CMS Pub. 100-04, ch. 1, § 30.2.14.1

A. Developing Questionable Payment Arrangements

Contractors (both FIs and Carriers) should assume that an arrangement in which

Medicare payment is being sent or is to be sent to an address other than the physical

location of the provider/supplier is consistent with the requirements of §30.2 in the

absence of evidence to the contrary. However, develop the facts of any case in which:

• The contractor becomes aware that it is mailing or asked to mail the

provider/supplier’s payments to the address of another person or organization;

and

• It is likely the other person or organization is not qualified to receive payments

under one of the exceptions in §30.2.1 or is a financial institution. (See §30.2.5.)

Contractors must develop the facts of the case, e.g., where it appears that the contractor is

mailing or asked to mail the provider provider/supplier’s payments to the address of a

company known to be engaging in factoring.

B. How to Develop Questionable Payment Arrangements

Discretion must be used in determining the procedure to follow in developing

questionable payment arrangements. Contractors should ascertain the reason for the

special address. Once it is determined that payments due the provider/supplier are being

made to another party (although in the name of the provider), the contractor must

ascertain whether any of the exceptions in §30.2.1 apply. After initial contact with the

provider/supplier, the contractor may find the other party to be the best source of

information about the arrangement. The contractor should establish the crucial elements

of the arrangement by obtaining a copy of the formal agreement, if any, between the

parties, copies of pertinent correspondence, and/or signed statements of the parties. The

failure of the provider/supplier to cooperate in furnishing the necessary information (or in

giving any necessary authorization for others to furnish information) is grounds (see

§30.2.15) for terminating the provider/supplier’s participation in the program and

revoking its right to receive assigned payment.

C. Change of Address

If the contractor determines that a person or organization is ineligible to receive payments

due a provider/supplier, routinely mailing the provider/supplier’s payments to that person

or organization’s address should be discontinued. However, such a mailing address is

acceptable if:

• The parties to the arrangement have given written assurances that the person or

organization to whose address the check is mailed will not convert the check to its

own use and control, or if the organization is a financial institution, that the

requirements of §30.2.5 are met; and

• The purpose of the arrangement makes the assurances credible.

An acceptable mailing arrangement could exist, e.g., when the provider/supplier wants its

checks mailed for bookkeeping purposes to a business agent who is ineligible to receive

the payment, and both the agent and the provider state in writing that the agent will

forward the checks to the provider’s bank for deposit in a business account from which

the provider/supplier is free to withdraw any deposited funds.

D. Reviewing Endorsements on Checks

In any case where the contractor, after developing the facts, continues to mail the

provider’s payments to an address which may be that of another person, but still doubts

that the arrangement is inconsistent with these instructions, review (after a reasonable

interval) endorsements on the returned checks for indications that the checks are being

negotiated under a power of attorney. When someone negotiates a provider/supplier’s

checks under a power of attorney, the provider/supplier’s name is typically printed on the

back of the check with the endorsee’s signature below, followed by “p.p.” or “p.p.a.” or

“p.o.a” (for per procuration, per power of attorney, or power of attorney).