100-06 Medicare Financial Management Manual: Chapter 3 - Overpayments

Medicare Financial Management Manual
Chapter 3 - Overpayments
Table of Contents
(Rev. 13825; Issued: 06-11-26)
Transmittals for Chapter 3
10 – Overpayments Determined by the Medicare Contractor
10.1 – Aggregate Overpayments
10.2 – Individual Overpayments
20 – Recovery of Cost Report Overpayments- Cost Report Filed
20.1 – Part A Provider is Participating in Medicare and Medicaid
20.2 – Provider is No Longer Participating in Medicare and Not Participating in Medicaid
20.3 – Provider is No Longer Participating in Medicare But is Participating in Medicaid
30 – Recovery of Cost Report Overpayments- Overdue Cost Report
30.1 - Part A Provider is Participating in Medicare and Medicaid
30.2 - Provider is No Longer Participating in Medicare and Not Participating in Medicaid
30.3 - Provider is No Longer Participating in Medicare But is Participating in Medicaid: One or
More Cost Reports Not Filed
40 – Recovery of Claims Accounts Receivables from the Provider- FI Only
40.1 – Demand Letter Contents
40.2- Sample Demand Letter for Claims Accounts Receivables
50 – Recovery of Overpayments When a Provider Changes its Contractor
50.1 – Action by Outgoing FI
50.2 – Action by Incoming Contractor
60 – Interim Rate Adjustments and Periodic Interim Payment Adjustments – Part A Only
70 – Determining Liability and Waiver of Recovery for Overpayments
70.1 – 1879 Determination – Limitation of Liability
70.2 – 1842(l) Determination
70.3 – 1870 Determination – Waiver of Recovery of an Overpayment
80 – Individual Overpayments Discovered Subsequent to the Fifth Year
80.1 – How to Determine the Fifth Calendar Year After the Year the Payment was Approved
80.2- Recovery of Overpayment Due to Overdue Cost Report
90 – Provider, Physician, or Other Supplier Liability
90.1 – Examples of Situations in Which Provider, Physician, or Other Supplier Is Liable
90.2 – Provider, Physician, or Other Supplier Protests Its Liability
100 – Beneficiary Liability
110 – Recovery Where the Beneficiary is Liable for the Overpayment
110.1 – Recovery Where the Beneficiary is Covered Under Medicaid or Another Health
Insurance Plan, Private or Governmental

110.2 – Recovery From the Beneficiary
110.3 - When to Suspend Efforts to Recover from the Beneficiary Following the Initial Demand
Letter
110.4 – Content of Demand Letter to Beneficiary
110.5 – Sample Demand Letter to Beneficiary
110.6 – Optional Paragraphs for Inclusion in Demand Letters
110.7 – Recovery Where Beneficiary is Deceased
110.8 – Beneficiary Wishes to Refund in Installments
110.9 – Beneficiary Protests
110.10 – When the Contractor Does Not Take Recovery Action in Beneficiary Cases but
Considers Whether Waiver of Recovery is Applicable
110.11 – Recording Overpayment Cases in Which the Provider is Not Liable- Part A
120 – Reserved for Future
130 – Change of Ownership (CHOW)
130.1 – Impact of Change of Ownership and Assignment of Medicare Provider
Agreement on Overpayments and Underpayments
130.2 – The Contractors Contact Only the Owner of Record
130.3 – Effect of New Owner’s Rejection of Assignment of the Medicare Provider
Agreement
140 - Bankruptcy
140.1 - Bankruptcy Forms
140.2 - Basic Bankruptcy Terms and Definitions
140.2.1 - Bankruptcy is Litigation
140.2.2 - Types of Bankruptcies
140.2.3 - Filing Bankruptcy Draws a Line in the Sand
140.2.4 - Bankruptcy Affects Nearly All Medicare Operations
140.2.5 - Recoupment and Set-off (see also §140.6.4)
140.2.6 - Time is of the Essence
140.3 - Contractors Establishment of Relationships to Ensure Effective Actions Regarding
Providers in Bankruptcy
140.3.1 - Contractor Staff Must Establish Relationships to Ensure That the CMS Office
and CMS Counsel Receive Prompt Notice of Provider Bankruptcies, so That Medicare
Can Take Quick Action
140.3.2 - Contractors Must Recognize and Advise CMS Staff About Potential Provider
Bankruptcies
140.3.3 - Contractor Staff Will Establish a Relationship with the CMS Office That has
Jurisdiction Over the Bankruptcy
140.3.4 - The CMS Office Jurisdiction Generally Parallels the Bankruptcy Court Where
Case Is Filed
140.3.5 - Contractor and the CMS Office Bankruptcy Point of Contact Staff Member
140.4 - Actions to Take When a Provider Files for Bankruptcy
140.4.1 - Establish Effective Lines of Communications
140.4.2 - Respond to the CMS Office Requests for Information
140.4.3 - Immediate Contractor Directives from the CMS Office

140.4.4 - Tracking Debts/CMS Communications
140.5 - Chain Bankruptcies
140.5.1 - Chain Providers
140.5.2 - Single Providers Serviced by a Contractor
140.6 - Affirmative Recovery Actions
140.6.1 - Working with the CMS Office and Regional Counsel's Office
140.6.2 - Assumption of the Medicare Provider Agreement
140.6.3 - Settlement Agreements or Stipulations
140.6.4 - Recoupment
140.6.5 - Administrative Freeze/Setoff
140.7 - Preparing and Filing Proof of Claim
140.8 - Reserved for Future Use
140.8.1 - Reserved for Future Use
140.8.2 - Debt Located at the Department of Treasury
140.8.3 - Managing Bankruptcy Debt at the Contractor
140.8.4 - Closure of Bankruptcy Cases and Treatment of Overpayment Reporting
Systems at End of Bankruptcy
150 – Accelerated Payments – FI Only
150.1 – Eligibility for Accelerated Payment
150.2 – Computation of the Accelerated Payment
150.3 – Recoupment of the Accelerated Payment
150.4 – Recoupment of the Accelerated Payment
Exhibit 1 – Sample Format for Provider Request for Accelerated Payment
160 – Debt Close-Out
160.1 – Reserved for Future Use
160.2 – Reserved for Future Use
170 – General Overpayment Provisions
170.1 – Offset of Overpayments Against Other Benefits Due- FI Only
170.2 – When the FI or Carrier Does Not Attempt Recovery Action
170.3 - Information and Help Obtainable from the Social Security Office 	(SSO)
170.4 – Recovery Where Physician or Other Individual Practitioner is 	Deceased- Carrier
Only
170.5 – Provider Offers to Settle on Compromise Basis
170.6 – Unsolicited Overpayment Refunds
170.7 – Timely Deposit of Overpayment Refund Checks
170.8 – Informal Referral to RO
180 – Reserved
190 – Collection of Fee-for-Service Payments Made During Periods of Medicare Advantage (MA)
Enrollment
200 - Section 935 of the Medicare Modernization Act (MMA) - Limitation on Recoupment
Overpayments
200.1 - Limitation on Recoupment Section 935(f)(2) Eligibility

200.1.1 - Overpayments Subject to Limitation on Recoupment:
200.1.2 - Overpayments Not Subject to Limitation on Recoupment
200.1.3 - Adjustment of the Fee-For-Service Claims
200.1.4 – The Rebuttal Process and the Limitation on Recoupment
200.1.5- Extrapolated 935 Overpayments
200.1.6 – Medicare Secondary Payer (MSP) Provider Duplicate Primary Payment (DPP)
200.1.7 – Immediate Recoupment Requirements for 935 Overpayments
200.2 - Requirements for All Initial Demand Letters (Manual or Ecectronic)
200.2.1 – 935 Initial Demand Letter
200.2.2 - Recoupment After The Initial Demand: When Does it Begin?
200.2.3 - Payments Made Upon Notice of Demand or Through An Immediate
Recoupment Request
200.2.4 – Payment Suspension Relating to Limitation on Recoupment
200.2.5 - Timeframe for Receiving, Validating and Flagging in the System to
Stop Recoupment for all Redetermination Requests
200.2.6- Extended Repayment Schedules (ERS) with an Overpayment Subject to
Limitation on Recoupment
200.3 - What to Do After the Validated Redetermination is Received
200.3.1 - Outcome From the Redetermination Decision
200.3.2 - Administrative Law Judge (ALJ) Third Level of Appeal
200.4 - What to Do After the Validated Reconsideration Request is Received
200.4.1 - Actions to Take Upon Receiving a Qualified Independent Contractor (QIC)
Notification
200.4.2 - The Reconsideration Receipt Notice Example
200.4.3 - Actions to Take after the Reconsideration Decision
200.4.4 - Recoupment Timeframes and Reconsideration Notices after Decision
200.4.5 - Reconsideration Notice/Revised Demand Letter
200.4.6 - Recoupment on Dismissals
200.4.7 - QIC Remands on Dismissals
200.5 - Administrative Law Judge (ALJ) Third Level and Subsequent Levels of Appeals
200.5.1 - Actions on a Valid Notification for the ALJ or Subsequent Level Appeal
Request
200.5.2 - Remanded back to the QIC from the ALJ
200.5.3 - Actions to Take After the ALJ or Subsequent Level Appeal Decision
200.5.4 – The Revised Overpayment Letter for ALJ and Subsequent Decisions
200.6 - Obligation to Pay Interest on Underpayments
200.6.1 - Calculations for Each 30-Day Period at the ALJ Decision or a Final
Determination Date
200.6.2 - Computing 935 Interest at the ALJ and Higher Levels
200.6.3 - How to Calculate 935 Interest:
200.6.4 - Obligation to Pay the Providers, Physicians, or Suppliers Late Payment Interest
200.7 - 935 Interest Calculation
200.7.1 - Assessment of 935 Interest
200.7.2 - Interest Rate and Calculation Periods on Recouped Funds for Purposes of
Paying 935 Interest

200.7.3 - Calculations for Each 30-Day Period at the ALJ Decision or The Final
Determination Date
200.7.4 - Timeframes When Calculating the 935 Interest
200.7.5 - Computing 935 Interest on Favorable Decisions at the ALJ and Subsequent Levels
200.8 - Tracking and Report on the 935 Interest payments

NOTE: Revision 3 includes a cross reference to the source sections in current manuals. The manual is
identified by A1, A2, A3, or A4 for Intermediary Manual Parts 1 through 4; or by B1, B2, B3 or B4 for
Carriers Manual Parts 1 through 4. This indicator is followed by a dash and the related section number.
10 - Overpayments Determined by the Medicare Contractor
(Rev.12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
Overpayments are Medicare payments to a provider, or beneficiary who received the amounts that are
due and payable under the statute and regulations. Once a determination of an overpayment is made, the
overpayment amount is a debt that the provider or beneficiary owes to the United States Government.
Under the Federal Claims Collection Act of 1966, as amended, each agency of the Federal Government
(pursuant to regulations jointly promulgated by the Attorney General and the Comptroller General of the
U.S.) must try to collect Federal Government claims that arise out of the agency’s activities.
The Contractor will not be liable for overpayments it makes to debtors in the absence of fraud or gross
negligence on its part. However once a contractor determines an overpayment has been made, it shall
attempt to recover the overpayments in accordance with the Medicare regulations, in accordance with
42 CFR 405.371.
The Federal Claims Collection Act requires timely and aggressive efforts to recover overpayments.
These include:
.1) Requesting an Extended Repayment Schedule (ERS).
2) Establishing the ERS repayment schedules.
3) Suspending interim payments to institutional providers.
4) Effecting recoupment or setoff, where appropriate.
5) Attempting to locate the debtor, where necessary.
6) In addition, The Debt Collection Improvement Act of 1996 (31 USC 3711) requires Federal agencies
to refer eligible delinquent debt to a Treasury-designated Debt Collection Center (DCC) for cross
servicing and offset.
In all cases, the Contractor ensures that the Intent to Refer Letter (ITR) is sent in enough time to allow
the debtor 60 days’ notice prior to referral to Treasury. In accordance with provisions of the Debt
Collection Improvement Act of 1996 (DCIA), eligible delinquent debts must be referred to Treasury
by the 120th day of delinquency. (Refer to IOM Pub.100-06, chapter 4, §70 for further detail.)
* The Healthcare Integrated General Ledger Accounting System (HIGLAS) adds an additional 5 days
after generating the intent to refer letter (ITR) to allow for interest accruals to appear on the ITR;
therefore, the ITR will be generated on day 66.
Generally there are two types of Overpayments:
A. Aggregate overpayments involve a group or all of provider’s claims, e.g.:
1) Overpayments determined when the Contractor settles the cost report.
2) Overpayments resulting from a pattern of improper application of Medicare coverage provisions;
3) Overpayments with a threshold of less than $25 to equal $25 or higher.
4) Overpayments resulting from adjusting periodic interim payments.

5) The provider failing to timely file a cost report.
6) Fraud, ID Theft, or program abuse.
7) Overpayments resulting from aggregated open uncollected balances for un-demanded claims
overpayments (Part A Only).
8) Overpayments resulting from extrapolations of a sampled claim review applied to a claim universe.
9) Aggregate overpayments are described in §10.1, §20 and §30 of this chapter and Chapter 4, Debt
Collection.
B. Individual overpayments refer to incorrect claims payment for services.
1) Individual overpayments are described in §10.2, §80 and Chapter 4, Debt Collection.
2) Medicare Secondary Payer (MSP) instructions can be found in the Medicare Secondary Payer
Manual, CMS Publication 100-5.
10.1 - Aggregate Overpayments
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
A. Institutional (Part A) Providers Serviced By the Contractor
Aggregate overpayments to providers (overpayments arising in other than individual cases) may occur
when:
• 	The Contractor determines the amounts due when the provider files a cost report, or during desk
review, final settlement or reopening of the cost report.
• 	The Contractor made excess interim payments to the provider.
• 	The provider includes non-allowable or excessive costs in its cost report.
• 	The provider fails to file a cost report (Chapter 3, §30).
• 	The provider fails to repay an accelerated payment; or
• 	The provider has a pattern of furnishing and billing for excessive or noncovered services. Refer
to the improper payment and not in compliance in the Program Integrity Manual Publication 100-08,
Chapter 1).
• 	The Contractor made adjustments in the claim processing systems (Claims Accounts
Receivables or carryover adjustment) (Refer to Chapter 4, §70.7.3).
1. The Provider initiates (Part A) the claim adjustment and after 60 days the amounts are
aggregated to reach the $25 threshold.
10.2 - Individual Overpayments
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
An individual overpayment is an incorrect payment the Contractor makes to a provider, or a beneficiary
for services under title XVIII.
Examples of individual overpayment cases are when the Contractor:
• 	Pays the provider, or beneficiary for services rendered after the beneficiary’s benefits
have been exhausted, or where the individual was not an eligible beneficiary.

• 	Incorrectly applies the deductible or coinsurance.
• 	Pays for noncovered items and services, including medically unnecessary services or
custodial care furnished an individual.
• 	Pays based on a charge that exceeds the reasonable charge.
• 	Processes duplicate charges/claims.
• 	Pays a physician on a non-assigned claim, or pays a beneficiary on an assigned claim,
(Payment made to wrong payee).
• 	Makes primary payment/s for items or services for which another entity is the primary payer.
• 	Pays for items or services rendered during a period when the beneficiary
was not an eligible Medicare beneficiary.
20 - Recovery of Cost Report Overpayments- Cost Report Filed
(Rev. 29, 01-02-04)
Providers of services under Part A of the Medicare program are normally required to submit a cost
report. A cost report must be submitted for each cost reporting year or upon termination of the
Medicare agreement.
20.1 - Part A Provider is Participating in Medicare and Medicaid
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
When the provider files a cost report indicating an overpayment, a final determination is deemed to have
occurred if the cost report is not accompanied by payment in full. Where the provider does not remit the
overpayment in full, the Contractor sends the initial demand letter notifying the provider that it will reduce
or suspend interim payments in 15 days if the provider does not make repayment arrangements.
If an overpayment is determined as a result of a tentative settlement, final settlement, interim rate
adjustment, or reopening the Contractor sends the Initial demand letter within 7 calendar days. (See Chapter
4, §20)
When the Notice of Program Reimbursement (NPR), which is sent at the conclusion of an audit, results in an
overpayment, the initial demand letter must also be sent.
• 	The NPR and the initial demand letter may be sent simultaneously, or
• 	The Initial demand letter may be sent as a separate document, or
• 	The Initial demand letter can be incorporated into the NPR.
If the issuance of the NPR changes the facts as stated in prior demand letters, the Contractor shall include in
the NPR an explanation of the revised overpayment amount.
See Chapter 4, §40 to determine if the overpayment requires a withhold of payments.
If the provider does not respond within 60 days after the date of the Initial demand letter, the C ontractor
sends a ITR letter notifying the provider of the C ontractors intent to recoup the overpayment from interim

payments. (If the current percentage of withhold is less than 100%, the demand letter shall state that interim
payments will be withhold at 100% in 30 days if repayment arrangements are not made.)
• 	The ITR letter shall include notification of the intent to refer the entire debt to the Department of
Treasury for additional collection action. (See Chapter 4, §20)
20.2 - Provider is No Longer Participating in Medicare and Not Participating in
Medicaid
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
If the C ontractor becomes aware that there is an imminent likelihood that a provider will be terminating
from the Medicare program it shall contact the RO with regard to future collection efforts.
If the Contractor discovers an overpayment upon the filing of a cost report, or on determination of program
reimbursement, with respect to a provider no longer participating in Medicare, it shall immediately contact
the terminated provider to obtain a refund in a lump-sum, if it has not been made.
The Initial demand letter shall be sent, and all subsequent collection activities performed as specified in
§20.1 and Chapter 4, §10-20.
If the terminated provider has sold the entity to a participating provider refer to Chapter 3, §130 for change
of ownership instructions.
20.3 - Provider is No Longer Participating in Medicare But Is Participating in
Medicaid
(Rev.12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
If the Contractor discovers an overpayment upon the filing of a cost report, or on determination of the
amount of program reimbursement for a former Medicare provider that is still participating in Medicaid, it
shall immediately contact the provider to obtain a refund in a lump sum, if it has not been made.
The Initial demand letter shall be sent and all subsequent collection activities performed as specified in §20.1
and Chapter 4, §10-20.
The Initial demand letter must provide notice (See Chapter 4, §10-20 and §60) that action to withhold its
Federal share of Medicaid payments will be requested if repayment arrangements are not made within 15
days of the date of this notice. The Contractor shall send the ITR letter 60 days from the date of the Initial
demand letter if the provider has not responded, even though procedures for withholding the Federal share of
payments in title XIX have been initiated, so that if recoupment efforts and withholding of Medicaid funds
are not effective, the case will be ready for referral to the Department of Treasury. If the terminated provider
has sold the entity to a participating provider refer to Chapter 3, §130 for change of ownership instructions.
30 - Recovery of Cost Report Overpayments - Overdue Cost Report
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
When a provider fails to submit a cost report by the due date the C ontractor shall take recovery action to
notify the provider that submission of the cost report is required and that additional collection action will
continue until an acceptable cost report is submitted.

30.1 - Provider is Participating in Medicare and Medicaid
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
A. General
For a participating provider, the cost report required for each cost report period is due on or before the last
day of the fifth month following the end of that particular cost report period. For cost reports ending on a day
other than the last day of the month, cost reports are due 150 days after the last day of the cost reporting
period.
If no cost report has been received by the seventh day after the due date (including extensions), the
Contractor must send the Initial demand letter in Chapter 4, §20. (The seven-day timeframe allows for
processing and mail time.) In addition, the C ontractor must initiate 100% suspension of all Medicare
payments on day seven if the cost report has not been received, an extension request has not been received
and approved or a reduction in the rate of suspension has not been approved.
If the provider does not respond within 60 calendar days from the date of the Initial demand letter, the
Contractor shall send the ITR letter. (See Chapter 4, §20)
Note: Contractors shall follow the instructions in Chapter 4, §10 on telephone contacts to the provider.
30.2.-.Provider is No Longer Participating in Medicare and Not Participating in
Medicaid
30.3 - Provider is No Longer Participating in Medicare But is Participating in
Medicaid: One or More Cost Reports Not Filed
(Rev.12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
Where a provider's agreement under title XVIII has terminated and one or more cost reports
have not been submitted the Contractor shall send the Initial demand letter. Requirements for
this letter are in Chapter 4, §20. Since this situation involves not only a terminated provider but a
provider that has failed to meet the basic obligation (submission of a cost report) for the period
when it did participate, the Initial demand letter provides notice that initiation of the procedure
for withholding the Federal share of Medicaid payments will begin in 15 calendar days if the
Contractor does not receive the cost report.
When the provider has not responded, even though the procedures for withholding the Federal share of
Medicaid payments have been initiated, the Contractor shall send the Initial demand letter by the 30 th
calendar day, followed by the ITR letter by the 60th calendar day from the date of the Initial demand letter.
This must be done so that if recoupment efforts and the withholding of Medicaid payments are not effective,
the case will be ready for referral to the Department of Treasury.

40 – Recovery of Claims Accounts Receivables from the Provider - FI
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
Part A claims A/R arises from adjustments in the Contractor’s claim processing systems (this type of
adjustment may also be referred to as a carryover adjustment). 	Some of the reasons these adjustments
occur include the duplicative processing of a claim, payment of a claim at the wrong Diagnostic Related
Group (DRG) rate, a request from a provider, a determination by the C ontractor that an adjustment was
required, or an adjustment created from a credit balance report, CMS-838 in accordance to Chapter 12,
Credit Balance Reporting. These adjustments are normally recovered through the recoupment of future
claims and the recovered amounts are included in the remittance advices to the providers. For additional
information see Chapter 4, §70.15.2.
40.1 – Demand Letter Contents
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
The Contractor will demand an overpayment resulting from a claims adjustment if the claims
adjustment has had no recoupment in the past 60 days.
The demand letter shall include the following information:
• 	That an overpayment was made;
• 	That interest will begin to accrue if the overpayment is not paid in full within 30 days;
• 	The name and Patient Control Number (PCN) of the beneficiary involved will be included in the
spreadsheet attachment;
• 	The dates and types of services for which the overpayment was made to include sufficient
information for the provider to identify the overpayment;
• 	How the overpayment was calculated;
• 	Why it is liable for recovery of overpayment (i.e., the reasons for finding the provider at fault);
• 	That recoupment of the overpayment from all available payments will occur on day 16 from the
date of the Demand Letter;
• 	Rebuttal language shall be included;
• 	A reference to the Appeals rights in the remittance advice.
40.2- Sample Demand Letter for Claims Accounts Receivables
(Rev.12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
Refer to Publication 100.06, Chapter 4, § 20.2, Sample Demand Letters for all Providers or Suppliers

50 - Recovery of Overpayments When a Provider Changes Its Contractor
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
Where CMS approves a change of Contractor the change is effective on the first day following the close
of the fiscal year in which the provider gave timely notice. (See Medicare Claims Processing, Chapter
1,General Billing Requirements.)
50.1 Action By Outgoing Contractor
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
The outgoing Contractor is responsible for effectuating final settlement for the cost report periods
during which it serviced the provider. It issues the reminder letter to ensure the timely receipt of the
cost report as well as any NPRs and demand letters. The outgoing Contractor is also responsible for
assuring that the incoming Contractor is aware of the outstanding overpayment and that recoupment is
initiated by the withholding of interim payments, if necessary.
If the overpayment remains uncollected, the outgoing Contractor is responsible for initiating the
withholding of Title XIX payments (Medicaid) and for referring the overpayment to the Department of
Treasury. The outgoing Contractor must copy the incoming Contractor on all correspondence with the
provider to ensure a timely collection process.
A. Notification to Incoming Contractor
When the outgoing Contractor is notified by the RO that the provider's request for a change of
Contractor has been approved, it shall notify the incoming Contractor in writing of all outstanding
program overpayments.
It shall include:
• 	The cost reporting period,
• 	The date the overpayment was determined.
• 	Explanation of the type of overpayment, e.g., cost report overpayment - desk review, cost report
overpayment - audit.
• 	The current status of collection action, including any withhold that is currently in place to recoup
the overpayment,
• 	The original balance of the overpayment and the current principal and interest balance of the
overpayment.
• 	The outgoing Contractor should also notify the incoming Contractor of future settlements that
will be occurring and of any unfiled cost reports.
B. Notice of Intent to Suspend Interim Payments
If at the time of the change of Contractor, the outgoing Contractor is recouping an overpayment by the
withholding of interim payments the incoming Contractor will continue the withhold. The outgoing
Contractor must notify the provider that the withhold will be continued by the incoming Contractor until

the overpayment is liquidated or an acceptable ERS is approved. In addition, the outgoing Contractor
must notify the incoming Contractor of the details of the withhold.
If after the change of Contractor occurs the outgoing Contractor determines that an overpayment exists,
the outgoing C ontractor must notify the provider in accordance with normal procedures. The current
Contractor should receive a copy of all NPRs and demand letters. The outgoing Contractor must contact
the current Contractor to make sure that recoupment begins when necessary.
50.2 – Action by Incoming Contractor
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
The incoming Contractor is responsible for effectuating final settlements for the cost report periods after
the change of Contractor becomes effective. If the Contractor receives a cost report from a prior period
it should forward it to the outgoing Contractor to make the final settlement. If the outgoing Contractor is
no longer participating in the Medicare program, the incoming Contractor shall contact the RO for
further instructions. After the outgoing Contractor has completed its review of the cost report, it notifies
the incoming Contractor whether the cost report is acceptable, and the final settlement. The incoming
Contractor in accordance with Ch. 4, §40, disposes of funds withheld during the suspension of interim
payments (for an unfiled cost report) and initiates recoupment by the withhold of interim payments if
necessary. While overpayments are outstanding at the outgoing Contractor, the incoming Contractor
must keep the outgoing Contractor up to date regarding the provider’s location and participation in the
Medicare program. If the incoming Contractor learns of a provider’s termination from the Medicare
program, it must notify the outgoing Contractor so that it may act accordingly.
60 - Interim Rate Adjustments and Periodic Interim Payment Adjustments – Part A
only
(Rev.12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
The interest provisions of Chapter 4, §30 do not apply to Part A overpayments or underpayments
determined as a result of interim rate and periodic interim payment (PIP) adjustments or utilization
reviews. If necessary, an interim rate or periodic interim payment adjustment shall occur prior to the
end of the cost reporting year. When this occurs, the interim rate or periodic interim rate is adjusted for
the remainder of the cost reporting year in order to have aggregate payments approximate total
allowable costs. This adjustment is based on any overpayment or underpayment determined as a result
of the interim review. Since payments are adjusted, this overpayment or underpayment should not exist
at the end of the cost reporting year.
If the review is completed after the end of the cost reporting year or after the cost report is filed,
adjustments to the interim or periodic rate are not possible. In this case any determined overpayment or
underpayment shall be considered in conjunction with the final settlement. By taking the overpayment
or underpayment into consideration with the tentative or final settlement the Contractor will issue a
tentative settlement payment, tentative settlement demand letter, or Notice of Program Reimbursement.
When a demand letter is issued, interest will be assessed if necessary. The Notice of Program
Reimbursement will begin the recoupment process in accordance to Chapter 4, § 10.

70 – Determining Liability and Waiver of Recovery for Overpayments
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
The Medicare law contains three provisions (§1870, §1879 and §1842(l)) dealing with liability
for, and recovery of, individual overpayments. These provisions do not cover cost report overpayments.
These provisions are reflected below and, for a more extensive treatment, in Medicare Claims
Processing Manual, Publication 100-04, Chapter 31, Financial Liability Protections.
The Contractor shall determine whether the provider, physician, or beneficiary is liable for the
overpayment. Most Contractor payments for provider services are made to providers on behalf of the
beneficiaries who received the services. If payment is made directly to the beneficiary, liability always
lies with the beneficiary unless recovery is waived under the limitation of liability provision. Where the
provider or physician has been overpaid, it is liable for the overpayment unless the Contractor determines
that it was without fault with respect to the overpayment. If the Contractor determines that an overpaid
provider or physician was without fault and therefore not liable for the overpayment, it relieves the
provider of liability for the overpayment. The beneficiary automatically becomes liable, whether or not
the beneficiary was at fault. However, recovery from the beneficiary may be waived if you determine the
beneficiary is without fault and recovery would defeat the purposes of Title II or Title XVIII or would be
against equity and good conscience.
70.1- 1879 Determination – Limitation of Liability
(Rev.12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
§ 1879 of the Social Security Act (the Act) provides financial relief to beneficiaries, providers,
practitioners, and other suppliers who acted in good faith in accepting or providing services found to be
not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the
functioning of a malformed body member, or to constitute custodial care. The provision applies to all Part
A/Part B claims decisions where claims are denied or reduced (pre-pay or post-pay) under §1862(a)(9)
and §1879 (e) and (g) of the Act. Contractors must make an individualized determination for each claim
that is denied as not reasonable and necessary. (See Medicare Program Integrity Manual (PIM),
Publication 100-08, Exhibits, §14.1)
A. Limitation on Liability – Indemnification Procedures for Claims Filed under Part B
§ 1879(b) of the Act provides that, when a physician/supplier is held liable for the payment of expenses
incurred by a beneficiary for items or services determined to be excluded and such physician/supplier
requests and received payment from the beneficiary or any person(s) who assumed financial responsibility
for payment of expenses, the Medicare program will indemnify the beneficiary or other person(s) for any
payments made to the liable physician/s supplier (including deductible and coinsurance payments).
Further, any such indemnification payments are considered overpayments to the physician/supplier. (See
PIM Exhibits, §14.1.)
B. 	Limitation on Liability Where Physician and Beneficiary Did Not Have Prior Knowledge
With Respect to Services Found to 	be not Reasonable and Necessary Services (§1879 of
Act)
When both the physician and the beneficiary did not have prior knowledge with respect to services
found 	to 	be 	not 	reasonable 	and 	necessary, 	permit 	Medicare 	payment 	to 	be 	made 	under
under the limitation on liability provision. (See Medicare Program Integrity Manual (PIM), Publication

100-08, Exhibits, §14.1) An overpayment does not exist if a determination is made that the limitation of
liability provision applies. The claim decision must incorporate a limitation of liability determination.
70.2 - 1842(l) Determination
(Rev.12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
For denials of non-assigned claims based on §1862(a)(1) involving physician services, the Contractor
must make a determination under §1842(l) of the Act regarding whether the physician or supplier must
refund any payment collected from the beneficiary. This should be done for initial determinations
(prepay) and for post-payment denials. (See Medicare Program Integrity Manual (PIM), Publication
100-08, Exhibits, §14.3)
70.3 - 1870 Determination – Waiver of Recovery of an Overpayment
(Rev.12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
Once the Contractor has concluded that an overpayment exists (that is, a finding that payment cannot be
made under the waiver of liability provisions) it makes a §1870(b) determination regarding whether the
provider/beneficiary was without fault with respect to the overpayment. Once this determination has been
made, then waiver of recovery of the overpayment from the provider/beneficiary should be considered
per §1870(c). The Contractor makes a §1870 determination for all assigned and non- assigned claims,
however, §1870 (b) or (c) of the Act, does not apply to the provider on non- assigned post-payment
§1862(a)(1) denied claims. However, it can apply to the beneficiary meaning that the beneficiary was not
at fault in causing he overpayment. The provider may have a refund obligation to the beneficiary, but the
provider did not receive an overpayment from the Medicare program, §1870 is not limited to claims denied
under §1862(a)(1) of the Act for not being reasonable and necessary. 	§1870 is the framework for
determining who is liable for the overpayment and whether the overpayment recovery can be waived. For
providers taking assignment, waiving recovery of an overpayment is appropriate where the provider was
without fault with respect to causing the overpayment. Where recovery from the provider is waived per
1870(c), the overpayment becomes an overpayment to the beneficiary. However, if the provider was “at
fault” in causing the overpayment, recovery of the overpayment from the provider must proceed. §1870
waiver of recovery determinations also must be made where the provider mistakenly receives direct
payment on an unassigned claim, and this is the basis for the overpayment.
Examples of §1870 determinations:
A. Overpaid Provider or Physician Not Liable Because It Was Without Fault 1870(b) of the
Act.)
If a provider was without fault with respect to an overpayment it received (or is deemed without fault,
in the absence of evidence to the contrary, because the overpayment was discovered subsequent to the
fifth calendar year after the year of payment) it is not liable for the overpayment: therefore, it is not
responsible for refunding the amount involved. The Contractor makes these determinations.
A. Beneficiary Liable for Overpayments to Provider That Was Without Fault With Respect to
the Overpayment (§§1870(a) and (b) of the Act)
• If an overpaid provider was without fault or is deemed without fault and therefore not Liable for
refund, liability shifts to the beneficiary.

