[Federal Register: September 22, 2006 (Volume 71, Number 184)]
[Proposed Rules]
[Page 55404-55415]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22se06-27]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 405
[CMS-6025-P]
RIN 0938-AN42
Medicare Program; Limitation on Recoupment of Provider and
Supplier Overpayments
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would implement a new provision of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
that prohibits recouping Medicare overpayments when an appeal is
received from a provider or supplier until a decision is rendered by a
Qualified Independent Contractor (QIC). The QIC is the second level of
appeal in the Medicare claims appeal process. 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 proposed 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: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on November 21,
2006.
ADDRESSES: In commenting, please refer to file code CMS-6025-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of three ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on specific
issues
[[Page 55405]]
in this regulation to http://www.cms.hhs.gov/regulations/ecomments.
(Attachments should be in Microsoft Word, WordPerfect, or Excel;
however, we prefer Microsoft Word.)
2. By mail. You may mail written comments (one original and two
copies) to the following address only: Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Attention: CMS-6025-
P, P.O. Box 8017, Baltimore, MD 21244.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses. If you
intend to deliver your comments to the Baltimore address, please call
telephone number (410) 786-9994 in advance to schedule your arrival
with one of our staff members. Room 445-G, Hubert H. Humphrey Building,
200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security
Boulevard, Baltimore, MD 21244-1850.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
FOR FURTHER INFORMATION CONTACT: Nancy Braymer, (410) 786-4323.
SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome comments from the public on all
issues set forth in this rule to assist us in fully considering issues
and developing policies. You can assist us by referencing the file code
CMS-6025-P and the specific ``issue identifier'' that precedes the
section on which you choose to comment.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. CMS posts all electronic
comments received before the close of the comment period on its public
Web site as soon as possible after they have been received. Hard copy
comments received timely will be available for public inspection as
they are received, generally beginning approximately 3 weeks after
publication of a document, at the headquarters of the Centers for
Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore,
Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4
p.m. To schedule an appointment to view public comments, phone 1-800-
743-3951.
I. Background
[If you choose to comment on issues in this section, please
include the caption ``Background'' at the beginning of your
comments.]
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 proposed rule would implement the second of these
provisions--the limitation on recoupment.
The statute requires CMS 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 Qualified
Independent Contractor (QIC). Since these changes to recoupment and
interest are tied to the Medicare fee-for-service claims appeal process
and structure, we will start with a general discussion of the appeal
process. Then we will explain the changes to CMS's overpayment
recoupment policy, and how CMS will now pay interest on reversals of
overpayment determinations at certain levels of the appeal process.
Medicare Claims Appeals Process
The Medicare, Medicaid and SCHIP Benefits and Improvement and
Protection Act of 2000 (BIPA) (Pub. L. 106-554) amended section 1869 of
the Act to require a major restructuring of the Medicare claims appeals
process. CMS incorporated these changes in federal regulations found at
42 CFR Part 405, Subpart I. The appeals process was changed to make one
unified structure for both Parts A and B of Medicare. Further, QICs
were created as new independent review entities that conduct second
level appeals after Medicare contractors conduct a redetermination of
initial determinations. An overpayment determination is considered a
revised initial determination.
The chart below outlines the levels of appeal and decision-making
time frames under this restructured process:
BILLING CODE 4120-01-P
[[Page 55406]]
[GRAPHIC] [TIFF OMITTED] TP22SE06.009
BILLING CODE 4120-01-C
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. The new MMA
[[Page 55407]]
provision and this implementing rule do not alter the rebuttal process.
An appeal is an examination of the validity of the overpayment.
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 were
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) was enacted, our recoupment process was
changed. The relevant statutory text is as follows:
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.
