Healthcare fraud involving Medicare and Medicaid, unfortunately, does occur, and the government utilizes its resources to combat fraud and abuse. While there is legitimate abuse, there are plenty of physicians accused of abuse who are not abusing the system at all. One claim of healthcare fraud is overpayment. This is when reimbursement is given to a provider in an amount that exceeds what the provider is legally entitled to receive under Medicare laws and regulations. While this can be fraudulent, there are often legitimate defenses for these claims. Due to the technical nature of these claims, consulting with an overpayment defense lawyer as soon as possible is highly recommended. If a physician is facing an overpayment demand, here is what to know.
Why Overpayments Occur
Overpayments occur for various reasons, often due to unintentional mistakes or administrative oversights. Common causes include insufficient documentation that does not support the services billed, errors related to medical necessity when providers submit services that fail to meet Medicare or Medicaid coverage criteria, and administrative or processing mistakes such as incorrect coding, duplicate claims, or clerical errors. For example, using outdated or inaccurate billing codes, submitting duplicate claims, or billing for services that are later deemed unnecessary can all result in improper payments. Regardless of the cause, physician practices are responsible for identifying and addressing overpayments in a timely manner to remain compliant with federal requirements.
What Overpayment Demands Are
A Medicare overpayment occurs when a provider receives funds in excess of the amount permitted under Medicare statutes and regulations. Once an overpayment is identified, providers are legally obligated to report and repay the amount, typically within 60 days. Failure to do so may result in penalties and could lead to fraud investigations. When an overpayment is identified, the excess amount is classified as a debt owed to the federal government. Federal law obligates the Centers for Medicare & Medicaid Services (CMS) to pursue recovery of all identified overpayments.
When Medicare identifies an overpayment of $25 or more, the Medicare Administrative Contractor (MAC) initiates the recovery process by issuing a formal demand letter requesting repayment. This letter informs the provider of the identified overpayment and advises that interest will accrue if the full repayment is not made within 30 days. The demand letter also outlines available options, including the possibility of immediate recoupment or the establishment of an Extended Repayment Schedule (ERS). Furthermore, it details the provider’s rights to submit a rebuttal or appeal the determination.
Consequences of Overpayment
If the overpayment is not paid in full within 30 days from the date of the initial demand letter, interest will begin to accrue starting on the 31st day. Simple interest will be charged on the outstanding principal balance of the debt from the date of the initial demand letter and for each subsequent 30-day period until the debt is fully paid. Once interest accrues and is assessed, any payments made will first be applied to the accrued interest, with the remainder applied to the principal balance.
Failing to repay overpayments can result in severe legal and financial consequences for healthcare providers. In addition to facing substantial fines, providers may be found in violation of the False Claims Act. False Claims Act violations occur when individuals or entities knowingly submit fraudulent claims or deceive the federal government to obtain improper payments or avoid repaying funds that are owed. Violators can face both civil and criminal penalties.
Moreover, noncompliance with repayment obligations may lead to exclusion from participation in Medicare and Medicaid programs, effectively barring providers from receiving payments through these federal healthcare programs. This exclusion can severely disrupt a provider’s ability to operate and serve patients who rely on these programs for coverage.
Providers who do not comply with overpayment rules risk more than just financial penalties and legal troubles; they may also suffer significant reputational damage. Noncompliance may raise concerns about the provider’s commitment to ethical billing practices and regulatory adherence, potentially impacting relationships with referral sources and contracting entities. Additionally, negative publicity or enforcement actions related to overpayment issues can harm a provider’s public image.
What Should Physicians Do When They Receive An Overpayment Demand?
Receiving an overpayment or demand letter is an unwelcome notification. It is essential not to ignore the letter, but to take immediate action.
The first thing that physicians should do upon receiving an overpayment demand is to secure the counsel of an experienced attorney specializing in overpayment demands. Early and strategic legal intervention helps protect the physician’s financial interests and reduces the risk of penalties or further enforcement actions.
Consult with an experienced attorney who specializes in healthcare overpayment demands. Engaging legal counsel early in the process ensures that the physician fully understands the implications of the demand and the best course of action to take. An experienced attorney can carefully review the demand letter, assess the accuracy of the alleged overpayment, and identify any potential errors or inaccuracies in the MAC findings.