• If the overpayment involves services that are not reasonable and necessary, you should
have made a §1879 determination regarding the beneficiary’s liability for the overpayment.
• 	If the overpayment does not involve medically necessary services, then limitation on
liability does not apply.
B. Contractor Waiver of Recovery from Beneficiary (§1870(c) of the Act)
• If a beneficiary is liable for an incorrect payment, recovery may be waived if the beneficiary was
without fault with respect to the overpayment and recovery would defeat the purposes of title II or
title XVIII of the Social Security Act (i.e., cause financial hardship) or would be against equity
and good conscience. (Where an overpayment is discovered subsequent to the fifth calendar year
after the year the payment was made, recovery is deemed against equity and good conscience if
the beneficiary was without fault.)
• If §1879 of the Act is applicable, then §1879 determination is made first since an overpayment
does not exist if payment can be made under §1879 because there was lack of knowledge by both
the beneficiary and the provider.
80 – Individual Overpayments Discovered Subsequent to the Fifth Year
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
There are special rules that apply when an overpayment is discovered subsequent to the fifth year
following the year in which notice was sent that the amount was paid. Ordinarily, the provider or
beneficiary will be considered without fault unless there is evidence to the contrary.
In the absence of evidence to the contrary, the Contractor will not demand and recover the
determined overpayment. (One example of evidence to the contrary would be a pattern of billing errors.
See Medicare Program Integrity Manual, Publication (PIM) 100-08, Chapter 3.)
EXAMPLE 1: On May 9, 2016, Dr. A is notified that he has been paid $1005.00 for services
provided to Mr. Smith, beneficiary. On January 6, 2022, the Contractor determines that Dr. A was
overpaid for the services to Mr. Smith, beneficiary. The Contractor will not recover this
overpayment if there is no evidence to the contrary because it was determined subsequent to the
fifth year after notification of payment. (Any determination date on or after Jan. 1, 2022, will not
be recovered.) (If evidence to the contrary existed, recoupment may be initiated. The PIM should
be referenced and if necessary, the appropriate Benefits Integrity unit at the Contractor for
guidance.)
EXAMPLE 2: On May 9, 2016, Dr. A is notified that he has been paid $1005.00 for services
provided to Mr. Smith, beneficiary. On September 20, 2019, the Contractor determines that Dr. A
was overpaid for the services to Mr. Smith, beneficiary. The Contractor will attempt recovery of the
overpayment. (Any determination dates up to and including Dec. 31, 2021, will be recovered.)

80.1 – How to Determine the Fifth Calendar Year after the Year the Payment Was
Approved
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
Only the year of the payment and the year it was found to be an overpayment enter into the
determination of the 5-calendar year period. The day and the month are irrelevant. With respect to
payments made in 2016, the fifth calendar year thereafter is 2021. For payments made in 2017, the fifth
calendar year thereafter is 2022, etc. Thus, the rules apply to payments made in 2016 and discovered to
be overpayments after 2021, to payments made in 2017 and discovered to be overpayments after 2022,
etc.
Where an overpayment to a provider, or a physician assignee for medically unnecessary services or
custodial care is discovered (i.e., demanded) subsequent to the fifth calendar year after the year in which
the payment was approved, the provider or physician assignee is prohibited from charging the
beneficiary or any other person for the services notwithstanding the fact that the provider or physician
assignee has refunded the overpayment if:
• The provider or physician assignee was at fault with respect to the overpayment; and
• The beneficiary was without fault with respect to the overpayment. (Where the overpayment is
discovered in, or before, the fifth calendar year, an "at fault" provider or physician assignee is not
prohibited from charging the beneficiary for the overpayment if it has refunded it. However, a without
fault beneficiary who pays an at fault provider's or physician assignee’s bill for medically unnecessary
services or custodial care, can be indemnified in accordance with Medicare Claims Processing Manual,
Publication 100-04, Chapter 30, Financial Liability Protections.
Reopenings (See Medicare Claims Processing Manual, Publication 100-04, Chapter 29 Appeals of
Claims Decisions for additional information)
Your initial, or review determination or a decision by a Hearing Officer may be reopened under the
following conditions:
Within 12 months after the date of the determination or decision it may be reopened for any reason;
After such 12-month period, but within 4 years after the date of the initial determination, it may be
reopened for good cause; or
At any time, if:
- Such initial or review determination was procured by fraud or similar fault of the beneficiary or some
other person.
If an overpayment is determined based on a reopening outside of the above parameters, the Contractor
will not recover the overpayment.

80.2 - Recovery of Overpayment Due to Overdue Cost Report
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
Where CMS approves a change of the Contractor, the change is effective on the first day following the
close of the fiscal year in which the provider gave timely notice. (See Pub 100-04, Medicare Claims
Processing Manual, Publication 100-04, Chapter 1, General Billing Requirements.)
A. Reminder Letter
The outgoing Contractor is responsible for effecting final settlement for the cost report
periods during which it serviced the provider. It issues the reminder letter required under
§30.1 to ensure the timely receipt of the cost report.
B. Initial Demand Letter
If no cost report has been filed by the first day after the due date of the cost report (including
extensions), the outgoing Contractor sends the first demand letter. (See Medicare Financial
Management Manual, Publication 100-06, Chapter 4, Debt Collection, §20.2, Exhibit l, Column B.)
It sends copies of the reminder letter and the first demand letter to the RO and incoming Contractor.
Upon receipt of its copy of the letter, the incoming Contractor suspends the interim payment.
C. Intent to Refer Letter
The Contractor shall issue a “modified Intent to Refer (ITR) Letter for Unfiled Cost Reports,” if
the provider has not filed the cost report and the overpayment balance has not been paid. (See
Medicare Financial Management Manual, Publication 100-06, Chapter 4, §20.2 Exhibit 7 for a
sample intent letter)
D. Receipt of Delinquent Cost Report
If the delinquent cost report is sent to the incoming Contractor, it sends the cost report to the
outgoing Contractor to make the final settlement.
After the outgoing Contractor has completed its review of the delinquent cost report, it notifies the
incoming Contractor whether the cost report is acceptable, and the final settlement. The incoming
Contractor, in accordance with Medicare Financial Management Manual, Publication 100-06,
Chapter 4, §40.1, disposes of funds withheld during the suspension of interim payments.

90 - Provider, Physician, or Other Supplier Liability
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
A provider, physician, or other supplier is liable for overpayments it received unless it is found to be
without fault. The Contractor, as applicable, makes this determination.
• 	The Contractor considers a provider, physician, or other supplier without fault, if it exercised
reasonable care in billing, and accepting the payment, i.e., it made full disclosure of all material
facts; and
• 	Based on the information available, including, but not limited to, the Medicare instructions and
regulations, it had a reasonable basis for assuming that the payment was correct, or, if it had reason
to question the payment; it promptly brought the question to the Contractor’s attention.
Normally, it will be clear from the circumstances whether the provider, physician, or other supplier was
without fault in causing the overpayment. Where it is not clear, the Contractor shall develop the issue.
90.1 - Examples of Situations in Which Provider, Physician, or Other Supplier
Is Liable
(Rev. 13825; Issued: 06-11-26; Effective:07-13-26; Implementation: 07-13-26)
In accordance with §90 above, the following are examples of situations in which the provider, physician,
or other supplier is liable for an overpayment it received.
A. The Provider, Physician, or Other Supplier Furnished Erroneous Information or Failed to
Disclose Facts That It Knew or Should Have Known, Were Relevant to Payment of the Benefit.
This includes, among others, situations in which a provider, physician, or other supplier failed to report
any additional payments he may have received from the beneficiary and situations in which a provider,
physician, or other supplier failed to request applicable information from the beneficiary including, but
not limited to, information needed by the Contractor to identify cases in which Medicare may be
secondary payer, or if it did request such information, it failed to annotate the billing form.
Providers, physicians, or other suppliers are instructed to ask beneficiaries for, and to annotate the claims
form with, information needed to help the Contractor identify cases in which Medicare may be secondary
payer, e.g., information about the circumstances of the illness or injury and the availability of benefits
under an insurance policy or plan. (See Medicare Claims Processing, Chapter 28, Coordination With
Medigap, Medicaid and Other Complementary Insurers).
EXAMPLE: A provider, physician, or other supplier submitted an assigned claim showing total fees of
$600. The provider, physician, or other supplier did not indicate on the CMS-1500 that any portion of the
bill had been paid. After the deductible and coinsurance, the Contractor determined the amount owed to
the provider, physician, or other supplier was $480 on the assumption that the provider, physician, or other
supplier 	received no other payment. The Contractor later learned the beneficiary paid the provider,
physician, or other supplier $200 before the provider, physician, or other supplier submitted the claim.
Thus, the payment should have been split, i.e., $400 should have been paid to the provider, physician, or
other supplier and $80 to the beneficiary. The provider, physician, or other supplier was at fault in causing
the $80 overpayment since s/he failed to inform the Contractor of the amount s/he received from the
beneficiary.
B. Provider, Physician, or Other Supplier Receives Duplicate Payments.

This includes the following situations:
• 	Provider, physician, or other supplier is overpaid when the Contractor processed the claim more
than once. If an overpayment to a provider, physician, or other supplier is caused by multiple
processing of the same charge (e.g., through overlapping or duplicate bills), the provider,
physician, or other supplier does not have a reasonable basis for assuming that the total payment
received was correct and thus should have questioned it. The provider, physician, or other supplier
is, therefore, at fault and liable for the overpayment.
• 	Provider, physician, or other supplier received payment from Medicare based on an assignment
and the beneficiary received payment on an itemized bill and turned the payment over to the
provider, physician, or other supplier.
• 	The provider, physician, or other supplier is liable for only the portion of the total amount paid in
excess of the provider’s, physicians, or other supplier’s portion of the allowable amount.
• 	The beneficiary is liable for the balance of the overpayment. However, if the beneficiary paid any
portion of the coinsurance to the provider, physician, or other supplier, the provider, physician, or
other supplier is also liable for that amount. If the provider, physician, or other supplier protests
recovery of the overpayment on the grounds that the provider, physician, or other supplier applied
all or part of the check received from the beneficiary to amounts the beneficiary owed the provider,
physician, or other supplier for other services, the beneficiary, rather than the provider, physician,
or other supplier, is liable for refunding such amounts.
EXAMPLE: Dr. A and Mr. B each received duplicate payments of $300 based on reasonable charges of
$375. Mr. B turned his $300 over to Dr. A. Thus, Dr. A received a total of $600. Mr. B did not owe money
to Dr. A for other services. Dr. A is liable for $225, which is the amount he received in excess of the
reasonable charge. Mr. B is liable for the remaining $75 of the duplicate payment. If Mr. B had previously
paid Dr. A the $75 coinsurance, Dr. A is liable for the entire $300 overpayment.
• 	Provider, physician, or other supplier receives duplicate payments from Medicare and another
insurer or plan (directly or through the beneficiary) which is the primary payer, i.e., an automobile
medical or no-fault insurer, a liability insurer, a WC insurer, or, under certain circumstances, an
EGHP. (See Medicare Claims Processing Manual, Chapter 28, Coordination with Medigap,
Medicaid, and Other Complementary Insurers).
• 	The provider, physician, or other supplier is liable for the portion of the Medicare payment in
excess of the amount Medicare is obligated to pay as secondary payer. (See Medicare Claims
Processing 	Manual, 	Chapter 	28, 	Coordination 	with 	Medigap, 	Medicaid, 	and 	Other
Complementary Insurers and/or Medicare Secondary Payer Manual). However, if the provider,
physician, or other supplier turns the other insurance payment over to the beneficiary, the
beneficiary is liable.
C. 	The Overpayment 	Resulted 	Through Misapplication 	of 	the Deductible or Coinsurance
Requirement or Payment After Exhaustion of Benefits and the Provider, Physician, or Other
Supplier Could Have Known from Its Own Records the Beneficiary's Utilization Status
Part A provider, physician, or other supplier is considered liable if it received a remittance record within
the 60 days preceding billing indicating deductible and benefit status. This condition is considered met

where, within the 60-day period preceding the admission that gave rise to the overpayment, the beneficiary
had been a patient in the same institution, or the provider, physician, or other supplier could have known
the beneficiary's utilization status from its own records.
The provider, physician, or other supplier is expected to ask the beneficiary, or the person acting on the
beneficiary’s behalf, at the time of admission if the beneficiary received inpatient services in a hospital or
SNF within the past 60 days and note the response on its records.
EXAMPLE: John Doe entered University Hospital on January 10, 2024. After using all of his benefit
days, including lifetime reserve days, he returned home, but reentered the same hospital in fewer than 60
days and stayed an additional 30 days. University Hospital neglected to check its records and billed the
Contractor for 30 days of inpatient hospital care. The Contractor made payment. Subsequently, the
overpayment was discovered. Since the hospital should have known from its own records that Mr. Doe
had exhausted his benefit days, the Contractor shall seek recovery from the hospital.
If the previous stay had been in a different hospital, or if more than 60 days had elapsed between the end
of the first stay and the start of the second stay but the benefit period had remained unbroken because
John had been in an SNF or a different hospital, the Contractor would consider University Hospital
"without fault." In this latter situation, the hospital would not have been able to ascertain from its own
records that benefit days had been exhausted. The Contractor would seek recovery from the beneficiary.
D. The Overpayment Was Due to a Mathematical or Clerical Error.
Examples:
• 	Error in calculation by the Contractor in calculating reimbursement.
• 	Error by the provider, physician, or other supplier in calculating charges, or
• 	Overlapping or duplicate bills.
Mathematical error does not include a failure to properly assess the coinsurance and/or deductible. The
Contractor would determine the liability for coinsurance and deductible overpayments in accordance with
D. above. Where payment to a provider, physician, or other supplier was based on a deductible amount,
the provider, physician, or other supplier is without fault. Seek recovery from the beneficiary.
E. The Provider, Physician, or Other Supplier Does Not Submit Documentation to Substantiate
That Services Billed to the Program Were Covered.
F. The Provider, Physician, or Other Supplier Does Not Submit Documentation to Substantiate
That It Performed the Services Billed to the Program Where There Is a Question as to Whether the
Services Were Performed.
(See 	the 	Program 	Integrity 	Manual, 	which 	can 	be 	found 	at 	the 	following 	Internet 	address:
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html
if fraud is suspected.)
G. The Beneficiary Was Not Entitled to Part A Benefits and the Provider, Physician, or Other
Supplier Had Reason to Believe That the Beneficiary Was Not Entitled to Such Benefits.
For example, the Medicare Office verified to the the hospital that the individual was not entitled to hospital
insurance benefits.

H. The Provider, Physician, or Other Supplier Billed, or Medicare Paid the Provider, Physician, or
Other Supplier for Services that the Provider, Physician, or Other Supplier Should Have Known
Were Noncovered.
1. Services that were not Medically Unnecessary or Custodial Services, e.g., skilled physical therapy
services furnished by a nonqualified physical therapist, or services rendered pursuant to an authorization
from the VA. (See the Medicare Benefit Policy, Chapter 16, Exclusions
In general, the provider, physician, or other supplier should have known about a policy or rule, if:
• 	The policy or rule is in the provider, physician, or other supplier manual or in Federal regulations.
• 	Contractors provided general notice to the medical community concerning the policy or rule.
• 	The Contractor gave written notice of the policy or rule to the particular provider.
• 	CMS, a CMS Contractor, or the OIG gave written notice of the policy or rule to the particular
provider, physician, or other supplier.
• 	The provider, physician, or other supplier was previously investigated or audited as a result of not
following the policy or rule.
• 	The provider, physician, or other supplier previously agreed to a Medicare enrollment Agreement
as a result of not following the policy or rule.
• 	The provider, physician, or other supplier was previously informed that its claims had been
reviewed/denied as a result of the claims not meeting certain Medicare requirements, which are
related to the policy or rule; or
• 	The provider, physician, or other supplier previously received documented training/outreach from
CMS or one of its Contractors, related to the same policy or rule.
Generally, a provider, physician, or other suppliers’ allegation that it was not at fault with respect to
payment for noncovered services because it was not aware of the Medicare coverage provisions is not a
basis for finding it without fault if any of the above conditions is met.
However, there may be other circumstances that justify a finding that the provider, physician, or other
supplier was not at fault. The Contractor shall consider all the circumstances, including such factors as
whether and to what extent a coverage rule is spelled out in regulations, instructions, or in a CMS notice,
and whether a Contractor misinformed the provider, physician, or other supplier about the rule; in
deciding whether a provider, physician, or other supplier acted reasonably in billing for and accepting
payment for noncovered services.
2. Medically Unnecessary or Custodial Services.
The Contractor shall apply the criteria in the Medicare Claims Processing Manual, Chapter 30, Financial
Liability Protections in determining whether the provider, physician, or other supplier should have known
that the services were not covered.

I. For Part A, the overpayment resulted from payment for services rendered in a nonparticipating portion
of the facility that is not certified for Medicare or for services to a beneficiary in a bed that Medicare
certified for a type of care other than what the provider furnished.
J. For Part B, the overpayment resulted with a payment to a physician on claim/s which did not accept the
assignment. Since, the physician was paid but did not accept assignment, the physician is liable whether
the beneficiary had also been paid.
K. Overpayment was for rental of durable medical equipment and the supplier billed under the one-time
authorization procedure.
Pursuant to Medicare Claims Processing, Chapter 20, suppliers of durable medical equipment who have
accepted assignment may be reimbursed for rental items based on a one-time authorization by the
beneficiary, i.e., without the need to obtain the beneficiary’s signature each month. A supplier using the
procedure must have filed with the Contractor, a statement that it assumes unconditional responsibility
for rental overpayments for periods after the beneficiary's death or while s/he was institutionalized or
while s/he no longer needed or used the equipment.
L 	Items or Services Were Furnished by Practitioner or Supplier not Qualified for Medicare
Reimbursement
Two examples of such services are:
• 	A laboratory test performed by a nonqualified independent laboratory, or
• 	Services rendered by a naturopath.
90.2 - Provider, Physician, or Other Supplier Protests Its Liability
(Rev. 12946, Issued:11-08-24; Effective: 12-10-24; Implementation:12-10-24)
A provider, physician, or other suppliers reply to a notification that the provider, physician, or other
supplier is liable for an overpayment may indicate dissatisfaction with some aspect of the overpayment
decision. Such a protest shall be considered a request for an appeal. In most instances, this will be a
redetermination which is the first level of appeal for an overpayment determination. However, if the
overpayment is identified during the course of the redetermination, the Contractor shall consider the
provider, physician, or other suppliers protest as a request for reconsideration (second level of appeal) by
the Qualified Independent Contractor (QIC). In conducting the appeal, the Contractor shall consider
whether:
a. There was an overpayment.
b. Was the amount of the overpayment calculated correctly; and whether,
c. The provider, physician, or other supplier is liable for repayment.
100 - Beneficiary Liability
(Rev. 13183; Issued: 04-24-25; Effective: 05-27-25; Implementation: 05-27-25)
A beneficiary is liable for:
• 	Overpayments made to a provider that was without fault except for overpayments for
medically unnecessary services or custodial care where the beneficiary, as well as the provider,
was without fault. (See Medicare Claims Processing, Chapter 30, Limitation on Liability.)

• 	Situations in which Medicare pays a provider, and a Workers' Compensation (WC)
carrier, automobile medical, or no-fault insurer or any liability insurer; or EGHP pays primary
benefits to the beneficiary for the same services. (See Medicare Secondary Payer Manual)
• 	Overpayments made to the beneficiary.
110 - Recovery Where the Beneficiary Is Liable for the Overpayment
(Rev. 13183; Issued: 04-24-25; Effective: 05-27-25; Implementation: 05-27-25)
When the contractor has determined the beneficiary to be liable for the overpayment, it shall initiate
recovery efforts in accordance with the following sections, as appropriate. The chart below is meant to
be a guide. The actual sections shall be reviewed for additional guidance.
MEDICARE BENEFICIARY NON-MSP
OVERPAYMENTS
O/P Amount 	Overpayment Notice 	Level of Pursuit 	Waiver Requests
$0-$49.99 	No- refer to Ch. 3 §110.2 	None 	N/A
$50-$999.99 	Yes, See Ch. 3 §110 	Attempt collection
following Ch. 3
§110.2. If case is in
offset status for one
year with no collection
activity, refer case to
RO with a
recommendation to
terminate collection
action.
Review all waiver
requests and decide
to approve or deny
the waiver based on
Ch. 3 §70.
$1000-$19999.99 	Yes, See Ch. 3 §110 	Attempt collection
following Ch. 3
§110.2. Attempt to
refer the case to SSA if
applicable.
Review all waiver
requests and decide
to approve or deny
the waiver based on
Ch. 3 §70.
$20000 and over 	Yes, See Ch. 3 §110 	Attempt collection
following Ch. 3
§110.2. Attempt to
refer the case to SSA if
applicable.
Review all waiver
requests and
recommend
approving or denying
the waiver based on
Ch. 3 §70. If the
recommendation is
for approval, refer the
waiver request to the
Regional Office for
concurrence.

110.1 - Recovery Where the Beneficiary Is Covered Under Medicaid or
Another Health Insurance Plan, Private or Governmental
(Rev. 13183; Issued: 04-24-25; Effective: 05-27-25; Implementation: 05-27-25)
When the contractor determines the beneficiary is liable, and the beneficiary carries supplemental health
insurance or is covered by another Government health benefits program such as Medicaid, TRICARE,
CHAMPVA, or the Federal Employees Health Benefits Program, it may be possible to recover the
overpayment from the other plan or program. Payments of deductible or coinsurance amounts and
payment for services rendered persons who are not entitled to Medicare are the payments most likely to
be recoverable.
If, based on the circumstances of the overpayment the contractor has knowledge of the other plan or
program and the contractor believes there is a possibility that the other plan or program will refund the
overpayment, it shall attempt to recover from the other plan or program. In this connection, it may be
necessary to ask the beneficiary for their policy number or other information concerning their non-
Medicare coverage. (See Medicare Claims Processing, Chapter 28, Coordination with Medigap,
Medicaid, and Other Complementary Insurers, for procedures to follow where the overpayment is for
services that should have been paid for by a WC carrier.)
To facilitate recovery of the Medicare overpayments to the extent possible, where another plan or
program is involved, the contractor shall attempt to work out mutually satisfactory arrangements with
the other carrier(s). In negotiations with Medicaid agencies or carriers, it may be helpful for the
contractor to point out that Medicare will refund directly to Medicaid agencies overpayments for
services reimbursed on a charge basis.
The methods listed below have been used successfully. The contractor shall use any one or a
combination, as it finds appropriate. The most desirable method in each situation depends upon the
individual circumstances and the provisions of the other plan or program.
• 	The contractor shall arrange with the other plan or program for direct refund of overpayments. If
the contractor is also the carrier under the other plan or program, a transfer of funds is the most
convenient method of recovering. If another insurance carrier is involved, the contractor shall send the
other insurance carrier a letter requesting refund of the overpayment. The letter should explain how the
overpayment occurred and how it was calculated. The contractor shall follow up in 30 days with
another letter or a phone call if payment or a letter of explanation has not been received. If this does not
bring a meaningful response, it shall write to the President or Chief Administrative Officer of the other
carrier.
• 	If the contractor does not use the above method for provider overpayments, it shall arrange with
the other plan or program to make payment to overpaid provider upon the contractor’s request, (even
though the provider has not billed the other plan or program) and to notify the contractor of the
payment. Upon receiving such a notice, the contractor shall recover the Medicare overpayment from the
provider.
• 	Where neither of the above methods is possible, the contractor shall ask the provider if it would be
willing to refund the overpayment and to bill the other plan or program, with the understanding that if it
is unable to obtain payment, the contractor will refund the amount recovered to the provider. If the
provider does not agree to refund the overpayment before collecting from the other plan or program, the
contractor shall ask it to bill the other plan or program and to use the payment to refund the
overpayment. If the contractor receives notice that a provider (or a beneficiary) plans to file a claim
with another plan or program, it shall suspend recovery efforts for a reasonable period.
If the contractor has questions concerning the proper approach in recovering from a welfare agency, or
another insurance plan, it should contact its RO.

If efforts to recover the overpayment are not successful, or if the contractor is certain that the other plan
or program will not refund a particular overpayment, it shall seek recovery from the beneficiary in
accordance with §110.2 of this chapter. It shall explain in the notice to the beneficiary that the other
plan or program will not make payment directly to it. However, if the beneficiary is a Medicaid
recipient, the contractor shall not attempt recovery from the beneficiary.
110.2 - Recovery From the Beneficiary
(Rev. 13183; Issued: 04-24-25; Effective: 05-27-25; Implementation: 05-27-25)
The term Medicare Beneficiary Identifier (MBI) is a general term describing a beneficiary’s Medicare
identification number.
To recover a non-MSP overpayment from a beneficiary, follow the recovery procedure below. If the
beneficiary protests following the receipt of a notification of overpayment, handle the protest in
accordance with §110.9 of this chapter.
A. 	Non-MSP Overpayment Is Less Than $50
Take no further recovery action. Do not send a recovery letter, or attempt recoupment. Also do not refer
case to CMS for further collection efforts. See §160.2 of this chapter for termination of collection
procedures.
B. 	Non-MSP Overpayment Amount Is $50 or More
Upon discovering an overpayment of $50 or more, send the beneficiary a recovery letter containing the
information in §110.4 of this chapter.
If there is no response within 30 days after sending the initial recovery letter and none of the conditions
in §110.3 of this chapter are present:
1. Send a follow-up letter to the beneficiary, and
2. Arrange to begin offset of the overpayment against any Medicare payments that become due the
beneficiary on day 60.
C. Referral to SSA
To be considered for SSA referral the overpayment amount must be $1000 or more and the beneficiary
must be in current pay status. If, within 90 days of sending the initial demand letter, the overpayment
has not been recovered and the individual has not requested a reconsideration, hearing or waiver (see
§110.9 of this chapter) Prepare the case for referral to SSA for possible recovery from the individual's
social security benefits.
However, if the beneficiary is not entitled to monthly social security benefits, do not refer the case to
SSA. Offset should be continued in the case of beneficiaries who is not entitled to monthly social
security benefits. If appropriate, the instructions for termination of collection action should be followed
(See 110.3D of this chapter for additional instructions.).
The contractor should not refer an overpayment to SSA if it has knowledge that the beneficiary is
deceased.
When preparing the case for referral to SSA the following must be included in the case file:
• Referral Form- contains the address of the referring agency (The Centers
for Medicare and Medicaid Services (CMS) Central Office, CMS Regional Office, or the
Medicare Contractor and information pertaining to the case; and
• Return Notice- for SSA use in recording information for crediting the CMS
Trust Fund; and

• Waiver Determination- if the Medicare Contractor or CMS RO determines
the beneficiary was at fault for the overpayment.
NOTE: 	The 	contractor’s 	file 	must 	contain 	all 	overpayment 	notification 	letters 	and
correspondence from the beneficiary and/or representative. Contractors may retrieve copies of
the relevant forms from the servicing regional office or by accessing SSA’s Program Operations
Manual System at http://policy.ssa.gov/poms.nsf/poms. 	Access the HI section for Health
Insurance and then the section number HI 022 titled Medicare Overpayments. Then access HI
02201 - Methods of Recovery for Title XVIII Overpayments and finally HI 02201.015 titled
Appeal Requests and Refunds. The Beneficiary Overpayment Referral Notice is Exhibit A.
When an individual or his/her authorized representative receives notice from SSA that a Medicare
overpayment will be withheld from title II benefits and protests the withholding, the protest applies only
to the deduction from his/her title II benefits. It does not apply to the Medicare overpayment because
the Medicare contractor has determined that the overpayment must be recovered.
If SSA receives an appeal and/or waiver request, they must stop the process of recovery. 	If the
Medicare Contractor, CMS RO, or the Administrative Law Judge has previously denied a waiver
request, SSA will then process the overpayment in accordance with current operating procedures. 	If the
individual has not requested a waiver with the contractor but files a waiver request with SSA, then SSA
must return the overpayment package to the appropriate contractor for processing.
When an individual or his/her representative goes to SSA to request a waiver and/or an appeal of the
Medicare Overpayment withholding, SSA must complete the following forms, depending on the
request:
• 	Waiver- Form 632-BK (Request for Waiver of Overpayment and Recovery of Change in
Repayment Rate)
• 	Appeal of Withholding – SSA-795 (Statement or Claimant or Other Person) since the rate of the
withholding is not an initial determination, does not use the SSA-561 (Request for
Reconsideration) or HA-501 (Request for Hearing).
NOTE: The referral of a non-MSP beneficiary debt to SSA occurs regardless of the classification of the
debt for financial reporting. Thus, a referral to SSA should occur even if the debt has been reclassified
to Currently Not Collectible (CNC).
D. Beneficiary “Write-Off” between $50- $999.99
If there has been “No Activity” (i.e. no recoupment) within a 12-month period of a beneficiary non-MSP
overpayment that is between $50-$999.99, verify that no collections are being made on any other older
debts for the same beneficiary before you make a recommendation for write-off to the Regional Office.
At the end of each Quarter compile a list of all beneficiary non-MSP overpayments between $50-$999.99
to the Regional Office for Write-Off.
Submit this information, including the status of probate, if applicable, with an explanation for the
beneficiary non-MSP overpayment Write-off.
Example:
Region # 	Contractor # 	Medicare beneficiary identifier# 	Claim #
xx 	xxxxx 	xxxxxxxxxx 	xxxxxxxxxxxx
Claim paid date 	Demand letter date 	Det. date. 	$ amt.
xxxxxxxx 	xxxxxxxx 	xxxxxxxx 	xxxx

The RO will be responsible for approval or denial of all recommendations for “write-off”, based on the
information submitted by contractor.
NOTE: The write-off of a non-MSP beneficiary debt between $50-$999.99 occurs regardless of the
classification of the debt for financial reporting. Thus, a request to write off non-MSP beneficiary debt
between $50-$999.99 should occur even if the debt has been reclassified to Currently Not Collectible
(CNC).
NOTE: Beneficiary overpayments that are greater than $1000 may be recommended for write-off
following the above instructions if the Medicare contractor has verified from SSA that the beneficiary is
not in a current pay status.
110.3 - When to Suspend Efforts to Recover From the Beneficiary Following
the Initial Demand Letter
(Rev. 13183; Issued: 04-24-25; Effective: 05-27-25; Implementation: 05-27-25)
Efforts to recover from the beneficiary should be suspended if any of the following conditions exist:
A. 	The Beneficiary Requests Administrative Appeal, or Questions the Overpayment Decision
The contractor shall make no further recovery efforts until it disposes of the appeal request. (See §110.9
of this chapter)
B. The Beneficiary Requests That Recovery be Waived or States Conditions that Might Qualify the
Beneficiary for Waiver of Recovery
The contractor shall refer beneficiary waiver requests over $20,000 to their RO for waiver eligibility.
C. 	The Beneficiary Is Receiving Welfare Benefits
If the beneficiary is receiving welfare benefits, i.e., cash benefits or Medicaid, the contractor shall
ascertain whether the welfare agency will reimburse Medicare for all, or part of, the overpayment. (See
§110.1 of this chapter.) If the welfare agency does not refund the overpayment in full, the contractor
shall not attempt recovery from the beneficiary, unless it is apparent that the beneficiary knew or should
have known that the payment was incorrect.
NOTE: If a beneficiary requests an appeal or a waiver after the overpayment has been referred to the
SSA for collection from Title II benefits, the SSA processing center will return the overpayment to the
Medicare contractor to review the waiver and/or appeal.
110.4 - Content of Demand Letter to Beneficiary
(Rev. 13183; Issued: 04-24-25; Effective: 05-27-25; Implementation: 05-27-25)
Any correspondence with a beneficiary concerning an overpayment must contain a clear and complete
explanation of the overpayment. An overpayment which is not clearly explained is less likely to be
refunded. Furthermore, lack of clarity may deprive the individual of sufficient information to decide
whether there is a basis for questioning the contractor’s determination. Clarity is also important because
the letter may eventually be used by CMS for further recovery attempts.
The following is the minimum information which shall be included in all overpayment refund letters
sent to a beneficiary:
A. Name and address of physician, date and type of service, charges, date of check, amount of check,
and name of payee.
B. A clear explanation of why the payment was not correct.
C. The amount of the overpayment and how it was calculated.

