Bankruptcy

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.