Medicare Program; Limitation on Recoupment of Provider and Supplier Overpayments, 47458-47470 [E9-22166]
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47458
Federal Register / Vol. 74, No. 178 / Wednesday, September 16, 2009 / Rules and Regulations
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Part 405
[CMS–6025–F]
RIN 0938–AN42
Medicare Program; Limitation on
Recoupment of Provider and Supplier
Overpayments
AGENCY: Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule.
SUMMARY: This final rule implements a
provision of the Medicare Prescription
Drug, Improvement, and Modernization
Act of 2003 (MMA) which prohibits
recouping Medicare overpayments from
a provider or supplier that seeks a
reconsideration from a Qualified
Independent Contractor (QIC). This
provision changes how interest is to be
paid to a provider or supplier whose
overpayment is reversed at subsequent
administrative or judicial levels of
appeal. This final rule defines the
overpayments to which the limitation
applies, how the limitation works in
concert with the appeals process, and
the change in our obligation to pay
interest to a provider or supplier whose
appeal is successful at levels above the
QIC.
DATES: Effective Date: These regulations
are effective on November 16, 2009.
FOR FURTHER INFORMATION CONTACT:
Debbie Miller (410) 786–1492.
SUPPLEMENTARY INFORMATION:
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I. Background
Prior to passage of the MMA, CMS
could recoup overpayments regardless
of whether a provider or supplier had
appealed. Section 935(f)(2) of the MMA,
codified at section 1892(f) of the Social
Security Act, prohibits the recoupment
of Medicare overpayments during a
provider or supplier appeal to a
Qualified Independent Contractor (QIC).
CMS will also stop recoupment during
the first level of appeal, the
redetermination, if the provider or
supplier files a timely request for
appeal, as explained in detail within the
text of this regulation. However, the
contractor may initiate or resume
recoupment, whether or not the
provider or supplier subsequently
appeals the QIC determination to the
Administrative Law Judge (ALJ), the
Medicare Appeals Council, or Federal
court.
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This final rule defines the
overpayments to which the limitation
on recoupment applies, how the
limitation works in concert with the
appeals process, and sets time limits for
recouping overpayments, specifically
providing 41 days for a provider or
supplier to file the first level of appeal
before the contractor can begin
recoupment and providing the provider
or supplier 60 days to appeal at the
second level before the contractor can
begin recoupment.
This final rule also changes how
interest is to be paid to a provider or
supplier whose overpayment is
subsequently reversed at the ALJ,
Medicare Appeals Council, or Federal
court levels of appeal. Before the MMA
was passed, CMS was liable for interest
charges if it did not pay within 30 days
of an underpayment determination. This
final rule requires that if an
overpayment determination is
overturned in administrative or judicial
appeals, above the QIC level of appeal,
CMS is liable for interest on recouped
overpayments that has accrued since the
original determination. This final rule
implements this new requirement,
while leaving all other interest
calculation regulations intact. Therefore,
if a provider or supplier takes advantage
of the limitation on recoupment, and
ultimately loses on appeal, it will still
be liable for all accrued interest.
A. Legislation
Section 935 of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub.
L. 108–173) amended Title XVIII of the
Social Security Act (the Act) to add a
new paragraph (f) to section 1893 of the
Act, the Medicare Integrity Program.
This new sub-section contains eight
substantive provisions addressing the
recovery of overpayments. This final
rule implements the second of these
provisions—the limitation on
recoupment.
The statute requires us to change the
way we recoup certain overpayments. It
also changes how interest is to be paid
to a provider or supplier whose
overpayment determination is reversed
at administrative or judicial levels of
appeal above the QIC. We note that the
changes to recoupment and interest
work in tandem with Medicare fee-forservice claims appeal process. We refer
readers to the September 22, 2006
proposed rule (71 FR 55406) or to the
applicable regulations at 42 CFR
405.900 for a further discussion of the
claims appeal process. The September
22, 2006 proposed rule includes a brief
discussion of the appeals process and a
detailed chart which sets forth the levels
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of appeals as well as applicable time
frames and amount in controversy
requirements.
B. Appeals and Limitation on
Recoupment
Recoupment is the recovery of a
Medicare overpayment by reducing
present or future Medicare payments
and applying the amount withheld
against the debt. Under our existing
regulations, providers and suppliers can
challenge an overpayment
determination through both the rebuttal
and appeals processes. The rebuttal
process provides the debtor the
opportunity to submit a statement and/
or evidence stating why recoupment
should not be initiated. The outcome of
the rebuttal process could change how
or if we recoup. Section 1893 of the Act
as amended by Section 935 of the MMA
and the provisions of this final rule do
not alter the rebuttal process. The
regulatory definition of ‘‘recoupment’’ is
set forth at § 405.370. See § 405.374 for
information on the rebuttal process.
An appeal is an examination of the
validity of the overpayment
determination. Before section 1893(f)(2)
of the Act was enacted, if a provider or
supplier elected to appeal, there was no
effect on our ability to recover the debt.
However, if the overpayment
determination was reversed in whole or
in part, at any stage of the
administrative or judicial appeal
process, appropriate adjustments would
be made to the overpayment and the
amount of interest assessed.
When section 1893(f)(2) of the Act
was enacted, our recoupment process
was changed. Section 1893 (f)(2) of the
Act states:
In the case of a provider of services or
supplier that is determined to have received
an overpayment under this title and that
seeks a reconsideration by a qualified
independent contractor on such
determination under section 1869(b)(1), the
Secretary may not take any action (or
authorize any other person, including any
Medicare contractor, as defined in
subparagraph (C)) to recoup the overpayment
until the date the decision on the
reconsideration has been rendered.
C. Assessment of Interest
In addition to changing the
recoupment process, section 1893(f)(2)
of the Act also has the effect of changing
how we pay interest to a provider or
supplier who is successful in having an
overpayment determination fully or
partially reversed at the latter stages of
the appeal process.
Previously, we paid interest on
underpayments solely in accordance
with sections 1815(d) and 1833(j) of the
Act. (See also, § 405.378.) An
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underpayment would usually result
when we had recovered, through
recoupment or otherwise, an
overpayment; the decision was fully or
partially reversed at some point in the
appeal process; and after appropriate
adjustments, we owed the balance to the
provider or supplier. Interest would
accrue from the date of the ‘‘final
determination’’ and was owed if the
underpayment was not paid within 30
days. Following an appeal decision
favorable to a provider or supplier, the
Medicare contractor would effectuate
the decision. If the decision created an
underpayment, the contractor would
issue a written determination of the
amount Medicare owed as an
underpayment. The written
determination was considered a new
final determination; interest would
accrue from the date of the final
determination and would be owed/
payable if the underpayment was not
paid by the Medicare contractor within
30 days of the final determination of the
underpayment.
The new interest provision found in
section 1893(f)(2)(B) of the Act revises
the way interest is to be paid to a
provider or supplier whose
overpayment determination is
overturned in administrative or judicial
appeals subsequent to the second level
of appeal (the QIC reconsideration).
Section 1893(f)(2)(B) of the Act states:
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Insofar as the determination on such
appeal is against the provider of services or
supplier, interest on the overpayment shall
accrue on and after the date of the original
notice of overpayment. Insofar as such
determination against the provider of
services or supplier is later reversed, the
Secretary shall provide for repayment of the
amount recouped plus interest at the same
rate as would apply under the previous
sentence for the period in which the amount
was recouped.
Section 1893(f)(2)(B) of the Act does
not specifically amend sections 1815(d)
and 1833(j) of the Act. In addition, the
MMA conference report does not
reference these sections. The statute and
the conference report are both silent on
the relationship between paying or
collecting interest: (1) Based on the final
determination concept embodied in
sections 1815(d) and 1833(j) of the Act;
and (2) the concept of paying interest
based on how long we held funds,
ultimately determined through the latter
stage of the appeal process to belong to
the provider, as incorporated in section
1893(f)(2)(B) of the Act.
The statute does not change the
obligation of the provider or supplier to
pay interest if the overpayment
determination is affirmed at any level of
administrative or judicial appeal. In
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accordance with sections 1815(d) and
1833(j) of the Act, interest continues to
accrue from the date of the final
determination as defined in
§ 405.378(c). Section 1893(f)(2)(B) of the
Act explains that if an appeal of an
overpayment is upheld before the QIC,
‘‘interest on the overpayment shall
accrue on and after the date of the
original notice of overpayment.’’ For
overpayments subject to the limitation
on recoupment provision, the date of
the final determination is the date of the
original notice of overpayment (that is,
the demand letter). Therefore, section
1893(f)(2)(B) of the Act is consistent
with sections 1815(d) and 1833(j) of the
Act and does not alter our ability to
assess interest against the provider or
supplier.
In addition, the statute does not
change the obligation of Medicare to pay
the provider or supplier interest if the
overpayment determination is reversed
at the first (redetermination) or second
(reconsideration) level of the
administrative appeal process and the
appeal decision generates an
underpayment. At these levels of
appeal, interest would continue to be
payable by Medicare if an
underpayment is not paid to the
provider or supplier within 30 days of
the date of the final determination. The
change in the method of paying interest
resulting from section 1893(f)(2)(B) of
the Act is applicable only where the
reversal occurs at the Administrative
Law Judge (ALJ) level or subsequent
levels of administrative appeal or
judicial review. At these higher levels of
administrative appeal or judicial review,
interest becomes payable by Medicare
based on the period we recouped and
retained the provider’s or supplier’s
funds where the decision results in a
full or partial reversal and Medicare
previously recouped funds.
We determine the rate of interest in
accordance with § 405.378 by
comparing the private consumer rate
with the current value of funds rate.
Interest is assessed at the higher of these
two rates that is in effect on the date of
the final determination of the amount of
the overpayment or underpayment.
Since February 2001 to the present time,
it has ranged from a low of 10.75
percent to a high of 14.125 percent. In
accordance with § 411.24(m)(2), interest
is calculated on Medicare Secondary
Payer (MSP) debts in the same manner
as for Medicare overpayments and
underpayments. In addition, the same
interest rate is used.
Interest accrues daily but is assessed
and calculated in full 30 day periods.
We charge simple rather than
compound interest, and payments we
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receive are applied first to accrued
interest and then to principal. Interest
we collect on overpayments and MSP
recoveries goes to the general fund of
the U.S. Treasury. The principal amount
we recover is used to reimburse the
applicable Medicare Trust Fund the
Hospital Insurance (Part A) or the
Supplementary Medical Insurance (Part
B and now D) trust funds, which are
special accounts in the U.S. Treasury.
Interest we pay on Medicare
underpayments comes from the
applicable Medicare Trust Fund.
D. Suspension
We note that this new MMA provision
does not affect how we recover
overpayments from providers or
suppliers that have been placed on
payment suspension. Under § 405.371,
an intermediary, a carrier, or CMS may
suspend the payment of claims if there
is reliable information that an
overpayment, fraud, or willful
misrepresentation exists or that
payments to be made may not be
correct. Once an overpayment amount is
determined, suspended payments must
first be applied to eliminate any
overpayment as specified in
§ 405.372(e). We do not interpret section
1893(f)(2) of the Act as amending our
authority to apply suspended payments
toward reducing or eliminating an
overpayment. Furthermore, we do not
interpret section 1893(f) of the Act to
require that suspended payments be
released to a provider or supplier once
an overpayment amount is determined.
If the suspended payments are
insufficient to fully eliminate any
overpayment, and the provider or
supplier meets the requirements of this
final rule, the limitation on recoupment
provision under section 1893(f)(2) of the
Act will be applicable to any remaining
balance still owed to CMS.
We also note that section 1893(f)(2) of
the Act does not alter the process for
providers or suppliers to appeal
overpayment determinations that follow
suspension actions. Providers and
suppliers may continue to appeal the
overpayment determination as they
could before the enactment of the MMA.
II. Provisions of the Proposed
Regulations and Response to Comments
In the September 22, 2006 Federal
Register (71 FR 55404), we published
the proposed rule entitled, ‘‘Limitation
on Recoupment of Provider and
Supplier Overpayments’’ and provided
for a 60-day comment period. The rule
proposed to implement a provision of
the MMA that prohibited recouping
Medicare overpayments when a
reconsideration appeal is received from
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a provider or supplier until a decision
is rendered by a QIC. The provision
changes how interest is to be paid to a
provider or supplier whose
overpayment is reversed at subsequent
administrative or judicial levels of
appeal. The proposed rule defined the
overpayments to which the limitation
applies, how the limitation works in
concert with the appeals process, and
the change in our obligation to pay
interest to a provider or supplier whose
appeal is successful at levels above the
QIC.
We received a total of 11 timely
comments from physicians, hospital
associations, home health facilities,
medical equipment providers, and other
individuals and health care
associations.
Brief summaries of each proposed
provision, a summary of the public
comments we received, and our
responses to the comments are set forth
below.
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A. General Comments
Most of the comments received
ranged from general comments that
supported or opposed the proposed
provisions, to very specific questions or
comments regarding the proposed
changes.
Comment: We received two comments
that supported CMS’s decision to halt
recoupment during the period that the
provider seeks a first level of appeal
(redetermination) as stated in proposed
§ 405.379(d)(1).
Response: We appreciate the
commenters recognizing that CMS has
attempted to fairly implement the
requirements of section 1893(f)(2) of the
Act while still fulfilling its fiduciary
responsibility to collect overpayments
aggressively.
Comment: One commenter expressed
concern that CMS’s limitation on
recoupment provisions afford greater
protections to overpaid providers than
to providers who are merely suspected
to have overpayments and for whom
payments are suspended while an
overpayment is being determined.
Response: Section 1893(f)(2) of the
Act prevents the Secretary from taking
any ‘‘action * * * to recoup the
overpayment’’. The disposition of
suspended funds as explained in
§ 405.372(e) is not a ‘‘recoupment’’ as
that term is defined in § 405.370. The
statute does not broaden or alter CMS’s
definition of recoupment to also apply
to the application of suspended funds.
Because CMS is only limited by section
1893 (f)(2) of the Act from recouping
Medicare payments, we are not
restricted in our ability to apply
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suspended funds to reduce or dispose of
an overpayment.
B. Authority Citation for Subpart C of
Part 405
Subpart C of part 405 implements
several sections of the Act including
sections authorizing the recovery of
overpayments and assessment of
interest. In the September 22, 2006
proposed rule, we proposed to revise
the authority citation to explicitly add
Section 1893 of the Act, amended by
section 935 of the MMA, to add the
limitation on recoupment as well as
other provisions addressing the recovery
of overpayments. We received no
comments on this provision. Thus, in
this final rule, we are adopting the
authority citation provisions of the
proposed rule without change.
C. Proposed Change to § 405.370
Definitions
Section § 405.370 defines key terms
that apply to subpart C of part 405. In
the September 22, 2006 proposed rule,
we proposed to revise § 405.378 and add
a new § 405.379. We added new
definitions to § 405.370. We also
proposed that selected terms used in
§ 405.378 and proposed § 405.379 be
given the same meaning as in the
appeals context.
Comment: Several commenters
suggested that the definition of
Medicare contractor be amended to
include Recovery Audit Contractors
(RACs).
Response: We agree with the
commenter and have revised the
definition of Medicare Contractor to
include this change. We note that our
intent was not to exclude RACs from
being subject to the rule.
Accordingly, we are revising the
definition of Medicare Contractor, and
finalizing all other definitions in
§ 405.370 as proposed without change.
D. § 405.373 Proceeding for Offset or
Recoupment
Section 405.373 establishes the
general rules and procedures to be
followed once CMS or a Medicare
contractor determines that an offset or
recoupment should be put into effect.
Specifically, § 405.373(e) addresses the
duration of a recoupment or offset that
has been put into effect and identifies
the three specific circumstances under
which a recoupment or offset would
stop. In the September 22, 2006
proposed rule, we proposed to revise
the introductory text of paragraph (e) to
explicitly refer to § 405.379,
implementing the statutory limitation
on recoupment, as a separate basis to
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stop recoupments that have been put
into effect.
We received no comments on these
provisions. Accordingly, we are
finalizing § 405.373 as proposed without
modification.