D. The beneficiary is required to refund the overpayment.
E. The refund should be by check or money order, and how it should be made out (enclose a pre-
addressed envelope).
F. The refund can be made by installments. (See §110.8. of this chapter)
G. Unless a refund is made, the overpayment may be withheld from other Medicare benefits payable to
the beneficiary and may be referred to the Social Security Administration for further recovery action.
H. Possible recovery from other insurance (if applicable).
I. An explanation of the beneficiary's right to a review or hearing as appropriate.
J. An explanation of the CMS/SSA waiver of recovery provisions. (See §170.3 of this chapter)
110.5 - Sample Demand Letter to Beneficiary
(Rev. 13183; Issued: 04-24-25; Effective: 05-27-25; Implementation: 05-27-25)
The contractor may use or adapt the following model letter for requesting refunds of
overpayments from beneficiaries:
"Dear Mr. ________:
A. 	Opening Paragraph:
"In (month and year) we paid (provider's, physician’s, supplier’s name and location) (you)
$___________ more than was due for services furnished by ____________ on _________ (from
__________ through __________) (on __________). We have reviewed the payment and determined
that it was incorrect. The correct payment should have been $________________."
The contractor shall include a clear and complete explanation of how the overpayment arose and how it
was calculated.)
It shall add if applicable: "We have recovered $________________ from (specify source). Thus, the
total remaining overpayment is $_______________.
B. 	Liability of Beneficiary When Payment Made to Physician or Supplier
If payment was made to the physician, add the following:
"Under the Medicare law, you are responsible for overpayments made on your behalf if the provider of
services was not at fault in causing the overpayment. In this case, (provider's, physician’s, supplier’s
name) was not at fault. Therefore, you are liable for the $_____________ incorrectly paid for the
services you received."
C. 	Request for Refund
"Please send us a check or money order for $ _________________, within 30 days. Make the check or
money order payable to (contractor name), and mail it in the enclosed self-addressed envelope.”
D. 	Possible Offset
“If other Medicare benefits become payable to you and you have not refunded the incorrect payment, we
will withhold the amount you owe from those benefits.” (In the initial letter the contractor shall add:
“beginning 60 days from the date of this letter.”)
E. 	Possible Referral to Social Security Administration
If the overpayment is over $1000, add the following:
“If you do not repay this amount, this overpayment may be referred to the Social Security
Administration (or Railroad Retirement Board) for further recovery action that, among other actions,

may result in the overpayment being deducted from any monthly social security (or railroad retirement)
benefits to which you may be entitled.”
F. 	Installment Payments
"If you are unable to refund this amount in one payment, you may make regular installments. To refund
in installments, you are required to pay a minimum of $_____________each month for ___ months.
However, we urge you to pay more each month so that this matter can be settled as soon as possible. If
you prefer to repay this overpayment through installments, please notify us promptly how much you are
able to pay and how often."
G. 	Possible Recovery from Other Insurance
(The contractor shall not use this paragraph where it has determined that the private insurer will not
pay.)
"If you carry private health insurance to supplement your Medicare benefits, you may be able to recover
the amount of this overpayment by claiming benefits from the other plan, or (name of provider or
physician) may be able to submit such a claim on your behalf. If you plan to file a claim with a
supplemental plan and use the proceeds to refund this overpayment, please let us know. If you need
help in filing such a claim, please contact any Social Security office."
H. 	Notification of Appeal Rights
The notification of appeal rights must be in accordance with the reopening rules in Medicare Claims
Processing, Chapter 29 – Appeals of Claims Decisions.
NOTE: If the overpayment was for medically unnecessary services or for custodial care, The contractor
shall begin the first sentence of the appeals paragraph:
"If you believe that this determination is not correct, or if you did not know that Medicare does not pay
for these services."
I. Notification of Waiver of Recovery Provision
"The law requires that you must repay an overpayment of Medicare benefits unless you meet both of the
following conditions:
• 	You were without fault in causing the overpayment in that the information you furnished
in connection with the claim was correct and complete to the best of your knowledge, and you had a
reasonable basis for believing that the payment was correct, and
• 	Paying back the overpayment would keep you from meeting your ordinary and necessary
living expenses or would be unfair.
If you claim that repayment will cause you serious financial hardship, it will be necessary to submit a
statement to the Social Security Administration regarding your income, assets, and expenses.
If you believe that both conditions for waiver of this overpayment apply in your case, please let us
know, giving a brief statement of your reasons. You may contact your Social Security office. You will
be notified if recovery of this overpayment is waived. If waiver cannot be granted, you will have the
opportunity to present your case at a personal conference. The conference will be conducted by an
employee of the Social Security Administration who did not participate in the initial waiver
determination."
110.6 - Optional Paragraphs for Inclusion in Demand Letters
(Rev. 13183; Issued: 04-24-25; Effective: 05-27-25; Implementation: 05-27-25)
The contractor should use or adapt the following paragraphs in explaining how the overpayment
occurred.

A. 	Inpatient Hospital Deductible or Coinsurance Not Properly Assessed – Part A
1. 	General – Part A
“Medicare pays all costs of covered services furnished during the first 60 days of hospitalization except
for the first $_____ (the inpatient deductible). For the 61st through the 90th days Medicare pays all
costs except for a coinsurance of $_____ per day. After 90 days of benefits have been used, an
additional 60 lifetime reserve days are available. There is $_____ per day coinsurance for each lifetime
reserve day used.
2. 	Deductible Overpayment
“Our records show that the claim for the inpatient services you received at (provider's name) was
improperly processed. Benefits were mistakenly paid for ____ days in full. However, since these were
the first inpatient hospital services furnished in this benefit period you are responsible for the deductible
and the $_____ inpatient hospital deductible should have been subtracted from the reimbursement paid
(provider's name) on your behalf. Thus (provider's name) was overpaid by $______.”
3. 	Coinsurance Overpayment
“Our records show that the claim for the inpatient services you received at (provider's name and
address) was improperly processed. Benefits were mistakenly paid for ____ full days (less the $____
deductible). However, since you had previously been hospitalized for ____ days at (name of provider
where previously hospitalized) during that benefit period, your claim should have been processed as ___
full days and ____ coinsurance days (and/or lifetime reserve days). Therefore (provider's name) has
been overpaid on your behalf for _____ coinsurance days at $_____ per day and/or lifetime reserve days
at $______ per day) (less $_____ for the inpatient hospital deductible which was improperly applied to
your claim). The total overpayment is $__________.”
B. Deductible Not Properly Assessed -Part B
“Under Part B of Medicare, no reimbursement may be made for the first $100 of approved charges
incurred by a beneficiary in each calendar year.” (If pertinent, add: “This is true even if you were
covered under Medicare for only part of the year.”) In these cases, explain the computation of the
overpayment.
C. 	Payment Made Under Workers’ Compensation Law
We paid $_____________ in benefits for services furnished you by (provider's, physician’s or supplier’s
name and location) on (dates). However, these payments were in error since these services were
covered under the (State) workers' compensation law and Medicare may not pay for services that are
covered under workers' compensation. Since (provider's, physician’s, supplier’s name) was not at fault
in causing this overpayment, you are required to refund the $_______________ Medicare paid on your
behalf. You may wish to submit the bill for these services to your employer or his workers'
compensation carrier for payment under the State workers' compensation provisions.”
D. 	Beneficiary Not Entitled to Medicare Benefits
"The Social Security Administration's records show that you were not entitled to (specify Part A
hospital insurance and/or Part B medical insurance) benefits when these services (item(s)) were
furnished. Your Medicare Handbook explains the difference between Part A (hospital) and Part B
(medical) insurance. The decision that you were not entitled to these benefits was made by the Social
Security Administration, and not by (contractor name). Therefore, if you disagree with this decision, or

if you have any questions about your entitlement to Medicare benefits, contact your Social Security
office. If you go to the Social Security office, take this letter with you.”
110.7 - Recovery Where Beneficiary Is Deceased
(Rev. 13183; Issued: 04-24-25; Effective: 05-27-25; Implementation: 05-27-25)
Where a beneficiary who is liable for an overpayment dies, the contractor shall attempt to recover from
such sources as State welfare agencies, or private insurance plans (see §110.1 of this chapter), or
withhold the overpayment from any underpayments due the beneficiary's estate or due a surviving
relative. (See 42 CFR 424.60)
If the entire overpayment cannot be recovered by the above methods, it shall send a letter (see sample
below) addressed to the estate of the deceased at the address of the legal representative if known, or to
the last known address of the deceased. It shall include the basic information in §110.5 of this chapter
but shall not mention the possibility of installment payments or the possibility of offset against monthly
benefits.
The contractor shall not direct recovery efforts against a person who answered a recovery letter
concerning an overpayment unless it is known that the individual represents the beneficiary's estate. It
shall not recover by offset against underpayments payable to a provider of services or to a person (other
than the beneficiary's estate) who paid the bill.
Model Refund Request to Estate of Deceased Beneficiary (contractor shall adapt to Fit the Situation)
Estate of (deceased beneficiary) (or, if known, "Representative of the Estate of (deceased beneficiary)).
Dear Sir (or Dear M. ___________ if estate representative's name is known).
On (date) we paid (provider's, physician’s, or supplier’s name and location) (deceased beneficiary, if
applicable) $ ________ more than was due for services furnished by (________) on _____ (from
______ through _____)."
(This paragraph should include a clear and complete explanation of how the overpayment
arose, the amount of the overpayment, how it was calculated, and why the payment was not correct.)
The contractor shall add if applicable:
"We have recovered $ __________ from (specify source). Thus, the total remaining overpayment is
$________.
“If other Medicare benefits become payable to the estate and you have not refunded the incorrect
payment, we will withhold the amount owed from those benefits.
If payment was made to the physician, add the following:
Under the Medicare law, the beneficiary is responsible for overpayments made on his behalf if the
(provider, physician) was not at fault in causing the overpayment. In this case ((provider,
physician) name) was not at fault. Therefore, the estate of (deceased beneficiary) is liable for the
$________ incorrectly paid to ((provider, physician) name) for the services it furnished (deceased
beneficiary).
“Please send us a check or money order in the amount of $ ___________ payable to (contractor name)
in the enclosed, self-addressed envelope within 30 days.
NOTE: The contractor shall undertake notification of appeal rights in accordance with the reopening
rules in Medicare Claims Processing, Chapter 29, Appeals of Claims Decisions.

“If you believe that (deceased beneficiary) was without fault in causing this overpayment and that
recovery of the overpayment would be unfair, you may request that recovery of the overpayment be
waived. Your request should include a brief statement of your reasons for requesting waiver."
110.8 - Beneficiary Wishes to Refund in Installments
(Rev. 13183; Issued: 04-24-25; Effective: 05-27-25; Implementation: 05-27-25)
The term Medicare Beneficiary Identifier (MBI) is a general term describing a beneficiary’s Medicare
identification number.
A. 	General
If an overpaid beneficiary states that they are unable to refund the full amount of an overpayment at one
time, regular monthly installment payments are acceptable. The amount and frequency of the
installments should be in reasonable relationship to the amount of the overpayment.
Normally, the installments should be large enough to effectively recover within 3 years; however, the
contractor shall allow a longer installment period if the beneficiary is willing to refund at least $50 per
month. In notifying a beneficiary that they can refund an overpayment by installments, the contractor
shall specify the amount (not less than $10) and the number of monthly installments necessary to
recover the overpayment.
NOTE: These provisions for repayment in installments do not apply to overpayments for which
providers are liable.
The contractor shall exercise care in distinguishing between a request for repayment in installments, and
a request for waiver. Where a beneficiary states that they cannot afford an installment of at least $10
per month, or that they can afford installments of $10 to $50 per month but the overpayment is so large
that recovery would take substantially more than 3 years, the contractor shall treat such statement as a
request for waiver. (See §110.9 of this chapter)
B. 	Notification of Installment Schedule
When agreement is reached with a beneficiary for refund by installments, the contractor shall notify the
beneficiary of the installment schedule. Request the beneficiary to sign an installment agreement such
as the one in paragraph C below. It shall give one copy of the agreement to the beneficiary and retain
the other.
C. 	Suggested Installment Agreement
_________________________ 	__________________________
Name of Overpaid Beneficiary 	Medicare Beneficiary Identifier
Beneficiary's Address
I hereby agree to repay my Medicare overpayment totaling $ ____________ to (contractor’s name),
which will receive the payments on behalf of the Centers for Medicare and Medicaid Services. My
payments will be made as follows:
DATE PAYMENT DUE (Month, Day,
Year)
Amount of Payment

____________________ 	___________________
____________________ 	___________________
____________________ 	___________________
________________________
Signature of Beneficiary
_____________
Date
D. 	Beneficiary Fails to Remit Installments
If the beneficiary fails to remit two consecutive installments, or after remitting the overdue installments,
fails to remit any subsequent installments, the contractor shall ask the beneficiary the reason for the
lapse. If it does not receive a response within 30 days or is informed that the beneficiary is unable to
continue paying any installments the statement should be treated as a waiver request. If the contractor
learns that the beneficiary is deceased, see §110.7 of this chapter.
E. 	Beneficiary Can No Longer Afford Installment Amount but Can Afford a Lesser Amount
If the beneficiary notifies the contractor that they can no longer afford to pay the agreed-upon
installments but can afford a lesser amount, the contractor shall set up a new agreement, provided the
new installment is at least $10 per month, and large enough to effect recovery of the remainder of the
overpayment within approximately 3 years after the date of the new installment agreement.
110.9 - Beneficiary Protests
(Rev. 13183; Issued: 04-24-25; Effective: 05-27-25; Implementation: 05-27-25)
A beneficiary's reply to a notification of overpayment or request for refund may constitute a request for
waiver, or request for appeal, i.e., reconsideration, review, contractor fair hearing, or ALJ hearing as
applicable, or a request for both waiver and appeal.
A. 	Protests To Treat as Requests Administrative Appeal
The contractor shall consider a beneficiary's reply to a request for administrative appeal (Part A
reconsideration, Part B review, Part B fair hearing, or ALJ hearing (both A & B), as applicable) if the
beneficiary protests the existence of an overpayment, the amount of the overpayment, or if the nature of
the protest is unclear. (See B below for which protests the contractor shall consider requests for
waiver.) It shall take no further recovery action in such cases until the administrative appeal process is
completed. (See Pub. 100-4, Medicare Claims Processing, Chapter 29, Appeals of Claims Decisions.)
The contractor shall tell the beneficiary that the request is being considered (or has been forwarded to
the Office of Hearings and Appeals, if a hearing request) and that no action is necessary until further
notice. If the overpayment case has been referred to SSA, the contractor shall inform SSA of the appeal
so that recovery action by SSA may be suspended pending the results of the appeal.

If the appeal determination is that the beneficiary is liable for an overpayment, the contractor shall send
the beneficiary another request for refund of the overpayment (including all information in §110.5 of
this chapter), unless the beneficiary has also requested waiver. In that event, see B below.
B. 	Protests To Treat as Requests for Waiver
If an overpaid beneficiary protests on the grounds of hardship, or that recovery would be inequitable, the
contractor shall treat the protest as a request for waiver even if it is filed on a form ordinarily used for
requesting administrative appeal. Discontinue collection efforts and make a waiver determination if
necessary. If the beneficiary offers evidence of financial condition, the contractor shall include it but
shall not solicit such evidence. It shall tell the beneficiary that the overpayment case will be forwarded
to the Social Security Administration and that no action is necessary until further notice.
NOTE: If the beneficiary has also requested appeal, the contractor shall conduct the appeal prior to the
waiver determination.
110.10 - When the Contractor Does Not Take Recovery Action in Beneficiary
Cases but Considers Whether Waiver of Recovery is Applicable
(Rev. 13183; Issued: 04-24-25; Effective: 05-27-25; Implementation: 05-27-25)
The contractor shall consider whether waiver of recovery from the beneficiary is applicable. If the
beneficiary is liable and the criteria for waiver of recovery from the beneficiary are likely to be met, i.e.,
it appears from the circumstances that the beneficiary was without fault and that recovery is against
equity and good conscience or defeats the purpose of the Medicare program (i.e., would cause the
individual financial hardship), the contractor makes a waiver determination.
The contractor shall first determine if the beneficiary was without fault see §70.3. If it appears that the
beneficiary was without fault the contractor shall then determine if recovery would be against equity and
good conscience or if recovery would defeat the purpose of title II or title XVIII of the Social Security
Act.
• 	For recovery to be against equity and good conscience an individual must
have changed his or her position for the worse or relinquished a valuable right because of
reliance upon a notice that a payment would be made or because of the overpayment
itself. (See 20 CFR §404.509)
• 	For recovery to defeat the purpose of title II or title XVIII of the Social
Security Act the beneficiary must need all his or her current income to meet ordinary and
necessary living expenses. (See 20 CFR §405.508)
The contractor shall make waiver of recovery determinations for individual non-MSP overpayments up
to $20,000. If an individual non-MSP overpayment is greater than $20,000, and the contractor believes
that the waiver of recovery is appropriate the contractor shall make a recommendation to the regional
office for approval to waive the recovery. If there is a situation that involves several beneficiaries where
the aggregate total of all waiver determinations exceeds $40,000, the regional office shall be notified.
The regional office shall provide guidance as to who shall approve the waiver of recovery
determinations.
If the contractor decides that the information available does not justify waiver, it proceeds with normal
recovery efforts from the beneficiary.
NOTE: If a beneficiary requests an appeal or a waiver after the overpayment has been referred to the
SSA for collection from Title II benefits, the SSA processing center will return the overpayment to the
Medicare contractor to review the waiver and/or appeal.

110.11 – Recording Overpayment Cases in Which the Provider is Not Liable— Part
A
(Rev. 13183; Issued: 04-24-25; Effective: 05-27-25; Implementation: 05-27-25)
If a provider is relieved of liability for refunding an overpayment, and an adjustment bill is required in
accordance with Medicare Bill Processing, Chapter 1, General Billing Requirements, the contractor
shall treat the charges involved in the year-end cost report as though they were covered; i.e., make
provision to assure that the overpaid amount is not recovered from the provider at the time of final cost
settlement.
If the contractor has a system capable of preventing year-end recovery from the provider, where it was
relieved of liability for refunding an overpayment, it need not maintain an additional record of the case.
120 - Reserved for Future
(Rev. 13235; Issued: 05-22-25; Effective: 06-23-25; Implementation: 06-23-25)
130 – Impact of Change of Ownership (CHOW) on the Overpayments and Debt
Referral Process
(Rev. 13235; Issued: 05-22-25; Effective: 06-23-25; Implementation: 06-23-25)
When a provider undergoes a CHOW where the new provider accepts assignment of the previous
owner’s Medicare agreement, the responsibility for repaying any outstanding and future overpayments
resides with the new owner. Exception: If any of the overpayments determined for a fiscal year when
the previous owner had assignment were discovered due to fraud, the responsibility for the repayment of
the overpayments does not shift to the new provider. It stays with the old provider. A sales agreement
stipulating that the new owner is not liable for the overpayments made to the previous owner is not
evidence enough for recovery from the new owner to not occur. Medicare was not a part of the sales
agreement. That is a civil matter, and it would be up to the new owner to enforce the sales agreement. If
the new owner assumes assignment of the Medicare agreement, Medicare will attempt to recover from
the new/current owner regardless of the sales agreement. The Contractor attempts collection from the
new owner. If this is not successful and the Contractor has reasonable evidence that the previous owner
can repay the overpayment it should refer the case to the RO. The RO will confer with the Office of
General Council (OGC) and decide if the case warrants collection from the previous owner. This action
should be completed before the debt is transferred to the Department of Treasury.
The primary source for information on Change of Ownership (CHOW) is located in the Centers for
Medicare & Medicaid Services (CMS) State Operations Manual (SOM), Publication 100-07, Chapters 2
and 3. Please refer to that manual for any subsequent update on the information in this section.
When the owner of a Part A Medicare provider agreement transfers the provider rights to a new owner,
(by sale, lease or other transaction), Medicare regulations state that the provider agreement is
automatically assigned to the new owner. Refer to 42 C.F.R. § 489.18(c). 	Such a transfer is called a
“Change of Ownership” (CHOW). A CHOW allows the provider’s participation in the Medicare
program to continue without any break in coverage.
However, if the new owner chooses to reject assignment of the provider agreement, the old owner’s
provider agreement terminates, and the new owner must apply to the CMS for certification as a new
Medicare Provider. This is not a “CHOW.” Just as any other new provider, this new provider is not
eligible for payment for services that it provided to beneficiaries before the date on which the CMS
approves its application to participate in Medicare. Refer to: 42 C.F.R. § 489.13(b).

For more information on payments during the CHOW processing period, refer to Program Integrity
Manual, CMS Publication 100-08, Chapter 10, § 5.5.2.5.
130.1 – Impact of Change of Ownership and Assignment of Medicare Provider
Agreement on Overpayments and Underpayments
(Rev. 13235; Issued: 05-22-25; Effective: 06-23-25; Implementation: 06-23-25)
Assignment of Medicare Provider Agreement:
When an existing provider agreement is assigned to a new owner, the new owner is subject to all of the
applicable statutes and regulations, terms and conditions under which the existing agreement was issued.
One of these statutes requires the adjustment of ongoing payments to the provider to account for prior
overpayments and underpayments. Under a CHOW, there is no change in the provider agreement; only
the owner has changed. Therefore, when a new owner accepts assignment of the Medicare provider
agreement, the Contractor continues to adjust any payments it makes to the provider.
A. The Contractor Collects All Overpayments from the New Owner
In a CHOW, the new owner that receives automatic assignment of the Medicare provider agreement
also accepts responsibility for any overpayments that Medicare made to the old provider, whether those
overpayments are currently outstanding or are determined after the CHOW. This rule applies even if the
overpayments relate to a cost report or other time periods before the CHOW. Therefore, after the
contractor receives the tie-in notice from CMS or the State Survey Agency (SA) confirming that CMS
or the SA has approved the CHOW, the Contractor contacts only the new/current owner to collect any
overpayments. It pursues all collection remedies against the new/current owner via (1) recoupment; (2)
offset against Medicaid payments; (3) correspondence to the new/current owner; or (4) referral to the
United States Department of the Treasury (Treasury).
B. The Contractors Recoup funds first on any outstanding Overpayments from any
Underpayments before releasing the excess amounts back to the new provider.
After a CHOW, the Contractor issues any provider underpayments to the new owner, even if the
underpayment relates to cost years or other periods before the CHOW. Such underpayments include,
but are not limited to, underpayments which result from reimbursement appeals (regardless of whether
they result from administrative or court decisions, from administrative resolutions or from court
settlements). Contractors verify if there are any underpayments. If so, the Contractors shall recoup funds
and apply to outstanding overpayments from any underpayments that are determined for the provider and
refund any excess amounts.
C. Sales/Transfer Agreements between Owners are not Binding in Medicare Program
If the new owner does not reject automatic assignment of the previous owner’s Medicare provider
agreement, the assignment will occur automatically, consistent with Medicare regulations. Therefore,
the Contractor shall recover overpayments from the new/current owner, regardless of the terms of any
sales or other transfer agreement.
D. Overpayments Related to Fraud

A new owner that accepts assignment of the prior owner’s Medicare provider agreement is responsible
for any overpayments, regardless of the basis for the determination of the overpayment unless the
overpayment is under fraud investigation. In the case where the previous owner was under a fraud
investigation the assignment of the overpayment would not pass to the new owner.
130.2 – The Contractors Contact Only the Owner of Record
(Rev. 13235; Issued: 05-22-25; Effective: 06-23-25; Implementation: 06-23-25)
Once the Contractor receives a tie-in notice from the CMS or SA, indicating that the CHOW processing
is complete, the Contractor deals exclusively with the new owner on issues pertaining to the provider. If
there are issues that the Contractor is unable to resolve, they may contact the Centers for Program
Integrity (CPI), Provider Enrollment & Oversight Group (PEOG) and/or the Center for Clinical
Standards & Quality (CCSQ), Survey & Operations Group (SOG). Where there has been more than one
CHOW, the Contractor deals with the provider’s current owner of record.
A. Overpayment/Demand Letters
The Contractors shall send demand letters or overpayment notification letters only to the provider’s
current owner. Refer to CMS Publication 100-06, Chapter 3, Section 40.1 & 40.2.
B. Refunds Based on Appeal Decisions
The Contractor sends payment/s resulting from a reimbursement appeal to the providers current owner.
This includes, but is not limited to, payments that result from administrative or court decisions, from
administrative resolutions or court settlements.
C. Civil Money Penalties (CMP) Imposed for Quality-of-Care Deficiencies
When the CMS asks the Contractor to reduce ongoing Medicare payments to recoup a 	CMP, the
Contractor collects the CMP from ongoing payments to the current owner, 	regardless of the dates for
which the CMS imposed the CMP.
130.3 – Effect of New Owner’s Rejection of Assignment of the Medicare Provider
Agreement
(Rev. 13235; Issued: 05-22-25; Effective: 06-23-25; Implementation: 06-23-25)
Assignment of Medicare Provider Agreement:
If the new owner rejects the assignment of the provider agreement, there is a voluntary termination of
the old owners provider agreement on the date of the sale or other transfer. There would be no CHOW
of the Medicare agreement, and the previous owner would still be responsible for any outstanding
overpayments. 	Contractors follow normal collection processes to recoup any outstanding debt from the
previous owner.
If the new owner wants to participate in the Medicare Program, they must apply as a new provider,
under a new Medicare Provider Agreement. 	The new provider will not be eligible to receive Medicare
reimbursement for services rendered to beneficiaries before the date CMS approves the new application.

For providers which must undergo a compliance survey, that survey cannot take place until after the
date on which the old owner terminates its Medicare participation and the new owner has begun
providing services.
In the case of the rejection of the provider agreement, the new owner will not be able to participate in
the Medicare Program until a valid provider agreement is issued from CMS. The Contractor seeks
recovery of all overpayments and issues all underpayments to the last owner of record under the
terminated provider agreement.
140 - Bankruptcy
(Rev. 13825; Issued: 06-11-26; Effective:07-13-26; Implementation: 07-13-26)
This section outlines the required actions that Contractors must implement to safeguard the Medicare
Trust Fund when a provider files for bankruptcy. Although the term "provider” is used throughout this
chapter for consistency, these provisions are equally applicable to suppliers and physicians. However,
use of the term "provider" does not imply that the Medicare program classifies suppliers and physicians
as providers under its definitions. The section also explains how to accurately report the Centers for
Medicare & Medicaid Services' (CMS) accounts receivable balances and support CMS's efforts in
effectively evaluating and managing bankruptcy cases. This section does not address bankruptcy issues
related to debts arising under the Medicare Secondary Payer (MSP) provisions.
This chapter will guide Contractor staff through the initial stages of a provider bankruptcy. It is not
intended to be, and cannot serve as, a step-by-step process from beginning to end. Bankruptcy is
litigation. Bankruptcy law and the bankruptcy court affect all the actions CMS, and its Contractors take
concerning a bankrupt Medicare provider. Therefore, Contractor staff shall consult closely with the
servicing CMS Office or CMS Counsel. In some cases, attorneys from the Department of Justice (DOJ)
in Washington, D.C. or the United States Attorney's Offices will work directly with CMS. However, in
most cases, the servicing CMS Office will be in contact with the assigned CMS Counsel.
140.1 - Bankruptcy Forms
(Rev. 13825; Issued: 06-11-26; Effective:07-13-26; Implementation: 07-13-26)
Upon receipt of a bankruptcy notice, Contractors shall do the following:
1. 	Upon receipt of a bankruptcy notice, Contractors shall send the bankruptcy notice to the
OPOLE IFM Bankruptcy mailbox at OPOLE_IFM_Bankruptcy@cms.hhs.gov for review and
place the provider in a bankruptcy status in the Health Integrated General Ledger Accounting
System (HIGLAS).
2. 	The servicing CMS Office will review the bankruptcy notice and seek legal advice, if
appropriate.
3. 	The CMS Office will contact the Contractor/s, via e-mail, that services the bankrupt provider/s
and provide detailed instructions on the proper handling of the provider/s in the HIGLAS and
the System for Tracking Audit & Reimbursement (STAR), if applicable.
4. 	The Contractor shall provide a Bankruptcy Referral Checklist for the bankrupt provider/s.
5. 	The Bankruptcy Referral Checklist is now divided into two (2) tiers, each designed to gather
the bankruptcy information within a reasonable timeframe.
• 	Tier I - Information shall be submitted to the CMS Office within ten (10) business days of
receipt of the CMS instructions regarding the bankruptcy notification. If the CPI Fraud

Check results have not been received within the ten (10) business days, the Contractor
shall submit the Tier I checklist with all required information and indicate that the CPI
Fraud Check results are pending. The Contractor shall forward the CPI Fraud Check
results to the CMS Office immediately upon receipt.
• 	Tier II - Information shall be submitted to the CMS Office upon request.
Exhibit 1 provides the required information to be submitted for Tier 1 and Exhibit 2 provides
examples of required information for Tier II.
Exhibit 1
Bankruptcy Referral Checklist Tier I
(Submit to the CMS Office as an Excel file, via e-mail, within ten business days from receipt of the CMS
Office’s instructions)
Description 	MAC Response 	MAC Comments
BNK Case Number
Bankruptcy Court
Petition Date
Provider Name
Provider Number (s)
Provider Tax ID Number
Any Claims Under Appeal (Y/N)?
Any Overpayments in Appeal Status
(Y/N)?
Open Cost Reports (Y/N or
N/A)? (Part A Only)
Year & Status of Open Cost
Reports? (Part A Only)
Pending Cost Reporting Years in
Appeal? (Part A Only)
Pending Cost Report Reopening(s)
(Y/N)? (Part A Only)
Any Fraud Overpayments or
Investigations (Y/N)? 1
Date of Fraud Cases, if applicable
Evidence of a Recent or Pending
CHOW (Y/N)?
1 Fraud Check Report Request Instructions
1. 	The Contractor shall email its fraud check request spreadsheet along with a completed
CPI data request form (Attachment #1) to CPIFraudcheck-OFMDebt@cms.hhs.gov with the
subject line “Contractor/Jurisdiction Fraud Check Request” (example – ABC/J2 Fraud Check
Request).
2. 	The Contractor should expect to receive the fraud check report from CPI within one week of
sending the fraud check request to CPI. The Contractor shall use the fraud check report to
determine if the provider/supplier has an open fraud case.

