Medicare Secondary Payer (MSP) Manual 
Chapter 7  MSP Recovery 
  
 Table of Contents 
      (Rev. 11775; Issued: 12-30-22) 
 
  
 
Transmittals for Chapter 7 
10  Medicare Right of Recovery 
10.1  General 
10.2  Time Limitation for MSP Recoveries 
10.3  Conflicting Claims by Medicare and Medicaid  
10.4  Determination of Primary Payers among Non-Medicare Payers  
10.5  MSP Contractor Correspondence  
10.6  Handling Freedom of Information Act (FOIA) and Subpoena Duces Tecum Received by the MSP 
Contractors 
10.7  Referral of Cases to Regional Office for Possible Government Intervention and/or Legal Action 
10.8  Recovery from Estate of Deceased Beneficiary 
10.9  Wrongful Death Statutes 
10.10  MSP Contractor Recovery Files 
10.11  Error Reports 
10.12  Undeliverable Correspondence 
20  Overpayment Due To Group Health Plan (GHP) Coverage 
20.1  Amount of GHP Primary Payments  
20.2  GHP Demand Process  
20.3  GHP Demand Letters 
20.4  GHP Demand Activities 
20.5  GHP Recovery Instructions to MACs 
           20.5.1- Automation of the Medicare Duplicate Primary Payment (DPP) Process   
 
20.6  GHP Communications Received in Response to Recovery Actions  
20.7  Recovery Where GHP Acknowledges Specific Debt (42 C.F.R.  411.25) 
20.8  Recovery from the Provider, Physician, or Other Supplier 
20.9  Recovery from a Beneficiary Who Has Received Primary Payment from Both Medicare and a GHP  20.10  Courtesy Copy of All MSP GHP-Based Recovery Correspondence to the Insurer/Third Party 
Administrator (TPA) 
30 - Overpayment Due To Workers Compensation Coverage 
30.1  General 
30.2  MAC Actions for Workers Compensation Recovery 
30.3  Time Limit for Filing Workers Compensation (WC) Claims 
30.4  Duplicate Payment Received by Provider, Physician, or Other Supplier 
30.5  Medicare Paid for Services which Should Have Been Paid for by Workers Compensation 
30.6  Medicare Made Party to WC Hearing 
30.7  Effect of Settlement 
40  Overpayment Recoveries from Liability Insurance Including No-Fault Insurance, Uninsured, or Under-
Insured Motorist Insurance 
40.1  General 
40.2  Provider, Physician, Other Supplier, and Beneficiarys Responsibility with Respect to No-Fault 
Insurance 
40.3  Conditional Primary Medicare Benefits 
40.4  Services Covered Under No-Fault Insurance Where Liability Claim Also Filed 
40.5  Action if a Liability Insurance Payment Has Been Made to the Provider, Physician, Other Supplier 
Who Accepted Medicare Assignment   
40.6  No-Fault Insurance Pays Service Benefits 
40.7  No-Fault Insurance Does Not Pay All Charges Because of Deductible or Coinsurance Provision in 
Policy 
40.8  Other Situations 
40.9  Existence of Overpayment 
40.10  Pre-Settlement Communications 
40.11  Designations in Settlements 
40.12  Allegation of Preexisting Conditions 
40.13  MSP Contractor Action if a Liability Claim Is Pending and Medicare Benefits Were Paid 
40.14  Recovery from Liability Insurers 
40.15  Recovery of Liability or No-Fault Payments from the Beneficiary 
40.16  Calculating Medicares Share of Beneficiarys Procurement Costs 
40.17  CMS Incurs Procurement Costs 
40.18  Medicare Liability Settlement Claim Reimbursement Summary 
40.19  Collecting Interest on Medicares Claim 
40.20  Installment Payments and Multiple-Party Settlement Checks  40.21  Appeals Procedures for MSP Liability and Waiver Determinations 
40.22  Initial Determinations 
40.23  Notification of the Right to Appeal 
40.24  Appeals of MSP Liability Determinations 
40.25  Role of MSP Contractors in MSP Liability Appeals Process 
50  Requests for Compromise or Waiver of Medicares Recovery Claim  
50.1  Requests That Medicare Accept Less Than Its Claim 
50.2  Authorities for Agreeing to Compromise or Waiver of Medicares Claim 
50.3  Compromise of Claim, or Suspension or Termination of Collection, under the Federal Claims 
Collection Act (31 U.S.C.  3711) 
50.4  Compromise Exercised Only by CMS 
50.5  Documentation Necessary for Liability Cases Where Compromise is Requested 
50.6  Waivers under Section 1870(c) of the Act 
50.7  Beneficiary Right to Request Waiver of Medicares Claim  
50.8  Beneficiary Must Submit Waiver Request in Writing 
50.9  Timely Processing of Waiver Determinations 
50.10  Steps for Waiver Determination under Section 1870(c) of the Act 
50.11  Allowing Out-of-Pocket Expenses in Waiver Determinations 
50.12  Factual Data in Determining Whether a Full or Partial Waiver is Warranted 
50.13  When Recovery Would Defeat the Purpose of Title II or Title XVIII 
50.14  Examples of Financial Hardship in Waiver Determinations 
50.15  Recovery Would Be Against Equity and Good Conscience 
50.16  When the Beneficiary Fails to Meet Either Waiver Criterion under Section 1870(c) 
50.17  Potential Waiver Indicators 
50.18  Waiver under Section 1862(b) of the Social Security Act 
60 - MSP Accounts Receivable (AR) Procedures 
60.1  General 
60.2  Collection of MSP Debts 
60.3  Identification of MSP Write-off/Closed Accounts 
60.4  Write-off/Closed Definition 
60.5  Documentation Required For Write-off/Closed 
60.6  Bases for Termination of Collection 
60.7  Criteria for MSP Based Debts to Qualify for Write-off/Closed 
60.8  Data Requirements and Format for Recommendations for Write-off/Closed  60.9  Write-off/Closed Debts Which Have Been Returned by Treasury or Recalled by CMS and CMS has 
Determined that No Further Collection Attempts are Appropriate 
60.10  Debts Returned by Treasury as Uncollectable (RU) or Out of Business (RN) 
60.11  Write-off/Closed Approval Process 
60.12  Financial Reporting for MSP Write-off/Closed 
60.13  Date for Establishment of MSP AR 
70 - Medicare Secondary Payer (MSP) Debt Collection and Treasury Referral Activities 
70.1  General 
70.2  Background 
70.3  Debt and Debtor Definitions 
70.4  Debt Selection and Verification 
70.5  Debt Selection Criteria  
70.6  Debt Excluded from Referral 
70.7  Monitoring Debts Excluded from the Debt Collection Improvement Act (DCIA) Referral Process 
70.8  Validation of Possible Eligible Debts for Referral 
70.9  Issuance of the Intent to Refer (ITR) to Treasury Letter 
70.10  Responding to Correspondence as a Result of the Issuance of the ITR Letter 
70.11  MSP Contractor Actions Subsequent to Treasury Referral 
70.12  DCIA Treasury Collection 
70.13  Intra-governmental Payment and Collection System 
70.14  Collection/Refund Spreadsheet 
70.15  Debt Paid in Full 
70.16  Treasury Approved Extended Repayment Schedule (ERS) 
70.17  Excess Collections 
70.18  Applying an Excess Collection 
70.18.1  If the Debtor Has Other Outstanding Debt 
70.18.2  If the Debtor Has No Other Outstanding Debt 
70.18.3  Additional Instructions for MSP Excess Collections 
70.19  Disputed Treasury Debts  
70.20  Financial Reporting for Collections 
70.21  Accrual of Interest 
80  Bankruptcy/State Insurer Liquidation Actions and Medicare Secondary Payer (MSP) Debt 
80.1  General 
80.2  Types of Bankruptcy Proceedings  80.3  State Ordered Insurer Liquidations 
80.4  Importance of Various Dates in Bankruptcy/Liquidation Proceedings 
80.5  Difference between Automatic Stay, Relief, and Discharge 
80.6  Affiliates  
80.7  Notice of Bankruptcy/Liquidation 
80.8  MSP Contractor Role in Bankruptcy/Liquidation 
80.9  Discharge of Bankruptcy/Liquidation Debts 
80.10  Actions Dismissed by the U.S. Bankruptcy Court 
80.11  Appeal Requests Citing Bankruptcy Defense 
 
 
 
 
 
 
 
 
 
 
 
 
 
