Refund Penalties

It was recently reported to us that one medical practice received a substantial penalty for not paying their refunds in a timely manner.  Please see the rules noted below for clarification:

50.12.3 - Time Limits and Penalties for Physicians and Suppliers in Making Refunds
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)

A required refund must be made within specified time limits:

- The refund must be made to the beneficiary within 30 days after the date the physician/supplier receives the remittance advice (RA) if the physician/supplier does not request review of an initial full or partial denial; or

- The refund must be made to the beneficiary within 15 days after the date the physician/supplier receives the notice of the review determination if the physician/supplier requests review within 30 days of receipt of the notice of the initial determination.

- Physicians/suppliers who knowingly and willfully fail to make a refund where required within these time limits may be subject to civil money penalties and/or exclusion from the Medicare program.

- The beneficiary should contact the contractor or CMS when a physician/supplier fails to make a timely refund.  If the contractor determines that a physician/supplier failed to make a refund, it will contact the physician/supplier in person or by telephone to discuss the facts of the case.  The contractor will attempt to determine why the required refund has not been made and will explain the legal requirements.  The contractor will determine whether referral to the Office of Inspector General (OIG) is appropriate and will make the referral to the regional OIG Sanctions Coordinator if necessary.  The OIG may impose civil money penalties, assessments and sanctions if it fails to make the required refund.  The contractor will retain a detailed written report of contact.

Refunds have often been an issue when we perform our audits.  There are times when we see refunds more than six months old.  It must also be noted that many managed care contracts have set limits on refunds.  Often, they will not refund any claims after a 60 day limit.  Want to know more?  Contact Mick Raich at Vachette Pathology, 517-486-4262.