The Contractor shall include a copy of CPI’s completed fraud check report for the NPIs that are included
in the Bankruptcy on the checklist spreadsheet Tier I that is sent to CMS.
*Note: The CPI Fraud check applies to bankrupt providers with NPI’s. Bankrupt providers with no
NPI’s should follow the current process of checking for fraud.
Attachment #1 – Sample Fraud Check Request Form
Exhibit 2
Bankruptcy Referral Checklist Tier II
(Submit to the CMS Office upon request, via email)
Examples:
Provider Participating in Medicaid program?
Provide copies of Demand Letters or Intent to Refer Letters
Provide copies of ERS approval or Denial Letters
Other Documents upon request such as provider agreements,
surety bond letters, expected completion of cost report
settlement, appeal outcomes, etc.
Referral Checklist Instructions for Tier I:
Category 	Data Element 	Instruction 	Example
Tier I 	Bankruptcy Case Number 	Prescribed format for this field
is Court Abbreviation + BNK
Case Number
TNMBKE-19-12345
Tier I 	Bankruptcy Court 	Court State and Region (if
applicable)
Tennessee Middle
Tier I 	Petition Date 	Date Petition Filed in US
Bankruptcy Court
01/01/2019

Tier I 	Provider Name
Tier I 	Provider Number (s) 	HIGLAS Provider or Supplier
Number
12-3456
Tier I 	Provider Tax ID Number 	12-3456789
Tier I 	Any Claims Under Appeal
(Y/N)
Tier I 	Any Overpayments in
Appeal Status (Y/N)
If Yes, provide stage of Appeal
(Ex: Reconsideration)
Tier I 	Open Cost Reports (Y/N
or N/A)? (Part A Only) If not Part A workload, list N/A
Tier I 	Year & Status of Open
Cost Reports? (Part A
Only)
If not Part A workload, list N/A
Tier I 	Cost Reporting Years in
Appeal (Part A Only) If not Part A workload, list N/A
Tier I 	Pending Cost Report
Reopening(s) (Y/N)? (Part
A Only)
Tier I 	Any Fraud Overpayments
or Investigations (Y/N)? CPI Fraud Check Request
Tier I 	Date of fraud cases, if
applicable
CPI Fraud Check Request
Tier I 	Evidence of a Recent or
Pending CHOW (Y/N)? Recent = Within a year of the
Petition Date
140.2 - Basic Bankruptcy Terms and Definitions
(Rev. 13825; Issued: 06-11-26; Effective:07-13-26; Implementation: 07-13-26)
The definitions below are generally accepted. Jurisdictional bankruptcy rules may impact the
interpretation of these terms. CMS Counsel’s guidance takes precedence over definitions listed below.
Adversary Proceeding is litigation in bankruptcy court to recover money or property; determine the
validity, priority or ranking of an interest in property; get approval for selling an estate's property
interest; revoke a discharge or an order of confirmation; and obtain declaratory judgments related to
matters of the bankruptcy estate. Litigation against the CMS to turn over recouped monies is an
example of an adversary proceeding.
Affirmative Recovery Actions is the debtor’s assumption of its executory contract (its provider
agreement).
Automatic Stay is an injunction that automatically springs into effect concurrently with the filing of the
bankruptcy petition. The automatic stay protects the assets of the estate from lawsuits, foreclosures,
garnishments, and any other collection activities that are not specifically exempt from the stay by statute
or specifically approved by the bankruptcy court. The automatic stay applies to Medicare overpayment
letters that demand repayment, assess interest or otherwise attempt to gain possession of property of the
bankruptcy estate.
Bankruptcy Trustee is a private individual or corporation appointed to represent the interests of the
bankruptcy estate and the debtor's creditors.

Bar Date is the deadline for filing a proof of claim. In general, the bar date for government agencies
such as the CMS is 180 days after the date of the order for relief (usually, the date the provider files for
bankruptcy). In some bankruptcies, however, the court may set a different date.
Claim is the creditor's right to payment or equitable relief creating a right to payment from a debtor or
the debtor's property whether that right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured. The date
a claim arises determines whether it is pre-petition or
post-petition. In Medicare, the date of service is the date of the claim.
Confirmation is bankruptcy court approval of a plan of reorganization.
Contingent Claim is a claim that may be owed by the debtor under certain circumstances, for example,
where the debtor is a co-signer on another person's loan and that person has not yet defaulted but may
fail to pay.
Creditor is a person or a business to which the debtor owes money, or which claims to be owed money
by the debtor.
Debtor is a person or business who has filed a bankruptcy petition.
Discharge is a release of a debtor from liability for certain dischargeable debts. It prevents the
creditors that are owed those debts from taking any action to collect those debts from the debtor or the
debtor's property. Prohibited actions include making telephone calls, sending letters, and having
contact that is intended to induce the debtor to pay the debt.
Dischargeable Debt is a debt for which the Bankruptcy Code allows the debtor's personal liability to be
eliminated.
Dismiss does not release a debtor from liability on any debts. It does not prevent creditors that are
owed those debts from taking appropriate action to collect those debts from the debtor or the debtor's
property. When a case is dismissed, it is as if the debtor never filed. Therefore, you may proceed with
actions that include making telephone calls, sending demand letters, and having contact that is intended
to induce the debtor to pay the debt.
Estate is the name for the Debtor's property interests overseen by the bankruptcy court. Filing a petition
in bankruptcy creates an estate consisting of all legal and equitable interests the Debtor has. In general,
a legal interest is direct ownership of property. In contrast, an equitable interest typically is indirect
and may require court involvement to obtain control or exercise the property rights.
Executory Contract is a contract under which the parties to an agreement have duties remaining to be
performed. A Medicare Part A provider agreement is treated as an executory contract.
Exemption is property that the Bankruptcy Code or applicable State law permits a debtor to keep from
creditors.
Fraudulent Transfer is a known and fraudulent transfer or concealment of property by the debtor with
the intent to defeat the provisions of the Bankruptcy Code.

Lien is a recorded claim upon specific property to secure payment of a specific debt or performance of
an obligation. Medicare does not have a lien on overpayments.
Liquidation is the conversion of the debtor's property into cash with the proceeds to be used for the
benefit of creditors.
Liquidated Claim is a creditor's claim for a fixed amount of money.
Motion to Lift the Automatic Stay is a request by a creditor to allow the creditor to take an action
against a debtor or the debtor's property that would otherwise be prohibited by the automatic stay.
Non-Dischargeable Debt is a debt that cannot be eliminated in bankruptcy. Overpayments resulting
from fraud are non-dischargeable. A complaint to determine discharge ability must be filed in the
bankruptcy court. See Adversarial Proceeding, above.
Plan of Reorganization is a debtor's detailed description of how the debtor proposes to pay creditors'
claims over a fixed period of time.
Priority is the Bankruptcy Code's statutory ranking of unsecured claims. It determines the order in
which unsecured claims will be paid if there is not enough money to pay all unsecured claims in full.
Priority Claim is an unsecured claim that is entitled to be paid ahead of other unsecured claims that are
not entitled to priority status. Administrative expenses for preserving the estate (e.g., certain accounting
fees or post-petition Medicare overpayments) are considered priority claims.
Secured Debt is a debt backed by a mortgage, pledged collateral, or another lien. The creditor that has
a secured debt has the right to pursue specific pledged property upon default. See lien above.
Schedule is a list submitted by the debtor along with the petition (or shortly thereafter) showing the
debtor's assets, liabilities, and other financial information. (There are official forms a debtor must use.)
Settlement Agreement is an agreement settling a dispute between two or more parties.
Stipulation is an agreement between parties respecting the conduct of legal proceedings approved by
the Bankruptcy Court. With appropriate approval, Medicare may enter into a stipulation agreement to
facilitate a change of ownership or to resolve an overpayment earlier than could be expected by
litigation.
United States Trustee is an officer of the Department of Justice responsible for supervising the
administration of bankruptcy cases, estates, and trustees, monitoring plans and disclosure statements,
monitoring creditors' committees, monitoring fee applications, and performing other statutory duties.
Unsecured debt is one that is not backed by property or collateral. Medicare claims are generally
unsecured.

140.2.1 - Bankruptcy is Litigation
(Rev. 13825; Issued: 06-11-26; Effective:07-13-26; Implementation: 07-13-26)
An individual or company declares bankruptcy by filing a petition for bankruptcy in a United States
Bankruptcy Court. The Bankruptcy Court then opens a bankruptcy case. The Bankruptcy Court closely
monitors the affairs of the individual or company (the debtor) including the creditors' treatment of the
debtor. Bankruptcy may appear to be "business as usual" for a debtor, but it is not. Upon receipt of a
bankruptcy notice, Contractors must place the provider in a bankruptcy status in HIGLAS and refer the
case to the CMS Office. Contractors should not take any further action against a debtor until they
consult the servicing CMS Office who will consult with the CMS Counsel assigned the bankruptcy. Do
not share any information about bankruptcy strategies or activities with the bankrupt provider.
140.2.2 - Types of Bankruptcies
(Rev. 13825; Issued: 06-11-26; Effective:07-13-26; Implementation: 07-13-26)
Title 11 of the United States Code (the Bankruptcy Code) identifies four types of bankruptcies that may
involve Medicare providers: Chapter 7, 9, 11 and 13. We briefly describe each type here to familiarize
the Contractor with these types of bankruptcy. However, these general descriptions do not replace your
attorney's specific advice in a particular bankruptcy case.
1. Chapter 7 - Debtors file Chapter 7 bankruptcies to obtain discharge of their debts. Companies that
file under Chapter 7 generally close. A court-appointed trustee accumulates the assets of the debtor, sells
them, and distributes the money among those whom the debtor owes (the creditors).
2. Chapter 9 - Chapter 9 bankruptcies involve municipalities, including entities such as hospital
districts. In a Chapter 9 case, the municipal entity itself – rather than the individual hospitals it operates
– is eligible for bankruptcy relief. Chapter 9 provides for reorganization, much like Chapter 11.
3. Chapter 11 - Debtors file Chapter 11 to reorganize a business or, in some cases, an individual’s
financial affairs. To emerge from Chapter 11, the debtor in possession submits a Plan of Reorganization
("Plan"), which specifies the amount and schedule of payments to creditors. Creditors whose claims are
impaired under the Plan are entitled to vote on it, while creditors whose claims are unimpaired are
deemed to accept the Plan. The Bankruptcy Court must confirm the Plan before it becomes effective.
Recovery amounts vary, and once the Plan is confirmed, the Bankruptcy Code provides for discharge of
the remaining debt, subject to certain exceptions.
4. Chapter 13 - Chapter 13 bankruptcies allow individuals (including sole proprietorships) with regular
income to adjust their debts. Generally, debtors must file a repayment plan within 15 days after filing
the petition. The Chapter 13 plan typically extends over a period of three to five years, during which the
debtor makes regular payments to a trustee for distribution to creditors.
140.2.3 - Filing Bankruptcy Draws a Line in the Sand
(Rev. 13825; Issued: 06-11-26; Effective:07-13-26; Implementation: 07-13-26)
The petition date (i.e., the date the debtor files its petition in bankruptcy with the Bankruptcy Court)
draws a line in the sand between pre-petition and post-petition actions. Events that occur before the
petition date are pre-petition. Events that occur on or after the petition date are post- petition. The
automatic stay governs many actions that Contractors may take concerning a debtor post-petition.

Contractors shall therefore consult with the servicing CMS Office before taking action, concerning the
debtor post-petition.
Medicare's right to recover overpayments in a bankruptcy case can depend on whether the overpayment
relates to pre-petition or post-petition periods. The CMS Office directs its Contractors on the
procedures for recovering both pre-petition and post-petition overpayments to ensure that Medicare
maximizes its recovery in accordance with the Bankruptcy Code. The distinction between pre-petition
and post-petition overpayments is based on the date of service, not the date of the demand for
repayment. Additionally, the ability of Medicare to recover overpayments may vary depending on the
district in which the bankruptcy is filed, as courts in different jurisdictions can interpret and apply
bankruptcy and Medicare recovery rules differently.
140.2.4 Bankruptcy Affects Nearly All Medicare Operations
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
Bankruptcy can affect every aspect of the interaction between the Medicare program and a debtor. Each
Contractor staff member who may encounter a debtor, is effectively a part of the Medicare "bankruptcy
team" for that case. The Contractor point of contact must ensure that all potential bankruptcy team
members notify the servicing CMS Office of any anticipated actions regarding the debtor and coordinate
those actions with the CMS Bankruptcy Analyst or the assigned CMS Counsel. In bankruptcy, both
inaction and inappropriate action hurt Medicare's chances of recovery. Some commonly affected areas
are:
1. Overpayment Recovery
Medicare's right to recover pre-petition and post-petition overpayments varies by federal jurisdiction.
(see discussion on set-off and recoupment in section F below). If the Contractor has overpaid a debtor,
they shall consult the servicing CMS Office and take appropriate action to maximize recovery of
Medicare overpayments. Contractor overpayment staff shall not send any manual letters to the debtor
until the CMS Office approves them for release, with the exception of NPRs and revised NPRs.
2. Fraud and Abuse
The Contractor shall ensure consultation with the CMS Program Integrity staff and the CMS
Bankruptcy Analyst before suspending an entity for fraud and/or abuse, recovering fraud overpayments,
or continue suspensions. If there is evidence that the provider filed for bankruptcy due to fraud it
committed, advise the CMS Bankruptcy Analyst handling the bankruptcy.
3. Reimbursement
Contractor reimbursement staff shall suspend payments if the provider does not timely file a cost report,
unless the CMS Office or CMS Counsel contacts the Contractor that suspension is not appropriate due
to circumstances requiring further review. DO NOT issue tentative settlement payments in bankruptcy
cases unless explicitly requested by the CMS Office.
Unless otherwise directed, Contractor reimbursement staff should continue to review and audit cost
reports following their usual procedures. The CMS Office will inform the Contractor of any stipulations
or settlements that may affect the review or audit process. In such situations, the CMS Office will
evaluate the costs and benefits of auditing cost reports when recovery is unlikely and will provide
appropriate guidance.

Contractors are no longer required to submit notices of program reimbursement (NPRs) or revised
NPRs to the CMS Office for review and approval when dealing with bankrupt providers. However, if the
CMS Office determines that a bankruptcy case is unique or exceptional, it will provide written direction
requesting the Contractor to submit NPRs or revised NPRs for the CMS Office’s review and approval
prior to issuance to the provider.
Once a final cost report settlement has been determined, Contractors shall ensure the required
language is included in the NPR or revised NPR before issuing it to the provider. If needed, Contractors
may contact the CMS Office to confirm any necessary actions for proper handling of the determination
in the Health Integrated General Ledger Accounting System (HIGLAS).
a. 	Cost Report Overpayment Letters shall include the following language:
Note: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding, please
follow the instructions found at the end of this letter.
If You Have Filed a Bankruptcy Petition
If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding, Medicare
financial obligations will be resolved in accordance with the applicable bankruptcy process.
Nothing in this letter should be considered as a request or demand for payment. Accordingly, we
request that you immediately notify us about this bankruptcy so that we may coordinate with both
the Centers for Medicare & Medicaid Services and the Department of Justice to assure that we
handle your situation properly. If possible, when notifying us about the bankruptcy, please
include the name the bankruptcy is filed under, the docket number, and the district where the
bankruptcy is filed.
If you have already notified CMS of the bankruptcy, the purpose of this letter is to inform you of
the overpayment owed to Medicare. Due to the automatic stay in bankruptcy, this letter does not
demand that you submit payment at this time. Because of the bankruptcy, recovery of Medicare
financial obligations will be resolved in accordance with the applicable bankruptcy process, and
pursuant to applicable jurisdictional and other provisions of the Medicare Act and regulations.
Please note that in bankruptcy, CMS may still exercise recoupment rights, which constitute a
defense to payment. Thus, we do not believe that the bankruptcy petition prohibits Medicare’s
recoupment rights, subject to the limitation on Medicare recoupment at section 1893(f)(2) of the
Social Security Act and the implementing regulations at 42 C.F.R. § 405.379.
If you dispute this overpayment determination, please follow the appropriate rebuttal and/or
appeals process described elsewhere in this letter.
To the extent any of the general instructions in this letter is not consistent with the bankruptcy
law and procedures, they may be modified to comport with bankruptcy law.
b. Cost Report Underpayment Letters shall include the following language:
Note: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding, please
follow the instructions found at the end of this letter.

If You Have Filed a Bankruptcy Petition
If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding, Medicare
financial obligations will be resolved in accordance with the applicable bankruptcy process.
Nothing in this letter should be considered as a request or demand for payment. Accordingly, we
request that you immediately notify us about this bankruptcy so that we may coordinate with both
the Centers for Medicare & Medicaid Services and the Department of Justice to assure that we
handle your situation properly. If possible, when notifying us about the bankruptcy, please
include the name the bankruptcy is filed under, the docket number, and the district where the
bankruptcy is filed.
If you have already notified CMS of the bankruptcy, the purpose of this letter is to inform you of
the underpayment amount. Because of the bankruptcy, recovery of Medicare financial
obligations will be resolved in accordance with the applicable bankruptcy process, and pursuant
to applicable jurisdictional and other provisions of the Medicare Act and regulations. Please
note that in bankruptcy, CMS may still exercise recoupment rights, which constitute a defense to
payment. Thus, we do not believe that the bankruptcy petition prohibits Medicare’s recoupment
rights, subject to the limitation on Medicare recoupment at section 1893(f)(2) of the Social
Security Act and the implementing regulations at 42 C.F.R. § 405.379.
If you dispute this underpayment determination, please follow the appropriate rebuttal and/or
appeals process described elsewhere in this letter.
To the extent any of the general instructions in this letter is not consistent with the bankruptcy law
and procedures, they may be modified to comport with bankruptcy law.
4. Payment
Contractor payment staff must receive approval from the CMS Office before taking any action that
changes the amounts payable or owed by a debtor.
5. Appeals
Contractor staff will be asked about any recent or ongoing appeals involving a provider in bankruptcy,
including Redeterminations, Qualified Independent Contractor (QIC) reviews, Administrative Law
Judge (ALJ) hearings, Provider Reimbursement Review Board (PRRB) cases and Department Appeal
Board (DAB) cases.
The Contractor should keep the CMS Office or CMS Counsel informed of material developments related
to appeals activity in bankruptcy cases that become known to it in the course of its operational
responsibilities that may affect the overpayment amount or CMS’ proof of claim.
If an appeal decision is favorable to the provider and reduces the overpayment amount, CMS or CMS
Counsel may determine that amendment of the proof of claim is required. In some cases, the CMS Office
may also direct the contractor to suspend or freeze outgoing funds.

6. Change of Ownership (CHOW)
A debtor may attempt to transfer provider agreements so that both parties may avoid overpayment
recovery. The Center for Clinical Standards and Quality (CCSQ) staff will notify the servicing CMS
Office when a debtor provider files for a CHOW and immediately notify the CMS Counsel who is
assigned the bankruptcy. The CHOW will not be processed until the CCSQ Office obtains the
concurrence of the CMS Counsel assigned the bankruptcy. In addition to CCSQ, the Medicare
Administrative Contractor’s provider enrollment staff and the Provider Enrollment Operations Group
(PEOG) within CPI also coordinate with the CMS Office assigned to the bankruptcy upon learning that
a debtor provider has initiated or plans to initiate a CHOW.
140.2.5 - Recoupment and Set-off (see also §140.6.4)
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
Recoupment and set-off are two of Medicare's primary tools for recovering overpayments from debtor
providers, but these terms may be used differently in other federal contexts, including under the Federal
Claims Collection Act. In bankruptcy, jurisdictions vary in their decisions about how Medicare can use
these tools. Some jurisdictions consider the Medicare Part A provider agreement one
contract/transaction and allow it to be the basis for broad powers of recoupment. Other jurisdictions
consider each cost report year as a distinct contract and restrict recoupment to periods within a particular
cost report year. The CMS Office/CMS Counsel can advise the Contractor whether current law in a
specified jurisdiction permits recoupment.
1. Recoupment
Recoupment permits a party to reduce current payments to account for prior overpayments made under
the same contract or transaction. Recoupment permits adjustment across the petition date and does not
require approval of the bankruptcy court. Therefore, Medicare should recoup in any jurisdiction where it
is permitted.
2. 	Set-off
If recoupment is not permitted, set-off will be considered. Medicare must take quick action to recover
overpayments using set-off. Set-off should not take place without specific instructions by the CMS
Office or CMS Counsel.
Set-off permits making similar adjustments in situations involving one or more contracts or transactions.
For example, suppose B owes A $40.00 under one contract and A owes B $50.00 under another
contract. If set-off is allowed, then A can take her $40 from the $50 she is holding for B (A would only
pay B $10.00). Generally, parties can request court permission to set-off. If allowed, parties can set-off
pre-petition claims against pre-petition payments or post-petition claims against post-petition payments.
They cannot set-off pre-petition claims against
post-petition claims.
3. 	Administrative Freeze
Once it is discovered that a provider is in bankruptcy, Medicare can enact a temporary administrative
freeze. An administrative freeze (sometimes called a Strumpf freeze, named after a Supreme Court case)
will allow time for Medicare to determine if there are any overpayments and to ask the bankruptcy court
to allow set-off. Speed is essential because courts do not permit set-off across the petition date. A pre-
petition overpayment can only be set-off against a pre-petition claim.

140.2.6 - Time is of the Essence -
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
Upon receiving credible information regarding an impending bankruptcy, the Contractor shall
immediately notify the CMS Office or CMS Counsel. This notification is essential to avoid forfeiting
the opportunity to recover Medicare overpayments. It is imperative not to wait for formal notice, and do
not assume that someone else has notified CMS, as timely communication is crucial. Various sources
may provide early bankruptcy information such as the Internet, newspapers, trade journals, and business
magazines. Contractors shall send information regarding an imminent provider/s bankruptcy to the
OPOLE IFM Bankruptcy mailbox at OPOLE_IFM_Bankruptcy@cms.hhs.gov.
140.3 - Contractors Establishment of Relationships to Ensure Effective Actions
Regarding Providers in Bankruptcy
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
140.3.1 - Contractor Staff Must Establish Relationships to Ensure That the CMS
Office and CMS Counsel Receive Prompt Notice of Provider Bankruptcies, so That
Medicare Can Take Quick Action
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
The Contractor may receive notice of a bankruptcy from many sources including the provider, other
Medicare Administrative Contractors, the State, the CMS CCSQ, or CMS Counsel. It is imperative that
Contractor staff act quickly when a provider files for bankruptcy in order for CMS to meet filing
deadlines in the bankruptcy court. Therefore, Contractor staff must establish relationships to ensure that
they receive information promptly about provider bankruptcies. Contractors shall send a notification of
bankruptcy to the OPOLE IFM Bankruptcy mailbox at OPOLE_IFM_Bankruptcy@cms.hhs.gov
140.3.2 - Contractors Must Recognize and Advise CMS Staff About Potential
Provider Bankruptcies
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
Contractor staff must be alert to news or notices of bankruptcy and notify CMS staff immediately.
Contractor staff should alert the CMS staff to all potential bankruptcies to the OPOLE IFM Bankruptcy
mailbox at OPOLE_IFM_Bankruptcy@cms.hhs.gov
Bankruptcy warning signs for Contractors (indications that a provider is experiencing financial
difficulty, and may file for bankruptcy):
1. 	Frequent unfiled or late-filed cost reports.
2. 	Failure to make timely payments on an extended repayment plan schedule.
3. 	Frequent changes of ownership.
4. 	Litigation
5. 	Voluntary or involuntary termination from the Medicare Program.
6. 	Provider has difficulty meeting payroll.

7. 	History of significant overpayment determinations.
8. 	Significant decline in Medicare and/or total patient census.
If the Contractor sees multiple early warning signs, contact the OPOLE IFM Bankruptcy mailbox at
OPOLE_IFM_Bankruptcy@cms.hhs.gov
140.3.3 - Contractor Staff will Establish a Relationship with the CMS Office that has
Jurisdiction Over the Bankruptcy
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
Contractors shall proactively establish a relationship with the CMS Office that handles bankruptcy
cases. This is important because bankruptcy laws may differ significantly from one jurisdiction to
another, due to the structure of the federal court system.
In the federal system, a party may appeal lower-level court decisions to a higher court, which has the
power to affirm or reverse the lower court. In order of increasing rank and authority, the federal system
is comprised of Bankruptcy Courts, District Courts, Courts of Appeals, and the Supreme Court. Each
court on this list generally hears appeals from the court immediately preceding it. Although the Supreme
Court has the final word, it hears a highly limited number of cases each year. This permits conflicts
between lower court decisions to continue for many years until they are resolved by the Supreme Court.
As a result, absent a Supreme Court decision, the most authoritative precedents that may exist (and
which may conflict with one another) are issued by the Courts of Appeals. There are 11 Courts of
Appeals (known as Circuits) covering various States, plus a District of Columbia Circuit. The decision
of each Court of Appeals is controlled within the States covered by that Circuit.
As discussed in greater detail below, the CMS may want to take different actions in a bankruptcy case
for different providers, including suspending payments, or recouping overpayments. In addition, the
CMS may have taken such actions before the provider filed for bankruptcy. Whether the CMS can
legally take or leave in place such actions may well depend on where the provider filed for bankruptcy,
and the existing legal precedents within that Circuit.
For example, at the time of this writing there is conflict in the Circuits about whether the CMS may
recoup pre-petition overpayments from post-petition payments without obtaining relief from the
automatic stay. The Third Circuit (covering Pennsylvania, New Jersey, Delaware, and the Virgin
Islands) forbids recoupment over different fiscal years without such relief. By contrast, the Ninth
Circuit (Alaska, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon, and Washington) and
the District of Columbia Circuit permit such recoupment. No other Court of Appeals has decided the
issue. There are various District Court decisions going both ways.
There are also conflicting decisions by District Courts on whether the CMS may continue to suspend
payments due to suspected fraud when the provider files for bankruptcy.
For these reasons, the Contractors shall neither initiate nor discontinue significant action affecting
payment without first contacting the CMS Office.

140.3.4 - The CMS Office Jurisdiction Generally Parallels the Bankruptcy Court
Where Case is Filed
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
In most cases, the RO which has jurisdiction over a bankruptcy case is the one which has jurisdiction
over the State in which the debtor files for bankruptcy (bankruptcy is filed in federal court). This RO
will usually be the lead RO. The RO will contact the contractor.
The ROs will review each bankruptcy, even when no current overpayments exist, since the possibility of
overpayment determinations remains until the FI settles all cost reports. Medicare is an unsecured
creditor in bankruptcy, and is among the last creditors to receive a distribution of funds, unless it takes
proactive steps to protect Medicare's interests.
140.3.5 - Contractor and the CMS Office Bankruptcy Point of Contact Staff Member
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
The contractors should contact their home RO to determine which RO will have responsibility for the
bankruptcy case. The RO point of contact may be at the RO level or the Consortium level in keeping
with Consortium agreements. The RO point of contact will consolidate information and manage, report,
and coordinate ongoing communication and activities among the appropriate involved parties (e.g.,
contractors, other ROs, Chief Counsels, and Central Office) regarding bankruptcies. The RO will
communicate the name, phone number, fax and e-mail address of the point of contact in writing or via e-
mail to the Accounting Management Group, Regional Counsel, and the affected Associate Regional
Administrators for Financial Management and respective contractors.
140.4 - Actions to Take When a Provider Files for Bankruptcy
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
140.4.1 - Establish Effective Lines of Communications
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
Upon becoming aware that a provider has filed for bankruptcy, the Contractor shall immediately inform
the OPOLE IFM Bankruptcy team via email at OPOLE_IFM_Bankruptcy@cms.hhs.gov as soon as
practicable, but no later than two (2) business days following such awareness.
Timely communication is critical due to court-imposed deadlines and the potential impact on Medicare’s
recovery rights.
The CMS Office will inform the Contractor of the CMS Bankruptcy Analyst assigned to the case. The
Contractor can coordinate with the assigned analyst regarding matters related to the bankrupt provider.

140.4.2 - Respond to the CMS Office Requests for Information
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
Upon receiving notification of a new bankruptcy, the Contractor shall prepare a Bankruptcy Referral
Checklist. The checklist is now divided into two (2) tiers, each designed to gather the bankruptcy
information. The Contractor shall refer to Section 140.1 – Bankruptcy forms - for information required
to be submitted to the CMS Office.
140.4.3 - Immediate Contractor Directives from the CMS Office
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
The assigned CMS Office will give the Contractor the following guidance as soon as the provider files
for bankruptcy.
1. The CMS Office will notify the Contractor of Provider Bankruptcy/Litigation.
a. 	Bankruptcy Filed
The servicing CMS Office will inform the Contractor that CMS has opened a bankruptcy case. The
CMS Office will inform the Contractor that it shall clear any future actions concerning the bankrupt
provider(s) through the CMS Office.
b. 	Bankruptcy Filing Date.
The servicing CMS Office shall notify the Contractor of the bankruptcy filing date, since it impacts
actions that the Contractor can take and the evaluation of whether payments are pre-petition or post-
petition.
c. 	Immediate response to requests.
Since bankruptcy has court-imposed deadlines, the Contractor shall take immediate action
whenever the CMS Office or CMS Counsel makes a request.
d. 	Obtain approval of all correspondence to provider.
The Contractor shall submit all correspondence that is not system generated to the servicing CMS
Office for approval prior to release, except for routine cost report settlement letters (e.g. NPRs or
revised NPRs), unless the CMS Office has directed that such correspondence be submitted for
review due to the unique or exceptional nature of the bankruptcy case. The servicing CMS Office
will modify all manual letters, obtain CMS Counsel approval, and will inform the Contractor of the
final copy of the letter that shall be released to the bankrupt provider.
e. 	The Servicing CMS Office
The servicing CMS Office will provide the Contractor with a contact name and telephone number.
The CMS Bankruptcy Analyst that provides oversight to the Contractor may need to continue to
assist the Contractor in an advisory role.
2. The CMS Office Will Notify the Contractor of Immediate Actions It Must Take.
a. 	Interim Rate Adjustment.

After consultation with the CMS Counsel, the CMS Office will direct the Contractor to
immediately perform an interim rate adjustment to ensure that payments are accurate and that no
future overpayments occur. (Medicare Financial Management Manual §2760.1(C.). 42 CFR
§413.64(i).
b. 	Recoupment.
The CMS Office will inform the Contractor (after discussion with the CMS Counsel) whether it
should continue or cease any current recovery action.
c. 	Administrative Freeze.
The CMS Office will inform the Contractor (after discussion with the CMS Counsel) whether it
should place payments in administrative freeze.
3. Actions the Contractor Must Take on an Ongoing Basis.
a. 	Expedite Cost Report Settlement
The CMS Office will instruct the Contractor to expedite the settlement of any open cost reports.
The CMS Office will caution the Contractor not to issue any tentative settlement payments unless
explicitly requested by the CMS Office (in consultation with the CMS Counsel). The Contractor
can issue final settlements to the provider without first obtaining permission from the CMS
Office (in consultation with the CMS Counsel) providing there was no formal communication
from CMS that the case is unique or exceptional in nature.
b. 	Contractors shall suspend payments if the provider does not timely file a cost report.
If the bankrupt provider fails to submit a timely and acceptable cost report, immediately notify
the assigned CMS Office or the assigned CMS Counsel prior to placing the provider in 100%
withhold and immediately notify the CMS Office or the CMS Counsel of the actions taken. When
the provider submits an acceptable cost report consult with the CMS Office or CMS Counsel
prior to release of the withheld funds.
c. 	Part B - Tracking Refunds
The Contractor may need to track voluntary refunds for a bankrupt provider. The assigned CMS
Office will work with the CMS Counsel to determine what information Counsel needs. The
Contractor should be aware of the impact on beneficiary deductibles and coinsurance in a Part B
bankruptcy.
d. 	Contractors should check with the assigned CMS Office before making other payments to the
provider.
It is important that all Contractors establish a process to ensure they do not make payments (e.g.,
underpayments, lump sum payments, or payments resulting from appeals) to bankrupt providers
who have outstanding overpayments unless the CMS Office (in consultation with the CMS
Counsel) so directs. This is especially critical for Contractors’ who must continue to settle open
cost reports.

