CMS Pub. 100-06, ch. 3, § 140.6.2

The Medicare Provider Agreement is considered an executory contract for purposes of bankruptcy.

Bankruptcy law permits a debtor to affirm ("assume") or reject each of its executory contracts. The

debtor must first get the formal approval of the bankruptcy court. If the debtor formally assumes the

Medicare provider agreement, and the Bankruptcy Court approves that assumption, the relationship

between the provider and Medicare will generally return to the ordinary course of business. The CMS

Office will inform the Contractor if the provider assumes the Provider Agreement.

If the debtor rejects the Provider Agreement, the rejection is a voluntary termination of the Provider

Agreement. The CMS Office will inform the Contractor if the provider terminates its provider

agreement in this way. The Contractor should not reimburse the provider for services it performs after

the date it rejects/terminates the Provider Agreement. If the bankrupt provider sells a facility to another

entity and that entity assumes the debtor's provider agreement, any outstanding Medicare

underpayments or overpayments regarding that facility should be transferred to the new owner (the

purchaser) when the new owner assumes the provider agreement. Although the debtor and the new

owner may have a private agreement regarding who is responsible for refunding Medicare

overpayments and who should receive any Medicare underpayments, CMS is not bound by such

agreements.

The Contractor shall calculate net amounts that may be due to or owing from the debtor.