A Critical Strategy for Overpayments

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A Strategy for Overpayments

The importance of managing overpayments in health care cannot be overstated!! If your Compliance Program does little else, be sure it is proactively identifying Overpayments! Regulatory changes in the past number of years seem to have focused attention on the calculations in the 60-day Rule, but the primary focus should be identifying Overpayments in the first place!!!

Federal and state government programs (e.g., Medicare, Medicaid, Tricare, etc.) use the term “overpayment” because the term is defined from their perspective – an overpayment means a provider, hospital, clinic, etc., has been overpaid by the government or CMS. Given the complexity of health care claims generation and billing, overpayments can arise from a wide range of factors:

  • A simple provider billing error, such as a coding error
  • Payment processing errors by the Medicare Administrative Contractor (MAC) or payer
  • Submitting a claim that does not meet medical necessity or that is not appropriately documented
  • Administration errors such as incorrect patient or provider information or coordination of benefits mistakes, e.g., Medicare Secondary Payer

False Claims Act

Overpayments are considered debts owed to the federal government. Retained Overpayments can become “false claims” and a violation of the paramount False Claims Act (“FCA”) which states that knowingly submitting, or causing to be submitted, a false or fraudulent claim to the government for payment or approval can result in civil liabilities, and can subject you to tremendous penalties and damages. The FCA is the primary tool used by the federal government to combat fraud against government programs, particularly Medicare and Medicaid.

 Every Claim is an Attestation

Adherence to Medicare and Medicaid billing rules should be at the very core of your Compliance Program. Every single claim submitted on a government claim form contains language relating to the FCA and certifies from the billing party that:

  • The services listed were medically necessary
  • The information provided is true, accurate, and complete
  • The provider agrees to comply with all applicable Medicare laws and regulations

60-Day Rule

Before the Affordable Care Act (ACA) was enacted in 2010, there was no statutory deadline for returning identified false claims or Medicare/Medicaid overpayments. Compliance relied on vague regulatory terms like “timely” or “promptly” to guide repayment. Since 2010, and with a few subsequent revisions, there is a clear statutory requirement to report and return overpayments within 60 days of identification (the 60 Day Rule). Because government rules are rarely clear and simple, the definition of when an overpayment is “identified” continues to be cause for further scrutiny but, the bottom line is that without a clear strategy to identify overpayments, the conversation about timely repayment—let alone meeting the 60-day deadline—can’t even begin.

Overpayment Strategy

Here are some Compliance Program strategies to assist with insuring claims integrity and avoiding Overpayments:

It goes without saying that ensuring integrity in your claims generation processes is critical because all of this information should be accurate before the claim even goes out the door. Ensure you have robust internal controls for validating:

  • Accurate patient demographics
  • Up-to-date payer and insurance information, as well as real-time eligibility and coordination of benefits
  • Appropriate payer authorizations and approvals
  • Timely and accurate clinical documentation
  • Accurate coding to include modifiers, or upcoding or unbundling errors that trigger payer edits

After claims are submitted proactive auditing and monitoring (Element 6 of the OIG’s General Compliance Program Guidance) is key. If you don’t know where to begin, a good rule of thumb is to start with high volume or high dollar claims as identified by your organization.

    • Conduct regular audits (manually if you need to) of high-risk codes, service lines or providers
    • Generate credit balance reports, or other claims reconciliation reports, and aggressively and timely work the queue
    • If you can, utilize data analytics to detect outliers, duplicate payments, or other variances
    • Conduct regular documentation and coding audits and train staff on audit findings
    • Monitor internal hotline calls and other compliance program activity

Overpayments Policy and Procedure

Every organization must define its strategy and internal controls for avoiding and repaying overpayments. All revenue generating departments, not just Patient Financial Services, are responsible for monitoring for potential Overpayments.

That means you must have a written policy and procedure! Because this issue is so critical to an Effective Compliance Program, Wild Consulting has a free, comprehensive policy and procedure available on our website at Overpayments – Wild Consulting, Inc., Your Partner in Healthcare Compliance

 

And remember:

Only the government can pay you wrong, and then fine you for paying you wrong.