‘Fiscal Cliff' Bill Increases Recovery Period For Medicare Overpayments to Five Years

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A provision in the American Taxpayer Relief Act of 2012, the “fiscal cliff” legislation signed into law Jan. 2, extends the statute of limitations on Medicare overpayment recoveries from three years to five years.

Section 638 of ATRA amends Section 1870 of the Social Security Act, which covers the acceptable time frame under which the Centers for Medicare & Medicaid Services can recover a Medicare overpayment.


“This sort of extension allows Medicare to further delay what it is more than capable of handling within three years.”  




--Kirk Ogrosky, Arnold & Porter LLP

Before ATRA, a provider who received an overpayment was “to be deemed without fault” if the determination of an overpayment “was made subsequent to the third year following the year in which notice was sent to such individual that such amount had been paid,” according to the Social Security Act.

Under Section 638 of ATRA, “third year” was replaced with “fifth year.” The provision went into effect Jan. 2.

Provider Uncertainty

Laurence J. Freedman, an attorney with Patton Boggs, Washington, told BNA that the statute of limitations extension negatively affects providers, both in terms of increasing provider uncertainty and increasing costs associated with defending and appealing old claims.

Kirk Ogrosky, an attorney with Arnold & Porter LLP, Washington, and former deputy chief of the Fraud Section in the Department of Justice's Criminal Division, also told BNA that providers can expect more uncertainty due to the extension.

“Providers need more certainty to help stabilize the market, and this sort of extension allows Medicare to further delay what it is more than capable of handling within three years,” Ogrosky said. “The notion that allowing Medicare more time to collect overpayments will somehow be helpful is misguided.”

Ogrosky said providers are already struggling to address issues that arise from reviewing medical files that are three years old. He said it is much easier “to discuss clinical decisionmaking and thought processes close in time to the actual treatment.”

Brian Roark, an attorney with Bass, Berry & Sims PLC, Nashville, Tenn., told BNA the statute of limitations extension will increase potential exposure for providers and impose greater burdens as providers will have to monitor an additional two years for overpayments.

“The change is another example of the federal government seeking to offset growing costs of the Medicare program through expanded enforcement efforts,” Roark said.

Kirk Nahra, an attorney with Wiley Rein, Washington, told BNA that the extension will help increase the government's leverage over providers in any negotiations involving overpayment.

“It increases a worst-case scenario for the provider,” Nahra said.

No Change to Formal Process

While acknowledging that the extension indicates the government's increased interest in recovering Medicare overpayments through administrative processes, it does not change the formal process that CMS must undergo to recover an overpayment, Gadi Weinrich, an attorney with SNR Denton US LLP, Washington, told BNA.

Weinrich said it was important to distinguish between when an overpayment is no longer recoverable, which is governed by Section 1870 of the SSA, and the formal process CMS must pursue to recover the overpayment, which is governed by Section 1869 of the SSA.

“Congress did not amend Section 1869 nor direct the Secretary of the Department of Health and Human Services to amend the claims reopening regulations,” Weinrich said.

Weinrich said that in most cases, CMS may only reopen a claim if less than four years has passed since the original payment was made.

“If CMS mistakenly paid a provider on January 2, 2009, for example, but CMS did not reopen that claim by January 3, 2013, it would not appear that, in the absence of reliable evidence that the provider engaged in 'fraud or similar fault,' CMS would be able to recover that payment,” Weinrich said, regardless of the newly amended Section 1870.

By James Swann  

The American Taxpayer Relief Act of 2012 is at http://op.bna.com/der.nsf/r?Open=csaz-93jjh5.

Section 1870 of the Social Security Act is at http://www.socialsecurity.gov/OP_Home/ssact/title18/1870.htm.