[Code of Federal Regulations]
[Title 42, Volume 2]
[Revised as of October 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR405.377]

[Page 103-104]
 
                         TITLE 42--PUBLIC HEALTH
 
                             HUMAN SERVICES
 
PART 405_FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED--Table of 
Contents
 
Subpart C_Suspension of Payment, Recovery of Overpayments, and Repayment 
                        of Scholarships and Loans
 
Sec.  405.377  Withholding Medicare payments to recover Medicaid 
overpayments.

    (a) Basis and purpose. This section implements section 1885 of the 
Act, which provides for withholding Medicare payments to certain 
Medicaid providers that have not arranged to repay Medicaid overpayments 
as determined by the Medicaid State agency or have failed to provide 
information necessary to determine the amount (if any) of overpayments.
    (b) When withholding may be used. CMS may withhold Medicare payment 
to offset Medicaid overpayments that a Medicaid agency has been unable 
to collect if--
    (1) The Medicaid agency has followed the procedure specified in 
Sec.  447.31 of this chapter; and

[[Page 104]]

    (2) The institution or person is one described in paragraph (c) of 
this section and either--
    (i) Has not made arrangements satisfactory to the Medicaid agency to 
repay the overpayment; or
    (ii) Has not provided information to the Medicaid agency necessary 
to enable the agency to determine the existence or amount of Medicaid 
overpayment.
    (c) Institutions or persons affected. Withholding under paragraph 
(b) of this section may be made with respect to any of the following 
entities that has or had in effect an agreement with a Medicaid agency 
to furnish services under an approved Medicaid State plan:
    (1) An institutional provider that has in effect an agreement under 
section 1866 of the Act. (Part 489 (Provider and Supplier Agreements) 
implements section 1866 of the Act.)
    (2) A physician or supplier that has accepted payment on the basis 
of an assignment under section 1842(b)(3)(B)(ii) of the Act. (Section 
424.55 sets forth the conditions a supplier agrees to in accepting 
assignment.)
    (d) Amount to be withheld. (1) CMS contacts the appropriate 
intermediary or carrier to determine the amount of Medicare payment to 
which the institution or person is entitled.
    (2) CMS may require the intermediary or carrier to withhold Medicare 
payments to the institution or person by the lesser of the following 
amounts:
    (i) The amount of the Medicare payments to which the institution or 
person would otherwise be entitled.
    (ii) The total Medicaid overpayment to the institution or person.
    (e) Notice of withholding. If CMS intends to withhold payments under 
this section, it notifies by certified mail, return receipt requested, 
the institution or person and the appropriate intermediary or carrier of 
the intention to withhold Medicare payments and follows the procedure in 
Sec.  405.374. The notice includes--
    (1) Identification of the institution or person; and
    (2) The amount of Medicaid overpayment to be withheld from payments 
to which the institution or person would otherwise be entitled under 
Medicare.
    (f) Termination of withholding. CMS terminates the withholding if--
    (1) The Medicaid overpayment is completely recovered;
    (2) The institution or person enters into an agreement satisfactory 
to the Medicaid agency to repay the overpayment; or
    (3) The Medicaid agency determines that there is no overpayment 
based on newly acquired evidence or a subsequent audit.
    (g) Disposition of funds withheld. CMS releases amounts withheld 
under this section to the Medicaid agency to be applied against the 
Medicaid overpayment made by the State agency.

[61 FR 63747, Dec. 2, 1996]