The Centers for Medicare & Medicaid Services Clarifies the 60 Day Overpayment Rule With Recent Regulation

Medicare Overpayment Rule

An investigation relating to Medicare overpayments may be costly, time consuming, and result in an outcome that can severely damage your practice. It is very important to report overpayments promptly, and recent rules provide clarity to those that discover that they have been over paid by the Government.

While the Centers for Medicare & Medicaid Services (CMS) finalized rules requiring the return of overpayments under Medicare Parts A and B in 2014, a similar rule pertaining to Parts C and D had not been issued until early 2016.

In February of this year, CMS finalized rules and provided clarification regarding overpayments. Section 1128J (d provides that if a person receives an overpayment, that person must report and return the overpayment and notify the agency or contractor in writing of the returned overpayment and the reason for the return.

The statute further defines a "person" as any of the following:

  • A provider of services
  • A supplier
  • A Medicaid managed care organization
  • A Medicare Advantage organization
  • A PDP sponsor

Overpayments must be returned no later than 60 days after the overpayment was identified or the date any corresponding cost is due if applicable. Previously, there had been uncertainty as to when exactly the clock begins to tick on the 60 day timeline, however, this new rule appears to clear up at least some ambiguity.


With the new rule, CMS intends to clarify the meaning of overpayment identification, the lookback period, and the methods by which the overpayment is to be returned. The Social Security Act does not define the meaning of "identification" but the new CMS regulation provides that a person has identified the overpayment when the person has or should have quantified the amount of the overpayment through reasonable diligence.

Additionally, the rule provides that a provider or supplier is not responsible for overpayments made if they were made 6 or more years ago. This rule is put in place so as not to put an undue burden or additional unreasonable costs on the supplier or provider.


Violation of the new rule and the laws it applies to can result in liability under the False Claims Act (FCA) and Civil Monetary Penalties Law (CMPL). Penalties under the FCA include up to $11,000 in fines for each false claim and up to three times the amount of damages claimed by the government. Under the CMPL, a supplier or provider may be liable for up to $50,000 for each false statement.

In addition to the statutory penalties, providers or suppliers found to be in violation of the overpayment rule may be excluded from federal healthcare programs in the future.


As of February of this year, we now have clarification on Medicare Parts A, B, C and D; however, it should be noted that we still await final rules on Medicaid. Although the new rule provides clarification, if you believe you have been overpaid you must adhere to the complicated notice requirements found in the rule and, if you are investigated for violation of the overpayment rule, you may face serious consequences. Levy Pruett Cullen is dedicated to helping you defend your professional license in both civil and criminal investigations.