Recoupment by Withholding Payments (Rev. 12346;

40.1 – Recoupment by Withholding Payments (Rev. 12346; Issued:11-01-23; Effective:10-30-23; Implementation:10-30-23) A. General In accordance with regulations (42 CFR §§405.371-372), payments determined to be payable to providers can be withheld to protect the Medicare program against financial loss if the intermediary has determined that the provider to whom payments are to be made has been overpaid. The withholding of interim payments may be partial (for example, a percentage of payments withheld or a set amount) or complete. B. Requirements for Withhold Comply with the following conditions to withhold interim payments: • Notify the provider in writing through the demand letter or in other correspondence of your intention to withhold payments, in whole or in part; and • Give the provider an opportunity to submit a statement (including any evidence) as to why the withhold shall not be put into effect. Inform the provider it has l5 days following the date of the notification to submit such a statement. C. Cost Report Overpayments Percentage of Withhold Some percentage of withhold shall begin 15 days after the date of the first demand letter (day 16) if the overpayment has not yet been liquidated or an extended repayment plan has not been requested. The matrix below shall be utilized to determine the percentage of withhold for an overpayment determined from a cost report that has been filed (as filed cost report, tentative settlement, or final settlement), a PIP review, or an interim rate review. See Chapter 3, §30.1 when a cost report remains unfiled. NOTE: A set amount of withhold may be proposed instead of a percentage. The amount shall not be less than the appropriate percentage unless specific instructions are received from RO or CO. D. Physician/Supplier Overpayments- Withhold of Payments Withhold of all payments shall begin 40 days (41st day) after sending the initial overpayment demand letter unless payment in full has been received or an ERS application has been received. If an ERS application has been received and is currently being reviewed by the MAC or CMS RO or CO and the good faith payment was sent in by the provider with the application, no withhold shall occur. If the good faith payment did not accompany the ERS application a 30% withhold shall be initiated. Day 16 No word from provider 100 % withhold Day 16 Provider has submitted Extended Repayment Schedule (ERS) application No withhold if provider submitted a good faith payment along with ERS application. Good faith payments must continue on a monthly basis until provider receives written approval or denial of the ERS request. If good faith payment is not received with the application request, withhold shall be initiated at 30%. Day 16 Provider has submitted ERS application but it is incomplete No withhold as long as provider submitted a first good faith payment along with ERS application. If good faith payment is not received with the application request, withhold shall be initiated at 30%. Once a completed application is submitted, good faith payments or 30% withholding must continue on a monthly basis until provider receives written approval or denial of the ERS request. If completed information is not received within an allotted amount of time (rarely more than 30 days) withhold shall be initiated at 100%. Day 16 Provider has said that it is planning to submit an ERS application 30% withhold- when ERS application is received, cease withhold if a good faith payment accompanies the application request; maintain 30% withhold if payment does not accompany application. Day 30 Still no word from provider Withhold at 100%. Day 30+ ERS application is being reviewed by RO or CO No withhold as long as provider continues to submit appropriate good faith payments on a monthly basis under the terms of the application request. If provider did not submit a first good faith payment or does not submit subsequent payments, withhold shall be 30% of payments unless RO or CO gives alternative instructions. Day 30 Provider said an ERS application was forthcoming but has not been received to date Increase withhold to 100%. If provider calls with an acceptable reason for the delay, make a judgment call to leave at 30% until day 45 or refer to RO for direction. Day 45+ No ERS application and no payment by provider Withhold at 100% NOTE: Additional Information for MACs If extenuating circumstances exist and the MAC believe that a higher or lower percentage of withhold is necessary to protect the Medicare Trust Fund, the MAC shall contact the servicing regional office for guidance and/or approval. Some examples include knowledge that the provider may file bankruptcy, a history of non-payment of overpayments, or evidence that the withhold percentage would cause irreparable harm. The payment submitted with the ERS application shall be one month’s payment based on the amortization schedule submitted with the ERS application. The amortization schedule shall not exceed 60 months, shall include principal and interest and the minimum monthly payment shall not be less than 1/60th of the overpayment. If the provider requests an ERS in excess of 60 months the good faith payment submitted shall be 1/60th of the overpayment. If the good faith payment submitted is not 1/60th of the overpayment, the MAC shall contact the provider (in writing or a documented telephone call with the appropriate personnel at the provider’s place of business) requesting additional funds. If the provider does not submit additional funds within 15 days of the date of the request, the MAC shall initiate a 30% withhold. Until a final decision is made regarding the ERS the provider should submit monthly good faith payments based on the amortization schedule. If the provider does not continue to submit monthly good faith payments, the MAC shall contact the provider requesting the payment. If the provider does not submit the monthly payment within 15 days of the date of the request, the MAC shall initiate a 30% withhold until a decision is made. E. Disposition of Withheld Funds All funds withheld shall be applied towards the outstanding overpayment. The funds shall be applied to the outstanding and accrued interest first and then to the outstanding principal balance. F. Duration of Withhold The withhold shall remain in effect until: • The overpayment is liquidated; • You enter into an agreement with the provider for liquidation of the overpayment; or • On the basis of subsequently acquired evidence, or otherwise, you determine that there is no overpayment.