(April 24, 2012): While considerable attention has been paid to the Affordable Care Act (generally referred to as “Health Care Reform”) and its requirement that “identified overpayments” be promptly repaid to the government, it is important to keep in mind that this repayment obligation is not new – it has long been firmly in place. Moreover, it applies to all health care providers, including dentists, orthodontists, and their outside billing companies. An identified dental overpayment must be repaid.
I. Handling a Medicaid Dental Overpayment:
As a review of the 1998 “Third Party Billing Company” Compliance Program Guidance issued by the Department of Health and Human Services, Office of Inspector General (HHS-OIG) in the Federal Register reflects, "[f]ailure to repay overpayments within a reasonable period of time could be interpreted as an intentional attempt to conceal the overpayment from the government, thereby establishing an independent basis for a criminal violation." (63 Fed. Reg. 70138 (Dec. 18, 1998)).
As this guidance clearly reflects, the government has long considered the failure of providers to return Medicare overpayments, Medicaid overpayments and overpayments made by other Federally-funded health plans to be a serious concern. Unfortunately, many dental practices appear to have been unaware of this requirement. We have seen situations where an identified dental overpayment was not actively worked, thereby placing the practice in peril.
Notably, there are also criminal prohibitions against the purposeful concealment and / or failure to disclose a Medicaid dental overpayment to the government. As 42 U.S.C. §1320a-7b(a)(3) states, "Whoever, having knowledge of the occurrence of any event affecting his initial or continued right to any such benefit or payment . . . conceals or fails to disclose such an event with an intent fraudulently to secure such benefit or payment either in a greater amount than is due or when no such benefit or payment is authorized [is a criminal violation]."
Unfortunately, our review of dental practices has found that most dentists do not have an effective Compliance Plan in place. As a result, few dental practices conduct periodic internal billing reviews. Moreover, even fewer dental practices have engaged outside legal counsel or consultants to examine their coding and billing practices. The dental community has been relatively quiet on this issue, to the detriment of dentists who are now finding their practices under investigation.
II. Handling Private Party Overpayments:
In addition to Federally-funded payor plans, Texas dental practices also have an obligation to repay an identified dental overpayment made by a private payor. Under 18 U.S.C. § 669, it is a violation to “knowingly and willfully” embezzle, steal or otherwise without authority convert or intentionally misapply the monies, funds or assets of a health benefits program. (emphasis added).
As this statutory provision reflects, this obligation covers all payor types, Federal and private. Therefore, dental practices are obligated by Federal (and possibly State) law to return a dental overpayment or incorrect payment to a private payor. In all likelihood, your contractual agreement with the private payor imposes repayment deadlines and other requirements.
As a final point in this section, it is essential to keep in mind that a dental overpayment does not belong to you, even if a private payor tells you to keep it. For example, if upon receiving a dental overpayment check from you, a private payor might say, “We are returning your check -- it would be an administrative nightmare for us to allocate this ‘overpayment’ properly to the dates of service in our system.” As set out below, virtually no dental overpayment belongs (or can be retained) by a dentist's office.
III. Handling “Unclaimed” Overpayments:
As discussed, any and all overpayments made to a dental practice by Medicaid, a private insurance payor, or a patient, must be promptly returned to their rightful owner.
Nevertheless, it is quite common for some overpayments to be returned to a dental office, either because a patient has moved, died or failed to claim their mail, or a private insurance company refused to accept the check because it would take too much administrative work to allocate the funds appropriately.
In such situations, it essential to keep in mind that every State has passed laws governing the State’s right to “Unclaimed Property and Funds.” Literally every state has “Escheat” and / or “Unclaimed Property” laws which cover such overpayments. For instance, in Texas:
The [Texas] unclaimed property law requires financial institutions, businesses, and government entities to report to the state, personal property they are holding that is considered abandoned or unclaimed.
The Texas Comptroller of Public Accounts is responsible for administering the Texas Unclaimed Property Program. Property is turned over to the Comptroller's office annually when the owner's whereabouts are unknown and the property has been inactive on the books of the reporting company after the appropriate abandonment period has expired.
Should you fail to report and turn over overpayments held by your dental practice, you may be subject to significant penalties if you are audited. As you can imagine, many States are aggressively audited companies in today’s poor economy in an effort to bolster their sagging treasuries.
IV. Deadlines for Returning a Medicaid Dental Overpayment – Prior to Health Care Reform:
Long before passage of the Affordable Care Act, the Centers for Medicare & Medicaid Services (CMS) had issued proposed rules in the Federal Register indicating that an overpayment must be returned to the government within 60 days of identification. As the Federal Register noted, health care providers must, within 60 days of identifying or learning of the excess payment, return the overpayment to the appropriate intermediary and carrier, at the correct address, and notify the intermediary and carrier, in writing, of the reason for the overpayment. (emphasis added) (67 Fed. Reg. 3662 (January 25, 2002)).
In the preamble to the proposed rule, CMS has implied that failure to report overpayments in accordance with the proposed rules might be a criminal violation of Section 1128B(a)(3) of the Social Security Act.
V. Impact of Affordable Care Act:
Among its various provisions, the Affordable Care Act legislation made it crystal clear that the knowing retention of an identified overpayment constitutes a violation of the False Claims Act. As the revised statutory provision states:
(d) Reporting and Returning of Overpayments.
(1) If a person has received an overpayment, the person shall—(A) report and return the overpayment to the Secretary, the State, an intermediary, a carrier, or a contractor, as appropriate, at the correct address; and (B) notify the Secretary, State, intermediary, carrier, or contractor to whom the overpayment was returned in writing of the reason for the overpayment.
(2) … An overpayment must be reported and returned under paragraph (1) by the later of—(A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.
(3) Enforcement. Any overpayment retained by a person after the deadline for reporting and returning the overpayment under paragraph (2) is an obligation (as defined in section 3729(b)(3) of title 31, United States Code) for purposes of section 3729 of such title. (emphasis added)(See 42 U.S.C. 1320a-7k)
Importantly, under Sec. 6402 of the Affordable Care Act, the term “overpayment” was expressly defined by its drafters to include both Medicare and Medicaid payments to which health care providers (such as a dental practice) are not entitled:
. . . any funds that a person receives or retains under title XVIII [Medicare] or XIX [Medicaid] to which the person, after applicable reconciliation, is not entitled under such title. (emphasis added).
Liles Parker is a full-service health law firm focusing on regulatory compliance and representing providers in health law and business matters. Our attorneys are highly skilled in designing and implementing effective Compliance Plans for dental practices, orthodontic practices, and other health care providers. Moreover, our attorneys are experienced in handling an array of complex health law matters, including the appeal of alleged overpayments to Medicaid and disclosure and repayment of an identified dental overpayment. For more information on how we can assist your practice in developing an effective dental compliance plan, call Robert W. Liles, Esq. Robert is a Managing Partner at the Firm and can be reached at 1 (800) 475-1906. Call him today for a free consultation.
 For a list of all State “Unclaimed Property” websites see: