[Code of Federal Regulations]
[Title 42, Volume 3]
[Revised as of October 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR447.30]

[Page 294-296]
 
                         TITLE 42--PUBLIC HEALTH
 
  CHAPTER IV--CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF 
                  HEALTH AND HUMAN SERVICES (CONTINUED)
 
PART 447_PAYMENTS FOR SERVICES--Table of Contents
 
                 Subpart A_Payments: General Provisions
 
Sec. 447.30  Withholding the Federal share of payments to Medicaid 
providers to recover Medicare overpayments.

    (a) Basis and purpose. This section implements section 1914 of the 
Act, which provides for withholding the Federal share of Medicaid 
payments to

[[Page 295]]

a provider if the provider has not arranged to repay Medicare 
overpayments or has failed to provide information to determine the 
amount of the overpayments. The intent of the statute and regulations is 
to facilitate the recovery of Medicare overpayments. The provision 
enables recovery of overpayments when institutions have reduced 
participation in Medicare or when physicians and suppliers have 
submitted few or no claims under Medicare, thus not receiving enough in 
Medicare reimbursement to permit offset of the overpayment.
    (b) When withholding occurs. The Federal share of Medicaid payments 
may be withheld from any provider specified in paragraph (c) of this 
section to recover Medicare overpayments that CMS has been unable to 
collect if the provider participates in Medicaid and--
    (1) The provider has not made arrangements satisfactory to CMS to 
repay the Medicare overpayment; or
    (2) CMS has been unable to collect information from the provider to 
determine the existence or amount of Medicare overpayment.
    (c) The Federal share of Medicaid payments may be withheld with 
respect to the following providers:
    (1) An institutional provider that has or previously had in effect a 
Medicare provider agreement under section 1866 of the Act; and
    (2) A Medicaid provider who has previously accepted Medicare payment 
on the basis of an assignment under section 1842(b)(3)(B)(ii) of the 
Act; and during the 12 month period preceding the quarter in which the 
Federal share is to be withheld for a Medicare overpayment, submitted no 
claims under Medicare or submitted claims which total less than the 
amount of overpayment.
    (d) Order to reduce State payment.
    (1) CMS may, at its discretion, issue an order to the Medicaid 
agency of any State that is using the provider's services, to reduce its 
payment to the provider by the amount specified in paragraph (f) of this 
section.
    (2) The order to reduce payment to the provider will remain in 
effect until--
    (i) The Medicaid agency determines that the overpayment has been 
completely recovered; or
    (ii) CMS terminates the order.
    (3) CMS may withhold FFP from any State that does not comply with 
the order specified in paragraph (d)(1) of this section to reduce 
payment to the provider and claims FFP for the expenditure on its 
quarterly expenditure report.
    (e) Notice of withholding. (1) Before the Federal share of payments 
may be withheld under this section, CMS will notify the provider and the 
Medicaid agency of each State that CMS believes may use the overpaid 
provider's services under Medicaid.
    (2) The notice will include the instruction to reduce State 
payments, as provided under paragraph (d) of this section.
    (3) CMS will send the notice referred to in paragraph (e)(1) by 
certified mail, return receipt requested.
    (4) Each Medicaid agency must identify the amount of payment due the 
provider under Medicaid and give that information to CMS in the next 
quarterly expenditure report.
    (5) The Medicaid agency may appeal any disallowance of FFP resulting 
from the withholding decision to the Grant Appeals Board, in accordance 
with 45 CFR part 16.
    (f) Amount to be withheld. CMS may require the Medicaid agency to 
reduce the Federal share of its payment to the provider by the lesser of 
the following amounts.
    (1) The Federal matching share of payments to the provider, or
    (2) The total Medicare overpayment to the provider.
    (g) Effective date of withholding. Withholding of payment will 
become effective no less than 60 days after the day on which the agency 
receives notice of withholding.
    (h) Duration of withholding. No Federal funds are available in 
expenditures for services that are furnished by a provider specified in 
paragraph (c) of this section from the date on which the withholding 
becomes effective until the termination of withholding under paragraph 
(i) of this section.
    (i) Termination of withholding.

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    (1) CMS will terminate the order to reduce State payment if it 
determines that any of the following has occurred:
    (i) The Medicare overpayment is completely recovered:
    (ii) The institution or person makes an agreement satisfactory to 
CMS to repay the overpayment; or
    (iii) CMS determines that there is no overpayment based on newly 
acquired evidence or a subsequent audit.
    (2) CMS will notify each State that previously received a notice 
ordering the withholding that the withholding has been terminated.
    (j) Procedures for restoring excess withholding. If an amount 
ultimately determined to be in excess of the Medicare overpayment is 
withheld, CMS will restore any excess funds withheld.
    (k) Recovery of funds from Medicaid agency. A provider is not 
entitled to recover from the Medicaid agency the amount of payment 
withheld by the agency in accordance with a CMS order issued under 
paragraph (d) of this section.

[50 FR 19688, May 10, 1985; 50 FR 23307, June 3, 1985]