The 60-day repayment rule adopted as part of the Affordable Care Act is a very strong arrow in the quiver of federal enforcement agencies.  Under the 60-day rule a known overpayment can become a False Claim if it is not repaid or if a self-disclosure is not filed within 60 days after identification.  Until final rules were promulgated in early 2016, it was not clear when a provider would be deemed to have “identified” an overpayment.  Prior to the final regulations, it was not clear whether the 60-day time period started as soon as a situation was brought to light that could possibly create an overpayment.  A strict view of the 60-day rule put a lot of pressure on providers to rapidly investigate situations that could lead to overpayments.  In many cases, it was very difficult to reasonably investigate and take action within such a short time frame.

The 2016 regulations gave providers a bit of relief.  The regulations clarify that an overpayment is not “identified” when the basic information comes in that could possibly result in an overpayment determination.  Instead, providers are expected to use reasonable diligence to investigate situations that could result in an overpayment.  Reasonable diligence requires a timely, good faith investigation of credible information.  In comments to the final regulations, the Office of Inspector General (OIG) states that reasonable diligence requires an investigation to be conducted within a maximum timeframe of six months from receipt of the credible information that an overpayment might exist.   Absent extraordinary circumstances, identified potential issues must be investigated to conclusion within six months.  At the expiration of the six-month period, the 60-day disclosure period commences.  This provides a total of eight months from initial identification until the time repayment or self-disclosure is due.

OIG acknowledges there might be extraordinary circumstances affecting the provider, supplier, or their community that may make it reasonable to take more than six months to investigate. What constitutes extraordinary circumstances is a fact-specific question.  Extraordinary circumstances may include unusually complex investigations the provider or supplier reasonably anticipate will require more than six months to investigate.  The OIG mentions natural disasters and states of emergency as providing reasonable justification for extending the investigation period.  Use of these circumstances as an example highlights the need to use all efforts necessary to complete the investigation as quickly as possible and to use the six-month standard as the outside target date.