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What are Medicare Overpayments and How to Deal With Them

When dealing with large organizations and invoices, it’s not uncommon that issues will occur with payments as they’re processed. Government organizations, nonprofits, and businesses of all sizes deal with these issues. Medicare is no different, and healthcare providers who accept Medicare will potentially have to deal with overpayments.

What are Medicare Overpayments?

A Medicare overpayment happens when the Centers for Medicare & Medicaid Services (CMS) makes a payment to a provider that’s in excess of the amount due and properly payable under the Medicare statute and regulations. Known overpayments are seen as debts owed to the federal government and should be returned to the federal government.

Overpayments can be caused by:

  • incorrect coding
  • insufficient documentation
  • medical necessity errors
  • processing and administrative errors

Are You Responsible for Returning an Overpayment?

If a provider is aware of an overpayment, they are responsible for returning the funds paid in excess. If a provider identifies instances of overpayment in your records, you can initiate a return of the overpayment. This must be done within:

  • 60 days of identifying the overpayment
  • six years from getting an overpayment, generally known as the “lookback period”
  • a corresponding cost report due date, if applicable

If a provider identifies an overpayment of $25 or more, they must initiate an overpayment return with their Medicare Administrative Contractor (MAC). When the return process is initiated with a MAC, the MAC will send a demand letter to the provider which will contain:

  • overpayment reason
  • how the overpayment was calculated
  • name and MBI of the patient involved
  • dates and types of services overpaid
  • how interest will accrue, and at what rate (if the overpayment isn’t repaid in full within 30 days)
  • extended repayment schedule (ERS)
  • the recoupment process and options (for example, when recoupment will start, the ability to request immediate recoupment, the impact of filing an appeal on recoupment)
  • rebuttal rights (if applicable)
  • administrative appeal rights
  • potential instruction to the Medicaid State Agency to withhold the federal share of any Medicaid payments until the full amount owed to Medicare is recouped

A provider can choose how to repay or respond to the overpayment. Options include:

  • make an immediate payment
  • request immediate recoupment
  • submit a rebuttal
  • appeal the overpayment by requesting a redetermination
  • request an Extended Repayment Schedule (ERS)

Can You Get In Trouble For a Medicare Overpayment?

After a provider receives a demand letter from their Medicare Administrative Contractor (MAC), if they do not pay in full, they will receive an Intent to Refer (ITR) letter within 61 to 90 days which will ask them to refund the overpayment or to enter into an Extended Repayment Schedule (ERS). If a provider doesn’t follow the options given, the debt will be sent to collections.

Speak to an Attorney About Medicare Overpayments

Whether you currently have Medicare overpayments due, are in debt collection for your Medicare overpayments, or are looking to better understand the law around Medicare, Fenton Jurkowitz Law Group can help with the next steps. For more information on how your organization can benefit from hiring an attorney to help you with Medicare overpayments, fill out our online contact form today.