    10  Medicares Right of Recovery  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
10.1  General 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Section 1862(b) of the Social Security Act (the Act) gives Medicare the right to recover payments it has 
made on behalf of private insurers that are the primary (or first) payers for Medicare beneficiaries. In 
situations where Medicare is a secondary payer, the primary payer must reimburse Medicare for any 
benefits that Medicare has mistakenly paid as primary on behalf of a beneficiary.  
The Medicare Secondary Payer (MSP) program ensures that Medicare is aware of situations where it should 
not be the primary (the first) payer of claims. If a beneficiary has Medicare and other health insurance, 
Medicare Coordination of Benefits (COB) rules decide which entity pays first.  Medicare may make 
payments on behalf of beneficiaries during COB activities, so that beneficiaries can maintain continual 
Medicare coverage throughout the COB period. Any such payments are conditioned on reimbursement to 
the appropriate Medicare trust fund.   
10.2 Time Limitation to Sue for NGHP Debt  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
 Under the Strengthening Medicare and Repaying Taxpayers Act of 2012 (the SMART Act), the United 
States may not file suit under Medicares direct right of action ( 1862(b)(2)(B)(iii)) with respect to payment 
owed unless the complaint is filed not later than three years after the date of CMSs receipt of notice of the 
settlement, judgment, award, or other primary payment in accordance with  1862(b)(8) that relates to such 
payment owed. 
10.3 Medicare and Medicaid Duplicate Payment 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Medicare and a State Medicaid agency may both conditionally or erroneously pay for items and/or services, 
and the amount recoverable for these items and/or services may be insufficient to reimburse both Medicare 
and Medicaid. In these situations, while both Medicare and Medicaid might have a recovery claim, 
Medicares right to recovery has priority over Medicaids recovery claim pursuant to 42 CFR  405.908 
Medicares priority right of recovery over Medicaid does not violate the concept of Medicaid being a payer 
of last resort. Under  1862(b) of the Act, Medicares ultimate statutory authority is not to pay at all where 
payment can reasonably be expected by a third party that is primary to Medicare; and Medicare has a 
concomitant right to recover any conditional benefits it has paid. 
The right of Medicaid agencies to recover benefits derives from an assignment by Medicaid beneficiaries to 
the States of their rights to third party reimbursement. Since the beneficiary can assign to the State a right no 
higher than the beneficiarys own, and since Medicares statutory right is higher than the beneficiarys, 
Medicares right is superior to that assigned to the State. 
Where both Medicare and Medicaid seek reimbursement from a primary payer, the MSP contractor informs 
the other parties to the claim that it must reimburse Medicare before it can pay any other entity, including a 
State Medicaid agency. Where a beneficiary, attorney, provider, physician, or other supplier receives 
payment from a primary plan, and the amount paid is less than the combined amounts paid by Medicare and 
Medicaid, the MSP contractor informs the payee that it is obligated to refund the Medicare payment up to 
the full amount of Medicares claim before paying the State Medicaid agency. Only after Medicare has 
recovered the full amount of its claim does the beneficiary, attorney, provider, physician, or supplier have 
the right to reimburse Medicaid or another entity. 
If a State Medicaid agency receives reimbursement from a primary payer before Medicare, the MSP 
contractor asks the State Medicaid Agency or the beneficiary to reimburse Medicare from any primary  payment funds remaining.  If the remainder of the primary payment is insufficient to reimburse Medicare in 
full, the MSP contractor asks the State Agency to reimburse Medicare up to the full amount the Agency 
received. The MSP contractor explains the legal basis for Medicares right to recover. If the State Medicaid 
Agency refuses to reimburse in full, the MSP contractor refers the case to the CMS Regional Office (RO). 
The ROs recovery actions may include offset of Medicares claim against any Federal Financial 
Participation funds otherwise due the State. The MSP contractor will inform the primary payer that in future 
cases involving claims by Medicare and Medicaid, it must reimburse Medicare first. 
10.4  Determination of Primary Payers among Non-Medicare Payers 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Medicare determines if it is a primary payer pursuant to 42 CFR  411.26; however, as to other payers, 
Medicare does not make determinations as to which of these payers might be primary.  Medicare may 
recover its mistaken and conditional payments from any party determined to have primary payment 
responsibility. 
a)  More Than One Primary Insurer 
There may be instances where Medicare is secondary payer to more than one primary insurer (e.g., an 
individual who is covered under his/her own Group Health Plan (GHP) and under the GHP of an employed 
spouse or under no-fault insurance). In such cases, the other primary payers will customarily coordinate 
benefits. If a portion of the charges remains unpaid after the other insurers have paid primary benefits 
secondary, a Medicare payment may be made.  
Coordination of benefits arrangements between private plans, whether based on State law or private 
agreements, cannot supersede Federal law that makes Medicare secondary payer to certain GHPs for 
individuals and spouses age 65 or over. Therefore, where the individual has GHP coverage based on current 
employment status in addition to GHP coverage as a retiree, Medicare is secondary to the GHP coverage 
based on current employment status and primary to the GHP coverage based on retirement regardless of the 
coordination of benefits arrangements between the plans.  
b)   Coordination of Benefits Rules Conflict with MSP Rules  
Coordination of benefits arrangements between private plans, whether based on State law or private 
agreements, cannot supersede Federal law that makes Medicare secondary payer to GHPs and Large Group 
Health Plans (LGHPs) in certain situations. There are two scenarios to consider. 
i.  The first scenario is where an individual has dependent GHP coverage that is primary to Medicare 
(e.g., coverage based on the employment of the individuals spouse) in addition to nondependent coverage 
that is secondary to Medicare (e.g., coverage based on the individual's retirement), Medicare is secondary to 
the dependent coverage and primary to the nondependent coverage. In other words, the dependent coverage 
pays first and the nondependent coverage pays second even though under private coordination of benefits 
agreements, the nondependent coverage would be expected to pay before the dependent coverage. For 
example: 
Chris Thomas, age 67, is a Medicare beneficiary with coverage under Part A and Part B. He has been 
employed continuously by XYZ Bolt Company since 2002 and has GHP coverage through his employer. 
His wife, Ann, age 62, has been retired from the local police department since 2000 and received retirement 
health insurance coverage for herself and her husband that is secondary to Medicare. The order of payment 
for Chriss medical expenses is as follows:  
A)  Chris's GHP, based on current employment status is primary payer.  
      B)  Medicare is secondary payer.  
C)  The spouse's retirement plan is the tertiary (third) payer.  ii.  The second scenario is where a plan's payment would normally be secondary to Medicare but, under 
coordination of benefit provisions, the payment is primary to a primary payer under Section 1862(b) of the 
Act, the combined payment of both plans constitutes the primary payment to which Medicare is a secondary 
payer. In other words, both plans pay first. For example: 
John Jones, age 75, is a Medicare beneficiary with coverage under Part A and Part B. He retired from the 
Acme Tool Company in 2003 and received retirement health insurance coverage that is secondary to 
Medicare. His wife, Mary, age 64, has been employed continuously with the local police department since 
1977 and since that time has received coverage for herself and her husband under the department's GHP. 
The priority of payment for Johns medical expenses is as follows:  
A)  The GHP of the spouse who has current employment status is primary payer. However, the 
retirement plan must coordinate benefits with the employed spouses GHP (i.e., the spouses GHP will not 
pay until after the retirement plan pays). Under these circumstances, the combined benefit of the two plans is 
primary to Medicare.  
B)  Medicare is secondary payer. 
NOTE: If the retirement plan is permitted to pay after the GHP under the private coordination of benefits, 
the order of payment will be as follows:  
A)  The GHP will be primary,  
B)  Medicare will be secondary, and  
C)  The retirement plan will be tertiary (third) payer.  
10.5  MSP Contractor Correspondence 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP contractors shall acknowledge and respond to all correspondence within 45 calendar days from the 
date of receipt in their corporate mailroom, or in any other mail center location, absent CMS instructions to 
the contrary for a particular activity. 
10.6  Handling Freedom of Information Act (FOIA) and Subpoena Duces Tecum 
Received by the MSP Contractors 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If MSP contractors directly receive any kind of Freedom of Information Act (FOIA) request, a subpoena 
duces tecum (i.e., subpoenas for records), or any other kind of a subpoena from a third party, it shall 
immediately refer the request and all associated documentation to CMS for review. 
MSP contractors shall address all CMS-sourced FOIA requests and subpoenas immediately 
10.7  Referral of Cases to Regional Office for Possible Government Intervention 
and/or Legal Action 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The MSP contractor shall refer the following situations to CMS and/or the appropriate RO: 
a)  Any notice from a court that CMS has been made a party to a lawsuit; or 
b)  Any case involving a lawsuit in which CMSs claim is at issue. 
The MSP contractor shall include pertinent Medicare claims information in its referral, if not previously 
provided to the RO. It also shall immediately refer a case to the RO if the MSP contractor is named in any 
legal proceeding seeking to define or limit Medicares right to recovery. It does not make referrals simply 
because a lawsuit has been filed between the beneficiary and the liable third party. However, it monitors 
such lawsuits so that timely referrals can be made to the RO if CMSs claim becomes an issue in the lawsuit.  CMS may notify a State Insurance Commissioner, or other official having jurisdiction over a GHP or 
employer/ other plan sponsor, that evidence suggests that Federal law was violated. CMS may request that 
the GHPs or employer/ other plan sponsors actions be investigated, and that it be ordered to comply with 
Federal law and to make the appropriate refund to Medicare.  
CMS may also advise the State Insurance Commissioner, or other responsible official, that the Medicare 
beneficiary is placed at risk by the GHPs actions and that Medicare will not make future primary payments 
for items and services covered by the GHP for this individual. The RO advises these officials that Medicare 
may recover from any parties to whom it has made improper payments. CMS may also consider possible 
legal action against the GHP or employer/other plan sponsor and/or referral of the case to the Equal 
Employment Opportunity Commission (EEOC). The ROs may consult with Central Office (CO), the HHS 
Office of the General Counsel (HHS OGC), the EEOC, and other appropriate entities regarding referral 
determinations.  
 10.8  Recovery from Estate of Deceased Beneficiary 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
A beneficiarys death does not materially change Medicares interest in recovering its payments made on 
behalf of the beneficiary while alive. Upon death, the estate of the beneficiary comes into existence by 
operation of law. State and local laws govern the formation and execution of estates. An executor or 
administrator whose sole purpose is to conclude all business and financial matters that still remained at death 
manages it. Medicares interest in the outcome of a third party liability claim is one of these matters. 
Therefore, Medicares claim is properly asserted against the estate, and the MSP contractor should request a 
copy of the letter of administration. 
If a beneficiary is deceased before resolution of a Medicare secondary payer recovery claim associated with 
a liability insurance (including self-insurance), no-fault insurance or workers compensation settlement, 
judgment, award, or other payment, new proof of representation on behalf of the beneficiarys estate must be 
submitted. If there is no will or formal estate, the document or documents must be signed by an individual 
who is entitled under state law to pursue the applicable claim. Where state law requires court documentation 
to establish such status, that documentation should be provided. Where such a state requirement exists, and a 
will is available, the initial page of the will, the page(s) showing the executor, and the notarized signature 
page(s) should be provided. The method and process for properly filing claims against an estate is, again, an 
operation of state and local laws and not within the control of Medicare or its contractors. 
Ordinarily, the estate should not have possession of any settlement proceeds that are due Medicare, since 
Medicares claim should have been satisfied before distribution to the estate (i.e., while the attorney was still 
in possession of the proceeds). However, if the proceeds have been distributed to the estate, the MSP 
contractor must act quickly to resolve the outstanding claim, taking the following steps: 
a)  When the MSP contractor learns that the beneficiary has died, it identifies and contacts the executor 
or administrator, or whoever is acting in that capacity. It finds out if they are in possession of all Medicare 
correspondence that had been sent to the beneficiary while alive. If the information was not available, it 
sends the executor or administrator dated copies of all such notices;  
b)  If a settlement is reached, a letter containing an initial determination should be sent to the executor or 
administrator, or whoever is acting in that capacity. The rights to request waiver and/or appeal that are 
expressed in this letter apply equally to the estate, if there is a surviving spouse or dependent that is entitled 
under Title II or XVIII of the Act. Where neither of these parties exists, waiver under Section 1870(c) of the 
Act may not be granted. However, relief may still be available under Section 1862(b) of the Act or the 
Federal Claims Collection Act (FCCA), and the MSP contractor will ensure that the executor or 
administrator understands Medicares priority right to satisfaction of its claim by re-emphasizing that fact in 
conversations. The MSP contractor should also attempt to end each conversation with a specific action that 
the administrator should take within a specific time period. If this time limit passes and the action has not  occurred, the MSP contractor contacts the administrator again. The most important thing is the prevention of 
settlement of the estate prior to satisfaction of Medicares claim. 
10.9  Wrongful Death Claims 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Wrongful death statutes (including survival statutes) are state laws that permit an entity (such as a 
decedents estate, personal representative or survivors) to assert the claims and rights that the decedent had 
at the time of death and/or to recover damages arising from that death itself. These laws may include 
recovery for the deceaseds medical expenses. Medicares right of recovery in relation to these statutes is 
governed by 42 CFR  411.24 and is as follows (note that the analysis of wrongful death statutes described 
below would be similar to an analysis of wrongful death actions at common law): 
a)  When a liability insurance payment is made under a wrongful death statute, Medicare may recover 
on account of that payment if the wrongful death statute permits recovery of the deceaseds medical 
expenses. If a state wrongful death statute does not permit recovery of the deceaseds medical expenses, 
Medicare has no claim against recovery obtained solely under that wrongful death statute; 
b)  If the wrongful death statute permits recovery of the deceaseds medical expenses, Medicare will 
pursue MSP claims arising from a primary payment obtained under that statute. Medicare will pursue its 
MSP claims even if the claimant who asserts the cause of action under the wrongful death statute:  
i)  fails to explicitly request recovery for the decedents medical expenses, and/or  
ii)  only requests recovery for damages/losses incurred by the decedents relatives and/or 
heirs; 
c)  When a wrongful death statue permits full recovery of medical expenses, but limits the amount that 
creditors may obtain from that recovery of past medical expenses, Medicare may recover up to the full 
amount of its conditional payments from the entire recovery obtained under the wrongful death statute. 
However, if the wrongful death statute limits the amount of medical expenses that may be recovered from 
the tortfeasor and/or responsible insurer, Medicare may recover only up to that limited amount of the 
recovery (or up to the amount of the settlement, judgment, award, or other payment if that amount is less 
than or equal to Medicares claim). 
When a settlement, judgment, award, or other payment was obtained under a wrongful death theory of 
liability, documentation of that claim should be retained by the beneficiarys estate, personal representative, 
or other claimant. In the event of a dispute, submission of supporting documentation may be required in the 
form and manner specified by the Secretary. The documentation should be maintained regardless of whether 
other claims were also asserted, or whether the wrongful death statute was not the sole claim related to the 
settlement, judgment, award, or other payment. In cases where a lawsuit is actually filed based on a 
wrongful death theory of liability, such documentation should include the court pleadings (including both 
the original pleadings and any amendments thereto).  
There may be cases where:  
a)  a wrongful death lawsuit was filed, but subsequently withdrawn and resolved with a general 
release; or 
b)  no lawsuit specifically seeking wrongful death recovery was ever filed. In those cases, 
examples of supporting documentation may include:  
i)  a fully executed settlement agreement or release;  
ii)  documents exchanged between the parties during settlement negotiations; and  
iii) other documents the parties exchanged in anticipation of litigation. 
iv)  
 
