medicare providers, not Medicaid providers, the judge noted.
In the Mount Sinai case, a whistle-blower pointed out the problem in 2011 to Continuum Health Partners, which has since merged with Mount Sinai. That whistle-blower, Continuum's former hospital revenue-cycle director Robert Kane, then filed a case against Continuum that same year, and the government and state of New York later joined. The lawsuit also alleges that the system repaid 300 of the claims only after the government issued a civil investigative demand.