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VBCR - October 2015, Volume 4, No 5 - Value Propositions

The first judicial decision to address the 60-day overpayment rule that is part of the Affordable Care Act and the Fraud Enforcement and Recovery Act was handed down in August by the United States District Court for the Southern District of New York. The rule requires providers to “report and return” Medicare and Medicaid overpayments within 60 days of the “date on which the overpayment was identified.” Healthcare providers who fail to return overpayments within that time are subject to liability under the False Claims Act. In Kane v Healthfirst, Inc, the district court addressed the issue of determining when the overpayment was “identified,” a term not defined in the rule.

The problems in the case began with a software glitch experienced by Healthfirst Inc, an insurance corporation, that eventually resulted in improper claims being submitted to New York’s Medicaid program by 3 hospitals in the Continuum Health Partners group. Robert Kane, a hospital employee, was directed to investigate, and in February 2011 he reported that over 900 claims had been billed improperly and more than $1 million had been overpaid. The hospitals began returning funds, but did not complete the repayment until March 2013. Kane, who had been fired, filed a suit against Continuum, and both the federal government and the state of New York intervened.

Continuum argued that claims of overpayment were only “identified” when they were “classified with certainty.” The government’s position was that the 60-day period began on the date the hospitals were “put on notice that a certain claim may have been overpaid,” and the court agreed. Providers should take note of this broad definition of “identified” adopted by the court in this case since it may impact subsequent cases and even the final form of the rule, due to be released in February 2016. Petrelli JW, et al. BakerHostetler. August 13, 2015.

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Last modified: October 29, 2015
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