 
10.10  MSP Contractor Recovery Files  (Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP contractors shall maintain an electronic recovery case file for all cases in which recovery has been 
attempted. Upon Medicares request, MSP contractors shall recreate or retrieve requested cases files within 
two (2) business days of a request. Documentation contained in the recovery case file should include, but is 
not limited to, full copies of all demands and recovery correspondence issued on the case, notes on all 
telephone communications, as well as any other information documenting an MSP debt and all associated 
communications.  
10.11  Healthcare Integrated General Ledger and Accounting System (HIGLAS) 
Error Reports 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Error reports are created by the HIGLAS when there are errors or edits that resulted in a case not having an 
accounts receivable or demand letter generated. MSP contractors shall review and resolve all such errors 
within 45 calendar days of identification. 
10.12  Undeliverable Correspondence 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
In the event that any recovery correspondence, especially a demand or ITR letter, is returned to the MSP 
contractor as Undeliverable Mail (mail that cannot be delivered to the addressee) the MSP contractor will 
review these returned items. Unless otherwise directed, the MSP contractor will look for the correct address 
and, if possible, re-mail the undeliverable correspondence within 30 calendar days. 
20  Overpayment Due to GHP Coverage 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
20.1  Amount of GHP Primary Payments  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The GHP (as defined in 42 C.F.R.  411.101) or other entity representing the GHP sponsor, might request 
that Medicare pay the GHP, or other entity representing the GHP, the amount that Medicare would have 
paid if a proper Medicare claim had been filed (or some other amount). Upon presentation of such a claim 
(even if it is for Medicare covered services which satisfy all of Medicares claim filing requirements), the 
MSP contractor shall advise the GHP, or other entity representing the GHP, that Medicare law does not 
authorize payment to an entity other than the beneficiary, provider, physician, or other supplier. Pursuant to 
42 CFR  424.70-80, Medicare does not recognize so called assignments of right to payment by 
providers, physicians, other suppliers, and individuals to GHPs. The GHP, employer/ other plan sponsor, or 
other entity representing the GHP or the employer/ other plan sponsor, may request the MSP contractors 
assistance in recouping its alleged mistaken primary payment, and in having the provider, physician, or other 
supplier bill Medicare. 
The MSP contractor shall advise the GHP, or other entity representing the GHP, that the Medicare 
contractor may not provide the requested assistance. The MSP contractor shall further explain that Medicare 
does not waive its timely filing requirement for initial claims from providers, physicians, or other suppliers 
and beneficiaries when a GHP recoups its mistaken primary payment.  This is because there has been no 
Governmental error. In addition, Medicare does not re-open claims previously adjudicated and either denied 
or paid as a secondary payer beyond one year of the date of initial determination on the original claim. This 
is because Medicares regulations establish that good cause for Medicare to re-open a claim after one year 
does not exist in this situation. 
 
