Four from Six: New Math, New Savings

Four from Six: New Math, New Savings

Medicare refunds should look back as far as four years, not six.

It’s a really tough time for hospitals, and every dollar counts. Yet what if I told you that most voluntary funds are one-third larger than necessary?

It is common for organizations to go back as far as six years when making a voluntary refund. In fact, I believe the law only requires a 48-month look-back period. It’s certainly true that the 60-day rule, found at 42 C.F.R. § 401.305(f), requires that an overpayment be reported and returned if the person identified the overpayment within six years of the date the overpayment was received. This leads most to conclude that you have to go back six years – but that ignores two very important points.    

First, you only need to go back six years if the money has been overpaid. Medicare regulations (42 C.F.R. § 405.980(b)) only allow the government to reopen a claim for 48 months, unless there is fraud or similar fault present. The 60-day statute defines an overpayment as “any funds that a person receives or retains under the title XVIII (Medicare) or XIX (Medicaid) to which the person, after applicable reconciliation, is not entitled under such title.”

If the government doesn’t have the authority to take the money back, you are entitled to it. Under the 60-day statute, if you are entitled to the money, it isn’t an overpayment, and you don’t have a duty to refund it. 

I would posit that if you haven’t heard this argument from your health law counsel, you need new counsel. I totally understand that you may choose to take the cautious route and refund the full six years. But your counsel should be providing you with the information necessary for you to make an informed decision. So, again – if you haven’t heard this from your counsel, it is time to go lawyer shopping.

Moreover, this isn’t the only reason that the six-year lookback should be discounted. Section 1870 of the Social Security Act requires the federal government to waive an overpayment when the recipient is without fault. That provision creates a statutory presumption that the recipient is without fault when the overpayment is sought more than five years after the year in which payment was received. The 60-day regulation effectively ignores that provision of the law. 

When the regulation was first proposed, then containing a 10-year lookback, I submitted a comment indicating that the regulation was inconsistent with this statute. The Centers for Medicare & Medicaid Services (CMS) reply did not directly address my comment, but they did discuss a similar provision of the Social Security Act, 1879, that requires waiver of an overpayment based on medical necessity when the recipient is without fault. CMS claimed that the law was inapplicable: “we believe it is inappropriate for providers or suppliers to make determinations regarding their own knowledge of non-coverage or whether they were the cause of an overpayment in lieu of reporting and returning an identified overpayment as required by this rule,” per 81 FR 7666. 

I call the excrement of bulls on this. The law is the law, and CMS can’t metaphorically plug its ears and go “la la la I’m not listening” like a petulant child and just ignore a statutory provision. 

For that reason, I tell all my clients to go back 48 months on a voluntary refund. Let’s say the government disagrees and insists you really need to go back six years. How indignant can they get? You’ve voluntarily given them four years’ worth of money and been completely transparent while doing so. I’ve had clients using the 48-month lookback for years, and it has yet to be challenged. I think there’s a good reason these organizations haven’t been attacked: the analysis is sound.

So, if you’re looking for a way to save some money, limit your refund lookback to 48 months. And once again, consider getting a new lawyer if yours hasn’t suggested this. 


David M. Glaser, Esq.

David M. Glaser is a shareholder in Fredrikson & Byron's Health Law Group. David assists clinics, hospitals, and other health care entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David's goal is to explain the government's enforcement position, and to analyze whether this position is supported by the law or represents government overreaching. David is a member of the RACmonitor editorial board and is a popular guest on Monitor Mondays.

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