Medicare Overpayment Rule Needs Clarification

APA is asking the federal government to clarify a proposed policy for determining the method and time frame by which physicians must repay the government for overpayments they receive from the Medicare program.

In a proposed rule appearing in the Federal Register on November 27, 2006, the Centers for Medicare and Medicaid Services (CMS) modified existing regulations that govern the criteria for how the administration determines plans for physician repayment of Medicare overpayments. This includes extended repayment schedules (ERS) to lengthen the usual 30-day time frame. The final rule is expected to be released in the fall, according to CMS.

Under existing policy, CMS and its contractors “determine the frequency and amount of the installment payments based... .on the amount of the claim, the debtor's ability to pay, and the cost to CMS of administering an installment agreement,” according to the notice.

The proposed rule would implement provisions in the Medicare Modernization Act of 2003, under which a Medicare provider could be deemed to be in“ hardship” and therefore deserving of a lengthier period for repayment.

Under such a case, CMS may approve an extended repayment schedule of between six months and three years for “hardship” cases or up to five years for “extreme hardship” cases. The proposed rule also seeks to create a “fast track” for providers seeking a six-month repayment schedule, in which providers do not need to submit financial documentation.

Overpayment to physicians is not uncommon. “Generally, overpayments result when payment is made by Medicare for noncovered items or services that exceed the amount allowed by Medicare for an item or service, or when payment is made for items or services that should have been paid by another insurer,” according to the Federal Register notice.

In a January 26 letter signed by APA Medical Director James H. Scully Jr., M.D., APA asked for details and clarification about the proposed process for determining “hardship,” “extreme hardship,” and six-month-only repayment schedules.

APA also asked for a more explicit definition of what CMS considers being in “default.” APA pointed out that the proposal is “absent a definition or other criteria for what constitutes 'missing' an installment payment or making a default on the repayment plan that would trigger a penalty.”

In the Federal Register notice, CMS states that “[w]hile the statute permits us to immediately collect on an entire overpayment, if a provider or supplier misses one installment payment in any ERS..., we are proposing to impose this penalty only on the automatic six-month repayment schedules. With all other ERSs, we propose to continue to use the existing procedures that define a default of an ERS as missing two consecutive installment payments.”

APA recommended that CMS adopt a fixed numerical threshold, such as 15 percent or greater, to define and distinguish “extreme hardship” from “hardship” for ERS purposes.

APA's comment letter is posted on the APA Web site at<www.psych.org/members/download.cfm?file=1465>. The proposed rule, titled “Medicare Program; Use of Repayment Plans,” is posted at<http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/E6-19960.htm>.▪