Part B NON-935 Overpayment Demand Letters to Physicians/Suppliers

90.2 - Part B NON-935 Overpayment Demand Letters to Physicians/Suppliers (Rev. 205; Issued: 02-09-12, Effective: 07-01-12, Implementation: 07-02-12) When a physician/supplier is liable for an overpayment of $10 or more, the carrier shall attempt recovery through the following procedures. It shall recover an overpayment made to a physician/supplier as an individual or to a professional corporation (following the procedures described below) only from the party to whom the overpayment was made. It shall make no attempt to recover an overpayment made to an individual physician/supplier from a professional corporation with which they may be associated as an employee or stockholder. Conversely, it shall not attempt recovery from an individual physician/supplier where the overpayment was made to a professional corporation with which they are, or were, associated. A. Overpayment Amount Is At Least $10 When the carrier determines an overpayment it shall issue a demand letter that requests the physician/supplier to pay the debt in full within 30 days, or the amount owed and any assessed interest will be collected by offset. B. Overpayment Demand Letter The purpose of an overpayment demand letter is to notify the physician/supplier of the existence and amount of an overpayment, and to request repayment. The demand letter shall be written in such a manner as to fully explain the nature of the overpayment and the amount determined. Each demand letter shall be: • Sent to the physician/supplier by first class mail; and • Determined within forty-five (45) calendar days of the discovery of the overpayment and mailed within seven (7) calendar days of the creation of the accounts receivable and generation of the demand letter. Longer amounts of time in between discovery and determination must be supported by additional documentation. In the case of the second request, the letter must be mailed within 45 days but no earlier than 30 days after the date of the first demand letter. A. Content of Demand Letters • Sent to the physician/supplier. • For a first request, mail within seven (7) calendar days of determination of the overpayment. • Each demand letter is an explanation of the nature of the overpayment, how it was established, in addition, the amount determined. • The Medicare contractor shall include the model immediate recoupment process language within the content of the Part B non-935 overpayment demand letters to physicians and other suppliers for the Part B Non-MSP overpayment demand letters. • The demand letter shall offer the physician and other supplier the opportunity to request an immediate recoupment. Refer to section 80.2. • The demand letter shall offer the physician/supplier the opportunity to apply for an extended repayment plan if immediate repayment of the debt will cause financial hardship. An extended repayment plan must be approved using the criteria set forth in Chapter 4, §50. Any approved repayment plan would run from the date of the FIRST REQUEST overpayment demand letter. • The demand letter constitutes a request to the physician/supplier to refund the overpaid amount. • The demand letter informs physicians/suppliers that the carrier will recover the overpayment through the recoupment of current payments due or from future claims submitted unless the carrier receives repayment or the physician/supplier provides a statement within 15 days of the date of the letter of why this action should not take place. The demand letter shall also inform physicians/suppliers that this recoupment will begin on the 41st day from the date of the letter. • The demand letter informs physicians/suppliers that interest will accrue on the overpayment if payment in full is not received by the 31st day from the date of the letter. The demand letter shall also inform physicians/suppliers of the applicable interest rate that will accrue if payment in full is not received by the 31st day from the date of the letter. • The demand letter informs physicians/suppliers that they have the right to request a review or hearing, as appropriate, if they believe the determination is not correct. (See Medicare Claims Processing, Chapter 29, Appeals of Claims Decisions.) A review is available for disputed overpayments of any amount, and a carrier fair hearing is available once the review has been conducted if the amount in dispute is at least $100. • Bankrupt providers. All correspondence, including demand letters, addressed to a bankrupt provider must be submitted to the Regional Office who has the lead in the bankruptcy proceedings for approval prior to release. The Medicare contractor shall refer to Exhibits I through VI for the standard formats for each demand and voluntary refund letters to be used in various overpayment situations. B. Recovery by Recoupment If, within 15 days of the date of the initial demand letter, the physician/supplier submits a statement (rebuttal) and/or evidence as to why recoupment should not be effectuated, the carrier shall promptly evaluate the material. This