Proposed Rule: Medicare: Provider and Supplier Overpayments Recoupment Limitation

55404 Federal Register / Vol. 71, No.
184 / Friday, September 22, 2006 / Proposed Rules
Technology Laboratory Superfund Site comment. If you send an e-mail requirements, Superfund, Water
without prior notice of intent to delete comment directly to EPA without going pollution control, Water supply.
because we view this as a non- through www.regulations.gov, your e- Authority: 33 U.S.C. 1321(c)(2); 42 U.S.C.
controversial revision and anticipate no mail address will be automatically 9601–9657; E.O. 12777, 56 FR 54757, 3 CFR
adverse comment(s). EPA has explained captured and included as part of the 1991; Comp., p. 351; E.O. 12580, 52 FR 2923;
our reasons for this deletion in the comment that is placed in the public 3 CFR 1987 Comp., p. 193.
preamble to the direct final deletion. If docket and made available on the Dated: September 12, 2006.
EPA receives no adverse comment(s) on Internet. If you submit an electronic Robert W. Varney,
this notice of intent to delete or the comment, EPA recommends that you Regional Administrator, U.S. EPA New
direct final notice of deletion, EPA will include your name and other contact England.
not take further action on this notice of information in the body of your [FR Doc. 06–7965 Filed 9–21–06; 8:45 am]
intent to delete. If EPA receives adverse comment and with any disk or CD–ROM BILLING CODE 6560–50–P
comment(s), EPA will withdraw the that you submit. If EPA cannot read
direct final notice of deletion and it will your comment because of technical
not take effect. EPA will address all difficulties and cannot contact you for
DEPARTMENT OF HEALTH AND
public comments in a subsequent final clarification, EPA may not be able to
HUMAN SERVICES
deletion notice based on this notice of consider your comment. Electronic files
intent to delete as appropriate. EPA will should avoid the use of special Centers for Medicare & Medicaid
not institute a second comment period characters, any form of encryption, and Services
on this notice of intent to delete. Any be free of any defects or viruses.
parties interested in commenting must FOR FURTHER INFORMATION CONTACT: 42 CFR Part 405
do so at this time. For additional Kymberlee Keckler, Remedial Project
information, see the direct final notice [CMS–6025–P]
Manager, U.S. EPA, 1 Congress Street,
of deletion located in the Rules section Suite 1100 (HBT), Boston, RIN 0938–AN42
of this Federal Register. Massachusetts 02114–2023, (617) 918–
DATES: Comments concerning this Site Medicare Program; Limitation on
1385 or toll-free at 1–800–252–3402
must be received by October 23, 2006. Recoupment of Provider and Supplier
extension 81385.
Overpayments
ADDRESSES: Submit your comments,
SUPPLEMENTARY INFORMATION: For
identified by Docket ID No. EPA–HQ– additional information, see the Direct AGENCY: Centers for Medicare &
SFUND–1994–0009, by one of the Final Notice of Deletion located in the Medicaid Services (CMS), HHS.
following methods: Rules section of this Federal Register. ACTION: Proposed rule.
• www.regulations.gov: Follow the
on-line instruction for submitting INFORMATION REPOSITORY: All documents SUMMARY: This proposed rule would
comments. in the docket are listed in implement a new provision of the
• E-mail: keckler.kymberlee@epa.gov. www.regulations.gov index. Although Medicare Prescription Drug,
• Fax: (617) 918–0385. listed in the index, some information is Improvement, and Modernization Act of
• Mail: Kymberlee Keckler, Remedial not publicly available, e.g., CBI or other 2003 that prohibits recouping Medicare
Project Manager, U.S. Environmental information whose disclosure is overpayments when an appeal is
Protection Agency, Region 1, 1 Congress restricted by statute. Certain other received from a provider or supplier
Street, Suite 1100 (HBT), Boston, material, such as copyrighted material, until a decision is rendered by a
Massachusetts 02114–2023. will be publicly available only in hard Qualified Independent Contractor (QIC).
• Hand delivery: 1 Congress Street, copy. Publicly available docket The QIC is the second level of appeal in
Suite 1100 (HBT), Boston, materials are available either the Medicare claims appeal process.
Massachusetts 02114–2023. Such electronically at www.regulations.gov or This provision changes how interest is
deliveries are only accepted during in hard copy at the U.S. Environmental to be paid to a provider or supplier
normal hours of operation, and special Protection Agency, Region 1, Superfund whose overpayment is reversed at
arrangements should be made for Records Center, 1 Congress Street, Suite subsequent administrative or judicial
deliveries of boxed information. 1100, Boston, Massachusetts 02114– levels of appeal. This proposed rule
Instructions: Direct your comments to 2023 and at the Watertown Free Public defines the overpayments to which the
Docket ID No. EPA ‘‘HQ–SFUND–1994– Library, 123 Main Street, Watertown, limitation applies, how the limitation
0009. EPA’s policy is that all comments MA 02472. The EPA Superfund Records works in concert with the appeals
received will be included in the public Center is open Monday through Friday process, and the change in our
docket without change and may be from 9 a.m. to 5 p.m. and the Watertown obligation to pay interest to a provider
made available online at Free Library is open Monday through or supplier whose appeal is successful
www.regulations.gov, including any Thursday from 9 a.m. to 9 p.m., Friday at levels above the QIC.
personal information provided, unless and Saturday from 9 a.m. to 5 p.m., and DATES: To be assured consideration,
the comment includes information Sunday from 1 p.m. to 5 p.m. The EPA comments must be received at one of
claimed to be Confidential Business Superfund Records Center’s telephone the addresses provided below, no later
Information (CBI) or other information number is (617) 918–1440 and the than 5 p.m. on November 21, 2006.
whose disclosure is restricted by statute. Watertown Free Library’s telephone ADDRESSES: In commenting, please refer
Do not submit information that you number is (617) 972–6431. to file code CMS–6025–P. Because of
consider to be CBI or otherwise List of Subjects in 40 CFR Part 300 staff and resource limitations, we cannot
protected through www.regulations.gov
jlentini on PROD1PC65 with PROPOSAL
accept comments by facsimile (FAX)

