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Under the Medicare program, if CMS or its contractors make a determination that an overpayment was made to a provider, the overpayment amount may be recouped from the provider. Prior to receiving an overpayment demand, providers typically receive a medical records request from a Medicare contractor. When medical records are requested from a provider, the Medicare contractor is typically reviewing the records for certain billing codes and within a certain date of service range to determine if an overpayment was made to the provider. Upon receiving a medical records request, it is advisable for providers to immediately seek counsel from an attorney. Although the timeframe for responding to medical requests can be as short as 15 days, it is important that the response be as comprehensive as possible to minimize the potential of an overpayment determination. 
 
Once the requested medical records are received by the Medicare contractor, the contractor will review the medical necessity of the claims and make a decision on a per claim basis as to whether the provider received the proper amount. The definition of medical necessity is set forth in the Medicare regulations – it is not the same as a physician’s determination of clinical necessity. If the contractor determines that an overpayment has been made, the total overpayment amount is determined through extrapolation. In very simplified terms (hey, I’m an attorney, not an accountant), if the contractor requests 100 records and of those records determines that 60 of them should not have been paid, it will then undertake a statistical extrapolation and the overpayment will be applied to 60 percent of all claims for those billing codes for that date of service range. This can, and has, resulted in extrapolating a claw-back amount of as little as, for example $8,000, into a total overpayment demand of over a million or several million dollars. This illustrates why it is critical that the initial response to the medical records request is as comprehensive as possible to limit the potential number of overpaid claims as much as possible. Bring your counsel in as early as feasible in this process. Your attorney can work with you to determine the best way to collect and submit documents and begin a review of the procedures in place. 
 
When an overpayment determination is made, the provider will receive an overpayment demand letter from the Medicare contractor. At this stage, providers should already have a lawyer involved. Depending on the amount of the alleged overpayment, a provider may also need to engage consultants to conduct a medical review of the claims and/or to challenge the contractor’s statistical extrapolation. There is a five-level appeal process to challenge Medicare overpayment demands. The first level is a Request for Redetermination. The provider has up to 120 days to submit a Request for Redetermination from the receipt of the overpayment letter, but if a response is not filed within 60 days from the receipt of the overpayment letter, then the contractor can begin to recoup the overpayment amount from the provider through suspension of payments on other claims. After a decision has been rendered on the Request for Redetermination, the second level is a Request for Reconsideration. Again, the provider must submit this Request for Reconsideration within 60 days of the receipt of the overpayment letter to prevent recoupment, but has a total of 180 days from the receipt of the overpayment letter to submit its Request for Reconsideration. The third level of review is a request for a hearing before an administrative law judge ("ALJ Hearing"). The request for an ALJ Hearing is due within 60 days from the decision on the Reconsideration. The fourth level is an appeal to the Medicare Appeals Council, which is also due within 60 days of receipt of notice of the ALJ’s decision. And the fifth level is an appeal to a U.S. District Court, which is due within 60 days of the decision from the Medicare Appeals Council.
 
As you can see, the entire process is lengthy and time consuming. To have any chance of success in lowering or completely overturning the overpayment demand, it is vitally important to involve your attorney and in some cases, appropriate consultants to assist with a medical review of the claims or a review of the contractor’s statistical extrapolation. Based on the current trends, we do not see these audits going to go away any time soon. Providers should not only be aware of the process for appeals to a Medicare overpayment demand, but should also work proactively with their regulatory counsel to ensure complete compliance in the hopes of avoiding overpayment determinations. Although not addressed in this blog post, a Medicare overpayment demand also triggers the 60 Day Rule, which requires upon credible information (information that supports a reasonable belief that an overpayment may have been received) providers to conduct their own investigations to determine if they have received an overpayment. Failure to comply with the 60 Day Rule can result in reverse False Claims liability.
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