CMS Pub. 100-06, ch. 5, § 80.2

The Medicare Contractor Monthly Cash Collections Worksheet is to identify cash

collections deposited in the Medicare Trust Funds related to Provider Overpayments.

The Medicare contractors are to follow the line by line instructions for completing the

collections worksheet. The instructions are to provide uniformity throughout all

contractors for the calculations of the data used to populate each line item. Medicare

contractors are required to maintain supporting documentation for the amounts reported

on the Medicare Contractor Monthly Cash Collections Worksheet.

Medicare contractors are required to submit the worksheet via email to

cashcollection@cms.hhs.gov on the 15th day of the following month end. For year-end,

Medicare contractors may be required to submit the Monthly Cash Collections

Worksheet in an accelerated time frame.

A. Total Monthly Principal Deposit (Using Forms CMS-1522, Forms CMS-751)

Line 1 - Enter the total ‘Other Deposits’ (Line 16b, Form CMS-1522) for the

reporting period (e.g., June 30, etc.).

Line 2 - Enter ‘Deposits-In-Transit’ (Line 20, Form CMS-1522) for the month

prior to the reporting period (e.g., May 31, etc.).

Line 3 - Enter ‘Deposits-In-Transit’ (Line 20, Form CMS-1522) for the reporting

period (e.g., June 30, etc.).

Line 4 – Enter the sum of Line 1 minus (-) Line 2 plus (+) Line 3 equal (=) ‘Total

Monthly Deposits.

Monthly Interest (Cash) Collections

Line 5 – Enter the total ‘Received-Provider Overpayment’ (Line 1, page 4, Form

CMS-1522) for reporting period (e.g., June 30, etc.).

Line 6 – Enter the total ‘Interest Offset’ for the reporting period. Total ‘Interest

Offset’ must equal the amount of the offset collections included in the

amount reported on Line 1, page 4/4, Form CMS-1522 and included in

the amount of the offset reported on Line 4b, Form CMS 751 for the

quarter ending June 30, 2005.

Line 7 – The sum of Line 5 minus (-) Line 6 equal (=) Monthly Interest Cash

Collections.

Line 8 – Monthly Interest Cash Collections = Line 7.

Line 9 – The sum of Line 4 (Total Monthly Deposits) minus (-) Line 8 Monthly

Interest Cash Collections) = Total Monthly Principal Cash Deposits.

B. Calculate HI/SMI Percentage Split (FI Only) – 12 month rolling average

Line 10 – Enter the sum of Line 4a (principal), Form CMS-751A (quarter ending

June 30, 2005). For example, Line 4a (principal) for the period ending

June 2005 plus (+) [Line 4a (principal), Form CMS-751A (period

ending September 2004) minus (-) Line 4a (principal), Form CMS-

751A (period ending June 2004)]. The sum of Line 4a (period ending

September 2004) minus Line 4a (period ending June 2004) must equal

Cash Collections for the period July 2004 – September 2004.

(NOTE: 12 months of most recent HI principal Cash Collections (e.g., July

2004 - June 2005))

Line 11 - Enter the sum of Line 4a (principal), Form CMS-751BA (quarter ending

June 30, 2005). For example, Line 4a (principal) for the period ending

June 2005 plus (+) [Line 4a (principal), Form CMS-751BA (period

ending September 2004) minus (-) Line 4a (principal), Form CMS-

751BA (period ending June 2004)]. The sum of Line 4a (period ending

September 2004) minus Line 4a (period ending June 2004) must equal

Cash Collections for the period July 2004 – September 2004.

(NOTE: 12 months of most recent SMI principal Cash Collections (e.g., July

2004 - June 2005))

Line 12 – Enter the sum of Line 10 plus (+) Line 11 = Total HI/SMI collections.

Line 13 – Enter the HI percentage split. The result of Line 10 divided by Line 12.