To the extent that the statutory language affords any discretion in
implementation, we have exercised that flexibility to strike a balance
among the following three objectives:
(1) To give effect to Congressional intent that providers and
suppliers be given expedited access to an objective party
(independent from the originating contractor) to review the
overpayment determination, prior to recouping, in the interest of
fairness;
(2) To carry out our fiduciary responsibility to recover
erroneous payments to providers or suppliers; to allow them to
retain program funds to which they are not entitled under the
Medicare statute would be unfair to the intended beneficiaries of
Medicare and to the taxpayers who contribute to the trust funds; and
(3) To ensure that providers' and suppliers' procedural due
process rights to challenge an overpayment determination through the
appeal process are not adversely affected.
Under the statutory language of section 1893(f)(2), if a provider
or supplier seeks a reconsideration by a QIC on an overpayment
determination, CMS and its Medicare contractors may not recoup the
overpayment until the date the decision on the reconsideration has been
rendered. Yet before reaching the QIC, a provider or supplier must
initially go through the first level of appeal by requesting a
redetermination by the Medicare contractor.
Based on the statutory language, we could recoup during the period
in which the provider is actively pursuing an appeal at this first
level. This approach would reduce the administrative 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 funds. However, this approach would mean, in many
instances, we would have recouped the overpayment before a provider
could request a reconsideration and thereby invoke the benefit of the
limitation on recoupment. Although legally permissible, we believe this
is inconsistent with Congressional intent.
Instead, we propose in this rule to cease recoupment when a valid
first level appeal is received. If the provider loses at the first
level, we would then proceed to recoup 30 days after giving notice to
the provider unless the provider appeals to the QIC in the interim. A
provider who acts in a timely fashion can preclude any recoupment until
the QIC decision is rendered as contemplated under the MMA.
Assessment of Interest
In addition to tying the recoupment process to the appeals 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. An ``underpayment'' would usually result when we had
recovered, through recoupment or otherwise, an overpayment; the
decision was reversed at some point in the appeal process; and after
appropriate adjustments, we owed the balance to the provider or
supplier. Interest accrues from the date of the ``final determination''
and is owed if the underpayment is not paid within 30 days. Following
an appeal decision favorable to a provider, the Medicare contractor
must effectuate the decision and make a written determination of the
amount Medicare owes. This is considered a new final determination, and
interest accrues from that date.
The new interest provision found in section 1893(f)(2)(B) of the
Act amends 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). The statutory text is as follows:
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.
This language did not specifically amend sections 1815(d) and
1833(j) of the Act. Nor did the MMA conference report reference these
sections. The statute and the conference report are both silent on the
relationship between paying or collecting interest (a) based on the
final determination concept embodied in sections 1815(d) and 1833(j) of
the Act; and (b) 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.
There has been no change in the obligation of the provider or
supplier to pay interest if the overpayment determination is affirmed
at any level of administrative or judicial appeal. Interest continues
to accrue from the final determination in accordance with sections
1815(d) and 1833(j) of the Act. 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, the first final determination is the date of
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, there has been no change in 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. At these
levels of appeal, interest would continue to be payable by Medicare if
the underpayment is not paid within 30 days 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.
We determine the rate of interest in accordance with 42 CFR 405.378
by
[[Page 55408]]
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. The current interest rate for Medicare
overpayments and underpayments is 12.625 percent (the private consumer
rate). Since February, 2001 to the present time, it has ranged from a
low of 10.75 percent to a high of 14.125 percent. By regulation 42 CFR
411.24(m)(2), interest is calculated on Medicare Secondary Payer (MSP)
debts in the same manner as for Medicare overpayments and
underpayments, and 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.
Suspension
We note that this new MMA provision does not affect how CMS
recovers overpayments from providers or suppliers that have been placed
on payment suspension. Under our authority at 42 CFR 405.371, CMS, an
intermediary, or carrier 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 pursuant to 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. In addition, we do not interpret the Act to
require that we return the suspended payments to a provider or supplier
once an overpayment is determined. Section 1893(f)(2) of the Act
prevents the Secretary from taking any ``action * * * to recoup the
overpayment.'' Yet, the disposition of suspended funds as explained in
42 CFR 405.372(e) is not a ``recoupment'' as that term is defined in
Sec. 405.370. When the Congress chose to limit CMS's ability to recoup
funds to satisfy an overpayment, it specifically used the word
``recoup'' which has been a long-standing defined term by CMS. There is
no evidence that the Congress intended to broaden or alter CMS's
definition of recoupment to also apply to 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.
