HHS may require doctors to keep Medicare financial records for 10 years

Physicians would have 60 days to return any overpayments discovered within that time period.

By Charles Fiegl amednews staff — Posted Feb. 27, 2012

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Physicians would be given two months to return any money flagged as a Medicare overpayment from as far back as 10 years under a proposed federal rule.

The Dept. of Health and Human Services unveiled new plans to collect overpayments within 60 days of discovery during a Feb. 14 briefing on 2011 federal fraud recoveries. HHS Secretary Kathleen Sebelius and U.S. Attorney General Eric Holder released a report to Congress detailing $4.1 billion in fraud prevention and other health care recoveries by federal agencies last year.

"Fighting fraud is one of our top priorities, and we have recovered an unprecedented number of taxpayer dollars," Sebelius said. "Our efforts strengthen the integrity of our health care programs."

The proposed rule to mandate the 60-day improper pay recovery period originates from the 2010 health system reform law. The regulation would penalize practices under the False Claims Act for failing to return overpayments quickly enough and would set a look-back period that was much longer than anticipated, said Thomas W. Beimers. He's special counsel for Faegre Baker Daniels in Minneapolis and a former prosecutor for the Justice Dept. Medicare Fraud Strike Force.

The proposal would require practices or auditors to report any overpayments that are discovered within 10 years of the date that the funds were received. The Centers for Medicare & Medicaid Services said the time frame is reasonable, allowing health professionals to close their financial books after the time period expires and not have ongoing liability. "We also believe that the length of the look-back period is long enough to sufficiently further our interest in ensuring that overpayments are timely returned to the Medicare Trust Funds," the agency wrote.

Beimers said a four-year look-back period generally is considered to be appropriate. Businesses close, employees leave and people would have a difficult time recalling the specifics of a situation 10 years ago, he said.

Attorney Lawrence W. Vernaglia, a partner with Foley & Lardner in Boston, said the 10-year window is unreasonable. Physician offices that identify a systemic problem in billing would be required to look through a full decade of records. Ordinarily, offices can go back only about six years, he said.

The proposed rule would allow physicians to make inquiries into questions about claims or bills before the official 60-day repayment clock starts, Vernaglia said. This gives a practice the opportunity to investigate an allegation and define the scope of an inquiry, which can take months to complete. But failing to start an inquiry when warranted, or deliberately dragging out an investigation, would be considered reckless disregard under the federal regulation.

"There is an art to establishing an overpayment review work plan," he said. "But diligence and thoughtfulness at these early stages will protect the physician practice."

A variety of scenarios can result in physicians or other health professionals receiving payment in excess to what is owed. The 60-day repayment countdown would begin once an overpayment is identified internally, perhaps by a physician office biller reviewing payment records, or once an outside auditor or contractor reports an overpayment to the recipient.

"That will ensure, for example, if providers receive two payments for the same claim they act quickly to return the extra money," Sebelius said.

Physicians and other health professionals could face monetary fines and exclusion from federal health programs for failing to report and return an overpayment, the proposed rule states. Cases also could be referred to the HHS Office of Inspector General for investigation of possible anti-kickback statute violations.

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Health care fraud recoveries set record

Anti-fraud activities returned $4.1 billion in health care funding to federal coffers in 2011. The total was the largest annual sum recovered from those attempting to defraud seniors and taxpayers, and from others receiving improper payments. The figures break down this way:

Treasury Dept.

  • $1.2 billion from criminal fines
  • $578.4 million from penalties and multiple damages
  • $22.4 million from asset forfeitures
  • $16.5 million from civil monetary penalties

Centers for Medicare & Medicaid Services

  • $660.5 million from restitution and compensatory damages
  • $74 million from audit disallowances recovered

Other agencies (restitution and compensatory damages)

  • $600 million from the federal share of Medicaid
  • $419.5 million from funds awarded to those filing suits on behalf of government
  • $354.1 million from OIG audits from Medicaid
  • $74.4 million from Tricare
  • $53 million from the Office of Personnel Management
  • $20.2 million from the Dept. of Veterans Affairs
  • $8.9 million from HHS Office of Inspector General audits
  • $11.3 million from miscellaneous agencies

Source: Dept. of Health and Human Services and Dept. of Justice Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2011, February (link)

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