How to Deal with Overpayment Recoupment by CMS

Overpayment recoupment by CMS (Centers for Medicare & Medicaid) can happen, but recently there have been a few cases in the news involving large amounts owed by home health agencies (HHAs), bringing this issue to the forefront.  These types of large monetary errors can be devastating to a home health agency.  In this blog, we will discuss the issue of overpayment recoupment and the different options to handle it effectively.

Defining Overpayment

A Medicare overpayment is defined as a payment an agency receives that is in excess of the amount that is payable under Medicare statutes and regulations.  Common occurrences, which can be attributed to overpayment include:

  • Insufficient documentation
  • Medical necessity errors
  • Duplicate payments
  • Administrative and processing errors

This overpayment is considered a debt that the HHA owes to the Federal government.  The collection process begins once Medicare identifies an overpayment of $25 or more.  This process is initiated by an agency’s servicing Medicare Administrative Contractor (MAC), beginning with a letter requesting payment, otherwise, known as the Demand Letter.  If the HHA identifies an overpayment within the “look back period”, which is within six years of the overpayment, it must be reported and returned.  The overpayment must be returned within 60 days of its identification date or the date any corresponding cost report is due, if applicable.  The later date of these two conditions should be followed.

The Demand Letter

The Demand Letter received by a HHA covers the following stipulations:

  • The reason for the overpayment
  • Interest terms, which include accruement if not repaid in full within 30 days
  • Options to request immediate recoupment
  • Options to request an Extended Repayment Schedule (ERS)
  • Rebuttal rights
  • Appeal rights

Demand Letter Responses – Payment Options

There are several payment options a HHA can consider when responding to a Demand Letter, which include:

  • Immediate Payment – This is the most straight forward option with the HHA just submitting payment as stated per the Demand Letter.
  • Recoupment – There are two types of recoupment – Immediate Recoupment and Standard Recoupment. Immediate Recoupment involves Medicare recovering an overpayment by offsetting future payments.  This type of recoupment can be partial or complete.  The MAC can begin it immediately per the instructions in the Demand Letter.  Unless otherwise specified, Immediate Recoupment will apply to all current and future debts.  With Standard Recoupment, the MAC automatically begins recoupment according to the Overpayment Debt Activities chart.  Interest accrues if the debt becomes delinquent.
  • ERS – If a HHA is unable to pay the overpayment in full in the required timeframe, the instructions in the Demand Letter, requesting an ERS from the MAC must be followed.

Other Options to Consider

Paying back an overpayment may not always be the answer for a HHA.  Below are other ways to address an overpayment by CMS:

  • Rebuttal – Within 15 days of the Demand Letter, a HHA can submit a rebuttal to its MAC. In the rebuttal, the HHA should explain or provide evidence why the MAC should not initiate recoupment.  A rebuttal is not considered an appeal; therefore, recoupment activities do not cease, but the MAC will evaluate this information.
  • Appeal – If a HHA disagrees with the overpayment decision, an appeal can be filed. The process for Medicare Part A and B appeal involves five levels:
  1. Redetermination by a MAC – It requests a second look at the claim by an employee who was not involved with the initial determination
  2. Reconsideration by a Qualified Independent Contractor (QIC)
  3. Hearing by an Administrative Law Judge (ALJ) or Review by an Attorney Adjudicator at the Office of Medicare Hearings and Appeals
  4. Review by the Medicare Appeals Council
  5. Judicial Review in U.S. District Court

Work with 5 Star Today to Avoid Overpayment Recoupment Issues Tomorrow

The team at 5 Star Consultants offers extensive experience in all facets of home healthcare.  Our experts work with HHA staff to ensure insufficient documentation and administrative and processing errors do not turn into bigger issues, such as overpayment recoupment by CMS.  If you would like to discuss our services and how they can help your HHA, please contact us at [email protected] or 866-428-4040.

Source: CMS Medicare Learning Network, “Medicare Overpayments”, October 2017

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