[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: 42CFR447.31]

[Page 296-297]
 
                         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. 447.31  Withholding Medicare payments to recover Medicaid overpayments.

    (a) Basis and purpose. Section 1885 of the Act provides authority 
for CMS to withhold Medicare payments to a Medicaid provider in order to 
recover Medicaid overpayments to the provider. Section 405.377 of this 
chapter sets forth the Medicare rules implementing section 1885, and 
specifies under what circumstances withholding will occur and the 
providers that are subject to withholding. This section establishes the 
procedures that the Medicaid agency must follow when requesting that CMS 
withhold Medicare payments.
    (b) Agency notice to providers. (1) Before the agency requests 
recovery of a Medicaid overpayment through Medicare, the agency must 
send either or both of the following notices, in addition to that 
required under paragraph (b)(2) of this section, to the provider.
    (i) Notice that--
    (A) There has been an overpayment;
    (B) Repayment is required; and
    (C) The overpayment determination is subject to agency appeal 
procedures, but we may withhold Medicare payments while an appeal is in 
progress.
    (ii) Notice that--
    (A) Information is needed to determine the amount of overpayment if 
any; and
    (B) The provider has at least 30 days in which to supply the 
information to the agency.
    (2) Notice that, 30 days or later from the date of the notice, the 
agency intends to refer the case to CMS for withholding of Medicare 
payments.
    (3) The agency must send all notices to providers by certified mail, 
return receipt requested.
    (c) Documentation to be submitted to CMS. The agency must submit the 
following information or documentation to CMS (unless otherwise 
specified) with the request for withholding of Medicare payments.
    (1) A statement of the reason that withholding is requested.
    (2) The amount of overpayment, type of overpayment, date the 
overpayment was determined, and the closing date of the pertinent cost 
reporting period (if applicable).
    (3) The quarter in which the overpayment was reported on the 
quarterly expenditure report (Form CMS 64).
    (4) As needed, and upon request from CMS, the names and addresses of 
the provider's officers and owners for each period that there is an 
outstanding overpayment.
    (5) A statement of assurance that the State agency has met the 
notice requirements under paragraph (b) of this section.
    (6) As needed, and upon request for CMS, copies of notices (under 
paragraph (b) of this section), and reports of contact or attempted 
contact with the provider concerning the overpayment, including any 
reduction or suspension of Medicaid payments made with respect to that 
overpayment.
    (7) A copy of the provider's agreement with the agency under Sec. 
431.107 of this chapter.
    (d) Notification to terminate withholding. (1) If an agency has 
requested withholding under this section, it must notify CMS if any of 
the following occurs:

[[Page 297]]

    (i) The Medicaid provider makes an agreement satisfactory to the 
agency to repay the overpayment;
    (ii) The Medicaid overpayment is completely recovered; or
    (iii) The agency determines that there is no overpayment, based on 
newly acquired evidence or subsequent audit.
    (2) Upon receipt of notification from the State agency, CMS will 
terminate withholding.
    (e) Accounting for returned overpayment. The agency must treat as a 
recovered overpayment the amounts received from CMS to offset Medicaid 
overpayments.
    (f) Procedures for restoring excess withholding. The agency must 
establish procedures satisfactory to CMS to assure the return to the 
provider of amounts withheld under this section that are ultimately 
determined to be in excess of overpayments. Those procedures are subject 
to CMS review.

[50 FR 19689, May 10, 1985, as amended at 61 FR 63749, Dec. 2, 1996]