In the recently released 2025 Physician Fee Schedule (“PFS”) Final Rule, the Centers for Medicare & Medicaid Services (“CMS”) implemented changes to the 60 Day Rule regarding the return of identified Medicare and Medicaid overpayments. Initially created by the 2010 Affordable Care Act, the 60 Day Rule requires healthcare providers to report and return Medicare and Medicaid overpayments within 60 days of identifying such overpayments. Failing to comply with the 60 Day rule may result in the imposition of a civil monetary penalty or an alleged violation of the Federal False Claims Act.
CMS made two significant changes to the 60 Day Rule in the 2025 PFS Final Rule. First, CMS formalized a six-month period for a good faith investigation before the 60-day clock begins to run. CMS had previously posited in guidance that it believed a provider should generally have up to six months to perform a good faith investigation before the provider is deemed to have “identified” the overpayment. In the 2025 Rule, CMS incorporated this position into the regulation itself, providing that the deadline for reporting and returning an overpayment will be suspended until either the provider completes the investigation or 180 days after the date the overpayment is initially identified, whichever is earlier.
Second, the 2025 Rule dropped the “reasonable diligence” standard and adopted the “knowingly” standard of the False Claims Act. Previously, the provider was deemed to have identified the overpayment if it had or should have determined through reasonable diligence that it had received a quantified overpayment. With the change, the provider will now be deemed to have identified an overpayment when it knowingly receives or retains an overpayment. “Knowingly” is defined by direct reference to the False Claims Act, thus aligning the two standards. Many observers had noted that it was inconsistent for CMS to claim providers would have False Claims Act liability for violating the 60 Day Rule, when the two had different standards. That inconsistency no longer exists.
The 60 Day Rule should be an important consideration both where a provider internally suspects that it may have received a Medicare overpayment or where it receives outside information that it has received a Medicare overpayment. A Medicare audit is one of the actions that can kick-start a provider’s obligation under the 60 Day Rule. CMS has long held the position that Medicare contractor overpayment determinations are a credible source of information not only for the claims reviewed or audited by the contractor, but for other potential overpayments based on similar conduct by the provider. Therefore, although audits by Medicare contractors are often not credible and riddled with errors and misunderstandings, providers should be wary of automatically discounting the obligations created by contractor overpayment determinations. However, CMS has also opined that it is reasonable for a provider who pursues an appeal of a contractor determination to assess that it is premature to initiate an investigation based on that contractor determination. This should be an important consideration when determining a response to a Medicare audit determination.
For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to the 60 Day Rule or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.