Medicare Financial Management 
Chapter 4 - Debt Collection 
 
Table of Contents 
(Rev. 11462, 06-23-22) 
 
Transmittals Issued for this Chapter 
 
10 - Requirements for Collecting Part A and B Provider Non-MSP Overpayments 
10.1 - Required Timeframes for Debt Collection Process for Provider Non-MSP Overpayments 
20 - Demand Letters 
20.1 - Number of Demand Letters 
20.2  Sample Demand Letters All Providers or Suppliers 
Exhibit 1  Initial Demand Letter Non-935 
Exhibit 2 - Initial Demand Letter  935 
Exhibit 3  Initial Demand Letter- 935  
Exhibit 4  Initial Demand Letter Unfiled  Cost Report 
Exhibit 5  Intent to Refer Letter Non-935 
Exhibit 6  Intent to Refer Letter- 935 
Exhibit 7 -  Intent to Refer Letter - Unfiled Cost Reports ONLY  
30  Interest Assessment/Payment on Overpayments and Underpayments 
30.1 - Final Determination 
30.2  Rates of Interest  FIs and Carriers 
30.3  Interest Accruals 
30.4  Procedures for Applying Interest During Overpayment Recoupment 
30.5  Notification to Providers Regarding Interest Assessment 
30.6  Waiver and Adjustment of Interest Charges 
40  Withholds and Suspensions  
40.1  Recoupment by Withholding Payments  
40.2  Suspension of Payment  
50  Establishing an Extended Repayment Schedule (ERS) - (formerly known as an Extended Repayment 
Plan (ERP)) 
50.1  ERS Required Documentation --Physician is a Sole Proprietor 
50.2  ERS Required Documentation Provider is an Entity Other Than a Sole 
Proprietor 
50.3  ERS Approval Process 
Exhibit 1  Protocol for Reviewing Extended Repayment Schedule (ERS) 
Exhibit 2  Statement of Source and Application of Funds Period Covered 
Exhibit 3  Cash Flow Statement Period Covered 
Exhibit 4  Projected Cash Flow Statement Cash from Operations (Schedule A) Period Covered 
50.4  Sending the ERS Request to the Regional Office (RO) 
50.5  Monitoring an Approved Extended Repayment Schedule (ERS) and Reporting Requirements 
50.6  Requests From Terminated Providers or Debts that are Pending Referral to Department of 
Treasury 
60 - Withholding the Federal Share of Payments to Recover Medicare or Medicaid Overpayments - General 
60.1 - Withholding the Federal Share of Medicaid Payments to Recover Medicare Overpayments  60.2  Withholding Medicare Payments to Recover Medicaid Overpayments 
70  Non-Medicare Secondary Payer (Non-MSP Debt Referral Instructions and Debt Collection 
Improvement Act of 1996 (DCIA) Activities 
70.1  Background 
70.2  Cross Servicing 
70.3  Treasury Offset program (TOP) 
70.4  Definition of Delinquent Debt 
70.5  Referral Requirements 
70.6  Debt Ineligible for Referral 
70.7  Intent to Refer Letter 
70.8  Response to Intent to Refer Letter 
70.9  Debt Collection System 
70.10  Cross Servicing Collection Efforts 
70.11  Actions Subsequent to DCS Input 
70.12 - Transmission of Debt 
70.13  Update to DCS after Transmission 
70.14  Collections 
70.14.1  Background 
70.14.2  Intra-governmental Payment and Collection (IPAC) System 
70.14.3 - Collections Posted to the Debt Collection System 
70.14.4 - Collection Refund Spreadsheet 
70.14.5 - Debt Paid in Full 
70.14.6 - Extended Repayment Schedule (ERS) 
70.14.7 - Excess Collections 
70.14.8 - Applying Excess Collections 
70.14.8.1 - If the Debtor Has Other Outstanding Debt 
70.14.8.2 - If the Debtor Has No Other Outstanding Debt 
70.15  Financial Report for Debt Referred 
70.15.1  Financial Reporting for Non- MSP Debt 
70.15.2  Financial Reporting for Intermediary Claims Accounts Receivable (A/R) 
70.15.3 - Financial Reporting for Collections Received on Debts from Cross Servicing 
70.15.4  Financial Reporting for Debts Returned to Agency (RTA) 
70.15.4.1  Debts RTA for Bankruptcy 
70.15.4.2  RTA and other Debts, Pending Final Disposition 
70.15.4.3  Debts RTA Because Dispute Timer Expired 
70.15.4.4  Debts RTA Paid in Full or Satisfied Payment Agreement or Satisfied 
Compromise 
70.16   Contractor Claims Accounts Receivable (AR) 
70.17  Debts Returned to Agency (RTA) by the United States Department of the Treasury 
(Treasury) 
70.17.1 - Debts RTA by Treasury due to Bankruptcy (RB) 
70.17.2 - Debts RTA by Treasury as Uncollectible (RU) or Out of Business (RN) 
70.17.3 - Debts RTA by Treasury as Dispute Response not Received Timely (RX) 
70.17.4 - Debts RTA by Treasury as a Miscellaneous Dispute, a Manual RTA, Complaint or 
as Recall Approved (RD)  70.17.5/Debts RTA by Treasury as paid in Full (RP), Satisfied Payment Agreement (RS) or 
Satisfied Compromise (RC) 
Exhibit 1  Intent to Refer (ITR) Letter  
Exhibit 3A - Collection/Refund Spreadsheet 
Exhibit 3B - Collection/Refund Spreadsheet 
Exhibit 4 - DCS User Guide  
Exhibit 5  Treasury Cross-Servicing Dispute Resolution 
80 - Recovery of Non MSP Overpayments from the Beneficiary 
80.1 - Reserved for Future Use 
80.2 - Immediate Recoupment Requirements for NON-935 Overpayment Recovery from the 
Physicians and Other Suppliers 
80.3 - Overpayment Recovery from Suppliers of Durable Medical Equipment, Prosthetics, Orthotics, 
and Suppliers (DMEPOS) 
90 - Physician/Supplier Overpayment Demand Letter - Carrier 
90 1  Part B Overpayment Demand Letters Beneficiaries 
90 2 - Part B NON-935 Overpayment Demand Letters to Physicians/Other Suppliers 
Exhibit 1  Initial Demand Letter to Physicians/Suppliers 
Exhibit 2  Follow Up Demand Letter to Physicians/Suppliers 
Exhibit 3  Intent to Refer Letter 
Exhibit 4  Optional Overpayment Customizing Paragraphs 
Exhibit 5  Sample Letter  Check Included for Correct Amount 
Exhibit 6  Sample Letter  Check Included for Wrong Amount (Too Much) 
90.3 - Notification to the Beneficiary When Recovery is Sought from the Provider or Physician 
90.4 - Sample Letter to Beneficiary Where Recovery is Sought from Provider 
 110-- Confirmed Identity Theft 
110.2-- Seized Monies Received from Law Enforcement 
120  Monitoring Accounts Receivable that are in a Redetermination or Reconsideration Status 
130  Federal Payment Levy Program  IRS Tax Levy Requests 
  10 - Requirements for Collecting Part A and B Non-MSP Provider Overpayments 
(Rev. 10821; Issued 05-24-21; Effective: 04-26-21; Implementation: 05-31-21) 
 
For purposes of these instructions, the term Provider, Physician and other Supplier will be referred to 
as Provider. 
 
The following collection activities are the minimum requirements the Medicare contractor (contractor) shall 
follow for all Non-MSP provider overpayments. Where additional information is located elsewhere in the 
manual chapter, an annotation of the specific section is included.  (See Medicare Financial Management 
Manual, Publication 100-06, Chapter 3, 40 and chapter 4, 70.16 for additional instructions related to Part 
A provider initiated claim adjustment accounts receivable). 
 
1. Initial Demand letter 
 
The contractor shall send an initial demand letter within established timeframes of the identification or 
notification of an overpayment. The contractor shall ensure the date of the initial demand letter is the date 
the AR is established and the date the letter is mailed. The initial demand letter shall include all required 
language and shall meet timeliness standards as outlined in chapter 3 200 and/or chapter 4 20 and 90. 
 
a. Dollar threshold 
 
The threshold amount to send the initial demand letters is $25 (principal).  The contractor shall aggregate all 
of the overpayments to the provider to meet the threshold amount for the initial demand letter. 
 
b. Undeliverable demand letter 
 
If the contractor receives the initial demand letter back as undeliverable, the contractor shall attempt to reach 
the provider by telephone within 10 business days of receiving the undeliverable letter. 
 
If the contractor is unsuccessful at reaching the provider by telephone, the contractor shall at the minimum 
attempt to locate the provider through other means including: 
 
  Querying the Provider Enrollment Change of Ownership System (PECOS) to determine if there 
is updated contact information (including an email address) for the provide); 
 
  Contacting the medical review staff or fraud and abuse staff for possible updates on the debtors 
whereabouts; 
 
  Conducting research to see if the provider is in bankruptcy or litigation, and by using the name of 
the owners, partners, or the corporation officers; 
 
  Conducting an internet search site, including using Lexis-Nexis or a similar program; 
 
  Contacting the servicing regional office (RO) for assistance or further guidance, if the contractor 
does not have access to a search engine. 
 
The contractor shall document in the case file all attempts to contact the provider. 
 
2. Recoupment 
 
The contractor shall initiate recoupment of the debt, or any remaining balance of the debt, as outlined below, 
except when the debt is in the following status: (1) appeal subject to the Limitation on Recoupment 
provisions (redetermination/reconsideration), (2) bankruptcy, (3) Extended Repayment Schedule (ERS) or 
(4) a pending ERS request. 
  For Part A (Non-935 Overpayments) 
 
  Recoupment shall begin 16 days from the date of initial demand letter if the debt is not subject to 
Limitation on Recoupment provisions of Section 935(f)(2) of the MMA. (See chapter 3, 200) 
 
  Refer to chapter 4, 70.16 for Claims Accounts Receivable (A/R) instructions. 
 
For Part B (935 and Non-935) and Part A 935 Overpayments 
 
  Recoupment shall begin 41 days from the date of the initial demand letter. 
 
  Recoupment shall continue until the debt is collected in full or is in a status that excludes 
recoupment. 
 
3. Interest 
 
If the overpayment is not paid in full 30 days from the date of the initial demand letter, contractors shall 
ensure that interest is assessed beginning on day 31. Simple interest shall be charged on the outstanding 
principal balance of the debt starting with the date of the initial demand letter and for every 30 day period 
thereafter, until the debt is paid in full.  Refer to chapter 4, 30 and 42 CFR 405.378 for additional 
information. 
 
4. Telephone Contacts: 
 
Contractors shall attempt to contact providers by phone, at least twice, as follows: 
 
a.  First telephone contact 
  
  Providers who have been terminated/revoked/ or have withdrawn from the Medicare 
program: 
 
  The telephone contact shall be made within 10 business days of the contractors notification of 
o
termination/revocation/withdrawal. 
 
  Active Providers: 
 
  The telephone contact shall be made when the debt is at least 60 days delinquent (90 days from the 
o
date of the demand letter) and is not in an appeal, litigation, ERS, or bankruptcy status. 
 
  The telephone contact may be made sooner if the contractor believes that earlier contact may result 
o
in a collection. 
 
  In situations where the provider cannot be reached by telephone the contractor shall leave a 
o
voicemail as needed. 
 
  Successful Phone Contact: 
 
  The contractor shall inform the provider of repayment options (e.g. ERS) and explain that any unpaid 
o
delinquent debt will be referred to Treasury for further collection activity. If the provider has a surety 
bond, the contractor shall inform the provider that the debt will be collected through the surety, and 
any remaining balance will be referred to Treasury. 
 
  If the first call is successful, (second call would not be necessary) document the contact. 
o
 
  Unsuccessful Phone Contact   
  The contractor shall discontinue telephone efforts when a providers number is disconnected. 
o
 
  The contractor shall at the minimum attempt to locate the provider through other means as listed in 
o
discussion of undeliverable demand letters, section 1(b), above. 
 
b.  Second Phone Contact 
 
The second phone call is only necessary if the contractor was unable to directly communicate with the 
provider on the first call. 
 
  The contractor shall make a second phone call to the provider at least 7 business days before 
referring the debt to Treasury. 
 
  The contractor shall leave a voicemail where the call is directed to voice messaging. 
  
  Leaving the second voicemail message shall be sufficient for attempting to reach the provider by 
telephone. 
 
The contractor shall document, in the case file, all attempts to contact the provider. 
 
5. Extended Repayment Schedule (ERS) 
 
If the provider submits an application for an ERS, the contractor shall follow the instructions in  
Chapter 4 50. An ERS application may be requested at any time during the collection process. 
 
 
6. Intent to Refer (ITR) letter 
 
For providers who have been terminated/revoked or have withdrawn from the Medicare program: 
 
The contractor shall send the ITR letter:  
 
  If the initial demand letter was returned undeliverable and a better address cannot be located (see 
below for Instructions Summary for Undeliverable Letters), or 
 
  When the contractor has verified in PECOS or Provider Enrollment that the provider is terminated or 
out of business.   
 
  The contractor utilizing HIGLAS shall manually update the accounts receivable (AR) 
o
status code to PROVIDER-TERMINATED if the ITR has not been issued and the 
contractor learns that the provider is terminated or out of business.  HIGLAS will not 
allow the AR status code to be updated to PROVIDER-TERMINATED if the existing 
AR status code is exempt from Treasury referral. 
 
  The contractor utilizing HIGLAS shall manually add a comment to the AR status 
o
indicating that the provider has been terminated or out of business, when a provider has 
been terminated or is out of business and has an AR with a status code that is ineligible 
for Treasury referral 
 
  The contractor not utilizing HIGLAS shall manually create the ITR letter and send it as 
o
soon as possible if an ITR letter has not been issued and the contractor learns that the 
provider is terminated or out of business. 
 
  For active providers: 
 
The contractor shall send the ITR letter when the debt is at least 30 days delinquent (60 days from the 
determination date)* and is not in a status excluded from debt referral. 
 
NOTE: In all cases, the contractor shall ensure that the ITR letter is sent in enough time to allow the debtor 
60 days notice prior to referral to Treasury. In accordance with provisions of the Digital Accountability and 
Transparency Act of 2014 (DATA Act) which amended the Debt Collection Improvement Act of 1996 
(DCIA), eligible delinquent debts must be referred to Treasury by the 120th day of delinquency. (Refer to 
chapter 4, 70 for further detail.) 
 
* The Healthcare Integrated General Ledger Accounting System (HIGLAS) adds an additional 5 grace days 
when determining when to generate the ITR letter to allow for interest accruals to appear on the ITR letter; 
therefore the ITR letter will be system generated on day 66. 
 
* Instructions Summary for Undeliverable Letters 
   
1.  If the contractor utilizing HIGLAS cannot locate a better address within 10 business days of receipt 
of the undeliverable demand letter, the contractor shall manually update the status code to LTR-
UNDL-1ST. 
 
2.  If the contractor locates a better address for the undeliverable initial demand letter, the contractor 
shall send the provider a manual undeliverable demand notification letter, with the initial demand 
letter attached, to the better address.  The original initial demand letter date shall remain in effect. 
 
3.  If the contractor not utilizing HIGLAS cannot locate a better address within 10 business days of 
receipt of the undeliverable initial demand letter, the contractor shall manually create the ITR letter 
immediately and send it as soon as possible. 
 
4.  If the ITR letter is returned as undeliverable and a better address cannot be located within 10 
business days of receipt, the contractor utilizing HIGLAS shall update the status code to LTR-
UNDL-ITR. 
 
5.  If the contractor locates a better address for the undeliverable ITR letter, the contractor shall send the 
provider a manual undeliverable ITR notification letter, with the original ITR letter attached, to the 
better address. The original ITR letter date shall remain in effect. 
 
 
Note:  The HIGLAS logic will review the letter history and the debt will become eligible for referral to 
Treasury 66 days from the ITR letter date. 
 
    
7. Surety Bond 
  
Prior to referral to Treasury, DME contractors shall refer to instructions outlined in Medicare Program 
Integrity Manual, Publication100-08, chapter 15, 21.7.1. 
 
 
8. Record Keeping 
 
The contractor shall keep records of all collection activities through all stages of the debt collection process. 
This record shall be detailed and include all correspondence and conversations with the provider, checks, 
and any other documents associated with debt collection processes. 
 
10.1 - Required Timeframes for Debt Collection Process for Provider Overpayments  (Rev. 259, Issued: 01-15-16 Effective: 02-16-16, Implementation: 02-16-16) 
 
Listed below are the general timeframes for most overpayment debt collection activities.  There may 
be instances, due to specific circumstances related to the debt, where these timeframes will not apply. 
 
Timeframes (Based on 
Medicare Contractor 
Date of Demand Letter) 
The accounts receivable (AR) is created, the 
initial demand letter sent. Contractors shall 
Day 1  ensure that the dates for establishing the AR, 
creating the demand letter and mailing the letter 
are the same. 
Deadline for provider rebuttal request.  A 
Day 15 
rebuttal does not delay recoupment. 
Immediate Recoupment, if requested by the 
Day 16 
provider starts by day 16. 
Recoupment shall begin for overpayments not 
subject to Limitation on Recoupment 
provisions of Section 935 (f)(2) of the MMA 
Day 16 
unless the debt is in an excluded category (ERS 
Request, an approved ERS, appeal or 
bankruptcy). 
Interest shall begin to accrue if overpayment is 
Day 31 
not paid in full by day 30. 
If not paid in full by day 40, recoupment begins 
for overpayments subject to Limitation on 
Recoupment provisions of Section 935(f)(2) of 
Day 41 
the MMA unless in an excluded category (ERS 
Request, an approved ERS, appeal or 
bankruptcy). 
The contractor shall attempt to contact the 
provider by telephone if the debt is 60 days 
Day 90 
delinquent and not in a status excluded from 
referral to Treasury. 
The contractor shall send the ITR on eligible 
Day 61-90 
delinquent debts. 
Eligible delinquent debt shall be referred to 
Day 126-150 
Treasury. 
At least 7 days prior to  The contractor shall make a second call to the 
referral to Treasury  provider before the debt is referred to Treasury. 
The DME contractor shall follow instructions 
Prior to Referral to 
in IOM Pub. 100-8, Chapter 15, related to 
Treasury (DME Only) 
surety bond collection requirements. 
 
20  Demand Letters 
(Rev. 316, Issued: 05-24-19, Effective: 10-01-19, Implementation: 10-07-19) 
  There are two overpayment demand letters, an Initial Demand Letter and an Intent to Refer Letter (ITR) 
(this does not include notification letters or response letters) used in the debt collection process.  The 
purpose of an overpayment demand letter is to notify the providers and suppliers of the existence and 
amount of an overpayment, and to request repayment.  Every demand letter, regardless of the cause of 
the overpayment or the status of the provider or supplier, shall meet certain requirements as to form and 
content. 
 
Below is a detailed list of the requirements for the basic overpayment demand letters to use in 
various overpayment situations (it is not all-inclusive). 
 
Non-Cost Report Overpayment Demand Letters: 
 
1.  The initial demand letter shall be sent to the provider or supplier within 7 calendar days of 
the determination of the overpayment. 
 
2.  The letters shall be labeled either Initial Demand Letter or The Intent to Refer Letter (ITR.). 
 
3.  The initial demand letter shall be sent by first class mail, secured email, or fax. 
4.  The initial demand letter is an explanation of the nature of the overpayment, how it 
was established, a bankruptcy notice, and the amount determined. 
 
5.  The initial demand letter includes language to request the provider or supplier to submit a 
refund or arrange for immediate recoupment, or file an appeal (with exception of Requests for 
Anticipated Payment (RAP) claims that shall not receive appeal rights, see 100-06 Chapter 3 
Section 200.1.2). 
 
6.  The initial demand letter offers the provider or supplier the opportunity to apply for an 
Extended Repayment Schedule (ERS) if repayment of the debt will cause financial hardship.  
(An ERS shall be analyzed using the criteria set forth in Chapter 4, 50.  Any approved ERS 
would run from the approval date.) 
 
7.  If payment in full is not received within 30 days, interest will be charged. 
 
8.  The initial demand letter includes Debt Collection Improvement Act (DCIA) Intent Language 
for referral to the Treasury Department for cross servicing. 
 
9.  The ITR letter is sent to the provider or supplier at least 60 days after the date of the initial, final 
or revised demand letter, if it is not in a status excluded from debt referral, and shall include the 
initial demand letter number.  
 
10. All correspondence, including demand letters, addressed to a provider or supplier in 
bankruptcy proceedings, shall be submitted to the Regional Office (RO), which has the lead in 
the bankruptcy proceedings, for approval prior to release. 
 
 
Cost Report Overpayment Demand Letters: 
 
1.  When a provider files a cost report without payment for the amount due from the provider, the 
contractor shall send a demand letter to the provider. The  demand letter shall inform the provider  
that the contractor will  recoup (reduce or withhold) Medicare payments if it does not receive the 
overpayment amount, or a request for a repayment schedule along with the first months payment 
within 15 days of the date of the demand letter.   
  2.  In the situation of an unfiled cost report, the cost report reminder letter serves as sufficient notice 
that future Medicare payments (interim payments) will be suspended if the overpayment amount is 
not received on or before its due date.  
 
3.  In addition to the suspension of future Medicare payments for failure to file a cost report, 
contractors shall deem all interim and lump-sum payments made for the fiscal period and all 
interim and lump-sum payments made in a subsequent period as an overpayment. These 
overpayments shall be immediately due and payable to CMS if the cost report is not received 
timely.   
 
4.  The contractor shall ensure that recoupment of Medicare payments does not start until the cost 
report demand letter is generated. 
 
5.   The initial cost report demand letters may be delivered certified mail, electronic mail (e-mail), or  
 through a secured portal, and shall include a receipt confirmation. 
 
6.  The initial cost report demand letters shall be sent to the provider or supplier on the 
7th day after the due date or extended due date of the cost report, if not received. 
 
7.  The initial cost report demand letters shall include the explanation of the overpayment 
determination and the amount due or Notice of Program Reimbursement (cost report). 
 
8.  The provider or supplier may submit a cost report, make a refund, arrange for immediate 
recoupment, or request an ERS, as applicable. 
 
9.  The percentage of withhold shall be indicated whenever an adjustment (reduction or 
suspension) of interim payments has been imposed. 
 
10. The cost report letters shall offer the provider the opportunity to apply for an ERS if repayment 
of the debt will cause financial hardship. (An ERS shall be analyzed using the criteria set forth in 
Chapter 4, 50. Any approved ERS would run from the approval date.) 
 
11. The cost report letters shall include DCIA Intent Language for referral to the Treasury 
Department for cross servicing. 
 
12. The ITR letter shall be mailed to the provider 60 days after the date of the Initial 
Demand letter, if it is not in a status excluded from debt referral. 
 
 
 
20.1 - Number of Demand Letters 
(Rev. 316, Issued: 05-24-19, Effective: 10-01-19, Implementation: 10-07-19) 
 
In general, the contractor sends one overpayment Initial (1st) demand letter to a provider or supplier.  
The contractor shall have at all times  access to copies of the demand letters generally housed in the case 
file, bulk PDF, or in HIGLAS.  When the demand letter has been sent and returned as undeliverable, the 
contractor shall attempt to locate the provider or supplier (see Chapter 4, 10).  If the contractor is 
unable to locate the provider or supplier and the overpayment is eligible for referral to the Department of 
Treasury, the contractor shall immediately send the ITR demand letter, which shall include the intent to 
refer language. 
 
Where a repayment schedule has been established after the Initial (1st) demand letter has been sent 
and the provider or supplier defaults on the repayment schedule, the contractor shall count that 1st  demand letter as one of the two  letters (1st and ITR) normally sent to an overpaid provider or supplier. 
 
20.2  Sample Demand Letters All Providers or Suppliers 
(Rev. 61, Issued:  12-10-04, Effective:  01-10-05, Implementation:  01-10-05) 
 
It is CMS responsibility to protect the Trust Fund and replenish any overpaid funds.  In this section, 
contractors are given templates to model when sending providers and suppliers a request for payment. 
 
EXHIBIT 1- INITIAL DEMAND LETTER - NON-935  
(Rev .316, Issued: 05-24-19, Effective: 10-01-19, Implementation: 10-07-19)  
 
Contractors shall use the appropriate template below: 
A. Contractors on HIGLAS shall use the list below for the appropriate system generated letters. 
 
1.  (BPROV1.pdf) Part B Provider/Supplier Initial Demand Letter 
2.  (BPROV1VA.pdf) Provider/Supplier Voluntary Returned Check 1st demand letter 
3.  (BPROV1N.pdf) Part B Provider/Supplier Notify Initial Demand Letter 
4.  (BPROV1V.pdf) Part B Provider/Supplier Voluntary Refund 1st Demand Letter 
5.  (APROV1.pdf) Part A Aggregate Claims Demand Letter 
6.  (APROV-CLA.pdf) Part A No Appeal 
 
B.  Contractors not on HIGLAS and Manual letters shall use this letter as your template. 
 
RE:  Initial Demand Letter 
Provider/Supplier Name: 
Provider/Supplier Number: 
& 
Overpayment Amount: 
&HINVOICE_AMOUNT  
Outstanding Balance: 
&DEMAND_AMOUNT 
C. Contractors shall use the appropriate first paragraph below: 
 
  Dear Sir/Madam: 
 
PART B Provider or Supplier Demand Letter (BPROV1.pdf in HIGLAS) 
 
This is to let you know that you have received a Medicare payment in error, which has resulted in 
an overpayment to you of &HINVOICE_AMOUNT.  The attached documentation explains how 
this happened. 
 
NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please 
follow the instructions found at the end of this letter.  
 
Or, 
 
PART B Provider or Supplier Notify 1st Demand Letter (BPROV1N.pdf in HIGLAS) 
 
We appreciate your recent inquiry regarding a Medicare payment that you believe was paid in error.  Our 
analysis found that the overpaid amount was &DEMAND_AMOUNT.  The attached documentation 
explains how this happened.  We thank you for bringing this overpayment to our attention. 
  NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please 
follow the instructions found at the end of this letter.  
 
Or, 
 
 
 
 
PART B Provider or Supplier Voluntary Returned/Refund 1st Demand, (BPROV1VA.pdf in 
HIGLAS) or (BPROV1V.pdf in HIGLAS) 
 
We have received your check in the amount of &INVOICE_RECEIPT_AMOUNT.  We thank you for 
bringing this overpayment to our attention.  While we appreciate you submitting payment to us, our 
review found that the overpaid amount was &HINVOICE_AMOUNT.  The attached documentation 
explains how this happened.  Please remit the additional &INVOICE_BALANCE_AMOUNT. 
   
  NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please follow 
the instructions found at the end of this letter. 
 
Or, 
 
PART A (Non-935) Aggregate Claims Demand Letter (APROV1.pdf in HIGLAS) 
 
 
Claims adjustments were entered in our system under provider &HPROVIDER_NAME. 
Additional adjustments were made to the claims, and a balance in the amount of &DEMAND_ 
AMOUNT has been outstanding for 60 days.  As this amount has not been recouped through claims 
submission, the purpose of our letter is to request that this amount be repaid to our office.  The attached 
documentation explains how this happened. 
 
NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please follow 
the instructions found at the end of this letter. 
 
Or, 
  
PART A No Appeal Claims Demand Letter (APROVNOAPPEAL1.pdf in HIGLAS) 
 
Claims adjustments were entered in our system under provider &HPROVIDER_NAME and a balance in 
the amount of &DEMAND_ AMOUNT is due. The purpose of our letter is to request that this amount be 
repaid to our office. The attached documentation explains how this happened. 
 
NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please follow the 
instructions found at the end of this letter. 
 
 
 
 
D. Contractors shall include the following language below in all initial letters after the first 
paragraph. 
Why you are responsible: 
You are responsible for following correct Medicare filing procedures and must use care when billing  and accepting payment.  You are responsible for repayment in this matter based upon one or both of the 
following criteria: 
 
1. You billed and/or received payment for services for which you should have known you were 
not entitled to receive payment.  Therefore, you are not without fault and are responsible for 
repaying the overpayment amount. 
 
2. You received overpayments resulting from retroactive changes in the Medicare Physician 
Fee Schedule and/or changes mandated by legislation. 
 
If you dispute this determination, please follow the appropriate appeals process listed below.  (Applicable 
authorities:  1870(b) of Social Security Act; sub 405.350 - 405.359 of Title 42, sub 404.506 - 404.509, 
404.510a and 404.512 of Title 20 of the United States Code of Federal Regulations.)  [This appeal 
paragraph is to be excluded in No-Appeal demand letters.] 
 
Rebuttal Process: 
 
Under our existing regulations 42 CFR  405.374, providers and suppliers will have 15 days from the 
date of this demand letter to submit a statement of rebuttal.  The rebuttal process provides the debtor 
the opportunity, before the suspension, offset, or recoupment takes effect, to submit any statement (to 
include any pertinent information) as to why it should not be put into effect on the date specified in the 
notice.  A rebuttal is not intended to request a review of supporting medical documentation nor to 
express disagreement with the overpayment decision.  A rebuttal shall not duplicate the redetermination 
process.  This is not an appeal of the overpayment determination.  Our office will advise you of our 
decision 15 days from the mailroom-stamped receipt date of your request. 
 
Interest Assessment: 
 
If you do not refund in 30 days: 
 
In accordance with 42 CFR 405.378, simple interest at the rate of &AR_INTEREST_RATE % will be 
charged on the unpaid balance of the overpayment, beginning on the 31st day.  Interest is calculated in 
30-day periods and is assessed for each full 30-day period that payment is not made on time.  Thus, if 
payment is received 31 days from the date of final determination, one 30-day period of interest will be 
charged.  Each payment will be applied first to accrued interest and then to principal.  After each 
payment, interest will continue to accrue on the remaining principal balance, at the rate of 
&AR_INTEREST_RATE %.  In addition, please note that Medicare rules require that payment be 
either received in our office by &LETTER_DATE_29 (United States Postal Service Postmark) for the 
payment to be considered timely.  A metered mail postmark received in our office after 
&LETTER_DATE_29 will cause an additional month's interest to be assessed on the debt. 
 
Payment by Recoupment: 
 
If payment in full is not received by &LETTER_DATE_40 (&LETTER_DATE_15 for Part A non-
935), payments to you can be recouped (recoupment) until payment in full is received if you haven't 
submitted an acceptable ERS request, an immediate recoupment request, and/or a valid and timely 
appeal is received. 
 
Make a payment or Arrange for payments: 
 
What you should do: 
 
Please return the overpaid amount to us by &LETTER_DATE_29 and no interest charge will be  assessed. Make the check payable to Medicare Part A and send it with a copy of this letter to: 
 
&CONTRACTOR_NAME 
&REVIEW_ADDRESS1 
&REVIEW_ADDRESS2 
&REVIEW_CITY, &REVIEW_STATE &REVIEW_POSTAL_CODE 
 
In addition, please note that Medicare rules require that payment be either received in our office by, 
&LETTER_DATE_29, or United States Postal Service postmark by that date, for the payment to be 
considered timely.  A metered mail postmark received in our office after &LETTER_DATE_29 will 
cause an additional month's interest to be assessed on the debt. 
 
If you are unable to make refund of the entire amount at this time, advise this office immediately with 
a request for an extended repayment schedule (ERS) so that we may determine if you are eligible for 
one.  Any repayment schedule (where one is approved) would run from the approval date.  You can 
visit our website at [&CONTRAC TOR_URL] for ERS instructions and forms. 
 
 
Immediate Recoupment: 
  
If Provider is enrolled in Immediate Recoupment- 
 
NO FURTHER ACTION IS REQUIRED BY YOU. You have previously elected to have your 
overpayment(s) repaid through the Immediate Recoupment process. Based on this payments to you will 
begin to be recouped on &LETTER_DATE_16   until payment is received in full. If the debt is not 
collected in full before day 31, interest will continue to accrue until the debt is collected in full.   
 
If Provider is NOT enrolled in Immediate Recoupment- 
 
TO SIMPLIFY THE REPAYMENT PROCESS, reduce the extra work and cost associated with mailing 
your repayment each time, you may elect to have automatic immediate recoupments for ALL overpayments 
by requesting the Immediate Recoupment process for All Current and Future Accounts Receivable. This 
will automatically begin recoupment starting on day 16 for ALL future accounts receivable. When the initial 
request is received after day 16 the debt shall be placed in an immediate recoupment status. If the debt is not 
collected in full before day 31, interest will continue to accrue until the debt is collected in full.   
 
 
You must specify whether you are submitting: 
 
1. A request on the current demanded overpayment (all accounts receivables within this demand letter) and 
ALL FUTURE OVERPAYMENTS; or 
 
2. A one-time request on this current demanded overpayment (all accounts receivables) addressed in this 
demand letter only. 
 
This process is voluntary and for your convenience. 
 
You can visit our website at {MAC site} for the Immediate Recoupment 
Request instructions. 
 
You may contact this office for information on how to fax your request. 
 
You may contact this office for information on how to fax your request.  (Immediate recoupment already in 
effect for Part A non-935.) 
  If you wish to appeal this decision:  [This appeal paragraph is to be excluded in No-Appeal demand 
letters.] 
 
If you disagree with this overpayment decision, you may file an appeal.  Please refer to the original 
remittance advice for additional instruction.  An appeal is a review performed by people independent 
of those who have reviewed your claim so far.  The first level of appeal is called a redetermination.  
You must file your request for a redetermination within 120 days of the date you receive this letter.  
Unless you show us otherwise, we assume you received this letter 5 days after the date of this letter.  
Please send your request for redetermination to: 
 
&CONTRACTOR_NAME &REVIEW_ADDRESS1 &REVIEW_ADDRESS2 
&REVIEW_CITY, &REVIEW_STATE &REVIEW_POSTAL_CODE 
 
 
Medicaid Offset: 
 
If this matter is not resolved, CMS may instruct the Medicaid State Agency to withhold the Federal 
share of any Medicaid payments that may be due you or related facilities until the full amount owed 
to Medicare is recouped, Title 42 CFR,  447.30(g).  These recoveries will be in addition to any 
recoupments from other Medicare funds due you until the full amount owed to Medicare is 
recovered. 
 
Right to Inspect Records Prior to Referral to Treasury: 
 
In the event an ITR letter is sent, you have the right to inspect and copy all records pertaining to your debt. 
In order to present evidence or review the CMS records, you must submit a written request to the address 
below.  Your request must be received within 60 calendar days from the ITR letter date.  In response to a 
timely request for access to CMS records, you will be notified of the location and time when you can 
inspect and copy records related to this debt.  Interest will continue to accrue during any review period.  
Therefore, while review is pending, you will be liable for interest and related late payment charges on 
amounts not paid by the due date identified above. 
 
 
For Individual Debtors Filing a Joint Federal Income Tax Return: 
 
The Treasury Offset Program automatically refers debts to the Internal Revenue Service (IRS) for Offset.  
Your Federal income tax refund is subject to offset under this program.  If you file a joint income tax 
return, you should contact the IRS before filing your tax return to determine the steps to be taken to 
protect the share of the refund which may be payable to the non-debtor spouse. 
 
 
For Debtors that Share a Tax Identification Number(s): 
 
Section 1866(j)(6) of the Social Security Act authorizes the Secretary of Health and Human Services (the 
Secretary) to make any necessary adjustments to the payments of an applicable provider or supplier who 
shares a TIN with an obligated provider or supplier, one that has an outstanding Medicare overpayment.  
The Secretary is authorized to adjust the payments of such a provider or supplier regardless of whether it 
has been assigned a different billing number or National Provider Identification Number (NPI) from that 
of the provider or supplier with the outstanding Medicare overpayment. 
 
Federal Salary Offset: 
 
If the facility ownership is either a sole proprietorship or partnership, your individual salary(s) may 
be offset if you are, or become, a federal employee. 
  If You Have Filed a Bankruptcy Petition: 
 
If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding, Medicare financial 
obligations will be resolved in accordance with the applicable bankruptcy process.  Accordingly, we 
request that you immediately notify us about this bankruptcy so that we may coordinate with both the 
Centers for Medicare & Medicaid Services and the Department of Justice so as to assure that we handle 
your situation properly.  If possible, when notifying us about the bankruptcy, please include the name 
the bankruptcy is filed under and the district where the bankruptcy is filed. 
Should you have any questions, please contact your overpayment representative at the following number: 
 
CONTACT_PHONE_NUM_ 
 
We look forward to hearing from you shortly.  
Sincerely, 
Medicare A or B Recovery Unit 
 
Enclosures: How This Overpayment Was Determined 
 
 
EXHIBIT 2- INITIAL DEMAND LETTER - 935  
(Rev. 316, Issued: 05-24-19, Effective: 10-01-19, Implementation: 10-07-19) 
 
A. Contractors on HIGLAS shall use the list below for the appropriate system generated letters. 
 
1.  (APROV9351.pdf):  Part-A Adjustment Initial Claims Demand letter 
2.  (BPROV9351.pdf):  Part-B 935 Adjustment Initial Claims Demand letter 
3.  (APROVAGG9351.pdf):  Part-A Aggregate Closure Initial Demand Letter 
4.  (BPROVAGG9351.pdf):  Part-B Aggregate Closure Initial Demand Letter 
5.  (APROVRAC1.pdf):  Part-A  935 RAC Adjustment Claims Demand Letter 
6.  (BPROVRAC1.pdf):  Part-B 935 RAC Adjustment Claims Demand Letter 
7.  (APROVRACAGG1.pdf): Part-A 935 RAC Adjustment Claims Initial Demand Letter 
8.  (BPROVRACAGG1.pdf):  Part-B 935 RAC Adjustment Claims Initial Demand Letter 
 
B. Contractors not on HIGLAS shall use this letter as your template. 
Letter Number: Date: 
&HPROVIDER_NAME 
&HPROVIDER_ADDRESS1 
&HPROVIDER_CITY, &HPROVIDER_STATE 
HPROVIDER_POSTAL_CODE 
 
INITIAL REQUEST 
[Contractors shall use the appropriate reference below for demanded 935 overpayments.] RE: 
MMA 935  
     Overpayment Amount 
 
Dear Sir/Madam, 
 
Contractors shall use the appropriate first paragraph below for all Initial Demands letters except Recovery 
Audit Contractors (RAC).   
This letter is to inform you that you have received a Medicare payment in error, which has resulted in an 
overpayment subject to  935(f) (2) of the Medicare Modernization Act (MMA),  1893(f) (2) of the 
Social Security Act, Limitation on Recoupment, in the amount & DEMAND_ AMOUNT. The purpose 
of this letter is to request that this amount be repaid to our office. The attached explains how this 
happened. 
 
NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please 
follow the instructions found at the end of this letter.  
 
 
(RAC Demand Letter Language only) 
 
This finding was a result of a Recovery Audit Program review.  If you have any questions relating 
to this letter or the recoupment process, you should contact us at: 
&CONTRACT_STATE_TOLL_FREE_ &CONTRACT_STATE_TOLL_FREE_NUM.  If you 
have any questions relating to the review rationale or you feel that this finding is in error and 
would like to submit additional documentation or discuss the issue further, please contact the 
Recovery Auditor. 
 
If you are unable to locate the name and contact information for the Recovery Auditor from 
prior correspondence, please contact the Medicare Administrative Contractor, which is located 
at the bottom of this page, for further information. 
 
NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please 
follow the instructions found at the end of this letter.  
 
 
How This Overpayment Was Determined: 
 
[When applicable on a Manual Letter, include explanation of the overpayment determination.] 
 
[Contractor shall explain the authority for reopening the claims (i.e., consistent with 42 CFR 405.980 
and Publication 100-04, Medicare Claims Processing Manual, chapter 34) and explain how the facts of 
the case allowed you to reopen within the timeframes established in those sections.] 
 
Why You Are Responsible: 
 
You are responsible for following correct Medicare filing procedures.  In this situation, you billed and/or 
received payment for services you should have known you were not entitled to.  Therefore, you are not 
without fault and are responsible for repaying the overpayment amount. If you dispute this 
determination, please follow the appropriate appeals process listed below.  Applicable authorities:  
1870(b) (c) of the Social Security Act; Sub 405.350 - 405.359 of Title 42 CFR, Sub 404.506 - 
404.509, 404.510a and 
404.512 of Title 20 of the United States Code of Federal Regulations. 
 
This amount is subject to  935(f) (2) of the Medicare Modernization Act (MMA) (section 1893(f) (2) of 
the Social Security Act), Limitation on Recoupment (42 CFR 405.379). 
 
Rebuttal Process: 
 
Under our existing regulations at 42 CFR  405.374, Providers or Suppliers will have 15 days from the 
date of this demand letter to have an opportunity for rebuttal by submitting a statement.  The rebuttal 
process provides the debtor the opportunity, before the suspension of payment, offset, or recoupment 
takes effect, to submit any statement (to include any pertinent information) as to why it should not be put  into effect on the date specified in the notice.  A rebuttal is not intended as a request for the review 
supporting medical documentation nor to express disagreement with the overpayment decision.  A 
rebuttal shall not duplicate the redetermination process.  This is not an appeal of the overpayment 
determination.  The limitation on recoupment under  1893 (f) (2) (a) of the Social Security Act does 
not apply to rebuttal requests.  Our office will advise you of our decision 15 days from the mailroom-
stamped receipt date of your request. 
 
Interest Assessment: 
 
If you do not pay the full amount in 30 days: 
 
In accordance with 42 CFR 405.378, simple interest at the rate of &AR_INTEREST_RATE percent will be 
charged on the unpaid balance of the overpayment, beginning on the 31st day.  Interest is calculated in 30-day 
periods and is assessed for each full 30-day period that payment is not made on time. 
 
Thus, if payment is received 31 days from the date of final determination, one 30-day period of interest 
will be charged.  Each payment will be applied first to accrued interest and then to principal.  After each 
payment, interest will continue to accrue on the remaining principal balance, at the rate of 
&AR_INTEREST_RATE percent. A metered mail postmark received in our office after 
&LETTER_DATE_29 will cause an additional month's interest to be assessed on the debt. 
 
 
In addition, please note that Medicare rules require that payment be either received in our office by 
&LETTER_DATE_29 or United States Postal Service Postmark by that date for the payment to be 
considered timely.   
 
Suspended Funds Applied To The Overpayment and Has a Remaining Outstanding Balance: 
 
If the suspended funds are insufficient to fully eliminate any overpayment, and the provider or supplier 
meets the requirements of 42 CFR  405.379 "Limitation on Recoupment" provision under 1893(f) (2) of 
the Act, then the provider or supplier is subject to 935 Appeals rights and will be available for offset after 
41 days on the remaining balance still owed to CMS.  (See 42 CFR  405.372(e) for more information.) 
 
Payment by Recoupment: 
 
If payment in full is not received by &LETTER_DATE_29 (date of the notification), payments to you can 
be recouped (recoupment) until payment in full is received if you haven't submitted an acceptable ERS 
request, an immediate recoupment request, and/or a valid and timely appeal is received. 
 
Make a Payment or Arrange for Payments: 
 
What You Should Do: 
 
Please return the overpaid amount to us by &LETTER_DATE_29 and no interest will be 
assessed. We request that you refund this amount in full. 
Make the check payable to Medicare [Part A] or [Part B] and send it with a copy of this letter to: 
&CONTRACTOR_NAME 
&CHECK_ADDRESS1 
&CHECK_CITY, &CHECK_STATE &CHECK_POSTAL_CODE 
 
If you are unable to make refund of the entire amount at this time, advise this office immediately 
with a request for an extended repayment schedule (ERS) so that we may determine if you are 
eligible for one.  Any repayment schedule (where one is approved) would run from the approval  date.  You can visit our website at [&CONTRAC TOR_URL] for ERS instructions and 
forms. 
 
 
Immediate Recoupment: 
  
If Provider is enrolled in Immediate Recoupment- 
 
NO FURTHER ACTION IS REQUIRED BY YOU. You have previously elected to have your 
overpayment(s) repaid through the Immediate Recoupment process. Based on this payments to you will 
begin to be recouped on &LETTER_DATE_16   until payment is received in full. If the debt is not 
collected in full before day 31, interest will continue to accrue until the debt is collected in full.   
 
If Provider is NOT enrolled in Immediate Recoupment- 
 
TO SIMPLIFY THE REPAYMENT PROCESS, reduce the extra work and cost associated with mailing 
your repayment each time, you may elect to have automatic immediate recoupments for ALL overpayments 
by requesting the Immediate Recoupment process for All Current and Future Accounts Receivable. This 
will automatically begin recoupment starting on day 16 for ALL future accounts receivable. When the initial 
request is received after day 16 the debt shall be placed in an immediate recoupment status. If the debt is not 
collected in full before day 31, interest will continue to accrue until the debt is collected in full.   
 
You must specify whether you are submitting: 
 
1. A request on the current demanded overpayment (all accounts receivables within this demand letter) and 
ALL FUTURE OVERPAYMENTS; or 
 
2. A one-time request on this current demanded overpayment (all accounts receivables) addressed in this 
demand letter only. 
 
This process is voluntary and for your convenience. 
 
You can visit our website at {MAC site} for the Immediate Recoupment 
Request instructions. 
 
You may contact this office for information on how to fax your request. 
 
This process is voluntary and for your convenience. Your request must specifically state you understand 
you are waiving potential receipt of interest payment pursuant to  1893(f) (2) for the overpayments. 
 
Note: Such interest may be payable for certain overpayments reversed at the ALJ level or 
subsequent levels of appeal. 
 
 
 
If You Wish To Appeal This Decision: 
 
If you disagree with this overpayment decision, you may file an appeal.  An appeal is a review performed 
by people independent of those who have reviewed your claims.  The first level of appeal is called a 
redetermination.  You must file your request for a redetermination 120 days from the date of this letter. 
However, if you wish to avoid recoupment from occurring, you need to file your request for 
redetermination within 30 days from the date of this letter, as described above.  Unless you show us 
otherwise, we assume you received this letter within 5 days of the date of this letter. 
Please send your request for redetermination to: 
  &CONTRACTOR_NAME - 935 APPEALS 
REDETERMINATION &REVIEW_ADDRESS1 
&REVIEW_CITY, &REVIEW_STATE &REVIEW_POSTAL_CODE 
 
How to Stop Recoupment: 
 
Even if the overpayment and any assessed interest has not been paid in full, you can temporarily stop 
Medicare from recouping any payments.  If you act quickly and decidedly, Medicare will stop 
recoupment at two points. 
 
First Opportunity:  We must receive a valid and timely request for a redetermination within 30 days 
from the date of this letter.  We will stop or delay recoupment pending the results of an appeal.  To assist 
us in expeditiously stopping the recoupment process, we request that you clearly indicate on your appeal 
request that this is a 935 overpayment appeal for a redetermination. 
 
Second Opportunity:  If the redetermination decision is (1) unfavorable, we will begin to recoup no 
earlier than the 60th day from the date of the Medicare redetermination notice (Medicare Appeal 
Decision Letter); or (2) if the decision is partially favorable, we will begin to recoup no earlier than the 
60th day from the date of the Medicare revised overpayment Notice/Revised Demand Letter.  Therefore, 
it is important to act quickly and decidedly to limit recoupment by submitting a valid and timely request 
for reconsideration within 60 days of the appropriate notice/letter.  The address and details on how to 
file a request for reconsideration will be included in the Redetermination decision letter. 
 
What Happens Following a Reconsideration By a Qualified Independent Contractor (QIC): 
 
Following a decision or dismissal by the QIC, if the debt has not been paid in full, we will begin or 
resume recoupment whether or not you appeal to the next level, Administrative Law Judge (ALJ). 
 
NOTE:  Even when recoupment is stopped, interest continues to accrue. 
 
Medicaid Offset: 
 
If this matter is not resolved, CMS may instruct the Medicaid State Agency to withhold the Federal share 
of any Medicaid payments that may be due you or related facilities until the full amount owed to 
Medicare is recouped; Title 42 CFR,  447.30(g).  These recoveries will be in addition to any 
recoupments from other Medicare funds due you until the full amount owed to Medicare is recovered. 
 
 
Right to Inspect Records Prior to Referral to Treasury: 
 
In the event an Intent to Refer (ITR) letter is sent, you have the right to inspect and copy all records 
pertaining to your debt. In order to present evidence or review the CMS records, you must submit a 
written request to the address below.  Your request must be received within 60 calendar days from the 
ITR letter date.  In response to a timely request for access to CMSs records, you will be notified of the 
location and time when you can inspect and copy records related to this debt. Interest will continue to 
accrue during any review period.  Therefore, while review is pending, you will be liable for interest and 
related late payment charges on amounts not paid by the due date identified above. 
 
 
For Individual Debtors Filing a Joint Federal Income Tax Return: 
 
The Treasury Offset Program automatically refers debts to the Internal Revenue  
  Service (IRS) for Offset. Your Federal income tax refund is subject to offset under this        program.  If 
you file a joint income tax return, you should contact the IRS before filing your tax return to determine the  steps to be taken to protect the share of the refund, which may be payable to the non-debtor spouse. 
 
For Debtors That Share a Tax Identification Number (TIN): 
 
Section 1866(j)(6) of the Social Security Act authorizes the Secretary of Health and Human Services (the 
Secretary) to make any necessary adjustments to the payments of an applicable provider or supplier who 
shares a TIN with an obligated provider or supplier, one that has an outstanding Medicare overpayment. 
The Secretary is authorized to adjust the payments of such a provider or supplier regardless of whether it 
has been assigned a different billing number or National Provider Identification Number (NPI) from that 
of the provider or supplier with the outstanding Medicare overpayment. 
 
Federal Salary Offset: 
 
If the facility ownership is either a sole proprietorship or partnership, your individual salary(s) may 
be offset if you are, or become, a federal employee. 
 
If You Have Filed a Bankruptcy Petition: 
 
If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding, Medicare financial 
obligations will be resolved in accordance with the applicable bankruptcy process.  Accordingly, we 
request that you immediately notify us about this bankruptcy so that we may coordinate with both the 
Centers for Medicare & Medicaid Services and the Department of Justice to assure that we handle your 
situation properly.  If possible, when notifying us about the bankruptcy, please include the name the 
bankruptcy is filed under and the district where the bankruptcy is filed. 
 
Should you have any questions, please contact your overpayment consultant at the following: 
 
&BUSINESS_PURPOSE_1 
&CONTRACT_CONTACT_PHONE_NUM_
1 
 
We look forward to hearing from you shortly.  
Sincerely, 
SELECT 
 
Supervisor, Part A Overpayments &CONTRACTOR_NAME 
 
Or, 
 
Medicare Part B Recovery Unit  
Enclosures 
How This Overpayment Was Determined 
 
EXHIBIT 3- INITIAL DEMAND LETTER- COST REPORTS FILED   
(Rev. 316, Issued: 05-24-19, Effective: 10-01-19, Implementation: 10-07-19) 
 
A.  Contractors on HIGLAS shall use the list below for the appropriate system generated letters. 
 
1.  (APROVCRASF1.pdf):  Part-A As-Filed Cost Report Initial Demand letter 
2.  (APROVNONCRASF1.pdf): Part A Cost Report Initial Letter  Tentative Settlement      
B. Contractors not on HIGLAS shall use this letter below as your template. 
 
C. Use the appropriate reference below for the first paragraph. 
 
 
INITIAL REQUEST 
 
RECEIPT CONFIRMATION REQUESTED 
 
RE: Initial Demand Letter Provider or Supplier Name:  
       Provider/Supplier Number: & 
Overpayment Amount: &HINVOICE_AMOUNT  
Outstanding Balance: & DEMAND_AMOUNT 
 
Date: 
 
Dear Mr. Smith: 
 
Contractors shall use the appropriate paragraph for the cost report situation:  
 
(NPR Issued) 
On July 26, 20xx, we received your cost report for the fiscal year ending June 30, xxxx.  We have fully 
reviewed this report, and the results of our review have been incorporated in the enclosed copy of your 
Notice of Program Reimbursement (dated August 21, 20xx).  As explained in the Notice, we find that 
the Valley Convalescent Center has been overpaid $  for the past fiscal year. 
 
NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please 
follow the instructions found at the end of this letter.  
 
(Tentative Settlement) 
 
On July 26, 20xx, we accepted your cost report for the fiscal year ending June 30, xxxx.  We have 
completed a preliminary review of this report and have determined that the Valley Convalescent Center 
has been overpaid $   for this fiscal year. 
 
NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please 
follow the instructions found at the end of this letter. 
 
(As Filed Cost Report) 
 
On July 26, 20xx, we received your cost report for the fiscal year ending June 30, xxxx.  The cost report, 
as filed, reflects an overpayment of $   for this fiscal year.  The Provider Reimbursement Manual 
(PRM) Part 1, Chapter 24, section 2409.A (2) states that, when a cost report is filed indicating an 
overpayment, a full refund shall accompany the cost report submission. 
 
NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please 
follow the instructions found at the end of this letter.  
 
PLEASE MAIL TO: 
 
&CONTRACTOR_NAME &CHECK_ADDRESS1 &CHECK_ADDRESS2 
&CHECK_CITY, &CHECK_STATE &CHECK_POSTAL_CODE   
 
The total of &DEMAND_AMOUNT should immediately be refunded in full. Your facility's check should 
include your provider number and be made payable to &CONTRACTOR_NAME. 
 
If payment in full is not received, payments to you will be withheld until payment in full is received or an 
acceptable extended repayment request is received. If you have reason to believe that the withhold should 
not occur, you must notify [contractor]. We will review your documentation, but will not delay 
recoupment.  
 
This is not an appeal of the overpayment determination. 
 
Medicaid Offset 
 
If this matter is not resolved within fifteen (15) days from the date of this letter, CMS may instruct the 
Medicaid State Agency to withhold the Federal share of Title XIX of any Medicaid payments that may 
be due you or related facilities until the full amount owed Medicare is recouped, Title 42 CFR,  
447.30(g). These recoveries will be in addition to any recoupments from other Medicare funds due you 
until the full amount owed to Medicare is recovered.  The appeal process is detailed in the Notice of 
Program Reimbursement (NPR). 
 
Interest Assessment: 
 
In accordance with 42 CFR 405.378, simple interest at the rate of  will be charged on the 
unpaid balance of the overpayment beginning on the 31st day.   Interest is calculated in 30-day periods 
and is assessed for each full 30-day period that payment is not made in full.  Thus, if payment is received 
31 days from the date of final determination, one 30-day period of interest will be charged and will 
continue to be assessed for full 30-day periods on any portion that remains outstanding until the debt is 
paid in full. 
 
Each payment will be applied first to accrued interest and then to principal. After each payment, 
interest will continue to accrue on the remaining principal balance, at the rate of  _. 
 
Extended Repayment Request: 
 
We request that you refund this amount in full.  If you are unable to make refund of the entire amount at 
this time, advise this office immediately so that we may determine if you are eligible for a repayment 
schedule. (Refer to www.Mac.com for details and forms.) Any repayment schedule (where one is 
approved) would run from the approval date.  If we do not hear from you, your interim payments will be 
withheld starting on the 16th day from the date of this letter, and applied towards the outstanding 
overpayment balance. 
Any amount withheld will not be refunded. 
 
If You Have Filed a Bankruptcy Petition: 
 
If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding, Medicare financial 
obligations will be resolved in accordance with the applicable bankruptcy process.  Accordingly, we 
request that you immediately notify us about this bankruptcy so that we may coordinate with both the 
Centers for Medicare & Medicaid Services and the Department of Justice so as to assure that we handle 
your situation properly.  If possible, when notifying us about the bankruptcy, please include the name 
the  bankruptcy is filed under and the district where the bankruptcy is filed. 
 
For Debtors That Share a Tax Identification Numbers: 
 
Section 1866(j)(6) of the Social Security Act authorizes the Secretary of Health and Human Services (the 
Secretary) to make any necessary adjustments to the payments of an applicable provider or supplier who  shares a TIN with an obligated provider or supplier, one that has an outstanding Medicare overpayment. 
The Secretary is authorized to adjust the payments of such a provider or supplier regardless of whether it 
has been assigned a different billing number or National Provider Identification Number (NPI) from that 
of the provider or supplier with the outstanding Medicare overpayment. 
 
Should you have any questions please contact   at   .  We expect to hear from you 
shortly. 
 
Sincerely, 
 
 
   (Name and Title) 
 
   Enclosure 
 (Name and Title)  
Enclosure 
 EXHIBIT 4- INITIAL DEMAND LETTER  UNFILED COST REPORT  
(Rev. 316, Issued: 05-24-19, Effective: 10-01-19, Implementation: 10-07-19) 
 
A.  Contractors on HIGLAS shall use the list below for the appropriate system generated letters. 
 
1.  (APROVNONCRASF1.pdf): Part-A Non As-Unfiled Cost Report Initial Demand Letter 
 
B.  Contractors not on HIGLAS shall use this letter as your template. 
 
(Mailed 7 calendar days after cost report was 
due.) Date: 
INITIAL DEMAND LETTER 
 
[Provider name] [Mail to Name] [Mail to Address 1] [Mail to Address 2] [City} {State} {Zip] 
 
RECEIPT CONFIRMATION REQUESTED 
 
RE: Late Medicare Cost 
Report Provider Name: [DBA 
Name] Provider Number: 
[xxxxxxxx] 
Fiscal Year End: [Month, Day, Year] 
 
 
Dear [Title] [Last Name] 
 
Contractors shall use the appropriate paragraph for the cost report situation:  
 
(Unfiled Cost Report) 
 
We have not received the cost report for [DBA Name], provider number [xxxxxxx] for the period ending 
[month/day/year]. Under Title 42 Code of Federal Regulations (CFR),  413.24, cost reports are due by 
the last day of the fifth (5th) month following the close of the providers cost report year or 30 days after  receipt of valid Provider Statistical and Reimbursement (PS&R) reports from the contractor, whichever 
is later.  Your report is now late, as it was due [month/day/year]. 
 
NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please 
follow the instructions found at the end of this letter.  
 
(Home Office Cost Report is Unfiled) 
 
We have not received the home office cost statement from   ______. According to our records,     
serves as the home office for your facility. Since the home office cost statement remains unfiled, the 
amount stated on your filed cost report for the fiscal year ending  for home office costs has been 
disallowed.  This disallowance will continue until the home office submits the home office cost statement. 
 
NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please 
follow the instructions found at the end of this letter.  
 
Deemed Overpayment: 
 
As a cost report has not been received from your facility, all interim and lump-sum payments made for 
the fiscal period noted above are deemed an overpayment.  The principal amount of the overpayment 
related to this fiscal period is [$ xxxxxx.xx].  If you do not submit a cost report, please be advised that 
this letter constitutes Federal Claims Collection Act (FCCA) notification that this amount is now 
due and must be remitted to us within thirty (30) days from the date of this letter.  Interest will be 
assessed on any portion of this amount that is not paid timely in accordance with Title 42 CFR 405.378 
(c) (1) (v). 
 
If full payment is not received or arrangements made for an extended repayment schedule, we will take  
all action(s) necessary to recover the full amount.  You can visit our website at [&CONTRAC 
TOR_URL] for ERS instructions and forms. 
 
Suspension: 
 
As your cost report has not been received timely, all payments to your facility have now been suspended 
under the authority of Title 42 CFR  405.371(d).  Payments will not be resumed until an acceptable cost 
report is received by us. 
 
Interest Charges: 
 
Interest is assessed on late cost reports and late payments under Title 42 CFR 405.378 (c) (1) (v): 
 
1. Cost reports reflecting an amount due to the Medicare program must include the full amount owed 
(including interest) from the day following the date the cost report was due to the date that the cost report 
is filed. 
 
2. If a late cost report reflects that there is an amount due Medicare and the full amount owed (including 
interest) is not included with the cost report, interest will continue to accrue on the overpayment until it 
is paid in full. 
 
3. Additionally, when it is determined that an additional overpayment exists on a late-filed cost report, 
through interim settlement or NPR, interest will be assessed on the overpayment from the day following 
the date the cost report was due to the date the cost report is filed.  If the subsequent overpayment is not 
paid within thirty (30) days of the date of the first demand letter, additional interest will be assessed from 
the date of the subsequent determination until the overpayment is paid in full.  If the full amount is not 
paid, any partial payments will be applied first to accrued interest and then to principal.  After each 
partial payment, interest will continue to accrue on the remaining principal balance.   
Interest Computation: 
 
The interest rate in effect at the time your cost report was due is [xx.xxx%].  This rate is applicable to any 
overpayments related to the untimely filing of your cost report.  Under Title 42 CFR  405.378 (b) (2), 
interest charges are assessed in thirty (30)-day periods.  Thus, if payment is received 31 days from the date 
of final determination, one 30-day period of interest will be assessed and for each full 30-day period until 
the debt is paid in full. 
 
Cost Report Submission: 
 
Please attend to this matter immediately by mailing a copy of this letter together with: (1) A completed 
cost report, together with any amounts due (principal and interest); (2) A complete refund of all interim 
payments, the deemed overpayment (principal and interest), within thirty (30) days of the date of this 
letter; or (3) A request for a repayment schedule of all interim payments, the deemed overpayment, 
within fifteen (15) days of the date of this letter.  Checks are to be made payable to [Contractor].  They 
and/or your remittance advice should be annotated with your provider name, number, and cost report year 
end that applies to the amount due. 
 
[Prime Contractor] [Division or Group] [Routing, Room Number] [Mail To Address 1] [Mail To 
Address 2] [City, State, Zip] 
 
As you are aware, cost reports are subject to further review.  There could be additional adjustments 
required after completion of a review.  Therefore, the records supporting this report are to be retained for 
at least three (3) years from the date of the NPR. 
 
For Debtors That Share Tax Identification Numbers: 
 
Section 1866(j)(6) of the Social Security Act authorizes the Secretary of Health and Human Services (the 
Secretary) to make any necessary adjustments to the payments of an applicable provider or supplier who 
shares a TIN with an obligated provider or supplier, one that has an outstanding Medicare overpayment. 
The Secretary is authorized to adjust the payments of such a provider or supplier regardless of whether it 
has been assigned a different billing number or National Provider Identification Number (NPI) from that 
of the provider or supplier with the outstanding Medicare overpayment. 
 
Medicaid Offset: 
 
If this matter is not resolved within fifteen (15) days from the date of this letter, CMS may instruct the 
Medicaid State Agency to withhold the Federal share of any Medicaid payments that may be due you or 
related facilities until the full amount owed Medicare is recouped, Title 42 CFR,  447.30(g).  These 
recoveries will be in addition to any recoupments from other Medicare funds due you until the full amount 
owed to Medicare is recovered. 
 
 
 
If You Have Filed a Bankruptcy Petition: 
 
If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding, Medicare financial 
obligations will be resolved in accordance with the applicable bankruptcy process.  Accordingly, we 
request that you immediately notify us about this bankruptcy so that we may coordinate with both the 
Centers for Medicare & Medicaid Services and the Department of Justice so as to assure that we handle 
your situation properly.  If possible, when notifying us about the bankruptcy, please include the name the 
bankruptcy is filed under and the district where the bankruptcy is filed. 
Termination of Medicare Provider Agreement:   
Be advised that under Title XVIII,  1866(b)(2)(A) of the Social Security Act, continued failure to 
submit the required cost report may result in the termination of your Medicare provider agreement. 
 
If you have submitted a cost report and any payment due Medicare, please disregard this letter.  If you 
have any questions concerning this letter, do not hesitate to call [Title] [Insert full name] at 
[(xxx) xxx-xxxx]. 
 
Sincerely, 
 
[Title] [Name] [Position Title] 
 
Intent to Refer Letters: 
 
EXHIBIT 5- INTENT TO REFER LETTER- NON-935   
(Rev. 316, Issued: 05-24-19, Effective: 10-01-19, Implementation: 10-07-19)  
Contractors shall use the appropriate template below: 
A. Contractors on HIGLAS shall use the list below for the appropriate system generated letters. 
 
1.  (BPROV3.pdf) Part B Provider Intent to Refer 
2.  (APROV3.pdf) Part A Aggregate Claims Intent to Refer 
 
B.  Contractors not on HIGLAS shall use this letter as your template. 
 
Note: Contractors shall use this template for manual letters and shall scan all letters for easy access. 
 
Date: &LETTER 
 
&LETTER_HEADER1  &LETTER_HEADER2 
&LETTER_HEADER3 &LETTER_HEADER4 
 
Letter Number: &LETTER_NUMBER 
 
&HPROVIDER_NAME 
&HPROVIDER_ADDRESS1 
&HPROVIDER_ADDRESS2 
&HPROVIDER_CITY, &HPROVIDER_STATE &HPROVIDER_POSTAL_CODE 
&HPROVIDER_COUNTRY 
 
RE: Overpayment Amount: &HINVOICE_AMOUNT Outstanding Balance: 
&DEMAND_AMOUNT  
  Provider Number: &HPROVIDER_NUMBER 
 
Notice of Intent to Refer Debt to the Department of Treasury's Debt Collection Center for Cross 
Servicing and Offset of Federal Payments and Certain Eligible State Payments 
 
Dear Sir/Madam: 
  On &DATE_OF_ORIGINAL_DEMAND_LETTER, we sent a letter requesting that you refund an 
overpayment made to you in the amount of &HINVOICE_AMOUNT that resulted from claim(s) accounts 
receivable(s).  As of the date of this letter, we have not yet received payment, an application for an 
extended repayment schedule, or have sufficient assigned Medicare claims been submitted for collection of 
the balance. The outstanding amount due for this overpayment is &DEMAND_AMOUNT, which includes 
a principal amount of &INVOICE_BALANCE_AMOUNT and interest assessed in the amount of 
&INTEREST_BALANCE_AMOUNT. 
 
Your debt to the Medicare Program is delinquent and, by way of this letter, we are providing 
notice that your debt may be referred to the Department of Treasury's Debt Collection Center 
(DCC) for Cross Servicing and Offset of Federal Payments.  Your debt may be referred under 
provisions of Federal Law, title 31 of the United States Code,  3720A, which is a provision of the 
Debt Collection Improvement Act of 1996. 
 
NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please 
follow the instructions found at the end of this letter.  
 
Repayment 
 
Your debt will not be referred to the Department of Treasury if you make payment in full.  The past due 
amount of &DEMAND_AMOUNT owed to the Medicare Program as of &LETTER_DT includes 
interest accrued through &LAST_INTEREST_ACCRUAL_DATE.  Interest is accrued monthly and is 
added to the balance of the debt. 
 
Your check or money order for the amount due should be made payable to Medicare and sent with a 
copy of this letter to: 
 
&CONTRACTOR_NAME &CHECK_ADDRESS1 &CHECK_ADDRESS2 
&CHECK_CITY, &CHECK_STATE &CHECK_POSTAL_CODE 
 
If you cannot make payment in full, you may be allowed to enter into an extended repayment 
agreement   if you are eligible under the requirements at 42 C.F.R. 401.607(c)(2).  If you are interested 
in an extended repayment agreement, please contact this office.  Refer to your initial demand letter to 
determine your rights to an appeal. 
 
 
Referral To The U.S. Department of The Treasury for Collection 
 
If your debt remains unpaid 60 days from the date of this letter, your debt will be referred to the United 
States Department of the Treasurys (the Treasury) Debt Management Services for Cross Servicing and 
Offset of Federal Payments.  Your debt will be referred under 31 U.S.C. 3711(g).  The Treasurys Debt 
Management Services will use various tools to collect the debt, including offset of federal payments, 
demand letters, phone calls, referral to a private collection agency, and referral to the U.S. Department of 
Justice for litigation. 
 
Due Process 
 
You have the right to request an opportunity to inspect and copy records relating to the debt.  This request 
must be submitted in writing to the address listed below.  You have the right to present evidence that all 
or part of your debt is not past due or legally enforceable.  In order to exercise this right, this office must 
receive a copy of the evidence to support your position, along with a copy of this letter.  You must submit 
any evidence that the debt is not owed or legally enforceable within 60 calendar days of the date of this 
letter.  If, after sixty (60) calendar days from the date of this letter, we have not received such evidence, 
your debt, if it is still outstanding and eligible for referral, may be referred to the Department of Treasury  or its designated Debt Collection Center for cross servicing/offset. 
 
For Individual Debtors Filing a Joint Federal Income Tax Return 
 
The Treasury Offset Program automatically refers debts to the IRS for offset.  Your Federal income tax 
refund is subject to offset under this program.  If you file a joint income tax return, you should contact the 
IRS before filing your tax return to determine the steps to be taken to protect the share of the refund, which 
may be payable to the non-debtor spouse. 
 
Overpayments from Debtors Who Share Tax Identification Numbers 
 
Section 1866(j)(6) of the Social Security Act authorizes the Secretary of Health and Human Services (the 
Secretary) to make any necessary adjustments to the payments of an applicable provider or supplier who 
shares a TIN with an obligated provider or supplier, one that has an outstanding Medicare overpayment. 
The Secretary is authorized to adjust the payments of such a provider or supplier regardless of whether it 
has been assigned a different billing number or National Provider Identification Number (NPI) from that 
of the provider or supplier with the outstanding Medicare overpayment. 
 
Federal Salary Offset 
 
If the facility ownership is either a sole proprietorship or partnership, your individual salary(s) may be 
offset if you are or become a federal employee. 
 
Medicaid Offset 
 
If this matter is not resolved, CMS may instruct the Medicaid State Agency to withhold the Federal      
share of any Medicaid payments that may be due you or related facilities until the full amount owed to 
Medicare is recouped, per Title 42 CFR,  447.30.  These recoveries will be in addition to any 
recoupment from other Medicare funds due you until the full amount owed to Medicare is recovered. 
 
Bankruptcy 
 
If you have filed bankruptcy and an automatic stay is in effect, you are not subject to offset while the 
automatic stay is in effect.  Documentation supporting your bankruptcy status, along with a copy of this 
notice, must be forwarded to this office at the above address. 
 
Should you have any questions, please contact your overpayment consultant at the following: 
 
 
&BUSINESS_PURPOSE_1 
&CONTRACT_CONTACT_PHONE_NUM_1 
&BUSINESS_PURPOSE_2 
&CONTRACT_CONTACT_PHONE_NUM_2 
&BUSINESS_PURPOSE_3 
&CONTRACT_CONTACT_PHONE_NUM_3 
&BUSINESS_PURPOSE_4 
&CONTRACT_CONTACT_PHONE_NUM_4 
&BUSINESS_PURPOSE_5 
&CONTRACT_CONTACT_PHONE_NUM_5 
 
We look forward to hearing from you shortly.  
Sincerely,  Medicare Recovery Unit 
 
EXHIBIT 6- INTENT TO REFER LETTER - 935 -  
(Rev. 316, Issued: 05-24-19, Effective: 10-01-19, Implementation: 10-07-19) 
 
A. Contractors on HIGLAS shall use the list below for the appropriate system generated letters. 
 
1.  (APROV9353.pdf)  Part A 935 Aggregate & Adjustment Claims Intent to Refer 
2.  (APROVRAC2.pdf)  Part A 935 RAC Adjustment Claims Intent to Refer 
3.  (BPROV9353.pdf)  Part B 935 Adjustment Claims Intent to Refer 
4.  (BPROVRAC2.pdf)  Part B 935 RAC Adjustment Claims Intent to Refer 
 
 
B.  Contractors shall use the appropriate first paragraph below. 
 
RE: Medicare Overpayment and Notice of Intent to Refer Debt to the Department of Treasury's 
Debt Collection Center for Cross Servicing and Offset of Federal Payments and Certain Eligible 
State Payments - MMA 935 
 
Provider Name: &HPROVIDER_NAME Provider Number: 
&HPROVIDER_NUMBER Outstanding Balance: 
&DEMAND_AMOUNT 
 
 
Dear Sir/Madam: 
 
Part A and B overpayments subject to 935 (excluding RAC overpayments) 
 
On &DATE_OF_ORIGINAL_DEMAND_LETTER, we sent a letter requesting that you refund an 
overpayment subject to 935, Limitation on Recoupment.  As of this date, we have not yet received 
payment, a 935 appeal request, or an application for an extended repayment schedule and insufficient 
assigned Medicare claims have been submitted for collection of the balance. The outstanding amount due 
for this overpayment is &DEMAND_AMOUNT, which includes a principal amount of 
&INVOICE_BALANCE_AMOUNT and interest assessed in the amount of 
&INTEREST_BALANCE_AMOUNT. 
 
NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please 
follow the instructions found at the end of this letter.  
 
Or, 
PART A and B 935 RAC Adjustment Claims 
 
On &DATE_OF_ORIGINAL_DEMAND_LETTER, we sent a letter requesting that you refund a 
Recovery Auditor-identified overpayment subject to 935, Limitation on Recoupment.  As of this date, we 
have not yet received payment, a 935 appeal request, or an application for an extended repayment schedule 
and insufficient assigned Medicare claims have been submitted for collection of the balance.  The 
outstanding amount due for this overpayment is &DEMAND_AMOUNT, which includes a principal 
amount of &INVOICE_BALANCE_AMOUNT and interest assessed in the amount of 
INTEREST_BALANCE_AMOUNT. 
 
NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please 
follow the instructions found at the end of this letter.  
 
[Contractors shall include the following language in all ITR-935 letters after the first 
paragraph.]  Your debt to the Medicare Program is delinquent and, by this letter, we are providing notice that your debt 
will be referred to the Department of Treasury's Debt Collection Center (DCC) for Cross Servicing and 
Offset of Federal Payments.  This could occur should the amounts recovered through withholding (offset) 
of your claims be insufficient to satisfy the monthly amount of your extended repayment schedule or the 
amount needed to be current on the extended repayment schedule.  Your debt will be referred under 
provisions of federal law, title 31 of the United States Code,  3720A, which is a provision of the Debt 
Collection Improvement Act of 1996. 
 
The Debt Collection Improvement Act of 1996 (DCIA) requires Federal agencies to refer delinquent debt 
to the Department of Treasury and/or a designated Debt Collection Center (DCC) for collection through 
cross servicing and/or the Treasury Offset Program (TOP).  Under the offset program, delinquent Federal 
debts are collected through offset of other Federal agency payments you may be entitled to, including the 
offset of your income tax return through the Internal Revenue Service (IRS).  The TOP offsets can also be 
taken from eligible state payments you are entitled to. 
 
The DCC shall use various tools to collect the debt, including offset, demand letters, phone calls, referral 
to a private collection agency and referral to the Department of Justice for litigation.  Other collection 
tools available, which may be used, include Federal salary offset and administrative wage garnishment.  
If the debt is discharged, it may be reported to the IRS as potential taxable income. 
 
During the collection process, interest shall continue to accrue on the debt and you shall remain 
legally responsible for any amount not satisfied through the collection efforts. 
 
For Individual Debtors Filing a Joint Federal Income Tax Return 
 
The Treasury Offset Program automatically refers debt to the IRS for offset. Your Federal income tax 
refund is subject to offset under this program.  If you file a joint income tax return, you should contact 
the IRS before filing your tax return to determine the steps to be taken to protect the share of the refund, 
which may be payable to the non-debtor spouse. 
 
Overpayments from Debtors Who Share Tax Identification Numbers 
 
Section 1866(j)(6) of the Social Security Act authorizes the Secretary of Health and Human Services (the 
Secretary) to make any necessary adjustments to the payments of an applicable provider or supplier who 
shares a TIN with an obligated provider or supplier, one that has an outstanding Medicare overpayment. 
The Secretary is authorized to adjust the payments of such a provider or supplier regardless of whether it 
has been assigned a different billing number or National Provider Identification Number (NPI) from that 
of the provider or supplier with the outstanding Medicare overpayment. 
 
 
Federal Salary Offset 
 
If the facility ownership is either a sole proprietorship or partnership, your individual salary(s) may 
be offset if you are or become a federal employee. 
 
 
Medicaid Offset 
 
If this matter is not resolved, CMS may instruct the Medicaid State Agency to withhold the 
Federal share of any Medicaid payments that may be due you or related facilities until the full amount 
owed to Medicare is recouped, Title 42 CFR,  447.30(g).  These recoveries will be in addition to any 
recoupment from other Medicare funds due you until the full amount owed to Medicare is recovered. 
 
Please read the following instructions carefully to determine what action you should take to avoid 
referral for cross servicing/offset.   
 
Due Process 
 
You have the right to request an opportunity to inspect and copy records relating to the debt.  This request 
must be submitted in writing to the address listed below.  You have a right to present evidence that all or 
part of your debt is not past due or legally enforceable.  In order to exercise this right, this office must 
receive a copy of the evidence to support your position, along with a copy of this letter.  You must submit 
any evidence that the debt is not owed or legally enforceable within 60 calendar days of the date of this 
letter.  If, after sixty (60) calendar days from the date of this letter, we have not received such evidence, 
your debt, if it is still outstanding and eligible for referral, shall be referred to the Department of Treasury 
or its designated DCC for cross servicing/offset. 
 
Repayment 
 
Your debt shall not be referred to the Department of Treasury if you make payment in full.  The past due 
amount owed to the Medicare Program as of the date of this letter includes current accrued interest.  
Interest is accrued monthly and is added to the balance of the debt. Your check or money order for the 
amount due should be made payable to: 
 
 
&CONTRACTOR_NAME &CHECK_ADDRESS1 &CHECK_ADDRESS2 
&CHECK_CITY, &CHECK_STATE &CHECK_POSTAL_CODE 
 
Include a copy of this letter with your payment. 
 
If you cannot make payment in full, you may be allowed to enter into an extended repayment 
agreement if you are eligible under the extended repayment requirements at 42 C.F.R. 401.607(c)(2).  If 
you are interested in an extended repayment agreement, please contact this office. 
 
Bankruptcy 
 
If you have filed for bankruptcy and an automatic stay is in effect, you are not subject to offset while 
the automatic stay is in effect.  Documentation supporting your bankruptcy status, along with a copy 
of this notice, must be forwarded to this office at the above address. 
We request that you refund this amount in full.  If you are unable to make refund of the entire amount at 
this time, advise this office immediately so that we may determine if you are eligible for a repayment 
schedule.  Any repayment schedule (where one is approved) would run from the approval date. 
 
If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding, Medicare financial 
obligations will be resolved in accordance with the applicable bankruptcy process.  Accordingly, we 
request that you immediately notify us about this bankruptcy so that we may coordinate with both the 
Centers for Medicare & Medicaid Services and the Department of Justice so as to assure that we handle 
your situation properly. 
 
If applicable, we have also initiated a request that your Federal share of Title XIX (Medicaid) payments 
be withheld.  If this withholding is initiated, it will not be removed until payment in full is received or an 
acceptable extended repayment request is received and approved. 
 
Should you have any questions, please contact your overpayment consultant at the following: 
 
&BUSINESS_PURPOSE_1 
&CONTRACT_CONTACT_PHONE_NUM_1 
&BUSINESS_PURPOSE_2 
&CONTRACT_CONTACT_PHONE_NUM_2  &BUSINESS_PURPOSE_3 
&CONTRACT_CONTACT_PHONE_NUM_3 
&BUSINESS_PURPOSE_4 
&CONTRACT_CONTACT_PHONE_NUM_4 
&BUSINESS_PURPOSE_5 
&CONTRACT_CONTACT_PHONE_NUM_5 
 
We look forward to hearing from you shortly. Sincerely, 
Supervisor, Part A Overpayments &CONTRACTOR_NAME 
 
EXHIBIT 7- INTENT TO REFER LETTER - UNFILED COST REPORTS ONLY-  
(Rev. 316, Issued: 05-24-19, Effective: 10-01-19, Implementation: 10-07-19) 
 
A. Contractors on HIGLAS shall use the list below for the appropriate system generated letters. 
1.   (APROVCRUNF3.pdf)  Part A Unfiled Cost Report Intent to Refer 
 
B.  Contractors not on HIGLAS shall use this letter as your template. 
 
RE:  Intent to Refer Letter  Provider or Supplier Name: Provider/Supplier Number: & 
 Overpayment Amount: &HINVOICE_AMOUNT Outstanding 
Balance: &DEMAND_AMOUNT 
 
 
Subject in Bold: Notice of Intent to Refer Unfiled Cost Report Debts to the Department of 
Treasurys Debt Collection Center for Cross Servicing and Offset of Federal Payments 
 
[Insert contractor opening paragraphs concerning the reason for the overpayment, date of 
determination and amount due. Refer to previous demand letters or other forms of contact 
regarding the debt.] 
 
NOTE: If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding please 
follow the instructions found at the end of this letter.  
 
Your unfiled cost report debt to the Medicare Program is delinquent and, by way of this letter, we are 
providing notice that your debt may be referred to the Department of Treasurys Debt Collection Center 
(DCC) for Cross Servicing and Offset of Federal Payments.  Your debt may be referred under the 
provisions of Federal law, Title 31 of the United States Code,  3720A and the authority of the Debt 
Collection Improvement Act of 1996. 
 
The Debt Collection Improvement Act of 1996 (DCIA) requires Federal agencies to refer delinquent debt 
to the Department of Treasury and/or a designated Debt Collection Center (DCC) for collection through 
cross servicing and/or the Treasury Offset Program.  Under the offset program, delinquent Federal debt is 
collected through offset of other Federal agency payments you may be entitled to, including the offset of 
your income tax return through the Internal Revenue Service (IRS). 
 
The DCC may use various tools to collect the debt, including offset, demand letters, phone calls, 
referral to a private collection agency and referral to the Department of Justice for litigation.  Other 
collection tools available, which may be used, include Federal salary offset and administrative wage 
garnishment. If the debt is discharged, it may be reported to the IRS as potential taxable income. 
 
For Individual Debtors Filing a Joint Federal Income Tax Return 
  The Treasury Offset Program automatically refers debt to the IRS for offset.  Your Federal income tax 
refund is subject to offset under this program.  If you file a joint income tax return, you should contact the 
IRS before filing your tax return to determine the steps to be taken to protect the share of the refund, which 
may be payable to the non-debtor spouse. 
 
Federal Salary Offset 
 
If the facility ownership is either a sole proprietorship or partnership, your individual salary(s) may be 
offset if you are (or become) a federal employee. 
 
Medicaid Offset 
 
As authorized in 42 CFR 447.30, and Section 1914 of the Social Security Act, CMS may instruct the State 
Medicaid Agency to offset the Federal share of any Medicaid payments due to you, your agency and/or 
related facilities.  At that time, the offset shall remain in effect until the Medicare overpayment is paid in 
full. 
 
Read the following instructions carefully to determine what action you should take to avoid 
referral for cross servicing/offset. 
 
Due Process 
 
You have the right to request an opportunity to inspect and copy records relating to the unfiled cost 
report debt.  This request must be submitted in writing to the address listed below.  You have the right 
to present evidence that all or part of your debt is not past due or legally enforceable. In order to 
exercise this right, this office must receive a copy of the evidence to support your position, along with a 
copy of this letter. 
You must submit any evidence that the debt is not owed or legally enforceable within 60 calendar days 
of the date of this letter.  If, after sixty (60) calendar days from the date of this letter, we have not 
received such evidence, your debt, if it is still outstanding and eligible for referral, may be referred to 
the Department of Treasury or its designated Debt Collection Center for cross servicing/offset.  NOTE: 
Unfiled Cost Report debts (including new ones) may be transferred to Treasury for cross 
servicing/offset, upon approval from CMS central/regional offices. 
 
Repayment 
Your unfiled cost report debt(s) shall not be referred to the Department of Treasury if you submit the 
cost report or make the payment in full; otherwise, you will remain legally responsible for any amount 
not satisfied through the collection efforts. 
Your check or money order for the amount due, made payable to: Medicare 
Contractor 
Address 000 Street 
Anywhere USA 00000-0000  
  Include a copy  of this letter with your payment. 
If you cannot make the payment in full, you may be allowed to enter into an extended repayment 
agreement.  
If you are interested in an extended repayment agreement, please contact this office. 
 
 
Bankruptcy 
  If you have filed for bankruptcy and an automatic stay is in effect, you are not subject to offset while the 
automatic stay is in effect.  You must forward documentation supporting your bankruptcy status, along 
with a copy of this notice, to this office at the above address. 
 
If you have any questions concerning this debt, please contact _________________ 
at __________________________________. 
                                                                               Sincerely, 
 
                                                                               ___________________________ 
 [Signature of Certifying Official] 
 
30 - Interest Assessment/Payment on Overpayments and Underpayments 
(Rev. 29, 01-02-04) 
 
The CMS regulations, in accordance with the Federal Claims Collection Act, as amended, the Social 
Security Act, and common law establish specific rules for the payment of interest on Medicare 
overpayments and underpayments (42 CFR 405.378).  As a general rule, interest shall be assessed at the 
prevailing rate specified by the Secretary of the Treasury unless the overpayment is recouped or the 
underpayment is paid within 30 days of a "final determination." 
 
Interest shall be assessed on overpayments, and shall be paid on underpayments, to providers and suppliers 
of services (including physicians and other practitioners), if the overpayment or the underpayment is not 
liquidated within 30 days from the date of the final determination. 
 
The provisions of this section may not apply to FI overpayments or underpayments determined as a result of 
interim rate and periodic interim payment (PIP) adjustments (See Chapter 3, 60) or utilization reviews.  
The basic rules for assessing interest are: 
 
30.1 - Final Determination 
(Rev. 29, 01-02-04) 
 
For purposes of this chapter: 
 
A final determination is deemed to occur upon final settlement of a cost report when both an NPR and a 
written demand for payment of an overpayment or a written determination of an underpayment is 
transmitted to a provider based upon: 
 
  An audited final settlement; 
 
  Final settlement without audit; or 
 
  Reopening for any reason. 
 
In cases in which an NPR is not used as a notice of determination, one of the following determinations is 
issued: 
 
  A written determination that an overpayment exists and a written determination for payment; 
 
  A written determination of an underpayment; 
 
  An Administrative Law Judge (ALJ) or hearing officers decision that reduces the amount of an 
overpayment below the amount that CMS has already collected.  A final determination is deemed to  have occurred only when the amount of the overpayment/underpayment has been calculated.  This 
may be at the decision time and it may be at a later time if recalculations are necessary. 
 
  A written determination that an As Filed Cost Report has been received without payment; 
 
  A written determination that an accelerated payment or advanced payment has occurred and has now 
been deemed an overpayment. 
 
A final determination is deemed to occur upon the due date of a timely filed cost report which indicates an 
overpayment is due CMS and is not accompanied by payment in full. 
 
A final determination is deemed to occur with respect to a cost report that is not filed on time, from the date 
due until such time as the cost report is filed. 
 
30.2 - Rates of Interest - FIs and Carriers 
(Rev. 30, 01-28-04) 
 
The interest rates on overpayments and underpayments is determined in accordance with regulations 
promulgated by the Secretary of the Treasury and is the higher of the private consumer rate or the current 
value of funds rate prevailing on the date of final determination.  Interest accrues from the date of the initial 
request for refund and is assessed for each 30-day period, or portion thereof, that payment is delayed after 
the initial refund request. 
 
The private consumer rate, historically higher than the current value of funds rate, is subject to quarterly 
revision.  The Department of the Treasury certifies the revised rate to the Department of Health and Human 
Services on a quarterly basis.  Medicare contractors will be receiving subsequent quarterly updates of the 
new interest rate for Medicare overpayments and underpayments through a recurring update notification.  
Interest assessed for both late payments and installment payments is computed as simple interest using a 
360-day year.  Simple interest is interest that is paid on the original principal balance and after each payment 
interest accrues on the remaining unpaid principal balance.  Interest charges will not be prorated on a daily 
basis for overdue payments received during the month (e.g., 10, 15, or 20 days late).  Interest is assessed for 
the full 30-day period. The interest rate on each of the final determinations will be the rate in effect on the 
date the determination is made. 
 
If periodic but unscheduled payments or credits are made in different calendar quarters, the quarterly rate 
prevailing at the time of the final determination is charged and remains the same until the debt is liquidated.  
Interest must be recalculated based on the outstanding balance at 30-day intervals from the date of final 
determination. 
 
The interest rate charged on overpayments repaid through an approved extended repayment schedule is the 
rate that is in effect for the quarter in which the determination was made.  The rate remains constant unless 
the provider defaults (i.e., misses two consecutive installment payments) on an extended repayment 
agreement. When the provider defaults on such an agreement, interest on the balance of the debt may be 
changed to the prevailing rate in effect on the date of the default if that rate is higher than the rate specified 
in the agreement. 
 
30.3 - Interest Accruals 
(Rev. 41, 04-30-04) 
 
NOTE:  Effective October 1, 2004, 42 CFR 405.378 was amended to change how interest is calculated on 
Medicare overpayments and underpayments to providers, suppliers, and other health care entities.  This 
change also applies to Medicare Secondary Payer (MSP) recoveries.  Under the new rule, interest is assessed 
for each full 30-day period that payment is not made on time.  This change applies to Medicare 
overpayments and underpayments determined (and MSP debts established) on or after October 1, 2004 (the 
effective date of the final rule).  Unliquidated debts determined prior to October 1, 2004 will continue to use  the former interest calculation method (a period of less than 30 days is considered to be a full 30-day period) 
until paid in full. 
 
Reminder:  The date of the demand letter (not the day after) is the first day of the first 30-day period. 
 
A.  Accrual of Interest; Timely filed Cost Report/Part B Overpayment Determination 
 
Interest will accrue from the date of the final determination and will either be charged on the overpayment 
balance or paid on the underpayment balance for each full 30-day period that complete liquidation is 
delayed. 
 
Generally, interest charges on an overpayment begin to accrue on the date the FI issued an NPR and/or the 
date the FI or carrier issued a notice of final determination of an overpayment, along with a written demand 
for payment. If the overpayment is paid in full within 30 days from the date of determination the interest 
accruals are normally waived. 
 
NOTE:  The standard systems generally post interest on a monthly basis.  Interest is assessed at the end of 
30-day periods.  If the payment is postmarked on or before the 30th day any interest accrual is waived or 
zero-balanced in the system. 
 
Cost Report Overpayment-Example of Interest Accrual- The provider with a FYE 08/31/04 submits a cost 
report on 01/28/05, showing $10,000 due the program, payment in full accompanies the cost report.  On 
02/15/05, the intermediary completes the desk review and determines an additional $25,000 overpayment.  
On 02/15/05 the first demand letter is sent.  The provider does not pay the $25,000 additional overpayment 
until 04/03/05 (45 days after the date of the initial demand letter).  Interest, therefore, accrues on the $25,000 
for one full 30-day period. 
 
Physician/Supplier Overpayment-Example of Interest Accrual- The carrier discovers that an overpayment 
for $795.45 exists and sends a demand letter on 12/01/04.  The physician/supplier does not remit payment 
on the overpayment until 01/15/05 (45 days after the date of the initial demand letter).  Therefore, interest 
accrues on the $795.45 for one full 30-day period. 
 
Physician/Supplier Overpayment  Example of Interest Accrual Prior to 10/01/2004  
 
The carrier discovers that an overpayment for $795.45 exists and sends a demand letter on 09/30/04.  (The 
determination date of this overpayment is prior to the effective date of the revision to 42 CFR 405.378).  The 
provider does not remit payment on the overpayment until 11/14/2004 (45 days after the date of the initial 
demand letter).  Therefore, interest accrues on the $795.45 for two full 30-day periods. 
 
Example of Waiver of Interest- Overpayment Paid in Full within 30 days from the date of determination- 
The FI/carrier determines and demands an overpayment on 11/03/04 for $1500.00.  The provider remits 
payment of $1500.00.  The postmark date on the payment is 11/30/04.  Any interest accrual is waived since 
the overpayment was paid in full within 30 days of the date of determination. 
 
B.  Accrual of Interest; Untimely Filed Cost Reports, Regarding Final Determinations at 30.1. 
 
Interest always accrues for any overpayment on a late filed cost report for the period of delinquency when an 
overpayment is declared or determined by CMS.  The overpayment may appear on the cost report, or may be 
determined later (including increases to overpayment, see example 2 below) through desk review or audit.  
Interest accrues during the period a cost report remains unfiled beyond the due date.  Interest is assessed for 
the period of time the cost report was unfiled even if the overpayment is satisfied at the time of the delayed 
filing of the cost report.  This interest assessment is due and payable following the notice of a final 
determination.  The interest rate will be the rate in effect as of the day following the due date of the cost 
report. 
  On any subsequent determination that increases the overpayment on a cost report filed untimely, the 
additional overpayment is also subject to accrued interest charges for the period the cost report was due until 
the date filed.  The interest rate will be the rate in effect as of the day following the due date of the cost 
report. 
 
Where desk review, audit or reopening determinations increase the originally filed and declared 
overpayment, the revised overpayment also is subject to the general provisions governing interest on 
overpayments from the date of the new or revised notice of final determination.  These interest charges will 
be in addition to the interest charges due for the period of time the cost report remained unfiled. 
 
Examples of Application when cost report not filed on time 
 
1.  The provider submits its cost report 70 days late and pays the declared overpayment of $50,000 when 
filing.  Interest at the prevailing rate accrues from the due date until the date filed, or, in this case, two 30-
day periods as only two full 30-day periods have passed.  Interest is assessed during the period of 
delinquency whether or not payment accompanies the cost report. 
 
The intermediary performs a desk review and determines an additional overpayment of $12,000.  Interest, at 
the prevailing rate at the time the cost report became overdue is assessed on the $12,000 for the two 30-day 
periods of delinquency.  In addition, interest accrues at the current prevailing rate on the $12,000 if payment 
is not made within 30 days of the date of the initial demand letter. 
 
2.  A provider with FYE 6/30/04 has a cost report that is due on 11/30/04.  The cost report became overdue 
on 12/01/04.  On 01/15/05 the cost report was submitted indicating an amount due the program; payment did 
not accompany the report.  Due to the late submission of the cost report, interest is assessed for one 30-day 
period.  The interest rate assessed is the rate in effect on the day the cost report became overdue, 12/01/04.  
In addition interest, at the rate in effect on the day the cost report became overdue, will accrue on the 
declared overpayment from the date the cost report is filed to the date the amount due is paid. 
 
On 03/12/05, the intermediary completes a desk review and determines an additional overpayment, issuing a 
NPR and demand letter. Interest will be assessed on this additional amount at the rate in effect on 3/12/05.  
In addition interest will be assessed for the period of delinquency at the rate in effect on the day the cost 
report became overdue, 12/01/04. 
 
C.  Accrual of Interest; Rejected Cost Report 
 
In terms of interest accrual, a rejected cost report is treated like an unfiled cost report.  If a cost report is 
officially rejected by the contractor, (see Audit and Reimbursement section to determine when to reject a 
cost report) interest accrues on the determined overpayment amount from the date the cost report is due until 
the date the cost report is resubmitted with payment in full.  The determined overpayment amount is the 
amount due the program on the accepted cost report.  If a cost report is submitted with payment in full and is 
later rejected the accrual of interest depends on the determined overpayment amount on the accepted cost 
report.  If the determined overpayment amount on the accepted cost report was paid in full by the original 
submission, no interest accrues.  If the determined overpayment amount is different than the overpayment 
amount listed on the original rejected cost report, interest will accrue on the difference. 
 
Example of Interest Accrual When the Cost Report is Rejected 
 
1.  A provider submits the cost report with payment in full before the due date.  Upon review the contractor 
rejects the cost report.  The provider corrects the cost report and resubmits it.  The contractor accepts the 
revised cost report.  The amount due the program on the revised cost report is equal to the check that 
accompanied the original cost report. Since the check fulfilled the determined overpayment on/ before the 
due date, there is no interest accrual. 
  2.  A provider submits the cost report with payment in full before the due date.  Upon review the contractor 
rejects the cost report.  The provider corrects the cost report and resubmits it.  The contractor accepts the 
revised cost report.  The amount due the program on the revised cost report is different than the amount of 
the check that was submitted with the original cost report.  The provider sent in a check for the additional 
amount with the revised cost report. Since the check with the original cost report was not the determined 
overpayment amount, interest accrues on the difference between the check and the overpayment listed on the 
revised cost report.  The interest rate is the rate that was in effect on the day the cost report was due. 
 
D.  Underpayments 
 
Generally interest charges on an underpayment begin to accrue upon the FIs or carriers issuance of: 
 
  An NPR (FI only) and a notice of final determination of an underpayment under 30.1. 
 
  A notice of final determination of an underpayment under 30.1 when an NPR is not issued. 
 
  An administrative law judge (ALJ) or hearing officers decision that reduces the amount of an 
overpayment below the amount that CMS has already collected.  Interest begins to accrue once 
the underpayment amount has been determined.  This may be at the decision time if the ALJ 
reverses the entire overpayment amount or the ALJ states a principal amount to be paid upon 
which interest may be calculated.   However, if the ALJ does not specify the overpayment 
amount and recalculations are necessary (not including a full reversal of the overpayment 
amount) interest will begin to accrue at the time of the recalculations.  If the FI/carrier is unsure 
when interest should accrue for a particular case, the servicing regional office should be 
contacted. 
 
  An Intermediary Hearing or a Provider Reimbursement Review Board (PRRB) decision that 
reduces the amount of an overpayment below the amount that CMS has already collected. 
 
However, no interest will be due and payable to a provider if the FI or carrier pays the underpayment within 
30 days from the date of notice of final determination of the underpayment. Interest will accrue each 30-day 
period on the underpayment balance that has not been satisfied. 
 
30.4 - Procedures for Applying Interest During Overpayment Recoupment 
(Rev. 41, 04-30-04) 
 
A.   General 
 
If a provider is unable to satisfy the overpayment within 30 days from the date of final determination and 
demand for repayment (30.1), interest accrues on the unpaid principal balance and is due and payable for 
each full 30-day period that an overpayment balance is outstanding.  The contractor first applies any 
payments received to the accrued interest charges and then to the overpayment principal.  If the provider has 
more than one overpayment outstanding and a payment is received, the contractor credits the payment to the 
oldest overpayment first, unless the provider designates otherwise. 
 
B.   Recoupment Through Installment Payments 
 
A provider is expected to repay any overpayment as quickly as possible.  If a provider cannot refund the 
total amount of the overpayment within 30 days after receiving the first demand letter, it should immediately 
request an extended repayment plan.  (See Chapter 4, 50 for extended repayment procedures.) 
 
The interest rate to assess on overpayments repaid through an approved extended repayment plan is the rate 
in effect for the quarter in which the final determination is issued to the provider. 
  Interest rates remain constant based upon the initial rate assessed unless the provider defaults, i.e., misses 
two consecutive installment payments of an extended repayment agreement.  Interest on the principal 
balance of the debt may be changed to the current prevailing rate if (a) the provider is delinquent on its 
installment payments and (b) the current prevailing rate in effect on the date the installment becomes 
overdue is higher than the rate specified in the agreement. (For FISS and APASS users only.) Each payment 
is applied first to accrued interest and then to principal.  After each payment interest will accrue on the 
remaining unpaid principal balance. 
 
C.   Proof of Receipt 
 
The U.S. Postal Service postmark date is controlling in determining the timely receipt of a cost report or 
payment of an overpayment. Therefore, the contractor should retain all envelopes in order to have proof of 
receipt.  If a due date for any payment falls on a holiday or a weekend, the next working day is considered 
the official due date for the purpose of applying accrued interest. (FISS and APASS users only.) CMS does 
not accept dates imprinted by a providers meter postage machine as confirmation of the postmark date.  In 
these cases the FI/carrier should use the date the cost report or payment was received and date stamped.  If a 
provider utilizes a commercial delivery service the date constituting a timely receipt is the date the 
commercial delivery service signs and accepts the package.  The date the cost report or payment is received 
by the FI/carrier controls if any other mailing service was used. 
 
30.5 - Notification to Providers Regarding Interest Assessment 
(Rev. 41, 04-30-04) 
 
A.   Cost Report Reminder Letters 
 
The FI is required to issue reminder letters to a provider of the time limitation for filing the cost report when 
the institutional provider fails to file by the last day of the fourth month following the end of the cost report 
period.  In addition to the requirements outlined in Chapter 3, 30 and Chapter 4, 20 the FI must include 
the following in a cost report reminder letter: 
 
  1.  Late Filing Interest- If a cost report is not filed on time and indicates an amount is due CMS, 
or if it is subsequently determined that an additional overpayment exists, such as when an NPR is issued, 
interest will be assessed on the overpayment from the due date of the cost report to the date the cost report 
was filed.  This interest assessment is made regardless of whether the overpayment is liquidated within 30 
days. 
 
  2.  Assessed Interest- If a cost report is filed on time and indicates an amount is due CMS, 
interest will accrue on that overpayment from the date the cost report is due, unless full payment 
accompanies the report or the provider and the contractor agree in writing, in advance, to recoup the amount 
of the overpayment from interim payments over the next 30-day period. 
 
B.   Notice of Program Reimbursement (NPR)  
 
In addition to the requirements outlined in audit instructions, all NPRs issued after September 3, 1982, must 
include the following: 
 
"In accordance with the procedures of 42 CFR 405.378ff interest will be assessed on the 
amount due CMS unless full payment is made within 30 days from the date of the Notice.  
Interest will be assessed for each full 30-day period that payment is delayed." 
 
C.   Overpayment Demand Letters 
 
In addition to the requirements of Chapter 4, 20 and 90 the FI and Carriers written demand for repayment 
must contain a notice that in accordance with 42 CFR 405.378, interest shall be assessed on all 
overpayments at the prevailing rate specified by the Secretary of the Treasury unless repayment is made  within 30 days.  Interest shall be assessed for each full 30-day period that payment is delayed and shall 
accrue from the date of the final determination.  The demand letter shall include the appropriate interest rate 
that will be assessed if payment in full is not received within 30 days. 
 
30.6 - Waiver and Adjustment of Interest Charges 
(Rev. 41, 04-30-04) 
 
A.   Waiver of Interest Charges 
 
Interest charges shall be waived if the overpayment is completely liquidated within 30 days from the date of 
final determination, or if the contractor or the RO determines that the administrative cost of collection would 
exceed the amount of interest. 
 
For institutional providers serviced by FIs, interest shall not be waived for the period of time during which 
the cost report was due but remained unfiled as specified in Chapter 4, 30.1.  Also, interest shall not be 
waived where a cost report is timely filed indicating an amount due CMS and is not accompanied by 
payment in full as specified in Chapter 4, 30.1 unless the provider and the FI agree in advance to liquidate 
the overpayment through a reduction in interim payments over the next 30-day period. 
 
For bankrupt providers and interest see Chapter 3, 140. 
 
B.   Adjustment of Interest Charges 
 
1.   Reopenings-FI 
 
When the FI reopens a final settlement pursuant to 42 CFR 405.1885 - 1887(a) and such reopening reverses 
some or all adjustments, whereby the previous overpayment is reduced or eliminated, it makes an 
appropriate adjustment to previously assessed and recovered interest to reflect the proper interest chargeable 
under 42 CFR 405.378 and the policies set forth. 
 
Should the reopening action establish or increase an overpayment, the rate of interest on the additional or 
new overpayment is the rate in effect as of the date of the new notice of final determination. 
 
If the original cost report was not submitted timely, any reopening action, which results in an adjustment to 
the previously determined overpayment, shall also include an appropriate adjustment to the late filing 
interest assessment. 
 
2.   FI and Provider Reimbursement Review Board Hearings - Institutional Providers Serviced by FIs 
 
If an overpayment or underpayment determination is reversed administratively by the FI or by the PRRB, 
and the reversal is the final decision in the case, it is necessary to recalculate the correct amount of interest 
to be assessed.  If any excess interest or principal has been collected, the FI refunds it to the debtor. No 
interest accrues on the refunded amount unless payment is not made within 30 days from the date of 
notification of the corrected overpayment or underpayment amount. 
 
If the hearing results in an additional overpayment, the FI assesses interest on the additional amount at the 
rate in effect on the date of the revised final determination.  Interest does not accrue until the FI notifies 
the provider of the revised overpayment or underpayment amount. 
 
Example of Application 
On 07/18/05, the intermediary completes a final settlement and issues a NPR and a written demand showing 
an amount due the program of $16,000. On 09/15/05, the provider pays the $16,000 overpayment plus one 
30-day period of accrued interest. 
  As a result of a hearing on 12/l0/05, the PRRB reverses the intermediary's findings and determines that the 
correct amount due the program was $4,000.  The excess $12,000 in principal and the accrued interest on 
$12000 that was assessed and collected must be returned to the provider. 
 
3.   Judicial Review 
 
The policies and procedures of this section do not apply to the time period for which interest is payable 
under 42 CFR 413.64(j) because the provider seeks judicial review of an adverse decision by the PRRB or 
the decision of the Administrator. Section 1878(f) of the Social Security Act authorizes a court to award 
interest in favor of the prevailing party on any amount due as a result of the courts decision.  The interest is 
payable for the period beginning on the first day of the first month following the 180-day period which 
began on either the date the intermediary made a final determination or the date the intermediary would have 
made a final determination had it been done on a timely basis.  The interest rate assessed is the rate on 
obligations issued for purchase by the Federal Hospital Insurance Trust Fund.  This rate of interest can be 
found at http://cms.hhs.gov/statistics/trust-fund-interest-rates/.  If the FI withheld any portion of the amount 
in controversy prior to the date the provider seeks judicial review by a Federal court, and the Medicare 
program is the prevailing party, interest is payable by the provider only on the amount not withheld.  
Similarly, if the Medicare program seeks to recover amounts previously paid to a provider, and the provider 
is the prevailing party, interest on the amounts previously paid to a provider is not payable by the Medicare 
program since that amount had been paid and is not due the provider.  However, if the Medicare program 
had recovered any of the amount in controversy interest would be payable from the time of recovery through 
the date of payment.) 
 
40  Withholds and Suspensions 
(Rev. 29, 01-02-04) 
 
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. 29, 01-02-04) 
 
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. 
 
Day 16  No word from  100 % withhold 
provider 
Day 16  Provider has submitted  No withhold as long as provider submitted a first 
ERP application  payment along with ERP application.  Payments 
must continue on a monthly basis until provider 
receives written approval or denial of the ERP 
request.  If payment is not received with the 
application request, withhold shall be initiated at 
30%. 
Day 16  Provider has submitted  No withhold as long as provider submitted a first 
ERP application but it  payment along with ERP application. If payment 
is incomplete  is not received with the application request, 
withhold shall be initiated at 30%.   Once a 
completed application is submitted payments 
must continue on a monthly basis until provider 
receives written approval or denial of the ERP 
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  30% withhold- when ERP application is 
is planning to submit  received, cease withhold if the first payment 
an ERP application  accompanies the application request; maintain 
30% withhold if payment does not accompany 
application 
Day 30  Still no word from  Remain at 100% 
provider 
Day 30+  ERP application is  No withhold as long as provider continues to 
being reviewed by RO  submit appropriate payments on a monthly basis 
or CO  under the terms of the application request.  If 
provider did not submit a first payment or does 
not submit subsequent payments withhold shall 
be 30% unless RO or CO gives alternative 
instructions 
Day 30  Provider said an ERP  Increase withhold to 100% 
application was  If provider calls with an acceptable reason for 
forthcoming but has  the delay, make a judgment call to leave at 30% 
not been received to  until day 45 
date 
Day 45+  No ERP application  100% 
and no payment by 
provider 
 
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 ERP application has been received.  If an ERP application has 
been received and is currently being reviewed by the Carrier or CMS RO or CO and the first payment was 
sent in by the provider with the application no withhold shall occur.  If the first payment did not accompany 
the ERP application a 30% withhold shall be initiated.   
 
NOTE:  Additional Information for Both FIs and Carriers 
 
If extenuating circumstances exist and the FI/carrier believe that a higher or lower percentage of withhold is 
necessary to protect the Medicare Trust Fund, the FI/carrier 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 ERP application shall be one months payment based on the amortization 
schedule submitted with the ERP 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 ERP in excess of 60 months the payment submitted shall be 1/60th 
of the overpayment.  If the payment submitted is not 1/60th of the overpayment, the FI/carrier shall contact 
the provider (in writing or a documented telephone call with the appropriate personnel at the providers 
place of business) requesting additional funds.  If the provider does not submit additional funds within 15 
days of the date of the request, the FI/carrier shall initiate a 30% withhold. 
 
Until a final decision is made regarding the ERP the provider should submit monthly payments based on the 
amortization schedule.  If the provider does not continue to submit monthly payments, the FI/carrier 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 FI/carrier shall initiated a 30% withhold. 
 
E.   Disposition of Withheld Funds 
 
All funds withheld shall be applied towards the outstanding overpayment. The funds shall be applied to the 
outstanding 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. 
 
40.2  Suspension of Payment (See Program Integrity Manual) 
(Rev. 29, 01-02-04) 
 
Medicare authority to withhold payment in whole or in part for claims otherwise determined to be payable is 
found in federal regulations at 42 CFR 405.370-377, which provides for the suspension of payments. 
 
Suspension may be used when the contractor possesses reliable information that: 
  Fraud or willful misrepresentation exists; 
  An overpayment exists but the amount of the overpayment is not yet determined;    The payments to be made may not be correct; or  
  The provider fails to furnish records and other requested information. (Some examples include cost 
reports, credit balance reports, and form CMS-91.) 
 
50 - Establishing an Extended Repayment Schedule (ERS) - (formerly known as 
an Extended Repayment Plan (ERP)) 
(Rev. 312, Issued: 04-05-19, Effective: 10-01-19, Implementation 10-07-19) 
 
For purposes of these instructions, the term Provider, Physician and other Supplier will be referred 
to as Provider. 
 
For purposes of these instructions, the term Medicare Contractor will be referred to as Contractor. 
 
 
For the purposes of these instructions, the following definitions apply; See 42 C.F.R. 401.607(c)(2) 
and (3): 
 
Hardship exists when the total amount of all outstanding overpayments (principal and interest) not included 
in an approved, existing repayment schedule is 10 percent or greater than the total Medicare payments made 
for: (1) the cost reporting period covered by the most recently submitted cost report; or (2) the previous 
calendar year for a non-cost report provider (see below additional factors to consider when determining 
eligibility). 
 
Extreme hardship exists when a provider qualifies as being in hardship as defined in the previous 
paragraph and a 36 month to 60 month extended repayment schedule (ERS) is deemed eligible for approval 
consideration by Medicare. 
 
 
Additional Factors to Consider:  
The contractor shall evaluate the request, based on the definitions written above, in conjunction with the 
requirements found in sections 50-50.3 of this chapter.  For a provider whose situation does not meet the 
definitions written above, the contractor shall evaluate the ERS request based on the requirements found in 
sections 50-50.3 of this chapter and consider the information in (i)  (iii) below, when deciding whether to 
grant an ERS. 
 
The contractor shall determine the number, amount, and frequency of installment payments based on the 
information submitted by the debtor and on other factors such as: 
 
(i) Total amount of the claim (overpayment); 
(ii) Provider's ability to pay; and 
(iii) Cost to CMS of administering an installment agreement. 
 
The contractor shall document evaluation factors, including communication with CMS, used during the 
decision making process. 
  
 
A provider is expected to repay any overpayment promptly.  If repaying an overpayment within 30 days 
would constitute a hardship on the provider, a request for an ERS should be submitted immediately. 
However, if the overpayment is outstanding and not referred to Treasury, the provider shall request an ERS 
beyond 30 days, and the contractor shall review that request.  Instructions on how to apply for an ERS shall 
be available on the contractors website for provider reference.  Medicare demand letters shall refer 
providers to the contractors website for detailed ERS instructions. Contractors shall include in the ERS 
instructions a form in which the provider can elect to have their underpayments or manual refunds  automatically applied to their overpayment (see section B below).  Providers shall be given the option to 
request a paper copy. 
 
A. The following steps shall be implemented upon receipt of an ERS:  
 
1.  A provider shall submit a signed ERS request which includes:  
 
i.  the specific overpayment for which an ERS is being requested;  
ii.  the number of months requested; 
iii.  CMS required documents (see sections 50.1-50.2) and a good faith payment equaling one 
months payment of the providers requested terms with its request (ex. 36 month request = 
1/36th minimum). 
 
This is what constitutes a complete ERS. 
 
2.  Contractors shall evaluate all providers requests for an extended repayment schedule up to 60 
months, but shall only approve/disapprove ERS requests of at least 12 months up to 36 months.  
 
3.  Contractors should consider ERS requests for 6-11 months on a case-by-case basis. Approval should 
only be for cases where it is clear that the debt can be repaid in this short period.  Requests for 6 -11 
month ERSs do not require submitting financial documentation if the provider meets the hardship 
qualifications and does not fall within a scenario found in section 50.3(1).  
 
4.  Contractors shall refer ERS requests over 36 months (or an ERS that need RO guidance) that are 
determined as eligible to their CMS Regional Office (RO), along with a recommendation.  
Contractors should not send requests to the RO if they determine: 
 
i.  that a providers request over 36 months is ineligible for approval due to not meeting the 
hardship criteria; or  
 
ii.  that the terms should be reduced less than 36 months, due to not meeting the extreme 
hardship criteria. 
 
5.  The RO shall evaluate and approve/disapprove ERS requests up to 60 months (see 42 CFR 401-
607(c)(2)(vi)).  
 
6.  CMS Central Office (CO) will evaluate ERS requests as needed or requested by the RO.   
 
7.  All ERS requests shall be reviewed and evaluated for approval, disapproval, or referral to RO/CO 
within 30 days of receipt of the complete request.  
 
8.  Providers shall request for a 6-11 month ERS without submitting financial documentation if they 
meet the hardship qualifications and do not fall within a scenario found in section 50.3(1).   
 
9.  The Provider shall submit financial documentation for ERS request 12 months or longer. 
 
10. The contractor or RO shall determine eligibility qualifications and the duration of the ERS based on 
its review of the providers documentation and any other information acquired (such as fraud 
information, claims data, overpayment history, etc.). 
 
11. If an ERS is approved and a provider misses one installment payment, the provider is in default 
(refer to 42 CFR 401.613(2)(v)).  The payment is considered missed if not received within 30 days 
after the payment due date.  The contractor shall send a notice of default to the provider within 5 
business days, suspend the ERS agreement, and immediately resume normal debt collection 
procedures.   
12. The contractor shall consider a providers request to reinstate the ERS, even after default.  If 
reinstated, the provider shall be required to submit new documentation to determine eligibility.  The 
contractor shall determine to reinstate the original ERS agreement or revise the schedule, if 
approved.  If revised, the contractor shall ensure that the revised terms do not extend the original 
and revised schedule beyond 60 months.  The ERS will be closed with no reopening, if the provider 
were to default again on the reinstated request. 
 
13. The contractor should not grant an ERS to a provider where there is a previously defaulted ERS 
that was not resolved (reinstated, paid up to date, or paid in full). 
 
B. The following steps shall be implemented when reviewing and establishing an ERS: 
 
1.  If a complete ERS request and a good faith check payment (see note a. below) are received, the 
contractor shall start reviewing the request immediately.  The contractor shall accept the good faith 
payment(s) and suspend any recoupment during the review of the ERS. 
 
2.  Contractors shall review the complete ERS package to make a final decision within 30 business days 
of receipt.  If the contractor needs additional time to review an ERS request, it shall work with their 
RO to determine a reasonable timeframe to complete. 
 
3.  If an ERS request is received with all documentation but no good faith payment, (see note a. below) 
the contractor shall immediately place the provider on 30% recoupment during the review of the 
ERS. 
 
4.  If an incomplete ERS request is received, the contractor shall review the submitted documentation, 
determine and request all missing documents, and immediately place the provider on no less than 
30% recoupment.  If the contractor requests additional documentation and the information is not 
received by the 16th day after the letter date, the contractor should close the request and resume 
collect activities. 
 
5.  Contractors shall review the ERS documents in detail to determine if there are any other documents 
needed.  If additional documents are needed the contractors shall request additional documentation.   
 
6.  Contractors should extend an additional 15 calendar days to receive the documentation from the 
provider before closing the request.  Upon receipt, the contractor shall complete its review of the 
additional documentation within 5 business days.   
 
7.  Contractors shall ensure that requesting additional documentation will not unnecessarily extend the 
decision-making period.   
 
8.  If the contractor needs additional time to conduct the review, they shall work with their RO to 
determine a reasonable timeframe to complete.  
 
9.  Contractors shall review and forward all ERS requests that they recommend to the RO for approval 
within 30 days of receiving a complete ERS request. 
 
10. Contractors shall NOT refund any payments received or recouped that occurred while processing 
an ERS, but shall apply such amount(s) to the outstanding overpayment(s) (apply to interest first 
then principal), unless CMS directs otherwise. 
 
11. If the ERS request is approved, the contractor shall establish an ERS to recover the remaining 
balance of an overpayment. 
 
12. Pre-accrued interest shall be recovered first before applying any payments to principal.  Pre- accrued interest can either be recovered in one lump sum or over multiple months (not to exceed 3 
months, unless directed by CMS), depending on a providers ability to pay in full or over time.  
 
13. Contractors shall ensure that interest continues to accrue on the overpayment until it is paid in full.  
While recovering the pre-accrued interest amounts, the contractor shall also recover the interest 
that continues to accrue on the outstanding principal balance.   
 
14. Once the pre-accrued interest is paid in full, the ERS (recovering principal and accruing interest) 
shall begin. 
 
15. Approved ERS requests will run from the ERS approval date. 
 
16. If the ERS request is denied, the contractor shall continue with normal debt collection activities.  
Providers shall be permitted one additional ERS request for an overpayment, where a previous 
ERS was denied.   
 
17. If both ERS requests are denied, any additional ERS requests for that overpayment (that a 
contractor deems should be considered) shall be forwarded to the RO for review.  
 
18. Contractors shall include in the ERS instructions an option in which the provider can elect to have 
all of its underpayments or manual refunds automatically applied to its overpayment.  Subject to 
section B below, a provider can rescind its consent to automatic recoupment or offset of 
underpayments and manual refunds, with further written notice to the contractor.  
 
19.  Any underpayments or manual refunds applied to an overpayment shall reduce the term of the 
ERS and shall not affect the installment amounts due under any amortization schedule. 
 
20. Unless the provider has submitted a request asking the MAC to automatically 
apply underpayments and manual payments to the ERS payments, contractors shall not 
automatically apply an underpayment due to a cost report or a manual refund due to over 
collection to the ERS overpayment.  
 
21.  If the contractor determines a Medicare underpayment or manual refund after  
establishing an ERS, the contractor shall notify the provider in writing of the underpayment or 
manual refund.  
 
22. The contractor shall permit the provider 15 calendar days following the date of notification to 
submit a request (with justification) to refund the underpayment. 
 
23. If the provider does not respond in the required timeframe or has not submitted a form asking the 
contractor to automatically apply the underpayment or manual refund to the ERS payments, the 
contractor shall immediately apply this amount to the ERS payments (with the exception of #20 
above).  
 
24. If the provider responds timely, the contractor has 15 calendar days from the receipt date to 
determine if the providers justification is in the best interest of the Medicare program.  The 
contractor should either apply the underpayment or refund the amount to the provider. 
 
  25. If a provider does not submit such a justification, the contractor shall deny the request and shall 
immediately apply this amount to the ERS payments.  
 
26.  If the provider fails to provide accurate current financial information, including certifying that  no material change has occurred, the contractor shall apply the underpayment or manual refund 
to the ERS.   
 
27.  If a refund request is denied, the contractor shall send written notice of the  
       determination to the provider, explaining the rationale for the determination.  
      The determination is not an initial determination and is not appealable.  
 
NOTE(S):   
 
a.  Good faith payments are monthly payments submitted by the provider while an ERS is in 
review.  They should equal one (1) months payment of the providers requested terms; ex., 36-
month request = 1/36th minimum good faith payment.  Payments less than this amount are not 
considered a good faith payment.  Payments shall continue to be submitted monthly while the 
ERS is being reviewed.   
 
b.  If under a 935 appeal, the provider shall continue to submit good faith payments or ERS 
payments.  These payments are considered voluntary payments and not 935 recoupments. 
 
 
50.1  ERS Required Documentation --Physician is a Sole Proprietor 
(Rev. 312, Issued: 04-05-19, Effective: 10-01-19, Implementation 10-07-19) 
 
A.  The contractor shall require that the provider (physician/sole proprietor) furnish the following 
for ERS request of 12 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 providers agreement to pay 
its overpayment through installment payments.  Signatures submitted in electronic form are 
permissible. 
 
2.  Installment Payments  The CMS requires the provider to submit the first installment 
payment (per the proposed amortization schedule) (good faith payment), along with any 
future payments due while under review. Providers shall submit a good faith payment each 
month until the ERS review is decided.  The MAC shall recoup the estimated monthly 
amount until the ERS review is completed. 
 
B.  The contractor shall require that the provider (physician/sole proprietor) furnish the following for an 
ERS request over 12 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 providers agreement to pay 
its overpayment through installment payments.  Signatures submitted in electronic form are 
permissible.  
 
2.  Installment Payments  The CMS requires the provider to submit the first installment payment 
(per the proposed amortization schedule) (good faith payment), along with any future payments 
due while under review.  Providers shall submit a good faith payment each month until the ERS 
review is decided. The MAC shall recoup the estimated monthly amount until the ERS review is 
completed. 
 
3.  CMS-379 Form - a completed CMS -379 Form.  The information requested on this form is 
necessary for the contractor to determine if the physician/sole proprietor will be able to make 
installment payments on a claim. 
  4.  Financial Statements - of Debtor. 
 
5.  Income Tax Return - a copy of the providers income tax filing for the most recent calendar 
year. 
 
50.2 - ERS Required Documentation Provider is an Entity Other Than a Sole 
Proprietor 
(Rev. 312, Issued: 04-05-19, Effective: 10-01-19, Implementation 10-07-19) 
 
A.  The contractor shall require that the provider (NOT a physician/sole proprietor) furnish the 
following for an ERS request of 12 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 providers agreement to pay 
its overpayment through installment payments.  Signatures submitted in electronic form are 
permissible. 
 
2.  Installment Payments  The CMS requires the provider to submit the first          installment 
payment (per the proposed amortization schedule) (good faith payment), along with any future 
payments due while under review.  Providers shall submit a good faith payment each month until 
the ERS review is decided. The MAC shall recoup the estimated monthly amount until the ERS 
review is completed. 
 
 
B.  The contractor shall require that the provider (NOT a physician/sole proprietor) furnish the following 
for ERS request over 12 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 providers agreement to pay 
its overpayment through installment payments.  Signatures submitted in electronic form are 
permissible. 
 
2.  Installment Payments  The CMS requires the provider to submit the first installment 
payment (per the proposed amortization schedule) (good faith payment), along with any 
future payments due while under review. Providers shall submit a good faith payment each 
month until the ERS review is decided.  The MAC shall recoup the estimated monthly 
amount until the ERS review is completed. 
 
3.  Balance sheets - the providers 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 dont 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 providers 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. 312, Issued: 04-05-19, Effective: 10-01-19, Implementation 10-07-19) 
 
Contractors shall not approve any ERS if any of the following apply: 
  1. When there is reason to suspect that the provider may: 
 
a)  the provider might file for bankruptcy; 
b)  cease to do business; 
c)  discontinue participation in the program; or 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 the first installment payment (per the proposed 
installment schedule). 
 
<12 month 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 <12 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 for <12 months is appropriate. 
 
> 12 month 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 
providers 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.  If the contractor recommends approval of an ERS that is over 36 months in 
length, it shall forward the recommendation to the RO for approval within 30 days of receipt of the 
completed request. 
 
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 providers 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 
providers documentation and the contractors 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 forward the request for extended repayment to the RO with its recommendation within 30 
days receipt of the completed request. 
 
Once the contractor completes the requirements for reviewing an ERS, it shall make a decision regarding 
approval or referral to the RO. 
 
If the contractor determines that the provider DOES meet the requirements for an ERS, it shall: 
 
a) notify the provider in writing, within 5 business 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 business days of making the decision; 
b) include the denial reason, in the notification; and 
c) include denial information on the quarterly report (see  50.4 of this chapter). 
 
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 
procedure, at a recoupment rate of 100% of the providers payments. 
 
Disagrees:  If a provider requests additional months 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  XXXX 
of equipment 
 
Decrease in net Accounts 
Receivable  XXXX 
Decrease in  XXXX 
Prepaid 
Expense 
 
Decrease in Inventory  XXXX 
Increase in  XXXX 
Accounts 
Payable 
 
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  12 months  > 12 months to 36  > 36 months to 60 
Completed before  months  months  RO or 
approval or denial 
CO ONLY 
Received and Reviewed  X  X  X 
all 
i d d t ti  
Received and Applied  X  X  X 
submitted payments 
while under review 
Complete ERS Protocol    X  X 
(See Exhibit 1) 
Analyzed Financial    X  X 
Statements 
Reviewed last 12  X  X  X 
months Claim 
History 
Reviewed last 12  X  X  X 
months Payment 
History 
Reviewed status of  X  X  X 
Additional Outstanding 
Overpayments 
Confirmed No Active  X  X  X 
Bankruptcy 
Confirmed Enrollment  X  X  X 
Status  
Terminated, 
Revoked, Suspended 
Reviewed status of  X  X  X 
Outstanding 
Advance/Accelerated 
Payments 
Part A-  X  X  X 
Reviewed status of 
Outstanding 
Cost Report Settlements 
Confirmed No  X  X  X 
Outstanding Fraud 
Investigations 
Sent to RO/CO for      X 
additional approval   
50.4  Sending the ERS Request to the Regional Office (RO) 
(Rev. 312, Issued: 04-05-19, Effective: 10-01-19, Implementation 10-07-19) 
 
After the contractor has reviewed the providers supporting documentation and determines that a 
referral is needed or the request is over 36 months, 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 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 providers proposed repayment plan and rationale. 
 
10. The contractors recommendation and supporting rationale including a completed ERS 
protocol (See Exhibit 1) and the last 12 months claim and payment history. 
 
11. The contractors opinion, based on experience, as to the reliability of the financial 
data. 
 
The RO will grant a provider an ERS of: 
 
  (a)  7 months 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 not be repaid through recoupment. 
 
50.5 - Monitoring an Approved Extended Repayment Schedule (ERS) and 
Reporting Requirements 
(Rev. 312, Issued: 04-05-19, Effective: 10-01-19, Implementation 10-07-19) 
 
After approval of an ERS, the contractor shall continue to monitor the case to ascertain whether 
recovery is being effectuated as contemplated.  If it becomes apparent that the repayment plan 
will not result in a liquidation of the indebtedness within the time period contemplated, the 
contractor shall take further action, preferably the renegotiation of the amount of installment 
payments so that the overpayment will be recouped within the time period originally agreed 
upon.  The contractor shall report to the RO any significant changes in the providers financial 
condition or any indication that the provider misstated or failed to disclose pertinent facts that 
could raise a question of its ability to liquidate the overpayment.  The contractor shall notify the 
RO within 5 business days and send a detailed written statement of the problem. 
 
ERS Reporting: 
 
Contractors shall report data on all approved and denied ERS request to their RO quarterly.  The 
RO shall direct these reports to CO, as needed or requested.  The preferred format would be in an 
Excel spreadsheet with 3 tabs: Approved, Denied and Pending. 
 
This data shall include: 
 
1.   Provider name 
2.   Provider number 
3.   Provider Status 
4.   Provider Type 
5.   AR number 
6.   FYE Date 
7.   Original Overpayment Amount (breaking out principle and interest) 
8.   Overpayment Description 
9.   Demand Letter Date 
10. 935 Appeal Y/N 
11. Fraud Investigation Pending Y/N 
12. ERS Receipt Date 
13. ERS Status (approved, denied, pending, referred to RO) 
14. Required Documentation Receipt Date   
15. Underpayment Amount Applied to ERS 
16. Underpayment Amount Refunded to Provider 
17. Recoupment Amount Applied to ERS 
18. Length Requested 
19. Length Approved 
20. Date Additional Information Requested 
21. Date Additional Information Received 
22. Date Referred to RO 
23. Contractor Referral Decision Submitted to RO (approve or deny) 
24. Final Decision 
25. Decision Date 
26. Denial reason 
27. ERS Monthly Payment 
28. ERS Term Dates 
29. Interest Rate 
30. ERS Loan Number 
31. Offset in Place Y/N 
32. Paid In Full Date 
33. ERS Default Date 
34. Delinquent Payment Collection Amount 
35. ITR Sent Date 
36. Referred to Treasury 
37. ERS Revised Terms 
38. Comments 
 
50.6 - Requests from Terminated Providers or Debts that are Pending 
Referral to Department of Treasury 
(Rev. 312, Issued: 04-05-19, Effective: 10-01-19, Implementation 10-07-19) 
 
When approving/denying an ERS request, the contractor is making a subjective decision 
concerning the providers ability to repay.  All complete ERS requests shall be reviewed by the 
contractor.  This includes ERS requests from terminated providers and requests received for 
debts where the contractor has already sent an Intent to Refer (ITR) letter.  
 
Terminated Providers:  
 
If a terminated provider submits an ERS request, the MAC shall consider the providers ability 
to repay the debt over time.  
 
The contractor shall refer requests to the RO if it determines that an ERS is in the best interest of 
the Medicare program; prior to denying the request based on the requirements in section 50.3.  
In addition, if the contractor has a reason to believe that the provider will terminate the program, 
they should research this issue and refer the request to the RO for a decision.  
 
 
   
Debts that are Pending Referral to Department of Treasury:  
 
If a contractor has sent an ITR letter and the contractor has approved an ERS prior to referral, 
the debt shall not be referred to Treasury.  It is preferred to recoup payments from present and 
future claims payments. If recoupment of payments is not possible, the contractor shall accept 
monthly checks in the full amount agreed.  If the provider misses one payment (31 days past 
due), the contractor shall continue with normal debt collection (including discontinuing the ERS, 
pursuing the full balance owed, and/or referral to Treasury). 
 
If denying an ERS request will result in the immediate referral of an active provider to the 
Department of Treasury, the contractor shall contact the RO to determine if an alternative 
exists. 
 
NOTE:  The requirements set forth in the Debt Collection Improvement Act of 1996 still apply. 
 
60 - Withholding the Federal Share of Payments to Recover Medicare or 
Medicaid Overpayments 
(Rev. 29, 01-02-04) 
 
Institutions and persons furnish health care services under both the Medicare and Medicaid 
programs, and are reimbursed according to the rules applicable to each program. Overpayments 
may occur in either program; at times resulting in a situation where an institution or person that 
provides services owes a repayment to one program while being reimbursed from the other. 
 
60.1 - Withholding the Federal Share of Medicaid Payments to Recover 
Medicare Overpayments 
(Rev. 29, 01-02-04) 
 
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/carriers 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 providers 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. 
 
60.2 - Withholding Medicare Payments to Recover Medicaid 
Overpayments 
(Rev. 29, 01-02-04) 
 
Section 1885 of title XVIII of the Act and 42 CFR 405.375 provide for CMS to withhold 
Medicare payments under both Part A and B to recover Medicaid overpayments that a Medicaid 
agency has been unable to collect. 
 
The RO determines if withholding the Medicare payments due the overpaid Medicaid institution 
is appropriate.  Where it determines that withholding the Medicare payments is proper, it advises 
the FI/carrier to withhold the Medicare payments to the institution by the lesser of: 
 
  The amount of the Medicare payments to which the institution would otherwise be 
entitled; 
 
  The total Medicaid overpayment. 
 
The FI/carrier shall terminate the withholding action if the Medicaid overpayment is recovered 
or the RO advises it to do so. 
 
It shall submit to the RO, at least monthly until the overpayment is recovered, the amount of 
Medicare payments withheld.  If no claims are received in any month, it informs the RO that no 
payments were withheld. 
 
The Medicaid agency establishes procedures to assure the return to the institution or person 
amounts withheld that are ultimately determined to be in excess of the Medicaid overpayments.  
The FI/carrier shall establish internal procedures to account for the Medicare amounts withheld 
under this section. 
 
70 - Non-Medicare Secondary Payer (Non-MSP) Debt Referral Instructions 
and Debt Collection Improvement Act of 1996 (DCIA) Activities 
(Rev. 77, Issued: 09-16-05, Effective: 10-17-05, Implementation: 10-17-05) 
 
(MSP Debt Referral Instructions are contained in the Medicare Secondary Payer Manual, 
Publication 100-05, Chapter 5, Section 60.) 
 
70.1 - Background 
(Rev. 77, Issued: 09-16-05, Effective: 10-17-05, Implementation: 10-17-05) 
 
The Debt Collection Improvement Act of 1996 (DCIA) facilitates collections by the Federal 
Government and encourages the streamlining of procedures within and among Federal agencies.  
The DCIA requires Federal agencies to refer eligible delinquent debt to the Department of   
Treasury (Treasury) or a Treasury designated Debt Collection Center (DCC) for cross servicing 
and/or offset through the Treasury Offset Program (TOP). 
 
70.2 - Cross Servicing 
(Rev. 77, Issued: 09-16-05, Effective: 10-17-05, Implementation: 10-17-05) 
 
Cross servicing is a process whereby Federal agencies refer eligible delinquent debt to Treasury 
for collection. The agency referring the debt retains responsibility for reporting the debt on the 
Treasury Report on Receivables Due from the Public. The agency is also responsible for 
removing accounts from its receivables when Treasury directs it to write off the debt.  To 
effectively collect the debt that agencies refer, Treasury issues demand letters, conducts 
telephone follow-up, initiates skip tracing, refers debt for administrative offset, and refers debt to 
a private collection agency (PCA). Other collection tools may include Federal salary offset and 
administrative wage garnishment.  The PCA shall attempt collection of the debt, using collection 
tools such as skip tracing, credit report search, demand letters and telephone calls. 
 
70.3 - Treasury Offset Program (TOP) 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
The TOP is a program that compares Federal payments and eligible state payments with Federal 
debt.  When a match occurs, the payment is offset to collect the debt.  When the Taxpayer 
Identification Number (TIN) and name of the debtor match the TIN and name of a payee, the 
payment to the payee is offset and monies that would have gone to the payee are sent to the 
creditor agency to satisfy the debt.  A debt may remain in TOP for offset up to ten years from 
date of determination.  Types of payments that can be offset may include tax refunds, vendor 
payments, benefit payments with certain restrictions, and eligible state payments. 
 
70.4 Definition of Delinquent Debt 
(Rev. 77, Issued: 09-16-05, Effective: 10-17-05, Implementation: 10-17-05) 
 
Per DCIA referral criteria, delinquent is defined as debt: (1) that has not been paid (in full) by 
the date specified in the agencys initial written notification (i.e., the agencys first demand 
letter), unless other payment arrangements have been made, or (2) that at any time thereafter the 
debtor defaults on a repayment agreement. 
 
70.5 - Referral Requirements 
(Rev. 259, Issued: 01-15-16 Effective: 02-16-16, Implementation: 02-16-16) 
 
The Centers for Medicare & Medicaid Services (CMS) is mandated to refer all eligible debt, 120 
days delinquent, for cross servicing and/or TOP.  Additionally, the CMS has the option of 
referring such debt before it is 120 days delinquent. 
 
70.6 - Debt Ineligible for Referral 
(Rev. 294, Issued: 10-06-17, Effective: 07-03-17,Implementation: 07-03-17) 
   
Non-MSP debt ineligible for referral include those: (1) in bankruptcy status, (2) in an appeal 
status (pending at any level), (3) at the Department of Justice, (4) where the debtor is deceased, 
(5) Federal entity debt where the debtor is a Federal agency, (6) where the principal and interest 
balance is less than $25, or (7) debt under fraud and abuse investigation where the investigating 
unit has provided the contractor with specific instructions not to attempt collection. 
 
Treasury has also approved a waiver for the mandatory referral of unfiled cost report debt for 
cross servicing and/or TOP and for debts less than $100 that do not have a TIN. 
 
Medicare contractors shall monitor debt previously ineligible for referral that become eligible for 
referral. If the status of the debt changes to an eligible status, Medicare contractors shall 
determine whether an ITR letter has been sent. If the ITR letter has been sent, and at least 60 
days have passed since the date of the ITR letter (including the ITR letter returned 
undeliverable), Medicare contractors shall input the debt to the Debt Collection System (DCS) 
within ten calendar days of the status change making the debt eligible for referral. If the ITR  
letter has not been sent, Medicare contractors shall send the ITR letter within ten calendar days 
of the status change making the debt eligible for referral, and follow the normal debt referral 
process. 
 
70.7 - Intent to Refer Letter 
(Rev. 294, Issued: 10-06-17, Effective: 07-03-17, Implementation: 07-03-17) 
 
To comply with the DCIA requirements to provide specific notice to debtors before referring a 
debt for cross servicing and/or TOP, Medicare contractors shall send an Intent to Refer (ITR)   
letter as their final demand letter for all eligible delinquent debt. The final demand letter is 
defined as the last letter routinely sent to debtors to request payment, and shall be sent when or 
before the debt is 90 days delinquent (120 days from the determination date). This letter may be 
sent before the debt is 90 days delinquent; however, the letter should not be sent until the 
contractor has placed the debtor on recoupment status for at least 30 days. A sample ITR letter is 
included in Exhibit 1 of this section. 
 
The ITR letter shall be sent regardless of previous collections on the debt, unless there is an 
approved current extended repayment agreement in effect. 
 
When appropriate, the ITR letter shall include the amount of interest due, along with the date of 
the last interest accrual. Medicare contractors may add additional wording to this letter that shall 
provide additional instructions or clarification regarding the recoupment of the overpayment. 
 
Medicare contractors should use their own language in the opening paragraphs to explain the 
reason for the overpayment and the current balance, including interest accrued and the interest 
rate. 
 
The ITR letter shall be signed by the Medicare contractor official who routinely signs the 
demand letters. 
   
The ITR letter may be sent for debt currently ineligible for referral based on the status if the 
contractor believes the debt shall become eligible for referral in the future. The language in the 
ITR letter shall include a sentence that says: If, after sixty calendar days from the date of this 
letter we have not received such evidence, your debt, if it is still outstanding and eligible for 
referral, shall be referred to the Department of Treasury or its designated Debt Collection Center 
for cross servicing/offset. The ITR letter shall not be sent if the debt is in a status that excludes 
it from receiving demand letters. 
 
70.8 - Response to Intent to Refer Letter 
(Rev. 294, Issued: 10-06-17, Effective: 07-03-17, Implementation: 07-03-17) 
 
Medicare contractors shall respond to any inquiries received as a result of the ITR letter within 
15 calendar days of receipt. If the status of the debt changes based on the communications with 
the debtor, Medicare contractors shall update all appropriate systems timely. 
 
The ITR letter provides debtors with 60 calendar days to respond. If, by day 61 the debtor has 
not responded, Medicare contractors shall input the debt into DCS. The debt shall be entered to 
the DCS no later than 70 calendar days from the date of the ITR letter. Debt for which less than 
full payment was received, or there is a current repayment agreement that is in default, are 
eligible for referral for cross servicing and/or TOP. Where there has been a partial recoupment or 
collection, but the collection is not the result of a current extended repayment agreement, the 
balance (if principal and interest balance is greater than or equal to $25) shall still be referred for 
cross servicing and/or TOP. Debts that are ineligible for referral or exempt from referral to cross 
servicing and/or TOP shall not be entered to the DCS. 
 
Before inputting a debt into DCS for cross servicing, Medicare contractors shall first determine if 
the debt should be referred to the Regional Office (RO) for litigation rather than referral to 
Treasury for cross servicing. If it is determined that the debt should be litigated, contact the RO 
for further action. 
 
If the ITR letter is returned as undeliverable, Medicare contractors shall follow established 
procedures to locate a better address. (See Chapter 4,  10 and 80.) If a better address is 
obtained, the contractor shall send the provider a manual ITR notification letter, with the original 
ITR letter attached, to the better address.  The original ITR letter date shall remain in effect.  If 
the ITR letter is returned as undeliverable and a better address cannot be located, Medicare 
contractors not utilizing HIGLAS shall input the debt into DCS at least 60 calendar days of 
return of the letter. 
 
70.9 - Debt Collection System 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
The DCS is a CMS developed system used for debt referral to Treasury or a designated Debt 
Collection Center (DCC) in order to comply with the provisions of the DCIA.  This system is 
comprised of a Data Entry Screen, which houses detailed information regarding the debt, a 
Comments screen for users to add comments regarding the particulars of a debt, and Collection   
screens for posting collections to a debt once it has been transmitted to Treasury for cross 
servicing/TOP. 
 
Medicare contractors shall enter debts to the DCS for referral to Treasury.  Detailed user 
instructions are included in Exhibit 4. 
 
The CMS developed reports are produced from this system; however, the system does not have 
user adhoc reporting capabilities. 
 
70.10 - Cross Servicing Collection Efforts 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
Medicare contractors, at the time of input to DCS, shall determine IF the Non-MSP debt is 
currently being recouped through Medicare (claims payments/withhold), and if the anticipated 
recoupments shall collect the debt in full within three years.  If the contractor anticipates that the 
debt shall be collected in full within three years of delinquency by Medicare recoupment, the 
debt shall not be referred to a PCA as part of the cross servicing collection process.  A specific 
debt type has been established in the DCS for this purpose.  The debt type shall alert Treasury 
that the debt is being recouped through Medicare and should not be forwarded to a PCA.  This 
determination shall eliminate many duplicate collections.  Specific instructions are found in the 
DCS User Guide, Exhibit 4 of this section. 
 
70.11 - Actions Subsequent To DCS Input 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
Once the debt is referred for cross servicing, active collection efforts by the Medicare contractors 
and/or CMS shall cease.  However, debt referred for cross servicing and/or TOP shall still be 
maintained in the Medicare contractors internal systems for financial reporting, interest accrual, 
and possible internal recoupment. Medicare contractors shall be responsible for updating all the 
applicable systems, including the DCS for the change of the status and the balance of the debt. 
 
70.12 - Transmission of Debt 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
When CMS transmits debt, CMS shall generate a report of the debt transmitted that week 
(Transmission Report) and send the report to the Medicare contractors.  The Medicare 
contractors shall review the report to ensure that debts transmitted remain valid and amounts are 
accurate.  Interest amounts listed on the report are the amounts that were entered in the DCS and 
shall not be updated in the DCS for any interest accruals since input.  The Medicare contractors 
shall verify the report, annotating any changes to the information on the report and updating the 
DCS, as appropriate. Changes for additional interest accruals are not required. 
 
The report shall be signed by the Chief Financial Officer (CFO), or his/her designee, and 
returned to CO via fax within 10 calendar days of the date of the report. 
 
70.13 - Update to DCS after Transmission   
(Rev. 143; Issued:  10-24-08; Effective Date:  01-01-09; Implementation Date:  01-05-09) 
 
Once a debt has been referred for cross servicing and/or TOP: 
 
If the Medicare contractors discover an error, collect (by check or recoupment), or receive 
information establishing that the debt is ineligible for cross servicing (i.e., bankruptcy, appeal), 
the Medicare contractors are responsible for updating the DCS, within ten days of the 
notification of the change to the debt.  The CMS CO shall notify Treasury and recall the debt due 
to a change of status code or a full collection or shall report partial collection information.  The 
updates in the DCS made by Medicare contractors shall be automatically transmitted to Treasury. 
 
If Treasury or the PCA discovers an error, collects on the debt, or receives information, that 
would render the debt ineligible for cross servicing, Treasury shall notify CO who, in turn, shall 
notify the Medicare contractors via the Treasury Cross-Servicing Dispute Resolution Form or the 
Collection/Refund Spreadsheet.  Medicare contractors are responsible for updating their internal 
records, and the DCS, as appropriate.  The Treasury Cross-Servicing Dispute Resolution Form or 
Collection/Refund Spreadsheet shall be returned to CMS within established timeframes. 
 
If Treasury or the PCA receives a dispute from the debtor or obtains additional information 
regarding the debt that requires CMS or Medicare contractor intervention, a Treasury Cross-
Servicing Dispute Resolution Form shall be sent to CMS.  The CMS shall maintain a report of all 
debt in dispute and forward the information to the Medicare contractors for review and decision.  
Central Office, upon receipt of the Treasury Cross-Servicing Dispute Resolution Form, shall 
update the DCS status code to XX for all Non-MSP disputed cases (or status code XO if the 
DCS is updated systematically), and CMS CO shall track these codes for timely disposition by 
the Medicare contractors.  The Medicare contractors shall have 30 calendar days to respond to 
Treasury and update DCS, their internal systems if applicable, and shall copy CMS RO and CO 
on their response.  If Medicare contractor determines the disputed debt shall be recalled from 
Treasury, the appropriate status code shall be entered to the DCS.  If the Medicare contractor 
determines that the debt shall remain at Treasury for collection, the status code shall be changed 
from XX (or XO) to UX to indicate the dispute was resolved and the debt is still valid.  
(See instructions in the DCS User Guide, Exhibit 4.) 
 
If Treasury does not receive the response to the dispute timely, the debt may be returned to 
agency (RTA) with the reason dispute timer expired.  In this case, even if the contractor 
responded to the dispute and changed the debt status in DCS back to UJ or changed the status 
code to UX, the contractor will be required to enter the debt as a new debt in DCS.  Once a debt 
is RTA, it cannot be updated in DCS.  A new entry is required. 
 
70.14 - Collections 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
70.14.1 - Background 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
Collections from the Department of the Treasury (Treasury) as a result of cross servicing efforts 
are received by CMS central office (CO) through the Intra-governmental Payment and Collection   
(IPAC) system.  Collections may be received as a result of collection efforts by Treasurys 
Servicing Center or by a Treasury contracted Private Collection Agency (PCA) including 
installment payments on Treasury approved extended repayment schedules or from offsets from 
the TOP.  Treasury provides the CMS CO with a collection report generated from the IPAC 
system through the Program Support Center (PSC) of the Department of Health & Human 
Service (HHS) on a monthly basis. 
 