4. Contractors Shall Track and Report Information to the CMS Office.
a. 	Cost Report Settlements and Claims Processed
Contractor staff should notify the CMS Office promptly of all proposed cost report settlements,
changes in the amount of determined overpayments or underpayments, and claims processed.
b. 	Appeals
If a bankrupt provider files an appeal for an overpayment, Contractor staff must keep the CMS
Office staff informed on the outcome of the appeal. Appeals may take place at the Contractor,
with an Administrative Law Judge, or at any Office of Hearings and Appeals, at the Provider
Reimbursement Review Board, or at Federal District Court. If the appeal is favorable to the
provider, it may require the CMS Office or CMS Counsel to amend its proof of claim because
the provider would have a smaller overpayment. Alternatively, in some cases, the CMS Office
may direct the Contractor to freeze any outgoing funds. The Contractor shall keep the CMS
Office or CMS Counsel updated on the status of appeals.
5. Record-Keeping.
a. 	Interest
The CMS will advise the Contractor whether it should continue to accrue interest for
overpayments. Medicare's ability to assess interest varies based on the circumstances of the case.
The CMS Office will consult with the CMS Counsel before determining whether the Contractor
should make an adjustment. If the bankruptcy is in a district where interest should stop accruing
on the petition filing date, the Contractor must make an adjustment to remove the interest.
The Contractor shall post these adjustments to the Contractors' internal systems and to the
Healthcare Integrated General Ledger Accounting System (HIGLAS). The Contractor shall also
post the adjustments to the Treasury Report on Receivables (TROR).
b. 	HIGLAS Update
The servicing CMS Office will instruct the Contractor to update the provider in bankruptcy
status in HIGLAS and whether recoupment of overpayments is permitted or not permitted.
• 	The Contractor shall allow for recoupment or netting of overpayments if recoupment of
overpayments is permitted,
• 	The Contractor shall not allow recoupment or netting of overpayments, if recoupment of
overpayments is not permitted.
c. 	Bankruptcy Case at the Contractor
Once the assigned CMS Office notifies the Contractor of a provider’s bankruptcy, the
Contractor shall ensure the bankruptcy debt is not referred to Treasury for collection under the
Debt Collection Improvement Act.

If any case has already been referred to Treasury – including debts automatically referred
through HIGLAS due to delinquency thresholds — the Contractor shall immediately take
appropriate action to recall the debt from Treasury upon notification of the bankruptcy.
All bankruptcy debts shall remain at the Contractor for financial reporting purposes. The
Contractor is responsible for ensuring that each debt is maintained in a bankruptcy status in
HIGLAS and that the correct netting indicator is applied or not applied, consistent with the CMS
Office instructions.
Debts will remain with the Contractor until the CMS Office provides direction regarding the
resolution of the debt, including whether to resume normal collection activities or proceed with
debt closure (e.g. write-off).
d. 	System for Tracking Audit and Reimbursement (STAR)
If the bankrupt provider participates in the Medicare program under Part A, the Contractor
shall ensure that STAR is updated with the effective date of the bankruptcy.
140.4.4 - Tracking Debts/CMS Communications
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
Financial Reporting. While the CMS Office is responsible for managing the bankruptcy case, all
bankruptcy debt will remain at the Contractor for financial reporting purposes on the TROR. The CMS
staff must work with Contractor staff to ensure proper reporting on the TROR throughout the
bankruptcy.
140.5 - Chain Bankruptcies
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
140.5.1 - Chain Providers
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
A chain provider is one that is owned by the same entity that owns another provider or provider. Chain
affiliates may include facilities that are public, private, charitable, or proprietary. They may also include
subsidiary organizations and holding corporations. Provider-based facilities, such as hospital-based
clinics, are not chain affiliates (MFMM § 2760.1).
When a chain files bankruptcy, there may be multiple Contractors involved in processing payments for
the chain. The CMS Bankruptcy Analyst, in coordination with CMS Counsel, will oversee the initial
bankruptcy case and work directly with the Contractors, informing them of the proper actions to take
with respect to recovering Medicare overpayments. The servicing CMS Office and CMS Counsel are
responsible for making all decisions and will communicate with Contractors regarding all aspects of the
bankruptcy.

140.5.2 - Single Provider Serviced by a Contractor
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
When a single provider, who is serviced by a Contractor, files for bankruptcy, the same principle for
processing a bankruptcy of a chain provider will apply. The CMS Bankruptcy Analyst, in coordination
with CMS Counsel, will oversee the initial bankruptcy case and work directly with the Contractor/s,
informing them of the proper actions to take with respect to recovering Medicare overpayments. The
servicing CMS Office and CMS Counsel are responsible for making all decisions and will communicate
with Contractors regarding all aspects of the bankruptcy.
140.6 - Affirmative Recovery Actions
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
140.6.1 - Working With the CMS Office and CMS Counsel
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
The Contractor notifies the servicing CMS Office or the CMS Counsel's Office immediately after it
receives information that a provider has filed for bankruptcy. It is essential for the Contractor to obtain
information on all Part A, Part B, or Durable Medical Equipment Administrative Contractor entities
involved in the bankruptcy, including Medicare identifying information, such as provider and supplier
numbers. If the Contractor has difficulty obtaining this information, it will consult with the CMS Office.
After gathering the information described in §140.4.2, the Contractor sends to the servicing CMS
Office.
The Contractor shall discuss with the CMS Office or CMS Counsel whether it should put payments in
an administrative freeze (a holding account) until Medicare has time to assess its position in the
bankruptcy. Also, the CMS Office or CMS Counsel will determine when the proof of claim is due and
whether the CMS Office or CMS Counsel will need additional information to prepare the proof of claim.
The Contractor shall share all new information regarding the provider's overpayments and
underpayments, cost report settlements, etc. with the CMS Office or CMS Counsel if asked. The
Contractor cannot take any further steps without obtaining the advice of the CMS Office and CMS
Counsel.
As the bankruptcy progresses, the CMS Office and Counsel may ask the Contractor to expedite
settlement of cost reports, update the CMS Counsel on provider overpayments or underpayments, and
provide Counsel with assistance on all aspects of the bankruptcy. As bankruptcy cases often have short
deadlines for filing pleadings and other documents, requests from the CMS Office or CMS Counsel must
have the highest priority in the workload, to protect Trust Fund assets.
140.6.2 - Assumption of the Medicare Provider Agreement
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
The Medicare Provider Agreement is considered an executory contract for purposes of bankruptcy.
Bankruptcy law permits a debtor to affirm ("assume") or reject each of its executory contracts. The
debtor must first get the formal approval of the bankruptcy court. If the debtor formally assumes the
Medicare provider agreement, and the Bankruptcy Court approves that assumption, the relationship
between the provider and Medicare will generally return to the ordinary course of business. The CMS
Office will inform the Contractor if the provider assumes the Provider Agreement.

If the debtor rejects the Provider Agreement, the rejection is a voluntary termination of the Provider
Agreement. The CMS Office will inform the Contractor if the provider terminates its provider
agreement in this way. The Contractor should not reimburse the provider for services it performs after
the date it rejects/terminates the Provider Agreement. If the bankrupt provider sells a facility to another
entity and that entity assumes the debtor's provider agreement, any outstanding Medicare
underpayments or overpayments regarding that facility should be transferred to the new owner (the
purchaser) when the new owner assumes the provider agreement. Although the debtor and the new
owner may have a private agreement regarding who is responsible for refunding Medicare
overpayments and who should receive any Medicare underpayments, CMS is not bound by such
agreements.
The Contractor shall calculate net amounts that may be due to or owing from the debtor.
140.6.3 - Settlement Agreements or Stipulations
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
During a bankruptcy, the servicing CMS Office and the CMS Counsel, working with the DOJ, may
negotiate a settlement agreement or stipulation with the debtor's attorney. Once a settlement agreement
or stipulation goes into effect, the CMS Office will advise all affected Contractors, other CMS Offices,
and the Office of Financial Management (CO). The servicing CMS Office will consult with the
Contractor to ensure that they conform to the conditions established in the settlement agreement or
stipulation.
140.6.4 - Recoupment
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
Generally, bankruptcy law prohibits recovery of pre-petition debt (debt arising prior to the filing of the
bankruptcy petition) from post-petition payments. However, Medicare Part A payments require
adjustments of ongoing payments to a provider to account for overpayments previously made to that
provider. 42 U.S.C. §1395g(a); §1395x(v)(1)(A). Most courts recognize this method of adjusting
payments as recoupment, which is permitted in bankruptcy, and is not subject to the automatic stay.
Alternatively, they recognize that bankruptcy law does not alter the adjustment of payments that the
Medicare statute requires. Thus, in most jurisdictions’ recoupment is appropriate. Nevertheless, the
Contractor always consult the CMS Office/CMS Counsel's Office about the adjustment (or recoupment)
of any payments to a bankrupt provider before taking, omitting, continuing or discontinuing any
action. (See also, discussion of Recoupment in §140.2.5).
Some courts do not agree that Medicare can recoup overpayments (without first obtaining relief from
the automatic stay) unless the provider incurred the overpayments in the current fiscal year. For
instance, in bankruptcy cases filed in Pennsylvania, New Jersey, Delaware and the Virgin Islands,
Medicare cannot recoup overpayments across fiscal years unless the debtor assumes the Medicare
provider agreement or CMS Counsel obtains permission from the court. The servicing CMS Office or
CMS Counsel will advise the Contractor whether it can recoup overpayments in these jurisdictions.
Again, the Contractor consults the servicing CMS Office and the CMS Counsel before adjusting or
recouping payments to a bankrupt provider.
140.6.5 - Administrative Freeze/Set-off
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)

Medicare can ask the court's permission to set-off pre-petition debts against pre-petition payments
(payments for pre-petition services, even if made post-petition) and post-petition debts against post-
petition payments (payments for post-petition services). CMS Counsel, through the DOJ, will file a
motion requesting permission to set-off.
Bankruptcy law allows a creditor like Medicare to freeze payments if it thinks it has the right to set-off
those payments. Generally, in the Part A context, the first 2-3 weeks of Medicare payments after a
debtor file for bankruptcy resulting from pre-petition services. Therefore, the CMS Office and CMS
Counsel might decide to freeze all payments for pre-petition services and then request bankruptcy court
permission to set-off those payments against pre-petition overpayments. Because there is such a short
period during which there might be pre-petition payments available to set-off available to freeze for set-
off, it is critical to find out about the bankruptcy and the provider's overpayments quickly.
Other pre-petition payments, such as underpayments or payments delayed because of medical review
may be available to set-off against pre-petition overpayments. It is important to notify the CMS Office
and CMS Counsel of any such underpayments or delayed payments.
Finally, because the U.S. Government is considered one creditor in bankruptcy, a Contractor may be
asked to freeze pre-petition payments to recover the debts owed by the provider to other government
agencies. However, we must use pre-petition payments to recover Medicare overpayments before
applying them to debts owed to other agencies.
140.7 - Preparing and Filing Proof of Claim
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
CMS provides a working definition of the term "claim" in §140.2. The proof of claim form alerts the
court to the existence of Medicare's claim. While exceptions exist, the general rule of thumb is that to
share in the bankruptcy estate, Medicare must file a proof of claim. The CMS Office or CMS Counsel
will file the proof of claim. It is critical that Contractors produce accurate and detailed overpayment
data, if requested, to the CMS Office or CMS Counsel to file a timely proof of claim.
In Chapter 7 and Chapter 13 bankruptcies, the deadline ("bar date") for the Government to file a proof
of claim is 180 days after the bankruptcy court's order granting relief from creditors (usually the date the
provider files for bankruptcy). The bankruptcy court establishes the bar date by court order in Chapter 9
and Chapter 11 bankruptcies. To meet the bar date, the Government must:
1. 	Get notice of the bankruptcy
2. 	Direct that notice to the appropriate agency and appropriate personnel
3. 	Determine exactly how many payment agreements the entity in bankruptcy has with Medicare
(i.e., do they owe Medicare and if so, how much)
4. 	Determine the status of each payment agreement
5. 	Prepare the proof of claim form
6. 	Get CMS Counsel approval
7. 	Sign it; and
8. 	File it in the bankruptcy court

Because the time to finalize a proof of claim can be short, the Contractors update overpayment
information as requested.
140.8 - Reserved for Future Use
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
140.8.1 - Reserved for Future Use
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
140.8.2 - Debt Located at the Department of Treasury
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
If a debt is located at the Department of Treasury (Treasury) for cross-servicing and the provider files
for bankruptcy, the servicing Contractor must immediately notify Treasury. The Contractor shall recall
the debt from Treasury as debts in bankruptcy status are ineligible for cross servicing and offset.
If the Treasury receives the initial notification of a bankruptcy filing while servicing a debt, they will
notify the Contractor, who, in turn, will notify the servicing CMS Office of the bankruptcy.
NOTE: Debts for unfiled cost reports are not reported on the TROR, therefore, if these debts become
"bankrupt," the Contractor shall record no transaction on these forms.
140.8.3 - Managing Bankruptcy Debt at the Contractor
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
All bankruptcy debts shall remain at the Contractor throughout the life of the debt. The servicing CMS
Office will assume full ownership and responsibility for managing the debt at the Contractor. The
Contractor and the servicing CMS Office establish communication procedures to ensure the Contractor
staff adhere to the procedures.
When chain providers are involved, the servicing CMS Office will contact the necessary contractors and
set up procedures for timely and accurate information transfer as requested.
During the bankruptcy, the Contractor is required to periodically review the Medicare Provider
Bankruptcy Dashboard within the HIGLAS Business Intelligence (HBI). This review ensures that any
transactions with discrepancies between the accounts receivable (AR) bankruptcy status and the
Provider or Customer bankruptcy status are addressed and resolved. For instance, if a provider is in a
bankruptcy status at the customer level and there are AR transactions not in a bankruptcy status, the
Contractor investigates the discrepancy to determine if the AR transactions should be placed in a
bankruptcy status.
The Contractor shall research and rectify the issue when a provider has a bankruptcy in a hold
status, in the Accounts Payable (AP) module but no bankruptcy status in the AR module.
The HBI Data Dictionary is available for Contractors as a source of information to understand the
definitions of the fields on the Medicare Provider Bankruptcy Dashboard. The Data Dictionary also

describes the situations that need to be researched and resolved by the Contractor in coordination with
the CMS Office.
The CMS Office or CMS Counsel is responsible for management of the debt from the initial petition
date through filing of the Proof of Claim, and the closure of the Bankruptcy. The Group Director or
Deputy Group Director for the Financial Operations & Oversight Group will have the authority to
terminate collection activity for cases that meet the criteria for being written off at the Group Director
or Deputy Group Director level.
140.8.4 - Closure of Bankruptcy Cases and Treatment of Overpayment Reporting
Systems at End of Bankruptcy
(Rev. 13825; Issued: 06-11-26; Effective: 07-13-26; Implementation: 07-13-26)
After a bankruptcy case is fully administered and the court discharges the trustee (if applicable), the
bankruptcy court closes the case. Chapter 11 bankruptcy usually ends with a confirmed reorganization
plan, beginning on the plan's "effective date", while Chapter 7 concludes when the Trustee dissolves the
corporation, ends operations, and distributes assets to creditors. The CMS Office or CMS Counsel will
provide specific guidance to the Contractor on required actions and resolving any remaining unpaid
debts when a bankruptcy case closes.
When a bankruptcy case closes, whether Chapter 11, or a proceeding under some other chapter of the
bankruptcy code, the Contractor must modify its financial records to reflect the outcome of the
bankruptcy. In general, amounts that the bankruptcy court does not require the provider to repay are
considered "discharged," and Medicare must release the provider from liability for the debt. All the
Contractors debt information must incorporate the bankruptcy outcome by writing off or resuming
normal collection of debts.
The Contractors are responsible to maintain detailed support for all revisions, as well as for any
extended repayment arrangements. Detailed documentation related to principal, interest charges,
immediate recoupment and extended repayment plans without interest are especially important in
global settlement adjustments which are common in some bankruptcy situations. These amounts may
need to be modified based on the global settlement. In global settlements which may cut across
providers in a chain, existing amounts may be removed from the provider listing and the new amount(s)
substituted in accordance with the bankruptcy documents. This will require close coordination among
the CMS Counsel, the CMS Office, CO and affected Contractor staff. Coordination and immediate
action are especially important if it is discovered that a bankruptcy discharge for a provider has
occurred in a previously unknown bankruptcy proceeding.
Occasionally, the court dismisses a bankruptcy because the debtor does not qualify for bankruptcy or
for some other reason. When there is a dismissal, with the advice of CMS Counsel, the CMS Office and
Contractor can usually treat the case as if the bankruptcy had never occurred and continue the normal
recovery process, which might include an "intent to refer" letter and subsequent transfer to Treasury.
Contractors shall ensure that their internal processing systems and financial reports no longer reflect
the case as one under bankruptcy, and interest should be reassessed upon termination of the case.

Always contact the CMS Office or CMS Counsel for guidance on the closure of a bankruptcy. There is
no standard formula for closing a bankruptcy, as it all depends upon the nature of the proceedings and
the court orders in the case. The closure could be preceded by a successful reorganization under
Chapter 11, a conversion to Chapter 7, or the result of a settlement agreement or stipulation. In all
cases, obtain approval from the CMS Office or CMS Counsel before closing the bankruptcy.
The servicing CMS Office instructs the Contractor on how to resolve unpaid debts after a bankruptcy
case closes. If the court terminates the bankruptcy case, without a discharge entered, the CMS Office
may direct the Contractor to resume collection of overpayments, including referring unpaid debts to
Treasury. For Treasury-eligible debts, the Contractor shall update the AR Status to ‘RESUME-COL-
BNK-TERMINATED’ on transactions emerging from bankruptcy.
Note: This status code informs the Treasury to override the bankruptcy status and continue the
normal collection process.
If the court concludes the bankruptcy case, with a discharge entered, the CMS Office will review the
debts to determine if the discharge is applicable. If the discharge applies, either the Group Director or
Deputy Group Director for the Financial Operations & Oversight Group will have the authority to
terminate collection activity for cases that qualify to be written off at their respective level.
Contractors shall update STAR, for providers classified under Part A, to reflect the bankruptcy
termination date. This ensures the continuation of the standard cost report settlement process without
requiring manual referral of settlement letters to the CMS Office, unless otherwise directed by specific
instructions from the CMS Office to halt the auditing of cost reports.
150 - ACCELERATED PAYMENTS- FI ONLY
(Rev. 29, 01-02-04)
An accelerated payment may be issued where there is:
• 	A delay in payment by the FI for covered services rendered to beneficiaries and this delay has
caused financial difficulties for the provider,
• 	In highly exceptional situations where a provider has incurred a temporary delay in its bill
processing beyond the provider’s normal billing cycle, or
• 	In highly exceptional situations where CMS deems an accelerated payment is appropriate.
A request for an accelerated payment shall not be approved unless the provider meets all eligibility
requirements, including an assurance that recoupment of the payment will be made on a timely basis.
The amount of the accelerated payment is computed as a percentage (sufficient to alleviate the impaired
cash position but in no case to exceed 70 percent) of the amount of net reimbursement represented by
unbilled discharges or unpaid bills applicable to covered services rendered to beneficiaries.
Accelerated payments shall be approved by the FI and the appropriate regional office. The regional
office will review each request for an accelerated payment to assure that the accelerated payment
provisions are being correctly and consistently applied and to provide the Administration with timely
information concerning provider and FI bill processing.

150.1 - Eligibility for Accelerated Payment
(Rev. 29, 01-02-04)
Provider eligibility for accelerated payments is contingent on the provider meeting all of the following
conditions;
• 	A shortage of cash exists whereby the provider cannot meet current financial obligations; and
• 	The impaired cash position described in “A” is due to abnormal delays in claims processing
and/or payment by the FI. However, request for accelerated payments based on isolated
temporary provider billing delays may also be approved where the delay is for a period of time
beyond the provider’s normal billing cycle. In this instance, the provider must assure and
demonstrate that the causes of its billing delays are being corrected and are not chronic; and
• 	The provider’s impaired cash position would not be alleviated by receipts anticipated within 30
days which would enable the provider to meet current financial obligations; and
• 	The basis for financial difficulty is due to a lag in Medicare billing and/or payments and not to
other third-party payers or private patients; and
• 	The FI is assured that recovery of the payment can be accomplished according to the instructions
in §150.4.
NOTE: Each FI is cautioned that neither the revision of the current financing regulations nor the
recovery of current financing payments is a basis for justifying a provider’s request for an accelerated
payment.
150.2- Computation of the Accelerated Payment
(Rev. 29, 01-02-04)
To compute the accelerated payment on account:
1. Determine the amount of the interim reimbursement for unbilled and unpaid claims;
2. Subtract the deductibles and coinsurance amounts, and
3. Multiply by 70% to determine the net reimbursable amount which can be paid to the provider.
150.3 - Recoupment of the Accelerated Payment
(Rev. 227, Issued: 09 17-13, Effective: 10-04-13, Implementation: 10-04-13)
The Medicare Contractor shall attempt to recover any accelerated payment within 90 days after it is
issued. To the extent that a delay in the provider’s billing process is the basis for the accelerated
payment, recoupment is made by a 100 percent withhold against the provider’s bills processed by the
(Part A) contractor or other monies due the provider after the date of issuance of the accelerated
payment. Any remainder is recovered by direct payment by the provider not later than 90 days after
issuance of the accelerated payment.

If the payment is necessitated by abnormal delays in claims processing and/or payment by the
contractor, recovery by recoupment will be reasonably scheduled to coincide with improvement in the
contractor’s bill processing situation and such recoupment will not impair the provider’s cash position.
In this situation, recoupment shall be completed within 90 days of the contractor processing the
provider’s claims.
If recovery is not complete 90 days after the accelerated payment is issued or 90 days after the
contractor begins processing claims, the accelerated payment is considered delinquent. The contractor
shall immediately send out an initial demand letter. This letter shall state that 100 percent recoupment
by withhold of all payments is in effect and that the recoupment will remain so until the debt is paid in
full or acceptable payment arrangements are made.
Contractors shall include the “Intent to Refer” language required to refer the debt to the Treasury
Department. (See Chapter 4, §70) Interest shall begin to accrue on the 31 st day after the date of the
demand letter at the prevailing rate set by the Treasury Department. If the contractor does not hear from
the provider within 15 days from the date of the demand letter, the contractor shall attempt to contact the
provider by telephone. If the demand letter is returned undeliverable the contractor shall attempt to
locate the provider using some of the guidelines set forth in Chapter 4, §10. If the contractor does not
hear from the provider within 60 days of the date of the demand letter, the contractor shall input the debt
into the Debt Collection System for referral to the Treasury Department for additional collection
activity.
SAMPLE FORMAT FOR PROVIDER REQUEST FOR ACCLERATED PAYMENT:
1. Provider:_________________________________ 	Provider Number:_________
Address:____________________________________________________________________________
___________________________________________________________
2. Contractor: ____________
3. Check (a) or (b) if applicable:
Cash balance is seriously impaired due to:
(a) 	Abnormal delay in Title XVIII claims processing and/or payment by the health insurance
Contractor.
(b) 	Delay in provider billing process of an isolated temporary nature beyond the provider’s normal
billing cycle and not attributable to other third party payers or private patients.
Note: If 3b is checked the provider should also include a narrative explaining the nature of the
problem, how it will be fixed, and the expected duration of the delay.
4. a. 	General fund cash position for provider as of ________ 	$_____
b. 	Anticipated receipts from all sources (exclusive of accelerated 	$_____
payments) in the next 30 days
c. 	Anticipated expenditures in next 30 days 	$_____

d. 	Indicated cash position in next 30 days 	$ ____
(a + b – c)
160 - Debt Close-Out
(Rev. 11787; Issued:01-19-23; Effective: 04-21-23; Implementation:04-21-23)
The contractor can request close-out for any eligible debt. However, the final decision to close- out any
debt must be approved by CMS. (See Chapter 4, §§ 70.16 and 70.17.2)
160.1- Reserved for Future Use
160.2 - Reserved for Future Use
170 – General Overpayment Provisions
(Rev. 29, 01-02-04)
The general overpayment provisions mentioned in this section are important to the overpayment collection
process but could not be categorized into another section. Some of these provisions require input from
other manual instructions and are only briefly mentioned in this manual. When necessary, another manual
reference has been cited for additional information.
170.1 - Offset of Overpayments Against Other Benefits Due – FI
(Rev. 29, 01-02-04)
A. Benefits Payable Under Part B - FI
Where the FI determines that a Part A overpayment has been made to a provider on behalf of a
beneficiary, it shall ascertain whether the beneficiary is entitled to any Part B payment for the services
in question. (See Medicare Benefit Policy, Chapter 6.) If it appears that Part B benefits are payable, it
shall arrange for billings under Part B. It shall use any Part B benefit as an offset against the Part A
overpayment.
B. 	Use of Lifetime Reserve Days - FI
If a Part A overpayment for which a beneficiary is liable was caused by payment for services rendered
after exhaustion of benefit period days, the FI shall reduce the amount of the overpayment by the
application of the beneficiary’s lifetime reserve days, unless the individual elected not to use them. An
individual who has been overpaid for services rendered after exhaustion of benefits can elect not to use
reserve days only if the individual refunds the overpaid amount. (See Medicare Benefit Policy, Chapter
5.)
170.2 - When the Carrier Does Not Attempt Recovery Action
(Rev. 29, 01-02-04)
The carrier shall not attempt recovery action on individual overpayments if:

A. 	Total Overpayment Less Than $10
The cost of recovering such a small amount ordinarily exceeds the amount recovered. However, the
Carrier shall accept unsolicited overpayment refunds regardless of the amount. See §160.1 for
termination of collection action procedures.
B - The Carrier Has Not Taken Action to Reopen the Payment Decision Within Four Years (48
Months) after the Date of the Initial Payment Determination
Unless fraud or similar fault is present, a payment determination may not be reopened where the Carrier
has not taken some action (which can be documented) questioning the correctness of the determination
within 4 years (48 months) after the date the initial determination was approved. (See Medicare Claims
Processing, Chapter 30, Correspondence and Appeals for policies governing the reopening and revision
of decisions to allow or disallow a claim.)
C - Payments to Providers for Medically Unnecessary Services or Custodial Care Where Waiver of
Liability Applies
Where both the beneficiary and provider were without fault (see Medicare Claims Processing, Chapter
31, Limitation on Liability), the Carrier shall waive liability for the overpayments.
170.3 - Information and Help Obtainable from the Social Security Office (SSO)
(Rev. 29, 01-02-04)
Occasionally, it may be possible for the FI or carrier to get information or help from the local SSO. For
instance, if the beneficiary has moved, the SSO may know the new address, or if the beneficiary has
died, it may know the administrator of the estate. If the beneficiary takes a check representing an
incorrect payment to the SSO, the SSO forwards the check to the FI or carrier. However, the FI or
carrier shall not ask the SSO to collect, or indirectly aid in, the collection of an overpayment.
170.4 - Recovery Where Physician or Other Individual Practitioner Is Deceased -
Carrier Only
(Rev. 29, 01-02-04)
Where a physician or other individual practitioner who is liable for an overpayment dies, the
overpayment should be withheld from other Medicare payments due their estate. If recovery is not
possible by recoupment, the carrier shall ascertain whether an administrator or executor has been
appointed and then send a letter to the estate of the decedent at the address of the legal representative, if
known, or the last known address of the deceased.
If the reply to the letter indicates that the estate will not refund the overpayment, or if a reply is not
received within 30 days, the case should be forwarded to CMS for possible litigation. When referring
such overpayments, the carrier shall include any information about the appointment of a legal
representative, the size of the estate, etc., and copies of any correspondence with survivors or others
concerning the overpayment.
170.5 -Provider Offers to Settle on Compromise Basis
(Rev. 29, 01-02-04)
An overpaid provider may offer to compromise an overpayment. The FI/Carrier shall forward
compromise offers to the RO only when further collection efforts would be unproductive and would not
benefit the Medicare Program.

170.6 - Unsolicited Overpayment Refunds
(Rev. 29, 01-02-04)
When a provider believes that an overpayment has been received and makes an unsolicited refund, the
FI/Carrier accepts it regardless of the amount. All documentation submitted with the unsolicited refund
should be forwarded to the correct department. (See Program Integrity Manual, Ch. 3, § 8.4 for unsolicited
refunds related to an outstanding fraud investigation.)
170.7 - Timely Deposit of Overpayment Refund Checks
(Rev. 29, 01-02-04)
Promptly deposit all refund checks into the Medicare “Federal Health Insurance Benefits Account”. The
FI/Carrier shall credit all such deposits on the day following the date of receipt in its mailroom or initial
point of entry. (It shall credit within 2 days if the bank is not located in the same city as the contractor.).
(See Ch.5, §100.3)
170.8 – Informal Referral to RO
(Rev. 29, 01-02-04)
For Medicare overpayment purposes a referral is a request to the Regional Office for assistance in an
overpayment. 	This may be for a waiver determination, a termination request, a request for technical
assistance, a referral to the Department of Justice, or any other aspect of the debt collection process. The
referral may be in the form of an email, phone, fax, or written correspondence. Any referral to the RO
should occur before the debt is eligible to be referred to the Department of Treasury. If changes occur to
the debt during the referral process, the FI/Carrier should immediately notify the RO.
Attachment A, located after the bankruptcy section, includes a referral checklist that FI/Carrier’s should
utilize if necessary.
180 - Reserved
(Rev. 227, Issued: 09 17-13, Effective: 10-04-13, Implementation: 10-04-13)
190 – Collection of Fee-for-Service Payments Made During Periods of Medicare
Advantage (MA) Enrollment
(Rev. 315, Issued: 05-17-19, Effective: 06-18- 19, Implementation: 06-18-19)
The term Medicare beneficiary identifier (Mbi) is a general term describing a beneficiary’s Medicare
identification number. For purposes of this manual, Medicare beneficiary identifier references both the
Health Insurance Claim Number (HICN) and the Medicare Beneficiary Identifier (MBI) during the new
Medicare card transition period and after for certain business areas that will continue to use the HICN as
part of their processes.
Effective October 1, 2003, Common Working File (CWF) implemented the informational unsolicited
response edit based on the same coding files made available for the reject edits in the risk-based MA
Enrollment coding files described in the CWF System Documentation at http://cms.csc.com/cwf/.
Upon receipt of notification that a beneficiary has previously enrolled in a MA Plan and the enrollment
is posted to the CWF, the CWF will search claims history to determine whether any fee-for-service
claims were erroneously approved for payment during a period of retroactive MA enrollment. The
CWF compares the period between the MA enrollment start date and the date of service of the claims in
history. Services that fall within the responsibility of the MA Organizations are identified.

