Physician Overpayment Proposal Needs Work, Says AAFP

CMS needs to make changes to a proposed rule on reporting and returning physician overpayments so that the final rule clearly delineates the differences between occasional overpayments and actual fraudulent activities by Medicare providers and suppliers, says the AAFP in a recent letter to CMS.

The Patient Protection and Affordable Care Act mandates that physicians who receive an overpayment must report and return that overpayment to CMS, the state contractor or any other relevant contractor, along with a written explanation for the overpayment, within 60 days. Physicians who fail to comply face the possibility of a lawsuit, civil monetary penalties, and further oversight from Medicare and Medicaid contractors.

CMS issued the proposed rule (9-page PDF; About PDFs) earlier this year, prompting immediate concerns from the AAFP that the proposal "confuses the occasional overpayments made by a CMS contractor with malicious or fraudulent activities on the part of Medicare providers and suppliers."

"While an overpayment can be indicative of fraud and abuse, most overpayments are caused by inadvertent errors and should be treated as such," says AAFP Board Chair Roland Goertz, M.D., M.B.A., of Waco, Texas, in an April 11 letter (4-page PDF; About PDFs) to CMS Acting Administrator Marilyn Tavenner, M.A.

Goertz points out that the Affordable Care Act requires the 60-day period to begin with identification of the overpayment, but CMS does not clearly specify whether actual knowledge of an overpayment occurs when a physician learns of a case that caused the overpayment or when the overpayment is determined and calculated.

"The AAFP is troubled that this proposal essentially creates an unfunded requirement that forces medical practices to implement self-audits and internal compliance plans," Goertz says. "Though often recommended business practices, they are time-consuming, expensive and never before required by Medicare. Further troubling is that this considerable burden is not even addressed in the regulatory impact section."

CMS should further consider the rule's financial impact on medical practices, says Goertz, and he calls on the agency to start the 60-day time frame after an audit has determined an overpayment has been made and identified the amount to be returned. This would give physicians, other providers and suppliers time to complete the audit before the repayment period begins, according to Goertz.

In addition, the AAFP "adamantly opposes" CMS' proposal to use a 10-year look-back period for overpayment -- particularly as the Health Insurance Portability and Accountability Act of 1996 only requires physicians to maintain billing records for six years, says Goertz.

"If (the records) are available, they may be archived and may not be readily retrievable," Goertz says. "Further, changes in the regulatory requirements over the past 10 years would also have to be reverse-engineered by physicians to determine whether an overpayment was, in fact, made. … The AAFP strongly urges CMS to enforce a three-year look-back period as it is a more compatible and considerate time frame for medical practices."

Goertz also points out that the proposed rule requests comments on assumptions made by CMS about the burden of the rule on physicians. "CMS estimates it will take a physician 2.5 hours to both complete a typical overpayment reporting form -- at an estimated cost of $37.10 per hour -- and return the overpayment," Goertz says. "The AAFP finds it alarming that CMS seems comfortable subjecting physicians to these time frames and costs."

The AAFP strongly urges CMS to streamline the reporting form and reduce the cost of reporting. "If the overpayment is less than $100, medical practices will likely expend as much or more to report and return the overpayment, for which they may not even be at fault," Goertz says. "Therefore, the AAFP urges CMS to consider establishing a minimum overpayment threshold in the spirit of simplifying inadvertent and innocent errors."