or e-mail. The www.regulations.gov Web Environmental protection, Air transmission.
site is an ‘‘anonymous access’’ system, pollution control, Chemicals, Hazardous You may submit comments in one of
which means EPA will not know your waste, Hazardous substances, three ways (no duplicates, please):
identity or contact information unless Intergovernmental relations, Penalties, 1. Electronically. You may submit
you provide it in the body or your Reporting and recordkeeping electronic comments on specific issues
VerDate Aug<31>2005 18:17 Sep 21, 2006 Jkt 208001 PO 00000 Frm 00051 Fmt 4702 Sfmt 4702 E:\FR\FM\22SEP1.SGM 22SEP1
Federal Register / Vol. 71, No. 184 / Friday, September 22, 2006 / Proposed Rules 55405
in this regulation to http:// Submitting Comments: We welcome proposed rule would implement the
www.cms.hhs.gov/regulations/ comments from the public on all issues second of these provisions—the
ecomments. (Attachments should be in set forth in this rule to assist us in fully limitation on recoupment.
Microsoft Word, WordPerfect, or Excel; considering issues and developing The statute requires CMS to change
however, we prefer Microsoft Word.) policies. You can assist us by the way we recoup certain
2. By mail. You may mail written referencing the file code CMS–6025–P overpayments. It also changes how
comments (one original and two copies) and the specific ‘‘issue identifier’’ that interest is to be paid to a provider or
to the following address only: Centers precedes the section on which you supplier whose overpayment
for Medicare & Medicaid Services, choose to comment. determination is reversed at
Department of Health and Human Inspection of Public Comments: All administrative or judicial levels of
Services, Attention: CMS–6025–P, P.O. comments received before the close of appeal above the Qualified Independent
Box 8017, Baltimore, MD 21244. the comment period are available for Contractor (QIC). Since these changes to
Please allow sufficient time for mailed viewing by the public, including any
recoupment and interest are tied to the
comments to be received before the personally identifiable or confidential
Medicare fee-for-service claims appeal
close of the comment period. business information that is included in
process and structure, we will start with
3. By hand or courier. If you prefer, a comment. CMS posts all electronic
a general discussion of the appeal
you may deliver (by hand or courier) comments received before the close of
process. Then we will explain the
your written comments (one original the comment period on its public Web
changes to CMS’s overpayment
and two copies) before the close of the site as soon as possible after they have
recoupment policy, and how CMS will
comment period to one of the following been received. Hard copy comments
now pay interest on reversals of
addresses. If you intend to deliver your received timely will be available for
overpayment determinations at certain
comments to the Baltimore address, public inspection as they are received,
levels of the appeal process.
please call telephone number (410) 786– generally beginning approximately 3
9994 in advance to schedule your weeks after publication of a document, Medicare Claims Appeals Process
arrival with one of our staff members. at the headquarters of the Centers for
Room 445–G, Hubert H. Humphrey Medicare & Medicaid Services, 7500 The Medicare, Medicaid and SCHIP
Building, 200 Independence Avenue, Security Boulevard, Baltimore, Benefits and Improvement and
SW., Washington, DC 20201; or 7500 Maryland 21244, Monday through Protection Act of 2000 (BIPA) (Pub. L.
Security Boulevard, Baltimore, MD Friday of each week from 8:30 a.m. to 106–554) amended section 1869 of the
21244–1850. 4 p.m. To schedule an appointment to Act to require a major restructuring of
(Because access to the interior of the view public comments, phone 1–800– the Medicare claims appeals process.
HHH Building is not readily available to 743–3951. CMS incorporated these changes in
persons without Federal Government federal regulations found at 42 CFR Part
I. Background 405, Subpart I. The appeals process was
identification, commenters are
encouraged to leave their comments in [If you choose to comment on issues in this changed to make one unified structure
the CMS drop slots located in the main section, please include the caption for both Parts A and B of Medicare.
lobby of the building. A stamp-in clock ‘‘Background’’ at the beginning of your Further, QICs were created as new
comments.] independent review entities that
is available for persons wishing to retain
a proof of filing by stamping in and conduct second level appeals after
Section 935 of the Medicare Medicare contractors conduct a
retaining an extra copy of the comments Prescription Drug, Improvement, and
being filed.) redetermination of initial
Modernization Act of 2003 (MMA) (Pub. determinations. An overpayment
Comments mailed to the addresses L. 108–173) amended Title XVIII of the
indicated as appropriate for hand or determination is considered a revised
Social Security Act (the Act) to add a initial determination.
courier delivery may be delayed and new paragraph (f) to section 1893 of the
received after the comment period. Act, the Medicare Integrity Program. The chart below outlines the levels of
FOR FURTHER INFORMATION CONTACT: This new sub-section contains eight appeal and decision-making time frames
Nancy Braymer, (410) 786–4323. substantive provisions addressing the under this restructured process:
SUPPLEMENTARY INFORMATION: recovery of overpayments. This BILLING CODE 4120–01–P
55406 Federal Register / Vol. 71, No. 184 / Friday, September 22, 2006 / Proposed Rules
BILLING CODE 4120–01–C

and applying the amount withheld process provides the debtor the
Limitation on Recoupment against the debt. Under our existing opportunity to submit a statement and/
regulations, providers and suppliers can or evidence stating why recoupment
Recoupment is the recovery of a challenge an overpayment should not be initiated. The outcome of
Medicare overpayment by reducing determination through both the rebuttal the rebuttal process could change how
present or future Medicare payments
EP22SE06.009</GPH>
and appeals processes. The rebuttal or if we recoup. The new MMA
provision and this implementing rule do implementing this new statutory services or supplier is later reversed, the
not alter the rebuttal process. provision. Also, it would shorten the Secretary shall provide for repayment of the
An appeal is an examination of the period of deferred recoupment under amount recouped plus interest at the same
validity of the overpayment. Before rate as would apply under the previous
the Act thereby minimizing risk to the
sentence for the period in which the amount
section 1893(f)(2) of the Act was Medicare trust funds. However, this was recouped.
enacted, if a provider or supplier elected approach would mean, in many
to appeal, there was no effect on our instances, we would have recouped the This language did not specifically
ability to recover the debt. However, if overpayment before a provider could amend sections 1815(d) and 1833(j) of
the overpayment determination were request a reconsideration and thereby the Act. Nor did the MMA conference
reversed in whole or in part at any stage invoke the benefit of the limitation on report reference these sections. The
of the administrative or judicial appeal recoupment. Although legally statute and the conference report are
process, appropriate adjustments would permissible, we believe this is both silent on the relationship between
be made to the overpayment and the inconsistent with Congressional intent. paying or collecting interest (a) based on
amount of interest assessed. Instead, we propose in this rule to the final determination concept
When section 1893(f)(2) was enacted, cease recoupment when a valid first embodied in sections 1815(d) and
our recoupment process was changed. level appeal is received. If the provider 1833(j) of the Act; and (b) the concept
The relevant statutory text is as follows: loses at the first level, we would then of paying interest based on how long we
proceed to recoup 30 days after giving held funds, ultimately determined
In the case of a provider of services or through the latter stage of the appeal
supplier that is determined to have received notice to the provider unless the
an overpayment under this title and that provider appeals to the QIC in the process to belong to the provider, as
seeks a reconsideration by a qualified interim. A provider who acts in a timely incorporated in section 1893(f)(2)(B) of
independent contractor on such fashion can preclude any recoupment the Act.
determination under section 1869(b)(1), the until the QIC decision is rendered as There has been no change in the
Secretary may not take any action (or contemplated under the MMA. obligation of the provider or supplier to
authorize any other person, including any pay interest if the overpayment
Medicare contractor, as defined in Assessment of Interest determination is affirmed at any level of
subparagraph (C)) to recoup the overpayment In addition to tying the recoupment administrative or judicial appeal.
until the date the decision on the Interest continues to accrue from the
reconsideration has been rendered.
process to the appeals process, section
1893(f)(2) of the Act also has the effect final determination in accordance with
To the extent that the statutory of changing how we pay interest to a sections 1815(d) and 1833(j) of the Act.
language affords any discretion in provider or supplier who is successful Section 1893(f)(2)(B) of the Act explains
implementation, we have exercised that in having an overpayment that if an appeal of an overpayment is
flexibility to strike a balance among the determination fully or partially reversed upheld before the QIC, ‘‘interest on the
following three objectives: at the latter stages of the appeal process. overpayment shall accrue on and after
(1) To give effect to Congressional intent Previously, we paid interest on the date of the original notice of
that providers and suppliers be given underpayments solely in accordance overpayment.’’ For overpayments
expedited access to an objective party with sections 1815(d) and 1833(j) of the subject to the limitation on recoupment,
(independent from the originating contractor) Act. An ‘‘underpayment’’ would usually the first final determination is the date
to review the overpayment determination, result when we had recovered, through of the demand letter. Therefore, section
prior to recouping, in the interest of fairness; 1893(f)(2)(B) of the Act is consistent
recoupment or otherwise, an
(2) To carry out our fiduciary responsibility with sections 1815(d) and 1833(j) of the
to recover erroneous payments to providers overpayment; the decision was reversed
at some point in the appeal process; and Act and does not alter our ability to
or suppliers; to allow them to retain program
funds to which they are not entitled under after appropriate adjustments, we owed assess interest against the provider or
the Medicare statute would be unfair to the the balance to the provider or supplier. supplier.
intended beneficiaries of Medicare and to the Interest accrues from the date of the In addition, there has been no change
taxpayers who contribute to the trust funds; ‘‘final determination’’ and is owed if the in the obligation of Medicare to pay the
and underpayment is not paid within 30 provider or supplier interest if the
(3) To ensure that providers’ and suppliers’ days. Following an appeal decision overpayment determination is reversed
procedural due process rights to challenge an at the first (redetermination) or second
favorable to a provider, the Medicare
overpayment determination through the (reconsideration) level of the
appeal process are not adversely affected. contractor must effectuate the decision
and make a written determination of the administrative appeal process. At these
Under the statutory language of amount Medicare owes. This is levels of appeal, interest would
section 1893(f)(2), if a provider or considered a new final determination, continue to be payable by Medicare if
supplier seeks a reconsideration by a and interest accrues from that date. the underpayment is not paid within 30
QIC on an overpayment determination, The new interest provision found in days of the final determination. The
CMS and its Medicare contractors may section 1893(f)(2)(B) of the Act amends change in the method of paying interest
not recoup the overpayment until the the way interest is to be paid to a resulting from section 1893(f)(2)(B) of
date the decision on the reconsideration provider or supplier whose the Act is applicable only where the
has been rendered. Yet before reaching overpayment determination is reversal occurs at the Administrative
the QIC, a provider or supplier must overturned in administrative or judicial Law Judge (ALJ) level or subsequent
initially go through the first level of appeals subsequent to the second level levels of administrative appeal or
appeal by requesting a redetermination of appeal (the QIC reconsideration). The judicial review. At these higher levels of
by the Medicare contractor. statutory text is as follows: administrative appeal or judicial review,
Based on the statutory language, we
interest becomes payable by Medicare