The CWF generates an Informational Unsolicited Response (IUR) with trailers 05 & 24 containing the
identifying information regarding the claim subject to the risk based MA payment rules. The IUR has all
necessary information to identify the claim including the Internal Control Number or the Document
Control Number, and the Medicare beneficiary identifier. The CWF electronically transmits the IUR to
the contractor that originally processed the claim. The IUR is included in the existing CWF response
file. The IURs in that file for claims to be adjusted are identified with a unique transaction identifier.
The previously submitted claim is not canceled and will remain on the CWF paid claims history file,
pending subsequent adjustment.
Upon receipt of the IUR the Shared System software reads the trailer for each claim and either a manual
or automated adjustment is performed. The contractor must initiate overpayment recovery procedures
to retract the original Part A and Part B payment and must generate an adjustment to update or cancel
the claim to update CWF and contractor history.
Carriers
When CWF receives an adjustment for the fee-for-service claim on history, the deductible is updated on
the beneficiary’s file, and the corrected deductible information is returned to the carrier in trailer 11.
Carriers are to recover any monies due back to Medicare resulting from these denials, by following the
standard or (customary) recovery process. Carriers are also responsible for providing the M/A plan
number to the providers in their correspondence.
In the event that a denial is reversed upon appeal, for carrier claims, the Group Health Organization
(GHO) override code of ‘1’ must be used to allow payment.
Fiscal Intermediaries (FIs)
When CWF receives an adjustment for the fee-for-service claim on history, the deductible is updated on
the beneficiary’s file, and the corrected deductible information is returned to the intermediary in trailer
11. To recover any monies due back to Medicare resulting from these denials, claims are to be adjusted
and overpayments are to be recovered through the customary recovery process.
In the event that a denial is reversed upon appeal, a 1 byte override code field is created at the header
level for FI claims. The FIs should use override code “1” in this field for adjustments to all inpatient
claims, including home health. For an Outpatient Denial with a 'N' No Pay Code, use a value of '2' in
the HMO override field. The purpose of using “1” or “2” is to by-pass the CWF edit, which allows no
changes to the amount initially paid for claims.
Messages To Be Used With Denials Based On Unsolicited Response
The following messages should be used when the carrier receives a reject code from CWF indicating
that the services were rendered during a period when the beneficiary was enrolled in a MA, and billing
should have been submitted to the Managed Care Plan for payment.
Remittance Advice
At the claim level, report adjustment reason code 24 - Payment for Charges Adjusted. Charges are
covered under a capitation agreement/managed care plan.
Information to be made available to providers via letter (or an alternate method).
Language for Carriers to Use in Letter to Provider
Carriers
This beneficiary was enrolled in [Plan Alpha Numeric ID]; a risked based managed care organization,
for the date of service of this claim. You must contact the Managed Care organization for payment for
these services. A list that provides the MCO name and address associated with the MCO number is

available on the CMS Internet at
http://www.cms.hhs.gov/HealthPlansGenInfo/claimsprocessing20060120.asp#TopOfPage.
Fiscal Intermediaries
The plan number is not required on intermediary communications. Those providers are to determine
which plan to contact through an eligibility inquiry or by contacting the beneficiary directly.
New Medicare Summary Notice (MSN)
The MSN code 16.57 - Medicare Part B does not pay for this item or service since our records show that
you were in an Medicare + Choice Plan on this date. Your provider must bill this service to the
Medicare + Choice Plan.
16.57 - La Parte B de Medicare no paga por este artículo o servicio ya que nuestros expedientes
muestran que en esta fecha usted estaba en un plan de Medicare + Opción. Suproveedor debe facturar
este servicio a el plan de Medicare + Opción.
200 - Section 935 of the Medicare Modernization Act (MMA) - Limitation on
Recoupment Overpayments
(Rev. 293, Issued: 09-14-17, Effective: 04- 02-18, Implementation: 04-02-18)
For purposes of this instruction, the Provider, Physician and other Supplier will be
referred to as “Provider”.
Section 1893 (f)(2)(a) of the Social Security Act provides limitations on the recoupment of Medicare
overpayments and the limitations extend to the redetermination (first level) and the reconsideration
(second level). This section provides protection to providers during the initial stages of the appeal
process. It also requires the payment of interest on monies recouped when the provider prevails at the
Administration Law Judge (ALJ) or subsequent levels of appeal. These limitations do not affect a
provider’s right to appeal nor the requirements and timeframes associated with appealing; however, to
stop recoupment, a provider must act decidedly to appeal. If the contractor discovers a Bankruptcy or
the provider is in bankruptcy and appeals an overpayment, the contractor shall refer to publication
100.06, Chapter 4, Bankruptcy, § 140.4.3
The contractor shall cease recoupment or not begin recoupment when a valid redetermination or
reconsideration request is received timely on an overpayment subject to these limitations (see
§ 200.1 below). The provider has until the appeal deadline to file an appeal (refer to
publication 100.04, Chapter 29). If a provider wants to delay recoupment, it must submit the
redetermination appeal request within 30 days of the demand letter date. To continue the delayed
recoupment, the provider will have 60 days from the redetermination decision to submit a
reconsideration request. If the request is received before the appeal deadline but after recoupment
has started, the contractor shall stop the recoupment. The contractor shall not refund any monies
collected back to the provider, unless otherwise directed by the Centers for Medicare & Medicaid
Services (CMS). The contractor shall be accountable to ensure the debts continue to age and accrue
interest until the debt is paid in full.
After the first two levels of appeal are completed, the contractor shall resume recoupment and Normal
debt collection processes. Whether or not the provider subsequently appeals the overpayment to the
ALJ, or subsequent levels (Department Appeals Board (DAB), or Federal court), the contractor shall
initiate recoupment at 100% until the debt is satisfied in full, unless an Extended Repayment Schedule
(ERS) is established. If the debt was referred to Treasury and the provider files for an appeal, the
contractor shall recall the debt from Treasury while in an appeal status. If the appeal decision is

unfavorable to the provider, any outstanding debt will be referred back to Treasury, unless an
approved ERS is established or the provider pays the debt in full.
The contractor shall take the necessary steps to adjust affected account receivables (AR) after each
favorable appeal decision . The contractor shall apply the funds collected (ERS payments, voluntary
payments or recoupments) to any outstanding eligible overpayments first (monies shall be applied to
interest first and then to principal) and any funds in excess will then be refunded to the provider.
If the provider prevails at the third level of appeal or higher:

Payment of Section 935 (f)(2) interest is only applicable to overpayments recovered through
involuntary recoupment under the limitation on recoupment provisions. Interest is not payable
on the principal amount recouped on voluntary payments, (e.g., payments from existing ERS,
immediate recoupment prior to the Qualified Independent Contractor (QIC) decision, payment
suspensions and check payments, including checks paid to Treasury).
Requirements that remain in effect:
1. The appeal timeframes and filing requirements. (Refer to Publication 100.04, Chapter 29)
2. Overpayment interest accrual and assessment requirements. (Refer to 42 CFR 405.378 and
Publication 100.06, Chapter 4)
3. Underpayment interest requirements. (Refer to 42 CFR 405.378 and Publication 100.06,
Chapter 4)
4. Rebuttal requirements. (Refer to 42 CFR 405.373-405.375)
Note: Rebuttal statements are not appeal requests. Only valid appeal requests at the first and
second level trigger Section 935(f)(2) Limitation on Recoupment rights in accordance with 42
CFR 405.379.
5. Suspended payment requirements. (Refer Publication 100-08, Chapter 4)
200.1 - Limitation on Recoupment Section 935 (f)(2) Eligibility
(Rev. 293, Issued: 09-14-17, Effective: 04- 02-18, Implementation: 04-02-18)
The contractor shall determine if the limitations apply once an overpayment is determined (refer
to §200.1.1 and §200.1.2 for guidance). This will trigger the creation of the appropriate
initial demand letter and recoupment timeframes.
200.1.1 - Overpayments Subject to Limitation on Recoupment
(Rev. 293, Issued: 09-14-17, Effective: 04- 02-18, Implementation: 04-02-18)
This applies to most Fee-For-Service claims for which a demand letter is issued (refer to 42 CFR,
405.379), such as:
A. Post-pay denial of claims (refer to 200.1.2 for exclusions).
B. Medicare Secondary Payer (MSP) Duplicate Primary Payment (DPP).
(That was referred to the MAC contractor by the BCRC, CRC, other MAC contractor, or due
to Self-Reporting (42 CFR 411.25)).
C. MSP recovery due to provider's failure to file a proper claim with the third party payer plan,

program, or insurer for payment.
D. Final Claims associated with a Home Health Agency (HHA) Request for Anticipated
Payment (RAP) under Home Health Prospective Payment System (HH PPS), (refer to
200.1.2(D) for exclusions).
200.1.2 - Overpayments Not Subject to Limitation on Recoupment
(Rev. 293, Issued: 09-14-17, Effective: 04- 02-18, Implementation: 04-02-18)
A. All other MSP overpayments that aren’t identified in § 200.1.1 above.
B. Beneficiary overpayments
C. Cost report overpayments
D. HHA Request for Anticipated Payment (RAP) (refer to 200.1.1 (D) for exceptions).
Note: This is not considered a claim for purposes of Medicare appeals regulations; however, it is
submitted using the same format as Medicare claims. RAPs under the Home Health Prospective
Payment System (HH PPS) do not have appeal rights during (1) the 120 days from the start of
the episode; or (2) 60 days from the payment date of the RAP to submit the final claim;
rather, appeals
rights are tied to the claims that represent all services delivered for the entire HH PPS
episode (refer to Publication 100-04 Medicare Claims Processing Manual, Chapter 10, §§10.1.10
through 10.1.12,
40.1 & 50).
E. Hospice Caps calculations
F. Provider initiated claim adjustments (including MSP DPP provider initiated adjustments)
G. Accelerated/Advanced Payments
H. Reopening of claims (Clerical errors and mass adjustments)
I. 	Periodic Interim Payment (PIP) rate adjustments (with the exception of a RAC claim
review, which determines an overpayment)
J. Payment Suspensions
200.1.3 - Adjustment of the Fee-For-Service Claims
(Rev. 293, Issued: 09-14-17, Effective: 04- 02-18, Implementation: 04-02-18)
The contractor shall adjust the claims after the 935 overpayment is determined. This will
trigger the creation of the initial demand letter to begin recoupment on the 41st day after
the date of the demand letter.
200.1.4 – The Rebuttal Process and the Limitation on Recoupment
(Rev. 293, Issued: 09-14-17, Effective: 04-02-18, Implementation: 04-02-18)

In 42 CFR 405.373 through 405.375, regulations require that providers be given an opportunity
to rebut before recoupment takes effect. The provider can submit a statement that includes any
pertinent information as to why recoupment should not be put into effect on the date specified in
the notice/demand letter within 15 days. The rebuttal process is not an appeal. A rebuttal permits
the provider a vehicle to indicate why the proposed recoupment should not take place. The
contractor may, based on the rebuttal statement, determine to stop recoupment or proceed with
recoupment. In contrast, the limitation on recoupment provision mandates that no recoupment
begins when a valid and timely request for a first level or second level appeal is received.
Refer to Publication 100.08, Medicare Program Integrity Manual, Chapter 3, Verifying Potential
Errors and Taking Corrective Actions, § 3.6.5 - Provider Financial Rebuttal of Findings
200.1.5 – Extrapolated 935 Overpayments
(Rev. 293; Issued: 09-14-17, Effective: 04-02-18, Implementation: 04-02-18)
The contractor shall create one account receivable (AR) for the total amount of the extrapolated
overpayment, which includes the statistical sampling of claims. Refer to Publication 100-08,
Medicare Program Integrity Manual (PIM) for instructions on extrapolations.
200.1.6 – Medicare Secondary Payer (MSP) Provider Duplicate Primary Payment
(DPP)
(Rev. 293; Issued: 09-14-17, Effective: 04-02-18, Implementation: 04-02-18)
The contractor shall not process new MSP DPP debts where the debtor is an individual or entity
other than the provider; however, contractors shall continue to process provider MSP DPP Debts.
The contractors shall separately identify MSP DPP (including provider initiated) debts from all
Non-MSP Debts for budget purposes only. Contractors shall process MSP DPP debt as a 935 debt
with the exception when the provider requests or initiates the adjustment, it will not be subject to the
limitation on recoupment.
Note: All MSP DPP debt workload and cost associated need to be accounted for under the MIP
funding.
1. 	All Contractors shall :
a) 	Adjust claims to reprocess as secondary when the Explanation of Benefits (EOB)/primary
payment sheet is included with claims.
b) 	Adjust claims to a full claims denial when the EOB/primary payment sheet is not included
with the submitted claim(s).
i. Contractors shall process these overpayments as any other 935 overpayment in
accordance to the procedures outlined in Publication 100.06, Chapters 3, 4 & 5.
A. Contractors on HIGLAS shall:
Use the existing PART A and PART B MSP Transaction Type Codes for the 935 MSP
DPP that was referred to the MAC contractor by the BCRC, CRC, other MAC
contractor, or due to Self-Reporting (42 CFR 411.25).

They are as follows:
1. MAGHP-PROV935
2. MANONGHP-PROV935
3. MBGHP-PROV935
4. MBNONGHP-PROV935
B. Contractors on HIGLAS shall:
Use the transaction types for “Provider Initiated Adjustments” Not Subject to the
Limitation on Recoupment.
These transaction types will be mapped to APROV1 and BPROV1 letters.
1. (APROV1.pdf): Part A Non-935 Aggregate Demand
Letter (To be used for MSP DPP Part A Provider Initiated)
• 	MAGHP-PROV:
• 	MANONGHP-PROV
2. (BPROV1.pdf): Part B Non-935 Initial Letter
( To be used for MSP DPP Part B Provider Initiated)
• 	MBGHP-PROV
• 	MBNONGHP-PROV
C. Contractors not on HIGLAS shall:
1. Provider Initiated Overpayments:
Refer to Publication 100.6, Chapter 4, §20.1 for Non-MSP / Non-935 demand
letter language (Not Subject to Limitation on Recoupment)
2. All other MSP DPP’s :
Refer to Publication 100.6, Chapter 4, §20.1 for the Non-MSP 935 Demand Letter
Language Use the HIGLAS-CMS Receivable Balance Detail Report (Extract) or CMS Receivable
Activity
Report to account for all MSP DPP debts under MIP.
200.1.7 - Immediate Recoupment Requirements for 935 Overpayments
(Rev. 293; Issued: 09-14-17, Effective: 04-02-18, Implementation: 04-02-18)
Contractors shall offer providers the opportunity to request immediate recoupment. Providers
can elect this process to avoid making payment by check and/or avoid the assessment of interest
if the immediate recoupment pays the debt in full before day 31. If providers request an immediate

recoupment, they must understand that it is considered a voluntary repayment. The request for
immediate recoupment should be received in writing at least 16 days from the date of initial demand
letter to avoid the assessment of interest, however when the request is received after 16 days
from the date of the demand letter, the debt shall be placed in an immediate recoupment
status and interest will continue to accrue if the debt is not fully collected by day 31.
A. Contractors shall offer two immediate recoupment options.
1. A one-time request on the total overpayment amount (All accounts receivables) in a
single demand letter and any future demanded overpayments; Or
2. A request on the demanded overpayment (All accounts receivables) addressed in
a single demand letter only.
B. Contractors shall incorporate the following minimum information related to “immediate
recoupment” on its website:
1. This option is ONLY for overpayments that receive a demand letter.
• The request must be in writing, and may be submitted using regular mail,
Facsimile, or email with an encrypted file.
• The request must include the following:
1. Provider Name and contact phone number
2. Provider’s Medicare Number and/or the National Provider Identification (NPI)
3. Provider, Administrator or CFO’s signature ( someone with authority is
required to sign)
4. Letter number or a copy of demand letters first page
5. Which option the provider is requesting
• The contractor shall scan, copy or keep the original request for proof of receipt.
2. Contractors shall use their discretion when a provider does not submit all 5 requirements to
either:
• 	Reach out to provider for the missing information or
• 	Not accept the request based on missing information
3. Contractors shall continue to maintain or update the website on the immediate recoupment

process as needed.
C. Contractors shall inform providers that going through the immediate recoupment
process is considered voluntary payments and will not be subject to 935 (f)(2)
interest pursuant to § 1893(f)(2).
D. Contractors shall consider all written requests for an immediate recoupment as a
payment arrangement that constitutes a voluntary payment except for immediate
recoupment 30 calendar days after reconsideration decision.
• 	When the provider appeals to the ALJ and prevails.
1. 	Any money recouped (applied to the principal balance) 30 days
after the reconsideration decision will be subject to 935 Interest.
2. 	Contractors shall follow the 935 (f)(2)interest calculation rules when the
provider prevails and recoupment continued after an unfavorable
reconsideration decision.
E. Contractors shall ensure the demand letter and website explain that, when there is a
remaining principal balance after the initial immediate recoupment, they shall continue
recoupment and other collection activities.
F. C ontractors shall update all ARs associated to the request within 14 calendar
days from the Mailroom-stamped receipt date.
G. As applicable, contractors on HIGLAS shall use the functionality in HIGLAS,
which allows user to set the flag to immediate recoupment for multiple ARs
instead of only one AR.
H. Contractors shall update ALL AR’s within the demand letter(s) in the shared
systems when a provider requests the immediate recoupment option.
I. 	Contractors shall accept a written request to discontinue participation in the immediate
recoupment process at any time. Once received, Contractor’s shall stop the
immediate offset process as soon as possible from the mailroom receipt date, but
no later than 14 calendar days from mailroom receipt date.
J. 	Contractors shall consider all written requests for an immediate recoupment as a
payment arrangement that constitutes a voluntary payment.
200.2 - Requirements for All Initial Demand Letters (Manual or
Electronic)
(Rev. 293; Issued: 09-14-17, Effective: 04-02-18, Implementation: 04-02-18)
Contractors shall issue demand letters for all overpayments subject to the limitation on
recoupment protections. Refer to Publication 100.6, Chapter 4, § 20 and §20.1 for the

935 demand letter template. In addition to the requirements listed in Chapter 3 & 4, on
Initial Demand Letters (excluding Cost Report Demand Letters) the following are
specific requirements for overpayments subject to the Limitation on recoupment
protections:
Contractors shall:
1. Include a claim level detail report of the claim adjustments (AR’s) that comprise the
overpayment along
with each demand letter to each provider.
2. Use the language in the letter templates in chapter 4, § 20.1 for Overpayments subject to
the limitation on recoupment protections.
• 	HIGLAS users shall select the appropriate system generated letters
listed in Chapter 4, §20 and §20.1
• 	Non-HIGLAS users shall use the template for the 935 Initial Demand Letter
• 	Use the 935 Initial Demand Letter Template for manual letters.
• 	Contractors shall use the paragraph under (RAC Demand Letter Language
only) in the
935 Initial Demand letter for RAC overpayments subject to 935 in chapter 4, §20
and 20.1.
3. Scan or copy all letters in the internal system for non-HIGLAS users and HIGLAS
users shall use the Tool (Paper Clip) to ensure the availability to obtain a copy of manual
letters as needed.
4. Send the demand letter by first-class mail.
200.2.1 – 935 Initial Demand Letter
(Rev. 293; Issued: 09-14-17, Effective: 04-02-18, Implementation: 04-02-18)
Refer to Publication 100.6, Chapter 4, Debt Collections, § 20.1
200.2.2 - Recoupment After the Initial Demand: When Does it Begin?
(Rev. 311, Issued: 02-22-19, Effective: 10-07-19, Implementation: 10-07-19)
Timeframe 	Medicare Contractor 	Provider
Day 1 	Send demand letter. 	Receives notification by first class
mail of overpayment determination.
(The letter date is the determination
date).

Day 1-15 	Process rebuttal
requests received
before or by day
15 	deadline. 	No
recoupment occurs.
Can submit a rebuttal request within
15 days from the date on the demand
letter. (The letter date is the
determination date). Can request an
Immediate recoupment
Day 16-30 	Process rebuttal
requests received
before or by day 15.
Performs administrative
activity (i.e., validating
Redeterminations and
updating account
receivables to the
Redetermination
status).
No recoupment occurs
unless the provider
requested the
Immediate
Recoupment
Can request a redetermination and
potentially prevent any recoupment
from occurring on day 41.
Day 31-40 	Performs administrative
activity (i.e. validating
Redeterminations and
updating account
receivables to the
Redetermination
status).
No recoupment occurs
unless the provider
requested the
Immediate
Recoupment.
Can request a redetermination and
potentially prevent any recoupment
from occurring.
Day 41 	Recoupment begins on
overpayments without a
validate
redetermination
request.
Can request a redetermination and
potentially stop recoupment from
continuing.

1. 	Recoupment shall proceed on day 41 (with the exception of
immediate recoupment) from the initial demand letter without a
timely and valid request for a redetermination.
2. 	To prevent recoupment from occurring on day 41, the
provider must file the request for a redetermination no later than
the 30 th calendar day following the date of the initial demand
letter.
3. 	Contractors shall refer to Publication 100-04 Medicare
Claims Processing Manual, Chapter 29, and Appeals of Claims
Decision, to determine what constitutes a valid request for a
redetermination.
4. 	Contractors shall have internal controls in place to ensure
when a provider is in an 	immediate recoupment status
the recoupment process continues unless a request from the
provider is received to stop the immediate recoupment.
5. 	Contractors shall continue to stop recoupment on or after
day 41 from the demand letter 	date when the appeal request is
received and validated with an outstanding balance.
• Providers have 120 days after the date of receipt of the initial
determination (the notice of initial determination is presumed
to be received 5 days after the date of the notice unless there is
evidence to the contrary) to request a redetermination in
accordance with Publication 100.04, Chapter 29
200.2.3 - Payments Made Upon Notice of Demand or Through An
Immediate Recoupment Request
(Rev. 311, Issued: 02-22-19, Effective: 10-07-19, Implementation: 10-07-19)
Payments made by a provider in response to a demand are not recoupments as defined in
405.372(e). Recoupment is the recovery by Medicare of any outstanding Medicare debt
by reducing present or future Medicare payments and applying the amount withheld to
the indebtedness. Therefore, payments and recoupments from the immediate recoupment
process made in response to a demand is voluntary and are not subject to 935 interest.
Refer to section 200.1.5 Immediate Recoupment requirements in section 200.1.5

200.2.4 - Payment Suspension Relating to Limitation on Recoupment
(Rev. 311, Issued: 02-22-19, Effective: 10-07-19, Implementation: 10-07-19)
Suspended funds involving providers, physicians and suppliers who have been put on
payment suspension under 405.372 (e) not a “recoupment” for purposes of the limitation
on recoupment. Suspended funds is not a “recoupment” as this term is defined in
§405.370. CMS is only limited by section 1893(f)(2) of the Act from recouping
Medicare payments. We are not restricted in our ability to apply suspended funds to
reduce or dispose of an overpayment. 	The Provider cannot appeal a payment
suspension; only the resulting overpayment determination, may be appealed and
subjected to limitation on recoupment.
Exception: If the suspended payments are insufficient to fully eliminate any
overpayment, and the provider or supplier meets the requirements of 42 CFR § 405.379
"Limitation on Recoupment" provision under §1893(f)(2) of the act will be owed to
Medicare.
200.2.5 	Timeframe for Stopping Recoupment After a Redetermination
Request is Received
(Rev. 311, Issued: 02-22-19, Effective: 10-07-19, Implementation: 10-07-19)
Contractors’ corporate mailroom receives and stamps the date of receipt on each appeal
request. The timeframe begins in the corporate mailroom starting with the stamped
receipt/date. The date for filing a request is defined as the date it was received by the
appropriate contractor in the corporate mailroom, the date received via facsimile, or the
date received in the secure internet portal/application in accordance with Publication 100-
04, Chapter 29, § 310.2.
Note: If the appeal request is not readily identifiable as such in the corporate mailroom
the date for filing a request is defined as the date the Medicare Contractor identifies the
correspondence as an appeal request. In such instances Contractors must ensure
documentation is maintained on file justifying the alternate appeal request date.
Contractors shall implement the following upon receipt of a Redetermination
Request:
A. 	Contractors shall take eight (8) business days when the redetermination
request is received on or after calendar day 31 to do the following:
1. Stamp the receipt date in mailroom
2. Review and validate the appeal request; and
3. Set the redetermination status to avoid/stop recoupment. (If the debt is
under an immediate recoupment agreement, the recoupment continues
and in the appeal status at the same time)

Note: Providers run the risk at having recoupments occurring when the
request is received on or 	after day 31. When a recoupment occurs on
day 41 or later, the contractor shall apply the amounts to
the overpayment and not refund those amounts.
B. 	Contractors shall have an exception to the eight (8) business day
requirement when the Redetermination request received prior to calendar day
31:
• 	Contractors shall have the additional time to process a
redetermination request when received prior to calendar day 31
(from the date of the demand letter).
• 	The additional time shall not exceed (2-3 calendar days)
before day 41 from the demand letter date to update systems
(HIGLAS, MCS, VMS) timely to avoid systematic offset/
recoupments of the provider’s overpayment.
C. 	Contractors shall have seven (7) additional business days (from the
redetermination appeal status update) to generate and send the
redetermination receipt notice to provider.
D. 	Contractors shall communicate and coordinate between the appropriate
operational areas, immediately following all validation(s), on 935 overpayment
appeal requests.
E. 	Contractors shall have internal controls in place after the appeal
validations for updating the redetermination status to stop recoupment from
occurring on day 41.
•When the provider has an immediate recoupment agreement in
place this shall continue with the appeal status update, unless the
provider request the immediate recoupment to stop).
• 	Contractors shall update the appropriate systems (e.g., HIGLAS
or VMS) to reflect the 	redetermination appeal status, to prevents
further recoupments from occurring after day 41.
•Contractors on HIGLAS shall update closed debts to reflect the
redetermination appeal status for tracking purposes.

200.2.6 - Extended Repayment Schedules (ERS) and Appealing an
Overpayment Subject to Limitation on Recoupment
(Rev. 12261; Issued: 09-22-23; Effective: 12-11-23; Implementation: 12-11-23)
If a provider, physician or other suppliers has been granted an extended repayment
schedule (ERS) and submitted a valid and timely request for a redetermination or
reconsideration to the Medicare contractor, the provider or other supplier will not be
considered in default if payments were not made by the provider. The appeal would
supersede the ERS agreement; (under normal circumstances this would have been put
on withhold due to default of payment). The contractor shall send a notice to the
provider explaining if they do not resume its ERS payments they may be placed on
recoupment when there is no appeal status in place according to IOM 100.6 chapter 4
§50. Payments made
by a provider under an ERS are not recoupments for the limitation provision and are not
subject to 935 interest if reversed at the ALJ appeal or above. However, if a provider
defaults on the ERS schedule and recoupment begins before a valid and timely request
has
been received, those recoupments are subject to payment of interest under the 935
interest requirements. For additional information on the Filing timeframes or instructions
on
Extended Repayment Schedules refer to Chapter 4 §50.
200.3 - What to Do After the Validated Redetermination is Received
(Rev. 12261; Issued:09-22-23, Effective: 12-11-23; Implementation:12-11-23)
Action to take:
1. Contractors shall cease recoupment on validated redetermination requests. (Refer to
Section 200.2.2 above).
2. If the contractor recouped funds prior to receiving and validating a redetermination
request on or after day 41 from the demand letter date, the amount recouped shall be
retained. (Contractors shall use their discretion to refund if the request was timely
received but recoupment did not stop timely).
3. Contractors shall continue to collect other debts not in an appeal status subject to 935.
4. Contractors shall apply any excess monies from a check payment to 935 overpayments
as a voluntary collection and update the system to reflect the collection as a check amount
and not as a recoupment.
5. Contractors shall not recoup (exception: immediate recoupment) or place in suspense
any monies related to 935 overpayment debt subject to “Limitation on Recoupment”
while

it is in an appeal status.
6. Debts continue to age and accrue interest on the outstanding amounts.
7. Contractors shall send a redetermination receipt notice to the provider within the
timeframes allotted in Section 200.2.2 above.
8. Construct a short paragraph, such as Exhibit 1 below. Contractors shall use the sample
letter as an example and can use their discretion to change the language to address the
overpayment accordingly, as needed:
Exhibit 1: Redetermination Receipt Notice:
Current Date
Provider Name
Address
City, State ZIP Code
Provider Number:
Demand Letter Number:
Account Receivable Number:
Dear Provider Name,
This letter serves as a notification that we have received your request for a
redetermination
for the above accounts receivable or the services at issue. All collection processes have
ceased on the unpaid balance of the accounts receivable, unless you have entered into an
extended repayment schedule, immediate recoupment or paid in full. Interest will
continue
to accrue on any outstanding unpaid balance of the overpayment as explained in your
demand letter. If you have any questions, please contact our office at the number listed
below. You
may also visit us at www._______________.com.
Sincerely,
(Name and title)
200.3.1 – Outcome From the Redetermination Decision
(Rev. 12261; Issued: 09-22-23; Effective: 12-11-23; Implementation: 12-11-23)
Refer to Publication 100.04, Chapter 29, Appeals of Claims Decisions, Section 310.11 -
Effectuation of the Redetermination Decision, as needed for additional guidance. When
the redetermination decision is a favorable reversal, in whole or in part, adjustments
shall be made with respect to the overpayment and the amount of interest charged, in

accordance with 42 CFR § 405.378 and Publication 100.06, Chapter 4, §30. A Partially
Favorable Decision reduces the original principal overpayment amount and any interest
that is attributable to the amount of principal that was reduced by the decision.
Contractors shall follow the appropriate actions below following the notification of a
Redetermination decision:
A. Redetermination Fully and Partially Favorable Decision Outcome:
1. Contractors shall perform the following steps after the Fully and Partially
Favorable Decisions:
• 	Effectuate the decision, which consists of a claim history adjustment correction in the
internal system (FISS, MCS, and VMS).
Note: When there is an underpayment after the effectuation, those amounts shall be
eligible for offset/recoupment, and be applied to other outstanding debts first before
dispersing the refund amount. This does not include any open debts that are in an
appeal status or other type of pending status of exclusion (i.e., bankruptcy, suspensions,
and fraud) in accordance with Publication 100.6, Chapter 4, Section 70.14.8.1, and
Chapter 5, Section 410.4 (10).
• 	Create a manual invoice in the Healthcare Integrated General Ledger
System (HIGLAS) when there is an excess amount remaining.
• 	Send a Revised Overpayment Demand Letter.
a. There may be situations when a Fully Favorable decision
outcome creates a remaining balance.
.
1. If this occurs Contractors shall need to send a revised
overpayment demand letter to address this action.
b. For Fully Favorable decisions without an open balance remaining, the
Remittance Advice (RA) shall be acceptable in place of additional
written Notices.
• 	When a reversal in favor of the provider occurs, interest may be payable by
Medicare only if the underpayment is not paid 30 calendar days from the
finalized claims adjustment date. Refer to 42 CFR 405.378.
Contractors Shall:

1. Recalculate the overpayment and refund the remaining excess amounts to providers
within 30 calendar days from the finalized claim adjustment date.
Note: With the exception of extrapolations, the timeframe is 30 calendar days from
the receipt of the recalculation amounts. The process is once the appeal decision
is received, the decision and claim information is sent to the appropriate contractor
for the recalculation of the extrapolation. Once this recalculation is received back,
the MAC effectuates the decision i.e., adjusting the balance of the AR in HIGLAS,
issuing a recalculation letter or issuing a refund as needed.
Note: For extrapolations, the timeframe is 30 calendar days from the
receipt of the Unified Program Integrity Contractor (UPIC) and the Office of the
Inspector General (OIG) recalculations.
2. Shall not apply any excess funds to other overpayments that are in an appeal status
or any other pending status in exclusion, such as bankruptcy, suspensions, fraud
etc.
3. Update the AR Status from the finalized claim adjustment date.
4. Create a manual invoice to refund the provider within 30 calendar days from the
finalized claim adjustment date.
5. Send the Revised Overpayment Demand Letter when the results are fully or
partially favorable, and an outstanding balance remains.
Note: This entire process (1-5) shall be completed within 30 calendar days from the
final determination (final claims adjustment) date.
B. Contractors shall perform the following steps after a Fully Unfavorable
Reconsideration Decision:
1. Send the Redetermination Revised Overpayment Demand Letter on open balances
only within 30 calendar days from the date of the appeal decision.
2. Follow normal collection processes, as outlined in the IOM publication 100.06,
Chapter 3 and 4.
3. Recoupment begins on day 76 following the AR Status update in HIGLAS.
4. Issue the Intent to Refer letter after the Redetermination decisions when
appropriate, in accordance with Chapter 4, Debt Collection.

• 	This does not apply to any open debts that are in a subsequent level appeal status
or other type of pending status of exclusion (i.e., bankruptcy, suspensions,and fraud).
5. Contractors shall have the overpayment remain "eligible for internal offset" status
until paid in full, received a timely and valid request for reconsideration, or referred
to Treasury.
C. Recoupment after a Redetermination Decision
While the Redetermination Revised Overpayment Demand Letter states that
recoupment can begin no earlier than the 61st calendar day, Contractors shall utilize the
additional 15 calendar days before recoupment begins on any unpaid balance to
reconcile the payment or perform administrative actions. In addition, the 15 calendar
day period between when the provider is informed recoupment can begin (day 61) and
when recoupment actually begins (day 76) is designed to facilitate communication
between the QIC and the contractor to determine if a Reconsideration request has been
received.
Recoupment shall not resume upon notification by the QIC of the receipt of a timely
and valid request for a reconsideration. If the debt has been in an appeal status and no
reconsideration has been received, the status of the debt shall be changed to reflect
“eligible for internal offset" to “resume recoupment”.
D. When Recoupment Can Begin or Resume After the Redetermination Decision
Timeframe 	Contractor actions for
recoupment
Provider
Day 60 	Overpayment remains in an
Appeal Status - No recoupment
occurs
Refunds the overpayment in
full or submits a request for
reconsideration, or requests
an ERS.
Day 61-75
No recoupment if the contactor
is in receipt of the
reconsideration case-file
and/or has official proof of
request received and stamped.
Overpayment remains in the
appeal status.
Files reconsideration or
refunds the overpayment, or
requests an ERS.