is different from a request for appeal (see subparagraph F) in that you are deciding only whether there is a basis to not effectuate recoupment. Any correspondence dealing with the basis of the overpayment does not affect your decision concerning recoupment. If the carrier determines that recoupment shall begin, it shall notify the physician/supplier in writing of its determination. It shall give specific reasons for its decision. If no such statement (rebuttal) is received or an extended repayment schedule has not been requested, the contractor shall initiate recovery by recoupment 40 days after the date of the initial demand letter (day 41), unless the physician/supplier refunds the overpaid amount in full. The contractor shall apply any amounts payable to the physician/supplier by reason of assignment on behalf of any beneficiary to recoup the overpayment. It shall apply any amount recouped first to the accrued interest and then to the principal. If it is not possible to make an immediate recoupment, the contractor shall annotate the physician's account so that the overpayment can be recouped from future Medicare benefits payable. When recoupment is used, the contractor sends the regular Medicare Summary Notice (MSN) to the beneficiary. However, it includes with the physician's/supplier's MSN an explanation that the benefits (or a specified amount of the benefit) are being applied to the overpayment and that the physician may not request the beneficiary to pay the amount applied to the overpayment. The contractor shall discontinue recoupment only when the overpayment, plus all accrued interest, is recovered, it is determined on appeal that the physician/supplier was not overpaid or an acceptable extended repayment plan request is received (See Chapter 4, §50). After a favorable appeal decision, the contractor shall refund any excess amount withheld through recoupment. Also, it shall refund any interest that was collected. C. Follow-up Request If the initial demand letter for an overpayment of $10 or more brings no response within 30 days, the carrier shall send a follow-up letter (enclose a copy of the initial letter to the physician/supplier) within 45 days. If any portion of the overpayment has been recovered, it shall include a statement of that amount. D. Physician Appeals Within 30 Days of Notification of the Intent to Recoup If, within 30 days after the date of the initial demand letter informing the physician/supplier of the intention to recoup, the physician/supplier submits a request for a review or hearing or otherwise protests the recovery, the carrier shall make every effort to conclude the appeal procedure expediently. However, it shall begin recoupment 40 days after the initial demand, if payment has not been made, regardless of the status of any appeal request. (See subparagraph D.) E. Demand Letter to Physician Returned as Undeliverable Where a refund letter is returned as undeliverable, the carrier shall attempt to locate the physician/supplier using such sources as telephone directories, city directories, postmasters, driver's license records, automobile title records, State and local medical societies, the American Medical Association or its own Medicare beneficiary records. (See Chapter 4, §80.) F. Direct Contact with Physician If attempted recoupment of the overpayment is unsuccessful for 30 days, the carrier shall contact the physician/supplier by telephone. (See Chapter 4, §80.) Third Demand Letter If the overpayment has not been recouped and the debt is eligible for referral to the Department of Treasury an intent to refer letter shall be sent once the overpayment becomes 90 days delinquent. (See CR 1683 or Chapter 4, §70) EXHIBIT 1- SAMPLE DEMAND LETTERS Exhibits I through VI include: the initial demand letter with optional opening paragraphs and the follow- up letter. It also includes a limited set of optional paragraphs to be used in specific situations, e.g., medical necessity denials, and installment payments. The carrier shall follow these formats, with the optional paragraphs, when preparing demand letters. This section also includes standard letters to be used when the physician/supplier voluntarily submits a check to the carrier. These letters are optional if the carrier uses the remittance advice to inform physicians/suppliers of receipt of their refund checks. EXHIBIT 1 - INITIAL Non-935 DEMAND LETTER TO PHYSICIANS/SUPPLIERS Dr. Joe Smith Anywhere St Anytown, State ZIP Code Date Dear Dr. Smith: Contractors should use the appropriate paragraph: "This is to let you know that you have received Medicare payment in error which has resulted in an overpayment to you of $______ for services dated _____ . The following explains how this happened." or "We appreciate your recent inquiry regarding Medicare payment that you believe was paid to you in error. We thank you for bringing this overpayment to our attention." or "We have received your check in the amount of $_____. We thank you for bringing this overpayment to our attention. While we appreciate you submitting payment to us, our review