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Medicare Overpayment & Recoupment – How to Respond to a Medicare Demand Letter

A payment made by Medicare in excess of the amount properly payable by law is an overpayment. If Medicare identifies an overpayment, it becomes a debt that you owe to the federal government. Under applicable federal law, CMS (Centers for Medicare Services) will attempt to recover the overpayment.

Once Medicare determines that you've made an overpayment, the Medicare Administrative Contractor (MAC) initiates the correction process by making an initial demand for repayment. If you practice in the state of Texas, Novitas Solutions, Inc. is your Medicare Administrative Contractor.

How Do Medicare Overpayments Happen?

Overpayments may arise out of:

  • Duplicate submission of the same service or claim;

  • Furnishing and billing for excessive or non-covered services;

  • Payment for excluded or medically unnecessary services;

  • Incorrect coding;

  • Insufficient documentation; or

  • Payment to the incorrect payee.

The best preventative measure to avoid overpayments is implementing direct and clear billing processes, airtight documentation, and procedures for identifying errors. However, it also helps to know what to watch for.

Consider These Common Reasons for Medicare Overpayment:

  • Ambulance transports. For example, there are times when Medicare will cover ambulance transports. In such instances, the transport must be from and to a Medicare-approved point of service. If not, Medicare will seek recoupment. If an ambulance transports a person from their residence and delivers them to a Medicare-approved facility, the transport may not be covered by Medicare if the individual lives outside of the Medicare-approved facilities service area and there was a closer approved Medicare facility.
  • Billing for services not delivered. The most obvious overpayment is billing for services that were not actually delivered. Recently, a pharmacy and its owner agreed to settle allegations brought by the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) for $1.3 million, in a case in which the OIG claimed the pharmacy and its owner submitted claims to Medicare Part D for brand name prescription drugs that it could not have dispensed based upon inventory records.
  • Improperly submitted claims. Recently, a physician practice providing otolaryngology services entered into a settlement with the OIG whereby the practice paid $200,630 in settlement to resolve allegations that the practice improperly submitted claims to Medicare and Texas Medicaid for hearing assessment services that were performed by unqualified technicians.

How Far Back Can Medicare Go to Recoup Payments?

Medicare contractors can review claims up to three years after the date they were filed. The look-back period for self-disclosed overpayments is six years from the date the overpayment was received. If a provider does uncover a Medicare overpayment, they must self-disclose the error within 60 days.

What to Do if You Receive a Medicare Demand Letter:

If you receive a demand letter for recovery of an overpayment, you have several options:

  • You can make an immediate payment;
  • Request immediate recoupment (give instructions to recover the overpayment from future payments);
  • Submit a rebuttal; or
  • Appeal the overpayment by requesting a redetermination.

If you choose to submit a rebuttal statement to your MAC, you must do so within 15 calendar days from the date of the demand letter. This rebuttal gives you the opportunity to explain and show proof as to why the alleged overpayment is not accurate. An attorney experienced in responding to overpayment demands and experienced in dealing with the OIG can help you prepare a credible rebuttal statement.

Requesting an Appeal to a Medicare Overpayment Decision

Alternatively, you or your Medicare audit defense lawyer can request an appeal. This is different from the rebuttal process.

There are five levels to a Medicare Part A and Part B appeals process. They are as follows:

  1. Redetermination by a MAC;
  2. Reconsideration by a Qualified Independent Contractor (QIC);
  3. Hearing by an Administrative Law Judge (ALJ) in the Office of Medicare Hearings and Appeals;
  4. Review by the Medicare Appeals Counsel; and
  5. Judicial Review in Federal District Court.

During the appeals process, CMS and its contractors are subject to certain limitations. When a valid first- or second-level appeal is received on an overpayment, CMS and MACs cannot recoup the overpayment until the decision on the redetermination and/or reconsideration is made. There are other certain applicable timetables which apply in such situations; therefore, the guidance of experienced legal counsel is important to protect your interest.

Also, it must be remembered that in the event a Medicare overpayment collection has been initiated, there will oftentimes be an investigation concurrently ongoing by the OIG for False Claims Act violations and/or fraud and abuse violations. Therefore, utilizing counsel that is familiar with each of these applicable regulations and who has had experience in dealing with the OIG and with Novitas is critical for the protection of your rights.

Contact Us: Call (713) 909-7323

Hendershot Cowart P.C., regularly defends clients in connection with Medicare recoupment claims through the appeal process and representation of clients in dealing with the OIG on False Claims Act violations and healthcare fraud and abuse investigations. To learn more, please visit our page on health care fraud.


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