The ACA turned mistaken overpayments by intermediaries, carriers and Medicaid agencies into potential False Claims Act violations by healthcare providers when it required that an overpayment be reported and refunded within 60 days after it was “identified.”  The ACA does not define what constitutes “identification” of an overpayment, so providers have been left to wonder when the 60-day period begins to run.  CMS issued proposed regulations in February 2012, not finalized.  They say that an overpayment is identified when a person has “actual knowledge of the existence of an overpayment or acts in reckless disregard or deliberate indifference of the overpayment.”  The preamble also says the 60-day period would not begin to run until the healthcare provider had an opportunity to undertake a “reasonable inquiry” into the circumstances of the overpayment.  So what does “reasonable inquiry” mean?  Does it mean the inquiry necessary to give a healthcare provider a sneaking suspicion that an overpayment might have occurred, or does it mean a detailed investigation that positively shows an overpayment, or something in between?

The U.S. District Court for the Southern District of New York may answer that question in a qui tam lawsuit brought against Continuum Health Partners, Inc., which squarely raises the issue of when is the 60-day time period is triggered.  This case marks the DOJ’s first intervention in a qui tam case premised on the 60-day provision.  The whistleblower alleges that Continuum Health Partners either purposefully or recklessly failed to take steps to identify approximately 900 overpayments after being notified of a suspicion that overpayments existed.  He also contends the 60-day time period begins to run when an overpayment is first suspected.  Arguing for dismissal, Continuum Health Partners explained why the 60 days should not begin to run until the conclusion of a thorough investigation that positively identifies an overpayment.  Continuum Health Partners has a lot of money riding on the Court’s answer, with potential exposure to civil penalties of between $5,500 and $11,000 per false claim, plus three times the amount of the damage the government suffers.  Other healthcare providers have a lot riding on it as well, since the answer will also dictate how much time and money they spend examining and analyzing reimbursements to identify potential overpaments.