could recoup during the period in Insofar as the determination on such
appeal is against the provider of services or
based on the period we recouped and
which the provider is actively pursuing supplier, interest on the overpayment shall retained the provider’s or supplier’s
an appeal at this first level. This accrue on and after the date of the original funds.
approach would reduce the notice of overpayment. Insofar as such We determine the rate of interest in
administrative complexity of determination against the provider of accordance with 42 CFR 405.378 by
comparing the private consumer rate limit CMS’s ability to recoup funds to given the same meaning as in the
with the current value of funds rate. satisfy an overpayment, it specifically appeals context. Therefore, these terms
Interest is assessed at the higher of these used the word ‘‘recoup’’ which has been are defined by reference to the
two rates that is in effect on the date of a long-standing defined term by CMS. definitions set forth in § 405.902.
the final determination of the amount of There is no evidence that the Congress
C. Proposed Change to § 405.373
the overpayment or underpayment. The intended to broaden or alter CMS’s Proceeding for Offset or Recoupment
current interest rate for Medicare definition of recoupment to also apply
overpayments and underpayments is to suspended funds. Because CMS is Section 405.373 establishes the
12.625 percent (the private consumer only limited by section 1893(f)(2) of the general rules and procedures to be
rate). Since February, 2001 to the Act from recouping Medicare payments, followed once CMS or a Medicare
present time, it has ranged from a low we are not restricted in our ability to contractor determines that an offset or
of 10.75 percent to a high of 14.125 apply suspended funds to reduce or recoupment should be put into effect.
percent. By regulation 42 CFR dispose of an overpayment. Paragraph (e) addresses the duration of
411.24(m)(2), interest is calculated on If the suspended payments are a recoupment or offset that has been put
Medicare Secondary Payer (MSP) debts insufficient to fully eliminate any into effect and identifies the three
in the same manner as for Medicare overpayment, and the provider or specific circumstances under which a
overpayments and underpayments, and supplier meets the requirements of this recoupment or offset would stop. We
the same interest rate is used. proposed rule, the limitation on propose to revise the introductory text
Interest accrues daily but is assessed recoupment provision under section of paragraph (e) to explicitly refer to the
and calculated in full 30 day periods. 1893(f)(2) of the Act would be new § 405.379, implementing the
We charge simple rather than applicable to any remaining balance still statutory limitation on recoupment, as a
compound interest, and payments we owed to CMS. separate basis to stop recoupments that
receive are applied first to accrued We also note that section 1893(f)(2) of have been put into effect.
interest and then to principal. the Act does not alter the process for D. Proposed Revisions to § 405.378
Interest we collect on overpayments providers or suppliers to appeal Interest Charges on Overpayment and
and MSP recoveries goes to the general overpayment determinations. Providers Underpayments to Providers, Suppliers
fund of the U.S. Treasury. The principal and suppliers may continue to appeal and Other Entities
amount we recover is used to reimburse the full amount of an overpayment
the applicable Medicare trust fund—the Section 405.378 implements sections
determination at the conclusion of a
Hospital Insurance (Part A) or the 1815(d) and 1833(j) of the Act which
suspension as they could prior to the
Supplementary Medical Insurance (Part requires us to charge interest on
enactment of the MMA.
B and now D) trust funds, which are overpayments and pay interest on
special accounts in the U.S. Treasury. II. Provisions of the Proposed underpayments if payment is not made
Interest we pay on Medicare Regulations within 30 days of the date of the ‘‘final
underpayments comes from the determination’’. Under sections 1815(d)
[If you choose to comment on issues in this
applicable Medicare trust fund. section, please include the caption and 1833(j) of the Act, the date of the
‘‘Provisions’’ at the beginning of your final determination dictates when
Suspension interest begins to accrue whether we
comments.]
We note that this new MMA provision pay interest on an underpayment or
does not affect how CMS recovers A. Proposed Change to Authority collect interest on an overpayment.
overpayments from providers or Citation for Subpart C of Part 405 Paragraph (c) of this section defines
suppliers that have been placed on Subpart C of part 405 implements what constitutes a final determination
payment suspension. Under our several sections of the Act including both for overpayments and
authority at 42 CFR 405.371, CMS, an sections authorizing the recovery of underpayments arising from a cost
intermediary, or carrier may suspend overpayments and assessment of report determination as well as those
the payment of claims if there is reliable interest. We propose to revise the that are claims based. Paragraph (d)
information that an overpayment, fraud authority citation to explicitly add establishes the basis for the interest rate
or willful misrepresentation exists or section 1893 of the Act which was used for Medicare overpayments and
that payments to be made may not be amended by section 935 of the MMA to underpayments as well as for other
correct. Once an overpayment amount is add the limitation on recoupment as Medicare program activities, for
determined, suspended payments must well as other provisions addressing the example Medicare Secondary Payer
first be applied to eliminate any recovery of overpayments. recoveries (see 42 CFR 411.24(m) which
overpayment pursuant to § 405.372(e). references § 405.378(d)).
We do not interpret section 1893(f)(2) of B. Proposed Change to § 405.370 We propose to amend § 405.378 to
the Act as amending our authority to Definitions specify how interest is assessed for the
apply suspended payments toward Section 405.370 defines key terms subset of overpayments subject to the
reducing or eliminating an that apply to subpart C of part 405. We limitation on recoupment under section
overpayment. In addition, we do not are proposing to revise § 405.378 and 1893(f)(2) of the Act. The proposed
interpret the Act to require that we add a new § 405.379 to implement the revisions in § 405.378 clarify that if a
return the suspended payments to a statutory limitation on recoupment. We provider or supplier overpayment
provider or supplier once an propose to add definitions for terms determination is affirmed at any level of
overpayment is determined. Section used in § 405.378 and the new administrative or judicial appeal,
1893(f)(2) of the Act prevents the § 405.379. The limitation on interest owed by the provider or
Secretary from taking any ‘‘action * * * recoupment is tied to the Medicare supplier continues to accrue from the
to recoup the overpayment.’’ Yet, the claims appeals process and structure final determination. If the overpayment
disposition of suspended funds as (the regulations for which appear in 42 determination is reversed in favor of the
explained in 42 CFR 405.372(e) is not a CFR Part 405). We propose that selected provider or supplier, interest may be
‘‘recoupment’’ as that term is defined in terms used in the proposed revisions to payable by Medicare to the provider or
§ 405.370. When the Congress chose to § 405.378 and the new § 405.379 be supplier under one of two different
methodologies depending upon the determination at the QIC interest is assessed against the
appeal level at which the reversal reconsideration level (the second level government at any administrative and
occurs. If the reversal in favor of the of appeal). This addition is designed to judicial appeal level above the QIC
provider or supplier occurs at the first clarify that if an overpayment reconsideration. This new method
(redetermination) or second determination is reversed in whole or in applies only to overpayments subject to
(reconsideration) level of the part at the QIC reconsideration, the final the limitation on recoupment under
administrative appeal process, interest determination for purposes of assessing § 405.379. It is predicated upon the
may be payable by Medicare if the interest is the date the contractor recoupment and retention of funds by
underpayment is not paid within 30 effectuates the QIC reconsideration CMS or the Medicare contractor at the
days of the final determination. It is decision and make a written time the decision reversing the
only where the reversal occurs at the determination of the amount Medicare overpayment determination, in whole or
ALJ level or subsequent levels of owes. Interest accrues from the date of in part, is rendered.
administrative appeal or judicial review this written determination and is owed Proposed paragraph (j)(1) states that
that interest becomes payable by to the provider or supplier if the the rate of interest is the same rate that
Medicare based on the period that we underpayment is not paid within 30 CMS charges on overpayments and pays
recouped and retained the provider’s or days. on underpayments to providers,
supplier’s funds. These changes to the final suppliers and other health care entities.
We propose to amend § 405.378 determination definitions are intended This rate, as provided in the existing
paragraph (a) by adding the section to work in conjunction with the and unchanged paragraph (d) of this
reference 1893(f)(2)(B) as one of the limitation on recoupment requirements section, is the higher of the private
enumerated provisions of the Act that in the new proposed § 405.379. consumer rate or the current value of
this regulatory section is designed to Providers and suppliers can take funds rate.
implement. advantage of the limitation on The interest rate established in
We propose to revise paragraph (b)(2), recoupment by not paying during the accordance with paragraph (d) changes
which states the basic rule that interest redetermination and reconsideration periodically. The proposed paragraph
accrues from the date of final levels of appeal, yet interest will still (j)(2) describes the point in time where
determination, to clarify there is a new continue to accrue during those periods. the applicable interest rate is fixed. This
exception to this rule by referencing If a provider or supplier loses at either is the date the decision reversing the
paragraph (j) of this section. level of appeal, and they did not pay overpayment is issued by the ALJ,
We propose to amend paragraph their overpayment during the appeal, Medicare Appeals Council, Federal
(c)(1)(ii) which lists what constitutes a they will owe both the overpayment district court or other Federal reviewing
final determination in cases where a amount and accrued interest. Therefore, court.
Notice of Amount of Program they receive a benefit during the first The proposed paragraph (j)(3)
Reimbursement (NPR) is not issued. two levels of appeal by retaining their explains how interest will be calculated.
First, we removed the existing final funds, but by doing so, they run the risk We propose that interest will be paid on
determination definition based on that they will owe interest on the the total principal amount recouped. We
certain Administrative Law Judge (ALJ) unpaid overpayment amounts. propose to pay simple rather than
decisions under paragraph(c)(1)(ii)(C). We propose to amend paragraph (c)(2) compound interest, and we will not pay
The change in how interest is assessed by adding the cross references to interest on interest; this mirrors the
under section 1893(f)(2) of the Act paragraphs (i) and (j) of this section manner in which we assess interest
applies at the third level of appeal (ALJ) which states the exceptions to assessing against providers. Monies we recouped
and subsequent administrative and interest based on the date of final and applied to interest would be
judicial review levels. Therefore, these determination. refunded and not included in the
levels of appeal are now discussed in For purposes of clarity and to group ‘‘amount recouped’’ for purposes of
proposed paragraph (j). the exceptions to the ‘‘final calculating any interest due the
Second, we propose to add an determination’’ rule in a logical provider. The periods of recoupment
additional definition for a final sequence, we propose to redesignate will be calculated in full 30-day periods;
determination, at paragraph (c)(1)(ii)(C), paragraph (h) as paragraph (i). We and interest will not be payable for any
arising from a full or partial reversal at propose to redesignate paragraph (i) as periods of less than 30 days in which
the redetermination level of appeal. paragraph (h). The text of these we had possession of the recouped
This change is designed to clarify that redesignated paragraphs is not changed. funds.
if an overpayment is reversed in whole We propose to add a new paragraph In calculating the period in which the
or in part at the first level of appeal— (j). This paragraph would establish the amount was recouped, we propose to
the redetermination level—interest new basis for paying interest to a deduct days in which either or both the
accrues from the date of the ‘‘final provider or supplier whose ALJ’s or the Medicare Appeals Council’s
determination’’ and is owed by overpayment determination is reversed adjudication time frames are tolled due
Medicare if the underpayment is not in whole or in part at the third level of to specific actions by the appellant over
paid within 30 days. Following a administrative appeal (ALJ) or above. the which the government has no
redetermination decision favorable to a This new interest provision is required control. Our rules on the procedures
provider or supplier, the contractor by section 1893(f)(2)(B) of the Act which and time frames to request an ALJ
must effectuate the decision and make provides ‘‘[i]nsofar as such hearing provide that if the appellant
a written determination of the amount determination against the provider of fails to copy the other parties or files the
Medicare owes. Interest accrues from services or supplier is later reversed, the request with an entity other than that
Secretary shall provide for repayment of specified in the QIC’s reconsideration,
the date of the written determination.