Line 14 – Enter the SMI percentage split. 1.00 minus the HI percentage split

(Line 13).

(NOTE: Line 14 must equal Line 11 divided by Line 12)

C. HI Monthly Cash Deposit = HI percentage split (Line 13) multiplied by Total

Monthly Principal Cash Deposit (Line 9).

D. SMI Monthly Cash Deposit = HI percentage split (Line 13) multiplied by Total

Monthly Principal Cash Deposit (Line 9).

E. The Chief Financial Officer (CFO) is required to certify/sign the Medicare

contractor Cash Collection Worksheet Attachment I (electronic signature is

acceptable if the email is sent by the CFO), as an indication of the

correctness/completeness of the data in accordance with applicable instructions.

(NOTE: The sum of C and D must equal Total Monthly Principal Cash Deposits

(Line 9))

90 - Intermediary Benefit Payment Report (Form CMS-456) – (Rev. 5,

08-30-02)

A1-1414

90.1 - Purpose and Scope - (Rev. 5, 08-30-02)

A1-1414.1

The Intermediary Benefit Payment Report (IBPR) is a report of current monthly

information that covers the categories of benefits the contractor paid and selected

statistical data that relates to those payments. CMS uses this data to:

Track benefit payments by type of provider to detect significant shifts in program

expenditures;

Monitor implementation of new programs, e.g., hospice benefits, and comprehensive

outpatient rehabilitation benefits; and

Identify operation problem areas for resolution by the contractor or CMS.

90.2 - Due Dates and Transmittal - (Rev. 5, 08-30-02)

A1-1414.2

Contractor shall input the reports accompanying the reconciliation between IBPR and the

Monthly Intermediary Financial Report (Form CMS-1522) into the CAFM system 20

work days following the report month.

90.3 - Verification of Data - (Rev. 5, 08-30-02)

A1-1414.3

The various subsidiary records that include the individual provider files must support the

data entered on the report.

The contractor must have the capability to trace all data entered on the report to the

individual provider files.

Where applicable, the Provider Statistical and Reimbursement Report and other provider

reports containing benefits paid data must support the data on the report.

90.4 - Accuracy of Data Contained on Report and Reconciliation of

Data Reflected on Monthly Intermediary Financial Report (Form CMS-

1522) - (Rev. 5, 08-30-02)

A1-1414.4

The contractor must ensure that all data reflected on the report is accurate.

Line 36, column (g) of the report, should equal the amount shown on the CMS-1522,

column (d), lines 1 and 2 in the aggregate. In the event that the amounts do not agree, the

contractor shall complete a reconciliation report.

90.5 - General Reporting Instructions - (Rev. 5, 08-30-02)

A1-1414.5

Where money is withheld from payments due the provider (as an offset) for monies due

the contractor, the contractor shall show the gross amount (less any deductibles,

coinsurance, interest, or sequestration) as the payment on the appropriate line and

column. It shall show the offset as a negative amount in its appropriate line and column.

For example, when the contractor reduces a PPS Periodic Interim Payment (PIP) for a

settlement amount due from the provider, it shall record the gross PIP amount (less any

deductibles, coinsurance, interest, or sequestration) on line lA in column 1 (a) or 1(b), as

appropriate. It shall record the offset on line 6B in column 1(a) or 1(b), as appropriate.

However, it shall record a claim adjustment (e.g., a PRO disallowance or subsequent

reversal) as a reduction of claims payments on line 2A for a non-PIP/PPS hospital.

Where the contractor makes an accelerated payment and the provider repays a portion of

the accelerated payment during the same reporting period, the contractor shall show the

net amount on the appropriate line and column.

For example, when an accelerated payment of $100,000 is made to a provider during the

period, and the provider repays $30,000 during the same period, the contractor shows

$70,000 as the net accelerated payment.