 
20.2  GHP Demand Process   (Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Cases will only be created if valid employer/ other plan sponsor and insurer/ TPA information is available 
for the MSP contractor. The MSP contractor shall follow debt collection and referral procedures as defined 
in  70 of this Chapter and Chapter 5 of the Medicare Financial Management Manual (CMS Pub. 100-06). 
All activities associated to the collection, adjustment, write-off, referral or closure of this debt shall be 
documented within the HIGLAS. The employer within the demand letter is the prime debtor and shall be 
referred for cross-servicing, if appropriate. For federal employers, the demand letter will be addressed to the 
associated insurer/ TPA. MSP contractors shall follow  20.6 of this Chapter, specific to insurer/TPA 
employer defenses. 
HIGLAS will generate the demand letter specific to the debtor and type of case identified. Two copies of the 
demand letter will be printed; one for the employer and one for the insurer/TPA. The employer is the 
primary debtor, therefore any actions specific to non-response or delinquency shall be initiated against the 
employer.  
20.3  GHP Demand Letters 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The MSP contractor shall provide the identified debtor (usually the employer/ other plan sponsor, or the 
employer is a federal employer, the insurer/ TPA) with sufficient materials to document a debt owed 
Medicare. A MSP recovery package should be sent for each demand made to an employer/ other plan 
sponsor. The MSP recovery package has three main components: 
a)  Demand letter addressed to the identified debtor;  
b)  Summary of claims included in calculating the demand; and 
c)  Claim facsimiles or claim detail for each claim mistakenly paid primary. The facsimiles or claim 
detail must contain the name of the provider, physician, or other supplier, the type or description of services, 
date of services, place, of service, charged amount and Medicare paid amount. The claims facsimiles are 
available to the employer/other plan sponsor upon request, but are only routinely sent to the insurer/claims 
processing TPA as a part of its courtesy copy. 
The recovery package must summarize and total the amount due Medicare. The total must equal the claim 
facsimiles or claim/detail.  
The MSP contractor shall issue demand letters for all debts it believes are valid following the MSP 
contractors required pre-demand validation, as specified in the contractors SOW. These demand letters 
shall include specific information regarding: the amount of the debt and how it arose; Medicares priority 
right of recovery; how to dispute the debt if the debtor feels it is not valid; and interest provisions.  
Information regarding the potential for referral to Treasury if the debt remains unresolved shall also be 
included. The MSP contractor shall establish Accounts Receivable (AR) at the time the demand letter is 
issued. The AR date shall match the date printed on the demand letter. The MSP contractor shall use 
HIGLAS to track all ARs with claims-level detail. 
20.4  GHP Demand Activities 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The MSP contractors shall take the following actions:  
a)  MSP contractors shall initiate paid claims history searches within the time parameter specified in the 
contractors Statement of Work (SOW). This information will be used to determine if Medicare mistaken 
primary payments have been made that meet or exceed recovery tolerances. 
b)  Contractors shall aggregate demand letters with respect to a single employer/ other plan sponsor and 
insurer/ TPA combination into one package.  MSP contractors shall issue a demand package to the identified  debtor (usually the employer or other plan sponsor). The demand package shall include the demand letter as 
well as a listing of the claims for which Medicare seeks payment, and any other identified enclosures to the 
letter.  
c)  MSP contractors shall issue a courtesy copy of the entire employer/ other plan sponsor demand 
package to the insurer/TPA, with the exception of federal employers, as noted above.  In a federal employer 
situation, the only copy of the demand package shall be the copy issued to the insurer/ TPA.  The courtesy 
copy issued to the insurer/TPA shall include individual claims facsimiles for all claims included in the 
demand package as well as an explanatory cover letter. Unless directed otherwise, MSP contractors shall 
issue all recovery correspondence via first class U.S. Mail.  
i.  In the event the insurer/TPA copy is returned to the contractor as undeliverable, do not attempt to 
find a better address. 
ii.  In the event a particular insurer/TPA consistently returns/refuses their courtesy copies of an 
employer/ other plan sponsors demand packages, the contractor should cease mailing courtesy copies to 
that insurer/TPA for that employer/ other plan sponsor. 
d)  The employer/ other plan sponsor or other entity acting on the employer/ other plan sponsors behalf 
may respond with a full payment. If the employer/ other plan sponsor or other entity repays Medicare in full 
(including any applicable interest), the MSP contractor shall close the recovery case. MSP contractors shall 
send an acknowledgment or response to the full payment to the employer/ other plan sponsor with a copy to 
the insurer/TPA.  
e)  If the employer/ other plan sponsor or other entity provides a full payment for certain services and 
provides a valid documented defense for all other services, MSP contractors shall close the case. A valid 
documented defense consists of evidentiary material demonstrating that the GHP was not obligated to repay 
Medicare pursuant to the MSP provision (an assertion of a defense without supporting evidence is not a 
valid documented defense). MSP contractors shall send an acknowledgment or response for the full payment 
and acceptance of the valid documented defense offered by notifying the employer/ other plan sponsor, if 
the insurer/TPA had sent in full payment without having an employer/ other plan sponsor authorization to 
act as its agent. 
f)  If the employer/ other plan sponsor or other entity makes less than a full payment or provides less 
than a valid documented defense, MSP contractors shall adjust the debt as appropriate and continue 
collection activities. MSP contractors shall send an acknowledgment or response to the partial payment or 
invalid defense by notifying the employer/ other plan sponsor with a copy to the insurer/TPA. 
g)  To the extent that an employer/ other plan sponsor or the other entity responds with a valid 
documented defense to any portion of a recovery claim, MSP contractors shall adjust the debt accordingly. If 
the valid documented defense is that the GHP made primary payment to a provider, physician, or other 
supplier, the contractor shall forward the information about the claim and defenses to the appropriate 
Medicare Administrative Contractor (MAC) to initiate recovery from the provider, physician, or other 
supplier. If the valid documented defense is that the GHP made primary payment to the beneficiary, MSP 
contractors shall consider this resolution of the claim. MSP contractors shall adjust the portion of the 
employer/ other plan sponsor debt, which had been paid directly to the provider, physician, other supplier, or 
beneficiary.  
h)  If an employer/ other plan sponsor requests specific information or asks a specific question about the 
recovery claim, MSP contractors shall provide the information or answer the questions.  
 
 
20.5  GHP Recovery Instructions to MACs  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21)  When a provider, physician, or other supplier receives primary payment from a GHP where Medicare has 
also paid primary, the provider, physician, or other supplier submits an adjustment bill showing the primary 
payment amount. The MAC instructs the provider, physician, or other supplier to return to the beneficiary 
the amounts of the Medicare deductible and coinsurance already paid. The provider, physician, or other 
supplier may retain any excess GHP payment over the gross amount payable by Medicare. 
If duplicate payment was or will be made to the provider, physician, or other supplier, i.e., the provider, 
physician, or other supplier received or expects to receive both primary GHP payments and primary 
Medicare benefits, the MAC collects the Medicare overpayment from the provider physician, or other 
supplier. The MAC reprocess or adjusts the claim to determine Medicares corrected payment amount. If 
Medicare paid the provider, physician, or other supplier and the GHP paid the beneficiary, the provider, 
physician, or other supplier is liable. (See the Medicare Financial Management Manual, Chapter 3,  90). 
The MAC recoups from the provider, physician, or other supplier in accordance with the Medicare Financial 
Management Manual, Chapter 3,  90.The recoupment is completed by the provider, physician, or other 
supplier. The MAC obtains a copy of the plans Explanation of Benefits (EOB) from the GHP or employer/ 
other plan sponsor in order to determine the excess Medicare payment. 
If an adjustment bill is not received from the provider, physician, or other supplier within 120 calendar days 
of notifying the provider, physician, or other supplier to file a claim with the GHP, or the provider, 
physician, or other supplier refunds the incorrect payment to the MAC using the quarterly Credit Balance 
Report, the MAC follows up to determine the status of the claim. If a credit balance report has not been 
utilized, the account receivable should be initiated to the provider. If the GHP has denied the claim for an 
acceptable reason, the recovery action may be canceled. If the GHP has denied the claim for another reason, 
or has not responded to the provider, physician, or other suppliers claim, the MSP contractor advises the 
provider, physician, or other supplier that Medicare will attempt to recover from the employer/ other plan 
sponsor. The MSP contractor advises the provider, physician, or other supplier to notify it immediately upon 
receipt of payment from the GHP. 
Section 20.5.1Automation of the Duplicate Primary Payer (DPP) Process 
(Rev.11775, Issued:12-30-22, Effective: October 1, 2022 - For CWF (requirements/coding/preliminary unit 
testing); for FISS (design/coding); for MCS (analysis/design/coding); for VMS (analysis & coding); January 
1, 2023 - For CWF (testing/implementation); FISS (continued development/testing/implementation); MCS 
(continued coding/testing/implementation); and VMS (testing & implementation), Implementation: October 
3, 2022 - For CWF (requirements/coding/preliminary unit testing); for FISS (design/coding); for MCS 
(analysis/design/coding); for VMS (analysis & coding); January 3, 2023 - For CWF 
(testing/implementation); FISS (continued development/testing/implementation); MCS (continued 
coding/testing/implementation); and VMS (testing & implementation) ) 
 
As described in Section 20.5, the A/B MACs and DME MACs currently handle DPPs manually.  Through 
this process, one or both of the Medicare Secondary Payer (MSP) contractors mail(s) a package of 
information that demonstrates a DPP situation.  If the A/B MAC or DME MAC receives enough detailed 
information about the primary payers action taken on various claims, the A/B MAC or DME MAC will 
initiate DPP adjustments to recover the Medicare primary payment from the provider.  To realize greater 
efficiencies in this process, CMS has decided to automate the DPP process. 
 
Through the automated DPP process, two of the Medicare Secondary Payer (MSP) contractors within the 
Coordination of Benefits & Recovery (COB&R) program enter information from the primary payers 
explanation of benefits or remittance advices or other payment remittances into the Benefits Coordination 
and Recovery System (BCRS).   The information (i.e., required data elements) that the contractors enter into 
BCRS will normally result in one of two types of Health Utilization Duplicate Primary Payment (HUDP) 
transactions that the COB&R systems contractor will create:  one that contains a Claims Processing 
Indicator value of F (primarily for a non-group health plan (NGHP)transaction) or one that contains a 
Claims Processing Indicator value of S (for a Group Health Plan (GHP)transaction).   If, for example, 
the information for an NGHP transaction that one of the COB&R contractors enters is very limited, such as  the beneficiary name (surname and first name), MSP Insurance Type Code, date of incident, and diagnosis 
code, the COB&R systems contractor will build a HUDP transaction with the Claims Processing Indicator 
set to F.  By contrast, the information for a GHP transaction that one of the COB&R contractors enters 
may be very comprehensive, providing enough of the required claims data to enable the shared system 
maintainer representing an A/B Medicare Administrative Contractor (MAC) or Durable Medical Equipment 
Medicare Administrative Contractor (DME MAC) to create and complete a DPP secondary claim 
adjustment.  Under this scenario, the COB&R systems contractor will build a HUDP transaction with the 
Claims Processing Indicator set to S. 
 