Finally, we propose to add paragraph the amount recouped plus interest at the the ALJ’s 90 day adjudication deadline
(c)(1)(ii)(D) as an additional type of final same rate as would apply under the is tolled. Similarly, our rules on the
determination. This is a written previous sentence for the period in procedures and time frames to request a
determination arising from a full or which the amount was recouped.’’ This Medicare Appeals Council review
partial reversal of an overpayment new paragraph (j) would explain how provide that if the appellant fails to
copy the other parties or files the ‘‘actions’’ taken after December 8, 2003. determined in accordance with
request with an entity other than that For purposes of delineating those established Medicare appeal regulations
specified in the notice of the ALJ’s provider and supplier overpayments and implementing policies. Therefore,
action, the Medicare Appeals Council’s subject to this provision and those that in this paragraph, we make the interplay
adjudication period to conduct a review are not, we interpret ‘‘actions’’ to refer between recoupment and appeals
is tolled. Therefore, in paragraph to those instances where the initial explicit by referencing the requirements
(j)(3)(iv) and (v) we propose that in recoupment occurred or will occur on or for a redetermination request as those
calculating how much interest we owe after December 9, 2003. For ease of contained in § 405.940 through
a provider or supplier, we account for administration and to establish a clear § 405.958 and the requirements for a
these potential delays by deducting days rule, we are defining the initial reconsideration request as those
attributable to actions by the provider or recoupment to be the date that the contained in § 405.974 through
supplier which have the effect of Medicare contactor could have § 405.978.
extending the time in which we had instituted recoupment in compliance Proposed paragraph (d) lays out the
possession of the recouped funds. with established Medicare policies general framework for implementing the
We propose in paragraph (j)(4) that, in whether or not a recoupment occurred limitation on recoupment.
the cases of a partial reversal of an in fact. Therefore, for Part A Once an overpayment is determined
overpayment determination, we would overpayments, including a MSP and the substantive and procedural
allocate the funds recouped first to that recovery based on the provider’s failure requirements to afford the provider or
portion of the overpayment to file a proper claim for Part A benefits, supplier an opportunity for rebuttal
determination affirmed by the ALJ, the limitation applies to debts under § 405.374 and § 405.375 are
Medicare Appeals Council, or any determined on or after November 24, satisfied, recoupment can proceed
Federal court. If after this allocation 2003. For Part B overpayments, unless and until a valid request for a
excess recouped funds remain, interest including a MSP recovery based on the redetermination is received. (The
would be paid to the provider or supplier’s failure to file a proper claim redetermination is the first level of
supplier on this amount in accordance for Part B benefits, the limitation applies appeal, and a provider or supplier has
with the other provisions of this new to debts determined on or after October 120 days to file a request for a
paragraph (j). 29, 2003. In addition, this section redetermination of the overpayment
applies to that small group of MSP determination.) This means we can
E. Proposed New § 405.379 Limitation recoup during the period when a
on Recoupment of Provider and recoveries in which the provider or
supplier received a duplicate primary provider’s or supplier’s right to request
Supplier Overpayments a redetermination has yet to expire. This
payment and for which a written
We propose to add a new section to demand for payment was issued on or places the obligation on the provider or
subpart C of Part 405 to implement the after October 10, 2003. supplier who wishes to capitalize on the
statutory limitation on recoupment For purposes of clarity, we propose benefit afforded by the recoupment
under section 1893(f)(2) of the Act. that paragraph (b) also identify limitation to act on a timely basis to
Proposed paragraph (a) cites section categories of overpayments to which the request a redetermination.
1893(f)(2) of the Act as the statutory limitation does not apply, although this Under BIPA, the Medicare contractor
basis for this section and briefly is not framed as an exhaustive list of is required to make a redetermination
summarizes the underlying purpose. exclusions. The limitation would not decision within 60 calendar days of the
This is to impose a limit on our apply to all MSP recoveries other than date the contractor receives a timely
recoupment of Medicare overpayments provider/supplier MSP duplicate filed request for a redetermination. We
if a provider of services or supplier primary payment recoveries or MSP propose in paragraph (d)(2) that if the
appeals until a decision by a QIC is recoveries attributable to the provider’s redetermination is an affirmation in
made. or supplier’s failure to file a proper whole or in part, we can proceed to
Proposed paragraph (b) delineates claim. It would not apply to beneficiary recoup any outstanding principal and
those types of overpayments that are overpayments nor overpayments that interest 30 days after notice unless a
expressly subject to the recoupment arise from a cost report determination valid request for a reconsideration is
limitation. We propose that the and are appealed under the provider received in the interim.
limitation on recoupment applies to (1) reimbursement process. A provider or supplier that wishes to
overpayments that may be appealed by Proposed paragraph (c) specifies how appeal an adverse redetermination
the provider or supplier under the two key actions that trigger the decision (an affirmation or partial
Medicare claims appeal process; and (2) limitation on recoupment are to be affirmation of the overpayment
post-pay denial of claims for benefits construed. The limitation on determination) has 180 calendar days to
under Medicare Part A and Part B for recoupment is tied to the Medicare file a request from the date of receipt of
which a demand for payment has been claims appeals process. Recoupment of the notice of the redetermination. Once
made. We propose that this provision an overpayment once initiated will be the 30 day notice period is over and in
also apply to a small subset of Medicare stopped at the first two levels of the the absence of the receipt of a valid
Secondary Payer (MSP) recoveries; these appeals process (the redetermination request for a reconsideration, we
would be MSP recoveries where the and the reconsideration) upon receipt of propose to initiate or resume
provider or supplier received a a timely and valid appeal request recoupment. As with the first level of
duplicate primary payment and MSP applicable to that level. The provider or appeal, this approach places the onus
recoveries based on the provider’s or supplier does not have to take any on the provider or supplier who wishes
supplier’s failure to file a proper claim affirmative action to invoke the to take advantage of the benefit offered
with the third party payer plan, program limitation on recoupment beyond the by the limitation on recoupment to act
or insurer for payment. act of appealing. What constitutes a on a timely basis in requesting a QIC
Section 935(b) of the MMA specified valid and timely request for a reconsideration.
that section 1893(f)(2) shall apply to redetermination and, subsequently, We propose in paragraph (d)(3) that
‘‘actions’’ taken after the date of what constitutes a valid and timely the Medicare contractor shall cease
enactment of the MMA; that is, request for a reconsideration must be recoupment upon receipt of a timely
and valid request for a reconsideration. written notice to the provider or However, we do not view this as a
If recoupment has not yet gone into supplier of the revised overpayment disadvantage to the provider or supplier
effect, the contractor shall not initiate it. amount if the redetermination results in who retains the ability to seek escalation
The contractor may initiate or resume an affirmation in part. We propose in or not. The proposed language also
recoupment upon final action by the paragraph (e)(2) that recoupment would clarifies that where the final action is
QIC in accordance with paragraph (f) be stopped again upon receipt of a the notice of the reconsideration, in
which is explained in detail below. timely and valid request for a order to institute or resume recoupment,
The general rule we propose in reconsideration by the QIC. the reconsideration decision must affirm
paragraph (d)(4) and (5) is that, unless Proposed paragraph (f) sets forth the the overpayment determination in
the reconsideration results in a full specific rules for initiating or resuming whole or in part.
reversal of the overpayment recoupment after final action by the Proposed paragraph (g) addresses
determination, recoupment of QIC. It also defines what constitutes through a series of specific rules and
outstanding principal and interest may final action by a QIC for purposes of this situations how recouped funds are to be
be initiated or resumed upon final section. As is the case when recoupment applied. Funds recouped prior to receipt
action by the QIC whether or not the is resumed after the redetermination of a timely and valid redetermination
provider or supplier appeals to the ALJ, decision, the conditions necessary for request may be retained and applied
the Medicare Appeals Council, or resumption are that the debt (remaining first to accrued interest and then to the
Federal court. If the provider or supplier unpaid principal balance and interest) principal balance. If the overpayment in
subsequently appeals, the contractor has not been liquidated and the question is reversed at the first level of
may continue recouping outstanding substantive and procedural rebuttal appeal, consistent with current policies,
overpayments in accordance with requirements have been satisfied. the amount held may be applied to any
§ 405.373(e). Under the statute, once a provider or other debt owed by the provider or
We also propose in paragraph (d)(6) to supplier has sought a reconsideration by supplier; any excess would then be
clarify that each overpayment the QIC, we may not take any action to released to the provider or supplier. In
determination and its appeal status is recoup the overpayment until the date the case of a partial reversal at the
separate and distinct from other debts the decision on the reconsideration has redetermination level in which the
owed by the same provider or supplier. been rendered. We believe it is an decision reduces the debt below the