70.14.2 - Intra-governmental Payment and Collection (IPAC) System 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
The collection report generated from the IPAC system includes a break out of principal and 
interest collected on individual debts; however, the report does not show the balance and the 
status of the debt after the collection.  Due to system limitations, interest on the CMS debts that 
have been referred to Treasury and its PCAs does not continue to accrue on Treasury/PCA 
records during the entire collection process.  Therefore, the amount of interest collected by 
Treasury or its PCAs may not equal the amount of interest shown as accrued by the Medicare 
contractors. 
 
70.14.3 - Collections Posted to the Debt Collection System 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
The CMS CO shall update the DCS for collection activity received from the IPAC collections 
reports.  The principal balance reported in the DCS should reflect the principal balance being 
pursued by Treasury and its PCAs and should be the principal balance reflected in Medicare 
contractors internal systems after posting the collection. 
 
NOTE:  If the principal balance in Medicare contractors system does not agree with the 
principal balance reported in the DCS, Medicare contractors shall research the discrepancy by 
querying the DCS collection screen to compare collection/adjustment entries to their internal 
systems/records to determine the difference.  Any differences shall be reconciled and the 
appropriate systems shall be updated. 
 
70.14.4 - Collection/Refund Spreadsheet 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
Medicare contractors will receive Treasury collection information from CMS CO via the 
Collection/Refund Spreadsheet (Exhibits 3A and 3B).  The Collection/Refund Spreadsheet, 
initially prepared by CMS CO, shall be forwarded electronically to Medicare contractors within 
15 calendar days of receipt of the IPAC collections.  However, no Collection/Refund 
Spreadsheet shall be forwarded to Medicare contractors with less than 15 calendar days 
remaining in the quarter. 
 
For each debt listed on the Collection/Refund Spreadsheet, Medicare contractors shall apply the 
collection to principal and interest amounts as indicated.  For collection of interest only, 
Medicare contractors shall post the interest as shown on the Collection/Refund Spreadsheet.  No 
interest adjustment is required prior to posting the collection.  For collection of principal and 
interest, Medicare contractors shall manually adjust the amount of interest accrued to the amount   
of interest collected as listed on the Collection/Refund Spreadsheet.  This will make the amount 
of the accrued interest equal to the amount of interest collected and listed on the 
Collection/Refund Spreadsheet.  Medicare contractors shall then post the collection.  If a 
principal balance remains after posting the collection, interest, if appropriate, shall continue to 
accrue on the remaining principal balance.  Medicare contractors shall use the current date as the 
date of collection to post the Treasury collections to their systems. 
 
Medicare contractors shall complete and return the Collection/Refund Spreadsheet within 15 
calendar days of receipt. 
 
Note:  Any principal balance that remains in Medicare contractors systems, after posting the 
collection activity, will be carried forward.  Medicare contractors shall continue to accrue 
interest, if applicable, on any outstanding principal balance until notified by CMS CO that the 
debt is paid in full or compromised. 
 
70.14.5 - Debt Paid in Full 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
If the principal balance of the debt in DCS after the IPAC collection is posted is zero, the status 
code of the debt will not be systematically changed to a paid in full status code.  Sometimes a 
debt has been collected by Treasury and the collection received in one IPAC, but a reversal of 
the collection occurs in a subsequent IPAC.  Medicare contractors shall not initiate any case 
close out activity on the debt when the collection is posted.  CMS will provide separate 
instructions on debts returned by Treasury as paid in full or closed. 
 
NOTE:  If Medicare contractors system does not reflect a zero principal balance after posting 
the collection, Medicare contractors shall research the discrepancy by querying the DCS 
collection screen to compare collection/adjustment entries to their internal systems/records, and 
update all the applicable systems to reflect the appropriate adjustment. 
 
70.14.6 - Extended Repayment Schedule (ERS) 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
Treasury and its PCAs have authority to approve extended repayment schedules (ERS) up to 60 
months without requesting CMS approval.  The ERS requests in excess of 60 months shall be 
referred to CMS CO for consideration. 
 
When Treasury notifies CMS CO of an approved ERS, CMS CO shall update the DCS with the 
DCS status code of UR.  The periodic payments on the approved ERS received by Treasury or its 
PCAs will be forwarded to CMS CO on an IPAC collections report.   When CMS CO receives 
the IPAC collections on the approved ERS, CMS CO shall indicate the ERS status on the 
Collection/Refund Spreadsheet to notify Medicare contractors of such status.  Upon receipt of 
the collection on the approved ERS on the Collection/Refund Spreadsheet from CMS CO, 
Medicare contractors shall remove the debt from any internal withhold/recoupment status. 
   
Medicare contractors shall apply each collection to principal and interest based on the breakout 
as indicated on the Collection/Refund Spreadsheet and follow Collection/Refund Spreadsheet 
instructions as outlined in section 70.14.3.4.  Medicare contractors shall continue to accrue 
interest, if applicable, on any outstanding principal balance until notified by CMS CO that the 
debt is paid in full. 
 
Debts that are in a Treasury approved ERS shall be reported as current on the Form CMS H 751. 
Debts in CNC classification shall remain in CNC and continue to be reported as delinquent on 
the Form CMS C 751.  For those Medicare contractors who have transitioned to HIGLAS, debts 
that are in a Treasury approved ERS shall be reported as current unless they are already 
classified as CNC.  Debts in CNC classification shall remain in CNC and continue to be reported 
as delinquent. 
 
70.14.7 - Excess Collections 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
Amounts collected may exceed the amount of the debt that was referred for cross servicing/TOP.  
As an example, an excess collection may result from Treasury and its PCAs receiving a 
collection and Medicare contractors recouping the same debt by internal withhold. 
 
Excess collections are identified on the Collection/Refund Spreadsheet by showing a negative 
principal balance in the DCS Principal Balance column. 
 
70.14.8 - Applying Excess Collections 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
Medicare contractors shall apply the portion of the collection to the debt listed on the 
Collection/Refund Spreadsheet in order to bring the balance to zero.  Medicare contractors shall 
then determine if the debtor has any other outstanding debts including interest to which the 
excess collection may be applied. 
 
70.14.8.1 - If the Debtor Has Other Outstanding Debt 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
If the debtor has other outstanding debt, the excess collection shall then be applied to the oldest 
debt first (then next oldest), in accordance with established procedures for applying excess 
collections against a debtors overpayments.  The breakout of principal and interest on the 
Collection/Refund Spreadsheet does not apply when the excess collection is applied to another 
outstanding debt.  Medicare contractors shall indicate on the Collection/Refund Spreadsheet the 
action taken and the way the collection was allocated to principal and interest on the other debt, 
and return the completed spreadsheet to CMS CO.  If the collection is applied to other debts, the 
Medicare contractors shall first update the DCS with the DCS Collection Type Code of AD to 
zero the negative balance of the debt where the excess collection is identified.  If the excess 
collection is applied to another debt currently at Treasury, Medicare contractor shall use AD to 
post the excess collection to the other debts. 
   
70.14.8.2 - If the Debtor Has No Other Outstanding Debt 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
If there are no other outstanding debts, the excess portion of the collection, after bringing the 
debt listed on the spreadsheet to a zero balance, shall be refunded.  The amount of the refund 
shall be annotated on the Collection/Refund Spreadsheet.  If the refund cannot be processed 
within the timeframe allotted for returning the Collection/Refund Spreadsheet, Medicare 
contractor shall annotate the spreadsheet as partially complete and return to CMS CO timely.  An 
additional 15 days shall be allowed for processing refunds.  Once the refunds are processed, the 
completed Collection/Refund Spreadsheet shall be forwarded to CMS.  A copy of the 
spreadsheet, with the appropriate annotations regarding the refund, shall be kept in the debtor file 
for audit trail purposes.  The contractor shall make appropriate adjustments in DCS, as well as 
internal systems to reflect the refund activity.  The DCS shall be updated to reflect the refund and 
bring the principal balance of the debt to zero.  Instructions are found in Exhibit 4, DCS User 
Guide, of this section. 
 
70.15 - Financial Reporting for Debt Referred 
(Rev. 77, Issued: 09-16-05, Effective: 10-17-05, Implementation: 10-17-05) 
 
70.15.1 - Financial Reporting for Non-MSP Debt 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
Medicare contractors shall continue to report the debt at their location for financial reporting 
purposes.  Debt referred to Treasury for cross servicing shall not be transferred out on the Form 
CMS 751 (Status of Accounts Receivable).  See Chapter 5 for Financial Reporting instructions. 
 
Medicare contractors shall continue to accrue and report interest in internal systems as well as 
the POR, if applicable, on a debt after the debt has been referred for cross servicing.  The DCS 
shall not reflect this additional interest unless/until DCS is updated with a collection. 
 
Medicare contractors shall follow the instructions outlined in Chapter 5, Section 270.  Medicare 
contractor shall report and post all activities related to these debts according to CMS guidelines 
and instructions. 
 
70.15.2 - Financial Reporting for Intermediary Claims Accounts Receivable 
A/R 
(Rev. 72, Issued:  07-29-05; Effective:  01-01-06; Implementation:  01-03-06) 
 
Intermediaries shall be able to identify and separate the claims A/R that have been demanded 
from those claims A/R that have not been demanded. The date of the initial demand letter shall 
become the new determination date for aging purposes and the financial reporting of the 
receivable in Line 2a. New Receivables on the H751, Status of Accounts Receivable, report. The 
date of the initial demand letter shall be the determination date for interest accrual, delinquency 
determination and referral to Treasury. The demanded claims A/R shall be reported as delinquent 
in Section B, Delinquent Receivables, if payment is not received within 30 days after the date of 
the initial demand letter.  These claims A/R shall age and the aging shall be reported in Section   
B, Delinquent Receivables.  The demanded claims A/R shall be eligible for currently not 
collectible (CNC) reclassification request in accordance with CNC instructions as outlined in 
chapter 5.  The accrual of interest shall begin on the 31st day, and shall be charged from the date 
of the initial demand letter. 
 
The balance of all Claims A/R (demanded and not demanded), shall be recorded on CMS Form 
H750 on the line "Claims Accounts Receivable." 
 
The balance of Claims A/R established during the fiscal year that have not been demanded shall 
continue to be reported on Form CMS-751, Line 2a, New Receivables.  These receivables should 
not be aged.  The outstanding balance of Claims A/R not demanded shall be reported in the Not 
Delinquent category of Section B, Form CMS-751.  Claims A/R that have been demanded shall 
be reported in the appropriate aging category of Section B, Form CMS-751.  These demanded 
Claims A/R shall accrue interest and age consistent with the intermediaries other types of 
overpayments. 
 
70.15.3 - Financial Reporting for Collections Received on Debts from Cross 
Servicing 
(Rev. 136; Issued:  02-15-08; Effective/Implementation Date:  03-17-08) 
 
Medicare contractors shall follow the instructions outlined in Chapter 5, Section 270.   Medicare 
contractor shall report and post all activities related to these debts according to CMS guidelines 
and instructions. 
 
Collections posted to the debts listed on the Collection/Refund Spreadsheet shall be reported in 
Section A, Line 4C, Collections Deposited at Other Location, and Section C, Line 4C, 
Collections Deposited at Another Location, of Forms CMS H 751.  If the debt is in a Currently 
Not Collectible (CNC) status, the amounts collected shall be reported in Section A, Line 4A, Re-
established as Active A/R, and Section C, Collections on CNC Debt, of the Forms CMS C 751 
and in Section A, Line 6B, Transfers In From CNC, and Line 4C, Collections Deposited at Other 
Location on Forms CMS H 751. 
 
The amount of accrued interest that is adjusted in order to equal the amount of interest collected 
and posted to the debt shall be reported on Line 5A, Adjusted Amounts, Internal Adjustments, of 
Forms CMS H 751 or Line 4E, Other, of Forms CMS C 751, if the debt is in CNC status.   
Medicare contractors shall separately track interest adjustment amounts reported on the 
Adjusted Amounts line on Forms CMS H 751 or reported on the Other line on the Forms 
CMS C 751.  The interest adjustment amounts shall be reported in the Remarks section of the 
Forms CMS 751. 
 
For Medicare contractors who have transitioned to the Healthcare Integrated General Ledger 
Accounting System (HIGLAS), collections reported and posted to the debts on the 
Collection/Refund Spreadsheet shall be reported on the Treasury Report on Receivables and 
Debt Collection Activities Report (TROR), Part I, Section A, Line (4)(D), Collections by 
Treasury through Offset and Cross-Servicing and in Part II, Section C, Line (1)(G), By 
Treasury/Designated Debt Collection Center Cross-Servicing.  If the debt is in a Currently Not   
Collectible (CNC) status, the amounts collected shall be reported in Part I, Section A, on Line (4) 
(D), Collections by Treasury Through Offset and Cross-Servicing, and Line (5) (E), Written-Off 
Debts Reinstated for Collections and also in Part II, Section C, Line (1) (G), By 
Treasury/Designated Debt Collection Center Cross-Servicing. 
 
70.15.4 - Financial Reporting for Debts Returned to Agency (RTA) 
(Rev. 143; Issued:  10-24-08; Effective Date:  01-01-09; Implementation Date:  01-05-09) 
 
Debts RTA shall be reported in the appropriate line of the CMS Form 751 and the Treasury 
Report of Receivables and Debt Collection Activities (TROR) Reports.  Details regarding debts 
RTA are outlined in Section 70.17 herein. 
 
70.15.4.1 - Debts RTA for Bankruptcy 
(Rev. 143; Issued:  10-24-08; Effective Date:  01-01-09; Implementation Date:  01-05-09) 
 
Debts RTA for Bankruptcy shall be reported in Bankruptcy status as soon as Medicare contractor 
has bankruptcy documentation to support the bankruptcy status. 
 
  C751 Reporting 
  Section D 
  (B)(1) In Bankruptcy 
 
  H751 Reporting 
  Section B 
  (4)(B)(1) In Bankruptcy 
 
TROR Reporting 
Section B 
(1)(D) 
 
70.15.4.2 - RTA and other Debts, Pending Final Disposition  
(Rev. 244, Issued: 10-17-14, Effective: 10- 01-14, Implementation: 11-18-14)  
 
Debts RTA for the following reasons: uncollectible, out of business, miscellaneous dispute, dispute 
timer expired, recall approved, manual RTA, and certain debts that have not been referred to 
Treasury shall be reported as follows: 
 
C751 Reporting  
Section D 
(B)(9) Pending Request Waiver/Compromise  for those debts waiting write off approval.  
Section D  
(B)(11) Other Exclusions  for those debts not yet eligible for write off due to age or past collections.  
Section A  
Line 4.D. Written-Off Closed  for those debts approved for Write off Closed. 
 
H751Reporting  
Section B    
4(B)(9) Pending Request Waiver/Compromise  for those debts waiting write off approval.  
Section B  
(4)(B)(11) Other Exclusions  for those debts not yet eligible for write off due to age or past 
collections.  
Section A  
Line 6.A. Amounts Written-Off (Bad Debts)  for those debts approved for Write off Closed.  
 
TROR Reporting  
Section B  
 
Line (3)(G) Debt Returned from Cross-Servicing  for those debts not yet eligible for write off due to 
age or past collections.  The HIGLAS Accounts Receivable status code DR-RTN-CS (Debts 
Returned from Cross-Servicing) is mapped to line (3)(G).  The receivable balance detail extract can 
be used to validate the detail of debts reported to this line. 
 
Part II, Section B, Line (1)(G)  Other  must footnote - HIGLAS Accounts Receivable status 
codes beginning with REQ (request) are mapped to this line.  A footnote(s) will be required for 
all balances on this line.  The footnote(s) should include the dollar amount and number of debts 
for all debts containing the REQ status codes (i.e. pending ERS request, pending RO WOC 
approval, etc.) 
 
Section A, Line (6) (B) Written Off and Closed Out  for those debts approved for Write off 
Closed that are not in CNC Status. For debts approved for write off closed already in CNC 
status:  
Section D  
Line (2) CNC Debts Closed Out During the Current FY 
 
70.15.4.3 - Debts RTA Because Dispute Timer Expired 
(Rev. 143; Issued:  10-24-08; Effective Date:  01-01-09; Implementation Date:  01-05-09) 
 
Debts to be re-referred to Treasury shall be reported as Referred to Treasury. 
 
C751 Reporting 
Section D 
(A) Referred for Cross Servicing OR 
Section D 
(B)(1)-(11)As appropriate. 
 
H751Reporting 
Section B 
4(A) Referred for Cross Servicing OR 
Section B 
(4)(B)(1)- (11) As appropriate. 
 
TROR Reporting 
Section B   
Line (3) (J) Debt Referred to Treasury or a Designated Debt Collection Center for Cross-
Servicing  for those debts resubmitted to Treasury. OR 
Debts ineligible for referral shall be reported in the appropriate line as an exclusion to 
debt referral. 
 
70.15.4.4 - Debts RTA Paid in Full or Satisfied Payment Agreement or 
Satisfied Compromise 
(Rev. 143; Issued:  10-24-08; Effective Date:  01-01-09; Implementation Date:  01-05-09) 
 
Debts in these status codes with other than a zero balance shall be reported as follows 
until further instructions are issued: 
 
C751 Reporting 
Section D 
(B)(11) Other Exclusions 
 
H751Reporting 
Section B 
(4)(B)(11) Other Exclusions. 
 
TROR Reporting 
Section B 
Line (3)(G) Debt Returned from Cross-Servicing.  The HIGLAS Accounts Receivable 
status code DR-RTN-CS (Debts Returned from Cross-Servicing) is mapped to line 
(3)(G).  The receivable balance detail extract can be used to validate the detail of debts 
reported to this line. 
 
70.16 - Contractor Claims Accounts Receivable (A/R) 
(Rev. 294, Issued: 10-06-17, Effective: 07-03-17, Implementation: 07-03-17) 
 
Contractor claims A/R arises from adjustments in the contractors claim processing systems (this 
type of adjustment may also be referred to as a carryover adjustment).  The adjustments may be 
the result of duplicative processing of a claim, payment of a claim at the wrong Diagnostic 
Related Group (DRG) rate, a request from a provider, or for any reason an contractor adjusts a 
claim payment. These adjustments are usually recovered through recoupment and the recovered 
amounts are included in the remittance advices to the providers. If the overpayment has not been 
recouped, the balance remains outstanding and is reported on the contractors financial records. 
 
The CMS has determined that these types of debt are eligible for referral for cross 
servicing/Treasury Offset Program (TOP). The following outlines procedures for 
referral/collection/termination of collection action and write-off closed of these debts. 
Intermediaries shall use these procedures to: 
 
 
  Address the current inventory of contractor claims A/R. 
   
  Demand and refer delinquent contractor claims A/R as part of their on-going debt 
collection procedures. 
 
To identify and address the current inventory of outstanding contractor claims A/R and to 
identify, on an ongoing basis, claims A/R to be demanded or recommended for termination of 
collection action and write-off closed, intermediaries shared system shall be able to separately 
identify the following: 
 
  Claims A/R, of any amount, regardless of age, that cannot be validated. 
 
  Claims A/R, for an individual provider, totaling less than $25 for the aggregated principal 
and interest balance, where no adjustment/recoupment has occurred in the past 60 days. 
 
  Claims A/R for an individual provider, greater than 10 years old, regardless of amount. 
 
  Claims A/R, for an individual provider, with an aggregate principal and interest balance 
greater than or equal to $25, which is less than 10 years old, and no 
adjustment/recoupment has occurred in the past 60 days. 
 
After these separations are made, the following procedures shall be followed: 
  
For Recommendation of Write-Off (Termination of Collection Action): 
 
When recommending write-off (termination of collection action), intermediaries shall follow 
instructions as outlined in the overpayment section of this manual, which begins at Section 100, 
or contact their regional office (RO) for guidance. 
 
  Claims A/R for an individual provider, totaling less than $25 for the aggregated 
principal and interest balance, where no recoupment has occurred in the past 60 days, 
should be recommended for termination of collection action and write-off closed. A 
listing should be forwarded to the RO which contains the following information: 
 
  Provider number; 
o
  Provider name; 
o
  Amount of claims A/R being requested for termination of collection action and 
o
write-off closed; 
  Date of claims A/R; 
o
  Date of last activity; and 
o
  Reason for requesting/recommending termination of collection action and write-
o
off closed. 
 
  Claims A/R, of any amount, regardless of age that cannot be validated, should be 
recommended for termination of collection action and write-off closed. This could 
include claims A/R received as a result of a Medicare contractor transition where no 
remittance advices are available, and other claims A/R where no remittance advice is 
available to support the balances. The contractor shall make a concerted effort to validate   
the claims A/R before selecting this option. A listing of this claims A/R shall be 
forwarded to the RO for approval. The list should contain the same information as above, 
with the reason for termination of collection action and write-off recommendation that 
provides reasonable evidence to substantiate that the claim is no longer available. 
 
  Claims A/R for an individual provider greater than 10 years old, regardless of amount, 
shall be recommended and submitted to the RO for termination of collection action and 
write-off closed. 
 
Intermediaries shall submit, at least quarterly, recommendations for write-off and termination of 
collection action of outstanding claims A/R meeting the above criteria. Requests shall be 
submitted to the RO no later than 30 days after the end of each calendar quarter. ROs shall have 
30 days after receipt of the request to respond, except for cases exceeding the ROs delegated 
authority. For those cases exceeding the RO authority, the RO shall forward the case to CO with 
the ROs recommendation, within 30 days of receipt of the contractors request. 
 
For issuing an initial demand letter: 
  
This instruction supersedes any other instructions for issuing demand letters for claims A/R, 
including those found in FMM Section 130. These instructions, however, do not apply to 
medical review and fraud overpayments. Claims A/R that are demanded shall age and accrue 
interest and the aging and interest accrual shall be reported in accordance with chapter 5,  200. 
 
Claims A/R for an individual provider with an aggregate principal and interest balance greater 
than or equal to $25 and less than 10 years old, and where no recoupment has occurred in the 
past 60 days, shall be validated and intermediaries shall send an initial demand letter for the 
outstanding amount claim A/R balance. The demand letter shall have a determination date equal 
to the date of the demand letter. In accordance with the contractors established demand process, 
the provider shall have 15 days to respond to the demand letter. In addition, the demand letter 
shall contain the following: 
 
  The letter shall explain the reason for the overpayment, provide the debtor 
o
with the opportunity to repay the debt, and explain that interest shall begin to 
accrue if the debt is not paid in full within 30 days. The letter shall provide the 
debtor with appeal rights and contain all provisions of a standard initial 
demand letter. The letter shall also contain language that explains how the 
overpayment was determined and that the claims A/R have been outstanding 
as an adjustment, with no recoupment activity in the last 60 days. 
Intermediaries shall include the date(s) of the remittance advice and original 
amount(s) of the claims A/R. 
 
  If the initial demand letter is returned as undeliverable, the contractor shall 
o
attempt to locate a better address. If a better address is found, or it is 
determined that there was a change of ownership, the contractor shall send the 
provider a manual demand notification letter, with the initial demand letter 
attached to the better address/owner.   
 
  If a current address cannot be located, the contractor shall send the Debt 
o
Collection Improvement Act of 1996 (DCIA) intent to refer (ITR letter, and 
follow established debt referral procedures. 
 
  If the initial demand letter is not returned undeliverable, the contractor shall 
o
follow established debt collection procedures similar to other accounts 
receivable overpayments as outlined in chapter 3,  20 and 40, with the 
exception that withhold does not stop for claims A/R for fifteen days from the 
initial demand letter.  The claims A/R debt collection process shall include 
sending the DCIA ITR letter if the overpayment is not recouped.  The DCIA 
ITR letter shall be sent no later than 120 days from the date of the initial 
demand letter. 
 
 
  Each demanded claim A/R shall be considered a separate identifiable debt and shall not 
be aggregated with other demanded claim A/R. 
 
  The contractors shared system must be able to properly report these claims A/R in 
accordance with financial reporting requirements outlined in Medicare Financial 
Management Manual, Publication 100-6, Chapter 5,  200 through 400. 
  
Exception to above procedures for issuing the initial demand letter: 
 
If the contractor has knowledge that the letter to a debtor shall be returned undeliverable, based 
on prior attempts to contact the debtor, and where the contractor cannot obtain a current address, 
the initial demand letter may be expanded to include the DCIA ITR letter language. The 
contractor shall send the initial demand letter with the DCIA ITR letter language and follow 
established debt referral procedures. The date of the initial demand letter shall be the 
determination date for aging, interest accrual and DCIA referral purposes. 
 
Claims A/R that are outstanding, but have not yet been demanded because they have not met the 
timeframe for issuing an initial demand letter or do not meet the dollar threshold for being 
demanded should be considered in cost report settlements if collection by withhold from interim 
payments or through the claims accounts receivable demand process is doubtful. Claims A/R that 
have been demanded, in accordance with these instructions, shall not be included in the cost 
report settlement process, as these are now considered as separate receivables. 
 
If the contractor determines that the provider has filed bankruptcy, established procedures 
regarding bankruptcy in Chapter 3, 140 shall be followed, including administrative freezes on 
recoupment, exemption to DCIA, and issuance of letters regarding the overpayment. This 
instruction does not change any of the procedures to be followed for bankrupt providers. 
 
70.17 - Debts Returned to Agency (RTA) by the United States Department of 
the Treasury (Treasury) 
(Rev. 198, Issued: 10-27-11, Effective: 11-01-11, Implementation: 11-28-11)   
 
During the collection process, Treasury either collects debts or makes a final determination as to 
the status of the debts. The Treasury returns to agency (RTA) debts to the Centers for Medicare 
& Medicaid Services (CMS) using the following reasons: 
 
In Bankruptcy 
Uncollectible 
Out of Business 
Dispute Timer Expired 
Miscellaneous Dispute 
Manual Return to Agency 
Recall Approved 
Complaint 
Paid in Full 
Satisfied through Payment Agreement 
Satisfied through Compromise 
 
The CMS will send monthly reports of these debts to the Medicare contractors (contractors) for 
final resolution. The reports will state the reasons Treasury RTA the debts. 
 
The CMS has developed new status codes in the Debt Collection System (DCS) for each of the 
reasons the debts were RTA. The RTA reports, prepared by CMS Central Office (CO), will 
reflect the new status codes.  If Treasury returns debts and the DCS already shows the debts in a 
recall status, the system will not update the status code. However, the RTA reports will include 
the debts showing the existing DCS recall status codes and the reason for the Treasury RTA. 
 
The RTA reports are sent out in Excel format so the contractors may sort them as appropriate.  
The contractors shall address all debts on the RTA reports and forward the completed report to 
CMS CO within 30 days after receipt. 
 
The following sections will give a detailed description of the new status codes in DCS for debts 
RTA by Treasury:  
 
70.17.1 - Debts RTA by Treasury due to Bankruptcy (RB) 
(Rev. 198, Issued: 10-27-11, Effective: 11-01-11, Implementation: 11-28-11) 
 
Debts in bankruptcy status are ineligible for cross servicing. If debts, RTA by Treasury due to 
bankruptcy are already status code 2B (Bankruptcy) in DCS; the debts will still appear on the 
RTA report but the status code will not change.  The CMS changes the status code of debts, RTA 
by Treasury, in DCS to RB (RTA  Bankruptcy). The RB status code indicates that these debts 
were RTA by Treasury due to bankruptcy. The contractor shall not make any further updates to 
the debts in DCS. The RTA debts, which appear on the monthly report, will remain in RB status 
in DCS. The contractors are responsible for obtaining bankruptcy documentation to support the 
bankruptcy status code listed on the RTA report. Once the contractors obtain the documentation, 
they shall update their internal records to reflect the appropriate code for bankruptcy. The 
contractors shall follow established procedures regarding debts in bankruptcy status.  The   
contractors shall properly report the status of these debts in their quarterly financial reports to 
CMS CO. (See Pub. 100-06, chapter 3, section 140.) 
 
The Treasury no longer routinely sends bankruptcy documents to creditor agencies. Therefore, 
contractors shall follow established procedures, including contacting the CMS Regional Office 
(RO), to obtain bankruptcy documentation. It is the contractors responsibility to obtain the 
bankruptcy documentation.  If the contractors cannot obtain bankruptcy documentation through 
established procedures, including asking the RO for assistance, the contractors may contact 
Treasury to obtain documentation for RTA debts in bankruptcy.  If the contractors are unable to 
obtain bankruptcy documentation through established procedures or through the assistance of the 
RO, they shall request bankruptcy documentation from Treasury via email to 
CrossServicing.Questions@fms.treas.gov. The subject line of the email request shall be entitled, 
Request for Bankruptcy Information. If the contractors do not receive a confirmation from 
Treasury within 2 business days of the request, the contractor shall re-send the email or make 
another request to Treasury via fax number 205-912-6353.  The contractors shall include the 
following information; the FedDebt number, debtor name and the contractors contact 
information on each request via email or fax. 
 
If the CMS Regional Office of General Counsel (OGC) advises the contractor that debts are not 
discharged in bankruptcy and are still eligible for referral, the contractor shall submit a new 
referral to Treasury. The contractors shall change the status code from RB to 2R (RTA Debt Re-
entered into DCS) and re-enter the debts into DCS as a new referral to Treasury. (See Exhibit 4 
of this section, the DCS User Guide, Section 2.1) The contractors shall not change the status 
code of a debt in RB status back to status code UJ (Sent to PSC for Cross-Servicing).  The 
contractors shall add a comment on the DCS comment screen reflecting any action taken, the 
date of the RTA report in which the debts appear on and the financial statement reporting quarter 
in which the debts were resolved. 
 
70.17.2 - Debts RTA by Treasury as Uncollectible (RU) or Out of Business 
(RN) 
(Rev. 198, Issued: 10-27-11, Effective: 11-01-11, Implementation: 11-28-11) 
 
If debts are RTA for one of the above reasons, CMS will update the DCS with the new codes 
unless the DCS is already showing the debts in a recall status.  The RTA report will reflect the 
recall status along with the reason for the RTA by Treasury.  
 
The contractors shall use the RTA report to research the debts in order to determine the current 
status or final disposition. The debts already in a recalled status are included so that the 
contractors will know that Treasury considers the debts uncollectible or out of business.  
 
The contractors shall determine whether collection by litigation is a viable option for debts 
showing a status code of RU (RTA  Uncollectible) or RN (RTA  Out of Business). If so, 
follow established procedures for referring the debts for litigation (See CMS Pub. 100-06, 
chapter 3, section 120). 
   
The contractors shall also consider whether all other appropriate actions to collect debts have 
been taken before recommending debts for Write-Off Closed (WOC), including the criteria listed 
below 
 
1.  Have there been any collections or payments on this debt in the last year? If so, and the 
contractor believes further collections are possible, the contractor shall not recommend 
the debt for WOC, but shall continue collection efforts for MSP and Non-MSP debts. 
 
2.  Has the debtor submitted any Medicare claims in the last 6 months?  If so, and the 
contractor believes further collections are possible, the contractor shall not recommend 
the debt for WOC, but shall continue collections efforts. 
 
3.  Is the debtor receiving Medicaid funds?  If so, the contractor shall not recommend the 
debt for WOC.  The contractor shall instead contact the CMS RO to institute an offset, 
and shall continue collection efforts. 
 
4.  If applicable, did the debtor undergo a Change of Ownership (CHOW) (a new owner who 
opts to receive automatic assignment of the old owners provider agreement)? 
 
If so, the contractor shall determine if collection efforts were pursued from the new 
owner. 
 
(a)  If so, the contractor shall recommend for WOC 
(b)  If not, the contractor shall follow the normal policies and procedures for debts 
collection. 
 
5.  If applicable, did the debtor file any cost reports that the contractor has not yet settled? 
 
If so, the contractor shall not recommend the debt for WOC.  Instead, the contractor shall 
await settlement of the cost report to determine whether it results in an underpayment. If 
it does result in an underpayment, the contractor shall apply any funds due to the provider 
to any outstanding debts first, before releasing any funds to the debtor 
 
6.  If applicable, does the debtor have any outstanding unfiled cost reports less than 1 year 
overdue? 
 
If so, the contractor shall not recommend the debt for WOC.  Instead, the contractor shall 
await filing and settlement of the cost report to determine whether it results in an 
underpayment.  If it does result in an underpayment, the contractor shall apply any funds 
due to outstanding debts first, before releasing any funds.  
 
7.  If applicable, does the debtor have any funds in suspense due to an unfiled cost report?  If 
so, and the provider has been terminated from the Medicare Program, the contractor shall 
apply the funds in suspense to recover the debt or any other outstanding debts for the 
provider. 
   
8.  If applicable, does the debtor have any claims or cost reports subject to re-opening? 
 
If so, the contractor shall not recommend the debt for WOC.  Instead, the contractor shall 
wait until the expiration of the reopening period.  If a cost report reopening during this 
period results in an underpayment, the contractor shall apply the underpayment to recover 
the debt or any other outstanding debts for the debtor, before releasing any funds. 
 
9.  Does the debtor have any open appeal(s)?  If so, the contractor shall not recommend the 
debt for WOC.  Instead, the contractor shall await the final determination on the 
appeal(s), and apply any funds due from a favorable decision to any outstanding debts 
first, before releasing any funds. 
 
10. Does the debtor have an active fraud case?  If so, the contractor shall not recommend the 
debt for WOC.  Instead, the contractor shall forward the debt to the appropriate Program 
Safeguard Contractor (PSC) or the Zone Program Integrity Contractor (ZPIC) or CMS 
Centers for Program Integrity that has the open fraud case. 
 
If the contractors have considered all of the above criteria above and are recommending the debts 
for WOC, the contractors shall submit a request to the CMS RO for approval.  The contractor 
shall submit two separate reports for debts in RU status: 1) Debts in RU status with a principal 
balance of $500,000 or less and 2) Debts in RU status with a principal balance greater than 
$500,000. 
 
The contractor shall also submit two separate reports to the CMS RO for debts in RN status:  1) 
Debts in RN status with a principal balance of $100,000 or less and 2) Debts in RN status with a 
principal balance greater than $100,000. 
 
The CMS RO will review the contractors recommendation and proceed as follows:  1) All debts 
with a principal balance greater than $25,000 must have the concurrence of the CMS RO OGC 
before approval for WOC by the RO is granted and 2) All debts with a principal balance less 
than $25,000 maybe approved by the RO; these debts do not require OGC concurrence to WOC. 
 
The above criteria allow the contractors to confirm that all appropriate methods of collection 
were completed before recommending debts for WOC.  The contractors may use the suggested 
format or choose a similar format of their own to submit WOC information.  Any format used 
shall include the Contractor Validation statement below with each submission: 
 
Contractor Validation: 
We recommend these debts for termination of collection action, close out and write-off-
closed.  We considered all criteria in section 70.17.2 in making this recommendation. 
Total debts recommend for Write-Off-Closed:   
Number of Debts: _____    Principal Balance:  ____________   Interest Balance:  
____________ 
 
Signature of Medicare Contractor CFO:  ________________________ Date:   
_______________   
 
The Debts recommended for WOC that do not meet the above criteria shall remain open until the 
criteria for WOC has been met.  The contractors shall report these debts on the appropriate line 
of the CMS Forms 751 or the Treasury Report on Receivables (TROR) to indicate Treasury has 
RTA the debts but the WOC process has not been completed.  (See CMS Pub 100-06, chapter 4, 
section 70.15.4)  The contractors shall submit a report of the debts recommended for WOC to the 
CMS RO using established procedures for recommending debts for WOC. 
 
Once CMS approves the debts for WOC, the contractors shall complete the WOC process and 
make all appropriate adjustments on CMS Form 751 or the TROR.  The contractors shall update 
debts approved for WOC to status code 2W (Non-MSP WOC) in DCS.  The contractors shall 
add a comment on the DCS comment screen reflecting the date of the RTA report in which the 
WOC debts appear on and the financial statement reporting quarter in which the debts were 
closed. 
 
 
70.17.3 - Debts RTA by Treasury as Dispute Response not Received Timely 
(RX) 
(Rev. 294, Issued: 10-06-17, Effective: 07-03-17, Implementation: 07-03-17) 
 
The Treasury returns debts with this status code because the dispute response was not received 
timely. The debts in this status will update to RX (RTA - Dispute Timer Expired) in DCS, if the 
debt was still in a dispute status code or was updated to UJ or UX (Dispute Resolved, Debt 
Returned for Cross-Servicing). The contractor shall research and resolve the debts in RX status 
in order to determine the current status of the debts. No further action is necessary if the debts 
are already in a recalled status. The contractors shall add a comment on the DCS comment 
screen reflecting any action taken, the date of the RTA report in which the debts appear on and 
the financial statement reporting quarter in which the debts were resolved. 
 
If the debts are still valid and eligible for referral to Treasury, the contractors shall re-enter debts 
as new entries in DCS, even if a response to the disputes were previously submitted to Treasury. 
The contractors shall not issue a second Intent to Refer (ITR) letter. However, the contractors 
shall change the status code of the original debt in DCS from RX to 2R (See Exhibit 4 of this 
section, the DCS User Guide, Section 2.1). If the final determination indicates that the debts 
should be in recall status, the contractors shall update the original debts in DCS from RX to the 
appropriate recall status code. 
 
70.17.4 - Debts RTA by Treasury as a Miscellaneous Dispute, a Manual RTA, 
Complaint or as Recall Approved (RD) 
(Rev. 294, Issued: 10-06-17, Effective: 07-03-17, Implementation: 07-03-17) 
 
The CMS updates the DCS to status code RD if the debts are not already in a recalled status. The 
contractors shall research and resolve debts in status code RD and update the DCS with the final 
disposition of the debts. If any debts are still valid and eligible for referral to Treasury, the 
contractors shall change the status code of the debts from RD to 2R and re-enter the debts as new   
entries in the DCS to be resubmitted to Treasury. The contractors shall not issue a second Intent 
to Refer (ITR) letter for the debts. (See Exhibit 4 of this section, the DCS User Guide, Section 
2.1). Lastly, the contractors shall add a comment on the DCS comment screen reflecting any 
action taken, the date of the RTA report in which the debts appear on and the financial statement 
reporting quarter in which the debts were resolved. 
 
70.17.5 - Debts RTA by Treasury as Paid in Full (RP), Satisfied Payment 
Agreement (RP) or Satisfied Compromise (RC) 
(Rev. 259, Issued: 01-15-16 Effective: 02-16-16, Implementation: 02-16-16) 
 
The CMS updates debts in the DCS to the above status codes unless the debts are already in a 
paid in full status.  If the principal balance of the debts in DCS and in the contractors internal 
systems are $100 or less, the contractors shall update the DCS status code from RP to 2Q (Cross-
Servicing Collection  Paid-in-Full) or RC to 2C (Cross Servicing Collection  System 
Compromise) as applicable.  The contractors shall close out the debts in their internal systems 
and any balance shall be adjusted to zero. 
 
If the principal balance of the debts in the DCS and the contractors internal systems has a 
negative balance, the contractors shall update the DCS using the codes listed above.  The 
contractors shall analyze the payments received and determine if a refund should be issued (see 
CMS Pub. 100-06, chapter 4, section 70.14.8).  If it is determined a refund is valid, the 
contractors shall follow procedures for applying excess collections and update their internal 
systems as well as the DCS to reflect any refund given (see CMS Pub. 100-06, chapter 4, section 
70.14.8). 
 
If the principal balance of the debts in DCS and in the contractors internal system is greater than 
$100, these debts shall remain in status codes RP or RC in DCS.  The CMS will issue additional 
instructions regarding the debts for this workload in the future. 
 
The contractor shall consider these debts as paid in full and shall annotate their internal systems 
accordingly so that no additional collections are applied to these debts.  The contractors shall add 
a comment on the DCS comment screen reflecting any action taken, the date of the RTA report 
in which the debts appear on and the financial statement reporting quarter in which the debts 
were resolved. 
 
Exhibit 1- Intent to Refer (ITR) Letter  
(Rev. 294, Issued: 10-06-17, Effective: 07-03-17, Implementation: 07-03-17) 
 
Intent to Refer Letter 
Background 
 
The DCIA requires Federal agencies to refer debt that is 120 days delinquent to the Department 
of Treasury or a Treasury designated Debt Collection Center for cross servicing. 
 
Prior to debt transfer, the DCIA requires agencies to inform the debtor of the agencys intent to 
refer the debt, and to provide debtor information regarding the referral process.   
 
Attached are specific paragraphs that explain the process and debtor rights. These paragraphs 
shall be included in the intent to refer letter sent to the debtor. 
 
Medicare contractors should use their own language in the opening paragraphs to explain the 
reason for the overpayment and the current balance, including interest accrued and the interest 
rate. 
 
Subject in Bold: Notice of Intent to Refer Debt to the Department of Treasurys Debt 
Collection Center for Cross Servicing and Offset of Federal Payments and Certain Eligible 
State Payments 
 
Contractor opening paragraphs concerning the reason for the overpayment, date of determination 
and amount due. May refer to previous demand letters or other forms of contact regarding the 
debt. 
 
Your debt to the Medicare Program is delinquent and, by this letter, we are providing notice that 
your debt will be referred to the Department of Treasurys Debt Collection Center (DCC) for 
Cross Servicing and Offset of Federal Payments. Your debt will be referred under provisions of 
Federal law, title 31 of the United States Code, Section 3720A and the authority of the Debt 
Collection Improvement Act of 1996. 
  
The Debt Collection Improvement Act of 1996 (DCIA) requires Federal agencies to refer 
delinquent debts to the Department of Treasury and/or a designated Debt Collection Center 
(DCC) for collection through cross servicing and/or the Treasury Offset Program. Under the 
offset program, delinquent Federal debts are collected through offset of other Federal agency 
payments you may be entitled to, including the offset of your income tax return through the 
Internal Revenue Service (IRS). The TOP offsets can also be taken from eligible state payments 
to which you are entitled. 
 
The Debt Collection Center will use various tools to collect the debt, including offset, demand 
letters, phone calls, referral to a private collection agency and referral to the Department of 
Justice for litigation. Other collection tools available, which may be used, include Federal salary 
offset and administrative wage garnishment. If the debt is discharged, it may be reported to the 
IRS as potential taxable income. 
 
During the collection process, interest will continue to accrue on the debt and you will remain 
legally responsible for any amount not satisfied through the collection efforts. 
 
 
For Individual Debtors Filing a Joint Federal Income Tax Return 
 
The Treasury Offset Program automatically refers debts to the IRS for offset. Your Federal 
income tax refund is subject to offset under this program. If you file a joint income tax return, 
you should contact the IRS before filing your tax return to determine the steps to be taken to 
protect the share of the refund which may be payable to the non-debtor spouse.   
 
Federal Salary Offset 
 
If the facility ownership is either a sole proprietorship or partnership, your individual salary(s) 
may be offset if you are or become a federal employee. 
 
Medicaid Offset 
 
As authorized at 42 CFR 447.30, (Subsection 1885 of the Social Security Act), CMS may 
instruct the State Medicaid Agency to offset the Federal share of any Medicaid payment due you, 
your agency and/or related facilities. At that time, the offset will remain in effect until the 
Medicare overpayment is paid in full. 
 
Please read the following instructions carefully to determine what action you may take to avoid 
referral for cross servicing/offset. 
 
Due Process 
 
You have the right to request an opportunity to inspect and copy records relating to the debt. This 
request must be submitted in writing to the address listed below. You have a right to present 
evidence that all or part of your debt is not past due or legally enforceable. In order to exercise 
this right, this office must receive a copy of the evidence to support your position, along with a 
copy of this letter. You must submit any evidence that the debt is not owed or legally enforceable 
within 60 days of the date of this letter. If, after sixty days from the date of this letter, we have 
not received such evidence, your debt, if it is still outstanding and eligible for referral, will be 
referred to the Department of Treasury or its designated Debt Collection Center for cross 
servicing/offset. 
Repayment 
 
Your debt will not be referred to the Department of Treasury if you make payment in full. The 
past due amount of $____________owed to the Medicare Program as of _____________ 
includes interest accrued through _____________. (Note: Medicare contractors may alter this 
sentence to read: The past due amount owed to the Medicare Program as of the date of this 
letter includes current accrued interest. This sentence may be omitted for debts that do not 
accrue interest.) Interest is accrued monthly and is added to the balance of the debt. 
 
Your check or money order for the amount due should be made payable to:  
 
Medicare 
Contractor Address  
000 Street 
Anywhere, USA 00000-0000. 
 
Include a copy of this letter with your payment. 
   
If you cannot make payment in full, you may be allowed to enter into an extended repayment 
agreement. If you are interested in an extended repayment agreement, please contact this office. 
 
Bankruptcy 
 
If you have filed for bankruptcy and an automatic stay is in effect, you are not subject to offset 
while the automatic stay is in effect. Documentation supporting your bankruptcy status, along 
with a copy of this notice, must be forwarded to this office at the above address. 
 
If you have any questions concerning this debt, please contact ________________    
at ________________. 
 
Sincerely, 
 
____________________ 
Signature of Certifying Official 
 
Official Position 
 
 
 
Exhibit 3 A - Collection/Refund Spreadsheet (Part A) 
(Rev. 124, Issued: 06-29-07, Effective: 07-30-07, Implementation: 07-30-07) 
 
Click here to review Exhibit 3 A  Collection/Refund Spreadsheet (Part A) 
 
Exhibit 3 B - Collection/Refund Spreadsheet (Part B) 
(Rev. 124, Issued: 06-29-07, Effective: 07-30-07, Implementation: 07-30-07) 
 
Click here to review Exhibit 3 B  Collection/Refund Spreadsheet (Part A)   
Exhibit 4  Debt Collection System User Guide 
(Rev. 143; Issued:  10-24-08; Effective Date:  01-01-09; Implementation Date:  01-05-09) 
 
 
 
SECTION ONE: 
 
ACCESSING DCS
   
USER INSTRUCTIONS FOR DEBT COLLECTION 
SYSTEM (DCS)
 
 
 
 
TO ACCESS DCS
 
1. The DCS is housed within the Customer Information Control System (CICS) region of the CMS 
Data Center.  Users must have a CMS User ID for system access.  For additional information, 
contact your system administrator. 
 
2. The CMS Data Center screen will appear.  From this screen Hit Enter. 
   
3. The next screen will be the application menu.  From this screen Type 3" and Hit Enter. 
  
   
4. Next will be the HCFA Production CICS Environment screen.  Type in your CMS User ID and Password.  For additional 
information, contact your system administrator. 
 
   
5. Next will be a menu option screen.  Type in the corresponding number for Debt Collection and Hit Enter. 
 
   
   
 
 
 
 
 
 
 
 
 
 
SECTION TWO: 
 
ENTERING DEBTS INTO DCS 
   
TO ENTER A DEBT INTO DCS 
1. The next screen will be the Cross Servicing Production System Search Screen.   
 
From this screen you may query a particular debt by entering data into any of the fields listed.  If you do not have the complete TIN 
(Taxpayer Identification Number), the system will allow you to enter a minimum of five characters.  If you do not have the complete 
COMP NAME (Company Name), the system will allow you to enter a minimum of six characters.  If you do not have the complete 
Debt #, the system will allow you to enter a minimum of four characters.  If you do not have the complete NPI (National Provider 
Identifier), the system will allow you to enter a minimum of six characters.  If you do not have the complete HIC (Health Insurance 
Claim) Number, the system will allow you to enter a minimum of four characters.  If you do not have the complete FEDET (FedDebt 
Number), the system will allow you to enter a minimum of five characters.  If you do not have the complete PAT NAME (Patient 
Name), the system will allow you to enter a minimum of six characters.  If you do not have the complete LAST NAME, the system 
will allow you to enter a minimum of four characters. The system will then bring up all debts related to the information provided.  You 
may then select the correct debt by using the F8 key to scroll forward through the debts. 
 
IMPORTANT: This query shall be used before entering a debt into the system so that you can check for a duplicate entry.  Once you 
have determined that the debt is not currently in the system, Hit F11 to insert a new debt. 
           
 
 
 
 
 
     
 
   
 
   
 
         
   
 
 
 
   
 
       
   
 
 
2. If you chose F11 to insert a new debt, the next screen to appear will be the Cross Servicing Production System Data Entry Screen. 
At this screen, you may begin data entry.  Once all information has been entered Hit Enter to save.       
1  2  3  4 
       
5  6  7 
  8     
 
9  10  11 
  12     
 
13  14  15 
  16     
  17  18 
   
19  20 
    24  25 
21  22  23 
   
  26      28 
27 
29     
  30 
 
31  32   
    36 
33  34  35 
 
    39 
37  38 
 
   
   
FIELD SPECIFIC INSTRUCTIONS FOR DATA ENTRY SCREEN 
Field  Description/Instruction 
# 
1.  DEBT NUMBER - Enter the associated debtor number.  This number will be to provide updates to the debt or to 
query the debt.  For Part B debt types use the Physician/Supplier number.  For Part A debt types use the Provider 
number.  For MSP debt type use the report ID for a data match case or HIC number for a non-data match case.  For 
all other debts, use a specific identifying debtor number.  When entering this number, enter from left to right, DO 
NOT use spaces and DO NOT use dashes.   
   
2.  DEBT TYPE - Enter the appropriate debt type.  Debt types are as follows:  
PTA (Part A, includes referral to a Private Collection Agency (PCA) and the Treasury Offset Program (TOP)); PTB 
(Part B, includes referral to PCA and TOP); TPA (Part A, includes referral to TOP only, will not be referred to a 
PCA); TPB (Part B, includes referral to TOP only, will not be referred to a PCA); MSP (Medicare Secondary Payer); 
HMO; FOI (Freedom of Information Act); RRB (Railroad Retirement Board); OTH (other); PUB (Public Invoices); 
LTC (Long Term Care); OIG (Office of the Inspector General); CBC (Centers for Beneficiary Choice) ; CLA 
(Intermediary Claims A/R); HAT (Part A HIGLAS, includes referral to a PCA and TOP); HBT (Part B HIGLAS, 
includes referral to PCA and TOP); HMS (HIGLAS Medicare Secondary Payer); HPA (Part A HIGLAS, includes 
referral to TOP only, will not be referred to a PCA); HPB (Part B HIGLAS, includes referral to TOP only, will not be 
referred to a PCA)  Debt types PUB, OIG and CBC are used by Central Office only. 
*It is important that the appropriate debt type be used.  If the debt is expected to be recouped in full within three 
years through internal offset, the debt should not be referred to a PCA. 
   
3.  TIN (Taxpayer Identification Number) - Enter the TIN (Social Security Number (SSN) or Employer Identification 
Number (EIN).   Do not use dashes between numbers.  This field is required for all Non MSP debts and must be 
entered on MSP debts if available.  For MSP debts, use the beneficiary SSN as the TIN when the beneficiary is the 
debtor. Use the EIN for company debt.  Do not enter a pseudo TIN. 
   
4.  SA CODE - Enter IND for an individual or COR for a corporate debtor or a partnership.  This code is used for TOP 
referral.  The debt will be rejected if the SA Code and name of the debtor are not in agreement. 
   
5.  F NAME (First Name) - Enter the first name of the debtor.  This field should not be used for corporate debtors. 
   
   
6.  L NAME (Last Name) - Enter the last name of the debtor. This field is required when the SA Code is IND.  This 
field should not be used for corporate debtors. 
7.  RG CD (Regional Code) - Enter the Regional Office number (i.e. 01). 
   
8.  COMP NAME (Company Name) - Enter the corporate name of the debtor.  For debt type LTC this will be the name 
on the provider agreement.  This field is required when the SA Code is COR. 
   
9.  FED DEBT - This field will be entered by Central Office.  It will contain the FedDebt number once it is supplied by 
the Department of Treasury. 
   
10.  NPI  Enter the National Provider Identifier (NPI) number for the debt.  This is a 10 character alpha numeric field. 
   
11.  HIC  Enter the Health Insurance Claim (HIC) number for the debt.  This field is for MSP debt only.  This is a 14 
character alpha numeric field. 
   
12.  STREET ADR (Street Address) - Enter the street address of the debtor. 
    
13.  CITY - Enter the city of the debtor. 
   
14.  ST (State) - Enter the state of the debtor. 
   
15.  ZIP - Enter the five numeric digit zip code of the debtor.  DO NOT MAKE THIS FIELD ALL ZEROS. 
   
16.  PATIENT NAME - This field is ONLY for MSP debts.  Enter the beneficiarys first and last name. 
   
17.  PRIN REFERRED AMT (Principal Referred Amount) - Enter the amount of the principal that is outstanding and is 
to be referred.  This will be the principal amount due as stated in the intent letter minus any adjustments, reductions 
due to a valid documented defense, partial payments, etc which are made before the debt is referred.  If this is an 
interest only MSP debt, enter 1.01.  This figure must be entered in as dollars and cents (xxx.xx).   
   
18.  INT REFERRED AMT (Interest Referred Amount) - Enter the amount of interest due as of the date entered into field 
19 (interest accrued thru date).  This figure must be entered in as dollars and cents (xxx.xx).  If there is no interest 
due at the time of referral enter .01 in this field. 
   
   
19.  INT RATE (Interest Rate) - Enter the interest rate for the debt.  It must be entered as a whole number and be three 
decimal places (13 1/2% would be 13.500).  This field is required if there is an interest referred amount.  If the debt 
will not accrue interest this field must be 00.000. 
   
20.  ACCR THRU DT (Interest Accrued Thru Date) - Enter the date the interest is accrued through. This must be entered 
as MM/DD/YYYY (slashes must be included).  This can not be a future date. 
   
21.  CONTR # (Contractor Number) - Enter the Medicare contractor number.  This field must be five numeric digits. 
   
22.  BSI  This is to be used for the future implementation of the Business Segment Identifier. 
   
23.  PR TY (Provider Type) - Enter the appropriate provider type for the debt.  This field is required for debt types 
PTA/TPA/MSP/CLA/TAO/PAO.  For MSP debt this field will correlate to the type of MSP case being entered into 
the system.  MSP case codes are as follows: 12 (Working Aged); 13 (ESRD  End Stage Renal Disease); 14 (Auto / 
No Fault); 15 (Workers Compensation); 41 (Black Lung); 42 (VA  Veterans); 43 (Disability); 47 (Liability).  This 
is a two digit numeric field (i.e. 10). 
   
24.  CLAIM (Claim Number) - Enter the fifteen-digit claim number or document control number. This field is required 
for debt types PTB/TPB/TBO/PBO/CLA.  This is not required for MSP.  This field is fifteen digits entered from left 
to right.  For debt type LTC, this will be the twelve digit LTC number. 
   
25.  A/R LOC (Accounts Receivable Location) - Enter the appropriate location of the receivable.  H - Central Office,  
R  Regional Office or C - Contractor.  This field represents the reporting responsibility for financial statements 
(Form CMS-751). 
   
26.  COST REPORT DT (Cost Report Date) - This field is required for Part A debts.   For MSP debts enter the date of the 
intent letter.  This must be entered as MM/DD/YYYY (slashes must be included).  This field cannot be greater than 
todays date. 
   
27.  DET DATE (Determination Date) - Enter the overpayment determination date for the debt.  If it is an MSP debt, 
enter the date of the demand letter to the identified debtor.  This must be entered as MM/DD/YYYY (slashes must be 
included).  This field cannot be greater than todays date. 
   
   
28.  CL PD DT (Claim Paid Date) - This field is required for debt types PTB/TPB/TBO/PBO.  This must be entered as 
MM/DD/YYYY (slashes must be included).  This field cannot be greater than todays date.  This is not required for 
MSP. 
   
29.  CERT BY (Certified By) - Enter the name of the contact person certifying the debt as valid and legally enforceable. 
   
30.  PHONE - Enter the phone number of the certifying/contact person.  If possible, please use direct line numbers. 
   
31.  FAX NUMBER - Enter the fax number of the certifying/contact person. 
   
32.  RO/CONTR NAME (Regional Office/Contractor Name) - Enter the location of the certifying office of the debt prior 
to referral.  This will be the Regional Office (i.e. Dallas Regional Office) or the Contractor name (i.e. Trailblazers).  
For HIGLAS contractors this will be: transaction number  workload number  customer number 
   
33.  LTR (Letter) - Enter Y to indicate that the intent to refer letter containing the DCIA language has been sent. 
   
34.  DT LTR (Date of Letter) - Enter the date the intent to refer letter was sent.  This date is used to calculate the 60 days 
notice the debtor is given prior to referral.  This must be entered as MM/DD/YYYY (slashes must be included).  This 
field cannot be greater than todays date. 
   
35.  STAT CD (Status Code) - Enter UU to indicate initial input.  If the intent to refer letter was returned undeliverable 
use the status code UN instead of UU.  When the debt is sent to Treasury, the status code will be changed by Central 
Office to UJ to indicate that the debt was referred for cross servicing.   
   
36.  STAT DT (Status Date) - This is a system-generated field.  It will update each time the status code changes. 
   
37.  OPER-ID (Operator ID) - This field is system generated and shows the User ID. 
   
38.  LAST UPDATE DATE - This field is system generated and shows the date of the last change made to the data entry 
screen of the debt 
   
39.  TRANSMIT DATE - This field is system generated when the debt is transferred to Treasury. 
   
 
 
SECTION 2.1 
 
RESUBMITTING A 
RECALLED/RETURNED DEBT 
 
 
This section explains the process for sending a debt back to Treasury that has previously been Returned to Agency (RTA) by Treasury 
or recalled.  A separate function key will be used for this process. 
 
To begin this process, the original debt to be re-submitted to Treasury must be in a recalled or RTA status code.  At the Data Entry 
Screen of the original debt, depress the F10 function key.  A new Data Entry Screen will appear, and most fields from the original debt 
will be pre-filled on the new screen.  You will be prompted to enter fields highlighted in red.  These fields are:  Debt Type, Principal 
Referred, Interest Referred, Interest Accrued Through Date, Certified By Name, Phone and Fax numbers, and Status Code. Enter 
status code UU.   After entering these fields, hit the Enter key to accept the new record.  The following comment will automatically 
be posted to the Comment Screen:  RTA RESUBMITTED TO TREASURY.   The RO/Contractor Name field will be 
automatically deleted from the original debt and transferred to the new debt in order to allow contractors on HIGLAS to continue 
sending updates to the debt.  This field on the original debt will be automatically filled with an internal timestamp.   
 
If the debt to be resubmitted is not in a recalled or RTA status code or the Transmit Date field is blank, the user will receive the 
following error message: NO TRANSMIT DATE OR STATCD = X OR U. 
 
   
   
 
SECTION THREE: 
 
UPDATING A DEBT 
   
UPDATING A DEBT 
 
Updates to a debt are made on the Data Entry Screen.  Debts already added to DCS cannot be deleted.  However, the system will allow 
users to update/edit information.   
 
The status code for Non MSP debts that require a status change prior to being transferred to Treasury begin with the number 1.  The 
status code for Non MSP debts that require a status change after being transferred begin with the number 2.  The status code for 
MSP debts that require a status change prior to being transferred to Treasury begin with the number 3".   The status code for MSP 
debts that require a status change after being transferred begin with the number 4".  
 
For debts transmitted to Treasury, do not update principal and interest amounts on the data entry screen.  Medicare 
Contractors should post all changes on the collection screen.  Be advised that the amounts on the data entry screen will not change 
once these updates are made.  These fields must stay in their original amounts so that Central Office can keep track of the dollar 
amount of debt referred to Treasury.  To see the balance of the debt, press F5 to go to the collection screen. 
 
The Contractor may make any necessary changes to the Data Entry Screen as long as the status code is UU, UN, or UJ and the 
transmit date field is blank.  If an error is discovered in one of these fields after the status code is UJ and the transmit date field is 
filled, the Contractor will need to recall the debt with the incorrect information and re-enter a new debt with the corrected information.  
Only the status code field should be changed on the data entry screen after the debt has been transmitted.  If the principal or interest 
referred amounts need to be adjusted downward, make the necessary changes on the collection screen.  If the principal or interest 
referred amounts need to be adjusted upward, these debts shall be recalled and re-entered with the correct information. 
 
Once a debt has been recalled using a 2 or 4 code it shall not be updated back to UJ.  If the debt needs to go back to Treasury it must 
be entered and referred as a new debt.
   
To change information for a debt, you must first query the debt and be at the Data Entry Screen.  If there is more than one debt for the 
queried information, use F8 to scroll to the correct debt.  Once on the Data Entry Screen, Hit F9.  At this point all information that can 
be updated will appear in red. 
 
NOTE: Any changes to this screen after transmission other than a status code change will not be sent to Treasury.  Therefore, 
the debt must be recalled and re-entered with the correct information for it to be sent to Treasury.
   
If the debt has not yet been transmitted to Treasury, and a change to one or several fields is necessary, tab to the field to be updated 
and insert the correct information.  Once all corrections have been made, hit Enter.  A message will appear at the bottom of the screen 
stating that the record has been updated. 
 
NOTE: A change to one field may require changes to other fields, based on system edits.  For example, changing the Debt Type from 
PTA to PTB will require changes to fields required for Part B debts.  The Status Date, Operator ID, Last Update Date, and Transmit 
Date fields are system protected and cannot be updated. 
   
   
 
 
 
 
 
 
 
 
 
SECTION FOUR: 
 
COMMENTS SCREEN 
   
COMMENTS SCREEN 
 
When F6 is chosen for comments, this is the screen that will appear if there are no current comments for that debt.  
 
 
When F6 is chosen for comments, this is the screen that will appear if there are previous comments for that debt. 
   
 
   
When F11 is chosen to add a new comment, the comment screen will appear as below.  (NOTE: The new comment screen will only 
allow for four lines of text.  Also, the text does not wrap from line to line.  Once you near the end of the text line you must hit tab to 
proceed to the next line.) 
 
   
Once all new comment information has been entered, Press Enter.  The system will provide a message to Hit F9 to add the comment. 
   
Hit F9 and the message Record Inserted will appear. 
 
   
The comments section may be used for two purposes.   
 
First, the comments area is used as an update log.  Each time the debt is updated a system generated entry is made in the comments 
screen.  The entry will show the date of the change, user ID of the person making the change and the previous information that has 
now been updated.  (NOTE: To have a history of all changes made to a debt, limit them to four at a time.  This is because the system 
will only note the first four updates made on a record.) 
 
Second, it can be used to enter important information that may clarify issues concerning the debt.  Some examples of this type of 
information could include items not on the data entry screen, changes in company ownership, contractor transitions or dispute 
resolution. 
 
NOTE: All users must enter a comment whenever there is an update or additional information on a debt.  
   
   
 
 
 
 
 
 
 
 
 
SECTION FIVE: 
 
COLLECTIONS SCREEN 
   
General Collections Information: 
Central Office staff, Regions and Contractors will use the Collection Screen to enter all types of collections and offsets applied to a 
debt. 
 
The status code of a debt may or may not change, based on a collection.  If a debt is offset at the contractor location, but is not paid in 
full, and that debt is already at Treasury, the debt will remain there for further collection and the status code will remain UJ or UX.  If 
a debt is collected in full the status code should be changed to the appropriate code.  Treasury will be notified of this reduction in the 
amount to be collected by an electronic file sent by CO. 
 
Central Office, Regional Offices, and Contractors will use the Comments Screen in conjunction with the Collections Screen to add 
any particular information regarding the collection. 
 
If a debt has a negative balance that is being refunded, use collection type RF to adjust DCS to a zero balance.  If a debt has a negative 
balance that is being applied to another debt, use collection type AD to adjust the negative balance to zero and to post the collection to 
another debt. 
 
The only updates that are transmitted to Treasury are status code changes, collections, and adjustments.
   
COLLECTIONS SCREEN 
 
When F5 is chosen for Collections, this is the screen that will appear if there is no current payment history for that debt.  (Note: The 
system states that there is no history of payments.) 
 
   
When F5 is chosen for Collections, this is the screen that will appear if there are previous payments for that debt. 
 
   
When F11 is chosen to add a payment entry, this is how the screen will appear.  (See attached collection screen field specific 
instructions) 
1  2  3 
4  5 
6  7 
9 
8 
10  11 
13 
12 
14  15 
16 
17 
18 
19 
21 
20 
22  23 
   
After all collection information has been added, Hit Enter.  The system will provide a message to Hit F9 to add the collection.  
   
Depress F9 and the message Record Inserted will appear. 
 
 
   
FIELD SPECIFIC INSTRUCTIONS FOR COLLECTION SCREEN 
 
Field #  Description/Instruction 
1.  DEBT # (Debt Number) - This field is carried over from the Data Entry Screen. 
   
2.  COMP NAME (Company Name) - This field is carried over from the Data Entry Screen 
   
3.  L NAME (Last Name) - This field is carried over from the Data Entry Screen.  For MSP this field will be blank. 
   
TOTAL DEBT AMOUNT - This is a system calculated field and is principal referred + interest referred + any     
4. 
additional interest. 
   
TOTAL NET CASH - This is a system calculated field and is total principal collected + total interest collected - 
5. 
total fees collected. 
   
TOTAL AMT REFERRED (Total Amount Referred) - This is a system calculated field and is principal referred + 
6. 
interest referred. 
   
TOT BALANCE OUTSTANDING (Total Balance Outstanding) - This is a system calculated field and is principal 
7. 
balance + interest balance. 
   
AMT REFERRED PRIN (Principal Amount Referred) - This field is carried over from the Data Entry Screen and 
8. 
is the principal amount referred to PSC/Treasury. 
   
TOT BALANCE PRIN (Total Principal Balance) - This is a system calculated field and is the remaining unpaid 
9. 
principal after posted collections and adjustments. (Amount Referred Principal - Total Principal Collected) 
   
AMT REFERRED INT (Interest Amount Referred) - This field is carried over from the Data Entry Screen and is 
10. 
the interest amount referred to PSC/Treasury. 
   
TOT BALANCE INT (Total Interest Balance) - This is a system calculated field and is the remaining unpaid 
11. 
interest referred after posted collections and adjustments.            
   
ADDTL INT AMOUNT (Additional Interest Amount) - This is a system calculated field and is for any additional 
12. 
interest collected or adjusted over the initial referred interest amount. 
   
AMT COLLECTED PRIN (Principal Amount Collected) - This is a system calculated field and is the total 
13. 
principal amounts that have been collected or adjusted to date. 
   
TOT FEE AMT (Total Fee Amount) - This is a system calculated field and is the total fee amounts that have been 
14. 
paid to PSC/Treasury to date. 
   
AMT COLLECTED INT (Interest Amount Collected) - This is a system calculated field and is the total interest   
15. 
amounts that have been collected or adjusted to date. 
   
16.  DATE - This field is system generated and shows the date of the entry. 
   
AMT COLLECTED PRIN (Principal Amount Collected) - This is a data entry field.  Enter the amount of the 
17.  collection received that is being applied to principal.  This figure must be entered as dollars and cents (xxx.xx).  If 
the amount is a negative, the minus sign must be entered after the amount (100.00-). 
   
18.  USER ID - This field is system generated and shows the User ID of the user posting the collection. 
   
AMT COLLECTED INT (Interest Amount Collected) - This is a data entry field.  Enter the amount of the 
collection received that is being applied to interest.  This figure must be entered as dollars and cents (xxx.xx).  If 
19.  the amount is a negative, the minus sign must be entered after the amount (100.00-).  If the collected interest 
amount is greater than the interest referred amount, the system will calculate the difference and apply it to the 
additional interest field. 
   
COLL TYP (Collection Type) - This is a data entry field.  Enter the appropriate collection type code for the 
payment that was received.  Collection type codes will be used for recording all collections and adjustments 
20. 
including reversals for previous collections or refunds.  For MSP, the contractor could use any one of these codes 
but CC, AD, or PC will be used in most instances. (Refer to the end of this section for collection type codes.) 
   
21.  FEE AMT (Fee Amount) - This is a data entry field based on the IPAC.  Enter the fee charged by PSC or Treasury 
to process the debt.  This amount will be stated on the Intergovernmental Online Payment and Collection (IPAC) 
Report.  This field is used by Central Office only. 
   
22.  ACCT DATE (Accounting Date) - This is a data entry field.  Enter the date the collection was received.  For MSP 
Contractor collections by check, use the date of the postmark on the envelope if available or the date of the check if 
the envelope is not available. (Contractors should routinely retain the envelope for all checks.) 
   
23.  NET CASH RECEIVED - This is a system generated field.  This amount is principal collected plus interest 
collected minus any fees that apply. 
 
Rules for Edits: 
 
If Collection Type = TO, TC, PC, JC, AO, SS, then the Fee Amount must be Greater than Zero. 
 
If Collection Type = CO, CC, CU, RC, HC, MO, AD, XT, XP, XC, XR, XH, RF then the Fee Amount must be blank. 
   
COLLECTION TYPES 
 
 
AD  Adjustments 
AO   HHS Administrative Offset 
CC  Contractor Collection 
CO  Contractor Offset 
CU  Contractor Underpayment (Underpayment Applied to Overpayment) 
HC  Central Office Collection 
JC  Dept of Justice Collection 
MO  Medicaid Offset 
PC  PSC Collection (includes collections by any entity under contract to the PSC) 
RC  Regional Office Collection 
RF  Refund 
SS   SSA Offset 
TC  Treasury Collection 
TO  TOP Offset 
XH  Central Office Compromise 
XP  PSC Compromise 
XR  Region Compromise 
XT  Treasury Compromise 
 
 
 
   
Certain fields on the Collection Screen are automatically system generated.   When the debt is entered into the Data Entry Screen and 
the Amount Referred Principal and Amount Referred Interest fields are completed, this will automatically fill in on the collection 
screen and the system will automatically total the amount of the debt being referred. Total Amount Referred, Total Debt Amount, 
Total Balance Outstanding, Total Principal Balance and Total Interest Balance fields are system generated.  
 
When the contractor enters a collection the following fields on the Collection Screen must be entered:  
-   the amount collected principal 
-   the amount collected interest  
-   the collection type status code 
-   and the accounting date 
 
When reviewing a debt for a current balance, always check the total balance principal, total balance interest and total balance 
outstanding fields on the collection screen.  (NOTE: Interest balance will not reflect actual current accrued interest as reflected in the 
contractors system.) 
 
 
   
Examples: 
1) If a contractor receives a partial payment or documentation such as a valid documented defense to reduce the debt prior to entering 
it into DCS, the contractor must make these adjustments before entering it into the system. Where there is partial payment, the 
contractor must adjust the interest amount and the principal amount to reflect the amount of payment applied to interest and principal.  
The remaining balance is the amount entered into DCS.  The contractor must also annotate the Comments Screen.  The annotation 
must show: how much the debt was prior to the reduction and/or partial payment, the amount of any payment or the amount of 
reduction and the basis of any reduction.  These figures must reflect the principal amount and interest amount separately. 
 
2) If the debt has been referred to the PSC and the contractor receives a check (full or partial payment), this information must be 
entered onto the DCS Collection Screen.  In addition, the contractor will note this on the DCS Comments Screen.  If the collection is 
for a partial recovery the DCS status code on the data entry screen stays as a UJ or UX.  If the collection is for a full recovery the DCS 
status code on the data entry screen must be changed to the appropriate code.  
 
3) If the contractor receives documentation which will reduce the amount due Medicare and/or close the case after it has been referred 
to PSC, this information should be entered onto the DCS Collection Screen.  If the documentation closes the case, update the 
Collection screen with an AD status code and update the DCS data entry screen with the appropriate status code.  If the documentation 
reduces the amount due Medicare leaving a balance on the case, update the Collection Screen with a status code of AD but do not 
change the status code on the data entry screen.  
 
4) If the contractor receives notification that the debtor is in bankruptcy, appeals, etc, and the debt has already been sent to PSC, enter 
the appropriate DCS status code on the data entry screen in order to pull back (recall) the debt from PSC.  
 
5) If the contractor receives a collection on a debt in the DCS, which has a status code of UU or UJ with no transmission date, update 
the data entry screen with the new principal referred amount and interest referred amount (old amount  collection = new amount that 
is entered into the DCS).  In this situation, the collection would not need to be posted to the Collection Screen.  A comment should be 
added to the comment screen. 
 
6) If the contractor reduces a debt for part of the debt and a check for all or part of the remaining debt that has already been sent to the 
PSC, the information would be entered on the collection screen as follows:  
1st the reduction amount and appropriate collection code. 
2nd the collections/check received and/or fee amt if applicable with the appropriate collection code.  
If the debt is paid in full, update the data entry screen with the appropriate status code. . If there is a remaining balance, the status code 
on the data entry screen would stay UJ or UX so PSC can continue recovery of the debt.     
   
7) If the contractor has a Non MSP debt with a negative principal balance, the debt will require your research to determine if it has 
been over collected.  If there is another debt that the excess collection can be applied to, adjust the negative balance on the over 
collected debt by using the collection type of AD.  (Reminder: the negative sign always goes after the dollar amount).   If the debt the 
excess collection is being applied to is also in the DCS, post this collection using the collection type of AD. If a refund will be issued, 
post the refund to the DCS using the collection type of RF.  Remember to post a comment to the comments screen explaining your 
adjustment or refund. 
 
