CMS Pub. 100-06, ch. 4, § 30.2

The interest rates on overpayments and underpayments are determined in accordance with regulations

promulgated by the Secretary of the Treasury and is the higher of the private consumer rate or the current

value of funds rate prevailing on the date of final determination. Interest accrues from the date of the initial

request for refund and is assessed for each 30-day period, or portion thereof, that payment is delayed after

the initial refund request.

The private consumer rate, historically higher than the current value of funds rate, is subject to quarterly

revision. The Department of the Treasury certifies the revised rate to the Department of Health and Human

Services on a quarterly basis. Medicare contractors will be receiving subsequent quarterly updates of the

new interest rate for Medicare overpayments and underpayments through a recurring update notification.

Interest assessed for both late payments and installment payments is computed as simple interest using a

360-day year. Simple interest is interest that is paid on the original principal balance and after each payment

interest accrues on the remaining unpaid principal balance. Interest charges will not be prorated daily for

overdue payments received during the month (e.g., 10, 15, or 20 days late). Interest is assessed for the full

30-day period. The interest rate on each of the final determinations will be the rate in effect on the date the

determination is made.

If periodic but unscheduled payments or credits are made in different calendar quarters, the quarterly rate

prevailing at the time of the final determination is charged and remains the same until the debt is liquidated.

Interest must be recalculated based on the outstanding balance at 30-day intervals from the date of final

determination.

Per The Debt Collection Improvement Act of 1996, the interest rate charged on overpayments repaid

through an approved extended repayment schedule is the rate that is in effect for the quarter in which the

determination was made. The rate remains constant unless the provider defaults (i.e., misses one

consecutive installment payment following a delinquent status) on an extended repayment agreement. When

the provider defaults on such an agreement, interest on the balance of the debt may be changed to the

prevailing rate in effect on the date of the default if that rate is higher than the rate specified in the

agreement.