E. § 405.378 Interest charges on
overpayment and underpayments to
providers, suppliers and other entities
Section 405.378 implements sections
1815(d) and 1833(j) of the Act which
requires us to charge interest on
overpayments and pay interest on
underpayments if payment is not made
within 30 days of the date of the ‘‘final
determination’’. Under sections 1815(d)
and 1833(j) of the Act, the date of the
final determination dictates when
interest begins to accrue and determines
whether we pay interest on an
underpayment or collect interest on an
overpayment.
In paragraph (c), we define what
constitutes a final determination both
for overpayments and underpayments
arising from a cost report determination
as well as those that are claims based.
In paragraph (d), we establish the
basis for the interest rate used for
Medicare overpayments and
underpayments as well as for other
Medicare program activities, for
example Medicare Secondary Payer
recoveries (§ 411.24(m) which
references § 405.378(d)).
In the September 22, 2006 proposed
rule, we proposed to revise § 405.378 to
specify how interest is assessed for the
subset of overpayments subject to the
limitation on recoupment under section
1893(f)(2) of the Act. In § 405.378, we
proposed to clarify that if a provider or
supplier overpayment determination is
affirmed at any level of administrative
or judicial appeal, interest owed by the
provider or supplier would continue to
accrue from the final determination. If
the overpayment determination is
reversed in favor of the provider or
supplier, interest may be payable by
Medicare to the provider or supplier
under one of two different
methodologies depending upon the
appeal level at which the reversal
occurs. If a full or partial reversal in
favor of the provider or supplier occurs
at the first (redetermination) or second
(reconsideration) level of the
administrative appeal process, interest
may be payable by Medicare to the
provider or supplier if the
underpayment is not paid within 30
days of the final determination as that
term is defined in the proposed
revisions to § 405.378(c).
It is only where the reversal occurs at
the ALJ level or Departmental Appeals
Board’s Appeals Council level of
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administrative appeal or judicial review
that interest becomes payable by
Medicare based on the period that we
recouped and retained the provider’s or
supplier’s funds.
In the September 22, 2006 proposed
rule, we proposed to amend § 405.378(a)
by adding the reference to 1893(f)(2)(B)
of the Act, which is one of the
enumerated provisions of the Act that
this regulatory section is designed to
implement.
We also proposed to revise paragraph
(b)(2), which states the basic rule that
interest accrues from the date of final
determination, to clarify there is a new
exception to this rule by referencing
paragraph (j) of this section.
In addition, we proposed to amend
paragraph (c)(1)(ii) which lists what
constitutes a final determination in
cases where a Notice of Amount of
Program Reimbursement (NPR) is not
issued.
First, we proposed to remove the
existing final determination definition
based on certain Administrative Law
Judge (ALJ) decisions under
paragraph(c)(1)(ii)(C). The change in
how interest is assessed under section
1893(f)(2) of the Act applies at the third
level of appeal (ALJ) and subsequent
administrative and judicial review
levels. Therefore, we proposed to make
these changes at paragraph (j).
Second, we proposed to add an
additional definition for a final
determination, at paragraph (c)(1)(ii)(C),
arising from a full or partial reversal at
the redetermination level of appeal.
This change was designed to clarify that
if an overpayment is reversed in whole
or in part at the first level of appeal, the
redetermination level, interest accrues
from the date of the ‘‘final
determination’’ and is owed by
Medicare if the underpayment is not
paid within 30 days. Following a
redetermination decision favorable to a
provider or supplier, the contractor
must effectuate the decision and make
a written determination of the amount
Medicare owes. Interest accrues from
the date of the written determination.
Finally, we proposed to add
paragraph (c)(1)(ii)(D) as an additional
type of final determination. This is a
written determination arising from a full
or partial reversal of an overpayment
determination at the QIC
reconsideration level (the second level
of appeal). This addition was designed
to clarify that if an overpayment
determination is reversed in whole or in
part at the QIC reconsideration, the final
determination for purposes of assessing
interest is the date of the written
determination to the provider or
supplier of the amount Medicare owes.
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Interest accrues from the date of this
written determination and is owed to
the provider or supplier if the
underpayment is not paid within 30
days.
These proposed changes to the final
determination definitions are intended
to work in conjunction with the
limitation on recoupment requirements
in § 405.379. Providers and suppliers
can take advantage of the limitation on
recoupment by not paying during the
redetermination and reconsideration
levels of appeal. However, interest will
still continue to accrue during those
periods. If a provider or supplier loses
at either level of appeal, and they did
not pay their overpayment during the
appeal, they will owe both the
overpayment amount and accrued
interest.
We proposed to revise paragraph
(c)(2) by adding the cross references to
paragraphs (i) and (j) of this section
which states the exceptions to assessing
interest based on the date of final
determination.
For purposes of clarity and to group
the exceptions to the ‘‘final
determination’’ rule in a logical
sequence, we proposed to redesignate
paragraph (h), respectively as paragraph
(i) and paragraph (i) as paragraph (h).
We note that the text of these
redesignated paragraphs did not change.
In addition, we proposed to add a
new paragraph (j) to establish the basis
for paying interest to a provider or
supplier whose overpayment
determination is reversed in whole or in
part at the third level of administrative
appeal (ALJ) or above. This new interest
provision is required by section
1893(f)(2)(B) of the Act which states,
‘‘[i]nsofar as such determination against
the provider of services or supplier is
later reversed, the Secretary shall
provide for repayment of the amount
recouped plus interest at the same rate
as would apply under the previous
sentence for the period in which the
amount was recouped.’’ In paragraph (j),
we explain how interest is assessed
against the government at any
administrative and judicial appeal level
above the QIC reconsideration. This
new method applies only to
overpayments subject to the limitation
on recoupment under § 405.379. It is
predicated upon the recoupment and
retention of funds by CMS or the
Medicare contractor at the time the
decision reversing the overpayment
determination, in whole or in part, is
rendered.
In paragraph (j)(1), we state that the
rate of interest is the same rate that CMS
charges on overpayments and pays on
underpayments to providers, suppliers
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47461
and other health care entities. This rate,
as specified in paragraph (d) of this
section, is the higher of the private
consumer rate or the current value of
funds rate. We note that the interest rate
established in paragraph (d) changes
periodically.
In paragraph (j)(2), we describe the
point in time where the applicable
interest rate is fixed. This is the date the
decision reversing the overpayment is
issued by the ALJ, Medicare Appeals
Council, Federal District Court or other
Federal reviewing court.
In paragraph (j)(3), we explain how
interest would be calculated. Interest
will be paid on the total principal
amount recouped. We will pay simple
rather than compound interest, and will
not pay interest on interest; this mirrors
the manner in which we assess interest
against providers. Monies we recoup
and apply to interest will be refunded
and not included in the ‘‘amount
recouped’’ for purposes of calculating
any interest due the provider. The
periods of recoupment will be
calculated in full 30-day periods; and
interest will not be payable for any
periods of less than 30 days in which
we had possession of the recouped
funds.
In calculating the period in which the
amount was recouped, we will deduct
days in which either or both the ALJ’s
or the Medicare Appeals Council’s
adjudication time frames are tolled due
to specific actions by the appellant over
which the government has no control.
Our rules on the procedures and time
frames to request an ALJ hearing
provide that if the appellant fails to
copy the other parties or files the
request with an entity other than that
specified in the QIC’s reconsideration,
the ALJ’s 90 day adjudication deadline
is tolled.
Similarly, our rules on the procedures
and time frames to request a Medicare
Appeals Council review provide that if
the appellant fails to copy the other
parties or files the request with an entity
other than that specified in the notice of
the ALJ’s action, the Medicare Appeals
Council’s adjudication period to
conduct a review is tolled. Therefore, in
paragraph (j)(3)(iv) and (v), we state that
in calculating how much interest we
owe a provider or supplier, we account
for these potential delays by deducting
days attributable to actions by the
provider or supplier which have the
effect of extending the time in which we
had possession of the recouped funds.
We state in paragraph (j)(4) that, in
the cases of a partial reversal of an
overpayment determination, we would
allocate the funds recouped first to that
portion of the overpayment
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determination affirmed by the ALJ,
Medicare Appeals Council, or any
Federal court. If after this allocation
excess recouped funds remain, interest
would be paid to the provider or
supplier on this amount in accordance
with the other provisions specified in
paragraph (j).
All comments and CMS’s responses
related to the proposed revisions of
§ 405.378 are discussed below:
Comment: Two commenters suggested
that § 405.378(j) be revised to state that
Medicare must pay interest from the
date of recoupment regardless of
whether the reversal occurs at the
redetermination, reconsideration, or ALJ
level.
Response: Section 1893 (f)(2)(B) of the
Act clearly states that CMS must pay
interest to a provider or supplier only
when a reconsideration is ‘‘later
reversed.’’ Therefore, we are not
authorized by statute to pay interest
from the date of recoupment if a
decision at the redetermination or
reconsideration level of appeal reverses
a prior determination or decision. The
statute only requires the payment of
interest back to the date of recoupment
when a finding by an ALJ, or other
higher administrative or judicial entity,
reverses a QIC reconsideration decision.
CMS only pays interest when
specifically obligated by statute. We
believe the commenter’s suggestion is
contrary to the plain meaning of the
statute.
Comment: One commenter suggested
that because interest charges continue to
accrue against a provider or supplier
even if they avail themselves of the
limitation on recoupment, CMS will
make itself whole by satisfying the
overpayment through interest
collections.
Response: CMS must forward to the
(Department of Treasury) General Fund
any interest collected. CMS neither
retains, nor is made whole by interest
collected on behalf of the Treasury.
Comment: One commenter stated that
the proposed new definitions of when
CMS pays interest on underpayments
that result from a reversal, in whole or
in part, at the redetermination level and
at the reconsideration level
(§ 405.378(c)(1)(ii)(C) and (c)(1)(ii)(D)),
are not fair to providers or suppliers,
and result in providers or suppliers
giving interest-free loans to Medicare for
the period of time between the decision
and when Medicare effectuates the
decision.
Response: Medicare’s longstanding
policy is that a final determination
occurs when the determination sets
forth a specific amount that is due.
Further, as explained in § 405.378(e)(4),
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interest to a provider or supplier does
not begin to accrue until the date of the
written determination notifying the
provider or supplier of the amount of
the underpayment. Although it is
possible that a decision at the QIC level
could include the precise amount that is
owed as an underpayment, more often,
the decision requires that the Medicare
contractor compute the amount due to
the provider. For example, if the QIC
decision is a partial reversal of an
overpayment where extrapolation was
used to determine the overpayment, it
typically must be recalculated to
account for the revisions made to the
sample claims upon which the
extrapolated overpayment is based.
Only after the recalculation of the
overpayment is completed will the
contractor become aware of any
potential underpayment. A written
determination on appeal that Medicare
owes an underpayment but without
specific information as to what the
amount is owed, does not permit
sufficient information to determine the
payment amount and subsequent
interest. Interest is paid when a specific
amount is known and is not paid within
30 days. Similarly, providers have 30
days to repay an overpayment where the
amount has been determined before
interest is assessed.
In considering the comment, we
decided to remove § 405.378(c)(1)(ii)(C)
and (c)(1)(ii)(D). These two provisions
included in our proposed rule explained
when a final determination of an
underpayment occurred during the first
two levels of administrative appeal.
However, we believe the language in
§ 405.378(c)(1)(ii)(B), which states that a
written determination of an
underpayment constitutes a final
determination, adequately covers these
two levels of appeal. Thus, we believe
paragraphs (c)(1)(ii)(C) and (c)(1)(ii)(D)
are unnecessary. After all levels of
appeal, an underpayment will be
determined when a sum certain is
calculated and the provider or supplier
is notified of the underpayment,
regardless of whether a QIC or a
contractor performs the recalculation.
Comment: One commenter stated that
interest should be prorated for periods
less than 30 days.
Response: CMS will continue to pay
interest on underpayments it owes the
provider or supplier, the same way it
assesses interest on overpayments owed
by the provider or supplier. Periods of
less than 30 days are not counted. Only
full 30 day periods are used to calculate
interest. This is based on § 405.378(b)(2)
where interest accrues and is paid for
each full 30 day period that payment is
delayed.
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Comment: Two commenters asked
CMS to reconsider the proposal to
deduct from the interest owed to the
provider those days that are tolled
during an ALJ or Appeals Council
adjudication period.
Response: The appeals regulations in
§ 405.1014 and § 405.1106 provide
extensions (or tolling) of the
adjudication timeframe for issuance of
ALJ decisions and Medicare Appeals
Council review decisions when certain
specific actions are taken by an
appellant that are outside the
government’s control, (for example, the
appellant fails to copy the other parties
on their request for an ALJ hearing). We
believe that our proposal to deduct the
days that are associated with an
appellant’s actions aligns itself with the
language in the appeals regulations.
CMS should not be required to pay
interest on days that the appellant is in
control of, or is perfecting an appeal
request, or takes action that delays the
administrative proceedings.
Accordingly, we are finalizing
§ 405.378 as proposed with
modifications, as noted above.
F. § 405.379 Limitation on Recoupment
of Provider and Supplier Overpayments.
In the September 22, 2006 proposed
rule, we proposed to add a new section
§ 405.379 to subpart C of Part 405 to
implement the statutory limitation on
recoupment under section 1893(f)(2) of
the Act.
Specifically, in proposed paragraph
(a) we explained that 1893(f)(2)(B) of the
Act is the statutory basis for this section.
In addition, we stated that the basis and
purpose of this section is to impose a
limit on our recoupment of Medicare
overpayments, if a provider or supplier
appeals until a decision by a QIC is
made.
In paragraph (b), we delineated those
types of overpayments that are expressly
subject to the recoupment limitation: (1)
those appealed by the provider or
supplier under the Medicare claims
appeal process; (2) post-pay denial of
claims for benefits under Medicare Part
A and Part B for which a demand for
payment has been made; and (3)
Medicare Secondary Payer (MSP)
recoveries where the provider or
supplier received a duplicate primary
payment and MSP recoveries based on
the provider’s or supplier’s failure to file
a proper claim with the third party
payer plan, program, or insurer for
payment.
Section 935(b) of the MMA specified
that section 1893(f)(2) of the Act shall
apply to ‘‘actions’’ taken after the date
of enactment of the MMA; that is
actions taken after December 8, 2003.
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For these purposes, we defined these
actions to be the date the contractor
could have instituted recoupment action
based on Part A debts determined on or
after November 24, 2003, Part B debts
determined on or after October 29, 2003,
and a small group of MSP debts
determined on or after October 10, 2003.
In paragraph (b), we also provided the
categories of overpayments to which the
limitation does not apply, although this
is not an exhaustive list of exclusions.
The limitation would not apply to all
MSP recoveries other than provider/
supplier MSP duplicate primary
payment recoveries or MSP recoveries
attributable to the provider’s or
supplier’s failure to file a proper claim.
It would not apply to beneficiary
overpayments nor overpayments that
arise from a cost report determination
and are appealed under the provider
reimbursement process.
In paragraph (c), we specified how
two key actions that trigger the
limitation on recoupment are to be
construed. A provider must act
decidedly to stop recoupment.
Recoupment of an overpayment once
initiated will be stopped at the first two
levels of the appeals process (the
redetermination and the
reconsideration) upon receipt of a
timely and valid appeal request
applicable to that level. The provider or
supplier does not have to take any
affirmative action to invoke the
limitation on recoupment beyond the
act of appealing. What constitutes a
valid and timely request for a
redetermination and, subsequently what
constitutes a valid and timely request
for a reconsideration is already
described in established Medicare
appeal regulations and implementing
policies. (See 42 CFR part 405 subpart
I).
In paragraph (d), we proposed the
general framework for implementing the
limitation on recoupment. Once an
overpayment is determined and the
substantive and procedural
requirements to afford the provider or
supplier an opportunity for rebuttal
under § 405.374 and § 405.375 are
satisfied, recoupment can proceed
unless and until a valid request for a
redetermination is received. This means
we can recoup during the period when
a provider’s or supplier’s right to
request a redetermination has not
expired. This places the obligation on
the provider or supplier who wishes to
capitalize on the benefit afforded by the
recoupment limitation to request a
redetermination.
