Medicare’s 60-Day Rule: Key Updates for 2025 and Practical Steps for Compliance

The Centers for Medicare & Medicaid Services (CMS) finalized significant updates to the Medicare 60-Day Rule, which governs how providers and organizations must handle overpayments. Taking effect January 1, 2025, these changes aim to clarify compliance obligations and ensure consistent application across Medicare programs. As your organization prepares for the new year, it’s crucial to understand these changes and take proactive steps to ensure compliance.

What is the Medicare 60-Day Rule?
Under the Affordable Care Act (ACA), the 60-Day Rule requires healthcare providers, suppliers, Medicare Advantage (MA) organizations, and Part D plan sponsors to return any identified Medicare overpayment within 60 days. Noncompliance can result in severe penalties under the False Claims Act (FCA), including fines and liability. An “overpayment” includes any funds received to which an entity is not entitled after applicable reconciliation.

Key Changes Finalized by CMS
In the 2025 Medicare Physician Fee Schedule Final Rule, CMS introduced revisions to its regulations implementing the 60-Day Rule, including the following:

• New Definition of “Identified” Overpayments

Previously, an overpayment was “identified” when a provider conducted reasonable diligence and quantified the amount. The updated rule redefines “identified” to align with the FCA’s standard of “knowingly,” which includes actual knowledge, reckless disregard, or deliberate ignorance of an overpayment. CMS pointed providers to the existing body of FCA case law and stated that whether a person has the requisite knowledge to have identified an overpayment for purposes of the 60-Day Rule “is a fact-specific inquiry.” 

• 180-Day Investigation Period Formalized

CMS has clarified that organizations have up to 180 days to conduct a good faith investigation to determine whether related overpayments that arise from the same or similar cause or reason as the initially identified overpayment exist. Once the investigation is complete, the 60-day repayment clock begins. This change allows for greater flexibility but also creates challenges in tracking when the repayment clock starts ticking.

Practical Takeaways for 2025
Medicare providers should:

1. Strengthen Internal Auditing and Monitoring

Implement or enhance systems that flag overpayments early, focusing on automated auditing tools and regular compliance reviews. Early detection minimizes the risk of “knowingly” retaining an overpayment and ensures faster resolution.

2. Review and Revise Overpayment Policies

Update your organization’s policies and procedures to reflect the new definitions and timelines. Ensure these policies provide clear guidance on how to handle potential overpayments, from detection through resolution. These policies should be part of an overall compliance program designed to meet the OIG’s Seven Elements of an Effective Compliance Program.

3. Refine Investigation Protocols

Establish clear protocols for investigating potential overpayments. Assign dedicated staff to manage investigations and track timelines to ensure compliance with the six-month investigation period and subsequent 60-day repayment window.

4. Train

Compliance training should be updated to reflect the changes to the 60-Day Rule and remind all employees and providers to report suspected overpayment issues immediately so a proper investigation can take place.

Preparing for Success in 2025
Compliance with the updated 60-Day Rule is essential to avoid a routine billing error turning into a potential FCA liability. If you have any questions about the changes or how to implement these changes in your organization, contact Colin McCarthy at (804) 771.5733 or cpmccarthy@kaufcan.com, or another member of the K&C Health Care Practice Group.