Day 76 to 180
Recoupment stops with a valid
receipt of the reconsideration.
Provider has 180 days from
date of receipt of the
redetermination to appeal to
the reconsideration level.
E. Redetermination Revised Overpayment Demand Letter for Favorable and
Unfavorable Appeal Decisions
Contractors shall use the letter template below in Exhibit 2 for favorable and
unfavorable decisions. If the language in Exhibit 2 does not address the appropriate
scenario, Contractors shall modify the language to address the overpayment as
appropriate.
1. 	Contractors shall send a Redetermination Revised Overpayment Demand letter on
partially and Fully Favorable Decisions when the recalculation resulted in:
a. Paying the new, revised amount in full from previous recoupments/collections.
b. Reducing the revised amount from previous recoupments/collections
c. Reducing the revised amount from previous recoupments/payments on an
established ERS.
d. Reducing the original amount with no recoupments/collections.
2. Refer to chapter 4, Section 50 for ERS instructions on a revised extended repayment
schedule.
3. Contractors shall use Exhibit 2 options or at their discretion, adjust the language to
address the scenario when sending the Redetermination Revised Overpayment Demand
Letter.
Exhibit 2: 	Medicare Redetermination Revised Overpayment Demand Letter
Current Date
Provider Name
Address
City, State ZIP Code
Provider Number:
Account Receivable Number:

Dear [Provider Name],
This letter is in reference to the redetermination decision dated__________, for the
overpayment in the amount of____________ issued to you on _________ [Date of
demand].
(Option 1 – Fully or Partially Favorable Revised Demand Letter)
Based on the Fully or Partially Favorable decision and the recalculation, the revised
balance
of the Principal is __________ and Interest is __________. 	A payment totaling ________
is due by __________.
Or
(Option 2 – Partially Favorable on Debts Paid in Full Due to Decision)
According to our records, CMS has applied a total of [AMOUNT PAID ON DEBT
BEFORE EFFECTUATION] to your debt. This amount represents the total amount of
payments on the debt before the effectuation of your redetermination decision. Based
on the effectuation of the redetermination decision, you had [AMOUNT] that was applied
to the remaining outstanding balance, after the redetermination decision was effectuated,
of [AMOUNT DUE AFTER REDETERMINATION] as a result, the debt has been paid in
full. This does not affect your right to appeal to the next level Reconsideration at the
Qualified Independent Contractor.
Or
(Option 3- Partially Favorable applied excess funds to other overpayments with
or without a refund)
According to our records, after the effectuation, your debt had an underpayment for
[AMOUNT] that was applied to other outstanding debts. The provider may request a
listing of debts by contacting [ xxx-xxx-xxxx].
Or
(Option 4 – Fully Unfavorable notification letter)
Based on the Unfavorable Determination, the balance of the principal is _____________
and the balance of outstanding interest is __________. 	A payment totaling __________
is due by __________.
When the redetermination decision is [Unfavorable or Favorable], we may begin
to recoup no earlier than 61 days after the date of this [Notification or Revised demand
letter]. 	Please note if recoupment stops, interest continues to accrue.

[Contractors shall select the correct option above based on the outcome of decision].
Rebuttal Process:
Under our existing regulations 42 CFR Sections 405.374, providers and other
suppliers will have 15 days from the date of this demand letter to submit a
statement of opportunity to rebuttal. The rebuttal process provides the debtor the
opportunity before the suspension, offset, or recoupment takes effect, to submit any
statement (to include any pertinent information) as to why it should not be put into
effect on the date specified in the notice. A rebuttal is not intended to request a review
of supporting medical documentation nor to express disagreement with the
overpayment decision. A rebuttal shall not duplicate the redetermination process.
This is not an appeal of the overpayment determination. Our office will advise you of
our decision 15 days from the mailroom stamped receipt date of your request.
The rebuttal statement does not cease recoupment activities consistent with Section 935
(f)(2) of the Medicare Modernization Act (MMA).
If you wish to appeal this decision:
If you disagree with this overpayment decision, you may file an appeal. An appeal is a
review performed by people independent of those who have reviewed your claim so far.
The second level of appeal is the reconsideration. You must file your request for the
reconsideration within 180 days from date of receipt of the appeal decision letter in
accordance to 42 CFR §405 962(a). However, if you wish to avoid recoupment from
occurring, you need to file your request for reconsideration within 60 days from the
date of this letter, as described above. Unless you show us otherwise, we assume you
received this letter, five days after the date of this letter.
[Include this paragraph when there is a remaining balance owed.]
If you have already sent a payment and will not be appealing to the next level
appeal, thank you, and we ask that you disregard this letter.
If you are unable to repay the amount due in full, please visit our website for
instructions on an extended repayment schedule (www.contractor.com).
Please refer to your initial demand letter for any other information not disclosed in
this letter.
If you have any questions or concerns on this matter, please write to our office or contact
us at the address at the bottom of this notice.

Thank you,
Analyst Name
Title
xxx
-
xxx
E. Initiating or resuming recoupment after a Withdrawal or Dismissal
Contractors shall initiate or resume recoupment following a request for a withdrawal
from the provider or other suppliers or from a Redetermination dismissal notification.
Remove the appeal status as soon as possible but no later than 30 calendar days from the
requested withdraw or from the dismissal notification to resume recoupment. For
additional guidance, refer to 42 CFR §§405.379, 405.952 and 405.972 and publication
100.04, Medicare Claims Processing Manual Chapter 29 – Appeals of Claims Decisions.
200.4 - Extended Repayment Schedules (ERS) With an Appeal That is
Subject to Limitation on Recoupment
(Rev. 12261; Issued:09-22-23, Effective: 12-11-23; Implementation: 12-11-23)
The Qualified Independent Contractor (QIC) determines the validity and timeliness of a
request for the reconsideration. To limit recoupment, the request should have a
mailroom receipt date no later than the 60th calendar day from the date of the
redetermination for Unfavorable Determinations or from the Revised Redetermination
Overpayment Demand Letter date.
1. 	Contractors shall place overpayments in the Reconsideration appeal
status toavoid further recoupments when validated on or after day 60
from the Redetermination decision date or the Redetermination Revised
Overpayment Demand Letter date.
2. 	Contractors shall recall debts back to its location when the overpayment
was referred to Treasury.
Note: Providers have 180 days from the date of receipt of the redetermination appeal
decision tofile for a reconsideration request in accordance with Chapter 29, Claim appeals,
section 240. Once the appeal is received and validated, Contractors shall update the appeal
status to stop recoupment. When the QIC receives a request for reconsideration, it will
request the case file from the MAC using the Redetermination Case File Request Form in
accordance with Publication 100-04, Medicare Claims Processing Manual Chapter 29 -
Appeals of Claims Decisions.
A. Contractors shall utilize the 15 additional calendar days (between the 61 st day
to the 76th day) starting from the redetermination appeal decision date or the

Revised Redetermination Overpayment Demand Letter date to address the listing
below after the case file requests are received.
1. 	The appropriate unit shall continue to update the list for the overpayment recovery
Unit with Part B case file requests received.
2. Review the MAS for updates on the Part A Reconsideration updates.
3. Update the HIGLAS to the reconsideration appeal status, when appropriate.
4. After the appeal status updates (in HIGLAS), send the Reconsideration Receipt
Notice to the appellant within eight (8) business days.
B. Contractors shall have internal controls in place to avoid recoupment from starting
on day 76.
C. Contractors shall contact the QIC only when it becomes necessary to confirm
receipt of an appeal when notified by the provider and the 76th calendar day is
approaching.
Contractors shall confirm:
1. 	There is no communication from the QIC for a request of the redetermination
case file for Part B.
2. There is no information in the MAS for Part A.
3. The Provider submitted a copy of the tracking number from (FedEx, United
States Postal Services (USPS), and United Parcel Services (UPS)) and/or a copy
of the QIC notification of receipt date for the reconsideration request.
200.4.1 - Actions to Take Upon Receiving Notification from the QIC for
Case Files:
(Rev. 12261; Issued:09-22-23, Effective: 12-11-23; Implementation: 12-11-23)
In accordance with Publication 100-04, Chapter 29, the QIC is required to use the
Reconsideration Case File Request form when requesting the case file from the
Contractors.
1. 	Contractors shall update the appeal status to stop or not start recoupment on
Reconsideration requests received on or after day 76. This shall be completed
within eight (8) business days from the email receipt date of the Redetermination
case file request to the appeals unit or from the receipt date of the submitted
reconsideration appeal request in MAS.
2. Contractors shall retain and apply any recouped funds collected on or after the
76th calendar day. However, if the request was timely stamped prior to day 76 and
recoupment occurred, it is at the Contractors’ discretion to refund those funds.

3. Contractors shall accept other legitimate information/sources to support placing
the AR in the Appeal status to stop recoupment including:
a. 	Proof of receipt (written notification from the QIC) from the provider that
shows the date the QIC received the reconsideration request.
b. Any legitimate information from an available and reliable source that
can identify the date when the QIC received and/or validated the
reconsideration request.
c. The tracking validation documentation (e.g., FedEx, United States Postal
Service (USPS), and United Parcel Services (UPS)) that reflects the
receipt date of the request.
4. 	Contractors shall continue to collect other debts owed by the provider but may not
withhold or place in suspense any monies related to the debt(s) in an appeal status.
a. 	Contractors shall report overpayments that are in appeal status on the
Treasury Report on Receivables (TROR).
b. 	Debts continue to age and accrue interest on the outstanding amounts.
5. Contractors shall send a Reconsideration Receipt Notice to the appellant within eight
(8) business days from the Reconsideration Appeal status update. Contractors can send
this notice via USPS mail or electronically (via email or a secure site).
The Reconsideration Receipt Notice example is provided in Section 200.4.2, Exhibit 3
below. Use the provided language or use your discretion to modify the proposed
language as needed to address the overpayment scenario, which include the following:
a. 	The notice shall have validation language.
b. 	If there was collection activity, explain that when the overpayment is in an
appeal status, recoupment stops during the appeal review process on those
overpayments that are not included in an immediate recoupment agreement; or
c. 	If the provider has an Immediate Recoupment agreement, the notice shall
state that the recoupment will continue due to this agreement.
200.4.2 - The Reconsideration Receipt Notice Example
(Rev. 12261; Issued:09-22-23, Effective: 12-11-23; Implementation: 12-11-23)
Exhibit 3: Reconsideration Receipt Notice
Current Date
Provider Name
Address
City, State ZIP Code

Provider Number:
Account Receivable Number:
Dear Provider Name,
This letter serves as a notification that [Contractor name] received confirmation that the
Qualified Independent Contractor (QIC) [Name] has validated your request for a
reconsideration review.
All collection processes have ceased on the unpaid balance of the accounts receivable unless
you have entered into an extended repayment schedule or an immediate recoupment
agreement.
Interest will continue to accrue on any outstanding unpaid balance of the overpayment as
Explained in your demand letter.
You will receive a reconsideration decision letter after the QIC has rendered its decision.
If you have any questions, please contact our office at the appropriate number listed below.
you may also visit us at [website].
Sincerely,
(Name and title)
200.4.3 - Actions to Take after the Reconsideration Decision
(Rev. 12261; Issued:09-22-23, Effective: 12-11-23; Implementation:12-11-23)
The QIC decision may require a recalculation of the debt’s balance and effectuation by the
Contractor. Refer to Publication 100-04, Medicare Claims Processing Manual, Chapter 29
§320.9 for additional information on effectuations. When a decision is in favor of the provider
occurs, interest may be payable by Medicare if the underpayment is not paid 30 calendar days
of the final determination (e.g., claim adjustments finalized due to decision). Refer to 42 CFR
405.378.
A. Contractors shall perform the following steps for Fully and Partially Favorable
Reconsideration decisions:
1. Effectuate the decision, which consists of a claims history adjustment correction in
the internal system (FISS, MCS and VMS).
Note: With the exception of extrapolations, the timeframe is 30 calendar days from
the receipt of the recalculation amounts. The process is once the appeal decision
is received, the decision and claim information is sent to the appropriate contractor

for the recalculation of the extrapolation. Once this recalculation is received back,
the MAC effectuates the decision i.e., adjusting the balance of the AR in HIGLAS,
issuing a recalculation letter or issuing a refund as needed.
Note: For extrapolations, the timeframe is 30 calendar days from the receipt of the Unified
Program Integrity Contractor (UPIC) and the Office of the Inspector General (OIG)
recalculations.
2. Create a manual invoice in HIGLAS when there is an excess amount.
3. Send a Revised Overpayment Demand Letter on Partially Favorable decisions.
a. There may be situations when a Fully Favorable decision outcome creates a
remaining balance.
• 	If this occurs Contractors shall need to send a Revised Overpayment Demand
Letter to address this action.
• 	For Fully Favorable decisions without an open balance remaining, the
Remittance Advice (RA) shall be acceptable in place of additional written notices.
Contractors Shall:
1. Recalculate the overpayment and refund the remaining excess amounts to the provider
within 30 calendar days from the finalized claim adjustment date.
• 	For extrapolations, timeframe for completion is 30 calendar days from the receipt
of the UPIC and OIG recalculations.
2. 	Shall not apply any excess funds to other overpayments that are in an appeal status or
any other pending status of exclusion (i.e., bankruptcy, suspensions, and fraud).
3. Update the AR Status from the finalized claim adjustment date.
4. Create a manual invoice to refund the provider.
5. Send the Revised Overpayment Demand Letter when the results are Fully or Partially
Favorable, and an outstanding balance remains.
• 	For Fully Favorable decisions without an open balance remaining, the
Remittance Advice (RA) shall be acceptable in place of additional written notices
Note: This entire process (1-5) shall be completed within 30 calendar days from the final
determination (final claims adjustment) date.
B. Contractors shall perform the following steps below after a Reconsideration

Fully Unfavorable Decision:
1. Send the Reconsideration Revised Overpayment Demand Letter on open balances
only within 30 calendar days from the date of the appeal decision.
2. Follow normal collection processes, as outlined in the IOM publication 100.06,
Chapter 3 and 4.
3. Recoupment shall begin on day 30 following the AR status update in HIGLAS after
receiving notification of the QIC decision or 30 days from the revised overpayment demand
letter date.
4. Issue the Intent to Refer letter within 60 calendar days from the AR status update, such
as (but not limited to) the 935-Reconsideration denied
• 	This does not apply to any open debts that are in a subsequent level appeal status or
other type of pending status of exclusion (i.e., bankruptcy, suspensions, and fraud).
5. Contractors shall have the overpayment remain "eligible for internal offset" status until
paid in full or referred to Treasury.
200.4.4 - Recoupment Timeframes and Reconsideration Notices after
Decision
(Rev. 12261; Issued:09-22-23, Effective: 12-11-23; Implementation:12-11-23)
A. When does Recoupment Begin or Resume after the Reconsideration?
Timeframe 	Medicare Contractor 	Provider
Day 30 (following
reconsideration
decision)
Resume or begin
recoupment without
regard to the ALJ appeal
request 30 calendar days
from the Fully
Unfavorable
Reconsideration
Decision, and from the
revised demand letter for
Partially Favorable
decisions.
Must either pay
Overpayment in full or
submit request for an
Extended Repayment
Schedule (ERS) to avoid
recoupment.

Day 60 (following
reconsideration
decision)
Recoupment continues
until the debt is fully
collected. This is also
the timeframe to send the
Intent to Refer letter
(ITR) or refer to
Treasury when the ITR
was previously sent.
Provider can request an
ERS prior to the referral to
Treasury. Provider can
also appeal to the ALJ.
1. 	Contractors shall use the Exhibit 4: Reconsideration Revised Overpayment
Demand Letter specified in Chapter 3, Section 200.4.5 or use your discretion to modify
the language, accordingly, to reflect the outcome of the adjustments to the overpayment.
• 	This letter states that the providers, physicians, and other suppliers have been afforded
the opportunity for rebuttal in accordance with requirements of CFR 42 §405.373(2)
through §405.375.
200.4.5 - Reconsideration Revised Overpayment Demand Letter
(Rev. 12261; Issued:09-22-23, Effective: 12-11-23; Implementation:12-11-23)
Exhibit 4: Reconsideration Revised Overpayment Demand Letter:
Month, Date, Year
Provide Number or NPI Number
Original Demand Letter Reference Number:
Dear [Provider Name],
This letter is in reference to the Medicare reconsideration [Decision], dated [DATE], for
the overpayment of [AMOUNT] issued to you on [DATE OF DEMAND].
According to our records, the balance on the Principal amount is [AMOUNT] and the
Interest amount is [AMOUNT]. 	A payment is due totaling [AMOUNT] by [DATE].
We can begin to recoup no earlier than 30 days from the date of this letter. Interest will

continue to accrue and will be assessed for the total amount due until the debt is collected
in full as explained in your demand letter in accordance with 42 CFR § 405.378.
[After adjusting the ARs on the unfavorable amounts due to a Partially Favorable
decision, Contractors shall modify this letter to show the claims that can be
appealed, for example:
According to our records, due to the Partially Favorable decision the overpayment was
collected in full. 	[Refer to your reconsideration appeal decision letter for the listing
of the unfavorable claims]
Rebuttal Process:
Under our existing regulations at 42 CFR § 405.374, providers and other suppliers
will have 15 days from the date of this demand letter to submit a statement of
opportunity to rebuttal. The rebuttal process provides the debtor the opportunity,
before the suspension, offset, or recoupment takes effect, to submit a statement (to
include any pertinent information) as to why it should not be put into effect
on the date specified in the notice. 	A rebuttal is not intended to request a review of
supporting medical documentation nor to express disagreement with the
overpayment decision.
A rebuttal shall not duplicate the reconsideration process. This is not an appeal of
the overpayment determination. Our office will advise you of our decision 15 days
from the mailroom stamped receipt date of your request.
The rebuttal statement does not cease recoupment activities consistent with Section
935(f)(2) of the Medicare Modernization Act (MMA).
If you wish to appeal this decision:
You can appeal the unfavorable amount if you disagree with this overpayment decision,
to the Administration Law Judge (ALJ) 60 days from the date of receipt of the
reconsideration. An Appeal is a review performed by people independent of those who
have reviewed your claim so far. Refer to your reconsideration appeal decision letter for
the listing of the unfavorable claims.
Recoupment proceeds regardless of the filing for an ALJ hearing. Following the final
decision by
the QIC, if the debt has not been paid in full, we will begin or resume recoupment
whether or not you appeal to the next level after 30 days from the date of this letter due to
the QIC decision or dismissal. [Disregard this paragraph if debt was paid in full
prior to or after recalculation]

If you have already sent payment, we thank you and ask that you disregard this letter. If
you are unable to repay the amount in full, please visit our website for instructions
on an Extended Repayment schedule [MAC WEBSITE].
Please refer to your initial demand letter for any other information not disclosed in
this letter.
Thank you,
[ CONTRACTOR NAME]
[CONTRACTOR PHONE]
NOTE: For revised letters on overpayments with a zero balance or paid in full, the
Rebuttal Statement
is not necessary.
200.4.6 - Initiating or Resuming Recoupment After a Reconsideration
Withdrawal or Dismissal
(Rev. 12261; Issued:09-22-23, Effective: 12-11-23; Implementation:12-11-23)
A. A request for an appeal may be dismissed for any number of reasons, including:
1. 	Abandonment of the appeal by the appellant.
2. A request is made by the appellant to withdraw the appeal.
3. A determination that an appellant is not a proper party.
4. The amount in controversy requirements have not been met.
5. The appellant has died and no one else is prejudiced by the claims
determination.
B.. Contractors shall perform the following actions following notification of a
withdrawal or dismissal:
1. Update the AR status to remove the appeal status as soon as possible but
no later than 30 calendar days from the notification of the withdrawal or
dismissal of the appeal.
2. Initiate or resume recoupment on the overpayment immediately upon
notice of withdrawal of an appeal.
3. Initiate or resume recoupment following the dismissal issued date from
the QIC.
4. Update the AR status to resume recoupment as soon as possible but no
later than 30 calendar days from the dismissal notification date.
C. For additional guidance, refer to 42 CFR §§405.379, 405.952, 405.972, and
publication 100-04, Medicare Claims Processing Manual Chapter 29 - Appeals of
Claims Decisions.
200.4.7 - QIC Remands on Dismissals

(Rev. 12261; Issued:09-22-23, Effective: 12-11-23; Implementation:12-11-23)
When the QIC performs its review of the dismissal, it will decide if the dismissal was correct.
If it determines that the contractor incorrectly dismissed the redetermination, it will vacate the
dismissal and remand the case back to the Contractor for a redetermination. When the QIC
remands an appeal, it is mandatory for the Contractor to issue a new redetermination decision
in accordance with Publication 100-04, Medicare Claims Processing Manual, and Chapter 29.
A. Contractors shall change the Reconsideration appeal status back to a Redetermination
appeal status until a new decision is rendered.
1. Update the AR status within eight (8) business days from the email receipt date
(from appeals) on all QIC remand notifications.
2. Contractors shall follow the Redetermination instructions specified in Chapter 3, §
200.3 (A) after the review is completed.
3. For additional guidance, refer to 42 CFR §§405.379, 405.952 and 405.972 and
publication 100-04, Medicare Claims Processing Manual Chapter 29 - Appeals of
Claims Decisions
200.5 - Administrative Law Judge (ALJ) Third Level and Subsequent
Level of Appeals
(Rev. 12509; Isuued:02-15-24; Effective: 07-01-24; Implementation: 07-01-24)
Whether or not the provider subsequently appeals the overpayment to the ALJ,
Departmental of Appeals Board (DAB), or Federal court, contractors shall continue to
recoup until the debt is satisfied in full. Recoupment remains in effect as provided in
CFR 42 §405.373 (e). Refer to Publication 100-04, Medicare Claims Processing Manual,
Chapter 29 §330-330.2. If an overpayment determination subject to the limitation
on recoupment under 42 CFR §§ 405.379 and 405.378 is reversed in whole or in part on
funds recouped (excluding voluntary payments, ERS collections, and immediate
recoupments requested by the provider or supplier prior to the Qualified Independent
Contractor decision), the 935 interest shall be paid to the provider or supplier.
A. Glossary:
Reversal - Although appeals in the administrative appeals process are de novo
proceedings (i.e., a new determination/decision is made at each level), Medicare uses
this term when the new determination/ decision is more favorable to the appellant than
the prior determination/ decision, even if some aspects of the prior
determination/decision remain the same.
Decisions and Determinations - If a Medicare appeal request does not result in a
dismissal, adjudication of the appeal results in either a “determination” or “decision.”
There is no apparent practical distinction between these two terms although applicable

regulations use the terms in distinct contexts. A decision that is reopened and
thereafter revised is called a “Revised determination.”
Effectuate - This means for the MAC to issue a payment or change liability.
Affirmation - A term used to denote that a prior claims determination has been upheld
by the current claims adjudicator. Although appeals through the OMHA level are de
novo, CMS and its contractors often use this term when an adjudicator reaches the same
conclusion as that in the prior determination, even though he/she is not bound by the
prior determination.
Office of Medicare Hearings and Appeals (OMHA) - The Office of Medicare
Hearings and Appeals is responsible for level 3 of the Medicare claims appeal process
and certain Medicare entitlement appeals and Part B premium appeals. At level 3 of the
appeals process, an appellant may have a hearing before an OMHA ALJ, or review by
an attorney adjudicator.
Administrative Law Judge (ALJ) - Adjudicator employed by the Department of Health
& Human Services (HHS), Office of Medicare Hearings and Appeals (OMHA) that holds
hearings and issues decisions related to level 3 of the appeals process.
Department of Appeals Board (DAB) Review - The DAB provides an impartial,
independent review of disputed decisions in a wide range of Department of Health and
Human Services programs under more than 60 statutory provisions.
Appeals Council - The Medicare Appeals Council (herein Appeals Council), a division
within the Departmental Appeals Board provides the final level of administrative review
of claims for entitlement to Medicare and individual claims for Medicare coverage and
payment.
Remand - An action taken by an adjudicator to vacate a lower-level appeal decision, or
a portion of the decision, and return the case, or a portion of the case, to that level for a
new decision.
Note: For additional information go to Publication 100.04, Medicare Claims
Processing Manual Chapter 29 - Appeals of Claims Decisions
200.5.1- Actions on a Valid Notification for the ALJ or Subsequent
Level
Appeal Request
(Rev. 12509; Isuued:02-15-24; Effective: 07-01-24; Implementation: 07-01-24)
A. When the Provider Appeals to the ALJ and Higher:
1. 	Contractors shall update the systems upon receipt of an authorized request
and/or a notification when the Provider appealed to the ALJ and higher.

a. Contractors shall accept written notification such as but not limited to:
• 	Copy of receipt from the courts,
• 	Copy of the tracking number from the post office or a fax cover sheet,
• 	Email with scanned documents
• 	Tracking numbers from UPS or FedEx as legitimate proof to update the
debts to the appeal status.
• 	Receipt letter from the ALJ
2. Contractors shall recall the overpayment if referred to Treasury after receiving
valid proof of the appeal request and update all systems to the appeal status.
200.5.2- Remanded Back to the QIC from the ALJ
(Rev.12509; Isuued:02-15-24; Effective: 07-01-24; Implementation: 07-01-24)
Remanding an appeal case is an action taken by an adjudicator to vacate a lower level
appeal decision, or a portion of the decision, and return the case, or a portion of the case,
to that level for a new review and decision. See 42 Code of Federal Regulations (CFR)
Section 405.1056 for additional discussion on this process.
A. Contractors shall update the Accounts Receivable (AR) back to the Reconsideration
appeal status when notified of the ALJ remand. Upon receipt of the QIC decision for
the ALJ remand, the contractors shall update the AR status to resume recoupment as
soon as possible but no later than 30 calendar days from the notification of the remand
of an unfavorable
decision.
• 	Contractors shall continue with the monthly payments as scheduled during
the review period when the provider is under an ERS agreement. Refer to
§200.8 below and Chapter 4 § 50, ERS instructions.
200.5.3- Actions to Take After the ALJ or Subsequent Level Appeal
Decision
(Rev.12509; Isuued:02-15-24; Effective: 07-01-24; Implementation: 07-01-24)
Contractors work the debt immediately upon receipt of the effectuation notice from the
Administrative Qualified Independent Contractor (QIC) or other notification of the
Decision outcome to complete the computation and the effectuation, as applicable.
Contractors adjust the claim(s) in the claims history system for the finalized claim
payment, effectuate, and refund the amounts recouped on the favorable claims. This
process is completed within 30 calendar days starting from the final determination (Final
claims adjustment date) to the manual invoice
entry date in HIGLAS.

Contractors shall perform the following steps after receipt of the effectuation notice
from the Administrative QIC related to fully and partially favorable decisions:
1. 	Contractors shall use the following suppression code when adjusting the claim
(claim history) to prevent adjustments from going to HIGLAS.
• 	Part B uses the ‘Y’ suppression on the adjusted claim to prevent the
adjustment from going to HIGLAS.
• 	Part A uses the ‘A’ tape to tape flag on the adjusted claim to prevent the
Adjustment from going to HIGLAS.
• 	DMAC's use “P” and “B” adjustment force codes to the adjusted claim in VMS
To prevent the adjustment from going to HIGLAS.
2. 	Effectuate any overpayments or refunds after the contractor computes the amount
for Any adjustments or payment to the provider. For additional guidelines refer to
Chapter 29, Section 330.4 - Effectuation Time Limits & Responsibilities.
3. Recalculate the overpayment and update the AR/s in HIGLAS and create a manual
invoice to refund the provider within 30 calendar days. This timeframe begins at the
final claims adjustment date to the entry date of the manual invoice.
Note: With the exception of extrapolations, the timeframe is 30 calendar days from the
receipt of the recalculation amounts. The process begins once the appeal decision is
received, the decision and claim information are sent to the appropriate contractor for the
recalculation of the extrapolation. Once the recalculation is completed and returned, the
MAC effectuates the decision i.e., adjusting the balance of the AR in HIGLAS, issuing a
recalculation letter or issuing a refund as needed.
Note: For extrapolations, the timeframe is 30 calendar days from the receipt of the Unified
Program Integrity Contractor (UPIC) and the Office of the Inspector General (OIG)
recalculations.
4. Issue a Revised Overpayment Demand Letter when there is a new revised amount,
and an open balance remains.
a. 	There may be circumstances when a Fully Favorable decision outcome creates
a remaining balance.
• 	If this occurs contractors shall need to send a Revised Overpayment
Demand Letter to address this action.
b. When the intent to refer letter (ITR) was previously sent:

• 	Include language that refers the provider back to the initial ITR.
c. 	For Fully Favorable decisions without an open balance remaining, the
Remittance Advice (RA) shall be acceptable in place of additional written notices.
d. 	Follow the same instructions as in Publication 100.06, Chapter 4 to proceed
with referring the remaining balance to Treasury.
3. Contractors shall use Exhibit 5 as an example and at their discretion, change the
language to address the overpayment accordingly, as needed.
Use the appropriate appeal level within the content of the letter:
a. 	Medicare Administrative Law Judge (ALJ)
b. 	Departmental Appeals Board (DAB)
c. 	Federal court levels.
C. Fully Unfavorable Appeal Decision:
1. When the ALJ issues an unfavorable decision:
a. Contractors shall update the status of the AR and send the Revised Overpayment
letter on open balances only after a Fully Unfavorable decision within 30-calendar
days starting from the receipt date available in the MAS.
b. Contractors shall be able to access reports in MAS, which identifies the
unfavorable ALJ appeal decisions.
• 	All ALJ level information in MAS is available once the ALJ level record is
closed and ECAPE close web service has transferred data to MAS.
2. Contractor shall refer any outstanding debt to Treasury within 30 calendar days
following the unfavorable decisions notifications for the ALJ or subsequent levels
based on the ITR previously sent.
200.5.4- The Revised Overpayment Letter for ALJ and Subsequent
Decisions:
(Rev.12509; Isuued:02-15-24; Effective: 07-01-24; Implementation: 07-01-24)
Exhibit 5:
Date:
Original Demand Letter Number:
Reference Number:
Provider Name:

This letter is in reference to the [Administrative Law Judge or subsequent levels]
decisions on [DATE], for the overpayment, [AMOUNT] issued to you on [DATE OF
DEMAND]. 	According to our records, the new revised overpayment amount is
[AMOUNT]. Following the final decision by the ALJ, when the debt has not been paid in
full, we will begin Recoupment immediately whether or not you appeal to the next level.
Interest continues to accrue and will be assessed for the total amount due in accordance
with 42 CFR § 405.378.
Rebuttal Process:
Under our existing regulations 42 CFR Sections 405.374, within 15 days from the
date of this letter, providers and suppliers will have the opportunity to submit a
rebuttal statement.
The rebuttal process provides the debtor the opportunity before the suspension,
offset, or recoupment takes effect, to submit any statement (to include any pertinent
information) as to why it should not be put into effect on the date specified in the
notice. A rebuttal is not intended to request a review of supporting medical
documentation nor to express disagreement with the overpayment decision. A
rebuttal shall not duplicate the appeal process. This is not an appeal of the
overpayment determination. Our office will advise you of our decision 15 days from
the mailroom stamped receipt date of your request.
The rebuttal statement does not cease recoupment activities consistent with Section
935(f)(2) of The Medicare Modernization Act (MMA).
If you wish to appeal this decision:
You may file an appeal request with the Medicare Appeals Council, the fourth level of
administrative appeal, following the instructions included in the ALJ decision (see also,
42 CFR §§405.1100-1130). Recoupment proceeds regardless of the filing for a Council
review. If there is no confirmation on the next appeal request, this debt may be referred to
Treasury.
If you have already sent payment, we thank you and ask that you disregard this letter. If you
are unable to repay the amount in full, please visit our website for instructions on an
Extended Repayment Schedule (www.contractor.com).
Please refer to your Initial Demand and Intent to Refer letters for any other
information
not disclosed in this letter.
Thank you
Contractor Name

xxx-xxx-xxxx
200.6 - Obligation to Pay Interest on Underpayments Owed to Providers
(Rev. 12509; Isuued:02-15-24; Effective: 07-01-24; Implementation: 07-01-24)
Medicare has the obligation to pay providers interest if the reversed overpayment at any
level of the administrative appeal process is not effectuated timely. Medicare will pay
interest on the underpayment for each full 30-day period a payment remains delayed.
Note: This late (Penalty) interest is not to be mistaken for the 935 interest.
Contractors 	shall follow the instruction outlined in Publication 100-06, Chapter 4 § 30.1
and 42 CFR 405.378 when determining payment of late interest for underpayments that are
delayed.
200.6.1 - Calculations for Each 30-Day Period at the ALJ Decision or a
Final Determination Date
(Rev. 141, Issued: 09-12-08, Effective: 09-29-08, Implementation: 09-29-08)
Interest shall be calculated for each 30-day period using the interest Rate in Effect on the
ALJ decision Date or the (revised written Final Determination Date). The contractor will
have 30 days to calculate and refund the provider from the ALJ Decision date or the final
determination Date.
NOTE: Contractors will need to issue a revised written determination to the provider,
physician or other supplier in accordance to Publication 100-04, Medicare Claims
Processing Manual, Chapter 29.
200.6.2 - Computing 935 Interest at the ALJ and Higher Levels
(Rev. 141, Issued: 09-12-08, Effective: 09-29-08, Implementation: 09-29-08)
Interest paid under 935 is only applicable at the ALJ or further appeal level when that
decision results in a full or partial reversal of the prior decision and contractors retained
recouped fund
What is needed to calculate 935 interest
The simple formula for calculating interest is: 1) Time; 2) Rate; and 3) Amount
For each recoupment action:
1. 	TIME: Determine the total Julian Days starting from the recoupment date to
the ALJ Decision date or date the revised notice with the new overpayment, if
applicable. Divide the number of Julian days by 30 to compute the number of
30-day periods. The interest will not be payable for any periods of less than 30
days in which we had possession of the recouped funds.

2. 	RATE: Use the Annual Rate of interest at the time of the ALJ decision date or
from the revised New Written Determination date from an effectuation and
convert interest rate to a monthly interest rate. (For example: The Rate of
Interest as of April 18, 2008 is 11.375%). Convert annual Rate to a monthly
rate by dividing by 12.
3. 	AMOUNT: The amounts that are to be used as the basis on which to compute
interest earned by the provider are those amounts that are credited to principal
resulting from any involuntary payments from the provider after the
elimination/satisfaction of all Medicare debt. Recouped monies applied to
interest are not included in determining the 935 interest. Only those principal
funds recouped via withholding (e.g. payments recouped under a defaulted ERS
or offset) are included. Do not include payments a provider makes under an
ERS or other voluntary payments made by the provider.
200.6.3 - How to Calculate 935 Interest
(Rev. 141, Issued: 09-12-08, Effective: 09-29-08, Implementation: 09-29-08)
Where there are multiple recoupments 935 interest must be calculated separately for each
recoupment action and then total for the amount due the provider.
Example:
How to calculate 935 Interest:
(935 interest at the ALJ and higher levels)
Fully Favorable
ALJ Decision Date: Jan 02,2008
Recoupment
Amounts
Recoup Date 	Rate of
Interest
from ALJ
Decision
Date
Length of Time
Money Held
Interest
Owed to
Provider
1) $ 9062 	March 07, 2007 	12.5% 	301 Julian Days
(10 mos. 1 day)
$ 943.95
2) $ 9806 	May 18, 2007 	12.5% 	230 Julian Days
(7 mos. 20 days)
$ 715.02
3) $ 9136 	August 08, 2007 	12.5% 	148 Julian Days
(4 mos. 28 days)
$ 380.66
Total 935
Interest owed 	$ 2,039.63
Calculation example: 	Time x Rate x Amount = Interest

1. 10 x (.125 ÷12) x $ 9062.00 = $943.95
2. 7 x (.125 ÷12) x $ 9806.00 = 	$715.02
3. 4 x (.125 ÷12) x $ 9136.00 = 	$380.66
4. 935 Interest amt owed Provider $2,039.63
200.6.4 - Obligation to Pay the Providers, Physicians, or Suppliers Late
Payment Interest
(Rev. 141, Issued: 09-12-08, Effective: 09-29-08, Implementation: 09-29-08)
Medicare has the obligation to pay providers, physicians and suppliers interest if the
overpayment determination is reversed at the first (redetermination) and second
(reconsideration) level of the administrative appeal process and the decisions are not
effectuated timely. At these levels of appeal, interest would continue to be payable by
Medicare if the underpayment is not paid within 30 days of the final determination
decision. See § 30.1 of Chapter 4.
200.7 - 935 Interest Calculation
(Rev. 12509; Isuued:02-15-24; Effective: 07-01-24; Implementation: 07-01-24)
Section 200.7.1 - 2007.5 instructs contractors how to calculate the 935 interest.
200.7.1 - Assessment of 935 Interest
(Rev.12509; Isuued:02-15-24; Effective: 07-01-24; Implementation: 07-01-24)
The limitation on recoupment provisions amended the way interest may be paid to a provider
whose overpayment determination is overturned in the administrative appeals process
subsequent to the second level of appeal (Reconsideration decision), or following judicial
review in a federal court.
Contractors shall calculate the 935 interest on involuntary recoupments using the date the
amount was recouped to the date of the decision.
A. The payment of 935 interest is only applicable to overpayments subject to the
limitation on recoupment provisions.
• 	Interest is only payable on the recouped amounts applied to the principal
balance prior to the decision.
B. Contractors shall not include any voluntary payments applied to the principal
balance for the purpose of calculating the 935 interest such as but not limited to:
a. 	Amounts from a check,
b. 	Amounts applied (recouped or check) due to an ERS agreement,

c. 	Amounts applied due to providers on an Immediate Recoupment Agreement
200.7.2- Interest Rate and Calculation Periods on Recouped Funds for
Purposes of Paying 935 Interest
(Rev. 12509; Isuued:02-15-24; Effective: 07-01-24; Implementation: 07-01-24)
We will pay simple interest rather than compound interest, and we will not pay interest on
interest. This mirrors the manner in which we assess interest against providers.
Monies we recouped and applied to interest are applied to outstanding debts as needed, or
refunded and not included in the “amount recouped” for purposes of calculating any interest
due the provider. The periods of recoupment will be calculated in full 30-day periods; and
interest will not be payable for any periods of less than 30-days in which we had possession
of the recouped funds.
200.7.3 - Calculations for Each 30-Day Period at the ALJ or Subsequent
Level Decision
(Rev. 12509; Isuued:02-15-24; Effective: 07-01-24; Implementation: 07-01-24)
Interest shall be calculated for each full 30-day period using the interest Rate in Effect on
the ALJ decision date or any subsequent level decision date in accordance with 42 CFR
405.378 (j)(2)(iii).
200.7.4- Timeframes When Calculating the 935 Interest on Favorable
Decisions.
(Rev. 12509; Isuued:02-15-24; Effective: 07-01-24; Implementation: 07-01-24)
A. 	Fully and Partially Favorable Decisions:
1. 	Upon receipt of the Administrative QIC effectuation notice, contractors shall have
30 calendar days to calculate and refund the 935 interest to the provider.
• 	Calculate and create a manual invoice in HIGLAS to refund the 935 interest
• 	This calculation begins from the finalized claim adjustment date or the receipt
date of the extrapolated recalculation to the entry date of the manual invoice.
• 	Shall calculate and refund the 935 interest from the final claim adjustment date
in accordance with 42 CFR § 405.378.
Note: On Partially Favorable calculations, if the decision by the ALJ, Medicare
Appeals Council, Federal district court or a subsequent Federal reviewing court,
reverses the overpayment determination, as modified by prior levels of administrative
or judicial review, in part, the Medicare contractor in effectuating the decision may
allocate recouped monies to that part of the overpayment determination affirmed by the

decision. Interest will be paid to the provider or supplier on recouped amounts that
remain after this allocation in accordance with paragraph (j) in 42 CFR §405.378.
2. Contractors should review the ALJ, and subsequent levels Notice of decision to
ensure all dates agree with the Administrative QIC Effectuation Notice and/or in the
MAS.
D. Extrapolated overpayments with a Favorable Decisions:
• 	Contractors shall have an additional 15 calendar days (a total of 45 calendar
days) for all extrapolation overpayments to calculate and refund 935 interest to
the provider.
E. Line by Line (Claims with multiple lines of services) Partially Favorable Decision:
• 	Contractors shall have an additional 15 calendar days (a total of 45 calendar
days) when the decision is on individual line/s to calculate and refund 935 interest
to the provider.
Note: Office of Medicare Hearings and Appeals (OMHA) has developed a system similar
to MAS called Electronic Case Adjudication and Processing Environment (ECAPE).
Due to system limitations, OMHA made changes to the decision letters and processes
related to the decision date.
a. 	On/after May 2018, OMHA’s decision letters no longer include a date of
decision, only the wet signature of the ALJ.
b. 	The ‘decision date’ is captured in the Notice of Decision.
c. 	The date captured in the Notice of Decision will match the date captured in
MAS.
For purposes of calculating interest for 935 Overpayments, contractors utilizing MAS
shall use the date captured in the Notice of Decision for OMHA decisions after May 2018.
Website Information
The OMHA ALJ Appeal Status Information System serves to allow appellants to check
the status of appeals submitted to OMHA.
https://www.hhs.gov/about/agencies/omha/filing-an-appeal/appeals-status-
lookup/index.html
https://www.hhs.gov/about/agencies/omha/index.

200.7.5 - Computing 935 Interest on Favorable Decisions from the ALJ
And Subsequent Levels
(Rev. 12509; Isuued:02-15-24; Effective: 07-01-24; Implementation: 07-01-24)
Interest shall be calculated for each full 30-day period on the amounts applied (by
recoupment “involuntary” on or after day 41) to the principal balance. Contractors shall
use the interest rate in effect from the ALJ decision date or a subsequent level. 	Interest
paid under the 935 provisions (is only applicable) after the ALJ or subsequent appeal
levels resulted in a full or partial reversal of the prior decision on retained recouped
funds applied to the principal balance only.
A. Elements of 935 Interest Calculation: Contractors shall use the following three
elements when calculating 935 interest: 1) Time; 2) Rate; and 3) Amount.
1. TIME:
To determine the total calendar days by calculating the days duration, starting
from the decision date and counting back to the recoupment date.
a. Divide the number of calendar days by 30 to compute the number of 30-day
periods.
b. Calculate each full 30-calendar day period starting from the recoupment
date Prior to the decision date for the purpose of calculating the 935
interest.
• 	Calculate each full 30-calendar day period starting from the recoupment
date prior to the decision date. (Excluding any recoupments
(involuntary) and voluntary payments (check) applied to an ERS,
Immediate Recoupment prior to the QIC decision and any checks
received and applied to an overpayment for the purpose of calculating
the 935 interest.)
c. The interest will not be payable for any periods of less than 30-calendar
days in which we had possession of the recouped funds.
2. 	RATE:
Use the Annual Rate of interest in effect from the ALJ decision date or subsequent
level decision date to calculate the 935 interest.
a. Convert annual interest rate to a monthly interest rate.
b. For example: The Rate of Interest as of January 6, 2014, is 10.125%.

c. Convert Rate of Interest to a monthly rate by dividing the interest rate by
12.
3. 	AMOUNT:
The contractor shall calculate the favorable recouped amount/s applied to the
principal balance only. The recouped amounts applied to the principal balance
from involuntary collections shall be used to compute the 935-interest earned
prior to the ALJ or subsequent levels decision date.
a. 	Recouped monies applied to interest shall not be included in determining
the 935 interest.
b. 	Only those principal funds recouped via withholding (e.g. payments
recouped due to a defaulted ERS) are included.
c. 	Payments made under an ERS or other voluntary payments (e.g.,
Immediate Recoupment requested by the provider or a check) shall be
excluded for purposes of the calculation.
Please Note: Any monies recouped (due to an immediate recoupment request) after
the QIC decision is considered to be involuntary.
B. Multiple Recoupments: For scenarios involving multiple recoupments.
a. 	When there are multiple recoupments, 935 interest shall be calculated
separately for each recoupment action; and
b. 	Once interest is calculated separately, the amount shall be aggregated to
compute the total amount due to the provider.
Note: Tolling of days is when providers request additional time to submit the appeal
request after the normal timeframe, or include additional evidence to submit for the
review to be suspended or delay review.
If the tolled days are clearly identified in the decision letter by the ALJ or higher,
contractors should follow 42 CFR 405.378 (j)(3)(iv), 42 CFR 405.1014, and 42 CFR
405.1106 and exclude those days for purposes of calculating the 935 interest.
C. Calculation Examples:
1. Fully Favorable Example A:

2. 	Partially Favorable Example B:
% Annual Interest Rate for an ALJ or subsequent level: 10.125%
Recoupment
Amounts
Applied to
Principal
balance
Recoup Date to
ALJ Date or higher
levels
Rate of Interest from
ALJ or higher levels
Decision Date
Length of Time
Money Held
Interest
Owed to
Provider
$ 9062 	03/07/12- 01/06/14 	10.125% 	671 Julian Days
(22 months)
$1,682.13
$ 5000 	05/18/12-01/06/14 	10.125% 	599 Julian Days
(19 months) 20 days- less
than 30 days is dropped
$801.56
$ 25,000 	08/08/12-01/06/14 	10.125% 	517 Julian Days (17
months)
$3,585.94
Total 935 Interest
owed
$6,069.63
Note: When there is less than 30 full days do not use the remaining days for calculation purposes. In
the second example above, the remaining “20 days” would not be included for the calculation, only
the 19 months is used because there were 19 – full 30-day periods.
Time x Rate x Amount = 935 Interest
1. 22 mos. x (.10125 ÷12) x $ 	9062.00 = 	$ 	1,682.13
2. 19 mos. x (.10125 ÷12) x $ 	5000.00 = 	$ 	801.56
3. 17 mos. x (.10125 ÷12) x $ 25,000.00 = 	$ 	3,585.94
Total 935 Interest Amount owed to Provider 	$ 	6,069.63

3. Partially Favorable Example C:
Original Overpayment Principal amount $ 4,608.01
ALJ Partially favorable amount 	- $ 3,232.80
Revised Overpayment Principal balance $ 1,375.21
Recoupment
Date
Principal
Amount
Recouped
Amt applied to
unfavorable
revised O/P
935 eligible
Principal
Balance
ALJ
Decision date
# of 30-
day
Period
% rate 	935
interest
refund
amt.
06/05/12 	$1,500.00 	$1,500.00 	(0) 	07/20/15 	0 	$0
06/06/12 	$700.00 	$75.21 Line by
Line Partial
624.79
07/20/15
38 	9.75 	$192.90
06/07/12 	$832.80 	0 	$832.80 	07/20/15 	37 	9.75 	$250.36
07/05/12 	$100.00 	0 	$100.00 	07/20/15 	37 	9.75 	$30.06
07/28/12 	$100.00 	0 	$100.00 	07/20/15 	36 	9.75 	$29.25
Time x Rate x Amount = 935 Interest
1. 38 mos. x (.0975÷12) x $ 624.79 = $ 	192.90
2. 37 mos. x (.0975÷12) x $ 832.80 = 	250.36
3. 37 mos. x (.0975÷12) x $ 100.00 = 	30.06
4. 36 mos. x (.0975÷12) x $ 100.00 = 	29.25
Total 935 Interest Payment 	$ 	502.57

4. Extrapolation Partially Favorable Example D:
Provider Name: 	Total Principal Collections: 	1135303.47
AR Number: 	New Overpayment Amount 	142249.17
Decision Type: 	Partially Favorable 	Less: Suspension Release 	0
Original Overpayment Amount: 6,801,349.00 	Less: Payments made by Check 	0
Revised Overpayment Amount: 142,249.17 	Less: Loan Payments 	731549.77
Revised Accrued Interest: 	2,400.46 	Less: Previous Refunds 	2954.14
ALJ Decision Date: 	03/26/2019 Less: Favorable Overpayments 	258550.39
Revised Overpayment Date: 	07/25/2019 Total Principal 935 Interest Eligible: 	258550.39
Interest Rate: 	10.75% Total Principal 935 used to Calculate 935: 	yes
935 Interest Due: 	138,970.84
Comments:
NAME 	DATE
Completed By:
Reviewed By:
Management Approval - Partial:
Recoupment date 	Principal Recoupment
Amount 	Interest Recoupment Amount
935 Interest
Eligible
Collection
Full 30
Day
Cycles
935 Interest
03/26/2014 $
- 	$92,137.13 	No 	60 	-
03/26/2014 $ 	$18,260.32 	No 	60 	-
03/26/2014 $142,249.17 	$ 	- 	No -ck 	60 	-
03/26/2014 	$2,954.14 $ 	- 	No -ck 	60 	-
03/26/2014 	$258,550.39 $ 	- 	Yes 	60 	$138,970.84
04/01/2014 	$6,728.34 $ 	- 	Loan-voluntary 	60 	-
05/01/2014 	$6,786.12 $ 	- 	Loan-voluntary 	63 	-
05/01/2014 $ 	$53,213.88 Loan-voluntary 	63 	-
06/01/2014 	$6,843.38 $ 	- 	Loan-voluntary 	62 	-
06/01/2014 $ 	$53,156.62 Loan-voluntary 	62 	-
07/01/2014 	$6,901.12 $ 	- 	Loan-voluntary 	61 	-
07/01/2014 $ 	$53,098.88 Loan-voluntary 	61 	-
08/01/2014 	$6,959.35 $ 	- 	Loan-voluntary 	60 	-
08/01/2014 $ 	$53,040.65 Loan-voluntary 	60 	-
ALJ 935 INTEREST CALCULATION
09/01/2014 	$7,018.07 $ 	- 	Loan-voluntary 	59 	-
09/01/2014 $ 	$52,981.93 Loan-voluntary 	59 	-
10/01/2014 	$7,077.28 $ 	- 	Loan-voluntary 	58 	-
10/01/2014 $ 	$52,922.72 Loan-voluntary 	58 	-
11/01/2014 	$7,137.00 $ 	- 	Loan-voluntary 	57 	-
11/01/2014 $ 	$52,863.00 Loan-voluntary 	57 	-
12/01/2014 	$7,197.21 $ 	- 	Loan-voluntary 	56 	-
12/01/2014 $ 	$52,802.79 Loan-voluntary 	56 	-
01/01/2015 	$7,257.94 $ 	- 	Loan-voluntary 	55 	-
01/01/2015 $ 	$52,742.06 Loan-voluntary 	55 	-

200.8- Tracking and Report on the 935 Interest Payments
(Rev. 12509; Isuued:02-15-24; Effective: 07-01-24; Implementation: 07-01-24)
02/01/2015 	$7,319.18 $ 	- 	Loan-voluntary 	54 	-
02/01/2015 $ 	$52,680.82 Loan-voluntary 	54 	-
03/01/2015 	$7,380.93 $ 	- 	Loan-voluntary 	53 	-
03/01/2015 $ 	$52,619.07 Loan-voluntary 	53 	-
04/01/2015 	$47,443.21 $ 	- 	Loan-voluntary 	52 	-
04/01/2015 $ 	$52,556.79 Loan-voluntary 	52 	-
05/01/2015 	$47,843.51 $ 	- 	Loan-voluntary 	51 	-
05/01/2015 $ 	$52,156.49 Loan-voluntary 	51 	-
06/01/2015 	$48,247.19 $ 	- 	Loan-voluntary 	50 	-
06/01/2015 $ 	$51,752.81 Loan-voluntary 	50 	-
07/01/2015 	$48,654.28 $ 	- 	Loan-voluntary 	49 	-
07/01/2015 $ 	$51,345.72 Loan-voluntary 	49 	-
08/01/2015 	$49,064.80 $ 	- 	Loan-voluntary 	48 	-
08/01/2015 $ 	$50,935.20 Loan-voluntary 	48 	-
09/01/2015 $ 	$50,521.22 Loan-voluntary 	47 	-
09/01/2015 	$49,478.78 $ 	- 	Loan-voluntary 	47 	-
10/01/2015 $ 	$50,103.74 Loan-voluntary 	46 	-
10/01/2015 	$49,896.26 $ 	- 	Loan-voluntary 	46 	-
11/01/2015 $ 	$49,682.74 Loan-voluntary 	45 	-
11/01/2015 	$50,317.26 $ 	- 	Loan-voluntary 	45 	-
12/01/2015 $ 	$49,258.19 Loan-voluntary 	44 	-
12/01/2015 	$50,741.81 $ 	- 	Loan-voluntary 	44 	-
01/01/2016 $ 	$48,830.05 Loan-voluntary 	43 	-
01/01/2016 	$51,169.95 $ 	- 	Loan-voluntary 	43 	-
02/01/2016 $ 	$48,398.31 Loan-voluntary 	42 	-
02/01/2016 	$51,601.69 $ 	- 	Loan-voluntary 	42 	-
03/01/2016 $ 	$47,962.92 Loan-voluntary 	41 	-
03/01/2016 	$52,037.08 $ 	- 	Loan-voluntary 	41 	-
04/01/2016 $ 	$47,523.86 Loan-voluntary 	40 	-
04/01/2016 	$50,448.03 $ 	- 	Loan-voluntary 	40 	-
05/09/2016 $ 	$4,504.19 	No 	39 	-
05/10/2016 $ 	$768.93 	No 	39 	-
05/17/2016 $ 	$147.33 	No 	38 	-
05/18/2016 $ 	$895.34 	No 	38 	-
05/25/2016 $ 	$1,119.57 	No 	38 	-
06/16/2016 $ 	$1,270.85 	No 	37 	-
06/23/2016 $ 	$1,805.01 	No 	37 	-
06/28/2016 $ 	$1,580.27 	No 	37 	-
06/29/2016 $ 	$3,551.93 	No 	37 	-
07/01/2016 $ 	$3,542.16 	No 	37 	-
07/08/2016 $ 	$2,886.24 	No 	37 	-
07/11/2016 $ 	$6,785.34 	No 	36 	-
07/13/2016 $ 	$890.36 	No 	36 	-
07/26/2016 $ 	$1,438.45 	No 	36 	-
08/05/2016 $ 	$497.48 	No 	36 	-
08/10/2016 $ 	$2,486.16 	No 	35 	-
08/11/2016 $ 	$602.27 	No 	35 	-
08/16/2016 $ 	$765.90 	No 	35 	-
08/18/2016 $ 	$854.74 	No 	35 	-
08/23/2016 $ 	$686.88 	No 	35 	-
09/14/2016 $ 	$413.57 	No 	34 	-
09/26/2016 $ 	$2,638.57 	No 	34 	-
10/05/2016 $ 	$3,605.91 	No 	34 	-
10/11/2016 $ 	$1,916.53 	No 	33 	-
10/18/2016 $ 	$872.56 	No 	33 	-
10/19/2016 $ 	$1,541.62 	No 	33 	-
12/12/2016 $ 	$558.72 	No 	31 	-
12/15/2016 $ 	$3,285.16 	No 	31 	-
12/21/2016 $ 	$602.27 	No 	31 	-
01/09/2017 $ 	$775.35 	No 	30 	-
01/11/2017 $ 	$4,505.74 	No 	30 	-
01/12/2017 $ 	$2,330.08 	No 	30 	-
01/17/2017 $ 	$686.88 	No 	30 	-
02/08/2017 $ 	$628.47 	No 	29 	-
02/14/2017 $ 	$2,249.28 	No 	29 	-
02/23/2017 $ 	$1,276.13 	No 	29 	-
04/21/2017 $ 	$22.01 	No 	27 	-
10/01/2018 $ 	$506.20 	No 	9 	-
02/04/2019 $ 	$129.63 	No 	5 	-
05/13/2019 $ 	$1,273.09 	No 	2 	-

Contractors shall report 935 interest paid each calendar quarter based on an ALJ or
subsequent level decision for fully and partially favorable decisions that were reversed
from the previous decision.
• 	Report 935 Interest payment amounts on all provider types.
• 	When a provider has more than one decision, those amounts shall be aggregated.
Report shall be sent electronically to:
Medicareoverpayments@cms.hhs.gov.
The contractor shall have 30 calendar days from the end of the calendar quarter to submit
the report to CMS.
Exhibit 1: 935 Interest Payment Tracking Report
1st Quarter: October, November and December
2nd Quarter: January, February and March
3 rd Quarter: April, May and June
4th Quarter: July, August and September
Include the following on the report:
1. Provider Name
2. Appeal Case #
3. Decision Date
4. Decision
5. 935 Interest Amount
Example:
Provider Name 	Appeal
case #
Decision Date 	Decision 	935 Interest-
Amount
ABC DME Home 	XXXXXXXXX 	01/03/2019 	Fully
Favorable
135000
Georgia Homecare 	XXXXXXXXX 	01/05/2019 	Fully Favora 	25000
Total Care 	XXXXXXXXX 	01/18/2019 	Partially
Favorable
29
Maximum Health group 	XXXXXXXXX 	01/29/2019 	Partially
Favorable
156000
Total 	$316029

Transmittals Issued for this Chapter

Rev # 	Issue Date Subject 	Impl Date CR#
R13825FM 06/11/2026 Updates to the Internet Only Manual,
Publication 100-06, Chapter 3,
Overpayments, Section 140-140.8.4 -
Bankruptcy
07/13/2026 14418
R13235FM 05/22/2025 Updates to the Internet Only Manual,
Publication 100-06, Chapter 3,
Overpayments, Sections 120 and 130
06/23/2025 14071
R13183FM 04/24/2025 100-06 Internet Only Manual (IOM) Updates
- Chapter 3 - Beneficiary Liability
05/27/2025 14044
R12946FM 11/08/2024 Medicare Financial Management Manual
Chapter 3 - Overpayments 10-90 Updates
2024
12/10/2024 13753
R12509FM 02/15/2024 Updating Chapter 3, Sections 200.5 - 200.8,
Limitation on Recoupment; Medicare
Overpayments Manual
07/01/2024 11808
R12261FM 09/22/2023 Updating Overpayment Manual, Chapter 3,
Sections 200.2.6-200.4.7, Limitation on
Recoupment
12/11/23 	11262
R12236FM 09/07/2023 Updating Overpayment Manual, Chapter 3,
Sections 200.2.6-200.4.7, Limitation on
Recoupment– Rescinded and replaced by
Transmittal 12261
12/11/2023 11262
R11787FM 01/19/2023 Publication (Pub.) 100-06, Chapter 4, Section
70 Revision (Removal of Debt Collection
System References and Corresponding
Updates) and Inclusion of Existing Debt
Close-Out (Termination of Collection Action)
Instructions
04/21/2023 12858
R11124FM 11/18/2021 Updates to Medicare Financial Management
Manual Chapter 3, Section 140.1 Bankruptcy
Forms
12/21/2021 12518
R335FM 	01/31/2020 Updates to Medicare Financial Management
Manual Chapter 3, Section 140.1 Bankruptcy
Forms
03/02/2020 11386
R315FM 	05/17/2019 Update to Publication (Pub.) 100-06 to
Provide Language-Only Changes for the New
Medicare Card Project
06/18/2019 11211
R311FM 	02/22/2019 Updating Chapter 3, Section 200, Limitation
on Recoupment; Medicare Overpayments
Manual, 2 of 4 CRs
10/07/2019 10336

R293FM 	09/14/2017 Revision to Publication 100-06, Chapter 3,
Medicare Overpayment Manual, Section 200,
Limitation on Recoupment
04/02/2018 9815
R292FM 	09/01/2017 Revision to Publication 100-06, Chapter 3,
Medicare Overpayment Manual, Section 200,
Limitation on Recoupment
04/02/2018 9815
R294FM 	10/06/2017 Pub. 100-6, Chapter 3 and 4 Revisions 	07/03/2017 10079
R285FM 	06/02/2017 Pub. 100-6, Chapter 3 and 4 Revisions 	07/01/2017 10079
R275FM 	11/18/2016 Pub. 100-06, Chapter 3, Section 90 (Provider
Liability) Revision
02/21/2017 9708
R260FM 	01/29/2016 Revision to Chapter 3 Section 200:
Limitation on Recoupment - Medicare
Overpayments Manual
03/01/2016 9458
R227FM 	09/17/2013 Removal of POR and PSOR instructions and
the Glossary of Acronyms from the Internet
Only Manual, Publication 100-06, Chapter 3
10/04/2013 8322
R225FM 	09/04/2013 Removal of POR and PSOR instructions and
the Glossary of Acronyms from the Internet
Only Manual, Publication 100-06, Chapter 3
10/04/2013 8322
R224FM 	08/02/2013 Revisions and Deletions to the Internet Only
Manual, Publication 100-06, Chapter 3,
Overpayment (Section 50.3); Chapter 4, Debt
Collection (Section 50 - 50.6 and 100.6.4)
Related to Extended Repayment Schedules
(ERS)
09/03/2013 8347
R222FM 	06/14/2013 Revisions and Deletions to the Internet Only
Manual, Publication 100-06, Chapter 3,
Overpayments; Section 140.2.3 - Filing
Bankruptcy Draws a Line in the Sand
07/17/2013 8324
R220FM 	06/07/2013 Removal of POR and PSOR instructions and
the Glossary of Acronyms from the Internet
Only Manual, Publication 100.06, Chapter 3
– Rescinded and replaced by Transmittal 225
07/09/2013 8322
R205FM 	02/09/2012 Immediate Recoupment for Fee For Service
Claims Overpayments
07/02/2012 7688
R204FM 	01/27/2012 Immediate Recoupment for Fee For Service
Claims Overpayments – Rescinded and
replaced by Transmittal 205
07/02/2012 7688
R141FM 	09/12/2008 Limitation on Recoupment (935) for
Providers, Physicians, and Suppliers
Overpayments
09/29/2008 6183

R106FM 	08/25/2006 Collection of Fee-for-Service Payments Made
During Periods of Managed Care Enrollment
06/26/2006 5105
R100FM 	07/03/2006 Collection of Fee-for-Service Payments Made
During Periods of Managed Care Enrollment
- Replaced by R106FM
06/26/2006 5105
R97FM 	05/26/2006 Collection of Fee-for-Service Payments Made
During Periods of Managed Care Enrollment
– Replaced by R100FM
06/26/2006 2801
R87FM 	1/03/2006 	Update to Carrier Demand Letter Appeals
Language
01/03/2006 4211
R64FM 	02/11/2005 For Fiscal Intermediaries (FIs), a new
Provider Type 80, Status Code CH, and
Method of Recoupment codes. For Carriers
and Durable Medical Equipment Regional
Carriers (DMERCs) Status Code 2
03/14/2005 3641
R61FM 	12/10/2004 New Location Code ICC, Status Code AR
and Modified Intent Letter for Unfiled Cost
Reports Only
01/10/2005 3563
R47FM 	06/25/2004 Expanded Identification and Workload
Reporting for CMS Medicare Systems
10/04/2004 3256
R43FM 	04/30/2004 Replaced by Revision 47FM 	10/04/2004 3256
R41FM 	04/30/2004 Change in Interest Calculation for Medicare
Overpayments and Underpayments and
Medicare Secondary Payer (MSP) Recoveries
10/04/2004 3163
R29FM 	01/02/2004 Revisions to Chapter 3 & 4 	02/06/2004 2911
R25FM 	11/03/2003 Rates of Interest – FIs and Carriers 	11/03/2003 2828
R22FM 	10/03/2003 Provider Overpayment Reporting System 	10/20/2003 2782
R12FM 	10/18/2002 Rewrite of Chapter 3 	10/25/2002 2350
R03FM 	08/30/2002 Initial Publication of Chapter 	N/A 	N/A
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