Therefore, we make explicit that if an appropriate balancing of interests and in amount already recouped, the same
overpayment determination is appealed keeping with the intent of this provision policies would be followed with respect
and recoupment stopped, this would to interpret ‘‘the date the decision on to the application of the recouped
not preclude the Medicare contractor the reconsideration is rendered’’ as the funds. In the case of an affirmation
from recouping other overpayments date on which the QIC issues its final where the provider or supplier appeals
owed by the provider or supplier. action with respect to a reconsideration. to the next level, the Medicare
We propose in paragraph (d)(7) to There are three possible actions that contractor would retain the monies and
make explicit that amounts properly a QIC may take with respect to a request apply them first to interest and then to
recouped prior to the imposition of the for reconsideration. First, it may the principal balance pending final
recoupment limitation, at either or both complete its review and issue a action by the QIC on the reconsideration
the first and second levels of appeal, reconsideration. Second, in appropriate request.
may be retained until and unless there circumstances, it may dismiss the If funds are properly recouped
is an administrative or judicial reversal request for reconsideration. Third, if the between a redetermination decision and
of the overpayment determination. QIC is unable to complete its a provider’s subsequent request for a
We propose in paragraph (d)(8) that if reconsideration within the mandated reconsideration, these would be
an overpayment determination is sixty (60) day time frame, it may issue retained and applied first to interest,
reversed through the administrative or a notice to the parties that it will not be then to principal pending final action by
judicial process, appropriate able to complete its reconsideration in the QIC. If the final QIC action is a
adjustments in the debt and the amount the allotted time and advise them of dismissal, receipt of a withdrawal,
of interest charged will be made to give their right to escalate their appeal to the notice of escalation, or a reconsideration
effect to these decisions. ALJ level. The parties may then notify decision affirming the overpayment in
Proposed paragraph (d)(9) makes the QIC of their intent to escalate the whole, funds recouped are applied to
explicit that interest is payable on appeal. Following the receipt of this interest, then to principal; recoupment
overpayments, subject to the notice, the QIC must either issue its may be resumed as necessary to
recoupment limitation, in accordance reconsideration within 5 days or issue a liquidate the debt. If the QIC
with the provisions of § 405.378. notice acknowledging the escalation reconsideration decision is a full
Proposed paragraph (e) states the request and forward the case file to the reversal, the amount recouped may be
specific rules for initiating or resuming ALJ hearing office. applied to any other debt (including
recoupment after the redetermination We propose that the earliest to occur interest) owed by the provider or
decision. The necessary conditions are of these three actions (a reconsideration, supplier before any excess is released. If
that the debt (remaining unpaid a dismissal, and the written notification the reconsideration decision is a partial
principal balance and interest) has not to the parties that the reconsideration reversal and reduces the debt below the
been liquidated and the substantive and has been escalated) or the receipt of a amount already recouped, the same
procedural rebuttal requirements have withdrawal request from the provider or policies would be followed with respect
been satisfied. Recoupment can resume: supplier would constitute the final QIC to the application of the recouped
(i) Immediately upon receipt of a decision for purposes of ending the funds.
request to withdraw the redetermination prohibition on our recouping an Proposed paragraph (h) would
request; (ii) on the 30th calendar day overpayment. The provider or supplier insulate a provider or supplier, invoking
after the date of the notice of who elects to escalate the appeal from the limitation on recoupment under this
redetermination affirming the the QIC to the ALJ would thereby lose section, from the operation of
overpayment determination in whole; or the benefit of the limitation on § 401.607(c)(2)(iv). This latter rule
(iii) on the 30th calendar day after a recoupment (recoupment could begin). provides that missing one payment
under a 6 month extended repayment businesses. For purposes of the RFA, made by that provider. The impact on
plan granted under the authority of small entities include small businesses, small rural hospitals is expected to be
§ 401.607(c)(2) constitutes a default nonprofit organizations, and similarly positive but unpredictable.
allowing CMS to accelerate the debt. government agencies. Most hospitals Therefore, we are certifying that this
and most other providers and suppliers proposed rule would not have a
III. Collection of Information are small entities, either by nonprofit significant impact on a substantial
Requirements status or by having revenues of $6 number of small rural hospitals.
This document does not impose million to $29 million in any 1 year. For Section 202 of the Unfunded
information collection and purposes of the RFA, all providers and Mandates Reform Act of 1995 also
recordkeeping requirements. suppliers affected by this regulation are requires that agencies assess anticipated
Consequently, it need not be reviewed considered to be small entities. costs and benefits before issuing any
by the Office of Management and Individuals and States are not included rule that may result in expenditure in
Budget under the authority of the in the definition of a small entity. any 1 year by State, local, or tribal
Paperwork Reduction Act of 1995. In addition, section 1102(b) of the Act governments, in the aggregate, or by the
requires us to prepare a regulatory private sector, of $110 million. This rule
IV. Response to Comments impact analysis if a rule may have a will not have this effect on State, local,
Because of the large number of public significant impact on the operations of or tribal governments, or on the private
comments we normally receive on a substantial number of small rural sector.
Federal Register documents, we are not hospitals. This analysis must conform to Executive Order 13132 establishes
able to acknowledge or respond to them the provisions of section 603 (proposed certain requirements that an agency
individually. We will consider all documents)/604 (Final documents) of must meet when it publishes a proposed
comments we receive by the date and the RFA. For purposes of section rule (and subsequent final rule) that
time specified in the DATES section of 1102(b) of the Act, we define a small imposes substantial direct requirement
this preamble, and, when we proceed rural hospital as a hospital that is costs on State and local governments,
with a subsequent document, we will located outside of a Metropolitan preempts State law, or otherwise has
respond to the comments in the Statistical Area and has fewer than 100 Federalism implications. This proposed
preamble to that document. beds. rule would not have a substantial effect
We are not preparing analyses for on State or local governments.
V. Regulatory Impact Statement either the RFA or section 1102(b) of the
[If you choose to comment on issues in this Act. We are uncertain how many small B. Conclusion
section, please include the caption ‘‘Impact’’ entities would be affected by this For these reasons, we are not
at the beginning of your comments.] proposed rule as this would depend in preparing analyses for either the RFA or
A. Overall Impact part upon voluntary actions on the part section 1102(b) of the Act because we
of the provider or supplier. The purpose have determined that this proposed rule
We have examined the impacts of this of this proposed rule is to limit our
proposed rule as required by Executive would not have a significant economic
ability to recoup against providers or impact on a substantial number of small
Order 12866 (September 1993, suppliers who appeal an overpayment
Regulatory Planning and Review), the entities or a significant impact on the
determination. In order to impact a operations of a substantial number of
Regulatory Flexibility Act (RFA) provider or supplier, the provider or
(September 19, 1980, Pub. L. 96–354), small rural hospitals.
supplier must have received an In accordance with the provisions of
section 1102(b) of the Social Security erroneous payment; an overpayment Executive Order 12866, this regulation
Act, the Unfunded Mandates Reform must be determined and demanded; the was reviewed by the Office of
Act of 1995 (Pub. L. 104–4), and provider or supplier must elect to Management and Budget.
Executive Order 13132. appeal; and the provider or supplier
Executive Order 12866 (as amended may not satisfy the overpayment by List of Subjects in 42 CFR Part 405
by Executive Order 13258, which making either a lump sum payment or Administrative practice and
reassigns responsibility of duties) requesting to repay the debt in procedure, Health facilities, Health
directs agencies to assess all costs and installments. The only possible adverse professions, Kidney diseases, Medical
benefits of available regulatory impact upon a provider or supplier is devices, Medicare, Reporting and
alternatives and, if regulation is that by deferring repayment of the recordkeeping requirements, Rural
necessary, to select regulatory overpayment until final action by the areas, X-rays.
approaches that maximize net benefits QIC, the provider would owe additional
(including potential economic, interest. However, the provider or For the reasons set forth in the
environmental, public health and safety supplier can avoid the additional preamble, the Centers for Medicare &
effects, distributive impacts, and interest exposure by electing to satisfy Medicaid Services proposes to amend
equity). A regulatory impact analysis the debt by a lump sum payment or an 42 CFR chapter IV as follows:
(RIA) must be prepared for major rules installment payment while still PART 405—FEDERAL HEALTH
with economically significant effects pursuing the appeal. In addition, should INSURANCE FOR THE AGED AND
($100 million or more in any 1 year). We the overpayment determination be DISABLED
do not expect this proposed rule to have reversed at a level above the QIC, the
a substantial financial impact on provider or supplier potentially will Subpart C—Suspension of Payment,
beneficiaries, providers, or suppliers. receive additional interest beyond what Recovery of Overpayments, and
We do anticipate that Federal costs to CMS would be obligated to pay under Repayment of Scholarships and Loans
implement this proposed rule may be current regulations. Therefore, we

