CMS Finalizes Changes to Medicare Overpayment Standard in 2025 Physician Fee Schedule
Among changes finalized in the CMS's 2025 Physician Fee Schedule, new rules for the refund of Medicare overpayment are finalized. These involve a definition of the identifications of standards for overpayments and adding a six-month period for providers to investigate possible overpayments as they apply to FCA regulations. The updated changes will be implemented on January 1, 2025.
The key changes are as follows: The "reasonable diligence" standard is replaced by the FCA's knowledge-based threshold. Providers will report only those overpayments for which they have "actual knowledge" or act with "reckless disregard or deliberate ignorance" of the overpayment. This change will apply to all Medicare parts, namely Part A (hospital care), Part B (physician care), Part C (Medicare Advantage), and Part D (prescription drugs).
CMS also codified a six-month timeframe for Parts A and B providers to research and identify overpayments prior to the 60-day repayment period. Providers performing good faith research within that timeframe will have up to 240 days to assess and report associated overpayments.
These updates respond to a 2018 court ruling in UnitedHealthcare Insurance Co. v. Azar, where the "reasonable diligence" standard for Medicare Advantage plans was rejected due to its incompatibility with the FCA. The CMS decided to extend these updates to all Medicare parts for consistency.
While regulatory changes tend to be scrutinized more during election transitions, it is unlikely that the provisions will be rolled back because of the legal underpinnings and practical benefits of the new provisions. The new rules also have clearer guidelines for compliance that reduce the liability risks for providers while ensuring a fairer investigatory process.
Providers should prepare themselves by reviewing their compliance protocols and documenting the investigations properly. Failure to comply may lead to FCA liability.