Initiation of the Automated DPP Process 
 
Following the creation of the HUDP file containing various DPP records for multiple beneficiaries and 
case types, the COB&R systems contractor shall transmit the file to the Common Working File (CWF).  This 
action could occur on a daily basis.  CWF shall review the incoming HUDP to determine if the Health 
Insurance Claim Number (HICN), MAC Contractor Number, MSP Type Code, Claims Processing Indicator, 
and Claim-From Date and Claim-Through Date (also known as Dates of Service (DOS)) are present and 
valid.  CWF shall also attempt to find a matching MSP auxiliary record (MSPA) when the incoming HUDP 
transaction Claims Processing Indicator is set to S or F.  
 
If CWF determines there are issues with the incoming HUDP transaction, the system shall return the 
applicable disposition code or error condition code to the COB&R systems contractor for resolution.   
 
If CWF determines that a portion of the incoming HUDP DPP records contains errors while other segments 
of the DPP records do not, CWF shall allow the DPP records without detected issues to be transmitted to 
the shared system representing a given MAC. And CWF shall return the DPP records that failed validation 
to the COB&R systems contractor.  CWF shall transmit the HUDP DPP records that passed validation to 
the shared system representing a given MAC via the current daily Unsolicited Response (UR) file or daily 
CWF reply file, as applicable to the shared system. 
 
CWF shall return a disposition code 01, denoting acceptable of the record, to the COB&R systems 
contractor.  CWF shall also transmit a disposition code 01 to the shared systems and associated A/B MACs 
and DME MACs as part of the HUDP file. 
 
A/B MAC and DME MAC Shared Systems Actions 
Upon receipt of the HUDP DPP records, the shared system shall determine whether it can create either a 
full claim denial adjustment (or full claim adjustment, as applicable) when the HUDP DPP record Claims 
Processing Indicator is set to F or attempt to create a DPP secondary claim adjustment when the Claims 
Processing Indicator is set to S. 
 
To the greatest extent possible, the shared system shall auto-adjudicate the identified DPP claims where 
Medicare inappropriately paid as primary.   
 
For HUDP DPP records where the Claims Processing Indicator is set to F, the shared system, or, as 
applicable, the A/B MAC or DME MAC, shall: 
  Fully deny the claim as a full claim denial adjustment. (Note: No matter how the shared systems or 
A/B MACs or DME MACs achieve the adjustment result or what terminology is used to describe the 
adjustment (i.e., a full claim denial, full claim adjustment, full replacement), CMSs intention is that 
the shared systems or A/B MACs or DME MACs shall reverse the claim(s) to take back Medicares 
full payment from the provider.)  
  Capture the MSP Type Code (Part B)/MSP Insurance Type Code (Part A) from the HUDP DPP 
record and associate it with the full claim denial adjustment.  
  Ensure that MSP savings are appropriately captured under the reported MSP Type Code (Part 
B)/MSP Insurance Type Code (Part A). 
  Initiate a full recovery from the provider.    
For HUDP DPP records where the Claims Processing Indicator is set to S, the shared system shall 
review the HUDP DPP record to ensure all required information is present.  Additionally, the shared system 
shall review the A/B MAC or DME MACs on-line DPP claim to extract other required data elements 
needed to create a Health Insurance Portability and Accountability Act (HIPAA) 837 compliant outbound 
claim as well as a compliant outbound Electronic Remittance Advice (ERA). 
 
When the shared system cannot create and/or complete a DPP adjustment due to problems with the HUDP 
DPP records content (e.g., missing required data elements or information that conflicts with the online 
DPP claim), the shared system shall include the information from the DPP record on to a report for A/B 
MAC or DME MAC review/intervention.   
 
As part of the automated DPP process, the shared system shall create DPP reporting on a daily and 
monthly basis and make the reports available to the associated A/B MAC or DME MAC.    
All A/B MACs and DME MACs, with the assistance of their Virtual Data Centers (VDCs), as necessary, 
shall store/retain all HUDP DPP records received from CWF and the various reports created and display 
them on-line for twelve (12) months. 
 
A/B MAC and DME MAC Requirements 
 
When adjudicating DPP adjustments, the shared system shall always set the claim header Mass Adjustment 
Indicator field value to O before transmitting the claims to CWF for normal processing.  Additionally, the 
shared systems shall always set the Beginning of the Hierarchical Transaction Reference Identification 
(BHT03) file value position 23 to S before creating outbound 837 coordination of benefits (COB) claims 
that result from DPP adjustments.  The DME MAC shared system shall also include the value S in the 
23rd byte 504-F04 (Message) field indicator when creating outbound National Council for Prescription 
Drug Programs (NCPDP) batch COB claims that result from DPP adjustments. 
 
All A/B MACs and DME MACs shall always process DPP adjustments as 935 adjustments. An exception 
to this rule is provider-initiated or requested adjustments, which are not handled as 935 adjustments. (See 
Pub.100-06, chapter 3, section 200 for more information.) 
 
For DPP adjustments, A/B MACs and DME MACs shall use the same reason/discovery codes as they have 
done under the manual DPP process. 
 
When incoming claims have dates of service that are five (5) or more years old, the shared system shall not 
create an automated DPP adjustment claim.  The shared systems shall instead include the DPP records on a 
report for A/B MAC or DME MAC review/intervention.  
 
When the shared systems do not auto-adjudicate a DPP claim whose Claim Processing Indicator= S and, 
instead, include the claim on a report for A/B MAC or DME MAC review and intervention due to missing 
required elements, the A/B MAC or DME MAC shall contact the BCRC or CRC, as applicable, by phone or 
via fax to attempt a resolution to the issue. 
 
If the appropriate MSP contractor is able to obtain the missing required information and enter it into BCRS, 
the COB&R systems contractor shall transmit the claim, with missing elements added, to CWF to re-initiate 
the DPP process. 
 
When there is conflicting information between the data on the DPP record and the claim within the A/B 
MAC or DME MACs claims history (e.g., the procedure codes and modifiers do not match), the A/B MAC 
or DME MAC shall:  
 
1)  Cancel the DPP claim if created by the shared system; and 
2)  Contact the BCRC or CRC, as applicable, by phone or via fax to attempt a resolution to the issue.  As with the missing required data scenario, if the appropriate MSP contractor is able to resolve the 
conflicting DPP information and make the needed correction in BCRS, the COB&R systems contractor shall 
transmit the corrected claim to CWF to re-initiate the DPP process.  
 
During the interval between CWF validating the incoming HUDP transaction and the time that the shared 
system receives an HUDP DPP record via the CWF UR daily response or daily CWF reply, it is possible 
that the primary payer may have deleted the MSP auxiliary record.  When this occurs, it is important that all 
stakeholders involved take certain steps to address the deleted MSP auxiliary record.  In this situation, the 
A/B MAC or DME MAC shall: 
 
  Not attempt to create an MSP Investigational (I) record on CWF; 
  Contact the appropriate MSP contractor to request that the primary payer be notified regarding the 
discrepancy between the evidence it has submitted to confirm its primacy status and the action taken 
to delete the MSP auxiliary record; and 
  Cancel the DPP adjustment. 
Important:  For the automated DPP process, all shared systems shall bypass their normal logic that 
requires the creation of an MSP I record when it has been determined that CWF does not contain an 
associated MSP auxiliary record. 
 
Once the appropriate MSP contractor has re-established the MSP auxiliary file, the COB&R systems 
contractor shall reinitiate the HUDP transaction, thereby restarting the DPP process.  
 
