Final CMS Overpayment Rule Rankles AAFP President

February 18, 2016 03:15 pm Sheri Porter

CMS has released a long-awaited final rule that drew sharp criticism from AAFP President Wanda Filer, M.D., M.B.A., of York, Pa., and is sure to raise eyebrows among family physicians.

[Stethoscope and billing statement on laptop]

The rule, published in the Feb. 12 Federal Register( requires all health care providers and suppliers who are paid with Medicare funds to report and return overpayments within 60 days of discovering an error.

Furthermore, physicians and others covered by the regulation are liable for reporting and returning Medicare overpayments made to them going back six years from the date the payment was received.

Those who fail to comply with the regulation face liability under the False Claims Act and could be subject to monetary penalties as well as exclusion from federal health care programs.

The regulation is the direct result of a section of the Patient Protection and Affordable Care Act that requires the return of overpayments as a means of protecting Medicare trust funds against improper and fraudulent payments.

The final rule is effective on March 14.

AAFP Fires Back

CMS states in the final rule that providers and suppliers "have a clear duty to undertake proactive activities to determine if they have received an overpayment."

Story Highlights
  • CMS has released a final rule requiring physicians to self-audit and self-report Medicare payment errors dating back six years from the time the overpayment was made.
  • AAFP President Wanda Filer, M.D., M.B.A., decried CMS' definition of "clear duty" and said family physicians have a clear duty to their patients.
  • Filer noted that the AAFP would continue to fight for a three-year look-back period.

Filer wasted no time objecting to a particular phrase in that statement.

"This whole idea about 'clear duty' is disturbing," Filer told AAFP News. "Family physicians have a clear duty to take care of their patients; it's CMS' clear duty to ensure that accurate payments are made to physicians within the Medicare system."

CMS rejected concerns raised by the Academy and other stakeholders that the rule presented physicians with an unfunded mandate by forcing practices to implement costly and time-consuming self-audits aimed at identifying overpayments spanning six years.

"We disagree that this rule creates a requirement for any formal compliance plan or audit strategy; rather, it requires that providers and suppliers maintain responsible business practices and conduct a reasonably diligent inquiry when information indicates that an overpayment may exist," CMS said in the final rule.

Still, the agency concluded that physicians and other entities affected by the regulation would bear an annual cost burden estimated at more than $161 million. CMS was not able to forecast any future financial benefits in terms of potentially recovered funds.

Filer acknowledged physicians' frustration -- and aggravation -- with a government rule that forces them, under threat of penalty, to self-audit their practices for the sole purpose of returning overpayments to CMS.

She suggested family physicians think of self-audits as a "preventive strategy."

"I've been hearing lots of feedback from family physicians who've described quite unpleasant experiences with auditors," Filer said. "These audits are really quite intrusive, and I know they're taking a personal toll on members."

"By all means, if physicians discover Medicare overpayments, they should voluntarily send them back and spare themselves a potentially painful government audit."

Moving Forward

"It's important for our members to know that the AAFP has been advocating since 2012 for a three-year look back related to this regulation," said Filer.

Indeed, in an April 2012 letter(4 page PDF) to CMS, the AAFP responded to a proposed rule and argued that CMS' suggested 10-year look-back period was "unwieldy and unmanageable."

The fight's not over, vowed Filer.

"Right now the rule is final and closed, but the AAFP will keep pushing for a three-year look back," she said.

In that same 2012 letter, the AAFP admonished CMS for its role in mistaking "occasional overpayments" made by CMS contractors 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," wrote the Academy.

This remains true in 2016, said Filer.

"The vast majority of errors related to billing and payment are inadvertent," Filer said. "It will be interesting to see what CMS' recovery results look like. If it turns out the recovery of overpayments from family physicians isn't much, CMS may conclude that they are not spending their resources in the right places."

Related AAFP News Coverage
Physician Overpayment Proposal Needs Work, Says AAFP
CMS Final Rule Should Reflect True Nature of Overpayments


More From AAFP
Sign-on Letter: Reporting and Returning Overpayments(7 page PDF)

Additional Resource
CMS Fact Sheet: Medicare Reporting and Returning of Self-Identified Overpayments(