If the suspended payments are insufficient to fully eliminate any
overpayment, and the provider or supplier meets the requirements of
this proposed rule, the limitation on recoupment provision under
section 1893(f)(2) of the Act would 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. Providers and suppliers may continue to appeal the full
amount of an overpayment determination at the conclusion of a
suspension as they could prior to the enactment of the MMA.
II. Provisions of the Proposed Regulations
[If you choose to comment on issues in this section, please
include the caption ``Provisions'' at the beginning of your
comments.]
A. Proposed Change to 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. We propose to revise the authority citation to
explicitly add section 1893 of the Act which was amended by section 935
of the MMA to add the limitation on recoupment as well as other
provisions addressing the recovery of overpayments.
B. Proposed Change to Sec. 405.370 Definitions
Section 405.370 defines key terms that apply to subpart C of part
405. We are proposing to revise Sec. 405.378 and add a new Sec.
405.379 to implement the statutory limitation on recoupment. We propose
to add definitions for terms used in Sec. 405.378 and the new Sec.
405.379. The limitation on recoupment is tied to the Medicare claims
appeals process and structure (the regulations for which appear in 42
CFR Part 405). We propose that selected terms used in the proposed
revisions to Sec. 405.378 and the new Sec. 405.379 be given the same
meaning as in the appeals context. Therefore, these terms are defined
by reference to the definitions set forth in Sec. 405.902.
C. Proposed Change to 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. Paragraph (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. We propose to revise the introductory text of
paragraph (e) to explicitly refer to the new Sec. 405.379,
implementing the statutory limitation on recoupment, as a separate
basis to stop recoupments that have been put into effect.
D. Proposed Revisions to 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 whether we pay interest on an underpayment or collect
interest on an overpayment. Paragraph (c) of this section defines what
constitutes a final determination both for overpayments and
underpayments arising from a cost report determination as well as those
that are claims based. Paragraph (d) establishes 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 (see 42 CFR 411.24(m) which references Sec.
405.378(d)).
We propose to amend 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. The proposed revisions
in Sec. 405.378 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 continues 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
[[Page 55409]]
methodologies depending upon the appeal level at which the reversal
occurs. If the 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 if
the underpayment is not paid within 30 days of the final determination.
It is only where the reversal occurs at the ALJ level or subsequent
levels of 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.
We propose to amend Sec. 405.378 paragraph (a) by adding the
section reference 1893(f)(2)(B) as one of the enumerated provisions of
the Act that this regulatory section is designed to implement.
We propose 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.
We propose 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 removed 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, these levels of appeal are now
discussed in proposed paragraph (j).
Second, we propose 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 is
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 propose 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
is 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 the contractor
effectuates the QIC reconsideration decision and make a written
determination 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 changes to the final determination definitions are intended
to work in conjunction with the limitation on recoupment requirements
in the new proposed 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, yet 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. Therefore, they receive a benefit during
the first two levels of appeal by retaining their funds, but by doing
so, they run the risk that they will owe interest on the unpaid
overpayment amounts.
We propose to amend 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 propose to redesignate
paragraph (h) as paragraph (i). We propose to redesignate paragraph (i)
as paragraph (h). The text of these redesignated paragraphs is not
changed.
We propose to add a new paragraph (j). This paragraph would
establish the new 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
provides ``[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.'' This new paragraph (j) would 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.
Proposed paragraph (j)(1) states 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
provided in the existing and unchanged paragraph (d) of this section,
is the higher of the private consumer rate or the current value of
funds rate.
The interest rate established in accordance with paragraph (d)
changes periodically. The proposed paragraph (j)(2) describes 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.
The proposed paragraph (j)(3) explains how interest will be
calculated. We propose that interest will be paid on the total
principal amount recouped. We propose to pay simple rather than
compound interest, and we will not pay interest on interest; this
mirrors the manner in which we assess interest against providers.