found that the overpaid amount was $________. Please remit the additional $______." How this overpayment was determined: NOTE: This paragraph should include a clear explanation of how the overpayment arose, the amount of the overpayment, how the overpayment was calculated, and why the original payment was not correct. Why you are responsible: NOTE: For medical necessity determinations, the carrier shall insert appropriate paragraphs. It shall be sure to give an 1879 determination for each claim as well as the regulatory and statutory references for the 1879 determination. You are responsible for being aware of correct claim filing procedures and must use care when billing and accepting payment. In this situation you billed and/or received payment for services you should have known you were not entitled to. Therefore, you are not without fault and are responsible for repaying the overpayment amount. If you dispute this determination please follow the appropriate appeals process listed below. (Applicable Authorities: Section 1870(b) of the Social Security Act; §§ 405.350 - 405.359 of Title 42, §§ 404.506 - 404.509, 404.510a and 404.512 of Title 20 of the United States Code of Federal Regulations.) What you should do: Please return the overpaid amount to us by __________(date) and no interest charge will be assessed. Make the check payable to Medicare Part B and send it with a copy of this letter to: Carrier Name Address City, State and Postal ZIP Code Immediate Recoupment request: “You may elect to have your overpayment(s) repaid through the “immediate recoupment” process and avoid paying by check or waiting for the standard recoupment that begins on day 41 from date of the initial demand letter. A request for immediate recoupment must be received in writing no later than 16 days from the date of initial demand letter. You must specify whether you are submitting: 1. A one-time request for the current overpayment and all future overpayments, or 2. A request for the current overpayment addressed in this demand letter only. This process is voluntary and for your convenience. Visit our website at www.______.___ or call (USA MEDICARE CONTRACTOR Name) at (XXX) XXX-XXXX for additional information and instructions for “Immediate Recoupment”. You may fax your request to XXX-XXX-XXXX. If you do not refund in 30 days: In accordance with 42 CFR 405.378 simple interest at the rate of __ will be charged on the unpaid balance of the overpayment beginning on the 31st day. Interest is calculated in 30-day periods and is assessed for each full 30-day period that payment is not made on time. Thus, if payment is received 31 days from the date of final determination, one 30-day period of interest will be charged. Each payment will be applied first to accrued interest and then to principal. After each payment interest will continue to accrue on the remaining principal balance, at the rate of __ . We request that you refund this amount in full. If you are unable to make refund of the entire amount at this time, advise this office immediately so that we may determine if you are eligible for a repayment plan. (See enclosure for details.) Any repayment plan (where one is approved) would run from the date of this letter. If payment in full is not received by, (specify a date 40 days from the date of the notification), payments to you will be withheld until payment in full is received, an acceptable extended repayment request is received, or a valid and timely appeal is received. If you have reason to believe that the withhold should not occur on _____ you must notify <contractor> before ___. We will review your documentation. However, this is not an appeal of the overpayment determination, and it will not delay recoupment. 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 first level of appeal is called a redetermination. You must file your request for a redetermination within 120 days of the date you receive this letter. Unless you show us otherwise, we assume you received this letter 5 days after the date of this letter. Please send your request for redetermination to: Address of Redetermination Department 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. 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 so as 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 and the district where the bankruptcy is filed. Should you have any questions please do not hesitate to contact _______ at __________. If we can assist you further in the resolution of this matter, we shall be glad to do so. We expect to hear from you shortly. Sincerely, (name and title) Enclosure EXHIBIT 2 - FOLLOW UP DEMAND LETTER TO PHYSICIANS/SUPPLIERS Dr. Joe Smith Anywhere St Anytown, State ZIP Code Dear (Name of Physician/Supplier): We previously sent you a letter requesting that you refund an overpayment made to you. Enclosed you will find a copy of the initial letter sent to you which explains how the overpayment was determined and why you are responsible. As of today, we have not heard from you, either to request an overpayment appeal or to make payment. The overpaid