CMS Pub. 100-06, ch. 4, § 60.1

Section 1914 of title XIX and 42 CFR §447.30 provide for CMS to withhold the Federal share of

Medicaid payments with respect to Medicaid providers that have, or previously had, a Medicare provider

agreement under §1866, and for physicians when:

• They have received an overpayment of title XVIII funds, and efforts to collect it have been

unsuccessful; or

• Efforts to secure from the provider, the necessary data and information to determine the amount, if

any, of the overpayment have been unsuccessful (i.e., a deemed overpayment because the provider

failed to file a cost report); and

• For physicians or suppliers, they have previously accepted Medicare payment on the basis of an

assignment under section 1842(b)(3)(B)(ii) of the Act, and during the 12 month period preceding

the quarter in which CMS proposes to withhold the Federal share of Medicaid payments for a

Medicare overpayment, submitted no claims under Medicare or submitted claims which total less

than the amount of the overpayment.

The CMS may order the State to withhold the Federal share of Medicaid payments of a provider to

recover Medicare overpayments plus accrued interest.

The FI/carrier shall establish whether or not a provider is subject to these procedures. The FI/carrier must

be sure the provider is participating in title XIX program prior to referring the case to the RO for

withholding. It shall refer only those cases that it is unable to collect through established procedures. The

RO resolves questions with respect to the provider's status in the Medicaid program.

Section 1914(a) of the Act permits, rather than requires, the Secretary to withhold the Federal share of

Medicaid payments to recover Medicare overpayments. To allow flexibility in the administration of this

provision, the ROs routinely determine whether it would be cost effective to withhold the Federal share.

If they determine that it is not feasible, they notify the FI/carrier, citing the reason for not processing the

collection request.

The provider may appeal the FI/carrier’s overpayment determination. The appeal procedures, however,

do not delay the withholding of the Federal share of payments due the Medicaid provider or physician.

If a provider is subject to the procedures for withholding the Federal share of Medicaid payments to

recover the Medicare overpayment and it has not met the conditions in the second demand letter, the

FI/carrier shall contact the RO with a recommendation to initiate withholding action.

If the RO determines that withholding the provider’s federal share of Medicaid payments would be cost

effective, the RO may request copies of the case file, which may include cost reports, demand letters, and

copies of all correspondence and contact with the provider.

To implement the withholding action, the RO notifies the provider and the State Agency (SA) responsible

for the State's title XIX expenditures. The withholding of Federal payments under title XIX remains in

effect until notice is received by the title XIX SA through the RO that:

• The overpayment has been refunded,

• Satisfactory arrangements have been made for repayment, or

• There is no overpayment based upon new evidence or a subsequent audit.

When the withholding of Federal payments under title XIX is no longer necessary, it will be lifted and the

provider again receives Federal title XIX payments for Medicaid services rendered.

The FI/carrier shall notify the RO immediately if the provider submits an acceptable cost report or makes

satisfactory arrangements for the repayment of the overpayment. It includes the date the delinquent cost

report was filed or satisfactory arrangements for the repayment were made. Because the withholding

process is a lengthy one, the RO may revoke a withholding before its effective date if the provider

submits a satisfactory cost report or if it makes satisfactory arrangements for repayment.

The RO monitors the collection and advises the FI/carrier when the overpayment is recovered. If an

excess amount is withheld, it advises the FI/carrier to restore any excess.