Mount Sinai Affiliated Hospitals to Pay $3 Million Settlement for Delaying Medicaid Overpayments

By: Fred Segal

On August 24, 2016, the US Attorney for the Southern District of New York, in conjunction with the US Department of Health and Human Services, Office of the Inspector General (OIG) announced that it settled a whistleblower suit with three hospitals in the Mount Sinai Health System in New York City for violating the federal “60-day” rule (60-Day Rule) governing the repayment of identified overpayments. According to the US Attorney, the three hospitals, working under a partnership called Continuum Health Partners, Inc. (Continuum) “learned that it had received over $800,000 in potential Medicaid overpayments in 2011,” and “had an obligation under the law to return those funds within 60 days.  Instead, Continuum delayed repayment for more than two years and only fully repaid the Medicaid program in 2013.”

Of significance, this is the OIG’s first settlement for violations under the 60-Day Rule since CMS published a final rule (Final Rule) clarifying certain parts of the 60-Day Rule, which was promulgated by the enactment of the Patient Protection and Affordable Care Act (i.e. “Obamacare,” or “PPACA” in 2010. Section 1128J(d)(2) of PPACA provides that an “overpayment be reported and returned by the later of—(A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due.”

After PPACA’s enactment, amongst a number of items, providers had sought clarification as to the meaning of when an overpayment “was identified”. The Final Rule provides “that a person has identified an overpayment when the person has or should have, through exercise of reasonable diligence, determined that the person received an overpayment and quantified the amount of the overpayment.

The complaint in the whistleblower suit discussed above was filed in April 2011. It alleges that, in 2010, Continuum was alerted by the New York State Comptroller that it submitted erroneous claims for Medicaid payment between 2009 and 2010. Continuum subsequently conducted an internal investigation in February 2011 identifying “approximately 900 claims totaling over $1million that may have been wrongly submitted to and paid by Medicaid.” Notwithstanding this discovery, Continuum did not fully repay the erroneous claims until March 2013 (almost two years later), which the complaint alleges is a violation of the 60-Day Rule.

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