In situations where an accelerated payment is made during the period, and the contractor

recovers a portion of the accelerated payment through reduction of interim payments, it

shall show the gross amount (less any deductibles, coinsurance, interest, or sequestration)

of interim payments as payment on the appropriate line and column. It shall show the

offset amount as a negative amount on the appropriate line and column.

For example, when an accelerated payment is made for $100,000 and later in the month

$30,000 of the accelerated payment is recouped by offset against PPS/PIP amounts of

$150,000 paid to the provider, the contractor shows the $150,000 gross PPS/ PIP amount

on line 1A in column 1(a) or 1(b), as appropriate. It shows a net accelerated payment of

$70,000 ($100,000-$30,000) on line 7 in column 1(a) or 1(b), as appropriate.

90.6 - Instructions for Completion of the IBPR - (Rev. 5, 08-30-02)

A1-1414.6

A. Heading

The contractor enters its name and assigned number. Multi-regional intermediaries use

the number assigned to the home office for administrative budget and cost reporting

purposes. The contractor shall furnish a consolidated report for all locations.

The contractor enters the calendar month and year as a four-digit entry, e.g., 1000, 1100,

1200, 0101.

B. Column Definitions - Page 1

Column (a) - Single Facility - refers to payments to PPS hospitals that do not have

distinct part facilities, such as SNFs, HHAs, psychiatric units, or rehabilitation units.

• Column (b) - Facility With Distinct Parts - refers to payments to PPS hospitals

that include distinct parts, such as SNFs, HHAs, psychiatric units, or

rehabilitation units.

NOTE: The contractor enters non-PPS payments to the distinct part on the appropriate

line and column of page 2.

• Column (c) - Non-PPS Payment - refers to payments to the following:

o Hospitals excluded from PPS (e.g., psychiatric, children's, rehabilitation

and long term);

o Hospitals receiving payments via an alternative payment program (waiver

States);

o Hospitals yet to be phased into PPS; and

o PPS hospitals for bills or underpayments applicable to pre-PPS fiscal

years.

• Column (d) - Total - refers to the total of columns (a), (b), and (c).

C. Line Item Definitions - Page 1:

1. Hospital Inpatient (PIP) - refers to hospitals paid by the PIP method. The

contractor shall show these figures less any deductibles, coinsurance, and interest

for all items on the PIP bills and any sequestration applicable to this line with any

offsets shown on line 6A or 6B.

A. Inpatient Operating Payments - refers to the amount of the PIP that covers

items that would otherwise be paid on a per claim basis plus those items

paid on a per claim basis in addition to PIP payment. (Such as payments

for outliers and hemophilia blood clotting factor add-on.)

The contractor enters the PIP amounts paid as follows:

PPS Provider Payments - Payments related to services furnished after

conversion to PPS in columns 1(a) or 1(b), as applicable. This includes outlier

payments, hemophilia blood clotting factor add-on payments, disproportionate

share amounts, indirect medical education, ESRD payments, and phased-in

capital-related costs during the transition period. Non-PPS Provider Payments

- column (c) - Payments related to services furnished prior to conversion to

PPS. Payments to all providers listed in the definitions for column (c).

B. Pass Through Costs - Contractor enters the PIP payments, including any

withholdings, but less any sequestration amounts for items paid on a

reasonable cost basis as follows:

• Capital;

• Direct medical education which includes nursing and paramedical

health professional (allied health) programs and graduate medical

education;

• Kidney and other organ acquisitions;

• Bad debts; and

• Nonphysician anesthetists.

NOTE: This includes that part of capital-related costs not included in line

1A.

C. Indirect Medical Education - Contractor enters the PIP payments for the

indirect medical education adjustment, whether on a PIP or a claim-by-claim basis for PIP providers, less any sequestration (already included in

line 1A).

NOTE: Contractor shall make entries on this line for memorandum purposes

only to identify the amount of indirect medical education for PIP hospitals.

