The Affordable Care Act (ACA) creates a 60‑day window to report and return overpayments from Medicare or Medicaid after the date on which the overpayments were identified. If the overpayments are not returned within 60 days, then they can become false claims. Though this has been the law since 2010, we are just now seeing how this plays out and how it may have a significant impact on OIG exclusion violations.
I. Recent DOJ Action
In United States ex rel. Kane v. Healthfirst, Inc., et al., Healthfirst is alleged to have violated the False Claims Act (FCA) because it did not fulfill its repayment obligation until nearly two years after it was notified about the potential overpayments. Ruling on Healthfirst’s Motion to Dismiss, the court considered the meaning of “identify” as it is used in the ACA. The ACA left ambiguity regarding when exactly the 60-day clock begins to run. The court held that an overpayment is identified at the moment a provider is “put on notice of a potential overpayment,” and not when the full extent of an overpayment is “conclusively ascertained.” As such, even though the hospital has repaid the money, it is potentially liable under the FCA.
The same day the court issued this important order, the U.S. Attorney’s Office in Georgia announced the first settlement under the FCA for the retention of overpayments in the form of credit balances. In that case, according to the press release, the provider paid $6.88 million because it simply reallocated overpayments it received into its revenue instead of “actively investigat[ing]” and promptly returning them to Medicare and Medicaid.
II. How this Impacts OIG Exclusion Violations
It is clear that DOJ intends to pursue overpayment cases when it can clearly establish a date of “notice,” and a long period of inaction that follows. This adds an additional risk for those who employ or contract with excluded persons because a provider is clearly on notice that they are in receipt of overpayments after determining that they have employed or contracted with an excluded person. Now a provider may not only be liable for Civil Monetary Penalties of up to $10,000 for each item or service provided directly or indirectly by an excluded person and an assessment of up to three times the amount claimed for the exclusion violation, but they may face additional FCA exposure of treble damages and penalties of $5,500 to $11,000 if they have notice of an excluded employee or contractor and don’t take action within 60 days of that notice!
III. Final Thoughts
Our mantra is that all providers should screen all employees and vendors against all Federal and state lists monthly. By conducting monthly screening, providers would likely avoid receiving overpayments related to OIG exclusion violations in the first place. Furthermore, monthly screening will reduce the risk of false claims or overpayment by DOJ on that basis.
Also read more on OIG Exclusion
Ashley Hudson, Associate Attorney at Liles Parker, LLP and former Chief Operating Officer for Exclusion Screening, LLC, is the author of this article. Feel free to contact us at 1-800-294-0952 or online for a free consultation.