Understanding the Compliance Issues of Reverse False Claims

The issue is reimbursement for overpayments made by the government.

Today I’m writing about an unusual situation that Ronald Hirsch, MD raised recently. As a reminder, the situation was that a provider procures an Advance Beneficiary Notice (ABN) prior to an elective procedure. To inform the Medicare Administrative Contractor (MAC) that the ABN has been obtained and let it know the provider does not expect payment, a G-code is applied to the bill. In some cases, the MAC pays the claim anyway. In many cases, however, the provider has already collected a significantly higher payment from the patient at the time of service. When this happens, the provider must return one of the payments. But which one? It’s worth noting that this is a very specific instance of overpayment. All overpayments from the Centers for Medicare & Medicaid Services (CMS) must be returned.

Here’s where the reverse false claim issue comes in. The reverse component of the False Claims Act (FCA) was added long after the original statute to specifically address, among other things, reimbursement for overpayments made by the government. The relevant elements of a violation are that the defendant a) concealed or improperly avoided or decreased an obligation to pay the government and b) did so knowingly. There is no requirement to show either use or materiality of a false record or statement.

Let’s look at the aforementioned overpayment now. If the provider has a functioning revenue integrity program, it knows that it has been overpaid – in fact, it has been paid twice. The question then becomes which payment to return? That depends on how the provider arrived at the conclusion that the service was not covered – and how certain they are of it.

If the provider is certain that the service is not covered by Medicare, it should refund the payment with an explanation. The MAC will have a specific form for reporting and returning funds.

If the provider is uncertain regarding coverage of the service, then it may retain the Medicare payment and refund the patient component. In this case, the CMS payment remains subject to audit and denial at a later date. In essence, the provider is relying on the MAC’s judgement and understanding of CMS payment policies. That reliance may not be entirely justified.

If a government auditor subsequently denies the claim for the portion covered by the ABN, the provider will have little hope upon appeal. In fact, it’s possible that the documentation of the ABN could be used as evidence that the provider knowingly retained an improper payment. The only good thing under such a circumstance is that the provider may then re-bill the patient if the ABN was properly obtained, documented, and retained.

What this means is that all providers need to have:

• A robust revenue integrity system in order to:
  • Ensure that duplicate payments are promptly identified; and that
  • The reason for the payment is understood and effectively reconciled;
• A “front-end” process to reliably identify services for which CMS will not reimburse payors;
• A patient-relations program to offer comprehensive explanation to the patient as to why the:
  • ABN was obtained;
  • The payment, if collected, was later refunded; and
  • The payment is being sought again.

When a contractor makes an overpayment through no fault of the provider, it raises doubt about the overall integrity of the Medicare system and perpetuates the idea that they’re incompetent bureaucrats.

These are complicated errors that adversely impact our relationship with patients and require us to be vigilant and proactive.

Retained funds are subject to later audit and recoupment.