Under the Benefits Improvement and
Protection Act of 2000, the Medicare
contractor is required to make a
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redetermination decision within 60
calendar days of the date the contractor
receives a timely filed request for a
redetermination. We proposed in
paragraph (d)(2) that if the
redetermination is an affirmation in
whole or in part, we can proceed to
recoup any outstanding principal and
interest 30 days after notice unless a
valid request for a reconsideration is
received in the interim.
In paragraph (d)(3), we specified that
the Medicare contractor shall cease
recoupment upon receipt of a timely
and valid request for a reconsideration.
If recoupment has not gone into effect,
the contractor shall not initiate it. The
contractor may initiate or resume
recoupment upon final action by the
QIC in accordance with paragraph (f)
which is explained in detail below.
The general rule we proposed in
paragraphs (d)(4) and (d)(5) states that,
unless the reconsideration results in a
full reversal of the overpayment
determination, recoupment of
outstanding principal and interest may
be initiated or resumed upon final
action by the QIC whether or not the
provider or supplier appeals to the ALJ,
the Medicare Appeals Council, or
Federal court. If the provider or supplier
subsequently appeals, the contractor
may continue recouping outstanding
overpayments in accordance with
§ 405.373(e).
In paragraph (d)(6), we clarified that
each overpayment determination and its
appeal status is separate and distinct
from other debts owed by the same
provider or supplier. Therefore, we
make explicit that if an overpayment
determination is appealed and
recoupment stopped, this would not
preclude the Medicare contractor from
recouping other overpayments owed by
the provider or supplier.
In paragraph (d)(7), we stated that
amounts properly recouped before the
imposition of the recoupment
limitation, at either or both the first and
second levels of appeal, may be retained
until and unless there is an
administrative or judicial reversal of the
overpayment determination.
In paragraph (d)(8), we stated that if
an overpayment determination is
reversed through the administrative or
judicial process, appropriate
adjustments in the debt and the amount
of interest charged would be made to
give effect to these decisions.
In paragraph (d)(9), we made explicit
that interest is payable on
overpayments, subject to the
recoupment limitation, in accordance
with the provisions of § 405.378.
In paragraph (e), we stated the
specific rules for initiating or resuming
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recoupment after the redetermination
decision. The necessary conditions are
that the debt (remaining unpaid
principal balance and interest) has not
been liquidated and the substantive and
procedural rebuttal requirements have
been satisfied. We proposed that
recoupment can resume: (1)
Immediately upon receipt of a request to
withdraw the redetermination request;
(2) on the 30th calendar day after the
date of the notice of redetermination
affirming the overpayment
determination in whole; or (3) on the
30th calendar day after a written notice
to the provider or supplier of the revised
overpayment amount if the
redetermination results in an
affirmation in part. We proposed in
paragraph (e)(2), that recoupment would
be stopped again upon receipt of a
timely and valid request for a
reconsideration by the QIC.
In paragraph (f), we set forth the
specific rules for initiating or resuming
recoupment after final action by the
QIC. It also defines what constitutes
final action by a QIC for purposes of this
section. As is the case when recoupment
is resumed after the redetermination
decision, the conditions necessary for
resumption are that the debt (remaining
unpaid principal balance and interest)
has not been liquidated and the
substantive and procedural rebuttal
requirements have been satisfied.
Under the statute, once a provider or
supplier has sought a reconsideration by
the QIC, we may not take any action to
recoup the overpayment until the date
the decision on the reconsideration has
been rendered. We believe it is
consistent with this provision to
interpret ‘‘the date the decision on the
reconsideration is rendered’’ as the date
on which the QIC issues its final
decision, dismissal order, or notice with
respect to escalation.
There are three possible actions that
a QIC may take with respect to a request
for reconsideration. First, it may
complete its review and issue a
reconsideration. Second, in appropriate
circumstances, it may dismiss the
request for reconsideration. Third, if the
QIC is unable to complete its
reconsideration within the mandated 60
day time frame, it may issue a notice to
the parties that it will not be able to
complete its reconsideration in the
allotted time and advise them of their
right to escalate their appeal to the ALJ
level. The parties may then notify the
QIC of their intent to escalate the
appeal. Following the receipt of this
notice, the QIC must either issue its
reconsideration within 5 days or issue a
notice acknowledging the escalation
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request and forward the case file to the
ALJ hearing office.
We proposed that the earliest to occur
of these three actions (a reconsideration,
a dismissal, or the written notification
to the parties that the reconsideration
has been escalated) or the receipt of a
withdrawal request from the provider or
supplier would constitute the final QIC
action that would permit the initiation,
or resumption, of the recoupment of an
overpayment. The provider or supplier
who elects to escalate the appeal from
the QIC to the ALJ would thereby lose
the benefit of the limitation on
recoupment (recoupment could begin).
However, we do not view this as a
disadvantage to the provider or supplier
who retains the ability to seek escalation
or not to seek escalation. We also
clarified that where the final action is
the notice of the reconsideration, in
order to institute or resume recoupment,
the reconsideration decision must affirm
the overpayment determination in
whole or in part.
In paragraph (g), we addressed a
series of specific rules and situations on
how recouped funds are to be applied.
Funds recouped before receipt of a
timely and valid redetermination
request may be retained and applied
first to accrued interest and then to the
principal balance. If the overpayment in
question is reversed at the first level of
appeal, consistent with current policies,
the amount held may be applied to any
other debt owed by the provider or
supplier; any excess would then be
released to the provider or supplier.
In the case of a partial reversal at the
redetermination level in which the
decision reduces the debt below the
amount already recouped, the same
policies would be followed with respect
to the application of the recouped
funds. In the case of an affirmation
where the provider or supplier appeals
to the next level, the Medicare
contractor would retain the monies and
apply them first to interest and then to
the principal balance pending final
action by the QIC on the reconsideration
request.
If funds are properly recouped
between a redetermination decision and
a provider’s subsequent request for a
reconsideration, these would be
retained and applied first to interest,
then to principal pending final action by
the QIC. If the final QIC action is a
dismissal, receipt of a withdrawal,
notice of escalation, or a reconsideration
decision affirming the overpayment in
whole, funds recouped are applied to
interest, then to principal; recoupment
may be resumed as necessary to
liquidate the debt. If the QIC
reconsideration decision is a full
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reversal, the amount recouped may be
applied to any other debt (including
interest) owed by the provider or
supplier before any excess is released. If
the reconsideration decision is a partial
reversal and reduces the debt below the
amount already recouped, the same
policies would be followed with respect
to the application of the recouped
funds.
In paragraph (h), we specified how we
would insulate a provider or supplier,
invoking the limitation on recoupment
under this section, from the operation of
§ 401.607(c)(2)(iv). This latter rule
provides that missing one payment
under a 6-month extended repayment
plan granted under the authority of
§ 401.607(c)(2) constitutes a default
allowing CMS to accelerate the debt.
All comments and CMS’s responses
related to § 405.379 are discussed
below:
Comment: Two commenters stated
that in the proposed rule CMS
explained that it would not recoup until
after the requirement to afford the
provider or supplier an opportunity for
rebuttal was satisfied. In addition, the
commenters asked if the rebuttal
process conflicts with the proposed
provisions.
Response: The rebuttal process is a
separate and independent right that is
not affected by this regulation, and
occurs independently of the appeals
process set forth in part 405 subpart I.
The statement in the proposed
regulation regarding the rebuttal process
was simply an acknowledgement that
this process remains available to
providers and suppliers. Sections
405.373 through 405.375 explain the
process by which CMS gives notice of
an overpayment and offers an
opportunity for rebuttal before it takes
an action to offset or recoup that
overpayment. The provider may submit
a rebuttal statement within 15 days of
the notice. The Medicare contractor has
15 days to review the statement and
determine whether to proceed with the
recoupment or not to proceed, based on
the rebuttal statement. In contrast, the
limitation on recoupment provision
does not afford the contractor any
discretion in proceeding or stopping
recoupment of an overpayment. If a
valid request for a first or second level
appeal is filed, the contractor must stop
recoupment. As a practical matter,
providers who want to ensure that CMS
stops recoupment will avail themselves
of the limitation on recoupment process
through a timely and valid appeal rather
than the rebuttal process.
Comment: Several commenters
recommended that CMS provide the full
120-day filing period for a
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redetermination and the 180-day period
for a reconsideration before starting
recoupment of the overpayment. The
commenters indicated that the proposed
rule forces providers to choose either to
initiate a timely appeal to stop
recoupment, or take full advantage of
the timeframe for filing an appeal. In
addition, the commenters stated that
recouping before the filing periods have
concluded was not in compliance with
the statute.
Response: The comment that
recoupment should be delayed 120 days
after the receipt of an overpayment
determination or 180 days after the
notice of a redetermination is
inconsistent with the applicable statute.
In order to trigger the statutory
limitation on recoupment, the provider
must seek a reconsideration. The statute
is clear that recoupment is either
stopped, or may not begin, when a valid
request for a reconsideration is filed.
However, the statute is silent with
regard to actions CMS may take after an
initial demand is issued and before a
request for reconsideration is filed. CMS
has a fiduciary responsibility to timely
and aggressively collect Medicare debt
or refer the debt to Treasury for
collection as mandated by the Debt
Collection Improvement Act. Unless a
provider or supplier purposely avails
themselves of the limitation on
recoupment, CMS has a statutory
obligation to collect these outstanding
debts. Based on the statutory language
CMS could recoup during the period the
provider is actively pursuing a first level
of appeal (redetermination). This
approach would reduce the complexity
of implementing this new statutory
provision. Also, it would shorten the
period of deferred recoupment under
the Act, thereby minimizing risk to the
Medicare Trust Fund. However, as we
noted earlier, this approach would
result in many instances where CMS
would have recouped the overpayment
before the provider could request a
reconsideration and thereby invoke the
limitation on recoupment. We suggested
in our September 2006 proposed rule
that this view, while permissible, would
unfairly impact many providers and
suppliers. Using our discretionary
rulemaking authority, CMS is also
limiting recoupment when the provider
requests a redetermination (that is, the
first level of appeal). Based on this
comment, CMS is revising § 405.379(a)
to make clear that we are implementing
the statutory requirement to limit
recoupment during reconsideration, as
well as limiting recoupment during
redetermination, the first level of
appeal.
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In both cases, the provider or supplier
must take some decided affirmative
action, (that is, requesting a
redetermination or a reconsideration).
Moreover, to wait until the expiration of
the appeals filing periods would
adversely impact providers and
suppliers who do not wish to appeal,
because they would be subject to several
months of interest. To avoid this, these
providers and suppliers would have to
take some affirmative action to indicate
that they do not want to appeal which
unfairly places a burden on these
providers and suppliers who want to
pay their overpayments and do not want
to appeal.
Therefore, CMS has determined that
the timeframes established for
recoupment are both reasonable for
allowing providers sufficient time to
initiate a timely appeal and are also
consistent with our fiduciary
responsibility for collecting Medicare
debt. Based on the foregoing discussion,
CMS is in compliance with the statute.
We are not adopting the commenters’
suggestion.
Comment: One commenter suggested
that if CMS does not halt recoupment
until the first and second level appeals
periods expire, CMS should require a
provider or supplier to inform the
contractor of its intent to initiate an
appeal. In addition, the commenter
indicated that providers expressing their
intent to appeal would not be subject to
recoupment.
Response: We believe the language of
the statute that the provider must
‘‘seek’’ a reconsideration clearly intends
for a process that actively engages both
the provider or supplier and CMS. An
intent to file has no time limits for a
provider or supplier and has the effect
of staying any collections indefinitely.
Further, simply signaling an intent to
file has no binding effect on a party, and
does not necessarily mean that a
provider or supplier will ultimately seek
any appeal. Thus, we are not adopting
the commenter’s suggestion.
Comment: One commenter suggested
that CMS should ensure that language in
the overpayment notices clearly advise
the provider or supplier that if it files a
request for a redetermination by a
specified date that recoupment would
be stayed and that these notices should
also specify the time period in which
recoupment would be stayed.
Additionally, language in the notices
should state that interest continues to
accrue from the date of the original
overpayment determination.
Response: We agree with the
commenter that language regarding
when recoupment starts and stops and
that interest continues to accrue from
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the date of the initial overpayment
determination should be included in the
overpayment determination letters.
However, we view those procedures as
part of the specific manual instructions
to be issued to Medicare contractors.
Manual instructions contain model
letters and instructions to Medicare
contractors on the preparation and
content of demand letters. Thus, we do
not believe it is necessary to revise the
rule to include the commenter’s
suggestion.
Comment: Two commenters stated
that the limitation of recoupment
should apply to those Part B debts
determined on or after October 29, 2003
and Part A debts determined on or after
November 29, 2003. The commenters
further explained that this means that
CMS could begin recoupment on the
16th day or the 41st day after the notice
of overpayment is issued and before a
redetermination is filed depending on
whether the notice came from the
Medicare intermediary or the Medicare
carrier. The commenter expressed that
this is disparate treatment and asked
CMS to explain the rationale for the
policy.
Response: Medicare contractors’
internal shared systems largely
determined when those contractors
instituted recoupment. Recoupment
began approximately 16 days after the
notice of overpayment, if the notice was
issued by a Medicare intermediary, and
41 days after the notice of overpayment
if the notice was issued by a Medicare
carrier unless in both cases, the
contractor received information from
the provider about how it intended to
repay the overpayment.
The limitation on recoupment
provision required us to consider more
consistent system rules for when
recoupment could begin or resume. For
consistent application of the limitation
on recoupment and before a request for
a redetermination is received, we
modified our Part A systems to be
consistent with our Part B systems and
both will begin recoupment at day 41
following the notice of overpayment for
those overpayments subject to the
limitation on recoupment. This aligns
itself with interest regulations at
§ 405.378, that states interest is not due
if the debt is liquidated within 30 days.
If a provider or supplier pays the
overpayment or requests a
redetermination by the 30th day
following the notice of overpayment,
Medicare contractors have an additional
10 days to ensure posting of payments
or receipt of a valid request for a
redetermination. Medicare overpayment
demand letters will include clear
language about when recoupment can
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begin. We are also amending the
regulation at § 405.379(d)(1) to reflect
the 41 day system modification.
Comment: Two commenters stated
that providers who fail to introduce all
relevant evidence before the QIC are
precluded from presenting new
evidence to an ALJ, absent good cause.
Thus, an appellant may need more than
30 days to prepare a request for
reconsideration that contains all
relevant evidence.
Response: The requirement in
§ 405.966 for the early presentation of
evidence by providers and suppliers is
based on the statutory requirement
contained in section 1869(b)(3) of the
Act, as added by section 933(a) of the
MMA, which states that a provider or
supplier may not, in any subsequent
level of appeal, introduce evidence that
was not presented at the reconsideration
conducted by the QIC, unless there is
good cause that precluded the
introduction of that evidence at or
before the reconsideration. While it is in
the interest of both the Medicare
provider and supplier community and
CMS that appellants have the
opportunity to submit a complete
appeal request with all relevant
evidence, we believe it is necessary to
strike a balance between the need to
timely recoup Medicare overpayments
and the need to give providers and
suppliers a reasonable time to prepare
an appeal.
Therefore, after carefully considering
all comments received, we have decided
to extend the period before contractors
may initiate recoupment following a
redetermination to the 60th calendar
day rather than the 30th calendar day.
Providers or suppliers may take the full
180 days to appeal. However, to avoid
recoupment starting or resuming
following a redetermination, a valid
request for reconsideration must be filed
with the appropriate QIC by the 60th
day following the date of the
redetermination. This change is
reflected at § 405.379(e)(1)(ii) and
(e)(1)(iii).
Comment: One commenter indicated
that there is no provision to notify the
provider or supplier that recoupment
has stopped once the provider or
supplier submits a request for
reconsideration to the QIC. The
commenter recommended that the QIC
issue to the provider or supplier a
written notification that recoupment
efforts have ceased once they file a
request for reconsideration to the QIC.
Response: As part of the QICs’ current
standard operating procedures, QICs
send an acknowledgement notice within
14 days of receipt of a request for
reconsideration to the provider or
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supplier. However, the Medicare
contractor, not the QIC, is responsible
for all overpayment recoupment
activities, including the cessation of
recoupments. The provider or supplier
is notified by the Medicare contractor
via a payment remittance advice that
claims are continuing to be paid and are
not being recouped or offset. We will
consider whether any additional notice
is necessary and, if so, we will include
additional guidance in our manual
instructions rather than through a
regulatory issuance.