substantial, but we do not expect them expect the impact of this proposed rule 1. The authority citation for subpart C
to exceed the $100 million threshold in to be positive although the extent to is revised to read as follows:
any 1 year. which it would benefit any one provider Authority: Secs. 1102, 1815, 1833, 1842,
The RFA requires agencies to analyze would depend upon specific facts and 1866, 1870, 1871, 1879, 1892 and 1893 of the
options for regulatory relief of small circumstances and voluntary choices Social Security Act (42 U.S.C. 1302, 1395g,
1395l, 1395u, 1395cc, 1395gg, 1395hh, A. Revising paragraph (a); CMS has already recovered by
1395pp, 1395ccc and 1395ddd) and 31 U.S.C. B. Revising paragraph (b)(2); recoupment or otherwise.
3711.
C. Republishing paragraph (c)(1) * * * * *
2. Section 405.370 is amended by: introductory text; (2) Except as required by any
A. Designating the existing text as D. Revising paragraph (c)(1)(ii) subsequent administrative or judicial
paragraph (a); introductory text; reversal and specifically as provided in
B. Adding a new paragraph (b); E. Removing ‘‘or’’ from (c)(1)(ii)(B); paragraphs (i) and (j) of this section,
The additions read as follows: F. Revising paragraph (c)(1)(ii)(C); interest accrues from the date of final
§ 405.370 Definitions. G. Adding paragraph (c)(1)(ii)(D); determination as specified in this
H. Revising paragraph (c)(2); section.
(a) * * *
(b) For purposes of sections 405.378 I. Redesignating existing paragraph (h) * * * * *
and 405.379, the following terms apply: as paragraph (i) and existing paragraph (j) Special rule for provider or
Appellant means the beneficiary, (i) as paragraph (h) respectively; supplier overpayments subject to
assignee or other person or entity that J. Adding paragraph (j). § 405.379. If an overpayment
has filed and pursued an appeal determination subject to the limitation
§ 405.378 Interest charges on on recoupment under § 405.379 is
concerning a particular initial
overpayment and underpayments to reversed in whole or in part by an
determination. Designation as an providers, suppliers and other entities.
appellant does not in itself convey Administrative Law Judge (ALJ) or at
standing to appeal the determination in (a) Basis and purpose. This section, subsequent administrative or judicial
question. which implements sections 1815(d), levels of appeal and if funds have been
Fiscal intermediary means an 1833(j) and 1893(f)(2)(B) of the Act and recouped and retained by the Medicare
organization that has entered into a common law, and authority granted contractor, interest will be paid to the
contract with CMS in accordance with under the Federal Claims Collection provider or supplier as follows:
section 1816 of the Act and is Act, provides for the charging and (1) The applicable rate of interest is
authorized to make determinations and payment of interest on overpayments that provided in paragraph (d) of this
payments for Part A of title XVIII of the and underpayments to Medicare section.
Act, and Part B provider services as providers, suppliers, HMOs, (2) The interest rate in effect on the
specified in § 421.5(c) of this chapter. competitive medical plans (CMPs), and date the ALJ, the Medicare Appeals
Medicare Appeals Council means the health care prepayment plans (HCPPs). Council, the Federal district court or
council within the Departmental * * * * * subsequent appellate court issues a
Appeals Board of the U.S. Department (b) Basic rules. * * * decision reversing the overpayment
of Health and Human Services. (2) Except as provided in paragraph (j) determination in whole or in part is the
Medicare contractor, unless the of this section, interest accrues from the rate used to calculate the interest due
context otherwise requires, includes a date of the final determination as the provider or supplier.
fiscal intermediary, carrier, and defined in paragraph (c) of this section, (3) Interest will be calculated as
Medicare administrative contractor. and either is charged on the follows:
Party means an individual or entity overpayment balance or paid on the (i) Interest will be paid on the
listed in § 405.906 that has standing to underpayment balance for each full 30- principal amount recouped only.
appeal an initial determination and/or a day period that payment is delayed. (ii) Interest will be calculated on a
subsequent administrative appeal (c) Definition of final determination. simple rather than a compound basis.
determination. (1) For purposes of this section, any of (iii) Interest will be calculated in full
Qualified Independent Contractor the following constitutes a final 30-day periods and will not be payable
(QIC) means an entity which contracts determination: on amounts recouped for any periods of
with the Secretary in accordance with less than 30 days in which the Medicare
* * * * * contractor had possession of the funds.
section 1869 of the Act to perform (ii) In cases in which an NPR is not
reconsiderations under § 405.960 (iv) In calculating the period in which
used as a notice of determination (that the amount was recouped, days in
through § 405.978. is, primarily under part B), one of the
Remand means to vacate a lower level which the ALJ’s adjudication period to
following constitutes a final conduct a hearing are tolled under 42
appeal decision, or a portion of the
determination— CFR 405.1014 shall not be counted.
decision, and return the case, or a
portion of the case, to that level for a * * * * * (v) In calculating the period in which
new decision. (C) A written determination by a the amount was recouped, days in
Vacate means to set aside a previous Medicare contractor that effectuates a which the Medicare Appeals Council’s
action. redetermination which reversed in full adjudication period to conduct a review
3. In § 405.373, paragraph (e) or in part an overpayment are tolled under 42 CFR 405.1106 shall
introductory text is revised to read as determination and the written not be counted.
follows: determination reduces the amount of (4) If the decision by the ALJ,
the overpayment below the amount that Medicare Appeals Council, Federal
§ 405.373 Proceeding for offset or CMS has already recovered by district court or a subsequent Federal
recoupment. recoupment or otherwise; or reviewing court, reverses the
* * * * * (D) A written determination by a overpayment determination, as
(e) Duration of recoupment or offset. Medicare contractor that effectuates a modified by prior levels of
Except as provided in § 405.379, if a reconsideration by a Qualified administrative or judicial review, in
recoupment or offset is put into effect, Independent Contractor which reversed part, the Medicare contractor in
it remains in effect until the earliest of in full or in part an overpayment effectuating the decision may allocate
the following: determination and the written recouped monies to that part of the
* * * * * determination reduces the amount of overpayment determination affirmed by
4. Section 405.378 is amended by— the overpayment below the amount that the decision. Interest will be paid to the
provider or supplier on recouped (c) Rules of construction. (e) Initiating or Resuming

