Medicare Overpayment Appeals

Fuerst Ittleman David & Joseph’s health care practice group has extensive experience in representing clients throughout the Medicare overpayment appeals process.

A Medicare overpayment is a payment which the Centers for Medicare & Medicaid Services (CMS) alleges that a Medicare supplier or provider has received in excess of amounts due and payable under the Medicare Act and its applicable regulation. Once CMS has identified an overpayment, the amount of overpayment is considered a debt owed by the provider/supplier to the federal government.

Identification of Overpayments

Provider and supplier overpayments are often identified through post-payment audits conducted by a Recovery Audit Contractor (RAC) as part of CMS’s Recovery Audit Program.

As described by CMS, “[t]he Recovery Audit Program’s mission is to identify and correct Medicare improper payments through efficient detection and collection of overpayments made on claims of health care services provided to Medicare beneficiaries. . . .” Overpayments may also be identified by Zone Program Integrity Contractors (ZPIC) audits.

Upon identification of an overpayment, the Medicare Administrative Contractor will commence the overpayment recovery process. The overpayment recovery process is typically commenced by the issuance of a notice of overpayment and initial demand letter for repayment by the MAC. If the contractor does not receive payment in full within 40 calendar days after the date of the first demand letter, the contractor will begin recoupment. During recoupment, CMS recovers the overpayment amount owed from current Medicare payments due, and future claims made by the provider until such time that the overpayment is recovered in full. All Medicare payment ceases until the overpayment is satisfied.

However, a provider or supplier may avoid recoupment if it acts quickly to assert its administrative appeals rights.

Appeal Rights for Providers

The Medicare and Social Security Acts set forth a system of administrative appeals, which a provider must use should it disagree with a coverage determination of the secretary. The Medicare overpayment appeals process consists of five stages that can be summarized as follows:

First, the contractor issues an initial determination as to payment, including, but not limited to, whether an individual is entitled to benefits and the amount of benefits available (42 U.S.C. § 1395ff(a); 42 C.F.R. §§ 405.920, 405.924). A provider who is dissatisfied with the initial determination may request that the contractor perform a redetermination within 120 days of receiving the notice of overpayment (42 U.S.C. § 1395ff(b); 42 C.F.R. § 405.940). The provider can prevent recoupment from occurring if the contractor receives a request for redetermination within 30 days of the notice of overpayment. However, it should be noted that although the recoupment process will begin, should a request for redetermination not be received within 30 days, Medicare will cease recoupment efforts at whatever point that a redetermination request is received, but Medicare may not refund any recoupment already taken until such time that a provider establishes that the alleged overpayment was incorrect.

During the redetermination stage, the contractor will conduct an independent review of the initial determination (42 C.F.R. § 405.948). After reviewing the evidence and findings upon which the initial determination was based, as well as any additional evidence submitted by the parties or that the contractor obtains on its own, the contractor renders a decision affirming or reversing, in whole or in part, the revised initial determination (42 C.F.R. §§ 405.948, 405.954). Should the contractor affirm the original overpayment determination, recoupment will commence on the 61st day following the redetermination decision. However, Medicare will again stop recoupment following an unfavorable or partially favorable, redetermination if a provider files for reconsideration (42 C.F.R. § 405.379).

A party to a redetermination who is dissatisfied may request reconsideration by a Qualified Independent Contractor (QIC) within 180 days of the redetermination. A reconsideration consists of an independent, on the record review of an initial determination, which includes the redetermination and all issues related to the payment of a claim (42 U.S.C. § 1395ff(c); 42 C.F.R. §§ 405.960; 405.968). Upon receipt of a timely and valid request for a reconsideration of an overpayment, the Medicare contractor shall cease recoupment of the overpayment. If recoupment has not yet commenced, the contractor is prohibited from initiating recoupment until the QIC has rendered a decision. 

A party may appeal an adverse reconsideration to an Administrative Law Judge (ALJ), who holds an evidentiary hearing at which the provider may present testimony to support its claim (42 U.S.C. § 1395ff(b)(1); 42 C.F.R. §§ 405.1000, 405.1002). A party must file its request for administrative hearing, in writing, within 60 days of receipt of an unfavorable, or partially favorable, reconsideration. Medicare ALJ’s are within the Office of Medicare Hearings and Appeals, (OMHA), which is part of HHS, but is not a component of CMS. CMS or its contractors may, but are not required to, participate in the ALJ hearing. The ALJ considers “all the issues brought out in the initial determination, redetermination, or reconsideration,” according to 42 C.F.R. § 405.1032(a). The ALJ may consider a “new issue” if the issue “(i) could have material impact on the claim or claims that are the subject of the request for hearing; and (ii) is permissible under the rules governing reopening of determinations and decisions (42 C.F.R. §§ 405.980, 405.1032(b)).

Parties dissatisfied with an ALJ’s decision may request the Medicare Appeals Council (MAC) to review the ALJ’s decision, states 42 U.S.C. § 1935ff(d)(2); 42 C.F.R. § 405.1100. The MAC conducts a de novo review of the ALJ’s decision considering all the evidence of record and may adopt, modify, or reverse the ALJ’s decision or remand the case to an ALJ for further proceedings (42 C.F.R. §§ 405.1100-405.1128). The decision of the MAC constitutes the final decision of the secretary, according to 42 C.F.R. § 405.1130. Finally, a party dissatisfied with the secretary’s final decision may seek judicial review by commencing a civil action in federal district court (42 U.S.C. §§ 405(g), 1395ff(b)(1)(A); 42 C.F.R. §§ 405.1130, 405.1136).

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