Comment: One commenter stated that
recoupment should cease upon a
request for reconsideration and should
not be initiated or resumed until after an
ALJ or judicial decision was rendered.
Response: When a valid request for a
reconsideration is received, recoupment
ceases. Section 1893(f)(2) of the Act
only requires CMS to stop recoupment
when a valid request for reconsideration
is received. It does not limit CMS’
authority to resume recoupment
following the reconsideration decision
issued by the QIC. Thus, as stated in
§ 405.379(d)(4) and (d)(5), recoupment
can resume following a decision by the
QIC, whether or not the QIC decision is
further appealed. Therefore, we are not
adopting the commenter’s suggestion, as
we believe the suggestion is contrary to
section 1893(f)(2) of the Act. However,
we are making technical changes to
§ 405.379(d), (f), and (g) of this section
to remove the word ‘‘final’’ preceding
‘‘action.’’ We believe that use of the
word ‘‘final’’ in these provisions is
confusing because ‘‘final action’’ could
be incorrectly construed as meaning a
final administrative action of the
Secretary which can be appealed
directly to Federal district court. The
intent of this regulatory provision is to
explain the types of actions by the QIC
that are binding on the parties and
would enable recoupment to be initiated
or resumed. As was stated in the
proposed rule and this final rule, these
actions are a decision, dismissal order,
or notice that it cannot complete its
reconsideration in a timely manner.
Because the underlying QIC actions that
will allow CMS to initiate or resume
recoupment have remained unchanged,
we are making only a non-substantive,
technical change to clarify the
ambiguity discussed above by deleting
the word ‘‘final.’’
We also note one further technical
change we are making to § 405.379(c). In
this paragraph, we revised incorrect
cross-references to § 405.940 and
§ 405.958, and cross references to
§ 405.974 through § 405.978.
Specifically, we revised the regulatory
text of (c)(1) to refer to § 405.940
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through § 405.958 and we revised the
regulatory text of (c)(2) to refer to
§ 405.960 through § 405.978.
Comment: One commenter suggested
that a provider’s choice to escalate the
appeal to the ALJ because of a delay at
the QIC should toll recoupment.
Response: Notice by the QIC that it is
unable to meet the mandated response
timeframe for issuing a decision
immediately gives the provider or
supplier control to request an ALJ
appeal. Practically, this result is no
different than a decision issued by the
QIC that affirms the prior decision and
the provider or supplier requests an
appeal. In both instances the appeal has
passed out of the reconsideration level
and the statutory requirement to limit
recoupment no longer applies. We note
that we are not adopting the
commenter’s suggestion.
Comment: One commenter stated that
CMS has not addressed how extended
repayment plans work in conjunction
with the limitation on recoupment. The
commenter stated that a provider might
want to repay the overpayment by
seeking an extended repayment plan at
some point in the appeals process. For
example, the provider might not have a
favorable decision at the first level of
appeal and chooses not to appeal to the
second level. Also, the commenter
recommended that CMS revise the rule
to include language that recoupment
may not occur for 30 days after the
redetermination and/or reconsideration
to give the provider time to request and
CMS to review and approve an extended
repayment plan.
Response: In paragraph (h) of
§ 405.379, we state that a provider or
supplier who timely files a
redetermination of an overpayment but
such overpayment is under an extended
repayment plan, a missed payment
under the plan does not put the
provider in default of the extended
repayment plan. This permits the
provider or supplier to invoke the
limitation on recoupment provisions to
stop recoupment when a valid request
for redetermination is filed. We are
revising paragraph (h) of § 405.379 to
permit the provider or supplier to
similarly invoke the limitation on
recoupment if a timely and valid request
for reconsideration is received.
Additionally, in this final rule, we do
not prohibit the provider or supplier
from requesting a repayment plan at any
time or at any stage of an appeal.
Payments made by a provider or
supplier who requested to repay in
installments under an extended
repayment plan are not recoupments for
purposes of this rule. If a provider or
supplier does not make timely payments
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under its schedule, the provider or
supplier would be placed on
recoupment but can invoke the benefit
of the limitation as stated above.
Providers or suppliers who wish to
make repayment arrangements
following a redetermination can do so
during the 60 days the provider or
supplier is also deciding whether to
appeal to a reconsideration. Providers or
suppliers who wish to make repayment
arrangements following a
reconsideration have the opportunity to
do that during the rebuttal period
required under § 405.374.
We note that we have revised
paragraph (h) of § 405.379 for clarity.
Yet these revisions do not make
substantive changes to the policy.
Further we corrected an incorrect cross
reference to § 401.607(c)(2)(iv).
Specifically we revised the regulations
text to refer to § 401.607(c)(2)(v).
Comment: One commenter suggested
that CMS give the provider the option
of repaying the overpayment
immediately, even if the provider
appeals the overpayment determination.
The commenter also stated that paying
the debt immediately allows the
provider to exercise their appeal rights
without incurring substantial interest
charges. The commenter also stated that
the statute does not preclude the
provider from voluntarily returning
funds during the administrative appeals
process.
Response: We appreciate the
observations and the suggestion
submitted by the commenter. Currently,
providers or suppliers have several
options at the time of the notice of
overpayment. For example, they may
pay the overpayment and not pursue an
appeal, pay the overpayment and
proceed with an appeal, or not pay the
overpayment and proceed with a timely
appeal. Providers or suppliers who
choose to pay immediately, as the
commenter suggests, avoid paying
interest. Also, as the commenter
suggested, providers or suppliers can
voluntarily repay any time during the
appeal, thereby limiting their interest
exposure. Because payments made as a
lump sum or through an extended
repayment plan are not recoupments
subject to the limitation, no
modifications are necessary.
Accordingly, we are finalizing
§ 405.379 with modifications as noted
above.
III. Provisions of the Final Rule
• In this final rule, we are adopting
the provisions as set forth in the
September 22, 2006 proposed rule with
the following revisions:
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• In § 405.370(b), we revised the
definition of Medicare contractor to
include a recovery audit contractor.
• In § 405.378(c), we removed
paragraphs (c)(1)(ii)(C) and (c)(1)(ii)(D)
regarding the definition of a final
determination.
• In § 405.379(a) we made revisions
to make clear that we are implementing
the statutory requirement to limit
recoupment during reconsideration, as
well as limiting recoupment during
redetermination, and the first level of
appeal.
• In § 405.379(c) we revised incorrect
cross-references to § 405.940 and
§ 405.958, and cross references to
§ 405.974 through § 405.978.
Specifically, we revised the regulatory
text of (c)(1) to refer to § 405.940
through § 405.958 and we revised the
regulatory text of (c)(2) to refer to
§ 405.960 through § 405.978.
• In § 405.379(d), we added language
to paragraph (d)(1) to provide that
recoupment may begin no earlier than
41 days following the date of the initial
notice of overpayment.
• In § 405.379(d), we made a
technical change to paragraph (d)(4) by
removing the word ‘‘final’’ to clarify that
actions of a QIC are not necessarily
considered final administrative actions
of the Secretary which can be appealed
directly to Federal district court.
• In § 405.379(e), we revised
paragraphs (e)(1)(ii) and (e)(1)(iii) to
extend the timeframe for limiting
recoupment before reconsideration is
filed from 30 calendar days to 60
calendar days.
• In § 405.379(f) and (g), we made
technical changes. Specifically, we
revised the heading of paragraph (f) by
removing the word ‘‘final’’. In
paragraphs (f)(1) and (2), and (g)(1) and
(2), we removed the word ‘‘final’’. We
made these technical changes to clarify
that actions of a QIC are not necessarily
considered final actions of the Secretary
which can be directly appealed to
Federal district court.
• In § 405.379(h), we added language
that permits the provider or supplier
who might otherwise be found to be in
default on their extended repayment
schedule, but submits a valid and timely
reconsideration not be deemed in
default. We also revised paragraph (h)
for clarity. These revisions do not make
substantive changes to the policy.
Further we corrected an incorrect cross
reference to § 401.607(c)(2)(iv).
Specifically we revised the regulatory
text to refer to § 401.607(c)(2)(v).
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IV. Collection of Information
Requirements
This document does contain
information collection requirements;
however, the Paperwork Reduction Act
of 1995 exempts the information
collection activities referenced in this
Final Rule. In particular, 5 CFR 1320.4
excludes collection activities during the
conduct of administrative actions such
as redeterminations, reconsiderations,
and/or appeals. Specifically, these
actions are taken after the initial
determination or a denial of payment.
See also, 44 USC 3518(c).
V. Regulatory Impact Statement
A. Overall Impact
We have examined the impacts of this
final rule as required by Executive
Order 12866 on Regulatory Planning
and Review (September 30, 1993), the
Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96–354),
section 1102(b) of the Social Security
Act, section 202 of the Unfunded
Mandates Reform Act of 1995 (Pub. L.
104–4), Executive Order 13132 on
Federalism (August 4, 1999), and the
Congressional Review Act (5 U.S.C.
804(2)).
Executive Order 12866 directs
agencies to assess all costs and benefits
of available regulatory alternatives and,
if regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity). A regulatory impact
analysis (RIA) must be prepared for
major rules with economically
significant effects ($100 million or more
in any 1 year). We do not expect this
final rule to have a substantial financial
impact on beneficiaries, providers, or
suppliers. Additionally, we anticipate
that Federal costs to implement this
final rule will be approximately $1 to
$10 million per year in additional
interest payments, which is well under
the threshold of $100 million in any 1
year.
The RFA requires agencies to analyze
options for regulatory relief of small
businesses if a rule has a significant
impact on a substantial number of small
businesses or other small entities. For
purposes of the RFA, small entities
include small businesses, nonprofit
organizations, and government agencies.
The great majority of hospitals and most
other providers and suppliers are small
entities, either by being nonprofit
organizations or by meeting the Small
Business Administration definition of a
small business (having revenues of less
than 7 million to 34.5 million in any 1
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47467
year). For purposes of the RFA, all
providers and suppliers affected by this
regulation are considered to be small
entities. Individuals and States are not
included in the definition of a small
entity.
In addition, section 1102(b) of the Act
requires us to prepare a regulatory
impact analysis if a rule may have a
significant impact on the operations of
a substantial number of small rural
hospitals. This analysis must conform to
the provisions of section 604 of the
RFA. For purposes of section 1102(b) of
the Act, we define a small rural hospital
as a hospital that is located outside of
a metropolitan statistical Area and has
fewer than 100 beds.
We are not preparing analyses for
either the RFA or section 1102(b) of the
Act. We are uncertain how many small
entities would be affected by this final
rule as this would depend in part upon
voluntary actions on the part of the
provider or supplier. The purpose of
this rule is to limit our ability to recoup
against providers or suppliers who
appeal an overpayment determination.
In order to impact a provider or
supplier, the provider or supplier must
have received an erroneous payment; an
overpayment must be determined and
demanded; the provider or supplier
must elect to appeal; and the provider
or supplier may not satisfy the
overpayment by making either a lump
sum payment or requesting to repay the
debt in installments. The only possible
adverse impact upon a provider or
supplier is that by deferring repayment
of the overpayment until final action by
the QIC, the provider would owe
additional interest. However, the
provider or supplier can avoid the
additional interest exposure by electing
to satisfy the debt by a lump sum
payment or an installment payment
while still pursuing the appeal. In
addition, should the overpayment
determination be reversed at a level
above the QIC, the provider or supplier
potentially will receive additional
interest beyond what CMS would be
obligated to pay under current
regulations. Therefore, we expect the
impact of this final rule to be positive
although the extent to which it would
benefit any one provider or supplier
would depend upon specific facts and
circumstances and voluntary choices
made by that provider or supplier. The
impact on small rural hospitals is
expected to be similarly positive but
unpredictable. Therefore, we are
certifying that this final rule will not
have a significant impact on a
substantial number of small rural
hospitals.
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Section 202 of the Unfunded
Mandates Reform Act of 1995 also
requires that agencies assess anticipated
costs and benefits before issuing any
rule whose mandates require spending
in any 1 year of $100 million in 1995
dollars, updated annually for inflation.
In 2009, that threshold is $133 million.
This rule will not have this effect on
State, local, or tribal governments, or on
the private sector.
Executive Order 13132 establishes
certain requirements that an agency
must meet when it publishes a proposed
rule (and subsequent final rule) that
imposes substantial direct requirement
costs on State and local governments,
preempts State law, or otherwise has
federalism implications. This final rule
will not have a substantial effect on
State or local governments.
A comment and the CMS response to
the impact analysis section are
discussed below:
Comment: One commenter states that
CMS should have performed an impact
analysis because the commenter
believes that the CMS proposal to
recoup before the 120 day time period
for filing a request for redetermination
has expired may not afford protections
from recoupment and may have an
impact on small business. Additionally,
the commenter believes CMS can
determine negative impact by looking at
overpayment data.
Response: As previously stated CMS
plans to adopt a process that will give
providers and suppliers an opportunity
to stop recoupment if they act decidedly
by submitting a request for
redetermination within 30 days of the
initial notice of overpayment. CMS will
not begin recoupment until the 41st day
allowing Medicare contractors time to
act on information it receives from the
provider. Also, after reviewing public
comments concerning the timeframe to
limit recoupment before reconsideration
is filed; CMS is expanding the 30 day
time limit to 60 days. We believe that
these timeframes afford providers or
suppliers ample protections to stop
recoupment. Thus, we are not adopting
the commenter’s suggestion.
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B. Conclusion
For these reasons, we did not prepare
analyses for either the RFA or section
1102(b) of the Act because we have
determined that this final rule would
not have a significant economic impact
on a substantial number of small entities
or a significant impact on the operations
of a substantial number of small rural
hospitals.
In accordance with the provisions of
Executive Order 12866, this regulation
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was reviewed by the Office of
Management and Budget.
List of Subjects in 42 CFR Part 405
Administrative practice and
procedure; Health facilities; Health
professions; Kidney diseases; Medical
devices; Medicare; Reporting and
recordkeeping requirements; Rural
areas; X-rays.
■ For the reasons set forth in the
preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR
chapter IV as follows:
PART 405—FEDERAL HEALTH
INSURANCE FOR THE AGED AND
DISABLED
Subpart C—Suspension of Payment,
Recovery of Overpayments, and
Repayment of Scholarships and Loans
1. The authority citation for subpart C
is revised to read as follows:
■
Authority: Secs. 1102, 1815, 1833, 1842,
1866, 1870, 1871, 1879, 1892 and 1893 of the
Social Security Act (42 U.S.C. 1302, 1395g,
1395l, 1395u, 1395cc, 1395gg, 1395hh,
1395pp, 1395ccc and 1395ddd) and 31 U.S.C.
3711.
2. Section 405.370 is amended by
designating the existing text as
paragraph (a), and adding a new
paragraph (b) to read as follows:
■
§ 405.370
Definitions.
*
*
*
*
*
(b) For purposes of §§ 405.378 and
405.379, the following terms apply:
Appellant means the beneficiary,
assignee or other person or entity that
has filed and pursued an appeal
concerning a particular initial
determination. Designation as an
appellant does not in itself convey
standing to appeal the determination in
question.
Fiscal intermediary means an
organization that has entered into a
contract with CMS in accordance with
section 1816 of the Act and is
authorized to make determinations and
payments for Part A of title XVIII of the
Act, and Part B provider services as
specified in § 421.5(c) of this chapter.
Medicare Appeals Council means the
council within the Departmental
Appeals Board of the U.S. Department
of Health and Human Services.
Medicare contractor, unless the
context otherwise requires, includes,
but is not limited to, a fiscal
intermediary, carrier, recovery audit
contractor, and Medicare administrative
contractor.
Party means an individual or entity
listed in § 405.906 that has standing to
appeal an initial determination and/or a
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subsequent administrative appeal
determination.
Qualified Independent Contractor
(QIC) Qualified Independent Contractor
(QIC) means an entity which contracts
with the Secretary in accordance with
section 1869 of the Act to perform
reconsiderations under § 405.960
through § 405.978.
