CMS Pub. 100-06, ch. 5, § 410.5

Conditional Endorsements

(Rev. 50, 07-30-04)

Conditional endorsements are statements on the face of the check or associated

correspondence, which might suggest that the payer has discharged its obligation by

writing “paid in full” or like phrases that the payer intends as satisfaction/ extinguishment

of the debt. Guidelines from the General Accounting Office (GAO) state that agencies

must be extremely careful to avoid an unintended accord and satisfaction (i.e., an

agreement to accept a payment in full for an amount less than the amount claimed).

The following instruction shall be applied to checks or associated correspondence with a

conditional endorsement:

1) Medicare contractors shall deposit such a check within 24 hours of receipt in

accordance with CMS’s Medicare Financial Management Manual, Chapter 5

Financial Reporting, section 100.3 and record the check in the account entitled

“Other Liabilities – Unapplied Receipts” per Form CMS-750 instructions found

in Chapter 5, Financial Reporting, Section 210.

2) If any checks are not deposited within a 24-hour period, contractors shall record

those checks in the account entitled “Assets/Cash – Undeposited Collections”

per Form CMS-750 instructions found in Chapter 5, Financial Reporting,

section 210. Medicare contractors shall implement internal controls to ensure

the safeguarding of these Medicare checks until deposit.

3) Contractors shall immediately notify the debtor and/or the entity on whose

account the check is drawn, if not the debtor, by certified mail. The following

statement is suggested: This is to acknowledge the receipt of the repayment

in the amount of $XX, check number XX. The matter is being researched;

however, the amount of the repayment may be insufficient to discharge the

obligation and the debt may not be fully extinguished.

4) The check(s) shall than be processed as outlined under section 410.4 or 410.6 as

applicable.

The infrequent receipt of checks with conditional endorsements should not negatively

impact your production process. The standard letter needed to meet this requirement

shall be added to your automated letter processing or generated from a personal

computer.