20.6  GHP Communications Received in Response to Recovery Actions 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Section 1862(b) (2) (B) of the Act, as amended by  2344(b) of the Deficit Reduction Act of 1984 (Pub. L. 
98-369), gives the Government the right to recover mistaken Medicare payments. Medicare must be 
reimbursed conditional primary benefits paid. The definition of primary payer, primary payment, and 
primary plan is found in 42 CFR  411.21. If the GHP still refuses to reimburse Medicare or does not 
respond to requests, the MSP contractor refers the case to Treasury in accordance with the Debt Collection 
Improvement Act (DCIA). 
If a GHP that is primary to Medicare refuses to reimburse Medicare for mistaken payments Medicare has 
made, the GHP must explain its reason. If the explanation is that plan benefits are not payable, and no valid 
defenses to non-payment are applicable, the MSP contractor shall not accept the explanation without 
supporting evidence from the GHP and/or the employer/ other plan sponsor. Valid defenses may include: 
coverage status; non-covered services; physician, provider, or other supplier duplicate primary payment 
(DPP); capitation; timely filing; employer size (working aged and disabled); long-term disability. If no valid 
defense is given, the MSP contractor shall inform the employer/ other plan sponsor that it is obligated to 
refund such payments to Medicare under applicable Medicare authority. Explanations that may not be 
accepted could include: the plan has not received a claim from the beneficiary; the insurance policy does not 
provide for payments to third parties; the plan maintains it is secondary payer for individuals who are in a 
30-month End Stage Renal Disease (ESRD) coordination period; the plan provides benefits secondary to 
Medicare regardless of the employment status of the individual or the individuals spouse; or the plan does 
not respond. 
If a GHP states that a primary payment was made, the contractor shall request an explanation of the benefits 
paid. In this situation, the information regarding the DPPs shall be forwarded to the appropriate MAC. The 
MAC shall recover any provider, physician, or other supplier, DPP. If payment was made to the beneficiary, 
the MSP contractor shall obtain a copy of the EOB from the employer/ other plan sponsor/GHP or the party 
that received the payment to confirm whether a true DPP situation exists with the beneficiary. It requests the 
party that received the GHP payment to refund the excess Medicare payment. The excess Medicare payment 
is the difference between the proper (as determined under the applicable regulations at 42 C.F.R. 411,  Subpart E) Medicare conditional primary payment and the amount Medicare is obligated to pay as 
secondary payer. 
MSP contractors shall use extra care when evaluating defenses submitted by the insurer/TPA when the 
debtor is the employer/ other plan sponsor. A defense raised by the insurer/TPA might be valid if the 
insurer/TPA were being pursued with respect to the debt, but invalid as a defense for the employer/ other 
plan sponsor. For example, the insurer might respond that it did not provide coverage during the period in 
question, or the TPA might respond that its contract was not in effect during the period in question. While 
proper documentation could establish these as defenses for the insurer and/or TPA, they are not defenses for 
the employer/ other plan sponsor. The employer/ other plan sponsor could have provided coverage through 
another insurer or had a different TPA contract in effect. Where the offered defense is an issue involving the 
specific coverage or payment limits of the policy, this should not be an issue. For example, a defense of 
exhaustion of the payment limits of the policy applies equally to the employer/ other plan sponsor and the 
Insurer/TPA.  
20.7  Recovery Where GHP Acknowledges Specific Debt (42 C.F.R.  411.25)  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If a GHP voluntarily and unsolicited by Medicare acknowledges that Medicare made a mistaken primary 
payment for a specific service and acknowledges that it should have or did make primary payment, the GHP 
must refund the Medicare primary payment. When a MSP contractor receives notice from a GHP along with 
identification of the specific claims for which Medicare mistaken primary payments were made, the MSP 
contractor shall: 
a)  Confirm whether a Common Working File record of the MSP situation has been established. If a 
record has not yet been established, the MSP contractor shall ensure the MSP occurrence is documented (via 
the Electronic Correspondence Referral System (ECRS) request, if necessary) no later than 30 calendar days 
following identification of the new MSP occurrence. 
b)  In the event of identified duplicate primary payments to physicians, providers, or other suppliers, the 
MSP contractor should refer those claims to the appropriate MAC for recovery. The MAC shall initiate the 
recovery process from the provider, physician, or other supplier for the identified duplicate primary 
payments. The MAC shall follow the instructions listed in the Medicare Financial Management Manual, 
(CMS Pub. 100-06), Chapter 3,  200.1.6. 
c)  In the event of an unsolicited voluntary refund, the MSP contractor sends notice and a refund check 
(classified as a voluntary/unsolicited refund) along with identification of the specific claims for which 
Medicare mistaken primary payments were made. The MSP contractor shall first: 
i.  Confirm that the payment was intended for GHP debt.  Look for any indication that the GHP has 
advised the contractor responsible for coordination of benefits of its primary payment responsibility. (e.g., 
there may be a cc at the bottom of the letter, etc.); 
ii.  If there is no indication that the GHP has advised of its primary payment responsibility, forward the 
notice information (usually via ECRS). If there is an indication that the GHP has advised CMS of its 
primary payment responsibility, do not send an ECRS request;  
iii.  Process the refund check as described in the Medicare Financial Management Manual (CMS Pub. 
100-06), Chapter 5,  410.4. 
20.8  Recovery from the Provider, Physician, or Other Supplier 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If both Medicare and the GHP made primary payment to the provider, physician, or other supplier, the MAC 
shall recover from the provider, physician, or other supplier pursuant to 42 CFR  411.24(g). Interest 
charges shall be assessed if repayment of the debt does not occur within the identified timeframe.  When a provider, physician, or other supplier receives payment from a GHP where Medicare has also paid, 
the provider, physician, or other supplier submits an adjustment bill showing the primary payment amount. 
The fact that the provider, physician, or other supplier received two primary payments establishes the 
repayment obligation. The MAC shall instruct the provider, physician, or other supplier to return to the 
beneficiary the amounts of the Medicare deductible and coinsurance already paid. The provider, physician, 
or other supplier may retain any excess GHP payment over the gross amount payable by Medicare. 
If duplicate payment was or will be made to the provider, physician, or other supplier, i.e., the provider, 
physician, or other supplier received both primary GHP payments and primary Medicare benefits, the MAC 
shall collect the duplicate primary payment from the provider, physician, or other supplier. The amount to be 
recovered is the lesser of the amount paid by Medicare and the amount that the GHP paid as its full primary 
payment. If the GHP paid the provider, physician or other supplier on a capitation basis, the appropriate 
amount to recover is the amount that Medicare paid. 
20.9  Recovery from a Beneficiary Who Has Received Primary Payment from Both 
Medicare and a GHP  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If both Medicare and the GHP made primary payment to the beneficiary, the MAC recovers the appropriate 
amount from the beneficiary based on the provisions of 42 CFR  411.24(g). The appropriate amount to be 
recovered is the lesser of the amount that Medicare paid and the amount that the GHP paid as its full primary 
payment. Interest charges shall not be accessed to the beneficiary for this type of recovery situation. 
If Medicare paid the provider, physician, or other supplier and the GHP paid the beneficiary, Medicare does 
not recover from either entity. Likewise, Medicare does not recover from any entity if the GHP paid the 
provider, physician, or other supplier and Medicare paid the beneficiary. Medicare has recovery rights 
against providers, physicians, and other suppliers, and beneficiaries only if both Medicare and the GHP paid 
the same entity. 
20.10  Courtesy Copy of All MSP GHP-Based Recovery Correspondence to the 
Insurer/Third Party Administrator (TPA)  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP contractors currently initiate GHP-based recoveries of mistaken payments to the employer/ other plan 
sponsor (considered the debtor if it received the original demand), with the exception of federal employers. 
In order to facilitate employer/ other plan sponsors efforts in responding to demand packages, MSP 
contractors shall send a copy of these demand packages and all other recovery correspondence to the 
employer/ other plan sponsors insurer/TPA.  
The courtesy copy sent to the employer/ other plan sponsors insurer/TPA does not change the employer/ 
other plan sponsors status as the debtor. The insurer/TPA is not considered a debtor because the 
insurer/TPA was not the addressee on the original demand letter. For Federal employer/ other plan sponsors, 
the insurer is considered the debtor and the demand letter is addressed to the insurer. MSP contractors shall 
comply with the sending of the courtesy copy of the demand package(s) to the employer/ other plan 
sponsors insurer/TPA. The demand letter will be addressed to the employer/ other plan sponsor, and the 
employer/ other plan sponsor is considered to be the debtor.   
MSP contractors shall follow debt referral procedures in  70 of this chapter. The fact that the insurer/TPA 
receives a copy of the demand package or that the insurer/TPA may be given authority to resolve a debt on 
behalf of its client (the employer/ other plan sponsor) does not change the status of the employer/ other plan 
sponsor as the debtor and as the entity to be referred to Treasury. 
30  Overpayment Due to Workers Compensation Coverage 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21)  30.1  General 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The provisions of 42 CFR  411.40(b) provide that no Medicare payment may be made for items and 
services to the extent that payment has been made or can reasonably be expected to be made for such items 
or services under a workers' compensation (WC) law or plan of the United States or any state. 
Further, no Medicare payment may be made if a WC plan has paid an amount: 
a)  Which equals or exceeds the Medicare reasonable charge; 
b)  Which equals or exceeds the providers charges for Medicare covered services; or  
c)  Which the provider, physician, or other supplier accepts or is required under the WC law to accept as 
payment in full. 
30.2  MAC Actions for Workers Compensation Recovery 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The MAC may pay for items or services, and subsequently learn that those services were work-related. The 
information indicating that a particular injury or illness occurred on the job does not necessarily mean that 
Medicare payments made for that injury were incorrect. In those circumstances, the MAC will review the 
information it received to determine if an MSP occurrence needs to be added.  
If the information included an EOB showing that payment was made to the provider by the WC carrier, the 
MAC initiates recovery according to their DPP process or accepts the funds sent with the Voluntary Refund 
or Credit Balance Report payment. Otherwise, recovery is made by the MSP contractor.    
30.3  Time Limit for Filing WC Claims  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Beneficiaries are obligated to apply for WC benefits to which they are entitled, and to abide by the terms 
under which those benefits are offered. See 42 CFR  411.43. Most WC plans have time limits within which 