 
 
 
 
 
   
   
 
 
 
 
 
 
 
 
 
 
 
SECTION SIX: 
 
REPORTS 
   
REPORTS
 
 
 
The Central Office will be responsible for generating reports and sending them to the Regional Offices.  Non MSP reports will be sent 
to Regional Offices and Contractors.  MSP reports will be sent to the Regional Offices or the Central Office MSP Project Officer and 
it will be their responsibility to forward these reports to the appropriate Contractors. 
 
 
Last Debts Transmitted to PSC - This report lists all debts that were sent to PSC during the last transmittal.  Each Region and 
Contractor will receive reports for their area.  There are a total of 12 transmittal reports: two are for Non MSP Part A Non HIGLAS 
debts, two are for Non MSP Part B Non HIGLAS debts, one is for Claims A/R debts, one is for MSP Non HIGLAS debts, two are for 
Non MSP Part A HIGLAS debts, two are for Non MSP Part B HIGLAS debts, one is for MSP HIGLAS debts, and one is for Long 
Term Care. 
 
MSP/DCS Snapshot  This is a MSP report only.  It lists all referred MSP debts in DCS by Contractor.  It is used by the MSP 
Contractors to reconcile their internal systems with DCS. 
 
Dispute Report  This report lists all debts with an X status code, which represents an outstanding dispute.  It is sent to the Regional 
Offices and Central Office MSP Project Officer to use as a monitoring tool for all disputes that have not been answered in a timely 
manner. 
 
TT Report  This report lists all debts with a TT status, which represents a transmittal hold.  A transmittal hold is the result of a debt 
not meeting referral standards.  These debts should be corrected in order to be transmitted on the following weeks report.  This report 
is sent out on a weekly basis to the regional offices whose contractors have debts listed on the report.   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
SECTION SEVEN: 
 
CODES/FUNCTION COMMANDS 
   
DCS STATUS CODES - Non MSP 
 
                 
RETURNED TO AGENCY BY TREASURY 
UN - Undeliverable Letter            RB  In Bankruptcy 
UU - Initial Entry              RU - Uncollectible 
UJ - Sent to PSC for Cross Servicing         RN  Out of Business 
UR - Extended Repayment Plan          RX  Dispute Timer Expired 
XX  Dispute               RD  Miscellaneous Dispute or 
UX  Dispute resolved, debt to stay at Treasury        - Manual RTA, or 
                    - Complaint, or 
RF - Refund Issued by CO              - Recall Approved 
RT - Returned from Treasury           RP  Paid in Full, or 
-  Satisfied Payment Agreement 
RC - Compromise 
 
NOT TRANSFERRED TO DCC  RECALLED FROM DCC 
   
1A  Appeal  2A  Appeal 
1B  Bankruptcy  2B  Bankruptcy 
1C  Compromise  2C  Compromise 
1D  Deceased  2D  Deceased 
1E  Error  2E  Error 
1F  Cost Report Filed  2F  Cost Report Filed 
1G  Fraud  2G  Fraud 
1L  Litigation  2L  Litigation 
1O  Contractor Offset  2O  Contractor Offset/Paid in Full 
1P  Voluntary Payment  2P  Voluntary Payment 
1R  Repayment Agreement  2Q  Cross Servicing Collection/Paid in Full 
1T  Under $600  2R  Reconciliation Issue or RTA-Debt Re-entered to DCS 
1W  Write Off  2T  Treasury Offset / Paid in Full 
2W  Write Off 
   
 
DCS STATUS CODES - MSP
 
 
 
UN  Undeliverable Letter              XV  Dispute/Valid Defense 
UU  Initial Entry                 XB  Dispute/Bankruptcy 
UJ  Sent to PSC for Cross Servicing          XW  Dispute/Wrong debtor 
UR      Extended Repayment Plan            XD  Dispute/Additional documentation requested    
XA  Dispute/Amount of Debt             XS  Dispute/Statue of Limitations 
XP  Dispute/Paid in Full (excludes Treasury/PSC/PCA Collections)  XO  Dispute/Other 
XG  Dispute/Part of Global Settlement                                                     RF  Refund Issued by CO 
RT       Returned from Treasury                     UX  Dispute resolved, debt to stay at Treasury 
 
NOT TRANSFERRED TO DCC  RECALLED FROM DCC 
   
3A  Appeal  4A  Appeal 
3B  Bankruptcy  4B  Bankruptcy 
3C  Compromise  4C  Compromise 
3D  Deceased  4D  Deceased 
3E  Error  4E  Error 
3F  Full Valid Documented Defense  4F  Full Valid Documented Defense 
3L  Litigation/Negotiation  4L  Litigation/Negotiation 
3O  Contractor Offset/Paid in Full  4O  Contractor Offset/Paid in Full 
3P  Voluntary Payment  4P  Voluntary Payment 
3R  Repayment Agreement  4Q  Cross Servicing Collection/Paid in Full 
3W  Write Off - Closed  4R  Repayment Agreement 
4V  1870 Waiver of Recovery 
4W  Write Off-Closed 
4X  Closed Backlog Collections 
4Z  Valid Defense & Check/Paid in Full 
   
FUNCTION KEY COMMANDS 
 
F3  Exit - If you are in one of the DCS screens, this will exit you out of the current screen and take you back to the previous screen.  If you 
are at the search screen, it will exit you completely out of the system. 
 
F5  Collections - This will take you to the Collections screen. 
 
F6  Comments - This will take you to the comments screen. 
 
F7  Up - This will allow you to scroll backwards through the screens when there is more than one page to a debt or more than one debt. 
 
F8  Down - This will allow you to scroll forward through the screens when there is more than one page to a debt or more than one debt. 
 
F9  Update - This will allow you to make changes to debt information on the data entry screen. 
 
F9 Add - This confirms the addition of a comment or collection when in the comments or collection screens. 
 
F10  Resubmit  This function key duplicates certain fields from the original debt to a new Data Entry Screen so the debt may be 
resubmitted to Treasury.  This function is activated only for debts in a recalled or RTA status code.  Specific instructions are outlined in 
Section 2.1 of this User Guide. 
 
F11  Add - This will allow you to add a new blank entry screen to a debt. 
   
   
 
 
 
 
 
 
 
 
 
SECTION EIGHT: 
 
NON MSP GENERAL HELP 
INFORMATION
 
   
NON MSP GENERAL HELP INFORMATION
 
 
 
Treasury Requests/Debtor Disputes 
All debts are transmitted through the Program Support Center (PSC) and are forwarded to the Department of Treasury for cross servicing. 
All debts with a TIN are sent to the Treasury Offset Program. 
 
Based on the debt type entered into DCS, Treasury forwards debts to Private Collection Agencies (PCA) as part of their cross servicing 
procedures.  As the PCA works the debts and contacts the debtors, questions arise or additional information may be needed.   
 
Treasury sends a Debt Management Services Action Form to Central Office, which requests additional information and/or requires 
some type of action on the part of CMS.  To maintain control over these requests, Central Office will update the debt in DCS with a status 
code of XX or (XO if the dispute is systematically updated in DCS).  These status codes will be used as Suspense codes meaning 
Treasury Request  Needs Action.  Central Office then forwards these forms to the individual who certified the debt.  A report will be 
generated on debts with these status codes and used for follow up action.  Contractors shall update the DCS appropriately when the 
dispute is resolved.  (Status Code UX shall be used when the dispute has been resolved and the debt should remain at Treasury for 
collection.) 
 
General Information 
The debt will reflect a DCS status code of UU or UN when the debt is initially entered.  If a debt has been transmitted to Treasury the 
status code will be UJ (Debt sent for cross servicing) or UX (Dispute resolved, debt to remain at Treasury).  The Contractor may make 
any necessary changes to the Data Entry Screen as long as the status code is UU, UN, UJ or UX and the transmit date field is blank.  If an 
error is discovered in one of these fields after the status code is UJ or UX and the transmit date field is filled, the Contractor will need to 
recall the debt with the incorrect information and re-enter a new debt with the corrected information.  If the principal or interest referred 
amounts need to be adjusted downward, make the necessary changes on the collection screen.  If the principal or interest referred amounts 
need to be adjusted upward, these debts shall be recalled and re-entered with the correct information. 
 
If a change to a debt is a result of a partial or full payment, this must be documented by the contractor on the collection screen.  Do not 
change the principal and interest amounts on the data entry screen.  These shall stay at their original amounts so that Central Office can 
track amounts referred to Treasury.  If the change is because of a valid documented defense, bankruptcy, appeal, etc., the contractor shall 
also make the appropriate changes to the DCS as part of the required activity to recall the debt.   
 
 
   
Note:  Contractors shall be aware of the current status code of a debt on the DCS before entering collections, adjustments, etc.  The status 
code is important in identifying exactly where a debt is in the process of referral and/or collection.  Knowing the status of a debt is critical 
in making a determination regarding what the next step will be. 
 
Debts are transmitted weekly to PSC by Central Office. 
 
   
Explanation of Debt Types 
 
PTA  is used for intermediary Part A debts where cross servicing will include referral to a Private Collection Agency (PCA) for further 
collection activity and the debt will continue to be referred to TOP. 
If a debtor is no longer participating in Medicare, the contractor should use this status code.  This code should also be used for a provider 
who is still participating in Medicare, but the contractor does not believe that future internal offsets/withholding will be sufficient to 
collect the debt in full within three years of the date that the debt became delinquent. 
 
PTB  is used for carrier Part B debts where cross servicing will include referral to a PCA for further collection activity and the debt will 
continue to be referred to TOP. 
If a debtor is no longer participating in Medicare, the contractor should use this status code.  This code should also be used for a 
physician/supplier who is still participating in Medicare, but the contractor does not believe that future internal offsets/withholding will be 
sufficient to collect the debt in full within three years of the date that the debt became delinquent. 
 
TPA  is used for intermediary Part A debts where cross servicing will not include referral to a PCA though they will continue to be 
referred to TOP. 
If the debtor is currently participating in Medicare, is currently in offset/withhold status and the contractor believes the debt can be 
collected through internal offset within three years of the date that the debt became delinquent, the contractor should use this code. 
 
TPB  is used for carrier Part B debts where cross servicing will not include referral to a PCA though they will continue to be referred to 
TOP. 
If the debtor is currently participating in Medicare, is currently in offset/withhold status and the contractor believes the debt can be 
collected through internal offset within three years of the date that the debt became delinquent, the contractor should use this code. 
 
CLA - is used for intermediary Claims A/R debts where cross servicing will include referral to a Private Collection Agency (PCA) for 
further collection activity and the debt will continue to be referred to TOP. 
If a debtor is no longer participating in Medicare, the contractor should use this status code.  This code should also be used for a provider 
who is still participating in Medicare, but the contractor does not believe that future internal offsets/withholding will be sufficient to 
collect the debt in full within three years of the date that the debt became delinquent. 
 
 
HAT  is used for intermediary Part A debts on HIGLAS where cross servicing will include referral to a Private Collection Agency 
(PCA) for further collection activity and the debt will continue to be referred to TOP. 
If a debtor is no longer participating in Medicare, the contractor should use this status code.  This code should also be used for a provider 
   
who is still participating in Medicare, but the contractor does not believe that future internal offsets/withholding will be sufficient to 
collect the debt in full within three years of the date that the debt became delinquent. 
 
HBT  is used for carrier Part B debts on HIGLAS where cross servicing will include referral to a PCA for further collection activity and 
the debt will continue to be referred to TOP. 
If a debtor is no longer participating in Medicare, the contractor should use this status code.  This code should also be used for a 
physician/supplier who is still participating in Medicare, but the contractor does not believe that future internal offsets/withholding will be 
sufficient to collect the debt in full within three years of the date that the debt became delinquent. 
 
HPA  is used for intermediary Part A debts on HIGLAS where cross servicing will not include referral to a PCA though they will 
continue to be referred to TOP. 
If the debtor is currently participating in Medicare, is currently in offset/withhold status and the contractor believes the debt can be 
collected through internal offset within three years of the date that the debt became delinquent, the contractor should use this code. 
 
HPB  is used for carrier Part B debts on HIGLAS where cross servicing will not include referral to a PCA though they will continue to 
be referred to TOP. 
If the debtor is currently participating in Medicare, is currently in offset/withhold status and the contractor believes the debt can be 
collected through internal offset within three years of the date that the debt became delinquent, the contractor should use this code. 
 
LTC  is used for Long Term Care debts on the Civil Monetary Penalties Tracking System where cross servicing will include referral to a 
PCA for further collection activity and the debt will continue to be referred to TOP. 
   
The following debt types are no longer used, but are included here for reference purposes only. 
 
PAO - is used for intermediary other Part A debts where cross servicing will include referral to a Private Collection Agency (PCA) for 
further collection activity and the debt will continue to be referred to TOP. 
If a debtor is no longer participating in Medicare, the contractor should use this status code.  This code should also be used for a provider 
who is still participating in Medicare, but the contractor does not believe that future internal offsets/withholding will be sufficient to collect 
the debt in full within three years of the date that the debt became delinquent. 
 
PBO - is used for carrier other Part B debts where cross servicing will include referral to a PCA for further collection activity and the 
debt will continue to be referred to TOP. 
If a debtor is no longer participating in Medicare, the contractor should use this status code.  This code should also be used for a 
physician/supplier who is still participating in Medicare, but the contractor does not believe that future internal offsets/withholding will be 
sufficient to collect the debt in full within three years of the date that the debt became delinquent. 
 
TAO - is used for intermediary other Part A debts where cross servicing will not include referral to a PCA though they will continue to 
be referred to TOP. 
If the debtor is currently participating in Medicare, is currently in offset/withhold status and the contractor believes the debt can be 
collected through internal offset within three years of the date that the debt became delinquent, the contractor should use this code. 
 
TBO - is used for carrier other Part B debts where cross servicing will not include referral to a PCA though they will continue to be 
referred to TOP. 
If the debtor is currently participating in Medicare, is currently in offset/withhold status and the contractor believes the debt can be 
collected through internal offset within three years of the date that the debt became delinquent, the contractor should use this code. 
   
   
 
 
 
 
 
 
 
 
 
SECTION NINE: 
 
RECALLS / ADJUSTMENTS 
   
RECALLS / ADJUSTMENTS 
 
Recall/Adjustment Process  
1. The Contractor will update DCS with the appropriate recall codes & information. 
2. Central Office will send a weekly report to PSC of all recalls, collections and adjustments. 
3. PSC will then recall the debt. 
 
RULES FOR RECALLS OR ADJUSTMENTS 
Example 1: If a debt was incorrectly transmitted at $1000 but should have been $100, do an adjustment for this debt. 
Example 2: If a debt was incorrectly transmitted at $100 but should have been $1000, do a recall for this debt. (This is because Treasury 
will not allow the upward adjustment of debts.)
   
 
 
 
 
 
 
 
 
 
 
 
 
SECTION TEN: 
 
MSP GENERAL HELP 
INFORMATION 
   
MSP General Information 
The debt will reflect a DCS status code of UU or UN when the debt is initially entered. If a debt has been 
transmitted to Treasury the status code will be UJ (Debt sent for cross servicing) or UX (Dispute resolved, 
debt to remain at Treasury).  The Contractor may make any necessary changes to the Data Entry Screen as 
long as the status code is UU, UN, or UJ and the transmit date field is blank.  If an error is discovered in 
one of these fields after the status code is UJ or UX and the transmit date field is filled, the Contractor 
will need to recall the debt with the incorrect information and re-enter a new debt with the corrected 
information.  If the principal or interest referred amounts need to be adjusted downward, make the 
necessary changes on the collection screen.  If the principal or interest referred amounts need to be 
adjusted upward, these debts shall be recalled and re-entered with the correct information. 
 
If a change to a debt is a result of a partial or full payment, this shall be documented by the contractor on 
the collection screen. Do not change the principal and interest amounts on the data entry screen.  These 
must stay at their original amounts so that Central Office can track amounts referred to Treasury.  If the 
change is because of a valid documented defense, bankruptcy, appeal, etc., the contractor shall also make 
the appropriate changes to the DCS as part of the required activity to recall the debt. 
 
Note: Contractors shall be aware of the current status code of a debt on the DCS before entering 
collections, adjustments, etc. The status code is important in identifying exactly where a debt is in the 
process of referral and/or collection.  Knowing the status of a debt is critical in making a determination 
regarding what the next step will be. 
 
Debts are transmitted weekly to PSC by Central Office. Debts to be transmitted are set to a UJ status on 
the data entry screen on Monday morning of each week. These debts are then transmitted to the PSC on 
Friday morning of the same week. 
 
Contractors must use the appropriate interest rate as of the date of the original demand letter.  This interest 
rate will not change for the life of the debt. 
 
If the intent to refer letter was returned undeliverable and the contractor has been unsuccessful in 
identifying a more appropriate address, the contractor should immediately enter the debt into DCS with a 
status code of UN.
   
MSP STATUS CODES 
Upon initial DCS entry, Contractors will, with one exception use the status code UU, which means initial 
entry.  If any subsequent activity occurs on the debt, the status code must be updated.  Where the intent 
letter is returned undeliverable, the contractor will proceed with the normal MSP research to obtain a 
better address in order to resend the intent letter.  If no additional information is found or the intent letter 
is returned a second time after being issued with a new mailing address, enter the debt into the DCS with 
a status code of UN (undeliverable).  Both UU and UN allow the debt to be transmitted to Treasury. 
 
Status Codes Defined: 
There are two lists of DCS status codes: codes beginning with 3 are used for debts entered into DCS but 
not transmitted due to information received prior to Central Office transmission of the debt (debts can not 
be deleted from DCS) and codes beginning with 4 are for debts recalled from Treasury due to subsequent 
activity or information. In most cases Contractors will use the recall codes that begin with 4. 
 
4E - Error: Duplicate, entered incorrectly or by mistake 
 
4F - Full valid documented defense 
 
4L - Litigation/Negotiation: Debt which was referred is in litigation/negotiations with CMS 
  
4O - Contractor offset/Paid in full: This can mean two things: contractor offset has resulted in a payment 
in full or payment in full by check to the contractor from the debtor has occurred. 
 
4Q - Cross Servicing Collection (PSC) / Paid in Full: Contractors will use this code when PSC has 
received full recovery on a debt.  
 
4P - Voluntary Payment: This is a voluntary payment from the debtor 
 
4W - Write Off: CMS has decided to write off the debt as write off closed, no longer pursing debtor.  
 
4X  Closed Backlog Collections  This is a CMS Central Office status code used to indicate the debt 
shall be closed due to Treasury collections. 
 
4Z - Valid Defense & Check/Paid in Full: The contractor receives both a valid documented defense and a 
check that covers full payment of the debt. 
   
   
 
 
 
 
 
 
 
SECTION ELEVEN: 
 
HIGLAS GENERAL  
HELP INFORMATION 
   
HIGLAS LOAD TO DCS 
The process for transmitting data from HIGLAS to the Debt Collection System (DCS) is as follows: 
 
1) Each contractor sends a file to Central Office through their data center via the Network Data Mover 
(NDM). 
 
2) Each business day CMS checks to see if files were received from one of the HIGLAS contractors.  If a 
file is received it is verified for proper format.  A duplicate check is run for the file to be loaded by 
checking the first and last record in the file.  If a duplicate exists the file is rejected and not loaded to 
DCS.  A duplicate check is also run for each individual new debt in the file.  If the first 20 characters of 
the HIGLAS A/R Reference Number (in DCS this is the RO/CONTR NAME field) of an individual debt 
matches one already in DCS or in the file to be loaded, the individual debt is rejected and not loaded to 
DCS. 
 
3) A job is run to process the file and update DCS. 
 
4) An NDM file is sent back to the contractors data center.  This file includes all debts accepted into 
DCS.  It also includes all debts rejected and the reason for rejection.  Debts rejected need to be verified by 
the contractor for validity and to ensure that they are not duplicates.  If the debt is not a duplicate it will 
need to be manually entered into DCS.  It is the contractors responsibility to check that the file is 
returned from CMS. 
 
DEBTS SYSTEMATICALLY LOADED TO DCS  
Contractors need to verify the following:  
 Manually enter ACCR THRU DT if it does not load with the debt (this is the last debit memo applied to 
the debt). 
 Manually enter PATIENT NAME for MSP if it does not load with the debt. 
 If the debt is under $100 and has no TIN, update the status code (1E for Non MSP or 3E for MSP) so 
that the debt does not transmit. 
 If the debt is NON MSP and the principal is under $25, update the status code so that the debt does not 
transmit.  
 If the debt is MSP and the principal plus interest is under $25, update the status code so that the debt 
does not transmit. 
 All HIGLAS debts load as SA CODE COR.  If it is an individual debtor, change the SA CODE to IND 
and update all appropriate fields based on system edits. 
 If the debt is NON MSP Part A and the debt should only go to the Treasury Offset Program (TOP), 
update the debt type from HAT to HPA. 
 If the debt is NON MSP Part B and the debt should only go to TOP, update the debt type from HBT to 
HPB. 
Generally, recalls and collections are posted systematically to DCS from HIGLAS.  If they are not, then 
they must be entered manually.  An example of where this may occur is if there is only one debt in 
HIGLAS but two duplicate debts in DCS.  Under these circumstances, one of the duplicate debts must be 
manually recalled from DCS in order to prevent over collection from Treasury. 
MANUAL ENTRY OF HIGLAS DEBT TO DCS 
 Contractors should follow the same process as manual entry for non HIGLAS debt (see Section Two: 
Entering Debts Into DCS). 
 Be sure to use HIGLAS debt types (HAT, HBT, HPA, HPB, HMS). 
 Use the enter key to go through fields, the debt type will prompt for the required fields. 
   
 
   
Exhibit 5 
(Rev. 315, Issued: 05-17-19, Effective: 06-18- 19, Implementation: 06-18-19) 
 
The term Medicare beneficiary identifier (Mbi) is a general term describing a beneficiary's Medicare 
identification number. For purposes of this manual, Medicare beneficiary identifier references both the 
Health Insurance Claim Number (HICN) and the Medicare Beneficiary Identifier (MBI) during the new 
Medicare card transition period and after for certain business areas that will continue to use the HICN as 
part of their processes. 
 
Treasury Cross-Servicing Dispute Resolution 
 
DMS Request Date:                        Total Number of Pages:  _____ 
SBU 
FedDebt Case ID.:                                    Principal Amt: $ 
Creditor Agency Debt ID:                                                   PCA Code: 
Debtor: 
 
Program:                                                                           For CMS Use Only: 
Creditor Agency Contact Name:                                      Medicare beneficiary identifier: 
Creditor Agency Contact Phone:                                     Beneficiary Name: 
Creditor Agency Facsimile: 
 
Dispute Number: 
Dispute request reason:  Miscellaneous Dispute 
Additional comments: 
 
If you have any questions regarding the dispute, please call Valencia Thompson at 205-912-6327. 
Creditor Agency must return response to Bosch Stanley via facsimile 205-912-6374 with 60 days of 
request date. 
 
Creditor Agency (CA) Dispute Resolution Section: 
Please indicate a response by checking one of the following reasons:  Please attach supporting 
documentation. 
 
DAIC    ___  CA agrees.  Debt amount is incorrect.  Requires financial adjustment. 
DACC   ___  CA disagrees.  Debt amount is correct.  Continue collection efforts. 
 
MDAA  ___  CA agrees.  Miscellaneous dispute, stop collection activity. 
MDFF    ___  CA agrees.  Miscellaneous dispute.  Requires financial adjustment, continue 
collection efforts. 
MDDD   ___  CA disagrees.  Miscellaneous dispute.  Continue collection efforts. 
 
VDWD   ___  CA agrees.  Wrong debtor, stop collection activity. 
VDRD    ___  CA disagrees.  This is not the wrong debtor, continue collection efforts. 
 
VDPP     ___  CA agrees.  Previously paid, stop collection activity. 
VDNP     ___  CA disagrees.  Not previously paid, continue collection efforts. 
 
   
VDPR     ___  CA agrees.  Previously resolved, stop collection activity. 
VDNR     ___  CA disagrees.  Not previously resolved, continue collection efforts. 
 
Financial Adjustment Information (To Be Completed By Creditor Agency): 
Principal Amount              $_______________ 
Interest Amount                 $_______________ 
Penalty Amount                 $_______________ 
Admin Cost Amount         $_______________ 
Total Balance Owed          $_______________ 
 
Please check one of the following: 
 Adjustment reflects the total balance currently owed by the debtor, and has been made by our 
Agency. 
 Adjustment has not been made in FedDebt by the Agency, and should be made by DMS. 
Creditor Agency Response Date:  __________  Creditor Agency Response Contact:  
__________________ 
Additional Comments By Creditor Agency:  
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________ 
 
80  Recovery of Non MSP Overpayments from the Beneficiary 
(Rev. 235, Issued: 05-14-14, Effective: 07-07-14, Implementation: 07-07-14) 
 
80.1  Reserved for Future Use 
(Rev. 235, Issued: 05-14-14, Effective: 07-07-14, Implementation: 07-07-14) 
 
80.2  Immediate Recoupment Requirements for NON-935 Overpayment Recovery 
from the Physicians and Other Suppliers 
(Rev. 205; Issued: 02-09-12, Effective: 07-01-12, Implementation: 07-02-12) 
 
Medicare contractors shall offer providers the opportunity to request immediate recoupment. 
 
Providers can elect this process to avoid making payment by check and/or avoid the assessment of interest 
if the immediate recoupment pays the debt in full before day 31.  If providers request an immediate 
recoupment they must understand that it is considered a voluntary repayment. 
 
A. Medicare contractors shall offer two options. 
 
  A one-time request on the specific overpayment and all future overpayments. Or 
 
  A request on the specific overpayment addressed in demand letter. 
 
B.  Medicare contractors shall incorporate the following minimum information related to immediate 
recoupment information on its website:  
 
  This option is for demanded debts only. 
   
 
  The request must be in writing, and may be submitted using regular mail, facsimile, 
or email. 
 
  The request must include the following: 
 
1.  Provider Name and contact number 
 
2.  Providers Medicare Number and/or the National Provider Identification (NPI) 
 
3.  Providers or the CFOs signature 
 
4.  Letter number 
 
5.  Which option the provider is requesting 
 
C.  Medicare contractors shall post to the website the language in the demand letter related to the 
immediate recoupment option. 
 
D.  Medicare contractors shall consider all written requests for an immediate recoupment as a 
payment arrangement that constitutes a voluntary payment. 
 
E.  Medicare contractors shall inform providers that going through the immediate recoupment process 
is considered voluntary payments. Refer to chapter 3 section 200 for overpayments subject to 935. 
 
F.  Medicare contractors demand letter and website shall explain, when there is a remaining 
principal balance after the initial immediate recoupment  you  shall continue recoupment and other 
collection activities. 
 
G. Medicare contractors website shall include instructions for providers currently in an immediate 
(offset) arrangement to submit a new request to continue the immediate recoupment process. 
 
H. Medicare contractors shall allow previous immediate offset agreements to continue when 
requested awaiting the submission of the new request. 
 
I.  Medicare contractors shall update each AR associated to the request within 10 business days 
from the mailroom stamped receipt date. Refer to Chapter 4 90.2. 
 
J.   As applicable, Medicare contractors shall use the new functionality in HIGLAS which allows user 
to set the flag to immediate recoupment for multiple ARs instead of one AR. 
 
K. Medicare contractors shall update individual or multiple ARs in the shared systems when a 
provider requests the immediate recoupment option. 
 
L.  Medicare contractors shall accept a written request to discontinue participation in the immediate 
recoupment process at anytime. 
 
M. Medicare contractor shall discontinue the recoupment process per providers written request. 
   
 
  You shall stop this process within 10 business days from the mailroom stamped receipt 
date. 
 
80.3  Overpayment Recovery from Suppliers of Durable Medical Equipment, 
Prosthetics, Orthotics, and Supplies (DMEPOS) 
(Rev. 208, Issued: 04-20-12, Effective: 05-20-12, Implementation: 05-20-12) 
 
Certain DMEPOS suppliers are required to have surety bonds.  Medicare contractors shall follow 
instructions in Pub.100-08, chapter 15, 15.21.7.1, related to collecting claims against surety bonds, if 
applicable, in addition to normal debt collection activities. 
 
90  Physician/Supplier Overpayment Demand Letters - Carrier 
(Rev. 29, 01-02-04) 
 
When a carrier determines an overpayment for a Part B service the carrier issues a demand letter to the 
physician, supplier or beneficiary. 
 
90.1  Part B Overpayment Demand Letters to Beneficiaries 
(Rev. 29, 01-02-04) 
 
See chapter 3, 100 and110ff 
 
90.2 - Part B NON-935 Overpayment Demand Letters to Physicians/Suppliers 
(Rev. 205; Issued: 02-09-12, Effective: 07-01-12, Implementation: 07-02-12) 
 
When a physician/supplier is liable for an overpayment of $10 or more, the carrier shall attempt recovery 
through the following procedures. It shall recover an overpayment made to a physician/supplier as an 
individual or to a professional corporation (following the procedures described below) only from the party 
to whom the overpayment was made. It shall make no attempt to recover an overpayment made to an 
individual physician/supplier from a professional corporation with which they may be associated as an 
employee or stockholder. Conversely, it shall not attempt recovery from an individual physician/supplier 
where the overpayment was made to a professional corporation with which they are, or were, associated. 
 
A.  Overpayment Amount Is At Least $10 
 
When the carrier determines an overpayment it shall issue a demand letter that requests the 
physician/supplier to pay the debt in full within 30 days, or the amount owed and any assessed interest 
will be collected by offset. 
 
B.  Overpayment Demand Letter 
 
The purpose of an overpayment demand letter is to notify the physician/supplier of the existence and 
amount of an overpayment, and to request repayment. The demand letter shall be written in such a manner 
as to fully explain the nature of the overpayment and the amount determined. Each demand letter shall be: 
 
  Sent to the physician/supplier by first class mail; and  
   
 
  Determined within forty-five (45) calendar days of the discovery of the overpayment and mailed 
within seven (7) calendar days of the creation of the accounts receivable and generation of the 
demand letter.  Longer amounts of time in between discovery and determination must be 
supported by additional documentation. In the case of the second request, the letter must be mailed 
within 45 days but no earlier than 30 days after the date of the first demand letter. 
 
A.  Content of Demand Letters 
 
  Sent to the physician/supplier. 
 
  For a first request, mail within seven (7) calendar days of determination of the overpayment. 
 
  Each demand letter is an explanation of the nature of the overpayment, how it was established, in 
addition, the amount determined. 
 
  The Medicare contractor shall include the model immediate recoupment process language within 
the content of the Part B non-935 overpayment demand letters to physicians and other suppliers 
for the Part B Non-MSP overpayment demand letters. 
 
  The demand letter shall offer the physician and other supplier the opportunity to request an 
immediate recoupment. Refer to section 80.2.  
 
  The demand letter shall offer the physician/supplier the opportunity to apply for an extended 
repayment plan if immediate repayment of the debt will cause financial hardship. An extended 
repayment plan must be approved using the criteria set forth in Chapter 4, 50. Any approved 
repayment plan would run from the date of the FIRST REQUEST overpayment demand letter. 
 
  The demand letter constitutes a request to the physician/supplier to refund the overpaid amount. 
 
  The demand letter informs physicians/suppliers that the carrier will recover the overpayment 
through the recoupment of current payments due or from future claims submitted unless the carrier 
receives repayment or the physician/supplier provides a statement within 15 days of the date of the 
letter of why this action should not take place. The demand letter shall also inform 
physicians/suppliers that this recoupment will begin on the 41st day from the date of the letter. 
 
  The demand letter informs physicians/suppliers that interest will accrue on the overpayment if 
payment in full is not received by the 31st day from the date of the letter. The demand letter shall 
also inform physicians/suppliers of the applicable interest rate that will accrue if payment in full is 
not received by the 31st day from the date of the letter. 
 
  The demand letter informs physicians/suppliers that they have the right to request a review or 
hearing, as appropriate, if they believe the determination is not correct. (See Medicare Claims 
Processing, Chapter 29, Appeals of Claims Decisions.) A review is available for disputed 
overpayments of any amount, and a carrier fair hearing is available once the review has been 
conducted if the amount in dispute is at least $100. 
 
   
  Bankrupt providers. All correspondence, including demand letters, addressed to a bankrupt 
provider must be submitted to the Regional Office who has the lead in the bankruptcy proceedings 
for approval prior to release.  
 
The Medicare contractor shall refer to Exhibits I through VI for the standard formats for each demand and 
voluntary refund letters to be used in various overpayment situations. 
 
B.  Recovery by Recoupment 
 
If, within 15 days of the date of the initial demand letter, the physician/supplier submits a statement 
(rebuttal) and/or evidence as to why recoupment should not be effectuated, the carrier shall promptly 
evaluate the material. This is different from a request for appeal (see subparagraph F) in that you are 
deciding only whether there is a basis to not effectuate recoupment.  Any correspondence dealing with the 
basis of the overpayment does not affect your decision concerning recoupment.  If the carrier determines 
that recoupment shall begin, it shall notify the physician/supplier in writing of its determination. It shall 
give specific reasons for its decision. 
 
If no such statement (rebuttal) is received or an extended repayment schedule has not been requested, the 
contractor shall initiate recovery by recoupment 40 days after the date of the initial demand letter (day 
41), unless the physician/supplier refunds the overpaid amount in full. The contractor shall apply any 
amounts payable to the physician/supplier by reason of assignment on behalf of any beneficiary to recoup 
the overpayment. It shall apply any amount recouped first to the accrued interest and then to the principal. 
 
If it is not possible to make an immediate recoupment, the contractor shall annotate the physician's 
account so that the overpayment can be recouped from future Medicare benefits payable. When 
recoupment is used, the contractor sends the regular Medicare Summary Notice (MSN) to the beneficiary. 
However, it includes with the physician's/supplier's MSN an explanation that the benefits (or a specified 
amount of the benefit) are being applied to the overpayment and that the physician may not request the 
beneficiary to pay the amount applied to the overpayment. 
 
The contractor shall discontinue recoupment only when the overpayment, plus all accrued interest, is 
recovered, it is determined on appeal that the physician/supplier was not overpaid or an acceptable 
extended repayment plan request is received (See Chapter 4, 50). After a favorable appeal decision, the 
contractor shall refund any excess amount withheld through recoupment. Also, it shall refund any interest 
that was collected. 
 
C.  Follow-up Request 
 
If the initial demand letter for an overpayment of $10 or more brings no response within 30 days, the 
carrier shall send a follow-up letter (enclose a copy of the initial letter to the physician/supplier) within 45 
days. If any portion of the overpayment has been recovered, it shall include a statement of that amount. 
 
D.  Physician Appeals Within 30 Days of Notification of the Intent to Recoup  
 
If, within 30 days after the date of the initial demand letter informing the physician/supplier of the 
intention to recoup, the physician/supplier submits a request for a review or hearing or otherwise protests 
the recovery, the carrier shall make every effort to conclude the appeal procedure expediently. However, 
   
it shall begin recoupment 40 days after the initial demand, if payment has not been made, regardless of 
the status of any appeal request. (See subparagraph D.) 
 
E.  Demand Letter to Physician Returned as Undeliverable  
 
Where a refund letter is returned as undeliverable, the carrier shall attempt to locate the physician/supplier 
using such sources as telephone directories, city directories, postmasters, driver's license records, 
automobile title records, State and local medical societies, the American Medical Association or its own 
Medicare beneficiary records. (See Chapter 4, 80.) 
 
F.   Direct Contact with Physician  
 
If attempted recoupment of the overpayment is unsuccessful for 30 days, the carrier shall contact the 
physician/supplier by telephone. (See Chapter 4, 80.) Third Demand Letter  
If the overpayment has not been recouped and the debt is eligible for referral to the Department of 
Treasury an intent to refer letter shall be sent once the overpayment becomes 90 days delinquent. (See CR 
1683 or Chapter 4, 70)  
 
EXHIBIT 1- SAMPLE DEMAND LETTERS 
 
Exhibits I through VI include: the initial demand letter with optional opening paragraphs and the follow-
up letter. It also includes a limited set of optional paragraphs to be used in specific situations, e.g., 
medical necessity denials, and installment payments. The carrier shall follow these formats, with the 
optional paragraphs, when preparing demand letters. 
 
This section also includes standard letters to be used when the physician/supplier voluntarily submits a 
check to the carrier. These letters are optional if the carrier uses the remittance advice to inform 
physicians/suppliers of receipt of their refund checks. 
 
