The Recoupment of Meaningful Use Incentives for Hospitals

By Jim Tate, EMR Advocate and Meaningful Use Audit Expert
Twitter: @JimTate

You are a 20 bed hospital that attested for CMS EHR Meaningful Use incentives in 2011 and received over $1,000,000 for that year alone. You are a large hospital system that also attested to achieving MU and received much, much more. It doesn’t matter how small you are or how large you are. The audit engagement letter you may receive remains the same.

“This letter is to inform you that you have been selected by CMS for an audit of your meaningful use of certified EHR technology for the attestation period. Attached to this letter is an information request list. Be aware that this list may not be all-inclusive and that we may request additional information necessary to complete the audit.”

Now suppose something goes terribly wrong during the audit. Many things can cause this train to jump the tracks. Missing documentation, changes in staff, confusion over the MU requirements, and on and on. There are numerous paths an unsuccessful audit can take. At some point the bad news is received.

“We performed a desk review on your facility’s meaningful use attestation for the Program Year 2011 and Payment Year 1…….Since your facility did not meet the meaningful use criteria, the incentive payment will be recouped. You will receive a demand for your total Medicare EHR incentive payment shortly from the EHR HITECH Incentive Payment Center. The demand letter will include all information regarding the repayment process, and will also include your appeal rights.”

About 3 or 4 weeks later comes the meaningful use incentives recoupment letter.

“The purpose of this letter is to inform you that a Meaningful Use Audit determined a HITECH incentive overpayment in the amount of $X,XXX.XXX.XX for Hospital X to be prepaid to our office in full. Please return in full the overpaid amount to us by XX/XX/XXX and no interest charge will be assessed……..If you do not refund in full within 30 days: In accordance with 42 CFR 405.378 simple interest at the rate of 10.125% will be charged on the unpaid balance of the overpayment beginning on the 31st day. If your debt reaches 61 days delinquent you debt will be referred to the Department of Treasury’s Debt Collection Center (DCC) for Cross Servicing and Offset of Federal Payments.”

That pretty much says it all. You failed the audit, you must return (within 30 days) 100% of the incentive amount for the attestation year audited, interest will begin to accumulate on the 31st day and on the 61st day you will be turned over to the Department of Treasury for debt collection. You do have the right to appeal the failed audit. However, during the appeal process, the interest continues to accumulate and the 31 and 61 day deadlines are still active. Even if you win the appeal you are still responsible for any penalties that have been generated. That might be hard to believe but in the process of going through numerous audits and appeals this is what I have been told by both the EHR Information Center and CMS appeal staff.

One potential problem is that there is no way a hospital can make sure their meaningful use incentives appeal will be heard prior to the 31 and 61 day deadlines being reached. There are many appeals in the pipeline and no assurance yours will be addressed in a matter of weeks. Decisions must be made. Even if you have a good case and believe you can possibly have the negative audit reversed at the appeal level you are not out of the woods. A 20 bed hospital that received a $1,000,000 incentive will begin generating $8,000+ a month in penalties 30 days after they receive the recoupment letter. This will be owned even if the audit decision is reversed. The absolutely safest and best practice is to send back the requested amount within 30 days and then let the appeal play out. Having to write that $1,000,000 check (possibly much more) would be difficult news to bring to the hospital CEO or Board. Better to win the audit, for if you don’t, your destiny may well be out of your hands.

Jim Tate is known as the most experienced authority on the CMS Meaningful Use (MU) audit and appeal process. His unique combination of skills has brought successful outcomes to hospitals at risk of having their CMS EHR incentives recouped. He led the first appeal challenge in the nation for a client hospital that had received a negative audit determination. That appeal was decided in favor of the hospital. He has also been successful in leading the effort to reverse a failed appeal, even after the hospital had received notification of the failure with the statement, “This decision is final and not subject to further appeal”.  That “final” decision was reversed in less than a week. Contact him at: