The 60 Day Rule: The Clock is Ticking
In an opinion sure to alarm health care providers across the country, the United States District Court for the Southern District of New York held that an overpayment is “identified” and the Affordable Care Act’s 60 day clock begins ticking “when a provider is put on notice of a potential overpayment.” In so doing, the court rejected the health system’s argument that the clock only starts ticking “when an overpayment is conclusively ascertained.” 
The complaint alleges that three New York hospitals erroneously billed Medicaid after having already been paid in full for the services provided. The hospitals were informed of the error in September of 2010 and began an investigation. The investigation soon identified potential overpayments, but the hospitals took several years to refund the money. A former employee, who had been part of the investigation, subsequently filed a suit alleging the hospitals had violated the False Claims Act (FCA) by failing to make repayment within 60 days.
The court’s decision is the first to grapple with what it means to “identify” an overpayment under the 60 day rule. Since the term is not defined in the statute, the court applied the canons of statutory construction to determine that: “the sixty day clock begins ticking when a provider is put on notice of a potential overpayment….” The court recognized that such an interpretation “would impose a stringent-and, in certain cases, potentially unworkable-burden” but felt an interpretation that a refund was only due after a health care provider determined exactly how much was owed would both lead to absurd results and be inconsistent with statutory intent.
- Providers should act “with reasonable haste” when they are put on notice of even a potential overpayment.
- Providers should review their compliance policies and procedures and revise them to ensure overpayments are reported and refunded within 60 days even when the exact amount of the overpayment is unknown.
- Providers should thoroughly document their efforts to investigate potential overpayments and document reasons potential overpayments were not reported and refunded within 60 days.
- Providers should continue to look for Centers for Medicare & Medicaid Services to issue a final rule on this issue, monitor other FCA cases, and work with experienced compliance counsel as part of an ongoing process to address the many difficult issues raised by the 60 day rule.
- Somewhat reassuring is the court’s insistence that prosecutors will exercise discretion where providers are working with “reasonable haste” to investigate, refund and repay overpayments.
Miller Johnson will continue to monitor legal developments. For more information, please contact Timothy Gutwald at firstname.lastname@example.org or any member of Miller Johnson’s Employment-Health Care or Heath Care Provider practice groups.
 United States ex rel. Kane v. Healthfirst, Inc., et al, No. 1:11-cv-02325-ER (S.D.N.Y) (Aug. 3, 2015)