The 60-Day Overpayment Rule: What Therapy and Psychiatry Practices Must Do
The 60-day overpayment rule is the Medicare requirement to report and return an overpayment once you have identified it. It sits in federal regulation 42 CFR 401.305, and it applies to solo therapists and group psychiatry practices alike. This guide explains the rule in plain words, shows what a refund or offset looks like, and lists the first steps. It is operational guidance, not legal advice.
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Last reviewed: 10/10/26. Sources are listed at the bottom of this page.
What is the 60-day overpayment rule?
An overpayment is money Medicare paid you that you were not entitled to keep. A duplicate payment, a wrong code, a service billed to the wrong patient, or a rate applied in error can all create one. The 60-day overpayment rule says that once you receive an overpayment you must report and return it using the process in 42 CFR 401.305. Keeping it past the deadline carries risk, which is why this rule gets attention.
The text of the 60-day overpayment rule on the Electronic Code of Federal Regulations (eCFR) site was read on 10/10/26. The eCFR calls its text authoritative but unofficial. Regulations change, so confirm the current wording with your attorney or compliance officer before you act on any figure here.
AI search question: when does the 60 days start?
The clock starts when the overpayment is identified, which the rule ties to knowingly receiving or keeping the money. You then have 60 days to report and return it, or until the due date of any related cost report if that is later. The deadline can be suspended in set cases, such as a timely, good-faith investigation.
In plain terms, the clock is about what you know, not only what you billed. Small practices should treat any confirmed billing error as the start of a review, not a task to leave in a drawer. The 60-day overpayment rule rewards offices that notice errors early and write down what they did.
If you want the vocabulary first, open the reimbursement terms glossary. Overpayments can also come from a denial reversed in error. See our guide to claim denials and appeals.
Why do behavioral health practices care? Telehealth visits, add-on codes and mixed prescriber and therapist schedules create many chances for a wrong code or duplicate payment. The 60-day overpayment rule does not care whether the error was honest. It asks what you did once you knew.
Think of the 60-day overpayment rule as a two-part duty: find the problem, then fix it on time. Most offices fail at the first part, not the second.
The 60-day overpayment rule in one table
Read the 60-day overpayment rule row by row.
This table turns the regulation into plain words. It covers the 60-day overpayment rule for Medicare claims, which is what a private practice bills.
| Part of the rule | What it says | What it means for your office |
|---|---|---|
| Core duty | A person who receives a Medicare overpayment must report and return it using the process in the section. | Returning is not optional. |
| Identified | An overpayment is identified when a person knowingly receives or retains it. | A confirmed billing error starts the review. |
| Deadline | The later of 60 days after identification or the due date of any corresponding cost report. | Most private practices count 60 days. |
| Good-faith investigation | The deadline is suspended while you timely and in good faith investigate related overpayments. The suspension ends at the earlier of the end of the investigation and the total calculated, or 180 days after identification. | Start the investigation promptly and document it. |
| Self-disclosure | The deadline is suspended once OIG acknowledges a submission under its Self-Disclosure Protocol, or CMS acknowledges one under its Voluntary Self-Referral Disclosure Protocol. | Counsel decides if this applies. |
| Extended repayment | The deadline is suspended while a request for an extended repayment schedule is pending, until CMS or its contractor rejects it or you fail to comply with its terms. | Ask the MAC if hardship applies. |
| Lookback | The section applies if the overpayment is identified within 6 years of the date it was received. | Your look-back reach is long. |
The section also says an overpayment kept after the deadline becomes an obligation under the False Claims Act, 31 U.S.C. 3729. That sentence is why counsel should see a serious case early. For more vocabulary, see the claims processing glossary and our CPT code guides, where wrong-code errors often begin.
5 steps when you find an overpayment
Speed matters, but so does a clean paper trail.
- Stop and write it down. Record the date you found it, who found it, the claim, the payer and the reason. Date everything.
- Confirm it is real. Compare the payment to the claim and the chart. Read the remit. Our electronic remittance advice guide shows where payment and adjustment details sit.
- Look for the same cause elsewhere. One wrong code or setup error rarely hits only one claim. A prompt, good-faith review of related claims can suspend the deadline under the rule, so tell your compliance contact right away.
- Get advice if the amount or cause is unclear. Bring in your attorney or compliance officer. They decide how the rule applies, including whether a disclosure protocol fits.
