New CMS Regulations on Medicare Repayment Effective 2025

A final rule on the Medicare 60-Day Repayment Rule (“60-Day Rule”) became effective on January 1, 2025.  The 60-Day Rule was enacted as a part of the Affordable Care Act (“ACA”) in 2010, requiring providers and suppliers (“Providers”) to repay Medicare and Medicaid overpayments within 60 days of identifying those overpayments.  This repayment obligation applied to any overpayment identified within six years of receipt by the Provider.  This statute required Providers to focus on repayment, since the failure to repay an overpayment was newly characterized as a false claim under the federal False Claims Act, subjecting Providers to treble damages and whistleblower liability. 

Under the ACA statute, the 60-day repayment period commenced upon “identification” of the overpayment, which might originally have been construed as “discovery” of the overpayment.  This was a concern for Providers, since many overpayment situations can be so complicated as to require review of affected patients’ medical records.  However, CMS published regulations on February 12, 2016, defining “identification” quite reasonably:

A person has identified an overpayment when the person has, or should have through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment. 

42 CFR § 401.305 (superceded 1/1/2025; emphasis added).  It was generally thought that there was no particular time limit for the Provider’s investigation to quantify the amount of the overpayment so long as the investigation proceeded with reasonable speed.  Then, following quantification, the Provider had an additional 60 days to make the repayment. 

The new regulation, published December 9, 2024, redefined “identification” altogether:

A person has identified an overpayment when the person knowingly receives or retains an overpayment. 

42 CFR § 401.305(a)(2) (effective 1/1/2025; emphasis added).  Notice that by this definition, the 60-day period commences upon receipt of the overpayment, without any allowance of time needed to calculate the amount of the overpayment. 

In addition, a reference to scienter was inserted. This refers to the culpability of the Provider’s state of mind.  Here, scienter is defined by cross-reference to the False Claims Act definition of “knowing.”  This statutory definition of “knowledge” includes actual knowledge, deliberate ignorance of the truth or falsity, or reckless disregard of the truth or falsity of a possible overpayment.  The regulatory cross-reference was carefully considered after the Supreme Court construed the definition of “knowledge” in a False Claims Act whistleblower claim, United States ex rel. Schutte v. SuperValu Inc., 598 U.S. 739 (2023).

Balancing out the lost time for quantification of the overpayment, the new 60-Day Rule allows for suspension of the 60-day period until the earlier of the date when the amount of the overpayment has been determined or 180 days after the initial identification of the overpayment.   The suspension is available only if:

1. A good faith investigation has not yet been completed to determine the existence of additional overpayments related to the initially identified overpayment, AND
2. Such a timely, good-faith investigation will be conducted.

In response to the new 60-Day Rule, Providers should take action quickly upon discovering a possible overpayment.  An investigation should be initiated promptly, with documentation to demonstrate the Provider’s good faith intention to conduct the investigation timely.  The documentation should include the rationale for the method and scope of the investigation, and the personnel chosen to carry it out.  The investigation and actual repayment must be completed within 180 days from the identification of the overpayment. 

In addition to the new regulations described above for Medicare Parts A and B, new regulations have gone into effect for Parts C and D as well, generally along the same lines.