amount is ______ (principal plus interest) for your claim that paid on _______. $_______ has been recovered. As stated in our initial letter, offset of the overpayment amount, plus interest, will be made against any pending and future assigned Medicare claims. If you have already sent payment, or our letters have crossed in the mail, we thank you and ask that you please disregard this letter. If you have any questions regarding this matter, please contact us at ________. Sincerely, (Name of individual) Enclosure EXHIBIT 3- INTENT TO REFER LETTER When an eligible physician/supplier overpayment remains delinquent for 90 or more days, the carrier shall send an intent to refer letter. (See CR 1683 and Chapter 4, §70 for more information.) EXHIBIT 4 - OPTIONAL OVERPAYMENT CUSTOMIZING PARAGRAPHS A1 - The carrier shall include this language in all overpayment letters that involve §1879 medical necessity denials. It shall place it as the first paragraph under the heading "Why you are responsible." Based on available information, we have determined that you had or should have had knowledge that the service(s) were not medically necessary and reasonable because (i.e., pertinent information was available from the law and regulations [provide a cite, if possible], from [cite name/issue number of your newsletter], from a meeting you attended on [date], and from your peers in the medical community). (Applicable Authorities: Section 1879 of the Social Security Act; §§411.404 and 411.406 of Title 42 of the United States Code of Federal Regulations.) NOTE: The carrier shall be sure to include the applicable authorities at the end of the §1879 language as it appears here. A2 - The carrier shall include this language in all overpayment letters that involve §1879 medical necessity denials where payment was collected from the beneficiary. This overpayment is for services that are not medically reasonable and necessary per Medicare standards. If you collected the amount of the overpayment from the beneficiary, the beneficiary has the right to request payment from Medicare. Any such indemnification will be recovered from you. B1 - The carrier shall include the following paragraph in all overpayment letters that involve payment in excess of the allowed charge. The overpayment resulted from payment made to you in excess of the allowed charge for services. If you have collected a coinsurance and/or deductible from the beneficiary based on the incorrect amount, please be sure to refund the excess amount to the beneficiary. B2 - The carrier shall include one of the appropriate paragraphs below in all overpayment letters that involve duplicate payments. • The overpayment resulted from excess payments caused by multiple processing of the same charge. • The overpayment resulted from Medicare payment on an assigned claim for which the beneficiary also received payment on an itemized bill and turned his payment over to you. Therefore, you are liable for $________ which represents that portion of the total amount paid in excess of the fee schedule amount. • You have mistakenly received duplicate primary payment from both Medicare and another entity (Specific payer). (Specific payer) is the appropriate payer. As such, you are liable for the portion of the Medicare payment in excess of the amount Medicare is obligated to pay as secondary payer. • This overpayment resulted from duplicate Medicare payments to you for services you provided to (named beneficiary). NOTE: The above paragraphs are not all-inclusive. EXHIBIT 5 - SAMPLE LETTER - CHECK INCLUDED FOR CORRECT AMOUNT Dear (Name of Physician/Supplier): We appreciate your recent inquiry regarding Medicare payment that you believe was paid to you in error. We thank you for bringing this overpayment to our attention, thereby protecting the integrity and resources of the Medicare program. A review of our records confirms that you have been overpaid. (This paragraph should include a clear explanation of how the overpayment arose, the amount of the overpayment, how the overpayment was calculated, and why the original payment was not correct.) We have received your check in the amount of $_______ and applied it to the overpayment. Thank you once again for bringing this matter to our attention. Sincerely, (Name of individual) EXHIBIT 6 - SAMPLE LETTER - CHECK INCLUDED BUT WRONG AMOUNT (TOO MUCH) Dear (Name of Physician/Supplier): We appreciate your recent inquiry regarding Medicare payment that you believe was paid in error. We thank you for bringing this overpayment to our attention. A review of our records confirms that you have been overpaid. (This paragraph should include a clear explanation of how the overpayment arose, the amount of the overpayment, how the overpayment was calculated, and why the original payment was not correct.) We have received your check for $_______. You will notice that the amount of your check exceeds the overpayment amount. We will send you a check shortly for the excess amount. Thank you once again for bringing this matter to our attention. Sincerely, (Name of individual) Enclosure