2. Hospital Inpatient (Non-PIP), refers to hospitals paid based upon bills reviewed

and approved. Contractor shall show total payments less any reductions on line

6A or line 6B.

A. DRG Bills Paid/Non-DRG Bills Paid - Contractor enters the calculated

payment less any deductibles, coinsurance, and interest for all items on the

bill and any sequestration applicable to this line. It shall include payments

for outliers, disproportionate share, indirect medical education, high

percentage of end-stage renal disease beneficiary discharges, and

hemophilia blood clotting factor add-on payments on a claim-by-claim

basis. Also, it shall include phased-in capital-related costs during the

transition period.

For DRG bills, it shall use columns (a) and (b). For non-DRG bills paid, it

shall use column (c).

It shall report all retroactive adjustments pertaining to hospitals on line 6A or

6B.

B. Pass Through Costs - The contractor enters the interim payments, less any

sequestration, for items paid on a reasonable cost basis as follows:

• Capital;

• Direct medical education which includes nursing and paramedical

health professional (allied health) programs and graduate medical

education;

• Kidney and other organ acquisitions;

• Bad debts; and

• Nonphysician anesthetists. NOTE: This includes that part of the

capital-related costs that are not included in line 2A.

C. Indirect Medical Education - Contractor enters the interim payments for

the indirect medical education adjustment (already included in line 2A).

NOTE: Contractor shall make entries on this line for memorandum purposes only to

identify the amount of indirect medical education for non-PIP hospitals. It shall not

adjust these amounts for MSP or sequestration.

3. Outlier Payments - Contractor enters additional amounts paid for outlier cases.

NOTE: Contractor shall make entries on this line for memorandum purposes only to

identify the total outlier payments that are found in the UB82 billing form in Locator 46-

49 in Value Code 17. These amounts are already included in the amounts recorded on

lines lA and 2A.

A. Days - The contractor enters additional payments made as a result of the

length of stay exceeding the day outlier threshold criteria. It shall make

entries on this line for memorandum purposes only. These are non-add

items.

NOTE: After FY 1997, outlier days no longer exist.

B. Cost - The contractor enters additional payments made for claims where

extraordinary costs were approved. It shall make entries on this line for

memorandum purposes only. These are non-add items.

4. Subtotal - Contractor enters the total of the amounts on lines 1A, 1B, 2A, and 2B.

NOTE: The amounts included in lines 1C, 2C, 3A and 3B are memo entries only and

have been included in lines 1A, 1B, 2A and 2B.

5. Outpatient Payments - Contractor enters the payment, less deductibles,

coinsurance and sequestration for outpatient and Part B inpatient services. It shall

report any offset against these amounts on line 6A or 6B. See line 19 for reporting

SNF outpatient payments.

6. Retroactive Adjustments:

• PPS Provider Payments - Contractor enters on lines 6A and 6B (as

applicable), columns (a) or (b), the net amount of retroactive adjustments

paid and received as a result of interim rate adjustments, pass through cost

adjustments, and cost report settlements applicable to current or prior

provider fiscal years.

Contractor shall show interest on cost report overpayments and late-filed cost

reports on these lines. An example of a proper recording of a retroactive

adjustment would be an entry of $500,000 of cash received from the provider

as the first installment of the final settlement of $1,000,000 due the program

from the prior year's cost report.

Another example would be an entry of $500,000 offset against current PIP

payments due of $1,000,000. (The $1,000,000 would be shown on line 1A.)

• Non-PPS Provider Payments - Contractor enters on line 6A or 6B (as

applicable) in column (c) the net amount of retroactive adjustments paid

and received as a result of interim rate adjustments and cost report

settlements applicable to current or prior provider fiscal years.

It shall show interest on cost report overpayments and late-filed cost reports

on these lines.

7. Accelerated Payments - Contractor enters the net amount of accelerated payments

made to and collected from hospitals and distinct part units. (See §160.5 for an

explanation of the appropriate recording of offsets.)