Monies we recouped and applied to interest would 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
propose to 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 the 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
[[Page 55410]]
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 propose 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 propose 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 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 of this new paragraph (j).
E. Proposed New Sec. 405.379 Limitation on Recoupment of Provider and
Supplier Overpayments
We propose to add a new section to subpart C of Part 405 to
implement the statutory limitation on recoupment under section
1893(f)(2) of the Act.
Proposed paragraph (a) cites section 1893(f)(2) of the Act as the
statutory basis for this section and briefly summarizes the underlying
purpose. This is to impose a limit on our recoupment of Medicare
overpayments if a provider of services or supplier appeals until a
decision by a QIC is made.
Proposed paragraph (b) delineates those types of overpayments that
are expressly subject to the recoupment limitation. We propose that the
limitation on recoupment applies to (1) overpayments that may be
appealed by the provider or supplier under the Medicare claims appeal
process; and (2) post-pay denial of claims for benefits under Medicare
Part A and Part B for which a demand for payment has been made. We
propose that this provision also apply to a small subset of Medicare
Secondary Payer (MSP) recoveries; these would be 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) shall
apply to ``actions'' taken after the date of enactment of the MMA; that
is, ``actions'' taken after December 8, 2003. For purposes of
delineating those provider and supplier overpayments subject to this
provision and those that are not, we interpret ``actions'' to refer to
those instances where the initial recoupment occurred or will occur on
or after December 9, 2003. For ease of administration and to establish
a clear rule, we are defining the initial recoupment to be the date
that the Medicare contactor could have instituted recoupment in
compliance with established Medicare policies whether or not a
recoupment occurred in fact. Therefore, for Part A overpayments,
including a MSP recovery based on the provider's failure to file a
proper claim for Part A benefits, the limitation applies to debts
determined on or after November 24, 2003. For Part B overpayments,
including a MSP recovery based on the supplier's failure to file a
proper claim for Part B benefits, the limitation applies to debts
determined on or after October 29, 2003. In addition, this section
applies to that small group of MSP recoveries in which 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.
For purposes of clarity, we propose that paragraph (b) also
identify categories of overpayments to which the limitation does not
apply, although this is not framed as 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.
Proposed paragraph (c) specifies how two key actions that trigger
the limitation on recoupment are to be construed. The limitation on
recoupment is tied to the Medicare claims appeals process. 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 must be determined in
accordance with established Medicare appeal regulations and
implementing policies. Therefore, in this paragraph, we make the
interplay between recoupment and appeals explicit by referencing the
requirements for a redetermination request as those contained in Sec.
405.940 through Sec. 405.958 and the requirements for a
reconsideration request as those contained in Sec. 405.974 through
Sec. 405.978.
Proposed paragraph (d) lays out 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. (The redetermination is the first level
of appeal, and a provider or supplier has 120 days to file a request
for a redetermination of the overpayment determination.) This means we
can recoup during the period when a provider's or supplier's right to
request a redetermination has yet to expire. This places the obligation
on the provider or supplier who wishes to capitalize on the benefit
afforded by the recoupment limitation to act on a timely basis to
request a redetermination.
Under BIPA, 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
propose 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.
A provider or supplier that wishes to appeal an adverse
redetermination decision (an affirmation or partial affirmation of the
overpayment determination) has 180 calendar days to file a request from
the date of receipt of the notice of the redetermination. Once the 30
day notice period is over and in the absence of the receipt of a valid
request for a reconsideration, we propose to initiate or resume
recoupment. As with the first level of appeal, this approach places the
onus on the provider or supplier who wishes to take advantage of the
benefit offered by the limitation on recoupment to act on a timely
basis in requesting a QIC reconsideration.
We propose in paragraph (d)(3) that the Medicare contractor shall
cease recoupment upon receipt of a timely
[[Page 55411]]
and valid request for a reconsideration. If recoupment has not yet 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 propose in paragraph (d)(4) and (5) is 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).