EXHIBIT 1 - INITIAL Non-935 DEMAND LETTER TO PHYSICIANS/SUPPLIERS  
 
Dr. Joe Smith  
Anywhere St  
Anytown, State ZIP Code  
Date  
Dear Dr. Smith: 
 
Contractors should use the appropriate paragraph:  
 
"This is to let you know that you have received Medicare payment in error which has resulted in an 
overpayment to you of $______ for services dated _____ . The following explains how this happened."  
 
or  
 
"We appreciate your recent inquiry regarding Medicare payment that you believe was paid to you in error. 
We thank you for bringing this overpayment to our attention."  
 
or  
   
 
"We have received your check in the amount of $_____. We thank you for bringing this overpayment to 
our attention. While we appreciate you submitting payment to us, our review found that the overpaid 
amount was $________. Please remit the additional $______."  
 
How this overpayment was determined: NOTE: This paragraph should include a clear explanation of 
how the overpayment arose, the amount of the overpayment, how the overpayment was calculated, and 
why the original payment was not correct.  
 
Why you are responsible:  
 
NOTE: For medical necessity determinations, the carrier shall insert appropriate paragraphs. It shall be 
sure to give an 1879 determination for each claim as well as the regulatory and statutory references for the 
1879 determination. 
 
You are responsible for being aware of correct claim filing procedures and must use care when billing and 
accepting payment. In this situation you billed and/or received payment for services you should have known 
you were not entitled to. Therefore, you are not without fault and are responsible for repaying the 
overpayment amount. If you dispute this determination please follow the appropriate appeals process listed 
below. 
 
(Applicable Authorities: Section 1870(b) of the Social Security Act;  405.350 - 405.359 of Title 42,  
404.506 - 404.509, 404.510a and 404.512 of Title 20 of the United States Code of Federal Regulations.) 
 
What you should do:  
 
Please return the overpaid amount to us by __________(date) and no interest charge will be assessed. 
Make the check payable to Medicare Part B and send it with a copy of this letter to:  
 
 
Carrier Name  
Address  
City, State and Postal ZIP Code 
 
Immediate Recoupment request: 
 
You may elect to have your overpayment(s) repaid through the immediate recoupment process and 
avoid paying by check or waiting for the standard recoupment that begins on day 41 from date of the 
initial demand letter.  A request for immediate recoupment must be received in writing no later than 16 
days from the date of initial demand letter.  You must specify whether you are submitting: 
 
1. A one-time request for the current overpayment and all future overpayments, or  
 
2. A request for the current overpayment addressed in this demand letter only.  
 
This process is voluntary and for your convenience. 
 
   
Visit our website at www.______.___ or call (USA MEDICARE CONTRACTOR Name) at (XXX) 
XXX-XXXX for additional information and instructions for Immediate Recoupment. 
 
You may fax your request to XXX-XXX-XXXX. 
 
If you do not refund in 30 days:  
 
In accordance with 42 CFR 405.378 simple interest at the rate of __ will be charged on the unpaid balance 
of the overpayment beginning on the 31st day. Interest is calculated in 30-day periods and is assessed for 
each full 30-day period that payment is not made on time. Thus, if payment is received 31 days from the 
date of final determination, one 30-day period of interest will be charged. Each payment will be applied 
first to accrued interest and then to principal. After each payment interest will continue to accrue on the 
remaining principal balance, at the rate of __ . 
 
We request that you refund this amount in full. If you are unable to make refund of the entire amount at 
this time, advise this office immediately so that we may determine if you are eligible for a repayment 
plan. (See enclosure for details.) Any repayment plan (where one is approved) would run from the date of 
this letter. 
 
If payment in full is not received by, (specify a date 40 days from the date of the notification), payments 
to you will be withheld until payment in full is received, an acceptable extended repayment request is 
received, or a valid and timely appeal is received. If you have reason to believe that the withhold should 
not occur on _____ you must notify <contractor> before ___. We will review your documentation. 
However, this is not an appeal of the overpayment determination, and it will not delay recoupment. 
 
If you wish to appeal this decision:  
 
If you disagree with this overpayment decision, you may file an appeal. An appeal is a review performed 
by people independent of those who have reviewed your claim so far. The first level of appeal is called a 
redetermination. You must file your request for a redetermination within 120 days of the date you receive 
this letter. Unless you show us otherwise, we assume you received this letter 5 days after the date of this 
letter. Please send your request for redetermination to:  
 
Address of Redetermination Department  
 
If you have filed a bankruptcy petition:  
 
If you have filed a bankruptcy petition or are involved in a bankruptcy proceeding, Medicare financial 
obligations will be resolved in accordance with the applicable bankruptcy process. Accordingly, we 
request that you immediately notify us about this bankruptcy so that we may coordinate with both the 
Centers for Medicare & Medicaid Services and the Department of Justice so as to assure that we handle 
your situation properly. If possible, when notifying us about the bankruptcy please include the name the 
bankruptcy is filed under and the district where the bankruptcy is filed. 
 
Should you have any questions please do not hesitate to contact _______ at __________. 
 
If we can assist you further in the resolution of this matter, we shall be glad to do so. We expect to hear 
from you shortly.  
   
 
Sincerely,  
 
(name and title)  
 
Enclosure 
EXHIBIT 2 - FOLLOW UP DEMAND LETTER TO PHYSICIANS/SUPPLIERS 
 
Dr. Joe Smith 
Anywhere St 
Anytown, State ZIP Code 
 
Dear (Name of Physician/Supplier): 
 
We previously sent you a letter requesting that you refund an overpayment made to you.  Enclosed you 
will find a copy of the initial letter sent to you which explains how the overpayment was determined and 
why you are responsible.  As of today, we have not heard from you, either to request an overpayment 
appeal or to make payment.  The overpaid amount is ______ (principal plus interest) for your claim that 
paid on _______.  $_______ has been recovered. 
 
As stated in our initial letter, offset of the overpayment amount, plus interest, will be made against any 
pending and future assigned Medicare claims.   
 
If you have already sent payment, or our letters have crossed in the mail, we thank you and ask that you 
please disregard this letter. 
 
If you have any questions regarding this matter, please contact us at ________.  
 
Sincerely, 
 
(Name of individual) 
 
Enclosure 
 
 
EXHIBIT 3- INTENT TO REFER LETTER 
 
When an eligible physician/supplier overpayment remains delinquent for 90 or more days, the carrier 
shall send an intent to refer letter.  (See CR 1683 and Chapter 4, 70 for more information.) 
 
 
EXHIBIT 4 - OPTIONAL OVERPAYMENT CUSTOMIZING PARAGRAPHS 
 
A1 - The carrier shall include this language in all overpayment letters that involve 1879 medical 
necessity denials. It shall place it as the first paragraph under the heading "Why you are responsible." 
 
Based on available information, we have determined that you had or should have had knowledge that the 
service(s) were not medically necessary and reasonable because (i.e., pertinent information was available 
   
from the law and regulations [provide a cite, if possible], from [cite name/issue number of your 
newsletter], from a meeting you attended on [date], and from your peers in the medical community). 
 
(Applicable Authorities:  Section 1879 of the Social Security Act; 411.404 and 411.406 of Title 42 of 
the United States Code of Federal Regulations.) 
 
NOTE: The carrier shall be sure to include the applicable authorities at the end of the 1879 language as 
it appears here. 
 
A2 - The carrier shall include this language in all overpayment letters that involve 1879 medical 
necessity denials where payment was collected from the beneficiary. 
 
This overpayment is for services that are not medically reasonable and necessary per Medicare standards.  
If you collected the amount of the overpayment from the beneficiary, the beneficiary has the right to 
request payment from Medicare.  Any such indemnification will be recovered from you. 
 
B1 - The carrier shall include the following paragraph in all overpayment letters that involve payment in 
excess of the allowed charge. 
 
The overpayment resulted from payment made to you in excess of the allowed charge for services. If you 
have collected a coinsurance and/or deductible from the beneficiary based on the incorrect amount, please 
be sure to refund the excess amount to the beneficiary. 
 
B2 - The carrier shall include one of the appropriate paragraphs below in all overpayment letters that 
involve duplicate payments. 
 
  The overpayment resulted from excess payments caused by multiple processing of the same 
charge. 
 
  The overpayment resulted from Medicare payment on an assigned claim for which the beneficiary 
also received payment on an itemized bill and turned his payment over to you.  Therefore, you are 
liable for $________ which represents that portion of the total amount paid in excess of the fee 
schedule amount. 
 
  You have mistakenly received duplicate primary payment from both Medicare and another entity 
(Specific payer).  (Specific payer) is the appropriate payer.  As such, you are liable for the portion 
of the Medicare payment in excess of the amount Medicare is obligated to pay as secondary payer. 
 
  This overpayment resulted from duplicate Medicare payments to you for services you provided to 
(named beneficiary). 
 
NOTE: The above paragraphs are not all-inclusive. 
 
 
EXHIBIT 5 - SAMPLE LETTER - CHECK INCLUDED FOR CORRECT AMOUNT 
 
Dear (Name of Physician/Supplier): 
 
   
We appreciate your recent inquiry regarding Medicare payment that you believe was paid to you in error.  
We thank you for bringing this overpayment to our attention, thereby protecting the integrity and 
resources of the Medicare program. 
 
A review of our records confirms that you have been overpaid. (This paragraph should include a clear 
explanation of how the overpayment arose, the amount of the overpayment, how the overpayment was 
calculated, and why the original payment was not correct.) 
 
We have received your check in the amount of $_______ and applied it to the overpayment.   
 
Thank you once again for bringing this matter to our attention. 
 
Sincerely, 
 
(Name of individual) 
 
 
EXHIBIT 6 - SAMPLE LETTER - CHECK INCLUDED BUT WRONG AMOUNT (TOO MUCH) 
 
Dear (Name of Physician/Supplier): 
 
We appreciate your recent inquiry regarding Medicare payment that you believe was paid in error. We 
thank you for bringing this overpayment to our attention. 
 
A review of our records confirms that you have been overpaid. (This paragraph should include a clear 
explanation of how the overpayment arose, the amount of the overpayment, how the overpayment was 
calculated, and why the original payment was not correct.) 
 
We have received your check for $_______.  You will notice that the amount of your check exceeds the 
overpayment amount.  We will send you a check shortly for the excess amount. 
 
Thank you once again for bringing this matter to our attention. 
 
Sincerely, 
 
(Name of individual) 
 
Enclosure 
 
90.3 - Notification to the Beneficiary When Recovery Is Sought from the Provider or 
Physician 
(Rev. 70, Issued:  05-27-05; Effective and Implementation dates: 06-27-05) 
 
When a claim adjustment creates an overpayment the beneficiary who received the services will normally 
receive a Medicare Summary Notice (MSN) notifying the beneficiary about the specifics of the 
adjustment and the beneficiarys appropriate appeal rights.  The MSN uses codes with accompanying 
descriptions to update the beneficiary.  Through a MSN code, the MSN can also be used to inform the 
   
beneficiary that the provider may be requested to repay the difference in the amount paid and the 
adjustment to Medicare. 
 
In situations where the claim adjustment creates an overpayment and a MSN is generated, a separate 
notice to the beneficiary is not required whenever recovery is sought from the provider. 
 
However, if a MSN is not generated a separate notice to the beneficiary is required whenever recovery is 
sought from the provider. Some reasons a MSN may not generate include, but are not limited to, if the 
claim has been purged from the system or if the overpayment is because of a mass adjustment.  In these 
situations a separate notice to the beneficiary is required whenever recovery is sought from the provider. 
(See Chapter 3, 100 & 110ff when recovering from the beneficiary.) 
 
The following instructions apply if a separate notice to the beneficiary is required. 
 
The contractor shall include in the notification to the beneficiary a copy of the letter sent to the provider 
unless the letter to the provider mentions more than one beneficiary or deals with overpayments which do 
not concern the particular being notified.  In such cases, a copy of the initial demand letter sent to the 
provider should not be attached to the beneficiary notice. 
 
Where overpayments to a provider have been determined by means of a sample study, the Contractor 
shall send a notice only to the beneficiaries identified in the overpayment notice sent to the provider as 
individuals on whose behalf the provider was overpaid a specified amount.  It shall not send the notice to 
the beneficiaries until it has been established that recovery action will be taken. 
 
In all cases the notice to the beneficiary should contain the following: 
 
  The name and address of the provider and dates of service for which the overpayment was 
made. 
 
  A clear explanation of why the payment was incorrect. 
 
  A statement that the provider has been requested to refund the overpayment and, if the 
provider is liable for medically unnecessary services or (FIs only) custodial care, the 
following additional information, as applicable: 
 
  If the error is discovered subsequent to the third calendar year after the year the payment 
was approved, and the other conditions described in Chapter 3, 80 apply, the Contractor 
shall advise the beneficiary that the provider is prohibited, by law, from requesting 
payment for the services; or 
 
  If the beneficiary is determined to be without fault, the Contractor shall state that if the 
beneficiary pays for the services, the beneficiary may request that the Contractor 
indemnify the beneficiary for such payment.  Any indemnification paid to the beneficiary 
will be recovered from the provider. (See Medicare Claims Processing Manual, Chapter 
30, Financial Liability Protections.) 
 
  In all other cases, Medicare law does not prohibit the provider from requesting the 
beneficiary to pay. 
   
 
An explanation of the beneficiary's appeal rights.  (See Medicare Claims Processing Manual, Chapter 29, 
Appeals of Claims Decisions.)  In the notice to the beneficiary, however, the Contractor shall not mention 
waiver since there is no provision for waiver when the physician is liable for the overpayment. 
 
90.4 - Sample Letter to Beneficiary Where Recovery Is Sought From Provider 
(Rev. 70, Issued:  05-27-05; Effective and Implementation dates: 06-27-05) 
 
A notice to the beneficiary is required whenever a provider is requested to repay Medicare because of an 
overpayment determined as a result of services provided to the beneficiary.  If a MSN is generated the 
appropriate notice codes shall be utilized informing the beneficiary that the provider may be requested to 
repay Medicare.  If this occurs no further action needs to be taken.  However, if a MSN is not generated 
notice shall be sent to the beneficiary.  Below is a sample letter to a beneficiary where recovery is sought 
from the provider. 
 
Dear ________________: 
 
In (month and year), we made a payment to (provider or physician name and location) on your behalf 
for services provided to you (insert dates). 
 
We have reviewed the payment and determined that the services were not covered under the Medicare 
program. 
 
(The Contractor shall explain as clearly as possible the reason why all, or part, of the payment was 
erroneous.) 
 
It shall use either paragraphs A, B or C below as appropriate: 
 
  A - Provider Liable for Medically Unnecessary or Custodial Care Services   (Physician 
Liable for Medically Unnecessary Services) 
 
(See Medicare Claims Processing, Chapter 30, Financial Liability Protections.) 
 
We have found that you (the beneficiary) did not know or have any way of knowing that the services you 
(he/she) received during (dates of services for which beneficiary's liability has been waived) would not 
be considered to be reasonable and necessary by Medicare.  However, the records show that (physicians 
name) should have known that such services would be considered noncovered.  When this situation 
occurs, the law requires that the liability for these noncovered services be transferred to the physician. 
 
Therefore, you (the beneficiary) are (is) not responsible for the charges billed by (provider's name) 
except for any charges for services or items never covered by Medicare.  If you (the beneficiary) have 
(has) paid (provider's name) for these services, you may be entitled to a refund.  To obtain this refund, 
please advise this office and enclose the following documents: 
 
  A copy of this notice; 
  The bill you received for the services; and 
  The payment receipt from (provider's name), your cancelled check, or any other evidence 
showing that you (the beneficiary) have (has) already paid (provider's name) for the services at issue. 
   
 
You should file your written request for payment within 6 months of the date of this notice. 
 
B.   Provider at Fault and Beneficiary Not at Fault for Medically Unnecessary or Custodial Services 
and the Overpayment was Discovered Subsequent to the Third Calendar Year After Year Payment 
Was Approved  
 
(Provider's name) has been requested to refund this overpayment.  Under the Medicare law, (provider's 
name) is prohibited from billing you, or any other source, for these noncovered services. If (provider's 
name) sends you a bill for these services, send it to us with a copy of this letter. 
 
C.   All Other Cases 
 
(Provider's name) has been requested to refund the overpayment.  Since the above services are not 
covered by Medicare, (Provider's name) may ask you to pay for them. However, if you are billed, this is 
a matter between you and (Provider's name) and will not affect your entitlement to future Medicare 
benefits in any way. 
 
NOTE: The notification of appeal rights should be in accordance with the reopening rules in Medicare 
Claims Processing, Chapter 29, Appeals of Claims Decisions. 
 
110 - Confirmed Identity Theft 
(Rev. 336: Issued: 02-07-20: Effective:05-08-20: Implementation; 05-08-20) 
 
The Centers for Medicare & Medicaid Services (CMS) is addressing instances of identity theft confirmed 
by the Investigating Unit (IU) through a CMS-approved identity theft victim validation and remediation 
process.  For purposes of this instruction, the IU is the Unified Program Integrity Contractor (UPIC) and 
the CMS Center for Program Integrity (CPI). 
 
When the IU confirms, by letter, to the contractor that a victims overpayment(s) resulted from identity 
theft:   
 
 The contractor shall immediately discontinue ALL collection efforts on the overpayment(s).  
These collection efforts shall include recoupments, sending demand letters, and referring the 
overpayment(s) to Treasury.  
 
 Contractors not utilizing the Healthcare Integrated General Ledger Accounting System (HIGLAS) 
shall recall the overpayment(s) if it was referred to Treasury. 
 
 The contractor shall update the Shared System, HIGLAS, and ViPS Medicare System (VMS), as 
appropriate, for all affected claims and accounts receivables (ARs) within 5 business days from 
the confirmation receipt date.  
 
 Contractors utilizing HIGLAS shall adjust down the AR(s) with the DELETE/ADJ TO ZERO 
activity code and close the AR(s) by changing the AR status code CLO-ERR. The 
DELETE/ADJ TO ZERO activity code will systematically recall the overpayment(s) if it was 
referred to Treasury. 
 
   
 Contractors not utilizing HIGLAS shall adjust down the related AR(s) to $0.00 and change the 
status to closed. 
 
  The contractor shall refund any monies within 30 calendar days that were recouped or paid to 
satisfy the overpayment(s). 
 
  The contractor shall request CMS to provide a revised (corrected) IRS Form(s) 1099-C if the 
original IRS Form(s) 1099-C included the overpayment(s). 
 
  The contractor shall send the request to MedicareOverpayments@cms.hhs.gov with 
o
"Corrected IRS Form(s) 1099-C Request for Confirmed ID Theft" in the subject field. 
 
  The contractor shall include in its request, a copy of the IU identity theft confirmation 
o
letter and the amount(s) that shall be corrected. 
 
  The contractor shall issue the revised (corrected) IRS Form(s) 1099-C to the victim. 
o
 
  The contractor shall issue a revised (corrected) IRS Form 1099-MISC if the original IRS Form 
1099-MISC issued to the victim contained amounts related to confirmed identity theft. 
 
  The contractor shall notify the victim, by letter, of all activity associated with the overpayment(s) 
of the confirmed identity theft case.  This activity shall include items such as notice of the 
rescission of the overpayment(s), the revision of the IRS Forms 1099-C and/or 1099-MISC, and 
the recall of the overpayment(s) from Treasury.  The letter shall also include all claim/document 
control numbers of all affected claims and all original accounts receivable amounts (principal and 
interest) that were adjusted down. 
 
110.2 - Seized Monies Received from Law Enforcement 
(Rev. 199, Issued: 11-04-11, Effective: 12-05-11, Implementation: 12-05-11) 
 
The contractor shall apply any seized monies received (e.g., Treasury check) from the perpetrator of the 
identity theft to the fraudulent debt in accordance with the Medicare Financial Management Manual, 
Publication, 100-06, Chapter 5. 
 
120  Monitoring Accounts Receivable that are in a Redetermination or 
Reconsideration Status 
(Rev. 261, Issued: 01-29-16, Effective: 03-01-16, Implementation: 03-01-16) 
 
The MAC shall develop controls to monitor accounts receivable (ARs) that are in the first 
(redetermination) or second (reconsideration) level of appeal.  ARs that are in either level of appeal are 
subject to limitations on recoupment as mandated by Section 935(f)(2)(a) of the Medicare Modernization 
Act of 2003.  The MAC shall monitor these ARs to make sure the days in status are not greater than 
120.  If the days in status are greater than 120, the MAC shall research the appeal to determine the 
status/decision of the appeal and update the ARs status accordingly.   
 
 
 
   
130 Federal Payment Levy Program  IRS Tax Levy Requests 
(Rev. 11462; Issued: 06-23-22; Effective: 07-25-22; Implementation: 07-25-22) 
 
In coordination with the Internal Revenue Services Federal Payment Levy Program (FPLP), under 
Internal Revenue Manual, Part 5, Chapter 11, Section 7, CMS receives automated Notice of Levy to 
collect delinquent debts owed to the federal government. Automated FPLP interfaces with the Bureau of 
Fiscal Services (BFS) Treasury Offset Program (TOP). CMS shall comply with automated FPLP 
requests under 26 U.S.C. 6331(a);(h), which requires: 
 
(1) A Levy shall extend only to property possessed and obligations existing at the time 
thereof, in  accordance to 26 USC 6331(b); 
(2) Any Federal payment owed to the taxpayer shall be levied on a continuous basis, until 
such levy is satisfied, as determined by the Secretary of Treasury; 26 USC 6331(h)(1) 
(3) Any such levy shall be applied at the rate of 100% for any payment(s) due to a Medicare 
provider or supplier under Title XVIII of the Social Security Act. 26 USC 6331(h)(2) 
 
For the purposes of operationalizing the CMSs obligations under the FPLP, specifically in identifying 
an  obligation  existing  at  the  time  thereof  under  26  USC  6331(a)  the  Social  Security  Act,   
1816(c)(3)(A)&(B), and 1842(c)(3)(A)&(B: 
 
(4)  No payment shall be issued, mailed, or otherwise transmitted with respect to any claim 
submitted under this title within the applicable number of calendar days after the date 
on which the claim is received. SSA 1816(c)(3)(A)&(B); and 
(5) Applicable number of calendar days means with respect to claims submitted 
electronically as prescribed by the Secretary, 13 days, and with respect to claims 
submitted otherwise, 28 days. SSA 1842(c)(3)(A)&(B) 
 
The Medicare Claims Processing Manual, Chapter 1, Section 80.2.1.2, Payment Floor Standards, 
describe the method of calculation of the applicable calendar days as described in SSA 1816(c)(3) & 
1842(c)(3). For the purpose of implementing this section, the Payment Floor Date, as described in 
Chapter 1, Section 80.2.1.2, is the earliest day after receipt of the clean claim that payment may be made. 
Any claims payment amounts owed to the provider of services, hospital, or supplier, which are held on the 
payment floor, but have not yet reached the Payment Floor Date, regardless of date of 
submission, shall be considered obligation(s) existing at the time thereof the IRS Levy is received by 
CMS. 
   
Under Internal Revenue Manual (IRM) 5.11.6.7.2, and in addition to automatic levies through FPLP, 
payments to Medicare providers and suppliers may be general levies, also referred to as paper levies, 
received on form 668a. 
 
A.  Medicare payment to providers and suppliers are subject to withhold due to receipt of a 
general or paper tax levy on form 668a when: 
 
1. A tax levy is served by the Internal Revenue Service (IRS) at the Medicare Administrative 
Contractor, or 
 
2. In rare circumstances, received by the CMS. 
  CMS as a responsible party shall promptly notify the appropriate MAC if a general or 
paper levy is served to the CMS. 
 
B.  Once received, the contractor shall implement the general or paper tax levy to recoup funds 
against current Medicare claims payments on behalf of the IRS. 
 
C.  Contractors shall be responsible to setup the paper levy as a Third-Party Payment (TPP) Debt. 
 
1.  Once a paper levy has been end-dated and sufficient paperwork is returned, it is possible for 
the provider to receive a new levy for the same provider, with new dates. 
 
2. It is also possible to have more than one paper levy served on a provider (not a duplicate) at the 
same time. 
 
  Contractors shall decline the additional 668a tax levy and return it to the IRS with 
instruction to resend when the existing debt is finished collecting. 
 
D.  General or paper tax levies received on IRS form 668a are not continuous levies. 
 
   If the provider or supplier for whom the paper levy is received is already subject to FPLP, the 
paper levy is setup as a TPP and collected according to the HIGLAS hierarchy. 
 
  Any provider claims received after the general or paper levy IRS FORM 668a has been served 
shall not be added to the obligated amount due to the provider. 
 
E.  Contractors shall follow these steps for general or paper tax levies received on IRS form 668a: 
 
1.  The amount shall be held at 100% up to the total amount reflected on the IRS form 668a 
general levy; 
2.  After the claims clear the payment floor, up to the amount of the levy, the amount shall be 
transmitted to the Treasury Department as requested; however: 
 
  If the amount due the provider on the day the levy was served, and 
   
  The total amount due the provider for the claims on the floor is not 
enough to cover the levy amount (once all the obligated claims clear the 
floor, no later than the number of calendar days specified in the IRS 
form 668a general levy). 
 
3. The entire amount withheld shall be released to the Treasury Department. 
 
F. Contractors shall have the number of calendar days specified in the IRS form 
668a levy to collect funds from the date the third-party transaction is set up. 
 
  Contractors shall add an inactive date to the third-party transaction when the 
full amount is not collected in full within the required timeframe. 
 
G. Contractors shall complete the back section on the IRS 668a form as requested by the 
IRS. 
 
1.  Send back the form to the IRS, after the number of calendar days specified in 
the IRS form 668a general levy and the total amount is collected. 
 
2.  Report the tax levies as a withholding on the Remittance Advice (RA). 
 
H. Contractors shall setup the TPP offset form for non-tax FPLP withholdings 
in the Medicare Provider Payment Offset process which are collected in the 
hierarchical order below: 
 
1.  Medicare Accounts Receivable debt, 
2.  FPLP Offsets for Federal Tax debt at 100% maximum of the payable amount, 
3. Administrative Offsets for Federal Non-Tax debt at 100% of the payable amount, 
and 
4. TPP 
Refer to https://www.irs.gov/businesses/small-businesses-self-employed/federal-payment-
levy-program 
for additional information on the Tax Levy Program. 
 
 
 
 
 
 
 
 
   
Transmittals Issued for this Chapter 
 
Rev #  Issue Date  Subject  Impl Date  CR# 
R11462FM 06/23/2022 Federal Paper Tax Levy  07/25/2022 12481 
 
R10821FM 05/24/2021 Pub. 100-06, Chapter 4, Section 10 Revision  04/26/2021 11832 
(New Accounts Receivable (AR) Status 
Codes for Undeliverable Initial Demand 
Letters and Terminated/Out of Business 
Providers 
R10527FM 12/23/2020 Pub. 100-06, Chapter 4, Section 10 Revision  04/26/2021 11832 
(New Accounts Receivable (AR) Status 
Codes for Undeliverable Initial Demand 
Letters and Terminated/Out of Business 
Providers)- Rescinded and replaced by 
Transmittal 10821 
R336FM  02/07/2020 Pub. 100-06, Chapter 4, Section 110  05/08/2020 11486 
(Confirmed Identity Theft) Revision 
R330FM  11/06/2019 The Medicare Fee-for-Service Recovery  11/04/2019 11464 
Audit Program 
R328FM  10/18/2019 Updates to Medicare Financial Management  10/07/2019 11128 
Manual Chapter 4, Section 50-50.6 Extended 
Repayment Schedules 
R326FM  10/04/2019 The Medicare Fee-for-Service Recovery  11/05/2019 11464 
Audit Program- Rescinded and replaced by 
Transmittal 330 
R316FM  05/24/19  Updates to Medicare Financial Management  10/07/2019 10776 
Manual Chapter 4, Section 20 and 20.1 
Demand Letters 
R312FM  04/05/2019 Updates to Medicare Financial Management  10/07/2019 11128 
Manual Chapter 4, Section 50-50.6 Extended 
Repayment Schedules- Rescinded and 
replaced by Transmittal 328 
R315FM  05/17/2019 Update to Publication (Pub.) 100-06 to  06/18/2019 11211 
Provide Language-Only Changes for the New 
Medicare Card Project 
R296FM  12/08/2017 Cessation of MAC Validation of Recovery  01/02/2018 10349 
Audit Program New Issues 
R286FM  06/09/2017 Medicare Financial Management Manual  07/03/2017 10023 
Chapter 4, Section 20 Demand Letter Updates 
R285FM  06/02/2017 Pub. 100-6, Chapter 3 and 4 Revisions  07/01/2017 10079 
   
Rev #  Issue Date  Subject  Impl Date  CR# 
 
R264FM  02/12/2016 Extended Repayment Schedule (ERS)  03/14/2016 9423 
Manual Updates 
R261FM  01/29/2016 Monitoring Accounts Receivable that are in a  03/01/2016 9470 
Redetermination or Reconsideration Status 
R259FM  01/15/2016 Internet Only Manual Pub.100-06, Chapter 4  02/16/2016 9469 
Revisions to Reflect the New Debt Referral 
Requirements Mandated by the Digital 
Accountability and Transparency Act of 2014 
(DATA Act) 
R246FM  11/26/2014 Recovery Auditor Appeal Adjustments with  12/29/2014 8973 
RI Indicator 
R244FM  10/17/2014 Treasury Report on Receivables (TROR)  11/18/2014 8936 
Reporting 
R241FM  09/26/2014 Recovery Audit Program Tracking Appeals  10/07/2014 8411 
and Reopenings 
R235FM  05/14/2014 Revisions and Deletions to the Internet Only  07/07/2014 8315 
Manual, Publication 100-06, Chapter 4, Debt 
Collection (Section 10) 
R233FM  04/04/2014 Revisions and Deletions to the Internet Only  07/07/2014 8315 
Manual, Publication 100-06, Chapter 4, Debt 
Collection (Section 10)  Rescinded and 
replaced by Transmittal 235 
R226FM  09/06/2013 Recovery Audit Program Tracking Appeals  10/07/2013 8411 
and Reopenings  Rescinded and replaced by 
Transmittal 241 
R224FM  08/02/2013 Revisions and Deletions to the Internet Only  09/03/2013 8347 
Manual, Publication 100-06, Chapter 3, 
Overpayment (Section 50.3); Chapter 4, Debt 
Collection (Section 50 - 50.6 and 100.6.4) 
Related to Extended Repayment Schedules 
(ERS) 
R210FM  05/18/2012 Validation of Recovery Audit Program New  06/19/2012 7733 
Issues 
R208FM  04/20/2012 Overpayment Recovery from Suppliers of  05/20/2012 7744 
Durable Medical Equipment, Prosthetics. 
Orthotics and Supplies (DMEPOS) 
R206FM  03/09/2012 Processing of Recovery Audit Program Error  04/09/2012 7724 
Files 
   
Rev #  Issue Date  Subject  Impl Date  CR# 
R205FM  02/09/2012 Immediate Recoupment for Fee For Service  07/02/2012 7688 
Claims Overpayments 
R204FM  01/27/2012 Immediate Recoupment for Fee For Service  07/02/2012 7688 
Claims Overpayments  Rescinded and 
replaced by Transmittal 205 
R202FM  01/06/2012 Recovery Audit Program MAC-issued  01/03/2012 7436 
Demand Letters 
R200FM  11/16/2011 Recovery Audit Program Tracking Appeals  09/27/2011 7458 
and Reopenings 
R199FM  11/04/2011 Instructions for Processing Physicians and  12/05/2011 7419 
Other Suppliers Debts that Have Been 
Confirmed as Identity Theft 
R198FM  10/27/2011 Medicare Financial Management Manual,  11/28/2011 7311 
Chapter 4-Debts Returned to Agency (RTA) 
by Treasury 
R193FM  08/26/2011 Recovery Audit Program Tracking Appeals  09/27/2011 7458 
and Reopenings  Rescinded and replaced by 
Transmittal 200 
R192FM  07/29/2011 Recovery Audit Program MAC-issued  01/03/2012 7436 
Demand Letters  Rescinded and replaced by 
Transmittal 202 
R189FM  05/06/2011 Recovery Audit Program Tracking  06/06/2011 7403 
Overpayments Instruction Alteration 
R186FM  03/18/2011 Receivables Initiated by the Recovery  04/18/2011 7336 
Auditor as Independent Audit Accessible 
Information 
R184FM  02/25/2011 Recovery Audit Program Underpayments  03/28/2011 7326 
Instruction Alteration 
R180FM  12/29/2010 Updated Appeal Reporting Recovery Audit  01/28/2011 7160 
Contractors (RACs) 
R169FM  04/30/2010 Recovery Audit Contractors (RACs)  06/01/2010 6951 
R168FM  04/30/2010 Recovery Audit Contractors (RACs)  06/01/2010 6936 
R167FM  03/23/2010 Recovery Audit Contractors (RACs)  05/24/2010 6871 
R162FM  10/30/2009 Recovery Audit Contractors (RACs)  12/15/2009 6398 
R156FM  08/07/2009 Recovery Audit Contractors  09/08/2009 6582 
R152FM  06/12/2009 Recovery Audit Contractors (RACs)  07/13/2009 6384 
R148FM  03/06/2009 Recovery Audit Contractors (RACs)  03/13/2009 6273 
R145FM  01/09/2009 Recovery Audit Contractors (RACs)   03/13/2009 6273 
Rescinded and replaced by Transmittal 148 
   
Rev #  Issue Date  Subject  Impl Date  CR# 
R143FM  10/24/2008 Instruction for Monthly Processing of Non- 01/05/2009 6083 
Medicare Secondary Payer (Non-MSP) Debts 
Returned to Agency (RTA) from the 
Department of Treasury 
R139FM  07/11/2008 Interaction With Recovery Audit Contractors  08/11/2008 6089 
(RACs) 
R137FM  02/29/2008 Reporting Costs Directly Associated with the  03/31/2008 5789 
RAC Program 
R136FM  02/14/2008 Revisions to Debt Referral Instruction  03/17/2008 5875 
R124FM  06/29/2007 Treasury Collection on Non-Medicare  07/30/2007 5631 
Secondary Payer (Non-MSP) Debts 
R109FM  10/27/2006 Claims Accounts Receivable-Clarification to  11/27/2006 5302 
CR 3963 
R104FM  08/11/2006 Updated Procedures for AC Communication  09/11/2006 5226 
with RAC 
R87FM  12/30/2005 Update to Carrier Demand Letter Appeals  01/03/2006 4211 
Language 
R77FM  09/16/2005 Non-Medicare Secondary Payer (Non-MSP)  10/17/2005 3964 
Debt Referral and Debt Collection 
Improvement Act of 1996 (DCIA) Activities 
R75FM  08/12/2005 New Thresholds for 2nd Demand Letter for  09/06/2005 3932 
Physicians/Suppliers 
R73FM  08/05/2005 New Thresholds for 2nd Demand Letter for  09/06/2005 3932 
Physicians/Suppliers - Replaced by Revision 
75FM 
R72FM  07/29/2005 Claims Accounts Receivable Update  01/03/2006 3963 
R70FM  05/27/2005 Revision to the Beneficiary Notification  06/27/2005 3795 
Process when Recovery is Sought from the 
Provider 
R69FM  05/27/2005 Update to Debt Collection System (DCS)  06/27/2005 3868 
User Guide 
R68FM  05/20/2005 Instructions for Affiliated Contractors  06/20/2005 3773 
Involved in the Recovery Audit Contractor 
(RAC) Demonstrations 
R61FM  12/10/2004 New Location Code ICC, Status Code AR  01/10/2005 3563 
and Modified Intent Letter for Unfiled Cost 
Reports Only 
   
Rev #  Issue Date  Subject  Impl Date  CR# 
R53FM  08/27/2004 Change Request 3367, Debt Collection  09/27/2004 3367 
System (DCS), replaces Change Request 
2952, Debt Collection System (DCS) 
R41FM  04/30/2004 Calculated Interest on Medicare  10/04/2004 3163 
Overpayments and Underpayments 
R30FM  01/28/2004 Notice of New Interest Rates for Medicare  02/04/2004 2829 
Overpayments and Underpayments 
R29FM  01/02/2004 Revisions to Chapters 3 and 4  02/06/2004 2911 
R19FM  07/25/2003 Intermediary Claims Accounts Receivable  08/08/2003 2753 
(A/R) 
R13FM  02/03/2003 Termination of Debt Collection Activities  07/01/2003 2436 
R04FM  08/30/2002 Initial Publication of Chapter  N/A  N/A 
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