Demand Letters

20 – Demand Letters (Rev. 13071; Issued: 03-13-25; Effective: 04-11-25; Implementation: 04-11-25) There are two overpayment demand letters, an Initial Demand Letter and an Intent to Refer Letter (ITR) (this does not include notification letters or response letters) used in the debt collection process. The purpose of an overpayment demand letter is to notify the providers and suppliers of the existence and amount of an overpayment, and to request repayment. Every demand letter, regardless of the cause of the overpayment or the status of the provider or supplier, shall meet certain requirements as to form and content. Below is a detailed list of the requirements for the basic overpayment demand letters to use in various overpayment situations (it is not all-inclusive). Non-Cost Report Overpayment Demand Letters: 1. The initial demand letter shall be sent to the provider or supplier within 7 calendar days of the determination of the overpayment. 2. The letters shall be labeled either Initial Demand Letter or The Intent to Refer Letter (ITR.). 3. All letters shall be scanned or copied into the internal system for non-HIGLAS users and HIGLAS users shall use the Tool (Paper Clip) to include a copy of manual letters. 4. The initial demand letter shall be sent by first class mail, secured email, or fax. 5. The initial demand letter is an explanation of the nature of the overpayment, how it was established, a bankruptcy notice, and the amount determined. 6. The initial demand letter includes language to request the provider or supplier to submit a refund or arrange for immediate recoupment or file an appeal (with exception of Requests for Anticipated Payment (RAP) claims that shall not receive appeal rights, see 100-06 Chapter 3 Section 200.1.2). 7. The initial demand letter offers the provider or supplier the opportunity to apply for an Extended Repayment Schedule (ERS) if repayment of the debt will cause financial hardship. (An ERS shall be analyzed using the criteria set forth in Chapter 4, §50. Any approved ERS would run from the approval date.) 8. If payment in full is not received within 30 days, interest will be charged. 9. The initial demand letter includes Debt Collection Improvement Act (DCIA) Intent Language for referral to the Treasury Department for cross servicing. 10. The ITR letter is sent to the provider or supplier at least 60 days after the date of the initial, final or revised demand letter, if it is not in a status excluded from debt referral, and shall include the initial demand letter number. 11. All correspondence, including demand letters, addressed to a provider or supplier in bankruptcy proceedings, shall be submitted to the Regional Office (RO), which has the lead in the bankruptcy proceedings, for approval prior to release. Cost Report Overpayment Demand Letters: 1. When a provider files a cost report without payment for the amount due from the provider, the contractor shall send a demand letter to the provider. The demand letter shall inform the provider that the contractor will recoup (reduce or withhold) Medicare payments if it does not receive the overpayment amount, or a request for a repayment schedule along with the first month’s payment within 15 days of the date of the demand letter. 2. In the situation of an unfiled cost report, the cost report reminder letter serves as sufficient notice that future Medicare payments (interim payments) will be suspended if the overpayment amount is not received on or before its due date. 3. In addition to the suspension of future Medicare payments for failure to file a cost report, contractors shall deem all interim and lump-sum payments made for the fiscal period and all interim and lump-sum payments made in a subsequent period as an overpayment. These overpayments shall be immediately due and payable to CMS if the cost report is not received timely. 4. The contractor shall ensure that recoupment of Medicare payments does not start until the cost report demand letter is generated. 5. The initial cost report demand letters may be delivered certified mail, electronic mail (e-mail), or through a secured portal and shall include a receipt confirmation. 6. The initial cost report demand letters shall be sent to the provider or supplier on the 7th day after the due date or extended due date of the cost report, if not received. 7. The initial cost report demand letters shall include the explanation of the overpayment determination and the amount due or Notice of Program Reimbursement (cost report). 8. All letters shall be scanned or copied into the internal system for non-HIGLAS users and HIGLAS users shall use the Tool (Paper Clip) to include a copy of manual letters. 9. The provider or supplier may submit a cost report, make a refund, arrange for immediate recoupment, or request an ERS, as applicable. 10. The percentage of withhold shall be indicated whenever an adjustment (reduction or suspension) of interim payments has been imposed. 11. The cost report letters shall offer the provider the opportunity to apply for an ERS if repayment of the debt will cause financial hardship. (An ERS shall be analyzed using the criteria set forth in Chapter 4, §50. Any approved ERS would run from the approval date.) 12. The cost report letters shall include DCIA Intent Language for referral to the Treasury Department for cross servicing. 13. The ITR letter shall be mailed to the provider 60 days after the date of the Initial Demand letter, if it is not in a status excluded from debt referral.