CMS Pub. 100-06, ch. 4, § 50.2

A. The contractor shall require that the provider (NOT a physician/sole proprietor) furnish the

following for an Extended Repayment Schedule (ERS) request of 15 months or less:

1. Signed Proposed Amortization Schedule – The CMS requires a signed request, including a

proposed monthly term and payment installment schedule, as a provider’s agreement to pay

its overpayment through installment payments. Signatures submitted in electronic form are

permissible.

2. Good Faith Payments – The CMS requires the provider to submit the first good faith

payment (per the proposed amortization schedule), along with any future payments due while

under review. Providers shall submit a good faith payment each month until the ERS review

is decided.

B. The contractor shall require that the provider (NOT a physician/sole proprietor) furnish the following

for ERS request of 16 months or more:

1. Signed Proposed Amortization Schedule – The CMS requires a signed request, including a

proposed monthly term and payment installment schedule, as a provider’s agreement to pay

its overpayment through installment payments. Signatures submitted in electronic form are

permissible.

2. Good Faith Payments – The CMS requires the provider to submit the first good faith

payment (per the proposed amortization schedule), along with any future payments due

while under review. Providers shall submit a good faith payment each month until the ERS

review is decided.

3. Balance sheets - the provider’s most current balance sheet and the balance sheet for the last

complete Medicare cost reporting period (or the most recent fiscal year).

NOTE:

If the time period between the two balance sheets is less than 6 months (or the provider cannot

submit balance sheets prepared by its accountant), it must submit balance sheets for the last two

complete Medicare cost reporting periods (for providers that file a cost report) or for the last two

complete fiscal years (for providers that don’t file a cost report).

4. Income statements - related to the balance sheets. The CMS requires that both the balance

sheets and income statements include similar agreement language:

MISREPRESENTATION OR FALSIFICATION OF ANY INFORMATION CONTAINED IN

THIS BALANCE SHEET OR INCOME STATEMENT SHALL BE PUNISHABLE BY FINE

AND/OR IMPRISONMENT UNDER FEDERAL LAW.

CERTIFICATION BY OFFICER/ADMINISTRATOR OF PROVIDER(S)

(For physicians/suppliers, “CERTIFICATION BY OFFICER/OWNER OF DEBTOR(S))

I HEREBY CERTIFY that I have examined the balance sheet and income statement prepared

by_______________________ and that, to the best of my knowledge and belief, it is a true,

correct and complete statement from the books and records of the provider.

Signed

Officer/Administrator of Provider(s) Title

(For physicians/suppliers: Officer/Owner of Debtor(s)

Title)

Date

5. Cash flow statements - for the periods covered by the balance sheets (see Exhibit 3 for

recommended format). If the date of the provider’s request for an extended repayment

schedule is more than 3 months after the date of the most recent balance sheet, a cash flow

statement shall be provided for all months between that date and the date of the request.

6. Projected cash flow statement - from the date of the request and covering the remainder of

the fiscal year. If fewer than 6 months remain, the provider shall include a projected cash

flow statement for the following year. (See Exhibit 3 for recommended format.)

7. List of restricted cash funds - by amount as of the date of request and the purpose for

which each fund is to be used (if applicable).

8. List of investments - by type (stock, bond, etc.), amount and current market value as of the

date of the report (if applicable).

9. List of notes and mortgages payable - by amounts as of the date of the report, and their due

dates (if applicable).

10. Schedule showing amounts - due to and from related companies or individuals included in

the balance sheets. The schedule should show the names of related organizations/persons,

TIN and NPI numbers. It shall also show where the amounts appear on the balance sheet--

such as Accounts Receivable, Notes Receivable, etc.

11. Schedule showing types - amounts of expenses (included in the income statements) paid to

related organizations. The schedule shall show names of the related organizations, TIN and

NPI numbers.

12. The percentage of occupancy- by type of patient (e.g., Medicare, Medicaid, private pay)

and total available bed days for the periods the income statements cover.

All financial records must be for the business participating in the program. It should not be for the owner if

the business is a partnership or a corporation. If an outside facility manages the financial aspects of the

business, the provider shall submit individual financial records, as well as the financial records of the outside

facility.

