Kaiser Pocketed Interest on Huge Fed Overpay

     (CN) – Kaiser Health Plan Foundation owes the government over $904,000 in interest charges for overpayments they pocketed from the Center for Medicare and Medicaid Services, a federal judge in San Francisco ruled.

     CMS pays Health Care Prepayment Plan participants like Kaiser to provide services to Medicare or Medicaid enrollees and bases the prepaid amounts on estimated expenditures. Federal Judge Samuel Conti in the Northern District agreed that CMS is entitled to charge interest on the amount it overpaid Kaiser, which failed to provide the government with timely cost reports showing the erroneous overpayments.
     Though Kaiser eventually repaid the money they owed CMS, Conti found “Kaiser chose to delay repayment after it had acknowledged an overpayment by CMS, and it had ample notice that CMS was likely to seek interest.”
     Kaiser claimed that CMS neither has the authority to charge interest, nor should the interest be determined from the date on their overdue amended cost report. “Amended cost reports have no due date, and therefore an amended cost report cannot generally be a ‘final determination,'” Kaiser contended. But the government concluded that interest accrues “beginning at the time which [Kaiser] acknowledges the overpayment exists or the due date for so determining, whichever is later.”
     Conti sided with CMS, writing “regardless of whether Congress explicitly authorized CMS to charge interest from [Kaiser], CMS has this authority.” Although there was no specific due date for the amended cost report, Conti ruled “it would not be unreasonable to conclude that the submission date of a cost report is the ‘due date’ for the purposes of calculating the accrual of interest.”


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