AMARILLO, TX – Three things in life are certain—death, taxes, and changes in the healthcare regulatory requirements pertaining to DME suppliers. On July 31, 2024, CMS proposed a rule called “Medicare and Medicaid Programs; CY 2025 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; Medicare Prescription Drug Inflation Rebate Program; and Medicare Overpayments” (with comment period ending September 9, 2024). The proposed rule serves, in part, to clarify and amend the 60-Day Report and Refund Rule for Medicare overpayments (the “Proposed Rule”). Though the Proposed Rule will not remove the obligation to report and refund overpayments, it clarifies the timeline extensions that may be available for DME suppliers conducting a good faith investigation of the cause, and total value, of the Medicare overpayments it received.

Overview of Proposed Rule
The 60-Day Report and Refund Rule is the common name for the obligation to report and refund overpayments, as required by § 401.305(b)(1) of the Public Health Act (Title 42 of the United States Code). The Proposed Rule would clarify and amend the 60-Day Report and Refund Rule in two primary ways: (i) through reference to an existing but revised § 401.305(b)(2); and (ii) through reference to a newly proposed § 401.305(b)(3).

•  401.305(b)(2)

This section describes the timeline in which a DME supplier must report overpayments to CMS in order to comply with the 60-Day Report and Refund Rule. The current timeline under this regulation is dependent on the specific circumstances of the overpayment and underlying facts, but generally, overpayments must be reported no later than sixty (60) days after the overpayment was identified or the date any corresponding cost report is due, if applicable. In certain circumstances, this deadline for returning a reported overpayment may be suspended. Specifically, the deadline may be suspended upon OIG or CMS, acknowledgement of receipt of a submission to the OIG Self-Disclosure Protocol or the CMS Voluntary Self-Referral Disclosure Protocol, respectively, or under other specified conditions if a DME supplier requests an extended repayment schedule (as permitted and defined by § 401.603).

The Proposed Rule would add introductory language to acknowledge that a suspension of the deadline to report and repay may be applicable to the circumstances described in the proposed § 401.305(b)(3). In effect, the proposed revision to this section is intended to expand the circumstances under which the strict 60-day timeline may be suspended, by and through reference to a newly proposed § 401.305(b)(3).

•  401.305(b)(3)

The Proposed Rule, if implemented, “would specify the circumstances under which the deadline for reporting and returning overpayments would be suspended to allow time for providers to investigate and calculate overpayments.” Specifically, under proposed § 401.305(b)(3)(i), the obligation to report and repay may be suspending so long as the two following conditions are satisfied:

• “A [DME supplier] has identified an overpayment but has not yet completed a good-faith investigation to determine the existence of related overpayments that may arise from the same or similar cause or reason as the initially identified overpayment; “and
• “The [DME supplier] conducts a timely, good-faith investigation to determine whether related overpayments exist.”

Under the proposed § 401.305(b)(3)(ii)), if the conditions specified under § 401.305(b)(3)(i) are satisfied, “the deadline for reporting and returning the initially identified overpayment and related overpayments that arise from the same or similar cause or reason as the initially identified overpayment will remain suspended until the earlier of the date that:

• “The investigation of related overpayments has concluded and the aggregate amount of the initially identified overpayments and related overpayments is calculated; “OR
• “The date that is 180 days after the date on which the initial identified overpayment was identified.”

In summary, if the conditions of proposed § 401.305(b)(3)(i) are met, the initial overpayment, and all overpayments discovered as a result of the good faith investigation “must be reported and returned within 60 days after either completion of the investigation or day 180, whichever is earlier.” Lastly, the suspension of the obligation to report and repay provided under this proposed § 401.305(b)(3) does not necessarily limit a suspension of the obligation as may be permitted when the DME supplier submits an OIG Self-Disclosure Protocol or CMS Voluntary Self-Referral Disclosure Protocol, as an extension based on those circumstances may nonetheless be available under § 401.305(b)(2), both prior to and after implementation of the Proposed Rule.

Understanding the Proposed Rule
There are two primary takeaways DME suppliers should keep in mind if the Proposed Rule is implemented: (i) the Proposed Rule specifies a 180-day investigation period, but this investigation period is not an “addition” to the existing 60-day period; and (ii) in the event a DME supplier investigates an overpayment, the investigation must be conducted timely and in good faith.

180-Day Investigation Period’s Impact of Deadline to Submit Report and Refund
As stated above, so long as a DME supplier is actively conducting a good faith, timely investigation to identify overpayments arising from a similar cause or reason of an initially identified overpayment, the report and refund is due only after the investigation has concluded or 180 days after the initial overpayment was identified, whichever is earlier. Therefore, the 180-day period is not a suspension period, but rather serves an absolute, hard deadline by which DME suppliers must report and refund overpayments if an internal investigation is conducted regarding an identified overpayment. To help DME suppliers understand the nuance here, see the hypothetical examples below:

Example 1: Supplier A, a DME supplier, identifies an overpayment related to its failure to secure a required document from the prescriber. The date of discovery is day 1. Supplier A is a nationwide DME supplier, and to ensure that no other overpayments have occurred based on its failure to secure the document, it begins its internal investigation on day 1. Supplier A works diligently to review its records and expends considerable time and resources to ensure a timely review, but due to its size, it concludes its investigation on day 179. In order to comply with the Proposed Rule, Supplier A would be obligated to report and return all identified overpayments no later than day 180 in order to comply with the Proposed Rule.

Example 2: Supplier B, a DME supplier, identifies an overpayment related to its failure to secure a document from the prescriber. The date of discovery is day 1. Supplier B is a mid-size DME supplier, and to ensure that no other overpayments have occurred based on its failure to secure the document, it begins its internal investigation on day 1. Supplier B works diligently to review its records and expends considerable time and resources to ensure a timely review. The investigation concludes on day 45. In order to comply with the Proposed Rule, Supplier B would be obligated to report and return all identified overpayments no later than day 105 in order to comply with the Proposed Rule, because day 105 is 60-days from the conclusion of the investigation, and day 105 falls at an earlier date than day 180.

Timely and Good Faith Investigation: Importance of Documentation and Issue Segregation
To qualify for a suspension of the 60-Day Report and Refund obligation under proposed § 401.305(b)(3)(i), a DME supplier must be “conduct[ing] a timely, good-faith investigation to determine whether related overpayments exist.” However, the Proposed Rule does define or describe exactly what “timely” or “good faith” mean in this context. But this language is utilized in similar contexts to ensure DME suppliers are not dragging their feet, wasting time, or improperly delaying payment. To best mitigate the risk of CMS taking issue with the timeliness and earnestness of an internal investigation, DME suppliers should carefully document each aspect of the investigation, including the initial date of discovery and the date the investigation was completed, as well as the personnel and resources it dedicates to the investigation.

Additionally, the proposed § 401.305(b)(3)(i) allows an investigation period for related overpayments, meaning overpayments that “may arise from the same or similar cause or reason as the initially identified overpayment.” Because of this language, DME suppliers should take caution against repaying and reporting all overpayments under one umbrella report, as the suspension described under the Proposed Rule is only applicable to overpayments with the same or similar cause or reason. To better understand this issue, consider the hypothetical example below:

Example: On day 1, Supplier C, a DME supplier, discovers an overpayment based on its failure to secure a required document (the “Documentation Issue”). Under the Proposed Rule, Supplier C may conduct a timely, good faith investigation to determine if there are overpayments related to a lack of the document… so long as Supplier C has reason to believe that it may have received overpayments for a lack of the required document for other claims it submitted to CMS. Under the Proposed Rule, Supplier C has 60 days from the end of its investigation (or 180 days from day 1, whichever is earlier) to report and return the overpayments identified. On day 160, during the course of the Documentation Issue investigation (or through other, unrelated means), Supplier C discovers overpayments due to its inaccurate enrollment disclosures to CMS (“Enrollment Issues”). These Enrollment Issue overpayments do not have the same or similar cause or reason as the Documentation Issue overpayments. Discovery of these Enrollment Issue overpayments does not extend the deadline in which Supplier C must report and repay the Documentation Issue overpayments; but, there may be a credible argument that there are independent report and repay timelines for each of these reporting obligations based on how the conditions of § 401.305(b)(3)(i) are written. As such, Supplier C may be able to argue that its deadline for reporting and returning overpayments related to Enrollment Issues is 60 days from the end of its investigation (or 180 days from day 160, whichever is earlier). Therefore, if Supplier C properly documents the date of each overpayment discovery, and the corresponding cause/reason for that overpayment, Supplier C may be entitled to suspend the report and repay obligation of the Enrollment Issue overpayments beyond the deadline to report and refund the unrelated Documentation Issue overpayments.

In summary, DME suppliers should carefully document all aspects of their investigations of overpayments in order to best comply with the requirements of the Proposed Rule.

Conclusion
The regulatory environment for DME suppliers is ever-changing, but DME suppliers are responsible for adhering to the changes as they take effect. An understanding of the Proposed Rule, and its impact on a DME supplier’s obligations to report and refund Medicare overpayments, is paramount not only for the purpose of allowing a DME supplier to maintain its enrollments and CMS provider agreements, but also to mitigate the risk of fraud, waste, and abuse allegations and enforcement.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].

Kianna L. Sitarski, JD, is an attorney with the Health Care Group at Brown & Fortunato, PC, a law firm based in Texas with a national health care practice. She represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. Ms. Sitarski can be reached at (972) 684-5788 or [email protected].