amounts that remain after this allocation (1) For purposes of this section, what Recoupment After Redetermination
in accordance with this paragraph (j) of constitutes a valid and timely request Decision.
this section. for a redetermination is to be (1) Recoupment that has been
5. Section 405.379 is added to read as determined in accordance with deferred or stopped may be initiated or
follows: § 405.940 and § 405.958. resumed if the debt (remaining unpaid
(2) For purposes of this section, what principal balance and interest) has not
§ 405.379 Limitation on recoupment of constitutes a valid and timely request
provider and supplier overpayments.
been satisfied in full and the provider or
for a reconsideration is to be determined supplier has been afforded the
(a) Basis and purpose. This section in accordance with § 405.974 through opportunity for rebuttal in accordance
implements section 1893(f)(2)(A) of the § 405.978. with the requirements of § 405.373
Act which limits recoupment of (d) General rules. through § 405.375. Recoupment may be
Medicare overpayments if a provider of (1) Upon receipt of a timely and valid resumed under any of the following
services or supplier appeals until a request for a redetermination of an circumstances:
decision is rendered by a Qualified overpayment, the Medicare contractor (i) Immediately upon receipt by the
Independent Contractor (QIC). shall cease recoupment of the Medicare contractor of the provider’s or
(b) Overpayments subject to overpayment in question. If the supplier’s request for a withdrawal of a
limitation. recoupment has not yet gone into effect, request for a redetermination in
(1) This section applies to the contractor shall not initiate accordance with § 405.952(a).
overpayments that meet the following recoupment. (ii) On the 30th calendar day after the
criteria: (2) If the redetermination decision is
(i) Is one of the following types of date of the notice of redetermination
an affirmation in whole or in part of the issued under § 405.956 if the
overpayments: overpayment determination,
(A) Post-pay denial of claims for redetermination decision is an
recoupment may be initiated or resumed affirmation in whole of the overpayment
benefits under Medicare Part A which is in accordance with paragraph (e) of this
determined and for which a written determination in question.
section. (iii) On the 30th calendar day after the
demand for payment has been made on (3) Upon receipt of a timely and valid
or after November 24, 2003; or date of the written notice to the provider
request for a reconsideration of an
(B) Post-pay denial of claims for or supplier of the revised overpayment
overpayment, the Medicare contractor
benefits under Medicare Part B which is amount if the redetermination decision
shall cease recoupment of the
determined and for which a written is an affirmation in part which has the
overpayment in question. If the
demand for payment has been made on effect of reducing the amount of the
recoupment has not yet gone into effect,
or after October 29, 2003; or overpayment.
the contractor must not initiate
(C) Medicare Secondary Payer (MSP) (2) Notwithstanding paragraphs (e)(i),
recoupment.
recovery where the provider or supplier (4) Following final action by the QIC (ii) and (iii) of this section, recoupment
received a duplicate primary payment on the reconsideration, the contractor must not be resumed, or if resumed,
and for which a written demand for may initiate or resume recoupment in must cease upon receipt of a timely and
payment was issued on or after October accordance with paragraph (f) of this valid request for a reconsideration by
10, 2003; or section. the QIC.
(D) Medicare Secondary Payer (MSP) (5) If the provider or supplier (f) Initiating or resuming recoupment
recovery based on the provider’s or subsequently appeals the overpayment after final action by the QIC on the
supplier’s failure to file a proper claim to the ALJ, the Medicare Appeals reconsideration request.
with the third party payer plan, Council, or Federal court, recoupment (1) Recoupment may be initiated or
program, or insurer for payment and, if remains in effect as provided in resumed upon final action by the QIC
Part A, demanded on or after November § 405.373(e). subject to the following limitations:
24, 2003, or, if Part B, demanded on or (6) If an overpayment determination is (i) The provider or supplier has been
after October 29, 2003; and appealed and recoupment stopped, the afforded the opportunity for rebuttal in
(ii) The provider or supplier can contractor may continue to recoup other accordance with the requirements of
appeal the overpayment as a revised overpayments owed by the provider or § 405.373 through § 405.375; and
initial determination under the supplier in accordance with this (ii) The debt (remaining unpaid
Medicare claims appeal process at 42 section. principal balance and interest) has not
CFR Parts 401 and 405 or as an initial (7) Amounts recouped prior to a been satisfied in full; and
determination for provider/supplier reconsideration decision may be (iii) If the final action by the QIC is
MSP duplicate primary payment retained by the Medicare contractor in the notice of the reconsideration, the
recoveries. accordance with paragraph (g) of this reconsideration decision either affirms
(2) This section does not apply to all section. in whole or in part the overpayment
other overpayments including, but not (8) If either the redetermination or determination, including the
limited to, the following: reconsideration decision is a full redetermination, in question.
(i) All Medicare Secondary Payer reversal of the overpayment (2) For purposes of this paragraph (f),
recoveries except those expressly determination or if the overpayment final action by the QIC on the
identified in this paragraph (b)(1)(i)(C) determination is reversed in whole or in reconsideration request is the earliest to
and (D); part at subsequent levels of occur of the following:
(ii) Beneficiary overpayments; and administrative or judicial appeal, (i) The QIC mails or otherwise
(iii) Overpayments that arise from a transmits written notice of the dismissal
adjustments shall be made with respect

