60-Day Rule Policy Update
As of January 1, 2025, the Centers for Medicare and Medicaid Services (CMS) implemented final rule policy to the Affordable Care Act’s “60-day rule” which significantly changes how healthcare providers must report and return Medicare and Medicaid overpayments.
The policy now allows for a temporary suspension of the 60-day deadline to report and return overpayments if a provider is conducting a timely, “good-faith investigation” into potential related overpayments. This investigation period is capped at 180 days and is essentially a “grace period” to allow time for review before returning funds. This policy update aims to provide more flexibility for healthcare providers to accurately identify and report overpayments while conducting thorough investigations.
Additionally, the update drops the “reasonable diligence” guideline defining when a provider has identified an overpayment. According to the CMS 2025 Medicare Physician Fee Schedule Final Rule, identification occurs when a provider has actual knowledge of an overpayment or acts with “reckless disregard” or “deliberate ignorance” of a potential overpayment. This new guideline aligns with language used in the False Claims Act when an overpayment is identified.
The Affordable Care Act (ACA), enacted in 2010, established the 60-day rule, which requires Medicare and Medicaid providers and suppliers, as well as Medicare Advantage and Medicare Part D Drug Plans to report and return overpayments within 60 days of identifying them. Non-compliance with this rule has significant consequences.
Providers and organizations that fail to adhere to the 60-day deadline may face substantial fines under the Civil Monetary Penalties Law. Additionally, retaining an identified overpayment can now trigger liability under the False Claims Act, which may result in further penalties for each claim and potential treble (triple) damages.
