One U.S. court noted that “Medicare regulations are among the most completely impenetrable texts within human experience.” That may be true, but it doesn’t mean hospitals and health systems are off the hook if they violate these regulations. On the contrary, there is a long and unfortunate history of healthcare entities violating these convoluted regulations and paying a heavy price.
One area of particular concern in healthcare is the False Claims Act (FCA) and the amendments to the Affordable Care Act (ACA) regarding Medicaid overpayments.
Recipients of Medicare and Medicaid funds who have received an overpayment must report and return the overpayments within 60 days after the date on which the overpayment was identified. If any overpayment is retained beyond that point, it constitutes an “obligation” carrying liability under the False Claims Acts. The result for hospitals and health systems that fail to identify and report these overpayments can be severe, including treble damages as well as significant civil penalties.
The Case
In United States ex rel. Kane v. Continuum Health Partners, Inc., a computer glitch resulted in several hospitals in the Continuum health system being overpaid by a Medicaid Managed Care Organization (MCO). The first entity to raise questions about the overpayments was the New York State Comptroller’s Office, about a year after the overpayments began.
Several months later, Continuum assigned an employee, Robert Kane, to identify which claims had been overpaid by Medicaid. Meanwhile, the comptroller was informing Continuum of further Medicaid overpayments. After Kane delivered Continuum a spreadsheet of all Medicaid overpayments, he was terminated. Several months later, Kane commenced a whistleblowers suit against Continuum and the DOJ and the New York Attorney General’s Office eventually intervened as plaintiffs and sought treble damages, plus an $11,000 penalty for each overpayment retained in violation of the FCA.
Continuum argued that because Kane’s spreadsheet did not provide exact dollar amounts of the overpayments, the overpayments had not been truly identified and the 60-day clock should not have started. Meanwhile, Continuum began repaying Medicaid in piecemeal fashion and eventually repaid everything by March of 2013, more than two years had passed since Kane’s spreadsheet identified all the Medicaid overpayments.
The Verdict
In the end it was decided that Continuum, in addition to several other New York hospitals, were guilty of violating the reverse false claims provision of the FCA (31 U.S.C. sec. 3729(a)(1)(G),). The court found that Kane’s spreadsheet did constitute the provider being put on notice for a potential overpayment, and the provider then failed to take timely steps to investigate, report, and return potential overpayments from Medicaid.
As a result of penalties assessed, the settlement totaled $2.95 million. The overpayment only totaled around $800,000.
The Lesson
The lesson of United States ex rel. Kane v. Continuum Health Partners, Inc? Providers cannot ignore the 60-day repayment requirement, even if they are unsure of the total amount. In other words, it may be advisable to make an estimated repayment in order to stop the clock and prevent the 60-day requirement from turning it into a potential FCA claim. Then, once the actual amount of the overpayment has been settled, seek a refund or credit — similar to making estimated income tax payments.
MedCom’s DRG Window Auditor Software allows facilities to identify and address potential compliance issues by importing each Medicare remittance advice and providing a daily report of any possible outpatient overpayments that are related to an inpatient claim and meet the three-day rule.
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