50.3 - ERS Approval Process (Rev. 12346;

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

Contractors shall not approve any Extended Repayment Schedule (ERS) if any of the following apply:

1. When there is reason to suspect that the provider may:

a) file for bankruptcy;

b) cease to do business;

c) discontinue participation in the program; or

d) when there is an indication of fraud or abuse committed against the program.

2. When any of the following is not submitted with request:

a) a signed request agreement;

b) all required documents;

c) a proposed term and installment schedule; and

d) the first installment payment (per the proposed installment schedule).

15 months or less ERS

The contractor shall review and confirm that none of the scenarios listed above apply. The contractor shall

review 12 months of claims and payment history and consider whether it supports full payment of the

overpayment within 15 months or less. Once the contractor determines ability to repay, it shall examine the

status of any outstanding overpayments, cost report settlements, advanced payments and accelerated

payments. In the case any of these overpayments are excessive, in default or delinquent, the contractor shall

determine if an ERS for 15 months or less is appropriate.

16 months or more ERS

The contractor shall review and confirm that none of the scenarios listed in the beginning of this section

apply. The contractor shall analyze the financial data submitted by the provider to determine the availability

of cash, marketable securities, accounts receivable, restricted and unrestricted endowment funds, or special

funds, and considers whether these funds could be used for partial or full payment of the overpayment (see

Exhibits 1-4 below).

The contractor shall review 12 months of claims and payment history, and considers whether it supports full

payment of the overpayment within the requested months. Once the contractor determines ability to repay, it

shall examine the status of any outstanding overpayments, cost report settlements, advanced payments and

accelerated payments. In the case any of these overpayments are excessive, in default or delinquent, the

contractor shall determine if an ERS is appropriate. The contractor shall reference and complete the ERS

protocol sheet (see Exhibit 1) while reviewing and once a decision is made.

The contractor should alter the length of time when approving an ERS request, based on its analysis of the

provider’s submitted documentation. For example, if a provider requests 24 months, but the contractor

determines that 12 months is sufficient, the contractor can deny the 24 month request and extend an offer of

a 12 month repayment plan.

The contractor should request additional financial information from the provider, if needed. It should also

request financial information from the owner if the owner is requesting to submit personal capital to help

repay the Medicare debt.

The contractor shall provide a recommendation to the RO; shall deny or approve for terms under its

authority; or shall request additional information from the provider within 30 days of receipt of the

completed ERS request.

If the provider is unable to furnish all of the required documentation listed in 50.1 and 50.2 of this chapter, a

full explanation shall be provided as to why this is the case. All documentation shall be received within 30

days of the date of the request (see § 50(2) of this chapter). Where the provider’s explanation is reasonable

and the documentation is otherwise acceptable, the contractor shall forward the request for extended

repayment to the RO with its recommendation, within 30 days receipt of the completed request. The

contractor shall comply with Chapter 4 §40 regarding recouping the overpayments pending receipt of the

provider’s documentation and the contractor’s decision on the extended repayment request.

If the provider is able to furnish all of the required documentation listed in 50.1 and 50.2 of this chapter timely,

the contractor shall approve, counter or deny the request within 30 days receipt of the completed request.

If the contractor determines that the provider DOES meet the requirements for an ERS, it shall:

a) notify the provider in writing, within 5 calendar days of making the decision;

b) include the amortization schedule showing principal and interest payment amounts and dates

payments are due; and

c) include approval information on the quarterly report (see § 50.4 of this chapter).

If the contractor determines that the provider DOES NOT meet the requirements for an ERS, it shall:

a) notify the provider in writing, within 5 calendar days of making the decision; and

b) include the denial reason, in the notification.

In the case the provider:

Rejects: If a provider rejects the approved terms, it shall submit a written and signed rejection notice to the

contractor. In this case, the contractor shall close out the request and follow normal recoupment policy and

procedures, at a recoupment rate of 100% of the provider’s payments.

Disagrees: If a provider requests additional month(s) due to hardship, the contractor shall elevate the

request to the RO for further review. When needed, the RO should contact CO for additional guidance.

No Response: If the provider has not responded, the contractor shall proceed with the ERS as outlined in

the approved schedule.