Remand means to vacate a lower level
appeal decision, or a portion of the
decision, and return the case, or a
portion of the case, to that level for a
new decision.
Vacate means to set aside a previous
action.
■ 3. In § 405.373, paragraph (e)
introductory text is revised to read as
follows:
§ 405.373 Proceeding for offset or
recoupment.
*
*
*
*
*
(e) Duration of recoupment or offset.
Except as provided in § 405.379, if a
recoupment or offset is put into effect,
it remains in effect until the earliest of
the following:
*
*
*
*
*
■ 4. Section 405.378 is amended by—
■ A. Revising paragraph (a);
■ B. Revising paragraph (b)(2);
■ C. Republishing paragraph (c)(1)
introductory text;
■ D. Revising paragraph (c)(1)(ii);
■ E. Revising paragraph (c)(2);
■ F. Redesignating paragraphs (h) and
(i) as paragraphs (i) and (h) respectively;
■ G. Adding paragraph (j).
§ 405.378 Interest charges on
overpayment and underpayments to
providers, suppliers and other entities.
(a) Basis and purpose. This section,
which implements sections 1815(d),
1833(j) and 1893(f)(2)(B) of the Act and
common law, and authority granted
under the Federal Claims Collection
Act, provides for the charging and
payment of interest on overpayments
and underpayments to Medicare
providers, suppliers, HMOs,
competitive medical plans (CMPs), and
health care prepayment plans (HCPPs).
(b) * * *
(2) Except as provided in paragraph (j)
of this section, interest accrues from the
date of the final determination as
defined in paragraph (c) of this section,
and either is charged on the
overpayment balance or paid on the
underpayment balance for each full 30day period that payment is delayed.
(c) * * * (1) For purposes of this
section, any of the following constitutes
a final determination:
*
*
*
*
*
(ii) In cases in which an NPR is not
used as a notice of determination (that
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is, primarily under part B), one of the
following constitutes a final
determination –
(A) A written determination that an
overpayment exists and a written
demand for payment; or
(B) A written determination of an
underpayment.
*
*
*
*
*
(2) Except as required by any
subsequent administrative or judicial
reversal and specifically as provided in
paragraphs (i) and (j) of this section,
interest accrues from the date of final
determination as specified in this
section.
*
*
*
*
*
(j) Special rule for provider or
supplier overpayments subject to
§ 405.379. If an overpayment
determination subject to the limitation
on recoupment under § 405.379 is
reversed in whole or in part by an
Administrative Law Judge (ALJ) or at
subsequent administrative or judicial
levels of appeal and if funds have been
recouped and retained by the Medicare
contractor, interest will be paid to the
provider or supplier as follows:
(1) The applicable rate of interest is
that provided in paragraph (d) of this
section.
(2) The interest rate in effect on the
date the ALJ, the Medicare Appeals
Council, the Federal district court or
subsequent appellate court issues a
decision reversing the overpayment
determination in whole or in part is the
rate used to calculate the interest due
the provider or supplier.
(3) Interest will be calculated as
follows:
(i) Interest will be paid on the
principal amount recouped only.
(ii) Interest will be calculated on a
simple rather than a compound basis.
(iii) Interest will be calculated in full
30-day periods and will not be payable
on amounts recouped for any periods of
less than 30 days in which the Medicare
contractor had possession of the funds.
(iv) In calculating the period in which
the amount was recouped, days in
which the ALJ’s adjudication period to
conduct a hearing are tolled under 42
CFR 405.1014 shall not be counted.
(v) In calculating the period in which
the amount was recouped, days in
which the Medicare Appeals Council’s
adjudication period to conduct a review
are tolled under 42 CFR 405.1106 shall
not be counted.
(4) If the decision by the ALJ,
Medicare Appeals Council, Federal
district court or a subsequent Federal
reviewing court, reverses the
overpayment determination, as
modified by prior levels of
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administrative or judicial review, in
part, the Medicare contractor in
effectuating the decision may allocate
recouped monies to that part of the
overpayment determination affirmed by
the decision. Interest will be paid to the
provider or supplier on recouped
amounts that remain after this allocation
in accordance with this paragraph (j) of
this section.
■ 5. Section 405.379 is added to read as
follows:
§ 405.379 Limitation on recoupment of
provider and supplier overpayments.
(a) Basis and purpose. This section
implements section 1893(f)(2)(A) of the
Act which limits recoupment of
Medicare overpayments if a provider of
services or supplier seeks a
reconsideration until a decision is
rendered by a Qualified Independent
Contractor (QIC). This section also
limits recoupment of Medicare
overpayments when a provider or
supplier seeks a redetermination until a
redetermination decision is rendered.
(b) Overpayments subject to
limitation. (1) This section applies to
overpayments that meet the following
criteria:
(i) Is one of the following types of
overpayments:
(A) Post-pay denial of claims for
benefits under Medicare Part A which is
determined and for which a written
demand for payment has been made on
or after November 24, 2003; or
(B) Post-pay denial of claims for
benefits under Medicare Part B which is
determined and for which a written
demand for payment has been made on
or after October 29, 2003; or
(C) Medicare Secondary Payer (MSP)
recovery where the provider or supplier
received a duplicate primary payment
and for which a written demand for
payment was issued on or after October
10, 2003; or
(D) Medicare Secondary Payer (MSP)
recovery based on the provider’s or
supplier’s failure to file a proper claim
with the third party payer plan,
program, or insurer for payment and, if
Part A, demanded on or after November
24, 2003, or, if Part B, demanded on or
after October 29, 2003; and
(ii) The provider or supplier can
appeal the overpayment as a revised
initial determination under the
Medicare claims appeal process at 42
CFR parts 401 and 405 or as an initial
determination for provider/supplier
MSP duplicate primary payment
recoveries.
(2) This section does not apply to all
other overpayments including, but not
limited to, the following:
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47469
(i) All Medicare Secondary Payer
recoveries except those expressly
identified in paragraphs (b)(1)(i)(C) and
(D) of this section;
(ii) Beneficiary overpayments; and
(iii) Overpayments that arise from a
cost report determination and are
appealed under the provider
reimbursement process of 42 CFR part
405 Subpart R—Provider
Reimbursement Determinations and
Appeals.
(c) Rules of construction. (1) For
purposes of this section, what
constitutes a valid and timely request
for a redetermination is to be
determined in accordance with
§ 405.940 through § 405.958.
(2) For purposes of this section, what
constitutes a valid and timely request
for a reconsideration is to be determined
in accordance with § 405.960 through
§ 405.978.
(d) General rules. (1) Medicare
contractors can begin recoupment no
earlier than 41 days from the date of the
initial overpayment demand but shall
cease recoupment of the overpayment in
question, upon receipt of a timely and
valid request for a redetermination of an
overpayment. If the recoupment has not
yet gone into effect, the contractor shall
not initiate recoupment.
(2) If the redetermination decision is
an affirmation in whole or in part of the
overpayment determination,
recoupment may be initiated or resumed
in accordance with paragraph (e) of this
section.
(3) Upon receipt of a timely and valid
request for a reconsideration of an
overpayment, the Medicare contractor
shall cease recoupment of the
overpayment in question. If the
recoupment has not yet gone into effect,
the contractor must not initiate
recoupment.
(4) The contractor may initiate or
resume recoupment following action by
the QIC in accordance with paragraph
(f) of this section.
(5) If the provider or supplier
subsequently appeals the overpayment
to the ALJ, the Medicare Appeals
Council, or Federal court, recoupment
remains in effect as provided in
§ 405.373(e).
(6) If an overpayment determination is
appealed and recoupment stopped, the
contractor may continue to recoup other
overpayments owed by the provider or
supplier in accordance with this
section.
(7) Amounts recouped prior to a
reconsideration decision may be
retained by the Medicare contractor in
accordance with paragraph (g) of this
section.
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Federal Register / Vol. 74, No. 178 / Wednesday, September 16, 2009 / Rules and Regulations
(8) If either the redetermination or
reconsideration decision is a full
reversal of the overpayment
determination or if the overpayment
determination is reversed in whole or in
part at subsequent levels of
administrative or judicial appeal,
adjustments shall be made with respect
to the overpayment and the amount of
interest charged.
(9) Interest accrues and is payable in
accordance with the provisions of
§ 405.378.
(e) Initiating or resuming recoupment
after redetermination decision. (1)
Recoupment that has been deferred or
stopped may be initiated or resumed if
the debt (remaining unpaid principal
balance and interest) has not been
satisfied in full and the provider or
supplier has been afforded the
opportunity for rebuttal in accordance
with the requirements of § 405.373
through § 405.375. Recoupment may be
resumed under any of the following
circumstances:
(i) Immediately upon receipt by the
Medicare contractor of the provider’s or
supplier’s request for a withdrawal of a
request for a redetermination in
accordance with § 405.952(a).
(ii) On the 60th calendar day after the
date of the notice of redetermination
issued under § 405.956 if the
redetermination decision is an
affirmation in whole of the overpayment
determination in question.
(iii) On the 60th calendar day after the
date of the written notice to the provider
or supplier of the revised overpayment
amount, if the redetermination decision
is an affirmation in part, which has the
effect of reducing the amount of the
overpayment.
(2) Notwithstanding paragraphs (e)(i),
(ii) and (iii) of this section, recoupment
must not be resumed, or if resumed,
must cease upon receipt of a timely and
valid request for a reconsideration by
the QIC.
(f) Initiating or resuming recoupment
following action by the QIC on the
reconsideration request. (1) Recoupment
may be initiated or resumed upon action
by the QIC subject to the following
limitations:
(i) The provider or supplier has been
afforded the opportunity for rebuttal in
accordance with the requirements of
§ 405.373 through § 405.375; and
(ii) The debt (remaining unpaid
principal balance and interest) has not
been satisfied in full; and
(iii) If the action by the QIC is the
notice of the reconsideration, the
reconsideration decision either affirms
in whole or in part the overpayment
determination, including the
redetermination, in question.
VerDate Nov<24>2008
16:10 Sep 15, 2009
Jkt 217001
(2) For purposes of this paragraph (f),
the action by the QIC on the
reconsideration request is the earliest to
occur of the following:
(i) The QIC mails or otherwise
transmits written notice of the dismissal
of the reconsideration request in its
entirety in accordance with § 405.972;
or
(ii) The QIC receives a timely and
valid request to withdraw the request
for the reconsideration in accordance
with § 405.972; or
(iii) The QIC transmits written notice
of the reconsideration in accordance
with § 405.976; or
(iv) The QIC notifies the parties in
writing that the reconsideration is being
escalated to an ALJ in accordance with
§ 405.970.
(g) Disposition of funds recouped. (1)
If the Medicare contractor recouped
funds before a timely and valid request
for a redetermination was received, the
amount recouped may be retained and
applied first to accrued interest and
then to reduce or eliminate the principal
balance of the overpayment subject to
the following:
(i) If the redetermination results in a
reversal, the amount recouped may be
applied to any other debt, including
interest, owed by the provider or
supplier before any excess is released to
the provider.
(ii) If the redetermination results in a
partial reversal and the decision reduces
the overpayment plus assessed interest
below the amount already recouped, the
excess may be applied to any other debt,
including interest, owed by the provider
or supplier before any excess is released
to the provider or supplier.
(iii) If the redetermination results in
an affirmation and the provider or
supplier subsequently requests a
reconsideration, the Medicare contractor
may retain the amount recouped and
apply the funds first to accrued interest
and then to outstanding principal
pending action by the QIC on the
reconsideration request.
(2) If the Medicare contractor also
recouped funds in accordance with
paragraph (e) of this section, the amount
recouped may be retained by the
Medicare contractor and applied first to
accrued interest and then to reduce or
eliminate the outstanding principal
balance pending action by the QIC on
the reconsideration request.
(3) If the action by the QIC is a
dismissal, receipt of a withdrawal, a
notice that the reconsideration is being
escalated to an ALJ, or a reconsideration
which affirms in whole the
overpayment determination, including
the redetermination, in question, the
amount recouped is applied to interest
PO 00000
Frm 00036
Fmt 4700
Sfmt 4700
first, then to reduce the outstanding
principal balance and recoupment may
be resumed as provided under
paragraph (f) of this section.
(4) If the action by the QIC is a
reconsideration, which reverses in
whole the overpayment determination,
including the redetermination, in
question, the amount recouped may be
applied to any other debt, including
interest, owed by the provider or
supplier to CMS or to HHS before any
excess is released to the provider or
supplier.
(5) If the action by the QIC is a
reconsideration which results in a
partial reversal and the decision reduces
the overpayment plus assessed interest
below the amount already recouped, the
excess may be applied to any other debt,
including interest, owed by the provider
or supplier to CMS or to HHS before any
excess is released to the provider or
supplier.
(h) Relationship to Extended
Repayment Schedules. Notwithstanding
§ 401.607 (c)(2)(v) of this chapter
regarding an extended repayment
schedule (ERS), a provider or supplier
will not be deemed in default if
recoupment of an overpayment is not
effectuated or stopped in accordance
with this section, and the following
conditions are met:
(1) The provider or supplier has been
granted an ERS under § 401.607(c) of
this chapter.
(2) The ERS has been granted for an
overpayment that is listed in paragraph
(b) of this section.
(3) The provider or supplier has
submitted a valid and timely request to
the Medicare contractor for a
redetermination of the overpayment in
accordance with §§ 405.940 through
405.958 or reconsideration of the
overpayment in accordance with
§§ 405.960 through 405.978.
(Catalog of Federal Domestic Assistance
Program No. 93.773, Medicare—Hospital
Insurance; and Program No. 93.774,
Medicare—Supplementary Medical
Insurance Program)
Dated: April 29, 2009.
Charlene Frizzera,
Acting Administrator, Centers for Medicare
& Medicaid Services.
Approved: June 17, 2009.
Kathleen Sebelius,
Secretary.
[FR Doc. E9–22166 Filed 9–15–09; 8:45 am]
BILLING CODE 4120–01–P
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Agencies
[Federal Register Volume 74, Number 178 (Wednesday, September 16, 2009)]
[Rules and Regulations]
[Pages 47458-47470]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-22166]
[[Page 47458]]
=======================================================================
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 405
[CMS-6025-F]
RIN 0938-AN42
Medicare Program; Limitation on Recoupment of Provider and
Supplier Overpayments
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule implements a provision of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)
which prohibits recouping Medicare overpayments from a provider or
supplier that seeks a reconsideration from a Qualified Independent
Contractor (QIC). This provision changes how interest is to be paid to
a provider or supplier whose overpayment is reversed at subsequent
administrative or judicial levels of appeal. This final rule defines
the overpayments to which the limitation applies, how the limitation
works in concert with the appeals process, and the change in our
obligation to pay interest to a provider or supplier whose appeal is
successful at levels above the QIC.
DATES: Effective Date: These regulations are effective on November 16,
2009.
FOR FURTHER INFORMATION CONTACT: Debbie Miller (410) 786-1492.
SUPPLEMENTARY INFORMATION:
I. Background
Prior to passage of the MMA, CMS could recoup overpayments
regardless of whether a provider or supplier had appealed. Section
935(f)(2) of the MMA, codified at section 1892(f) of the Social
Security Act, prohibits the recoupment of Medicare overpayments during
a provider or supplier appeal to a Qualified Independent Contractor
(QIC). CMS will also stop recoupment during the first level of appeal,
the redetermination, if the provider or supplier files a timely request
for appeal, as explained in detail within the text of this regulation.
However, the contractor may initiate or resume recoupment, whether or
not the provider or supplier subsequently appeals the QIC determination
to the Administrative Law Judge (ALJ), the Medicare Appeals Council, or
Federal court.
This final rule defines the overpayments to which the limitation on
recoupment applies, how the limitation works in concert with the
appeals process, and sets time limits for recouping overpayments,
specifically providing 41 days for a provider or supplier to file the
first level of appeal before the contractor can begin recoupment and
providing the provider or supplier 60 days to appeal at the second
level before the contractor can begin recoupment.
This final rule also changes how interest is to be paid to a
provider or supplier whose overpayment is subsequently reversed at the
ALJ, Medicare Appeals Council, or Federal court levels of appeal.