Additionally, experienced overpayment defense lawyers can help determine whether a timely rebuttal or appeal should be filed to challenge the demand. Physicians generally have a limited window to respond with a rebuttal to the MAC, making immediate action critical. Moreover, an attorney can guide the physician through the complexities of repayment options, such as negotiating an Extended Repayment Schedule (ERS) or requesting immediate recoupment.
With the guidance of counsel, the physician should then carefully review the demand letter. The demand letter typically outlines the basis for the alleged overpayment, the amount owed, and instructions on repayment or appeal options. Physicians and their legal counsel should conduct a thorough review of the documentation, including any audit reports or findings supporting the demand.
Physicians can then decide whether to make payment, rebut, or appeal.
Can Physicians Appeal or Contest The Demand?
One resolution is simply to make a payment. If repayment is warranted or unavoidable, physicians should work with counsel to explore available repayment options. These may include immediate repayment in full or requesting an Extended Repayment Schedule (ERS) to spread the amount owed over a longer period.
Physicians have other options when they receive a demand letter. Healthcare providers have the right to appeal overpayment demands if they believe the determination is incorrect. The appeal process requires submitting supporting documentation and explanations to challenge the claim.
Physicians can submit a rebuttal or appeal in the payor reimbursement dispute. A healthcare provider has 120 days from the date of receipt of the Demand Letter to submit a request for redetermination.
Submitting A Rebuttal
A provider may submit a rebuttal to the Medicare Administrative Contractor (MAC) within 15 calendar days of the date on the demand letter. A rebuttal offers the provider an opportunity to address conflicts, highlight issues, and correct inaccurate statements contained in the demand. A healthcare attorney can assist by identifying errors in the MAC’s assertions and presenting supporting evidence to defend the provider.
Appealing an Overpayment Demand
If there is disagreement with an overpayment determination, an appeal may be filed with the Medicare Administrative Contractor (MAC) for an independent review. The initial appeal, called a redetermination, involves a qualified MAC employee conducting a thorough and impartial review of the decision. Following an unfavorable or partially favorable redetermination outcome, a second-level appeal, known as reconsideration, can be requested and will be conducted by a Qualified Independent Contractor (QIC).
The Medicare Part A and Part B appeals process consists of five levels:
- Redetermination by the Medicare Administrative Contractor (MAC)
- Reconsideration by a Qualified Independent Contractor (QIC)
- Hearing before an Administrative Law Judge (ALJ) at the Office of Medicare Hearings and Appeals
- Review by the Medicare Appeals Council
- Judicial review in Federal District Court
How Experienced Healthcare Attorneys Help With Overpayment Demands
Managing overpayment demands effectively involves both proactive and reactive legal strategies. Experienced healthcare attorneys proactively help providers reduce compliance risks by ensuring accurate billing and conducting regular audits. When overpayment claims arise, they react quickly to analyze the issues and guide clients through the resolution process to protect their interests.
Here is how an overpayment defense lawyer can help physicians:
- Advise clients on best practices for accurate coding, billing, and documentation to minimize the risk of overpayment demands and regulatory scrutiny
- Conduct regular compliance assessments and internal audits to identify potential vulnerabilities before they escalate into enforcement actions
- Explain payment policies and regulatory requirements across various reimbursement systems, enabling both the prevention of compliance risks and the swift resolution of disputes
- Guide clients through the appropriate procedures for returning identified overpayments or correcting underpayments, ensuring adherence to all applicable regulations and avoiding further liability
- Help healthcare providers and professionals navigate reimbursement issues, payor audits, recoveries, and compliance matters related to Medicare and Medicaid
- Promptly react to overpayment notices and audit findings by analyzing complex reimbursement issues and formulating effective responses
- Provide clear legal counsel on the implications of the False Claims Act and fraud and abuse laws to ensure clients understand their obligations and avoid costly penalties.
Contact An Experienced Overpayment Defense Lawyer
Receiving an overpayment demand that is extrapolated can be frightening. We are here to help you. Our healthcare law skills team knows how to navigate overpayment demands to get them drastically reduced and, in some situations, completely eliminated. Never go at these alone. These are very technical situations that can often be successfully handled with the right team in place. Get the help you need today.