We also propose in paragraph (d)(6) to clarify 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.
We propose in paragraph (d)(7) to make explicit that amounts
properly recouped prior to 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.
We propose in paragraph (d)(8) that if an overpayment determination
is reversed through the administrative or judicial process, appropriate
adjustments in the debt and the amount of interest charged will be made
to give effect to these decisions.
Proposed paragraph (d)(9) makes explicit that interest is payable
on overpayments, subject to the recoupment limitation, in accordance
with the provisions of Sec. 405.378.
Proposed paragraph (e) states 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. Recoupment can resume: (i)
Immediately upon receipt of a request to withdraw the redetermination
request; (ii) on the 30th calendar day after the date of the notice of
redetermination affirming the overpayment determination in whole; or
(iii) 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 propose in paragraph (e)(2) that
recoupment would be stopped again upon receipt of a timely and valid
request for a reconsideration by the QIC.
Proposed paragraph (f) sets 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 an appropriate balancing of interests and in
keeping with the intent of this provision to interpret ``the date the
decision on the reconsideration is rendered'' as the date on which the
QIC issues its final action with respect to a reconsideration.
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 sixty (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 request and forward the case file to the ALJ hearing office.
We propose that the earliest to occur of these three actions (a
reconsideration, a dismissal, and 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 decision for purposes of ending the prohibition on our
recouping 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. The
proposed language also clarifies 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.
Proposed paragraph (g) addresses through a series of specific rules
and situations how recouped funds are to be applied. Funds recouped
prior to 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.
Proposed paragraph (h) 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
[[Page 55412]]
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.
III. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995.
IV. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
V. Regulatory Impact Statement
[If you choose to comment on issues in this section, please
include the caption ``Impact'' at the beginning of your comments.]
A. Overall Impact
We have examined the impacts of this proposed rule as required by
Executive Order 12866 (September 1993, Regulatory Planning and Review),
the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 (as amended by Executive Order 13258, which
reassigns responsibility of duties) 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 proposed rule to have a substantial financial
impact on beneficiaries, providers, or suppliers. We do anticipate that
Federal costs to implement this proposed rule may be substantial, but
we do not expect them to exceed the $100 million threshold in any 1
year.
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and government agencies.
Most hospitals and most other providers and suppliers are small
entities, either by nonprofit status or by having revenues of $6
million to $29 million in any 1 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 603 (proposed
documents)/604 (Final documents) 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 proposed rule as this would depend in part upon voluntary
actions on the part of the provider or supplier. The purpose of this
proposed 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 proposed
rule to be positive although the extent to which it would benefit any
one provider would depend upon specific facts and circumstances and
voluntary choices made by that provider. The impact on small rural
hospitals is expected to be similarly positive but unpredictable.
Therefore, we are certifying that this proposed rule would not have a
significant impact on a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in expenditure in any 1 year by State,
local, or tribal governments, in the aggregate, or by the private
sector, of $110 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 proposed rule would not have a substantial effect on
State or local governments.
B. Conclusion
For these reasons, we are not preparing analyses for either the RFA
or section 1102(b) of the Act because we have determined that this
proposed 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 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 proposes to amend 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,
[[Page 55413]]
1395l, 1395u, 1395cc, 1395gg, 1395hh, 1395pp, 1395ccc and 1395ddd)
and 31 U.S.C. 3711.
2. Section 405.370 is amended by:
A. Designating the existing text as paragraph (a);
B. Adding a new paragraph (b);
The additions read as follows:
Sec. 405.370 Definitions.
(a) * * *
(b) For purposes of sections 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 Sec.
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 a fiscal intermediary, carrier, and Medicare administrative
contractor.
Party means an individual or entity listed in Sec. 405.906 that
has standing to appeal an initial determination and/or a subsequent
administrative appeal determination.
Qualified Independent Contractor (QIC) means an entity which
contracts with the Secretary in accordance with section 1869 of the Act
to perform reconsiderations under Sec. 405.960 through Sec. 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 Sec. 405.373, paragraph (e) introductory text is revised to
read as follows:
Sec. 405.373 Proceeding for offset or recoupment.
