Delayed Return of Medicare Overpayments Under the PPACA

Are you aware of an entity retaining Medicare or Medicaid funds improperly? Medicare and Medicaid pay out an estimated $60 billion in overpayments every year, according to the U.S. Department of Health and Human Services. With your help, we can reduce that amount.

During the Obama administration, Congress amended the False Claims Act and the Social Security Act to make it clear that the U.S. Government can recover overpayments made by Medicare and Medicaid to entities in the healthcare industry when the entity knows that it has been improperly received or retained. As a result, whistleblowers can now bring a qui tam lawsuit to report this type of fraud to the government and potentially earn a reward of between 15 and 30 percent of the amount recovered.

The History of Liability for Retention of Overpayments

Only in the past few years has Congress clarified that it intended for the retention of Medicare and Medicaid overpayments to be actionable under the False Claims Act.

Fraud Enforcement and Recovery Act

When Congress passed the Fraud Enforcement and Recovery Act of 2009 (FERA), it amended the False Claims Act to remove the requirement of a false record or statement in a reverse false claim. Following the FERA amendments, liability under the FCA can also apply when a person “… knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” See 31 U.S.C. § 3729(a)(1)(G).

Prior to FERA, the false claims submitted by healthcare entities were not made with the requisite intent. When they received the overpayment, they did not “knowingly” make a false or fraudulent claim. When they retained the payment, they did not make a false record or statement. So the law made it difficult to prove a violation of the FCA.

Patient Protection and Affordable Care Act

The Patient Protection and Affordable Care Act (also known as the “PPACA”, the “Affordable Care Act” or “ObamaCare”) amended the Social Security Act to clarify the reporting and return of overpayments of Medicare or Medicaid funds in the context of the False Claims Act. Generally, if a person receives or retains any Medicare or Medicaid funds improperly, they must return the overpayment and report it within 60 days of identifying it. If they do not, the retained overpayment becomes an obligation as defined by the False Claims Act. See 31 U.S.C. 3729(b)(3).

The retention of the overpayment should now be actionable as a “reverse false claim.” The False Claims Act authorizes a civil penalty and treble damages for any person, whether an individual or entity, that “knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” 31 U.S.C. § 3729(a)(1)(G).

Since Passage of the Affordable Care Act

CMS Final Rules

The Centers for Medicare & Medicaid Services issued proposed rules to implement the PPACA on overpayments in 2012.  The commentary published with the regulations clarifies that an overpayment includes:

  • Payments for noncovered services;
  • Payments in excess of the allowed amount for a service;
  • Errors and nonreimbursable expenses in cost reports;
  • Duplicate payments; and
  • Receipt of payment when another payor had primary responsibility for payment.

The commentary also addresses the issue of a provider or supplier declining to perform self-audits, compliance checks and other research in order to be deliberately ignorant of overpayments.  The proposed CMS rule defines the identification of an overpayment to include acts in reckless disregard or deliberate ignorance of any overpayment.  Through this definition, providers and suppliers are required to continue to act reasonable diligence to identify any overpayments.

Normally, there is a three year time period for the consideration of new rules. However, in early 2015, CMS issued a one year extension noting that the complexity of the rule and the scope of comments warranted the extension.  Even absent the publication of the final rules in the Federal Register, organizations are still required to comply with the terms of the Affordable Care Act.

Whistleblower Lawsuits

If your healthcare entity has identified overpayments and has not returned them by the later of the filing of the hospital cost report or within sixty days of identification of the issue, it may be a violation of the law.  Please contact one of our attorneys to discuss reporting it.

Medicare and Medicaid providers and suppliers may have received an overpayment for a number of reasons.  These reasons include:

  • Incorrect service date;
  • Duplicate payment;
  • Incorrect CPT code;
  • Insufficient documentation; and
  • Lack of medical necessity.

This is still a developing area of the law as few cases have been litigated on the theory to this point.  The U.S. Government has intervened and filed its complaint-in-intervention in a heavily watched case, U.S. ex. rel. Kane v. Continuum Health Partners, Inc., taking place in the Southern District of New York.  In the case, a software error caused hospitals to bill and receive payment from Medicaid as a secondary payor when their services had been fully compensated by a managed-care organization.  Instead of paying these claims after they were identified in the prescribed time period, repayment took up to two years.

The False Claims Act

The False Claims Act imposes substantial penalties on doctors, hospitals and other health care companies engaged in fraud while rewarding whistleblowers for providing evidence of the misconduct to the Justice Department through a qui tam lawsuit.

Our Federal False Claims Act lawyers have guided whistleblower cases to several significant settlements on behalf of relators. Our largest unsealed cases are currently focused on kickbacks in violation of the Anti-Kickback Statute, but we have a broad base of experience across other types of Medicaid and Medicare fraud. In the pursuit of suspected frauds, we have brought cases to the attention of the government in many states, including New York, Florida, California and here in Philadelphia. In 2016, for example, we helped the federal and state governments recover $54 million from a Valeant subsidiary for kickbacks paid through speaker programs.

The law rewards whistleblowers for information with between 15 and 30 percent of the proceeds from the litigation, subject to numerous terms and conditions specified in the law. During President Obama's Administration, the U.S. paid out more than $4 billion to whistleblowers. For those not familiar with whistleblower cases, we have written a quick guide to the process.

Our False Claims Act attorneys undertake a thorough review of whistleblower evidence up front during the case evaluation process. We confirm that there is sufficient evidence of both inappropriate government billings as well as evidence of intentional or reckless conduct by the individuals in charge. We understand that no one person needs to have every piece of the puzzle and we have evaluated thousands of potential cases while honing our judgment. We also answer any questions that a whistleblower has in order to ensure that you can make an informed judgment about whether to proceed with a qui tam lawsuit.

To begin the process and get your questions answered, use our contact form or call 1-800-590-4116 for a free, confidential and no-obligation initial legal consultation from our whistleblower attorneys.