Under the governing statute, any Medicare Advantage Organization (MAO) that “has received an overpayment,” 42 U.S.C. § 1320a-7k(d)(1), must “report and return the overpayment,” id. § 1320a-7k(d)(1)(A), no later than “60 days after the date on which the overpayment was identified,” id. § 1320a-7k(d)(2)(A). CMS implemented this statutory overpayment provision through our Parts C & D Overpayment Rule in May 2014. A group of MAOs challenged that Rule’s inclusion of instances where an MAO “should have determined through the exercise of reasonable diligence. . . that [it] has received an overpayment” in the regulation’s definition of “identified,” 42 C.F.R. § 422.326(c). The District Court for the District of Columbia held that this regulatory provision was impermissible under the statute. See UnitedHealthcare Ins. Co. v. Azar, 330 F. Supp. 3d 173, 191 (D.D.C. 2018), rev’d in part on other grounds sub nom. UnitedHealthcare Ins. Co. v. Becerra, 16 F.4th 867 (D.C. Cir. 2021), cert. denied, 142 S. Ct. 2851 (U.S. June 21, 2022) (No. 21-1140). CMS views the District Court’s ruling as having invalidated the definition of “identified” set out in 42 C.F.R. § 422.326(c). However, MAOs remain obligated to report and return all overpayments that they have identified within the meaning of the statute, 42 U.S.C. § 1320a-7k(d)(2)(A).
In the December 27, 2022 proposed rule titled “Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, Medicare Parts A, B, C, and D Overpayment Provisions of the Affordable Care Act and Programs of All-Inclusive Care for the Elderly; Health Information Technology Standards and Implementation Specifications” (the December 2022 NPRM), CMS proposed revisions to regulations primarily governing Medicare Advantage (MA or Part C) and the Medicare Prescription Drug Benefit (Part D). 87 Fed. Reg. 79,452 (Dec. 27, 2022). CMS proposed in the December 2022 NPRM to remove the existing definition of “identified” in the Parts C & D Overpayment Rule at 42 C.F.R. §§ 422.326 and 423.360 (as well as the corresponding Parts A and B regulation). See 87 Fed. Reg. 79,559. Under the C & D overpayment proposal, an MAO or Part D sponsor would have identified an overpayment when it had actual knowledge of the existence of the overpayment or acted in “reckless disregard” or “deliberate ignorance” of the overpayment. Id. CMS has received inquiries regarding this proposal and want to be clear that it remains under consideration and that CMS intends to issue a final rule to revise the definition of “identified” in the overpayment rules as soon as is reasonably possible.