8. Total - The contractor enters the total of lines 4 through 7.

D. Statistical Data-Hospitals-Page 1:

9. PIP:

A. Contractor enters the total number of bills processed for hospitals paid by

the PIP method.

B. Contractor enters the dollar amount that would have been paid if the bills

processed were not subject to PIP in accordance with the definition of line

2A.

10. Non-PIP - Contractor enters the total number of bills for hospitals paid on a

submitted-bill basis.

11. Number of Hospitals - Contractor enters the total number of hospitals

participating in the Medicare program.

12. Number of Admissions - Contractor enters the total number of admissions the

Common Working File (CWF) has approved for payment.

13. Number of Discharges - Contractor enters the number of discharge bills processed

during the reporting month.

14. Number of Readmissions - Contractor enters the total number of readmissions to a

hospital within 7 calendar days of discharge from an acute care facility.

15. Number of Transfers - Contractor enters in column (a) and column (b) the total

number of transfers to a PPS hospital. It enters in column (c) the total number of

transfers to a non-PPS hospital.

16. Outlier Bills:

A. Days - Contractor enters the total number of day outlier bills paid that

relate to the dollar amounts shown in line 3A.

NOTE: Outlier days have been obsolete since the end of FY 1997.

B. Costs - Contractor enters the total number of cost outlier bills paid that

relate to the dollar amounts shown in line 3B.

17. Outpatient - Contractor enters the total number of outpatient bills and Part B

inpatient bills paid that relate to the dollar amounts shown in line 5.

E. Column Definitions - Page 2

• Column (e) - Single Facility - Refers to all providers that are not part of a hospital

complex.

• Column (f) - Part of Hospital Complex - Refers to providers that are an integral

part of a hospital and are operated with other departments of the hospital under

common licensure and governance.

• Column (g) - Total - Refers to total of columns (e) and (f).

F. Line Item Definitions - Page 2

Skilled Nursing Facilities - Including swing bed payments for SNF care.

18. PIP - Contractor enters all PIP payments made to SNFs. It enters total payments

(less any deductibles, coinsurance, interest or sequestration) with any withholding

reductions being shown on line 20.

19. Bills Paid - Contractor enters total payments less any deductibles, coinsurance,

interest, or sequestration with any withholdings shown on line 20. It enters the

calculated payment, less any deductibles, coinsurance and interest for all items,

and any sequestration applicable to SNFs on a submitted-bill basis. It shall

include Part A and Part B services.

20. Retroactive Adjustments - Contractor enters the net amount of retroactive

adjustments paid and received as a result of cost report settlements and lump sum

interim rate adjustments made in prior or current provider fiscal years.

21. It shall show interest on cost report overpayments and late-filed cost reports on

this line. An example of a proper recording of a retroactive adjustment would be

an entry of $500,000 cash received from the provider as the first installment of the

final settlement of $1,000,000 due the program from the prior year's cost report.

22. Accelerated Payments - Contractor enters the net amount of accelerated payments

made to and collected from SNFs. (See §160.5) for an explanation for reporting

accelerated payments.)

23. Total SNF Payments - Contractor enters the total of lines 18 through 21.

Home Health Agencies:

23. PIP - Contractor enters all PIP payments made to HHAs including SNF-based.

24. It shall show total payments less any deductibles, coinsurance, interest, or

sequestration with any withholding reductions shown on line 25.

25. Bills Paid - Contractor shall show total payments (less any deductibles,

coinsurance, interest, or sequestration) with any withholdings shown on line 25. It

enters the calculated payment, less any deductibles, coinsurance, and interest, for

all items, and any sequestration applicable to HHAs on a submitted-bill basis. It

shall include Part A and Part B services and SNF-based HHAs payments.

26. Retroactive Adjustments - Contractor enters the net amount of retroactive

adjustments paid and received as a result of cost report settlements and lump sum

interim rate adjustments made in prior current provider fiscal years.