Before the MMA was passed, CMS was liable for interest charges if it
did not pay within 30 days of an underpayment determination. This final
rule requires that if an overpayment determination is overturned in
administrative or judicial appeals, above the QIC level of appeal, CMS
is liable for interest on recouped overpayments that has accrued since
the original determination. This final rule implements this new
requirement, while leaving all other interest calculation regulations
intact. Therefore, if a provider or supplier takes advantage of the
limitation on recoupment, and ultimately loses on appeal, it will still
be liable for all accrued interest.
A. Legislation
Section 935 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173) amended Title XVIII
of the Social Security Act (the Act) to add a new paragraph (f) to
section 1893 of the Act, the Medicare Integrity Program. This new sub-
section contains eight substantive provisions addressing the recovery
of overpayments. This final rule implements the second of these
provisions--the limitation on recoupment.
The statute requires us to change the way we recoup certain
overpayments. It also changes how interest is to be paid to a provider
or supplier whose overpayment determination is reversed at
administrative or judicial levels of appeal above the QIC. We note that
the changes to recoupment and interest work in tandem with Medicare
fee-for-service claims appeal process. We refer readers to the
September 22, 2006 proposed rule (71 FR 55406) or to the applicable
regulations at 42 CFR 405.900 for a further discussion of the claims
appeal process. The September 22, 2006 proposed rule includes a brief
discussion of the appeals process and a detailed chart which sets forth
the levels of appeals as well as applicable time frames and amount in
controversy requirements.
B. Appeals and Limitation on Recoupment
Recoupment is the recovery of a Medicare overpayment by reducing
present or future Medicare payments and applying the amount withheld
against the debt. Under our existing regulations, providers and
suppliers can challenge an overpayment determination through both the
rebuttal and appeals processes. The rebuttal process provides the
debtor the opportunity to submit a statement and/or evidence stating
why recoupment should not be initiated. The outcome of the rebuttal
process could change how or if we recoup. Section 1893 of the Act as
amended by Section 935 of the MMA and the provisions of this final rule
do not alter the rebuttal process. The regulatory definition of
``recoupment'' is set forth at Sec. 405.370. See Sec. 405.374 for
information on the rebuttal process.
An appeal is an examination of the validity of the overpayment
determination. Before section 1893(f)(2) of the Act was enacted, if a
provider or supplier elected to appeal, there was no effect on our
ability to recover the debt. However, if the overpayment determination
was reversed in whole or in part, at any stage of the administrative or
judicial appeal process, appropriate adjustments would be made to the
overpayment and the amount of interest assessed.
When section 1893(f)(2) of the Act was enacted, our recoupment
process was changed. Section 1893 (f)(2) of the Act states:
In the case of a provider of services or supplier that is
determined to have received an overpayment under this title and that
seeks a reconsideration by a qualified independent contractor on
such determination under section 1869(b)(1), the Secretary may not
take any action (or authorize any other person, including any
Medicare contractor, as defined in subparagraph (C)) to recoup the
overpayment until the date the decision on the reconsideration has
been rendered.
C. Assessment of Interest
In addition to changing the recoupment process, section 1893(f)(2)
of the Act also has the effect of changing how we pay interest to a
provider or supplier who is successful in having an overpayment
determination fully or partially reversed at the latter stages of the
appeal process.
Previously, we paid interest on underpayments solely in accordance
with sections 1815(d) and 1833(j) of the Act. (See also, Sec.
405.378.) An
[[Page 47459]]
underpayment would usually result when we had recovered, through
recoupment or otherwise, an overpayment; the decision was fully or
partially reversed at some point in the appeal process; and after
appropriate adjustments, we owed the balance to the provider or
supplier. Interest would accrue from the date of the ``final
determination'' and was owed if the underpayment was not paid within 30
days. Following an appeal decision favorable to a provider or supplier,
the Medicare contractor would effectuate the decision. If the decision
created an underpayment, the contractor would issue a written
determination of the amount Medicare owed as an underpayment. The
written determination was considered a new final determination;
interest would accrue from the date of the final determination and
would be owed/payable if the underpayment was not paid by the Medicare
contractor within 30 days of the final determination of the
underpayment.
The new interest provision found in section 1893(f)(2)(B) of the
Act revises the way interest is to be paid to a provider or supplier
whose overpayment determination is overturned in administrative or
judicial appeals subsequent to the second level of appeal (the QIC
reconsideration). Section 1893(f)(2)(B) of the Act states:
Insofar as the determination on such appeal is against the
provider of services or supplier, interest on the overpayment shall
accrue on and after the date of the original notice of overpayment.
Insofar as such determination against the provider of services or
supplier is later reversed, the Secretary shall provide for
repayment of the amount recouped plus interest at the same rate as
would apply under the previous sentence for the period in which the
amount was recouped.
Section 1893(f)(2)(B) of the Act does not specifically amend
sections 1815(d) and 1833(j) of the Act. In addition, the MMA
conference report does not reference these sections. The statute and
the conference report are both silent on the relationship between
paying or collecting interest: (1) Based on the final determination
concept embodied in sections 1815(d) and 1833(j) of the Act; and (2)
the concept of paying interest based on how long we held funds,
ultimately determined through the latter stage of the appeal process to
belong to the provider, as incorporated in section 1893(f)(2)(B) of the
Act.
The statute does not change the obligation of the provider or
supplier to pay interest if the overpayment determination is affirmed
at any level of administrative or judicial appeal. In accordance with
sections 1815(d) and 1833(j) of the Act, interest continues to accrue
from the date of the final determination as defined in Sec.
405.378(c). Section 1893(f)(2)(B) of the Act explains that if an appeal
of an overpayment is upheld before the QIC, ``interest on the
overpayment shall accrue on and after the date of the original notice
of overpayment.'' For overpayments subject to the limitation on
recoupment provision, the date of the final determination is the date
of the original notice of overpayment (that is, the demand letter).
Therefore, section 1893(f)(2)(B) of the Act is consistent with sections
1815(d) and 1833(j) of the Act and does not alter our ability to assess
interest against the provider or supplier.
In addition, the statute does not change the obligation of Medicare
to pay the provider or supplier interest if the overpayment
determination is reversed at the first (redetermination) or second
(reconsideration) level of the administrative appeal process and the
appeal decision generates an underpayment. At these levels of appeal,
interest would continue to be payable by Medicare if an underpayment is
not paid to the provider or supplier within 30 days of the date of the
final determination. The change in the method of paying interest
resulting from section 1893(f)(2)(B) of the Act is applicable only
where the reversal occurs at the Administrative Law Judge (ALJ) level
or subsequent levels of administrative appeal or judicial review. At
these higher levels of administrative appeal or judicial review,
interest becomes payable by Medicare based on the period we recouped
and retained the provider's or supplier's funds where the decision
results in a full or partial reversal and Medicare previously recouped
funds.
We determine the rate of interest in accordance with Sec. 405.378
by comparing the private consumer rate with the current value of funds
rate. Interest is assessed at the higher of these two rates that is in
effect on the date of the final determination of the amount of the
overpayment or underpayment. Since February 2001 to the present time,
it has ranged from a low of 10.75 percent to a high of 14.125 percent.
In accordance with Sec. 411.24(m)(2), interest is calculated on
Medicare Secondary Payer (MSP) debts in the same manner as for Medicare
overpayments and underpayments. In addition, the same interest rate is
used.
Interest accrues daily but is assessed and calculated in full 30
day periods. We charge simple rather than compound interest, and
payments we receive are applied first to accrued interest and then to
principal. Interest we collect on overpayments and MSP recoveries goes
to the general fund of the U.S. Treasury. The principal amount we
recover is used to reimburse the applicable Medicare Trust Fund the
Hospital Insurance (Part A) or the Supplementary Medical Insurance
(Part B and now D) trust funds, which are special accounts in the U.S.
Treasury. Interest we pay on Medicare underpayments comes from the
applicable Medicare Trust Fund.
D. Suspension
We note that this new MMA provision does not affect how we recover
overpayments from providers or suppliers that have been placed on
payment suspension. Under Sec. 405.371, an intermediary, a carrier, or
CMS may suspend the payment of claims if there is reliable information
that an overpayment, fraud, or willful misrepresentation exists or that
payments to be made may not be correct. Once an overpayment amount is
determined, suspended payments must first be applied to eliminate any
overpayment as specified in Sec. 405.372(e). We do not interpret
section 1893(f)(2) of the Act as amending our authority to apply
suspended payments toward reducing or eliminating an overpayment.
Furthermore, we do not interpret section 1893(f) of the Act to require
that suspended payments be released to a provider or supplier once an
overpayment amount is determined. If the suspended payments are
insufficient to fully eliminate any overpayment, and the provider or
supplier meets the requirements of this final rule, the limitation on
recoupment provision under section 1893(f)(2) of the Act will be
applicable to any remaining balance still owed to CMS.
We also note that section 1893(f)(2) of the Act does not alter the
process for providers or suppliers to appeal overpayment determinations
that follow suspension actions. Providers and suppliers may continue to
appeal the overpayment determination as they could before the enactment
of the MMA.
II. Provisions of the Proposed Regulations and Response to Comments
In the September 22, 2006 Federal Register (71 FR 55404), we
published the proposed rule entitled, ``Limitation on Recoupment of
Provider and Supplier Overpayments'' and provided for a 60-day comment
period. The rule proposed to implement a provision of the MMA that
prohibited recouping Medicare overpayments when a reconsideration
appeal is received from
[[Page 47460]]
a provider or supplier until a decision is rendered by a QIC. The
provision changes how interest is to be paid to a provider or supplier
whose overpayment is reversed at subsequent administrative or judicial
levels of appeal. The proposed rule defined the overpayments to which
the limitation applies, how the limitation works in concert with the
appeals process, and the change in our obligation to pay interest to a
provider or supplier whose appeal is successful at levels above the
QIC.
We received a total of 11 timely comments from physicians, hospital
associations, home health facilities, medical equipment providers, and
other individuals and health care associations.
Brief summaries of each proposed provision, a summary of the public
comments we received, and our responses to the comments are set forth
below.
A. General Comments
Most of the comments received ranged from general comments that
supported or opposed the proposed provisions, to very specific
questions or comments regarding the proposed changes.
Comment: We received two comments that supported CMS's decision to
halt recoupment during the period that the provider seeks a first level
of appeal (redetermination) as stated in proposed Sec. 405.379(d)(1).
Response: We appreciate the commenters recognizing that CMS has
attempted to fairly implement the requirements of section 1893(f)(2) of
the Act while still fulfilling its fiduciary responsibility to collect
overpayments aggressively.
Comment: One commenter expressed concern that CMS's limitation on
recoupment provisions afford greater protections to overpaid providers
than to providers who are merely suspected to have overpayments and for
whom payments are suspended while an overpayment is being determined.
Response: Section 1893(f)(2) of the Act prevents the Secretary from
taking any ``action * * * to recoup the overpayment''. The disposition
of suspended funds as explained in Sec. 405.372(e) is not a
``recoupment'' as that term is defined in Sec. 405.370. The statute
does not broaden or alter CMS's definition of recoupment to also apply
to the application of suspended funds. Because CMS is only limited by
section 1893 (f)(2) of the Act from recouping Medicare payments, we are
not restricted in our ability to apply suspended funds to reduce or
dispose of an overpayment.
B. Authority Citation for Subpart C of Part 405
Subpart C of part 405 implements several sections of the Act
including sections authorizing the recovery of overpayments and
assessment of interest. In the September 22, 2006 proposed rule, we
proposed to revise the authority citation to explicitly add Section
1893 of the Act, amended by section 935 of the MMA, to add the
limitation on recoupment as well as other provisions addressing the
recovery of overpayments. We received no comments on this provision.
Thus, in this final rule, we are adopting the authority citation
provisions of the proposed rule without change.
C. Proposed Change to Sec. 405.370 Definitions
Section Sec. 405.370 defines key terms that apply to subpart C of
part 405. In the September 22, 2006 proposed rule, we proposed to
revise Sec. 405.378 and add a new Sec. 405.379. We added new
definitions to Sec. 405.370. We also proposed that selected terms used
in Sec. 405.378 and proposed Sec. 405.379 be given the same meaning
as in the appeals context.
Comment: Several commenters suggested that the definition of
Medicare contractor be amended to include Recovery Audit Contractors
(RACs).
Response: We agree with the commenter and have revised the
definition of Medicare Contractor to include this change. We note that
our intent was not to exclude RACs from being subject to the rule.
Accordingly, we are revising the definition of Medicare Contractor,
and finalizing all other definitions in Sec. 405.370 as proposed
without change.
D. Sec. 405.373 Proceeding for Offset or Recoupment
Section 405.373 establishes the general rules and procedures to be
followed once CMS or a Medicare contractor determines that an offset or
recoupment should be put into effect. Specifically, Sec. 405.373(e)
addresses the duration of a recoupment or offset that has been put into
effect and identifies the three specific circumstances under which a
recoupment or offset would stop. In the September 22, 2006 proposed
rule, we proposed to revise the introductory text of paragraph (e) to
explicitly refer to Sec. 405.379, implementing the statutory
limitation on recoupment, as a separate basis to stop recoupments that
have been put into effect.
We received no comments on these provisions. Accordingly, we are
finalizing Sec. 405.373 as proposed without modification.
E. Sec. 405.378 Interest charges on overpayment and underpayments to
providers, suppliers and other entities
Section 405.378 implements sections 1815(d) and 1833(j) of the Act
which requires us to charge interest on overpayments and pay interest
on underpayments if payment is not made within 30 days of the date of
the ``final determination''. Under sections 1815(d) and 1833(j) of the
Act, the date of the final determination dictates when interest begins
to accrue and determines whether we pay interest on an underpayment or
collect interest on an overpayment.
In paragraph (c), we define what constitutes a final determination
both for overpayments and underpayments arising from a cost report
determination as well as those that are claims based.
In paragraph (d), we establish the basis for the interest rate used
for Medicare overpayments and underpayments as well as for other
Medicare program activities, for example Medicare Secondary Payer
recoveries (Sec. 411.24(m) which references Sec. 405.378(d)).
In the September 22, 2006 proposed rule, we proposed to revise
Sec. 405.378 to specify how interest is assessed for the subset of
overpayments subject to the limitation on recoupment under section
1893(f)(2) of the Act. In Sec. 405.378, we proposed to clarify that if
a provider or supplier overpayment determination is affirmed at any
level of administrative or judicial appeal, interest owed by the
provider or supplier would continue to accrue from the final
determination. If the overpayment determination is reversed in favor of
the provider or supplier, interest may be payable by Medicare to the
provider or supplier under one of two different methodologies depending
upon the appeal level at which the reversal occurs. If a full or
partial reversal in favor of the provider or supplier occurs at the
first (redetermination) or second (reconsideration) level of the
administrative appeal process, interest may be payable by Medicare to
the provider or supplier if the underpayment is not paid within 30 days
of the final determination as that term is defined in the proposed
revisions to Sec. 405.378(c).
It is only where the reversal occurs at the ALJ level or
Departmental Appeals Board's Appeals Council level of
[[Page 47461]]
administrative appeal or judicial review that interest becomes payable
by Medicare based on the period that we recouped and retained the
provider's or supplier's funds.
In the September 22, 2006 proposed rule, we proposed to amend Sec.
405.378(a) by adding the reference to 1893(f)(2)(B) of the Act, which
is one of the enumerated provisions of the Act that this regulatory
section is designed to implement.
We also proposed to revise paragraph (b)(2), which states the basic
rule that interest accrues from the date of final determination, to
clarify there is a new exception to this rule by referencing paragraph
(j) of this section.
In addition, we proposed to amend paragraph (c)(1)(ii) which lists
what constitutes a final determination in cases where a Notice of
Amount of Program Reimbursement (NPR) is not issued.
First, we proposed to remove the existing final determination
definition based on certain Administrative Law Judge (ALJ) decisions
under paragraph(c)(1)(ii)(C). The change in how interest is assessed
under section 1893(f)(2) of the Act applies at the third level of
appeal (ALJ) and subsequent administrative and judicial review levels.
Therefore, we proposed to make these changes at paragraph (j).