* * * * *
(e) Duration of recoupment or offset. Except as provided in Sec.
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) introductory text;
E. Removing ``or'' from (c)(1)(ii)(B);
F. Revising paragraph (c)(1)(ii)(C);
G. Adding paragraph (c)(1)(ii)(D);
H. Revising paragraph (c)(2);
I. Redesignating existing paragraph (h) as paragraph (i) and
existing paragraph (i) as paragraph (h) respectively;
J. Adding paragraph (j).
Sec. 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) Basic rules. * * *
(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 30-day period
that payment is delayed.
(c) Definition of final determination. (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 is, primarily under part B), one of the following
constitutes a final determination--
* * * * *
(C) A written determination by a Medicare contractor that
effectuates a redetermination which reversed in full or in part an
overpayment determination and the written determination reduces the
amount of the overpayment below the amount that CMS has already
recovered by recoupment or otherwise; or
(D) A written determination by a Medicare contractor that
effectuates a reconsideration by a Qualified Independent Contractor
which reversed in full or in part an overpayment determination and the
written determination reduces the amount of the overpayment below the
amount that CMS has already recovered by recoupment or otherwise.
* * * * *
(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
Sec. 405.379. If an overpayment determination subject to the
limitation on recoupment under Sec. 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
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
[[Page 55414]]
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:
Sec. 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 appeals until a
decision is rendered by a Qualified Independent Contractor (QIC).
(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:
(i) All Medicare Secondary Payer recoveries except those expressly
identified in this paragraph (b)(1)(i)(C) and (D);
(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 Sec. 405.940 and Sec. 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 Sec. 405.974 through Sec. 405.978.
(d) General rules.
(1) Upon receipt of a timely and valid request for a
redetermination 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 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) Following final action by the QIC on the reconsideration, the
contractor may initiate or resume recoupment 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 Sec. 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.
(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 Sec. 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 Sec. 405.373 through Sec. 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 Sec. 405.952(a).
(ii) On the 30th calendar day after the date of the notice of
redetermination issued under Sec. 405.956 if the redetermination
decision is an affirmation in whole of the overpayment determination in
question.
(iii) On the 30th 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 after final action by the QIC
on the reconsideration request.
(1) Recoupment may be initiated or resumed upon final 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 Sec. 405.373 through
Sec. 405.375; and
(ii) The debt (remaining unpaid principal balance and interest) has
not been satisfied in full; and
(iii) If the final 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.
(2) For purposes of this paragraph (f), final 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 Sec. 405.972; or
(ii) The QIC receives a timely and valid request to withdraw the
request
[[Page 55415]]
for the reconsideration in accordance with Sec. 405.972; or
(iii) The QIC transmits written notice of the reconsideration in
accordance with Sec. 405.976; or
(iv) The QIC notifies the parties in writing that the
reconsideration is being escalated to an ALJ in accordance with Sec.
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
final 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
final action by the QIC on the reconsideration request.
(3) If the final 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 first, then to reduce the outstanding
principal balance and recoupment may be resumed as provided under
paragraph (f) of this section.
(4) If the final 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 final 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.
If (1) a provider or supplier has been granted an extended
repayment schedule (ERS) under Sec. 401.607(c); (2) the overpayment
for which the ERS has been granted is one to which this section is
applicable; and (3) a valid and timely request for a redetermination
has been received by the Medicare contractor, then notwithstanding the
language of Sec. 401.607(c)(2)(iv), the provider or supplier will not
be deemed in default if recoupment is not put into effect or stopped in
accordance with this section.
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program)
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: April 15, 2006.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
Approved: June 12, 2006.
Michael O. Leavitt,
Secretary.
Editorial Note: This document was received in the Office of the
Federal Register on September 18, 2006.
[FR Doc. 06-8009 Filed 9-21-06; 8:45 am]
BILLING CODE 4120-01-P