the employee must notify the employer/ other plan sponsor that a work-related injury or illness occurred and 
file a claim. If a claim was not timely filed to the WC carrier, Medicare would deny the claim if submitted 
for payment. 
30.4  Duplicate Payment Received by Provider, Physician, or Other Supplier 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If a Medicare payment duplicates a WC payment, the MSP contactor recovers the Medicare payment from 
the provider, physician, or other supplier in accordance with the Medicare Secondary Payer Manual, Chapter 
3,  10.4. 
In any case, in which a primary payment is received from Medicare and from a third party payer, Medicare 
must be reimbursed within sixty (60) calendar days of receipt of the duplicate payment pursuant to the 
provisions of 42 CFR  489.20(h) 
Recovery of conditional payments is not subject to the reopening rules nor to the limitation on recovering 
incorrect Medicare payments discovered later than three years after the WC plan has become the primary 
payer. (See SSA  1862(b) (2) (B) (iii)). 
30.5  Medicare Paid for Services Which Should Have Been Paid for by WC 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
In any case in which it is clear that Medicare paid for services that should have been paid for by the WC 
carrier, the MSP contractor shall request that the Medicare program be reimbursed for the amounts 
conditionally paid by Medicare.  The MSP contractor includes in the request the amount that Medicare paid but should not have. In addition, 
it explains that the Medicare law excludes payments for services covered under WC, and requires WC 
carriers to refund the Government where Medicare has paid for services that are reimbursable under WC. If 
the beneficiary requests a waiver or an appeal of the overpayment determination, the beneficiary will be held 
responsible for the interest on the debt if the agency prevails and a refund is later collected. See 42 C.F.R.  
411.24(m). If the beneficiary is represented by an attorney, the MSP contractor should copy the attorney on 
any correspondence. The MSP contractor sends copies of all correspondence to the WC carrier when the 
WC carrier is the identified debtor, and issues courtesy copies to the WC state agency. 
42 C.F.R.  411.24(h) requires that a beneficiary or other entity repay CMS within 60 calendar days of 
receiving a primary payment. See 42 C.F.R.  411.24(h). Medicare assesses interest on MSP debts by 
exercising common law authority that is consistent with the FCCA and implementing regulations. See 42 
C.F.R.  411.24(m). If CMS does not receive a full refund, or adequate proof that no overpayment exists, 
within 60 calendar days of notifying the beneficiary of CMSs demand, the MSP contractor begins assessing 
interest as of the date of the mailing of the demand letter. 
42 C.F.R.  411.24(h) and 42 C.F.R.  411.24(m) provide express authority to assess interest on MSP debts. 
Interest is calculated on MSP debts using the method applicable to Non-MSP Medicare overpayments and 
underpayments as stated in 42 C.F.R.  405.378. For Medicare overpayments and underpayments and MSP 
debts, interest is calculated in full 30-day periods. Interest instructions for Medicare overpayments and 
underpayments are found in Chapter 4 of the Medicare Financial Management Manual, CMS Pub. 100-06. 
30.6  Medicare Made Party to WC Hearing 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If a WC agency has suggested that Medicare be represented at a WC hearing or has named Medicare as a 
party to a WC claim, the MSP contractor will contact CMS for guidance.  
30.7  Effect of Settlement 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If the beneficiary agrees to a settlement, and the settlement has given reasonable recognition to the income 
replacement objectives of the WC law, the settlement may be accepted as a basis for applying the WC award 
amount agreed to in the compromise lump sum settlement.  
The MSP contractor recovers, from the beneficiary, any Medicare payments made for items or services that 
have also been paid for by the WC settlement. (See the Medicare Secondary Payer Manual, Chapter 2,  50 
and 42 CFR  411.45). 
Pursuant to 42 CFR  411.47(b), where the award does not identify the items of medical or hospital expense 
covered, the MSP contractor allocates the amount of the award for medical and hospital expenses incurred 
up to the date of the award, in the following manner: 
a)  First to any beneficiary payments for services payable under WC but not covered under Medicare; 
b)  Second to any beneficiary payments for services payable under WC and also under Medicare Part B. 
(These include deductible and coinsurance amounts and, in unassigned cases, the charge in excess of the 
reasonable charge); and  
c)  Third to any beneficiary payments for services payable under WC and also covered under Medicare 
Part A. (These include. Part A deductible and coinsurance amounts and charges for services furnished after 
benefits are exhausted). 
The difference between the amount of the WC payment for medical expenses and any beneficiary payments 
constitutes the Medicare overpayment. The beneficiary is liable for that amount. 
The following examples illustrate the above concepts:  a)  A WC settlement paid for $6,000 of the total medical expenses. The $18,000 in medical expenses 
included $1,500 in charges for services not covered under Medicare, $7,500 in charges for services covered 
under Medicare Part B, and $9,000 in hospital charges for services covered under Medicare Part A. All 
charges were at the workers compensation payment rate, that is, in amounts the provider, physician, or 
other supplier must accept as payment in full. 
The Medicare allowed charge for physicians services was $7,000 and Medicare paid $5,600 (80 percent of 
the reasonable charge). The Part B deductible had been met. The Medicare payment rate for the hospital 
services was $8,000. Medicare paid the hospital $7,480 ($8,000 minus the Part A deductible of $520) 
    In this situation, the beneficiarys payments totaled $3,920 as follows: 
Services not covered under Medicare  totaled $1,500. 
Excess of physicians charges over reasonable charges totaled $500. 
Medicare Part B coinsurance was $1,400. 
Part A deductible was $520. 
Total:  $3,920  
The Medicare overpayment, for which the beneficiary is liable, would be $2,080 ($6,000 -$3,920). 
If it appears that a settlement represents an attempt to shift to Medicare the responsibility for the payment of 
medical expenses for the treatment of a work-related condition, it will not be recognized. Settlements of this 
type may occur, for example, when the parties attempt to maximize the amount of disability benefits paid an 
injured employee under WC by releasing the WC carrier from liability for a particular course of treatment, 
despite facts showing a relationship between the work injury and the condition that necessitated the 
treatment.  
b)  A Medicare beneficiary had surgery for a hip fracture received in the course of employment. 
Following surgery, the individual went into postoperative shock and suffered a cerebrovascular accident that 
required hospitalization for an additional three (3) months. The total hospital bill was $12,000. Despite the 
fact that, under these circumstances, the State WC plan would have covered the individuals entire hospital 
bill, the beneficiarys attorney instructed the hospital to bill the WC carrier only for the expenses incurred 
through the date of the hip surgery, pending the outcome of the disability settlement that was being 
negotiated. 
The State WC agency subsequently approved a compromise settlement, under the terms of which the WC 
carrier admitted liability for the hip fracture but not for the stroke. The settlement provided payment to the 
beneficiary of $18,000 plus payment to the hospital of $1,200 for his stay through the date of the surgery. 
Following the settlement, the beneficiary requested the MSP contractor to pay for the three months of 
hospitalization following the surgery, since the settlement did not stipulate that treatment of the stroke was 
work-related. The MSP contractor determined that payment under WC for treatment of the stroke could 
reasonably have been expected if the beneficiary had not agreed to give up his right to such compensation. 
It, therefore denied the claim. The provider, physician, or other supplier has the right to bill the beneficiary, 
since these services would have been covered by WC and, therefore, are not payable by Medicare. 
c)  A Medicare beneficiary settled a WC claim which stipulated, among other things, that the WC 
carrier would: 
i.  Pay the individual a lump sum of $50,000 as compensation for permanent and total disability; 
ii.  Pay all of the individuals medical expenses related to his work injury until he became entitled to 
benefits under Medicare or any other Government medical benefit program; and  iii.  Continue to pay, without any time limitation, any portion of his medical expenses for the work injury 
that was not reimbursable under a Government program. 
It further stipulated that the employee would seek payment for the medical care related to the work injury 
from State and Federal Government programs to reduce the obligation of the employer/ other plan sponsor 
and carrier as much as possible. 
Although the compensation order was designed to reduce the obligation of the employer/ other plan sponsor 
and carrier to pay for medical care by shifting medical expenses to Medicare and other Government 
programs where possible, the agreement recognized the WC carriers continuing responsibility for the 
individuals medical care. Since Medicare is not bound by such covenants, benefits were denied for all 
expenses subsequently incurred for treatment of the work injury. The Medicare beneficiary may be billed for 
these services. 
d)  In July, 1998, Mr. Y, age 30, was involved in an accident at work sustaining injury to his neck, back, 
right arm and legs. Beginning with the date of the accident, the WC carrier paid Mr. Y weekly benefits of 
$207 for temporary disability and also paid all of his medical expenses. 
In 2000, Mr. Y became entitled to Medicare based on disability. In July 2002, the WC insurer decided to 
terminate Mr. Ys medical and disability payments based on medical advice that his continuing impairments 
were not attributable to the work injury. By this time, the insurer has paid a total of $90,000 for Mr. Ys 
medical care. 
Mr. Y contested the termination of his WC benefits, and the case was settled by compromise. A lump sum of 
$46,000 ($6,000 of which was designated as attorneys fees) was paid to Mr. Y. As part of the settlement 
agreement, Mr. Y signed a final release that stipulated that future medical expenses were in dispute and that 
they were to be assumed by Mr. Y as his sole responsibility. 
The fact that Mr. Y accepted, and the State WC agency approved, a relatively small lump sum payment, 
compared with what Mr. Y would have received had his WC claim been approved in full, indicates that 
there was doubt as to the compensability of the injury. There was no indication that the lump sum was 
intended to be payment for future medical expenses, nor do these facts indicate that the settlement 
represented an attempt to shift the responsibility for future medical expenses from WC to Medicare. 
Therefore, Mr. Ys signing of the final release of all rights under WC makes it possible for medical expenses 
incurred after the date of settlement to be reimbursed under Medicare. 
40  Overpayment Recoveries from Liability Insurance Including No-Fault Insurance, 
Uninsured, or Under-Insured Motorist Insurance 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
40.1  General 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Section 1862(b) of the Act grants Medicare a priority right of recovery. Section 1862(b) also gives the 
Medicare program the right of subrogation for any amounts payable to the Medicare under Section 1862 of 
the Act. To recover any conditional payments it has made, Medicare may bring a direct cause of action in its 
own right against the entity responsible or required to pay Medicare for the items and/or services Medicare 
conditionally paid, or against any other entity that has received payment. In addition, Medicare has, under 
