Published On: Wed, Nov 23rd, 2016

How to Deal with Medicare Overpayments

As of March 14th, 2016 all healthcare providers and physicians are required by law to report and repay any Medicare overpayments within 60 days of discovering them. Any overpayment that was discovered within 6 years of the payment being received must be reported to Medicare and repaid accordingly. The new rule applies to Medicare Part A and Part B providers as well as suppliers. Medicare Part C and Part D sponsors are subject to a separate law that was previously enacted on May 23rd, 2014. In addition to becoming familiar with these fundamental laws, heeding the following four tips will help physicians and healthcare providers deal with Medicare overpayments appropriately:


  • 1. Learn How to Identify Common Causes of Overpayments


The best way to deal with overpayments is to prevent them from ever happening in the first place. Common causes of overpayments include upcoding, duplicate bills, EMR/EHR glitches or errors, redundant documentation, and improper use of modifiers. Ultimately, physicians and staff who regularly maintain and update health records or deal with billing should be thoroughly trained in these areas, and every practice and healthcare facility should have a go-to solutions provider for medical coding and billing solutions. For example, many providers rely on the services at revenuexl.com to ensure coding compliance and avoid overpayments on an ongoing basis.


  • 2. Understand What Constitutes an Overpayment


photo by photoSteve101 via Flickr

photo by photoSteve101 via Flickr

According to the Centers for Medicare and Medicaid Services (CMS), providers and suppliers are required to exercise “reasonable diligence” to ensure proactive compliance by monitoring any claims and conducting investigative activities to address any possibility of a potential overpayment. Any billing errors that did not result in an increase in reimbursement are not considered overpayments.


  • 3. Use the Reasonable Diligence Period


While the law states that all overpayments must be reported and returned within 60 days, that time frame doesn’t actually start until the reasonable diligence period (6 months) has ended, so providers actually have about 8 months from the time of the overpayment to rectify the matter. This is a general rule of thumb to go by, but CMS does make exceptions under “extraordinary circumstances.”


  • 4. Know How to Report and Refund Overpayments


While CMS gives providers a reasonable amount of time to respond, the best course of action to avoid an audit or other unnecessary hassle is to simply report and refund the overpayment as soon as it’s discovered. The amount refunded should be equal to the difference between the amount that was paid and the amount that would have been paid if the claim had been submitted correctly. The agency allows  overpayments to be returned multiple ways, including via an applicable claims adjustment, self-reported refund, or credit balance.


  • Conduct Routine Audits and Consult with Legal Counsel


It would be wise to hire a dedicated compliance specialist, auditor, or medical coder who can conduct routine audits, monitor incoming payments to spot overpayments immediately, and proactively prevent practices that might lead to non-compliance. Furthermore, you might also want to have a go-to legal expert you can consult with in case there’s ever an issue with a problematic overpayment.

Author: Joao Pedro

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