27. It shall show interest on cost report overpayments and late-filed cost reports on

this line. An example of a proper recording of a retroactive adjustment would be

an entry of $500,000 cash received from the provider as the first installment of the

final settlement of $1,000,000 due the program from the prior year's cost report.

28. Accelerated Payments - Contractor enters the net amount of accelerated payments

made to and collected from HHAs. (See §160.5) for an explanation for reporting

accelerated payments.)

29. Total HHA Payments - Contractor enters the total of lines 23 through 26.

Additional Providers:

28. ESRD - Contractor shall include in these columns payments to ESRD networks,

as applicable:

Column (e) - It enters net payments to independent facilities. Column (f) - It enters

net payments to hospital-based facilities.

29. Hospice - Contractor enters net payments made to hospices.

30. RHC - Contractor enters net payments made to rural health clinics (RHCs).

31. OPA/HL - Contractor enters net payments made to organ procurement agencies

and histocompatibility laboratories.

32. CORF - Contractor enters net payments made to comprehensive outpatient

rehabilitation facilities (CORFs).

33. Distinct Part Units - Contractor enters net payments made to exempt distinct part

rehabilitation and psychiatric units.

34. All Others - Contractor enters net payments made to other providers not listed in

lines 28 -33.

NOTE: Contractor shall make adjustments, pertaining to providers, identified on lines

28 through 34 directly to the specific line. This includes checks received and offsets or

withholdings.

35. Total - Contractor enters the total of lines 28 through 34.

36. Grand Total - Contractor enters the total of lines 8(d), 22(g), 27(g) and 35(g).

G. Statistical Data - Page 2:

37. SNF:

• Number of SNFs - Contractor enters the total number of participating

SNFs.

• Number of Admissions - Contractor enters the total number of SNF

admissions.

38. HHA:

• Number of HHAs - Contractor enters the total number of participating

HHAs.

• Number of Bills - Contractor enters the total number of bills processed.

(Audit intermediaries should not complete this line.)

39. Number of Transfers to Distinct Part Units - Contractor enters the total number of

transfers to distinct part units for which payments are shown in line 33.

It shall use edit checks to ensure completeness, arithmetical accuracy, and to discover

inconsistencies. It shall have an authorized official sign and date the report.

90.7 - Form CMS-456 - Schedule R - (Rev. 5, 08-30-02)

A1-1414.7

(Page 3 of 3 of the Monthly Intermediary Benefit Payment Report) Reconciliation

Between IBPR and CMS-1522.

A. Purpose and Scope

The contractor shall use the Schedule R to account for any variances between line 36(g),

Total on the IBPR, and the HI and SMI Benefits reported on lines 1(d) and 2(d) of the

CMS-1522 Report.

Schedule R is an integral part of the IBPR and must be completed each month whether or

not a variance exists between the IBPR and the CMS-1522 Report. If there is no variance,

the contractor shall complete line 36(g) of the IBPR and HI and SMI Benefits for lines

1(d) and 2(d) of the Form CMS-1522. If there is a variance, it shall reconcile the two

reports by completing the appropriate lines.

It must have the capability to substantiate all amounts reflected on Schedule R.

Schedule R includes line items that will facilitate the contractor's reconciliation process.

It shall input the Schedule R, along with pages 1 and 2 of the IBPR, into the Contractor

Administrative Budget and Financial Management System (CAFM) for each report

month.

B. Instructions for Completion of Schedule R:

Heading - The contractor enters the report month and year. (See §160.6A) for

intermediary name and number.) Also, it enters its current letter-of-credit number.

Line Item Definitions - Schedule R:

CMS-456 (IBPR) Column:

Line 36(g) Total - Contractor enters the amount obtained from page 2 of 3 on line 36(g)

of the IBPR.

