IG Report: CMS Must Recoup Additional Medicaid Overpayments

Earlier this month CMS Office of Inspector General released a report highlighting CMS’s inability to adequately recoup over payments made to state Medicaid agencies, and by extension, Medicaid providers. The report identified $226 million in unclaimed overpayments in 11 states over the past 10 years. The report did note that CMS has successfully reclaimed nearly $1 billion in Medicaid over payments documented over the past decade.

CMS and state Medicaid agencies are required by law to pursue over payments they identify. The states included in the report released earlier this month include Indiana, Illinois, Kansas, Louisiana, Missouri, New Jersey, Oregon and Pennsylvania. Efforts are already underway to collect over payments made to Medicaid providers in Florida, New York and Massachusetts. Be on the lookout from your state Medicaid agencies of overpayment notices, with budgets remaining tight, states will look to any mechanism possible to recoup these over payments. Below is pertinent statutory information from CMS on state and federal requirements on identifying and recouping over payments to Medicaid providers.

Federal and State Requirements Related to Medicaid Overpayments

Under 42 CFR § 433.312, States are responsible for recovering from providers any amounts paid in excess of allowable Medicaid amounts and for refunding the Federal share to CMS. Effective March 23, 2010, States have up to 1 year from the date of discovery of an overpayment for Medicaid services to recover, or attempt to recover, the overpayment before making an adjustment to refund the Federal share. Except for over payments resulting from fraud, States must make the adjustment no later than the deadline for filing the quarterly expenditure report (Form CMS-64) for the quarter in which the 1-year period ends, regardless of whether the State recovers the overpayment.

In general, an overpayment is discovered when a State either (1) notifies a provider in writing of an overpayment and specifies a dollar amount subject to recovery or (2) initiates a formal recoupment action. Discovery may also occur when the provider initially acknowledges a specific overpaid amount in writing to the State. If a Federal review (such as an audit) indicates that a State has failed to identify an overpayment, the overpayment is considered discovered on the date the Federal official first notifies the State in writing of the overpayment and specifies a dollar amount subject to recovery.

Providers record and accumulate charges and reimbursements for services in each patient’s record of account (invoice record). Providers should reconcile invoice records with credit balances to include a review of all charges and payment records, and, if the reconciliation identifies a Medicaid overpayment, the provider should report the overpayment to the State. The State must refund the Federal share of the overpayment to CMS (the Act, § 1903(d)(2)(A), and 42 CFR pt. 433, subpart F).

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