Exhibit I – Protocol for Reviewing Extended Repayment Schedule (ERS)

Provider _______________________________________________________

Provider Number _________________________________

(Part A Only) Cost Report ___________________________

FYE (Part B Only) Date(s) ___________________________

Overpaid Overpayment ______________________________

Amount $ ____________________________________

Date of Demand Letter _________________

No. of Months Requested for ERS ___________

Date of Request Received ___________________

Bankrupt ___ Terminated ___ Suspended ___ Revoked ___ Fraud ___ Documented ____

Decision Date (36 Months or less) _______ (36 or more) ______ # of Mos. Apprvd. ________

Date Referred to RO for Consideration __________________

Name of Contractor ____________________________

Decision Reason __________________________________________________________

Reviewed By ______________________________________________

Contractor Analyst __________________________________________

Supervisor Review __________________________________________

Date _______________________________________

1. Contractor shall summarize the major reasons why the overpayment occurred.

2. Contractor shall review the documentation the provider submits to determine

whether it is complete. (Refer to §50.1 and 50.2 for required documentation.)

Contractor analyzes the financial data submitted (for an ERS over 12 months) to

determine the availability of cash, marketable securities, accounts receivable,

restricted and unrestricted endowment funds, or special funds, and considers

whether these funds could be used for partial or full payment of the overpayment.

3. Contractor shall perform the following calculations by using the most current

financial data that the provider submitted to determine whether the provider qualifies

for an ERS.

(a) Current Ratio

The current ratio relates the dollar value of current assets to the dollar value of

current liabilities in order to evaluate an organization's ability to pay its current

debt. Derived as:

CURRENT ASSETS_______

= CURRENT LIABILITIES

This ratio defines the number of dollars held in current assets per dollar of

current liabilities (e.g., it relates current assets to current liabilities).

Multiple coverage of liabilities is desirable. Generally, high values for the

current ratio imply a good ability to pay short-term obligations and, thus, a

low probability of technical insolvency.

Normally, the contractor considers a current ratio of 2:1 adequate to meet

current liabilities. However, a provider with a current ratio of 2:1 or greater)

can have short-term payment problems if its current assets are not expected to

be in liquid form (cash or short-term investments) in time to meet the expected

payment dates of the current liabilities.

(b) Quick Ratio

A liquidity ratio which measures the number of dollars of liquid assets (cash

plus marketable securities plus accounts receivable) available per dollar of

current liabilities. Derived as:

CASH + MARKETABLE SECURITIES + ACCOUNTS RECEIVABLE

= CURRENT LIABILITIES

This is a more stringent measure of liquidity than the current ratio. The

contractor uses it to determine the adequacy of cash, accounts receivable, and

marketable securities to pay current liabilities.

Normally, the contractor considers a quick ratio of 1.5:1 adequate to meet

current liabilities. However, a provider with a high quick ratio can have short-term payment problems if it has excessive amounts of slow-paying or doubtful

accounts receivable, which it cannot turn into cash soon enough to meet

maturing current liabilities. Conversely, a low quick ratio might not imply a

future liquidity crisis if current liabilities include terms that will not require

payment from existing current assets.

4. The contractor for institutional providers shall determine whether there are any

settlements (interim rate adjustments or cost report) in process which could be

used to offset the outstanding overpayment.

5. Based upon the previous steps, the contractor shall summarize whether or not it

should approve or deny, or recommend approval of a repayment plan. If it

recommends approval, it indicates the number of months, how it calculated the

monthly payment and the reason(s) for the approval. If it recommends denial, it

indicates the reason(s).

Exhibit 2 - Cash Flow Statement Period Covered

CASH FLOW STATEMENT

FOR THE PERIOD

Cash provided by:

Operations (net) (Schedule A) (See Exhibit 4) $XXXX

Cash donations (unrestricted) XXXX

Long-term borrowing XXXX

Investment earnings (cash dividends, interest) XXXX

Sale of long-term investments XXXX

Sale of equipment XXXX

Issuance of bonds XXXX

Decrease in current assets – other than Accounts

Receivable, Prepaid Expenses, and Inventory XXXX

Increase in current liabilities – other than Accounts

Receivable, Prepaid Expense, and Inventory XXXX

Others XXXX

Total Cash Provided $XXXX

CASH FLOW STATEMENT

FOR THE PERIOD

Cash applied to:

Purchase of equipment $XXXX

Payment of long-term debt XXXX

Purchase of long-term investments

Payment of dividends

Purchase of land and/or building XXXX

(Purchase price less mortgage, capital stock

and non-cash assets given toward purchase)

