Medicare Contractors Lag in Collecting Millions in Overpayments

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By James Swann

Medicare contractors failed to collect the bulk of overpayments referred to them in fiscal year 2014, increasing the financial risk to the program.

Medicare Administrative Contractors (MACs) attempted to collect $482 million in overpayments that were referred by Zone Program Integrity Contractors (ZPICs) and Program Safeguard Contractors (PSCs), but had collected only 20 percent ($96 million) as of September 2015, according to a report from the Health and Human Services Office of Inspector General released Sept. 29.

The Centers for Medicare & Medicare Services overpayment collection process doesn’t work very well, Judith Waltz, a health-care attorney with Foley & Lardner LLP in San Francisco, told Bloomberg BNA Oct. 2. She cited a combination of the agency’s lack of full settlement authority and a lack of coordination among the contractors.

Overpayments are any health-care provider payments that exceed what should be paid under Medicare regulations, and the longer they go uncollected, the greater the risk that the money will never be returned to Medicare.

Recommendations, Response

The HHS OIG recommended that the CMS identify strategies to improve overpayment tracking and collection and work with the ZPICs and and Unified Program Integrity Contractors (UPICs) to improve the identification of overpayments. UPICs are intended to replace ZPICs, PSCs, the Medicare-Medicaid data match program (Medi-Medi), and Medicaid Integrity Contractors (MICs), though they aren’t fully operational yet.

The federal Medicare agency agreed with most of the OIG’s recommendations, and noted it has begun transitioning the ZPICs’ work to the UPICs. However, the agency neither agreed nor disagreed with an inspector general recommendation to implement a surety bond requirement for home health providers.

The surety bond would guarantee that the CMS could collect some money from home health providers in the case of an overpayment.

Lack of Coordination

The OIG focused on overpayment referrals to the MACs, and suggested a lack of coordination that is troublesome for the CMS fraud-fighting efforts, Waltz said.

The MACs don’t always agree with the ZPIC referrals, Waltz said, or make tweaks to the what the ZPICs recommend.

Waltz acknowledged that the CMS has limited abilities to deal with overpayments.

It can recoup an overpayment, as long as the provider or supplier is still submitting claims, and it can refer overpayments to the Department of Treasury for collection, but it has limited settlement authority, Waltz said.

“The Department of Justice has to step in for affirmative litigation, and for settlements over a set amount, the DOJ’s approval is required,” Waltz said. Affirmative litigation refers to situations where the provider or supplier is no longer participating in the Medicare program, preventing the CMS from recouping overpayments.

If the CMS had better settlement authority, collections would likely be higher, Waltz said.

To contact the reporter on this story: James Swann in Washington at

To contact the editor responsible for this story: Kendra Casey Plank at

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