The One Simple Rule for Practitioners to Avoid Overpayments and False Claims Act Penalties

Lisa Hinkle

Lisa English Hinkle

In December, the Centers for Medicare and Medicaid Services (CMS) released its “Supplementary Appendices for the Medicare Fee-for-Service 2015 Improper Payments Report,” an annual compilation of statistics from investigations into overpayments and other instances of fraud, waste and abuse in Medicare payments. The national average for improper Fee-for-Service (FFS) payments for FY 2015 was 12.1 percent, with 21 states receiving improper payments at more than that average. What should shock Kentucky providers, however, is that Kentucky has the seventh highest percentage of projected overpayments at 15.4 percent, or $897.7 million. More than one out of every seven Medicare FFS payments made to healthcare providers in the Commonwealth is projected to be an overpayment in 2015, yet many of these problems could have been avoided by following one simple rule: document claims properly.

In the face of such alarming statistics, what should truly give practitioners pause is that the great majority of these overpayments – 65.4 percent– occur due to, according to the report, “insufficient documentation.” In other words, it’s not that the claim is fraudulent or not provided, necessarily, it’s that the claim is not fully supported by documentation. With increasing focus on documentation, the use of electronic medical records is important, but must be carefully reviewed to make sure that providers are not simply cutting and pasting from a patient’s previous record, which is sometimes called “cloning”, but creating a medical record that accurately reflects an assessment of the individual patient’s condition.  With the potential of transformation of simple overpayments into false claims by failing to take timely action to repay, providers must correct lax administrative policies and oversight of critical staff by refocusing on compliance.

Medical records, particularly electronic records, should be carefully reviewed through a robust compliance program.  Providers often make simple mistakes that can be easily corrected if addressed. If not addressed, those errors of omission can be transformed into overpayments and false claims.  For example, adding an electronic signature to the patient’s medical record may seem basic, but sometimes practitioner, but is supposed to generate the electronic signature automatically when closed. If something is missing from a patient record, there can be ways to address the omission not through correction of the record, but rather by adding an additional record that is attested to by the practitioner.

Overpayments, if not corrected and repaid in a timely fashion, can lead to substantial and potentially catastrophic penalties. It is concerning that overpayments can be those which a provider actually knows about and those which a provider should have known about. The danger in these overpayments lies in what happens when they aren’t immediately repaid to the government. Under provisions of the Patient Protection and Affordable Care Act (ACA) and now a final rule from CMS (the 60-day rule), providers have a 60-day window after identifying potential overpayments in which to repay them. This applies to both potential overpayments known to the provider and potential overpayments about which the provider should have known. After that window closes, overpayments become potential violations of the False Claims Act (FCA). FCA violations carry significant penalties, with treble damages and a penalty ranging from $5,500 to $11,000 for each violation. The Final Rule on when overpayments become False Claims Act violations gives a three-year “lookback” period for investigators to find identified but unreported overpayments, which creates additional liability for practitioners.

Determining when the overpayment is due and how the overpayment should be returned is complex as there are several different ways to do so.  Careful review and choices should be made so that the returned overpayment does not take on more significance with regulators than it deserves or precipitate more review.

With increasing oversight of the many different entities now involved in policing health care providers, practitioners must make renewed efforts to implement effective compliance with a specific goal of reviewing the documentation that supports Medicare billing. Staff training may play a crucial role in this process. Complete and proper documentation is potentially the easiest route to compliance with Medicare billing practices, yet it accounts for the highest proportion of improper payment errors. Physicians and providers must take effective steps to “healthy billing practices.”

Practitioners, if you would like more information on this topic, McBrayer will be holding a webinar on May 24th and 25th to provide healthcare practitioners with a primer and update on overpayments, the False Claims Act and best practices. Please visit to register.

Lisa English Hinkle is a Member of McBrayer.  Ms. Hinkle concentrates her practice area in healthcare law and is located in the firm’s Lexington office.  This article is intended as a summary of newly enacted federal law and does not constitute legal advice. 

U.S. Department for Health and Human Services, the Centers for Medicare and Medicaid Services. (2015). The Summary Appendices for the Medicare Fee-for-Service 2015 Improper Payments Report. Retrieved from