Many providers looked to alternative methods of treating patients and achieving outcomes this past year due to the pandemic. To meet the needs of their patients and their financial obligations, many providers implemented services that were not customary to their practice, or their billing departments. As is the case for any office that begins to provide something new, there is always the potential for error in any aspect of the practice involved with the patient or claim. Therefore, I believe it is a great time to refresh providers on the procedures for reporting and returning Medicare overpayments as they are discovered moving forward.

As many of you are aware, in 2016 the Centers for Medicare and Medicaid Services (CMS) published a final rule pursuant to Section 1128J(d) of the Social Security Act (the Act), as amended by the Affordable Care Act, that requires Medicare Parts A and B health care providers to report and return overpayments 60 days after the date an overpayment is identified, or the due date of any corresponding cost report, if applicable, whichever is later. If credible information indicates that an overpayment exists, the rule requires that a reasonably diligent inquiry must be performed.

Identification of Overpayments

All providers enrolled with Medicare are required to report and return any overpayments they receive in addition to ensuring the claims they submit are accurate and appropriate at the time of submission. The rules state a provider is deemed to have “identified” an overpayment when he or she has, or should have through the exercise of reasonable diligence, determined that the provider (1) received an overpayment and (2) quantified the amount of the overpayment. “Overpayments” are defined as any fund that a provider has received or retained to which the provider, after applicable reconciliation, is not entitled, regardless of the reason, be it human or system error, fraud, or any other, and regardless of whether it was caused by or was otherwise outside the control of the provider.

How Far Must A Practice Lookback Once An Overpayment Has Been Identified?

Providers are now required to report and return all overpayments that have been identified within six (6) years of the date the overpayment was received. Be aware that once an overpayment is reported and returned the overpayment is subject to revision and reopening by a contractor.

Reporting and Returning of Overpayments

There is a 60-day bright line standard regarding the reporting and returning of overpayments. The 60-day clock begins when either the reasonable diligence is completed or on the day the provider received credible information of a potential overpayment if the provider failed to conduct reasonable diligence and the provider in fact received an overpayment. Be aware though that in the event a provider finds a single overpaid claim the 60-day clock does not begin immediately. Providers are obligated to conduct audits that accurately quantify the overpayment and determine whether there are more overpayments related to the same issue and claim type before reporting and returning the initial overpaid claim that was identified.


Following the initial discovery of an overpayment a reasonable time that has been determined to report the overpayment is eight (8) months. The eight (8) months consists of six (6) months for timely investigation into the claim and all other potential claims reasonably related, and an additional sixty (60) days for reporting and returning at the conclusion of the investigation.

Regulations & Penalties

Providers need to be aware in the case of overpayments that they are still subject to the statutory requirements found in section 1128J(d) of the Act and could face potential False Claims liability, Civil Monetary Penalties, and exclusion from federal health care programs for failure to report and return an overpayment.

As is the case with any issue healthcare providers face it is always best to consult with a healthcare attorney when facing an overpayment issue to ensure that guidance can be provided in regard to the potential False Claims, and Civil Monetary Penalties that may result from such issues.

Mr. Simpson is an attorney with the Florida Healthcare Law Firm in Delray Beach, FL.