Increases in current assets - other than XXXX

Accounts Receivable, Prepaid Expenses, and Inventory

Decreases in current liabilities – other than XXXX

Accounts Payable and Prepaid Income

Other XXXX

Total Cash Applied XXXX

Increase (Decrease) in Cash $XXXX

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

- - Cash at end of period (date) $XXXX

Less: Cash at beginning of period (date) XXXX

Increase (Decrease) in Cash XXXX

Exhibit 3 - Projected Cash Flow Statement Cash from Operations

(Schedule A) Period Covered

PROJECTED CASH FLOW

CASH FROM OPERATIONS (SCHEDULE A)

Net Income (or Net Loss)

$XXXX Increases: Depreciation expense

$XXXX

Loss from sale

of equipment

XXXX

Decrease in net Accounts

Receivable XXXX

Decrease in

Prepaid

Expense

XXXX

Decrease in Inventory XXXX

Increase in

Accounts

Payable

XXXX

Increase in Prepaid Income XXXX

Others XXXX

XXXX Gross Cash

from

Operations

Decreases: Gain from sale of equipment $XXXX

Increase in net Accounts Receivable XXXX

Increase in Prepaid Expense XXXX

Increase in Inventory XXXX

Decrease in Accounts Payable XXXX

Decrease in Prepaid Income XXXX

Others XXXX

XXXX Net Cash from Operations

XXXX

$XXXX

Requirements to be Completed Before

Approval or Denial

15 Months or Less 16 Months or More

Received and Reviewed all required

documentation

X X

Received and Applied

submitted payments while under review

X X

Complete ERS Protocol

(See Exhibit 1)

X

Analyzed Financial

Statements

X

Reviewed last 12 months Claim

History

X X

Reviewed last 12

months Payment

History

X X

Reviewed status of

Additional Outstanding

Overpayments

X X

Confirmed No Active

Bankruptcy

X X

Confirmed Enrollment

Status is not– Terminated, Revoked,

Suspended

X X

Reviewed status of

Outstanding

Advance/Accelerated

Payments

X X

Part A-

Reviewed status of

Outstanding

Cost Report Settlements

X X

Confirmed No

Outstanding Fraud

Investigations with CPI Staff

X X

Sent to RO/CO for opinion

(if needed)

X X

50.4 – Sending the ERS Request to the Regional Office (RO) (Rev. 12346;

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

After the contractor has reviewed the provider’s supporting documentation and determines that a referral

to the RO is needed, it shall send its recommendation to the RO for consideration of approval. The

contractor shall submit the following:

1. A copy of all information the provider submitted.

2. The date of the initial contact between the contractor and the provider regarding the

overpayment.

3. Copies of all correspondence, including demand letters and the complete Extended Repayment

Schedule (ERS) request. Also include notes of telephone conversations, if any.

4. Part A - The amount of the overpayment; cost report year in which it occurred; dates and

amounts of any repayments; dates and amounts of payments (interim or retroactive) held in

account.

5. Part B - The amount of the overpayment, claim paid date, dates and amounts of any

repayment.

6. Part A - The cost reports in which the overpayments appeared or were found. The contractor

shall furnish any information it has on the financial status of related organizations, as

determined through audits and other sources, such as mercantile reports.

7. Documentation reflecting current enrollment status along with any bankruptcy, fraud and abuse

and other litigation cases.

8. Amount repaid to date on pending ERS request along with current status on any additional

outstanding overpayments.

9. The provider’s proposed repayment plan and rationale.

10. The contractor’s recommendation and supporting rationale including a completed ERS protocol

(See Exhibit 1) and the last 12 months’ claim and payment history.

11. The contractor’s opinion, based on experience, as to the reliability of the financial data.

The RO will grant a provider an ERS of:

(a) Up to 36 months if repaying an overpayment in full will constitute a “hardship,” as defined in

section 50 of this chapter.

(b) 37 months up to 60 months if repaying an overpayment in full will constitute an “extreme

hardship,” as defined in section 50 of this chapter. See also 42 CFR 401-607(c)(2)(vi).

If the contractor receives no response from the RO in 30 days, the contractor shall follow up with the RO

for a status update.

NOTE: An ERS shall be repaid through recoupment, unless a provider supplies a valid reason why the

ERS shall be paid by another method, such as payment by check.