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April 4, 2012

Self-Disclosure and Compliance

Federal and state regulatory agencies continue to place great emphasis on the responsibility of health care providers to self-disclose Medicare and Medicaid overpayments as part of a provider's overall compliance process. This Legal Alert provides an update and overview regarding recent initiatives and provider responsibilities in this area.


CMS issued proposed federal regulations in February 2012, requiring providers and suppliers who receive funds under the Medicare program to report and return overpayments by the later of 60 days after the date on which the overpayment was identified by the provider or the date when any corresponding cost report is due (if applicable). The proposed rule implements and seeks to clarify provisions contained in the federal Affordable Care Act (ACA).

Under the proposed rule, an overpayment is identified when a person has "actual knowledge of the existence of an overpayment or acts in reckless disregard or deliberate ignorance of the overpayment." The 60-day period does not commence until after the provider has an opportunity to undertake a reasonable inquiry into the basis of the potential overpayment.

Additionally, the proposed rule expands the "look-back period" for overpayments to ten years. This longer period would create a significantly increased liability for providers.

In the proposed rule, CMS defines overpayments as any funds that a person receives or retains under the Medicare program for which "after applicable reconciliation" such person is not entitled. Examples of overpayments would be payments for non-covered services and payments in excess of allowable amounts. Reporting and returning the overpayment tolls the 60-day period and is achieved by the provider submitting a self-disclosure to either the HHS OIG or to CMS.

This proposed rule seeks to clarify the existing statutory requirement under the ACA to report and refund Medicare overpayments within 60 days. This statutory responsibility is not deferred until these regulations are finalized. Under current federal law, including the False Claims Act, providers face penalties (including civil monetary penalties and exclusion) if they fail to promptly report and refund Medicare overpayments. Comments regarding the proposed regulation are due by April 16, 2012 and it is expected that CMS will finalize this regulation in 2012.


The website of the New York State Office of Medicaid Inspector General (OMIG) provides for a detailed overview of Medicaid self-disclosure requirements ( The position of the OMIG with regards to the Medicaid "look-back period," as currently stated on its website, is that "OMIG will not require . . . providers to look back more than six years from the date of disclosure unless the disclosure involves a base year cost report, or the OMIG determines that there is a basis to suspect fraud." Medicaid overpayments continue to be required to be reported and refunded by providers within 60 days from the date of discovery. A self-disclosure form for reporting overpayments to the OMIG is available on the OMIG website as is guidance regarding the self-disclosure process.

Generally, in reporting an overpayment, the provider will be required to state to the OMIG:

  • the time period of the payments at issue;
  • services provided and nature of the improper payment;
  • how the overpayment was identified;
  • relevant facts and regulations (if known) including the total amount billed and the amount of the overpayment (with an attached CD containing an Excel file of the overpayment claims);
  • personnel involved in causing the overpayment, discovering the overpayment and in rectifying the problem;
  • identification of a contact person;
  • procedures employed to prevent a re-occurrence of the overpayment; and
  • attestation of accuracy and completeness of the review.

As in the case of federal requirements, a failure by a provider to timely comply with state self-disclosure requirements can subject the provider to sanctions such as exclusion, penalties and interest, in addition to being required to repay the amount of the overpayment. We will apprise you in future Legal Alerts should OMIG policy regarding self-disclosure change or if new guidance is provided.


As we have advised in previous Legal Alerts, aside from being a statutory requirement, federal and state regulatory agencies have placed great importance on health care providers having in place an effective compliance plan. The OMIG views a provider's responsibility to disclose and correct the causes of Medicaid overpayments as an integral part of a provider's compliance plan. The OMIG has begun its process of conducting on-site reviews of provider compliance plans and has the authority to take appropriate action (including exclusion or termination of enrollment) against providers who do not have an effective plan in operation. The OMIG during its "focused review" of provider compliance plans may also request that a provider complete a Compliance Program Assessment Tool. This document is available on the OMIG website and follows the statutory requirements for compliance plans but also includes some items that OMIG would consider "best practice" and can enable providers to perform a self-review of their compliance program.

Issues regarding compliance and self-disclosure can be extremely complicated. In the area of self-disclosure, issues such as whether a particular claim (or claims) is an overpayment and when the 60-day period for self-disclosure begins to run can "turn" on facts that a provider may not have identified or believes to be insignificant. Should you have questions or concerns regarding self-disclosure or compliance requirements, we urge you to seek advice of counsel given the ramifications of this issue and the recent commencement of compliance review proceedings headed up by the OMIG's Compliance Bureau. Compliance is not just an issue for medical providers and is likewise becoming an increasingly important issue for county and school based clients (school districts) which submit Medicaid claims for payment in the area of school-based medical services. We remind you of the requirement (and quite frankly the need) to have in place an effective Medicaid compliance plan. Should you have issues in this area, feel free to contact Hiscock & Barclay's compliance team to find out what is required and how you can access the team's depth of experience and knowledge in your provider segment.

Robert Tengeler is Of Counsel to Hiscock & Barclay and a former New York State Assistant Medicaid Inspector General. During his State service, Mr. Tengeler supervised the conducting of Medicaid audits and investigations and drafted many program integrity-related laws and regulations regarding health care providers including school districts, counties, physicians, nursing homes and pharmacies. He can be contacted at 518-331-3757 or at


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