CMS Pub. 100-04, ch. 1, § 80.2.2

Interest must be paid on clean claims if payment is not made within the applicable

number of calendar days (i.e., 30 days) after the date of receipt as described above. The

applicable number of days is also known as the payment ceiling. For example, a clean

claim received on March 1, 2009, must have been paid before the end of business on

March 31, 2009. Interest is not paid on:

• Claims requiring external investigation or development by the provider’s FI or

carrier;

• Claims on which no payment is due;

• Full denials;

• Claims for which the provider is receiving PIP; or

• HH PPS RAPs

Interest is paid at the rate used for §3902(a) of title 3l, U.S. Code (relating to interest

penalties for failure to make prompt payments). The interest rate is determined by the

applicable rate on the day of payment.

This rate is determined by the Treasury Department on a 6-month basis, effective every

January and July 1. Providers may access the Treasury Department Web page

http://fms.treas.gov/prompt/rates.html for the correct rate. Medicare contractors shall

include notification to providers of any change to the Treasury Department interest rate in

their routine educational materials and/or website for providers.

Interest is calculated using the following formula:

Payment amount x rate x days divided by 365 (366 in a leap year) = interest payment

The interest period begins on the day after payment is due and ends on the day of

payment.

NOTE: The example below is for one 6-month period in which the interest rate was

5.625 percent.

Milestones Clean Paper Claim

(in calendar days)

Clean Electronic Claim

(in calendar days)

Date Received March 1, 2009 March 1, 2009

Payment Due March 31, 2009 March 31, 2009

Payment Made April 3, 2009 April 3, 2009

Interest Begins April 1, 2009 April 1, 2009

Days for Which Interest is

Due

3 3

Amount of Payment $100 $100

Interest Rate 5.625% 5.625%

See section 80.2.1.1 for the definition of EMC and paper claims.

The following formula is used:

For the clean paper claim - $100 X .05625 X 3 divided by 365 = $.0462 or $.05

when rounded to the nearest penny.

For the clean electronic claim - $100 X .05625 X 3 divided by 365 = $.0462 or

$.05 when rounded to the nearest penny.

When interest payments are applicable, the Medicare contractor reports the amount of

interest on each claim on the remittance record to the provider.

PIP/Non-PIP:

Under the periodic interim payment ("PIP”) mechanism, a provider receives flat biweekly

payments to approximate the average costs of covered inpatient services during a 2-week

period. Non-PIP claims are claims made by a provider not under the periodic interim

payment mechanism. PIP on inpatient bills does not preclude interest payments on

outpatient bills. Interest is paid on a per bill basis at the time of payment.