Congress Clarifies Law on Overpayment and Refund
For some time, the law regarding what a provider was required to do in the event of a Medicare or Medicaid overpayment was unclear. The government took the position a provider was required to disclose the overpayment to the Program and refund it. But there was no statute saying precisely that.
Now, as part of the new Patient Protection and Affordable Care Act (PPACA), i.e., the recent national healthcare reform legislation, Congress has indeed created the statute to say precisely that and to require providers to refund the overpayment within 60 days of the overpayment being identified.
There are many theoretical "angels dancing on top of pins" questions that could be asked about exactly when an overpayment is "identified" and many factual situations may become complicated, but the new law makes it crystal clear that a provider may not keep a known overpayment with the intent of "settling up later," nor may a provider "turn a blind eye" and decline to investigate the facts of a potential overpayment situation.
One dilemma providers face is whether to investigate a potential overpayment through its own staff or by bringing in outside experts such as attorneys and billing and coding experts. The advantage of using a provider's own staff typically is lower investigative costs and a faster completion of the investigation. Bringing in outside experts, although more expensive, generally offers a strong statement of objectivity that may convince the government to accept the refund without further investigation. Also, an outside investigation conducted at the direction of an attorney will be protected against disclosure by the attorney-client privilege and work product doctrine. There is no easy solution. As always, "it all depends on the specific facts."
Hello,
Does the law discuss "Patient Overpayments"? For instance, if a patient over pays 1,000 and is not aware of the error can the healthcare provider keep that payment or must it be returned?
Hi Melissa--The PPACA refers to federal payments, generally Medicare or Medicaid. While I cannot give specific legal advice via this blog, I can say that non-governmental overpayments are generally a matter of contract between the patient's insurance company and the hospital. If the patient is self-insured, the patient would have a variety of theories (unjust enrichment, conversion, etc) to pursue against the hospital if the provider kept the overpayment. John