Health care reform legislation increased the tools the government can use to recover money incorrectly paid to providers. The risk to providers of retaining overpayments has increased significantly.

Effective March 23, 2010, the law requires a person (including health care providers who are reimbursed under part A and Part B) who has received an overpayment from claims billed to Medicare or Medicaid to report and return the overpayment to the Secretary of HHS, the State, the intermediary, carrier, or contractor, as appropriate. In addition, the person must state the reason for the overpayment.

An overpayment is defined as any funds a person receives or retains under Medicare or Medicaid to which the person, after applicable reconciliation, is not entitled. The overpayment must be reported and returned no later than: 1) 60 days after the date on which the overpayment was identified; or 2) the date any corresponding cost report is due, if applicable. Thus, the law provides a relatively limited time to report and return the overpayment, once the overpayment has been “identified.” This term is not defined under the law and may mean once the fact, and not the amount, of the overpayment is known.

Any overpayment retained by a person after the deadline may be treated as an obligation as defined under the False Claims Act. Each violation of the False Claims Act subjects a person to triple damages for the overpayment, as well as significant civil monetary penalties per violation. In addition, the provider could face exclusion from federal health care programs.

This new provision is in effect now. Accordingly, providers should develop and/or review their compliance programs to ensure adequate procedures are in place to reduce the risk of exposure to this type of liability.