Keeping Compliant Where Federal Overpayment Rule Set Aside, Affordable Care Act Ruled Unconstitutional, Appeals Pending

In 2016, CMS published its Overpayment Rule, 81 F.R. 7652 (2/12/2016), effective March 14, 2016, 42 CFR Part 401, Subpart D, to clarify when and how Medicare and Medicaid providers were to identify and return “overpayments” in order to avoid False Claims Act liability added by the Affordable Care Act (ACA).  The new Compliance and Ethics Program Condition of Participation for Nursing Facility Providers, 42 CFR § 483.85, with its effective date of November 28, 2019 coming soon, also implements a requirement added by the ACA. 

While efforts to pass laws that “repeal and replace” the ACA have not succeeded to date, there have been two recent court victories on this front.  First, in September 2018, the U.S. District Court for the District of Columbia, in a challenge to the Overpayment Rule under the Federal Administrative Procedures Act (APA), ruled that the entire Rule must be set aside.  UnitedHealthcare Ins. Co. v. Azar, 330 F.Supp.3d 173 (D.D.C. 2018), currently on appeal to the U.S. Court of Appeals for the D.C. Circuit (No. 18-5326). 

Second, in December 2018, the U.S. District Court for the Northern District of Texas ruled, in a challenge by several States to the entire ACA as amended by the Tax Cuts and Jobs Act of 2017, reducing the ACA’s shared responsibility payment to -0-, that the entire ACA, including the overpayment provision, must be stricken as unconstitutional.  Texas v. U.S., 340 F.Supp.3d 579 (N.D. Tex. 2018).  Since the District Court granted a stay of its decision pending review by the U.S. Court of Appeals for the Fifth Circuit, 352 F.Supp.3d 665 (N.D. Tex. 2018), appeal pending at No. 19-10011, the ACA remains “in effect.” 

Even if these two efforts are successful in further reducing providers’ False Claims Act liability, these lower court victories should not change provider compliance program behavior.  Longstanding OIG Compliance Guidance, issued before the enactment of the ACA, advised that providers must take decisive steps to correct identified noncompliance, including the return of any overpayments.  Both the OIG and the Pennsylvania Medicaid Program have established self-disclosure protocols for providers “to voluntarily come forward and disclose overpayments or improper payments.” 

Participation in these programs and continuing current compliance program efforts can reduce provider risks, including avoidance of compulsory Corporate Integrity Agreements, reduction in potential damages, and deferral of actual repayment pending settlement.  State and Federal audits for potential overpayments are also not letting up. 

If you have concerns about how to deal with possible overpayments identified through your compliance program or related to recent audit results, you may contact Bruce G. Baron, Esq. ( at our Firm.