CMS has recently published its Final Rule addressing limitations on the recoupment of alleged overpayments by its contractors. This Final Rule finalizes (at least for now) how contractors are to proceed when pursuing recoupment actions. "Recoupment" is defined as the recovery of a Medicare overpayment by reducing present or future Medicare payments and applying the amount withheld against the debt.

Under existing regulations, providers may challenge recoupment through either the rebuttal or appeals process. Prior to passage of the Medicare Modernization Act (MMA), CMS could recoup overpayments, regardless of whether the provider or supplier had filed an appeal. With CMS' Final Rule in place, limitations have been set on the ability of its contractors to pursue a recoupment action. As the Federal Register states:

"This final rule defines the overpayments to which the limitation on recoupment applies, how the limitation works in concert with the appeals process, and sets time limits for recouping overpayments, specifically providing 41 days for a provider or supplier to file the first level of appeal before the contractor can begin recoupment and providing the provider or supplier 60 days to appeal at the second level before the contractor can begin recoupment" (74 Fed. Reg. 47458, 47458 (Sept. 16, 2009)).

Notably, a Medicare contractor may freely initiate recoupment on an overpayment once a reconsideration decision has been rendered, regardless if an Administrative Law Judge (ALJ) appeal is filed.

Should a provider elect to delay recoupment, the amount owed will be subject to the Medicare interest rate. This amount varies but is generally quite high. For example, as of 07/17/09, it was 11.25%. As such, it is especially important that providers consider the following:

(1) If an overpayment determination is overturned past the reconsideration level of appeals, CMS is liable for interest on recouped overpayments that has accrued.

(2) If a provider or supplier takes advantage of the limitation on recoupment and ultimately loses an appeal, it will still be liable for all interest accrued since the original determination, along with the overpayment.

With so much at stake, it is vital that health care providers and suppliers fully understand the nuances of the overpayment appeals and recoupment process. By timely filing appeals or rebuttals, providers can effectively delay recoupment but unfortunately cannot avoid it altogether. Ultimately, CMS' final rule will make it more important than ever that health care providers undergoing overpayment review get qualified legal advice to help guide them through the process.

This article is provided as general information only. It does not constitute legal advice and should not be used as a substitute for seeking legal counsel. Readers with legal questions should call Liles Parker PLLC or consult their attorney.