Medicare Secondary Payer (Non-Providers Cash Recoveries) - Contractor enters the cash

receipts and offsets applied to claims payments or other refunds that are received from

attorneys, beneficiaries, insurance companies or other non-providers. These amounts

should be negative numbers since they represent cash receipts.

Other Recoveries Identify - Contractor enters recovered or offset amounts not included in

any other line item (lines 1 through 36 or lines 1 and 3 of Schedule R). These amounts

should be negative numbers since they represent cash receipts.

Other Items Identify (Lines 3A through 3E) - Contractor enters any other benefit

payments or refunds not included elsewhere on the CMS-456 or on lines 1 and 2. The

items shown here may be unique to its operation and should be identified accordingly. It

shall itemize each major category on lines 3A. through 3E. These amounts could be

positive or negative numbers.

Total - Contractor enters the sum of all line items in this column. It must take care to

subtract negative amount(s) included on the above lines. The total amount must equal the

amount in the total adjacent CMS-1522 column.

1. Remarks - Contractor enters an explanation to clarify any item or amount.

• Line Item Definitions - Schedule R:

CMS-1522

1. HI Benefits, Line 1 (d) - Contractor enters the HI benefits amount from form

CMS-1522 in line 1(d).

2. SMI Benefits, Line 2(d) - Contractor enters the SMI benefits amount from form

CMS-1522 in line 2(d).

3. Subtotal - Contractor enters the total HI and SMI benefit amounts.

4. Other Items Identify - Contractor enters any other benefit payments or refunds

that may be unique to your operation that are not included on lines 1(d) or 2(d) of

form CMS-1522. It shall itemize each major category and identify on line 1

through 6. These amounts could be positive or negative numbers.

5. Total - Contractor enters the sum of all line items in this column. It must take care

to subtract negative amounts included in items 1 through 6. The total amount must

equal the amount in the total adjacent CMS-456 column.

Public reporting burden for this collection of information is estimated to average 30 hours

per response. This includes time for reviewing instructions, searching existing data

sources, gathering and maintaining data needed, and completing and reviewing the

collection of information. Send comments regarding this estimated burden or any other

aspect of this collection of information, including suggestions for reducing the burden, to:

Centers for Medicare & Medicaid Services

Office of Financial Management

7500 Security Boulevard

Baltimore MD 21244-1850

and to:

Office of Management and Budget

Paperwork Reduction Project (0938-0361)

Washington DC 20503

100 - Issuance of Letter-Of-Credit - (Rev. 5, 08-30-02)

A1-1416, B1-4414

The Letter-of-Credit, Standard Form-1193, authorizes a Federal Reserve Bank or Branch

to advance funds to a designated commercial bank on behalf of CMS. Under the Checks

Paid Method of financing, a letter-of-credit is issued to authorize the designated

commercial bank to withdraw funds for deposit only to the contractor's Benefits Account

when a bank presents a payment voucher (FMS-5401).

Upon receipt of the properly executed signature cards and notification from the Federal

Reserve Bank that the required collateral has been posted, CMS prepares and certifies a

letter-of-credit in favor of the designated commercial bank. The certified letter-of-credit,

together with the executed signature cards, are sent to the Treasury Department for

forwarding to the servicing Federal Reserve Bank or Branch. A copy of the certified

letter-of-credit and signature cards are also sent to the contractor, the RO, and the

designated commercial bank.

100.1 - Monthly Limitation - (Rev. 5, 08-30-02)

A1-1416.1, B1-4414.1

The letter-of-credit specifies a maximum amount of funds that the bank may draw during

each month. The ceiling amount on the letter-of-credit is established at a sufficiently high

level to provide for fluctuations in monthly disbursement patterns and is based upon

benefit payments estimated by CMS and the contractor. The unused portion of the letter-of-credit is revoked at the end of each month, and the full monthly ceiling amount is

automatically renewed at the beginning of each month. There is no carryover of any

unused ceiling amount. Each month stands by itself.