The Centers for Medicare & Medicaid Services has proposed to redefine what it means to “identify” a Medicare overpayment. The proposal would remove the requirement that providers, suppliers, managed care organizations, and plan sponsors use “reasonable diligence” and adopts the False Claims Act’s “knowingly” standard.

• Reverses CMS’s previous position
• Provides Medicare participants more leeway in their day-to-day compliance efforts
• Does not remove the obligations to monitor reimbursement, conduct audits, and investigate credible evidence of potential overpayments

The Centers for Medicare & Medicaid Services (CMS) is proposing to redefine what it means to “identify” a Medicare overpayment. Buried in a late December publication, the new definition seems to be an about-face from CMS’s previous comments in rulemaking implementing the 2010 Affordable Care Act (ACA) overpayment requirement. Specifically, the proposed revisions remove the requirement that Medicare providers, suppliers, managed care organizations, and plan sponsors (“Medicare participants”) use “reasonable diligence” to identify an overpayment. CMS proposes that “[a] person has identified an overpayment when the person knowingly receives or retains an overpayment,” with “knowingly” having the same meaning as in the False Claims Act (FCA). While this change appears to relax certain obligations to investigate suspected overpayments, the net effect on day-to-day compliance activities is likely to be minor....

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