CMS Pub. 100-06, ch. 4, § 40

In accordance with regulations (42 CFR §405.370), recoupment and suspension are defined as:

Recoupment- The recovery by Medicare of any outstanding Medicare debt by reducing present or future

Medicare payments and applying the amount withheld to the indebtedness.

Suspension of Payment- The withholding of payment by an intermediary or carrier from a provider of an

approved Medicare payment amount before a determination of the amount of the overpayment exists.

40.1 – Recoupment by Withholding Payments (Rev. 12346;

Issued:11-01-23; Effective:10-30-23; Implementation:10-30-23)

A. General

In accordance with regulations (42 CFR §§405.371-372), payments determined to be payable to providers

can be withheld to protect the Medicare program against financial loss if the intermediary has determined

that the provider to whom payments are to be made has been overpaid.

The withholding of interim payments may be partial (for example, a percentage of payments withheld or a

set amount) or complete.

B. Requirements for Withhold

Comply with the following conditions to withhold interim payments:

• Notify the provider in writing through the demand letter or in other correspondence of your intention

to withhold payments, in whole or in part; and

• Give the provider an opportunity to submit a statement (including any evidence) as to why the

withhold shall not be put into effect. Inform the provider it has l5 days following the date of the

notification to submit such a statement.

C. Cost Report Overpayments Percentage of Withhold

Some percentage of withhold shall begin 15 days after the date of the first demand letter (day 16) if the

overpayment has not yet been liquidated or an extended repayment plan has not been requested. The matrix

below shall be utilized to determine the percentage of withhold for an overpayment determined from a cost

report that has been filed (as filed cost report, tentative settlement, or final settlement), a PIP review, or an

interim rate review. See Chapter 3, §30.1 when a cost report remains unfiled.

NOTE: A set amount of withhold may be proposed instead of a percentage. The amount shall not be less

than the appropriate percentage unless specific instructions are received from RO or CO.

D. Physician/Supplier Overpayments- Withhold of Payments

Withhold of all payments shall begin 40 days (41st day) after sending the initial overpayment demand letter

unless payment in full has been received or an ERS application has been received. If an ERS application has

been received and is currently being reviewed by the MAC or CMS RO or CO and the good faith payment

was sent in by the provider with the application, no withhold shall occur. If the good faith payment did not

accompany the ERS application a 30% withhold shall be initiated.

Day 16 No word from

provider

100 % withhold

Day 16 Provider has submitted

Extended Repayment

Schedule (ERS)

application

No withhold if provider submitted a good faith

payment along with ERS application. Good faith

payments must continue on a monthly basis until

provider receives written approval or denial of

the ERS request. If good faith payment is not

received with the application request, withhold

shall be initiated at 30%.

Day 16 Provider has submitted

ERS application but it

is incomplete

No withhold as long as provider submitted a first

good faith payment along with ERS application.

If good faith payment is not received with the

application request, withhold shall be initiated at

30%. Once a completed application is

submitted, good faith payments or 30%

withholding must continue on a monthly basis

until provider receives written approval or denial

of the ERS request. If completed information is

not received within an allotted amount of time

(rarely more than 30 days) withhold shall be

initiated at 100%.

Day 16 Provider has said that it

is planning to submit

an ERS application

30% withhold- when ERS application is

received, cease withhold if a good faith payment

accompanies the application request; maintain

30% withhold if payment does not accompany

application.

Day 30 Still no word from

provider

Withhold at 100%.

Day 30+ ERS application is

being reviewed by RO

or CO

No withhold as long as provider continues to

submit appropriate good faith payments on a

monthly basis under the terms of the application

request. If provider did not submit a first good

faith payment or does not submit subsequent

payments, withhold shall be 30% of payments

unless RO or CO gives alternative instructions.

Day 30 Provider said an ERS

application was

forthcoming but has

not been received to

date

Increase withhold to 100%.

If provider calls with an acceptable reason for

the delay, make a judgment call to leave at 30%

until day 45 or refer to RO for direction.

Day 45+ No ERS application

and no payment by

provider

Withhold at 100%

NOTE: Additional Information for MACs

If extenuating circumstances exist and the MAC believe that a higher or lower percentage of withhold is

necessary to protect the Medicare Trust Fund, the MAC shall contact the servicing regional office for

guidance and/or approval. Some examples include knowledge that the provider may file bankruptcy, a

history of non-payment of overpayments, or evidence that the withhold percentage would cause irreparable

harm.

The payment submitted with the ERS application shall be one month’s payment based on the amortization

schedule submitted with the ERS application. The amortization schedule shall not exceed 60 months, shall

include principal and interest and the minimum monthly payment shall not be less than 1/60th of the

overpayment. If the provider requests an ERS in excess of 60 months the good faith payment submitted

shall be 1/60th of the overpayment. If the good faith payment submitted is not 1/60th of the overpayment, the

MAC shall contact the provider (in writing or a documented telephone call with the appropriate personnel at

the provider’s place of business) requesting additional funds. If the provider does not submit additional

funds within 15 days of the date of the request, the MAC shall initiate a 30% withhold.

Until a final decision is made regarding the ERS the provider should submit monthly good faith payments

based on the amortization schedule. If the provider does not continue to submit monthly good faith

payments, the MAC shall contact the provider requesting the payment. If the provider does not submit the

monthly payment within 15 days of the date of the request, the MAC shall initiate a 30% withhold until a

decision is made.

E. Disposition of Withheld Funds

All funds withheld shall be applied towards the outstanding overpayment. The funds shall be applied to the

outstanding and accrued interest first and then to the outstanding principal balance.

F. Duration of Withhold

The withhold shall remain in effect until:

• The overpayment is liquidated;

• You enter into an agreement with the provider for liquidation of the overpayment; or

• On the basis of subsequently acquired evidence, or otherwise, you determine that there is no

overpayment.