What is Medicare Overpayment?
A Medicare overpayment is a payment that exceeds amounts properly payable under Medicare statutes and regulations. When Medicare identifies an overpayment, the amount becomes a debt Provider owes the Federal government. Federal law requires the Centers for Medicare & Medicaid Services (CMS) to recover all identified overpayments. Medicare overpayments commonly occur due to:
- Incorrect coding
- Insufficient documentation
- Medical necessity errors
- Processing and other administrative errors
The provider must report and return a self-identified overpayment to Medicare as outlined in Section 1128J(d) of the Social Security Act (the Act) within:
- 60 days of overpayment identification
- 6 years from overpayment receipt, generally referred to as the “lookback period”
- If applicable, the cost report due date
When an overpayment is $25 or more, Provider Medicare Administrative Contractor (MAC) initiates overpayment recovery by sending a demand letter requesting repayment.
Overpayment Collection Tools
A MAC demand letter explains:
- The overpayment reason
- Interest begins to accrue if the Provider does not repay the overpayment in full within 30 days
- Immediate recoupment request options
- Extended Repayment Schedule (ERS) request options
- Rebuttal rights
- Appeal rights
The provider may choose from these options when responding to an initial demand letter:
- Make an immediate payment
- Request immediate recoupment
- Submit a rebuttal
- Appeal the overpayment by requesting a redetermination
- Immediate Payment – Follow the demand payment letter directions.
- Request Immediate Recoupment – This occurs when Medicare recovers an overpayment by offsetting future payments. Recoupment may be partial (for example, a percentage of payments recouped) or complete. Upon Provider request, Provider MAC can begin recoupment immediately by following the demand letter instructions. Establishing immediate recoupment applies to all current and future debts unless otherwise specified.
- Request Standard Recoupment – Provider MAC automatically begins standard recoupment according to the Overpayment Debt Collection Activities chart schedule. Interest may accrue if the debt becomes delinquent.
- Request an ERS – Follow the instructions in the MAC ERS demand letter if the Provider cannot make the full overpayment in the required timeframe.
- Rebuttal – Submit a rebuttal within 15 calendar days from the date Provider receive the MAC demand letter. Explain or provide evidence why no recoupment should occur in a Provider rebuttal statement. The MAC promptly evaluates the Provider rebuttal statement. NOTE: A rebuttal is different than an appeal and does not stop recoupment activities.
- Appeal – Provider or Provider representative can file a request for an appeal if Provider disagrees with an overpayment decision. Medicare Part A and Part B have five appeal levels:
- A redetermination is the first appeal level after the initial Part A and Part B claims determination. The MAC takes a second look at the claim and supporting documentation. A MAC employee uninvolved in the initial determination makes the redetermination.
- Reconsideration by a Qualified Independent Contractor (QIC).
- Hearing by an Administrative Law Judge or Review by an Attorney Adjudicator at the Office of Medicare Hearings and Appeals (OMHA).
- Review by the Medicare Appeals Council.
- Judicial Review in U.S. District Court. Refer to the Medicare Parts A & B Appeals Process booklet for more information about appeals.
Overpayment Collection Process
If Provider fails to pay in full, Provider receives an ITR letter 60–90 days after the initial demand letter. The ITR letter advises Provider to refund the overpayment or establish an ERS. Otherwise, your debt is referred for collection. CMS refers to the overpayment debt to the Treasury or to a Treasury-designated Debt Collection Center (DCC). Either the Treasury or the DCC works through the Treasury Offset Program (TOP) to collect the overpayment. The Treasury may effectively collect the debt that agencies refer using:
- Demand letters
- Phone follow-up
- Skip tracing
- Administrative offset referrals
- Private collection agency referrals, which may collect the debt with skip tracing, credit report search, demand letters, and phone calls
- Federal salary offset
- Administrative wage garnishment
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