Second, we proposed to add an additional definition for a final
determination, at paragraph (c)(1)(ii)(C), arising from a full or
partial reversal at the redetermination level of appeal. This change
was designed to clarify that if an overpayment is reversed in whole or
in part at the first level of appeal, the redetermination level,
interest accrues from the date of the ``final determination'' and is
owed by Medicare if the underpayment is not paid within 30 days.
Following a redetermination decision favorable to a provider or
supplier, the contractor must effectuate the decision and make a
written determination of the amount Medicare owes. Interest accrues
from the date of the written determination.
Finally, we proposed to add paragraph (c)(1)(ii)(D) as an
additional type of final determination. This is a written determination
arising from a full or partial reversal of an overpayment determination
at the QIC reconsideration level (the second level of appeal). This
addition was designed to clarify that if an overpayment determination
is reversed in whole or in part at the QIC reconsideration, the final
determination for purposes of assessing interest is the date of the
written determination to the provider or supplier of the amount
Medicare owes. Interest accrues from the date of this written
determination and is owed to the provider or supplier if the
underpayment is not paid within 30 days.
These proposed changes to the final determination definitions are
intended to work in conjunction with the limitation on recoupment
requirements in Sec. 405.379. Providers and suppliers can take
advantage of the limitation on recoupment by not paying during the
redetermination and reconsideration levels of appeal. However, interest
will still continue to accrue during those periods. If a provider or
supplier loses at either level of appeal, and they did not pay their
overpayment during the appeal, they will owe both the overpayment
amount and accrued interest.
We proposed to revise paragraph (c)(2) by adding the cross
references to paragraphs (i) and (j) of this section which states the
exceptions to assessing interest based on the date of final
determination.
For purposes of clarity and to group the exceptions to the ``final
determination'' rule in a logical sequence, we proposed to redesignate
paragraph (h), respectively as paragraph (i) and paragraph (i) as
paragraph (h). We note that the text of these redesignated paragraphs
did not change.
In addition, we proposed to add a new paragraph (j) to establish
the basis for paying interest to a provider or supplier whose
overpayment determination is reversed in whole or in part at the third
level of administrative appeal (ALJ) or above. This new interest
provision is required by section 1893(f)(2)(B) of the Act which states,
``[i]nsofar as such determination against the provider of services or
supplier is later reversed, the Secretary shall provide for repayment
of the amount recouped plus interest at the same rate as would apply
under the previous sentence for the period in which the amount was
recouped.'' In paragraph (j), we explain how interest is assessed
against the government at any administrative and judicial appeal level
above the QIC reconsideration. This new method applies only to
overpayments subject to the limitation on recoupment under Sec.
405.379. It is predicated upon the recoupment and retention of funds by
CMS or the Medicare contractor at the time the decision reversing the
overpayment determination, in whole or in part, is rendered.
In paragraph (j)(1), we state that the rate of interest is the same
rate that CMS charges on overpayments and pays on underpayments to
providers, suppliers and other health care entities. This rate, as
specified in paragraph (d) of this section, is the higher of the
private consumer rate or the current value of funds rate. We note that
the interest rate established in paragraph (d) changes periodically.
In paragraph (j)(2), we describe the point in time where the
applicable interest rate is fixed. This is the date the decision
reversing the overpayment is issued by the ALJ, Medicare Appeals
Council, Federal District Court or other Federal reviewing court.
In paragraph (j)(3), we explain how interest would be calculated.
Interest will be paid on the total principal amount recouped. We will
pay simple rather than compound interest, and will not pay interest on
interest; this mirrors the manner in which we assess interest against
providers. Monies we recoup and apply to interest will be refunded and
not included in the ``amount recouped'' for purposes of calculating any
interest due the provider. The periods of recoupment will be calculated
in full 30-day periods; and interest will not be payable for any
periods of less than 30 days in which we had possession of the recouped
funds.
In calculating the period in which the amount was recouped, we will
deduct days in which either or both the ALJ's or the Medicare Appeals
Council's adjudication time frames are tolled due to specific actions
by the appellant over which the government has no control. Our rules on
the procedures and time frames to request an ALJ hearing provide that
if the appellant fails to copy the other parties or files the request
with an entity other than that specified in the QIC's reconsideration,
the ALJ's 90 day adjudication deadline is tolled.
Similarly, our rules on the procedures and time frames to request a
Medicare Appeals Council review provide that if the appellant fails to
copy the other parties or files the request with an entity other than
that specified in the notice of the ALJ's action, the Medicare Appeals
Council's adjudication period to conduct a review is tolled. Therefore,
in paragraph (j)(3)(iv) and (v), we state that in calculating how much
interest we owe a provider or supplier, we account for these potential
delays by deducting days attributable to actions by the provider or
supplier which have the effect of extending the time in which we had
possession of the recouped funds.
We state in paragraph (j)(4) that, in the cases of a partial
reversal of an overpayment determination, we would allocate the funds
recouped first to that portion of the overpayment
[[Page 47462]]
determination affirmed by the ALJ, Medicare Appeals Council, or any
Federal court. If after this allocation excess recouped funds remain,
interest would be paid to the provider or supplier on this amount in
accordance with the other provisions specified in paragraph (j).
All comments and CMS's responses related to the proposed revisions
of Sec. 405.378 are discussed below:
Comment: Two commenters suggested that Sec. 405.378(j) be revised
to state that Medicare must pay interest from the date of recoupment
regardless of whether the reversal occurs at the redetermination,
reconsideration, or ALJ level.
Response: Section 1893 (f)(2)(B) of the Act clearly states that CMS
must pay interest to a provider or supplier only when a reconsideration
is ``later reversed.'' Therefore, we are not authorized by statute to
pay interest from the date of recoupment if a decision at the
redetermination or reconsideration level of appeal reverses a prior
determination or decision. The statute only requires the payment of
interest back to the date of recoupment when a finding by an ALJ, or
other higher administrative or judicial entity, reverses a QIC
reconsideration decision. CMS only pays interest when specifically
obligated by statute. We believe the commenter's suggestion is contrary
to the plain meaning of the statute.
Comment: One commenter suggested that because interest charges
continue to accrue against a provider or supplier even if they avail
themselves of the limitation on recoupment, CMS will make itself whole
by satisfying the overpayment through interest collections.
Response: CMS must forward to the (Department of Treasury) General
Fund any interest collected. CMS neither retains, nor is made whole by
interest collected on behalf of the Treasury.
Comment: One commenter stated that the proposed new definitions of
when CMS pays interest on underpayments that result from a reversal, in
whole or in part, at the redetermination level and at the
reconsideration level (Sec. 405.378(c)(1)(ii)(C) and (c)(1)(ii)(D)),
are not fair to providers or suppliers, and result in providers or
suppliers giving interest-free loans to Medicare for the period of time
between the decision and when Medicare effectuates the decision.
Response: Medicare's longstanding policy is that a final
determination occurs when the determination sets forth a specific
amount that is due. Further, as explained in Sec. 405.378(e)(4),
interest to a provider or supplier does not begin to accrue until the
date of the written determination notifying the provider or supplier of
the amount of the underpayment. Although it is possible that a decision
at the QIC level could include the precise amount that is owed as an
underpayment, more often, the decision requires that the Medicare
contractor compute the amount due to the provider. For example, if the
QIC decision is a partial reversal of an overpayment where
extrapolation was used to determine the overpayment, it typically must
be recalculated to account for the revisions made to the sample claims
upon which the extrapolated overpayment is based. Only after the
recalculation of the overpayment is completed will the contractor
become aware of any potential underpayment. A written determination on
appeal that Medicare owes an underpayment but without specific
information as to what the amount is owed, does not permit sufficient
information to determine the payment amount and subsequent interest.
Interest is paid when a specific amount is known and is not paid within
30 days. Similarly, providers have 30 days to repay an overpayment
where the amount has been determined before interest is assessed.
In considering the comment, we decided to remove Sec.
405.378(c)(1)(ii)(C) and (c)(1)(ii)(D). These two provisions included
in our proposed rule explained when a final determination of an
underpayment occurred during the first two levels of administrative
appeal. However, we believe the language in Sec. 405.378(c)(1)(ii)(B),
which states that a written determination of an underpayment
constitutes a final determination, adequately covers these two levels
of appeal. Thus, we believe paragraphs (c)(1)(ii)(C) and (c)(1)(ii)(D)
are unnecessary. After all levels of appeal, an underpayment will be
determined when a sum certain is calculated and the provider or
supplier is notified of the underpayment, regardless of whether a QIC
or a contractor performs the recalculation.
Comment: One commenter stated that interest should be prorated for
periods less than 30 days.
Response: CMS will continue to pay interest on underpayments it
owes the provider or supplier, the same way it assesses interest on
overpayments owed by the provider or supplier. Periods of less than 30
days are not counted. Only full 30 day periods are used to calculate
interest. This is based on Sec. 405.378(b)(2) where interest accrues
and is paid for each full 30 day period that payment is delayed.
Comment: Two commenters asked CMS to reconsider the proposal to
deduct from the interest owed to the provider those days that are
tolled during an ALJ or Appeals Council adjudication period.
Response: The appeals regulations in Sec. 405.1014 and Sec.
405.1106 provide extensions (or tolling) of the adjudication timeframe
for issuance of ALJ decisions and Medicare Appeals Council review
decisions when certain specific actions are taken by an appellant that
are outside the government's control, (for example, the appellant fails
to copy the other parties on their request for an ALJ hearing). We
believe that our proposal to deduct the days that are associated with
an appellant's actions aligns itself with the language in the appeals
regulations. CMS should not be required to pay interest on days that
the appellant is in control of, or is perfecting an appeal request, or
takes action that delays the administrative proceedings.
Accordingly, we are finalizing Sec. 405.378 as proposed with
modifications, as noted above.
F. Sec. 405.379 Limitation on Recoupment of Provider and Supplier
Overpayments.
In the September 22, 2006 proposed rule, we proposed to add a new
section Sec. 405.379 to subpart C of Part 405 to implement the
statutory limitation on recoupment under section 1893(f)(2) of the Act.
Specifically, in proposed paragraph (a) we explained that
1893(f)(2)(B) of the Act is the statutory basis for this section. In
addition, we stated that the basis and purpose of this section is to
impose a limit on our recoupment of Medicare overpayments, if a
provider or supplier appeals until a decision by a QIC is made.
In paragraph (b), we delineated those types of overpayments that
are expressly subject to the recoupment limitation: (1) those appealed
by the provider or supplier under the Medicare claims appeal process;
(2) post-pay denial of claims for benefits under Medicare Part A and
Part B for which a demand for payment has been made; and (3) Medicare
Secondary Payer (MSP) recoveries where the provider or supplier
received a duplicate primary payment and MSP recoveries based on the
provider's or supplier's failure to file a proper claim with the third
party payer plan, program, or insurer for payment.
Section 935(b) of the MMA specified that section 1893(f)(2) of the
Act shall apply to ``actions'' taken after the date of enactment of the
MMA; that is actions taken after December 8, 2003.
[[Page 47463]]
For these purposes, we defined these actions to be the date the
contractor could have instituted recoupment action based on Part A
debts determined on or after November 24, 2003, Part B debts determined
on or after October 29, 2003, and a small group of MSP debts determined
on or after October 10, 2003.
In paragraph (b), we also provided the categories of overpayments
to which the limitation does not apply, although this is not an
exhaustive list of exclusions. The limitation would not apply to all
MSP recoveries other than provider/supplier MSP duplicate primary
payment recoveries or MSP recoveries attributable to the provider's or
supplier's failure to file a proper claim. It would not apply to
beneficiary overpayments nor overpayments that arise from a cost report
determination and are appealed under the provider reimbursement
process.
In paragraph (c), we specified how two key actions that trigger the
limitation on recoupment are to be construed. A provider must act
decidedly to stop recoupment. Recoupment of an overpayment once
initiated will be stopped at the first two levels of the appeals
process (the redetermination and the reconsideration) upon receipt of a
timely and valid appeal request applicable to that level. The provider
or supplier does not have to take any affirmative action to invoke the
limitation on recoupment beyond the act of appealing. What constitutes
a valid and timely request for a redetermination and, subsequently what
constitutes a valid and timely request for a reconsideration is already
described in established Medicare appeal regulations and implementing
policies. (See 42 CFR part 405 subpart I).
In paragraph (d), we proposed the general framework for
implementing the limitation on recoupment. Once an overpayment is
determined and the substantive and procedural requirements to afford
the provider or supplier an opportunity for rebuttal under Sec.
405.374 and Sec. 405.375 are satisfied, recoupment can proceed unless
and until a valid request for a redetermination is received. This means
we can recoup during the period when a provider's or supplier's right
to request a redetermination has not expired. This places the
obligation on the provider or supplier who wishes to capitalize on the
benefit afforded by the recoupment limitation to request a
redetermination.
Under the Benefits Improvement and Protection Act of 2000, the
Medicare contractor is required to make a redetermination decision
within 60 calendar days of the date the contractor receives a timely
filed request for a redetermination. We proposed in paragraph (d)(2)
that if the redetermination is an affirmation in whole or in part, we
can proceed to recoup any outstanding principal and interest 30 days
after notice unless a valid request for a reconsideration is received
in the interim.
In paragraph (d)(3), we specified that the Medicare contractor
shall cease recoupment upon receipt of a timely and valid request for a
reconsideration. If recoupment has not gone into effect, the contractor
shall not initiate it. The contractor may initiate or resume recoupment
upon final action by the QIC in accordance with paragraph (f) which is
explained in detail below.
The general rule we proposed in paragraphs (d)(4) and (d)(5) states
that, unless the reconsideration results in a full reversal of the
overpayment determination, recoupment of outstanding principal and
interest may be initiated or resumed upon final action by the QIC
whether or not the provider or supplier appeals to the ALJ, the
Medicare Appeals Council, or Federal court. If the provider or supplier
subsequently appeals, the contractor may continue recouping outstanding
overpayments in accordance with Sec. 405.373(e).
In paragraph (d)(6), we clarified that each overpayment
determination and its appeal status is separate and distinct from other
debts owed by the same provider or supplier. Therefore, we make
explicit that if an overpayment determination is appealed and
recoupment stopped, this would not preclude the Medicare contractor
from recouping other overpayments owed by the provider or supplier.
In paragraph (d)(7), we stated that amounts properly recouped
before the imposition of the recoupment limitation, at either or both
the first and second levels of appeal, may be retained until and unless
there is an administrative or judicial reversal of the overpayment
determination.
In paragraph (d)(8), we stated that if an overpayment determination
is reversed through the administrative or judicial process, appropriate
adjustments in the debt and the amount of interest charged would be
made to give effect to these decisions.
In paragraph (d)(9), we made explicit that interest is payable on
overpayments, subject to the recoupment limitation, in accordance with
the provisions of Sec. 405.378.
In paragraph (e), we stated the specific rules for initiating or
resuming recoupment after the redetermination decision. The necessary
conditions are that the debt (remaining unpaid principal balance and
interest) has not been liquidated and the substantive and procedural
rebuttal requirements have been satisfied. We proposed that recoupment
can resume: (1) Immediately upon receipt of a request to withdraw the
redetermination request; (2) on the 30th calendar day after the date of
the notice of redetermination affirming the overpayment determination
in whole; or (3) on the 30th calendar day after a written notice to the
provider or supplier of the revised overpayment amount if the
redetermination results in an affirmation in part. We proposed in
paragraph (e)(2), that recoupment would be stopped again upon receipt
of a timely and valid request for a reconsideration by the QIC.
In paragraph (f), we set forth the specific rules for initiating or
resuming recoupment after final action by the QIC. It also defines what
constitutes final action by a QIC for purposes of this section. As is
the case when recoupment is resumed after the redetermination decision,
the conditions necessary for resumption are that the debt (remaining
unpaid principal balance and interest) has not been liquidated and the
substantive and procedural rebuttal requirements have been satisfied.
Under the statute, once a provider or supplier has sought a
reconsideration by the QIC, we may not take any action to recoup the
overpayment until the date the decision on the reconsideration has been
rendered. We believe it is consistent with this provision to interpret
``the date the decision on the reconsideration is rendered'' as the
date on which the QIC issues its final decision, dismissal order, or
notice with respect to escalation.
