CMS Proposes Changes to Reporting and Returning Medicare Parts A and B Overpayments

Tucked into the Physician Fee Schedule is a provision that should be of interest to False Claims Act attorneys. Regarding Medicare overpayments, CMS proposed to change Medicare regulations regarding requirements for reporting and returning Parts A and B overpayments. If finalized, the rule would retain the Medicare Parts A and B provisions published in CMS’s Medicare Program CY 2024 proposed rule from December 2022 and revise existing regulations regarding the deadline for reporting and returning overpayments.

More on Rules

As explained in the CY 2025 PFS Proposed Rule, Section 6402(a) of the Patient Protection and Affordable Care Act of 2010—entitled “Enhanced Medicare and Medicaid Program Integrity Provisions—established an Overpayment Rule in Section 1128J(d) of the Social Security Act. As currently enacted, Sections 1128J(d)(1) and (2) require persons to report and return overpayments to Medicare to “the Secretary, the State, an intermediary, a carrier, or a contractor.” “Overpayments” are defined as any funds that a person receives or retains to which they are not entitled under title XVIII or XIX of the Social Security Act. “Persons” as defined to include providers, suppliers, Medicaid managed care organizations, Medicare Advantage organizations, and prescription drug plan sponsors. Payments must be returned by the later of the date that is 60 days after the date on which the overpayment was identified or the date any corresponding cost report is due, if applicable. An overpayment must also be reported and returned if a person identifies an overpayment within 6 years of receiving it; this is known as the lookback period.

According to CMS’s February 2016 final rule entitled “Medicare Program, Reporting and Returning of Overpayments ” regarding Medicare Parts A and B, a provider or supplier has identified an overpayment when the provider or supplier determines, or should have determined through the exercise of “reasonable diligence,” that it has received an overpayment and quantified the amount.

The December 2022 rule referenced above, if finalized, would amend regulations around reporting and returning overpayments to apply the definition of “knowing” and “knowingly” in the FCA to CMS regulations regarding Medicare payments. This amendment removed the standard of “reasonable diligence” from the 2016 overpayments final rule. In the 2025 proposed Fee Schedule, CMS declined to change the December 2022 rule as the agency is still reviewing comments from that rule. CMS plans to respond to that feedback and new comments it received from the Fee Schedule proposed rule.

Fee Schedule Changes

Under federal regulations, a person who has received an overpayment must report and return it by the latter of the date that is 60 days after the date on which the overpayment was identified or the date any corresponding cost report is due. However, this deadline will be suspended if the HHS OIG acknowledges receipt of a submission to the OIG Self-Disclosure Protocol, CMS acknowledges receipt of a submission to the CMS Voluntary Self-Referral Disclosure Protocol, or a person requests an extended repayment schedule.

The proposals in the Fee Schedule would add to the circumstances under which the deadline for returning payments will be suspended. This includes if a person has identified an overpayment but has not yet completed a good-faith investigation to determine the existence of related overpayments that may arise from the same or similar cause or reason as the initially identified overpayment and the person conducts a timely, good-faith investigation to determine whether related overpayments exist.

The proposal would provide that if the conditions are met, the obligation to return the initially identified overpayment and related payments will remain suspended until earlier of the date that the investigation of related overpayments has concluded, and the aggregate amount of the initially identified overpayments and related overpayments is calculated, or is 180 days after the date on which the identified overpayment was identified.

Impact to Medical Practices

Medical practices should pay close attention to the recent provisions proposed in the 2025 Physician Fee Schedule regarding Medicare overpayments. The CMS proposal retains key provisions from the 2024 rule while introducing adjustments to deadlines and procedures for reporting and returning overpayments. Notably, the proposal impacts practices’ responsibilities by clarifying the definitions of “knowing” and “knowingly” in alignment with the False Claims Act and removing “reasonable diligence” as a standard. Additionally, practices should note the proposed suspension of reporting deadlines under specific conditions, such as when conducting good-faith investigations related to overpayments. Compliance with these evolving regulations will be critical, as failure to accurately report or return Medicare overpayments could expose practices to False Claims Act liability. Practices are advised to stay informed of these regulatory updates to ensure compliance and mitigate risks associated with Medicare overpayment obligations.

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