Administrative Freeze/Set-off

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.