cost report determination and are to the overpayment and the amount of of the reconsideration request in its
appealed under the provider interest charged. entirety in accordance with § 405.972;
reimbursement process of 42 CFR Part (9) Interest accrues and is payable in or
405 Subpart R–Provider Reimbursement accordance with the provisions of (ii) The QIC receives a timely and
Determinations and Appeals. § 405.378. valid request to withdraw the request
for the reconsideration in accordance (2) If the Medicare contractor also excess is released to the provider or
with § 405.972; or recouped funds in accordance with supplier.
(iii) The QIC transmits written notice paragraph (e) of this section, the amount (h) Relationship to Extended
of the reconsideration in accordance recouped may be retained by the Repayment Schedules.
with § 405.976; or Medicare contractor and applied first to
(iv) The QIC notifies the parties in accrued interest and then to reduce or If (1) a provider or supplier has been
writing that the reconsideration is being eliminate the outstanding principal granted an extended repayment
escalated to an ALJ in accordance with balance pending final action by the QIC schedule (ERS) under § 401.607(c); (2)
§ 405.970. on the reconsideration request. the overpayment for which the ERS has
(g) Disposition of funds recouped. been granted is one to which this
(1) If the Medicare contractor (3) If the final action by the QIC is a section is applicable; and (3) a valid and
recouped funds before a timely and dismissal, receipt of a withdrawal, a timely request for a redetermination has
valid request for a redetermination was notice that the reconsideration is being been received by the Medicare
received, the amount recouped may be escalated to an ALJ, or a reconsideration contractor, then notwithstanding the
retained and applied first to accrued which affirms in whole the language of § 401.607(c)(2)(iv), the
interest and then to reduce or eliminate overpayment determination, including provider or supplier will not be deemed
the principal balance of the the redetermination, in question, the in default if recoupment is not put into
overpayment subject to the following: amount recouped is applied to interest effect or stopped in accordance with
(i) If the redetermination results in a first, then to reduce the outstanding this section.
reversal, the amount recouped may be principal balance and recoupment may
(Catalog of Federal Domestic Assistance
applied to any other debt, including be resumed as provided under Program No. 93.778, Medical Assistance
interest, owed by the provider or paragraph (f) of this section. Program)
supplier before any excess is released to (4) If the final action by the QIC is a (Catalog of Federal Domestic Assistance
the provider. reconsideration, which reverses in Program No. 93.773, Medicare—Hospital
(ii) If the redetermination results in a Insurance; and Program No. 93.774,
whole the overpayment determination,
partial reversal and the decision reduces Medicare—Supplementary Medical
including the redetermination, in
the overpayment plus assessed interest Insurance Program)
question, the amount recouped may be
below the amount already recouped, the
applied to any other debt, including Dated: April 15, 2006.
excess may be applied to any other debt,
interest, owed by the provider or Mark B. McClellan,
including interest, owed by the provider
supplier to CMS or to HHS before any Administrator, Centers for Medicare &
or supplier before any excess is released
excess is released to the provider or Medicaid Services.
to the provider or supplier.
(iii) If the redetermination results in supplier. Approved: June 12, 2006.
an affirmation and the provider or (5) If the final action by the QIC is a Michael O. Leavitt,
supplier subsequently requests a reconsideration which results in a Secretary.
reconsideration, the Medicare contractor partial reversal and the decision reduces
may retain the amount recouped and the overpayment plus assessed interest Editorial Note: This document was
received in the Office of the Federal Register
apply the funds first to accrued interest below the amount already recouped, the
on September 18, 2006.
and then to outstanding principal excess may be applied to any other debt,
pending final action by the QIC on the including interest, owed by the provider [FR Doc. 06–8009 Filed 9–21–06; 8:45 am]
reconsideration request. or supplier to CMS or to HHS before any BILLING CODE 4120–01–P

Proposed Rule: Medicare: Provider and Supplier Overpayments Recoupment Limitation

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Proposed Rule: Medicare: Provider and Supplier Overpayments Recoupment Limitation

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55404 Federal Register / Vol. 71, No.

184 / Friday, September 22, 2006 / Proposed Rules

accept comments by facsimile (FAX)

BILLING CODE 4120–01–C

and appeals processes. The rebuttal or if we recoup. The new MMA

interest becomes payable by Medicare

the date of the written determination.

implement this proposed rule may be current regulations. Therefore, we

provider or supplier on recouped (c) Rules of construction. (e) Initiating or Resuming

adjustments shall be made with respect

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