There are three possible actions that a QIC may take with respect
to a request for reconsideration. First, it may complete its review and
issue a reconsideration. Second, in appropriate circumstances, it may
dismiss the request for reconsideration. Third, if the QIC is unable to
complete its reconsideration within the mandated 60 day time frame, it
may issue a notice to the parties that it will not be able to complete
its reconsideration in the allotted time and advise them of their right
to escalate their appeal to the ALJ level. The parties may then notify
the QIC of their intent to escalate the appeal. Following the receipt
of this notice, the QIC must either issue its reconsideration within 5
days or issue a notice acknowledging the escalation
[[Page 47464]]
request and forward the case file to the ALJ hearing office.
We proposed that the earliest to occur of these three actions (a
reconsideration, a dismissal, or the written notification to the
parties that the reconsideration has been escalated) or the receipt of
a withdrawal request from the provider or supplier would constitute the
final QIC action that would permit the initiation, or resumption, of
the recoupment of an overpayment. The provider or supplier who elects
to escalate the appeal from the QIC to the ALJ would thereby lose the
benefit of the limitation on recoupment (recoupment could begin).
However, we do not view this as a disadvantage to the provider or
supplier who retains the ability to seek escalation or not to seek
escalation. We also clarified that where the final action is the notice
of the reconsideration, in order to institute or resume recoupment, the
reconsideration decision must affirm the overpayment determination in
whole or in part.
In paragraph (g), we addressed a series of specific rules and
situations on how recouped funds are to be applied. Funds recouped
before receipt of a timely and valid redetermination request may be
retained and applied first to accrued interest and then to the
principal balance. If the overpayment in question is reversed at the
first level of appeal, consistent with current policies, the amount
held may be applied to any other debt owed by the provider or supplier;
any excess would then be released to the provider or supplier.
In the case of a partial reversal at the redetermination level in
which the decision reduces the debt below the amount already recouped,
the same policies would be followed with respect to the application of
the recouped funds. In the case of an affirmation where the provider or
supplier appeals to the next level, the Medicare contractor would
retain the monies and apply them first to interest and then to the
principal balance pending final action by the QIC on the
reconsideration request.
If funds are properly recouped between a redetermination decision
and a provider's subsequent request for a reconsideration, these would
be retained and applied first to interest, then to principal pending
final action by the QIC. If the final QIC action is a dismissal,
receipt of a withdrawal, notice of escalation, or a reconsideration
decision affirming the overpayment in whole, funds recouped are applied
to interest, then to principal; recoupment may be resumed as necessary
to liquidate the debt. If the QIC reconsideration decision is a full
reversal, the amount recouped may be applied to any other debt
(including interest) owed by the provider or supplier before any excess
is released. If the reconsideration decision is a partial reversal and
reduces the debt below the amount already recouped, the same policies
would be followed with respect to the application of the recouped
funds.
In paragraph (h), we specified how we would insulate a provider or
supplier, invoking the limitation on recoupment under this section,
from the operation of Sec. 401.607(c)(2)(iv). This latter rule
provides that missing one payment under a 6-month extended repayment
plan granted under the authority of Sec. 401.607(c)(2) constitutes a
default allowing CMS to accelerate the debt.
All comments and CMS's responses related to Sec. 405.379 are
discussed below:
Comment: Two commenters stated that in the proposed rule CMS
explained that it would not recoup until after the requirement to
afford the provider or supplier an opportunity for rebuttal was
satisfied. In addition, the commenters asked if the rebuttal process
conflicts with the proposed provisions.
Response: The rebuttal process is a separate and independent right
that is not affected by this regulation, and occurs independently of
the appeals process set forth in part 405 subpart I. The statement in
the proposed regulation regarding the rebuttal process was simply an
acknowledgement that this process remains available to providers and
suppliers. Sections 405.373 through 405.375 explain the process by
which CMS gives notice of an overpayment and offers an opportunity for
rebuttal before it takes an action to offset or recoup that
overpayment. The provider may submit a rebuttal statement within 15
days of the notice. The Medicare contractor has 15 days to review the
statement and determine whether to proceed with the recoupment or not
to proceed, based on the rebuttal statement. In contrast, the
limitation on recoupment provision does not afford the contractor any
discretion in proceeding or stopping recoupment of an overpayment. If a
valid request for a first or second level appeal is filed, the
contractor must stop recoupment. As a practical matter, providers who
want to ensure that CMS stops recoupment will avail themselves of the
limitation on recoupment process through a timely and valid appeal
rather than the rebuttal process.
Comment: Several commenters recommended that CMS provide the full
120-day filing period for a redetermination and the 180-day period for
a reconsideration before starting recoupment of the overpayment. The
commenters indicated that the proposed rule forces providers to choose
either to initiate a timely appeal to stop recoupment, or take full
advantage of the timeframe for filing an appeal. In addition, the
commenters stated that recouping before the filing periods have
concluded was not in compliance with the statute.
Response: The comment that recoupment should be delayed 120 days
after the receipt of an overpayment determination or 180 days after the
notice of a redetermination is inconsistent with the applicable
statute. In order to trigger the statutory limitation on recoupment,
the provider must seek a reconsideration. The statute is clear that
recoupment is either stopped, or may not begin, when a valid request
for a reconsideration is filed. However, the statute is silent with
regard to actions CMS may take after an initial demand is issued and
before a request for reconsideration is filed. CMS has a fiduciary
responsibility to timely and aggressively collect Medicare debt or
refer the debt to Treasury for collection as mandated by the Debt
Collection Improvement Act. Unless a provider or supplier purposely
avails themselves of the limitation on recoupment, CMS has a statutory
obligation to collect these outstanding debts. Based on the statutory
language CMS could recoup during the period the provider is actively
pursuing a first level of appeal (redetermination). This approach would
reduce the complexity of implementing this new statutory provision.
Also, it would shorten the period of deferred recoupment under the Act,
thereby minimizing risk to the Medicare Trust Fund. However, as we
noted earlier, this approach would result in many instances where CMS
would have recouped the overpayment before the provider could request a
reconsideration and thereby invoke the limitation on recoupment. We
suggested in our September 2006 proposed rule that this view, while
permissible, would unfairly impact many providers and suppliers. Using
our discretionary rulemaking authority, CMS is also limiting recoupment
when the provider requests a redetermination (that is, the first level
of appeal). Based on this comment, CMS is revising Sec. 405.379(a) to
make clear that we are implementing the statutory requirement to limit
recoupment during reconsideration, as well as limiting recoupment
during redetermination, the first level of appeal.
[[Page 47465]]
In both cases, the provider or supplier must take some decided
affirmative action, (that is, requesting a redetermination or a
reconsideration). Moreover, to wait until the expiration of the appeals
filing periods would adversely impact providers and suppliers who do
not wish to appeal, because they would be subject to several months of
interest. To avoid this, these providers and suppliers would have to
take some affirmative action to indicate that they do not want to
appeal which unfairly places a burden on these providers and suppliers
who want to pay their overpayments and do not want to appeal.
Therefore, CMS has determined that the timeframes established for
recoupment are both reasonable for allowing providers sufficient time
to initiate a timely appeal and are also consistent with our fiduciary
responsibility for collecting Medicare debt. Based on the foregoing
discussion, CMS is in compliance with the statute. We are not adopting
the commenters' suggestion.
Comment: One commenter suggested that if CMS does not halt
recoupment until the first and second level appeals periods expire, CMS
should require a provider or supplier to inform the contractor of its
intent to initiate an appeal. In addition, the commenter indicated that
providers expressing their intent to appeal would not be subject to
recoupment.
Response: We believe the language of the statute that the provider
must ``seek'' a reconsideration clearly intends for a process that
actively engages both the provider or supplier and CMS. An intent to
file has no time limits for a provider or supplier and has the effect
of staying any collections indefinitely. Further, simply signaling an
intent to file has no binding effect on a party, and does not
necessarily mean that a provider or supplier will ultimately seek any
appeal. Thus, we are not adopting the commenter's suggestion.
Comment: One commenter suggested that CMS should ensure that
language in the overpayment notices clearly advise the provider or
supplier that if it files a request for a redetermination by a
specified date that recoupment would be stayed and that these notices
should also specify the time period in which recoupment would be
stayed. Additionally, language in the notices should state that
interest continues to accrue from the date of the original overpayment
determination.
Response: We agree with the commenter that language regarding when
recoupment starts and stops and that interest continues to accrue from
the date of the initial overpayment determination should be included in
the overpayment determination letters. However, we view those
procedures as part of the specific manual instructions to be issued to
Medicare contractors. Manual instructions contain model letters and
instructions to Medicare contractors on the preparation and content of
demand letters. Thus, we do not believe it is necessary to revise the
rule to include the commenter's suggestion.
Comment: Two commenters stated that the limitation of recoupment
should apply to those Part B debts determined on or after October 29,
2003 and Part A debts determined on or after November 29, 2003. The
commenters further explained that this means that CMS could begin
recoupment on the 16th day or the 41st day after the notice of
overpayment is issued and before a redetermination is filed depending
on whether the notice came from the Medicare intermediary or the
Medicare carrier. The commenter expressed that this is disparate
treatment and asked CMS to explain the rationale for the policy.
Response: Medicare contractors' internal shared systems largely
determined when those contractors instituted recoupment. Recoupment
began approximately 16 days after the notice of overpayment, if the
notice was issued by a Medicare intermediary, and 41 days after the
notice of overpayment if the notice was issued by a Medicare carrier
unless in both cases, the contractor received information from the
provider about how it intended to repay the overpayment.
The limitation on recoupment provision required us to consider more
consistent system rules for when recoupment could begin or resume. For
consistent application of the limitation on recoupment and before a
request for a redetermination is received, we modified our Part A
systems to be consistent with our Part B systems and both will begin
recoupment at day 41 following the notice of overpayment for those
overpayments subject to the limitation on recoupment. This aligns
itself with interest regulations at Sec. 405.378, that states interest
is not due if the debt is liquidated within 30 days. If a provider or
supplier pays the overpayment or requests a redetermination by the 30th
day following the notice of overpayment, Medicare contractors have an
additional 10 days to ensure posting of payments or receipt of a valid
request for a redetermination. Medicare overpayment demand letters will
include clear language about when recoupment can begin. We are also
amending the regulation at Sec. 405.379(d)(1) to reflect the 41 day
system modification.
Comment: Two commenters stated that providers who fail to introduce
all relevant evidence before the QIC are precluded from presenting new
evidence to an ALJ, absent good cause. Thus, an appellant may need more
than 30 days to prepare a request for reconsideration that contains all
relevant evidence.
Response: The requirement in Sec. 405.966 for the early
presentation of evidence by providers and suppliers is based on the
statutory requirement contained in section 1869(b)(3) of the Act, as
added by section 933(a) of the MMA, which states that a provider or
supplier may not, in any subsequent level of appeal, introduce evidence
that was not presented at the reconsideration conducted by the QIC,
unless there is good cause that precluded the introduction of that
evidence at or before the reconsideration. While it is in the interest
of both the Medicare provider and supplier community and CMS that
appellants have the opportunity to submit a complete appeal request
with all relevant evidence, we believe it is necessary to strike a
balance between the need to timely recoup Medicare overpayments and the
need to give providers and suppliers a reasonable time to prepare an
appeal.
Therefore, after carefully considering all comments received, we
have decided to extend the period before contractors may initiate
recoupment following a redetermination to the 60th calendar day rather
than the 30th calendar day. Providers or suppliers may take the full
180 days to appeal. However, to avoid recoupment starting or resuming
following a redetermination, a valid request for reconsideration must
be filed with the appropriate QIC by the 60th day following the date of
the redetermination. This change is reflected at Sec.
405.379(e)(1)(ii) and (e)(1)(iii).
Comment: One commenter indicated that there is no provision to
notify the provider or supplier that recoupment has stopped once the
provider or supplier submits a request for reconsideration to the QIC.
The commenter recommended that the QIC issue to the provider or
supplier a written notification that recoupment efforts have ceased
once they file a request for reconsideration to the QIC.
Response: As part of the QICs' current standard operating
procedures, QICs send an acknowledgement notice within 14 days of
receipt of a request for reconsideration to the provider or
[[Page 47466]]
supplier. However, the Medicare contractor, not the QIC, is responsible
for all overpayment recoupment activities, including the cessation of
recoupments. The provider or supplier is notified by the Medicare
contractor via a payment remittance advice that claims are continuing
to be paid and are not being recouped or offset. We will consider
whether any additional notice is necessary and, if so, we will include
additional guidance in our manual instructions rather than through a
regulatory issuance.
Comment: One commenter stated that recoupment should cease upon a
request for reconsideration and should not be initiated or resumed
until after an ALJ or judicial decision was rendered.
Response: When a valid request for a reconsideration is received,
recoupment ceases. Section 1893(f)(2) of the Act only requires CMS to
stop recoupment when a valid request for reconsideration is received.
It does not limit CMS' authority to resume recoupment following the
reconsideration decision issued by the QIC. Thus, as stated in Sec.
405.379(d)(4) and (d)(5), recoupment can resume following a decision by
the QIC, whether or not the QIC decision is further appealed.
Therefore, we are not adopting the commenter's suggestion, as we
believe the suggestion is contrary to section 1893(f)(2) of the Act.
However, we are making technical changes to Sec. 405.379(d), (f), and
(g) of this section to remove the word ``final'' preceding ``action.''
We believe that use of the word ``final'' in these provisions is
confusing because ``final action'' could be incorrectly construed as
meaning a final administrative action of the Secretary which can be
appealed directly to Federal district court. The intent of this
regulatory provision is to explain the types of actions by the QIC that
are binding on the parties and would enable recoupment to be initiated
or resumed. As was stated in the proposed rule and this final rule,
these actions are a decision, dismissal order, or notice that it cannot
complete its reconsideration in a timely manner. Because the underlying
QIC actions that will allow CMS to initiate or resume recoupment have
remained unchanged, we are making only a non-substantive, technical
change to clarify the ambiguity discussed above by deleting the word
``final.''
We also note one further technical change we are making to Sec.
405.379(c). In this paragraph, we revised incorrect cross-references to
Sec. 405.940 and Sec. 405.958, and cross references to Sec. 405.974
through Sec. 405.978. Specifically, we revised the regulatory text of
(c)(1) to refer to Sec. 405.940 through Sec. 405.958 and we revised
the regulatory text of (c)(2) to refer to Sec. 405.960 through Sec.
405.978.
Comment: One commenter suggested that a provider's choice to
escalate the appeal to the ALJ because of a delay at the QIC should
toll recoupment.
Response: Notice by the QIC that it is unable to meet the mandated
response timeframe for issuing a decision immediately gives the
provider or supplier control to request an ALJ appeal. Practically,
this result is no different than a decision issued by the QIC that
affirms the prior decision and the provider or supplier requests an
appeal. In both instances the appeal has passed out of the
reconsideration level and the statutory requirement to limit recoupment
no longer applies. We note that we are not adopting the commenter's
suggestion.
Comment: One commenter stated that CMS has not addressed how
extended repayment plans work in conjunction with the limitation on
recoupment. The commenter stated that a provider might want to repay
the overpayment by seeking an extended repayment plan at some point in
the appeals process. For example, the provider might not have a
favorable decision at the first level of appeal and chooses not to
appeal to the second level. Also, the commenter recommended that CMS
revise the rule to include language that recoupment may not occur for
30 days after the redetermination and/or reconsideration to give the
provider time to request and CMS to review and approve an extended
repayment plan.
Response: In paragraph (h) of Sec. 405.379, we state that a
provider or supplier who timely files a redetermination of an
overpayment but such overpayment is under an extended repayment plan, a
missed payment under the plan does not put the provider in default of
the extended repayment plan. This permits the provider or supplier to
invoke the limitation on recoupment provisions to stop recoupment when
a valid request for redetermination is filed. We are revising paragraph
(h) of Sec. 405.379 to permit the provider or supplier to similarly
invoke the limitation on recoupment if a timely and valid request for
reconsideration is received. Additionally, in this final rule, we do
not prohibit the provider or supplier from requesting a repayment plan
at any time or at any stage of an appeal. Payments made by a provider
or supplier who requested to repay in installments under an extended
repayment plan are not recoupments for purposes of this rule. If a
provider or supplier does