HFMA comments on CMS’s proposed rule on reporting and returning of overpayments

April 16, 2012

Marilyn Tavenner
Acting Administrator
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: CMS-6037-P
P.O. Box 8013
Baltimore, MD 21244-8013

File Code: CMS-6037-P

Re: Proposed Rule: Medicare Program; Reporting and Returning of Overpayments

Dear Ms. Tavenner:

The Healthcare Financial Management Association (HFMA) appreciates this opportunity to comment on the Centers for Medicare & Medicaid Services’ (CMS) proposed rule on the Medicare Program; Reporting and Returning of Overpayments, published in the February 16, 2012, Federal Register. This was in regard to Section 6402(a) of the Affordable Care Act, which established a new section 1128J(d) of the Medicare program entitled, ”Reporting and Returning of Overpayments.”

HFMA is a professional organization of more than 37,000 individuals involved in various aspects of healthcare financial management. HFMA is committed to helping its members improve management of and compliance with the numerous rules and regulations that govern the industry. We appreciate CMS’s efforts to create a standardized system that encourages reporting and returning of Medicare overpayments. However, we believe that within the proposed rule, clarification and change is needed in the following areas: 

• Duplicative and/or conflicting procedures and requirements
• Burdensome reporting and record keeping
• Change in application of the False Claims Act

Introduction
HFMA has long supported the concept of accountability through development of auditing processes and voluntary compliance plans. They are a foundation of the basic conservative principles of accounting and a standard of practice. With respect to both internal audit teams and specific compliance plan efforts, HFMA takes this responsibility very seriously.

Duplicative and/or Conflicting Procedures and Requirements
The proposed rule appears to fail to recognize that compliance programs and activities are currently built on the existing rules and processes for billing and payment. These changes in process would result in significant costs in terms of not only dollars, but also effort and staff time. The proposed rule is written for blanket application. This results in questioning all of the pre- and post-payment processes that CMS already has in place, such as the cost report and claims reconciliation process, “timely filing” requirements, reviews and audits by Medicare contractors (e.g., Medicare Administrative Contractors and Recovery Audit Contractors), and the current process under the CMS-838 form for Credit Balance reporting and refunding under sections 1815(a), 1833(e), 1886(a)(1)(C), and related provisions of the Social Security Act. The rule is mostly silent as to how all of these processes will be coordinated and implemented and which takes precedence when conflicts arise. We are concerned that this create conflict and cause misunderstanding on existing processes as well as create additional burden and expense. Therefore, we believe that the final rule should not apply when existing CMS (or MAC) regulations, protocols, or guidance already address overpayments (as examples CMS’s Self-Referral Disclosure Protocol and the OIG’s Self-Disclosure Protocol). CMS should also confirm that no existing processes will be affected to avoid potential conflicting requirements or duplication of effort.

Burdensome Reporting and Record Keeping
Under the proposed rule, providers are required to repay an overpayment within 60 days from the first indication that it exists. This timeframe overlooks the extensive process involved to determine if an overpayment was received. Under the proposed rule, the first indication of a potential overpayment is equated to “identification” of an overpayment and starts the 60-day clock running for repayment. This ignores the fact-finding work that a hospital must do, given the complexity of existing reimbursement and compliance rules, and the effort required to establish the scope of a problem, assess what happened and why, and determine the actual amount that is due. The amount of time that it will take varies with the facts and circumstances. For example, identifying and understanding the impact of an isolated incident differs significantly from an incident requiring an extensive medical record review for potential overpayment due to insufficient medical necessity documentation. The proposed rule does not allow flexibility for these circumstances. The final rule should recognize the practicality of implementing a reasonable timeframe and approach for repayment taking into account the various facts and circumstances.

The expansion of the “look back” period for overpayments to 10 years is further cause for concern. This change more than doubles the current standard look back period (from four to 10 years). The justification that CMS offers is that it wanted to match the outside time limit for bringing a False Claims Act (FCA) lawsuit – which has a different set of facts and circumstances and creates unreasonable burdens for hospitals. Records would have to be kept much longer than currently required, information systems will need to be changed and new procedures adjusted.

The proposed rule appears to assume that 10 years worth of claims will be immediately available upon implementation. Unfortunately, this is not the case due to previously mentioned record retention policies and configuration of software and systems. The rule also assumes that an immediate and final determination can be made of whether an overpayment was received–not taking into account the various changes in billing regulation, rules, and procedures occurring during that ten year period. Hospitals base their record retention policies, compliance activities, and financial planning based on definitive guidance within a reasonable timeframe. Under the proposed rule, claims believed to have been closed and final for years could be subject to re-opening the day the rule takes effect. That uncertainty and longer period is an undue cost burden for the system. Since the intent of this statute is not about fraud, we believe there should not be an adjustment in the look back period from currently established CMS regulation.

Change in Application of the False Claims Act (FCA)
We are concerned that the proposed rule would impose FCA liability on hospitals for mistakes. Congress wrote the overpayment statute to create a duty to repay when a participant in the Medicare program “identifies” an overpayment. As noted in the statute, researching and confirming an overpayment is a process that, when completed, results in an overpayment being “identified.” The statute appears to recognize the difference that exists between that process and the 60 days it might take a hospital to prepare the paperwork and cut a check to re-open the claim and refund the overpayment.

However, the proposed rule states that it does not matter whether one was aware of an overpayment. It appears to state that if “you should have known,” FCA liability could apply for not refunding the overpayment fast enough. Practically, that means hospitals would need to be 100 percent correct, 100 percent of the time. That is an impossible standard for hospitals – and for the government and its contractors. While the proposed rule does not say FCA applies directly, that appears to be the way the rule is written. It improperly substitutes the term “knowing” from the FCA (which includes not only actual knowledge, but also “reckless disregard” and “deliberate ignorance”) for the overpayment provision’s term “identified.” There is nothing in the overpayment statute that supports such an expansion of the FCA to overpayments received by mistake. The final rule should not reference use of the FCA terminology.

HFMA looks forward to any opportunity to provide assistance or comments to support CMS’s effort to create a simplified, standardized, and non-duplicative program. As an organization, we take pride in our long history of providing balanced, objective financial technical expertise to Congress, CMS, and advisory groups.

We are at your service to help CMS gain a balanced perspective on this complex issue. If you have additional questions, you may reach me or Richard Gundling, Vice President of HFMA’s Washington, DC, office, at (202) 296-2920. The Association and I look forward to working with you.

Sincerely,

Richard L. Clarke, DHA, FHFMA
President and Chief Executive Officer
Healthcare Financial Management Association

About HFMA
HFMA is the nation’s leading membership organization for more than 37,000 healthcare financial management professionals. Our members are widely diverse, employed by hospitals, integrated delivery systems, managed care organizations, ambulatory and long-term care facilities, physician practices, accounting and consulting firms, and insurance companies. Members’ positions include chief executive officer, chief financial officer, controller, patient accounts manager, accountant, and consultant.

HFMA is a nonpartisan professional practice organization. As part of its education, information, and professional development services, HFMA develops and promotes ethical, high-quality healthcare finance practices. HFMA works with a broad cross-section of stakeholders to improve the healthcare industry by identifying and bridging gaps in knowledge, best practices, and standards.