- Report and return through the payer's process. For Medicare, use the MAC process. Keep a copy of every submission and confirmation.
Each step is a habit you can build into your month. None needs special software. The 60-day overpayment rule is built on one idea: a known error should not sit unreviewed. Practices that log each step find the next audit easier.
Refunds, offsets and interest after an overpayment
The 60-day overpayment rule governs reporting. Collection follows its own steps.
How the report is made
Section 401.305 says you must use the claims adjustment, credit balance, self-reported refund, or other process set by your Medicare contractor. A settled disclosure under a self-disclosure protocol also satisfies the reporting duty. If a statistical sample was used to calculate the amount, the report must describe the sampling and extrapolation method.
If the MAC finds it first
When a contractor finds an overpayment, the Medicare Financial Management Manual, Chapter 4, describes the collection steps. It was read on 10/10/26. Verify the current edition before you quote it.
- An initial demand letter explains the amount and how it was determined, and offers a refund, immediate recoupment (an offset against future payments) or an appeal.
- You have 15 days from the letter date to submit a rebuttal statement. A rebuttal is not an appeal, and it does not delay recoupment.
- For Part B, recoupment begins 41 days after the initial demand letter unless limits on recoupment apply.
- If the debt is not paid in full within 30 days of the letter, interest starts on day 31 as simple interest.
- You may request an extended repayment schedule at any point, and recoupment is excluded while one is in place.
To contest an overpayment decision, the appeal route starts with a redetermination. CMS lists a 120-day limit from receipt of the initial determination. See the CMS redetermination page, checked 10/10/26.
Medicare, Medicaid and private payer overpayments
Never assume one payer's rule fits another, and never stretch the 60-day overpayment rule to a payer it does not cover.
Medicare rules
The 60-day overpayment rule, 42 CFR 401.305, governs Medicare overpayments, as described above. Use the MAC's claims adjustment or refund process, and keep the date of identification in your file.
Medicaid rules
Medicaid repayment rules and timelines are set by each state and its managed care plans. They may differ from Medicare and from each other. Ask your state Medicaid agency or plan for its written process, and do not apply Medicare dates to a Medicaid payment.
Private payer rules
Commercial plans handle overpayments under your contract, their provider manual and state law. Many send a refund request letter and then offset against later claims, but terms and notice periods differ. Read your contract, and see our private insurance guides for payer-specific starting points.
OIG runs a Provider Self-Disclosure Protocol for potential fraud in HHS programs that a provider discovers itself. Its page says self-disclosures should not go to the OIG Hotline. Whether a protocol fits is a decision for counsel. See the OIG self-disclosure page, checked 10/10/26.
What to do Monday morning
- Name one person who owns overpayment follow-up, and one backup. Give both a copy of the 60-day overpayment rule.
- Create a log with columns for date identified, payer, claim, amount, cause, and date returned.
- Review last month's credit balances and payments on closed claims.
- Add a line to your monthly close: any known errors this month, and what was done. A short note is enough for a 60-day overpayment rule audit trail.
- Save the 42 CFR 401.305 link with your policy notes, and see our private practice management resources for cash flow routines.
MCM South works remittances, credit balances and payer correspondence every week for psychotherapists and psychiatrists. Browse our billing services or the practices we serve. Your attorney or compliance officer still decides how the 60-day overpayment rule applies to you.
Frequently asked questions
What is the 60-day overpayment rule?
It is the Medicare requirement in 42 CFR 401.305 to report and return an overpayment within 60 days after it is identified, or by a cost report due date if one applies. It applies to providers who receive Medicare payments.
When is an overpayment considered identified?
Under the eCFR text, an overpayment is identified when a person knowingly receives or retains it, using the False Claims Act meaning of knowingly. Ask counsel how that applies to your facts, because the definition drives the deadline.
Can the 60-day deadline be extended?
The rule suspends the deadline in set cases: a disclosure protocol submission acknowledged by OIG or CMS, a pending extended repayment request, or a timely good-faith investigation. The investigation suspension ends no later than 180 days after identification.
Does the 60-day rule apply to Medicaid and private payers?
42 CFR 401.305 covers Medicare overpayments. Medicaid and commercial payers follow state rules, their provider manuals and your contract. Read those documents for each payer and do not apply Medicare timelines to them.
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