subrogation law, a right to recover its payment from an individual or other entity that received payment from 
a third party payer. 
Medicare has a priority right of recovery regarding its benefits, which takes precedence over the claims of 
any other party, including Medicaid. MSP contractors should focus on Medicares priority right of recovery 
when corresponding with the beneficiary and/or the beneficiarys attorney.  Medicare may employ various statutory authorities to waive, compromise, terminate, or suspend its right of 
recovery. Section 1862(b)(2)(B)(v) of the Act provides for waiver of an MSP overpayment when it is in the 
best interests of the Medicare program. Section 1870(c) of the Act also permits Medicare to waive its right 
to recovery when the beneficiary meets certain criteria. See 42 C.F.R.  411.28. The Federal Claims 
Collection Act (FCCA) of 1966 (31 U.S.C.  3711) gives Medicare the right to compromise claims for less 
than the full amount on behalf of the Government of the United States, or to suspend or terminate collection 
action. MSP contractors have authority to resolve claims under Section 1870(c) of the Act, but not under the 
FCCA nor Section 1862(b) of the Act.  
It is common for insurance companies to settle claims without admitting liability. Therefore, any payment 
by a liability insurer, except payments under a no-fault clause in a non-automobile policy, constitutes a 
liability insurance payment whether there has been a determination of liability. In addition, regardless of 
how amounts may be designated in a liability award or settlement, e.g., loss of consortium, special damages 
or pain and suffering, Medicare is entitled to be reimbursed for its payments from the proceeds of the award 
or settlement. 
If a negligent party who carries liability insurance decides to pay a liability claim with his/her own funds 
rather than submit the claim to the liability insurer, Medicare recovers its benefits for such a payment 
because it is deemed to be a liability insurance payment (which includes self-insured entities). See 42 C.F.R. 
 411.50. 
40.2  Provider, Physician, Other Supplier, and Beneficiarys Responsibility with 
Respect to No-Fault Insurance 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The provider, physician, other supplier, and beneficiary (or the beneficiarys representative) are responsible 
for taking whatever action is necessary to obtain any payment that can reasonably be expected under no- 
fault insurance. See 42 CFR  411.50(c) and 489.20. Therefore, unless conditional payments can be made 
under  40.7 of this Chapter, Medicare shall not make any Medicare payments until the provider, physician, 
other supplier, or the beneficiary has exhausted the entire claims process under no-fault insurance (unless the 
claim is disputed by the no-fault insurer, in which case Medicare is obligated to pay the claim, if properly 
submitted to Medicare). Conditional benefits are not payable if payment cannot be made under no-fault 
insurance because the provider, physician, other supplier, or the beneficiary failed to file a proper claim. 
(See Chapter 1,  20 of the Medicare Secondary Payer Manual for definitions). 
40.3  Conditional Primary Medicare Benefits  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Conditional Medicare payments may be made in liability cases under the following circumstances: 
a)  The beneficiary has filed a claim with the liability insurer, and the MSP contractor determines that 
the insurer will not pay or will not pay promptly (i.e., within 120 calendar days of receipt of the claim) for 
any reason except when the liability insurer claims that its benefits are only secondary to Medicare; or 
b)  The beneficiary, because of physical or mental incapacity, failed to meet a claim filing requirement 
of the liability insurer. 
When such conditional Medicare payments are made, they are made on condition that the beneficiary will 
reimburse the program to the extent that the liability/no-fault insurer subsequently makes payment. When 
making such payments, the MSP contractor notifies the beneficiary and the insurer of the requirement for 
repayment. (However, failure to do so does not relieve the beneficiary or insurer of the obligation to refund 
the payments.)  
The MSP contractor flags all cases for possible follow-up action to recover the conditional payments.  An individuals refusal to file a claim with a liability or no-fault insurer or to cooperate with a provider, 
physician, or other supplier in filing such a claim is not a basis for making a conditional Medicare payment. 
40.4  Services Covered Under No-Fault Insurance Where Liability Claim Also Filed 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If injuries are covered under automobile, medical, or no-fault insurance, and the individual also files a claim 
against a third party for injuries suffered in the same accident, a claims determination must first be made by 
the automobile, medical, or no-fault insurer before a claim for Medicare benefits can be paid. Conditional 
Medicare payment may be made to the extent that payment is not made under the automobile, medical, or 
no-fault insurance. The payment is subject to recovery, if the individual later receives payment from a 
liability insurer. For example, an individual incurs $20,000 in covered medical expenses due to an 
automobile accident. The individual receives $5,000 in no-fault insurance benefits toward covered medical 
expenses and also has a liability claim pending against the driver of the other car. Medicare does not pay 
benefits for the $5,000 in expenses paid for by the no-fault insurer but pays conditional benefits based on the 
additional $15,000 in expenses. The Medicare payment is subject to recovery when the liability claim is paid 
(in other words, a settlement, judgment, award, or other payment has been received/made). 
40.5  Action if a Liability Insurance Payment Has Been Made to the Provider, 
Physician, or Other Supplier Who Accepted Medicare Assignment 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If a MAC discovers that Medicare paid primary benefits and payment was also made by a liability/no-fault 
insurer, it recovers the excess Medicare benefits in accordance with Chapter 3 of the Medicare Financial 
Management Manual. Section 90 of that manual states when a provider, physician, or other supplier is liable 
for refunding the primary Medicare payments.  The beneficiary is liable in all other situations. 
Upon receipt of information that a liability/no-fault insurer paid a provider, physician, or other supplier for 
services previously paid for by Medicare, the MAC determines the amount of Medicare secondary benefits 
payable on the claim. It recoups from the provider, physician, or other supplier any portion of the amount 
Medicare paid in excess of the amount of Medicare secondary benefits payable, subject to the overpayment 
recovery threshold (currently $25) in the Medicare Financial Management Manual. (See Chapter 4,  10 of 
the Medicare Financial Management Manual). Where no Medicare secondary benefits are payable, the MAC 
recovers the amount of the Medicare payment. The provider, physician, or other supplier may keep the full 
liability/no-fault insurance payment, but may not charge the beneficiary any amount for the services and 
must return any deductible and coinsurance amounts paid by or on behalf of the beneficiary. (See Medicare 
Financial Management Manual, Chapter 3, Section 70 (CMS Pub. 100.06), where the provider, physician, or 
other supplier did not file a proper claim). 
40.6  No-Fault Insurance Pays and Medicare Makes No Secondary Payment 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Under 42 C.F.R.  411.32(b), Medicare does not make a secondary payment if the provider, physician, or 
other supplier is either obligated to accept, or voluntarily accepts as full payment, a third party payment that 
is less than its charges. 
For example, if the amount of payment for particular services under no-fault insurance is less than the 
provider, physician, or other suppliers charges but is deemed payment in full under State law, Medicare 
benefits are not payable. The insurance payment constitutes a service benefit; i.e., the payment constitutes 
full discharge of the patients liability to the provider, physician, or other supplier. 
40.7  No-Fault Insurance Does Not Pay All Charges Because of Deductible or 
Coinsurance Provision in Policy 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21)  In a number of States, no-fault insurers may reduce no-fault insurance benefits by deductible or coinsurance 
amounts, or may offer the option for such a reduction. If such contract provisions apply to all policyholders, 
Medicare pays benefits with respect to otherwise Medicare-covered expenses that are not reimbursable 
under such a no-fault contract. Therefore, if a no-fault insurer has been billed and has made no payment 
because of a deductible or coinsurance, or only a partial payment (e.g., the insurance deductible has been 
bridged), the claimant may bill Medicare following the procedures set forth in the Medicare Claims 
Processing Manual for billing for secondary Medicare benefits. If no payment was made under no-fault, the 
MSP contractor applies the usual Medicare deductibles and coinsurance in calculating the Medicare 
secondary payment. See 42 CFR  411.50-411.53.  
For example, the beneficiary receives outpatient hospital services covered by no-fault insurance. The total 
charges are $200. The no-fault insurer is billed for $200, but makes no payment because of a $1000 
deductible in policy. The hospital then bills Medicare for $200.   
40.8  Other Situations 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
In other cases, no-fault insurance may not pay the provider, physician, or other suppliers charges because 
the beneficiarys total medical expenses exceed the dollar limit of the coverage, or because of some other 
coverage limit, deductible, or coinsurance applicable to all policyholders. (See  40.7 of this Chapter). 
A provider, physician, other supplier of services, or any other facility, may not charge a beneficiary or any 
other party for Medicare covered services, if the provider, physician, other supplier, or facility has been paid 
by a no-fault insurer an amount that equals or exceeds the gross amount payable by Medicare. This 
prohibition is based on the terms of their Medicare participation agreements, under which a provider, 
physician, or other supplier may bill a Medicare beneficiary only for deductible and coinsurance amounts 
and for non-covered services. 
If a MSP contractor has reason to question the correctness of the amount shown on the Medicare claim as 
having been paid by no-fault insurance, it confirms the amount with the insurer or beneficiary. A copy of a 
no-fault insurers explanation of benefits is the best evidence.  
40.9  Medicares Recovery from a Primary Payer  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
There is no Medicare overpayment until the beneficiary receives a settlement, judgment, award, or other 
payment. Medicares claim comes into existence by operation of law (Section 1862(b)(2)(B)(ii) of the Act) 
when payment for medical expenses that Medicare conditionally paid for has been made by a third party 
payer. Consequently, while Medicare may alert beneficiaries and their attorneys of Medicares right to 
recover settlement proceeds in pre-settlement correspondence, no demand for recovery may be made until a 
settlement has been reached. However, the MSP contractor should send a letter to the beneficiary and 
attorney giving notice of possible recovery by Medicare. 
40.10  Pre-Settlement Communications 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
In many instances, liability settlements are reached without resorting to litigation, or before a trial 
commences. If the beneficiary is pursuing the claim, the MSP contractor advises the beneficiary of 
Medicares interest in the matter.  
If the beneficiary has engaged counsel, that counsel should file a proof of representation with Medicare. 
Without the proof of representation, Medicare cannot communicate with the beneficiarys representative. If 
the MSP contractor receives proof of representation, it will retain copies for the file. Note that if the 
beneficiary has not engaged counsel, there may not be beneficiary procurement costs to subtract from 
Medicares claim. MSP contractors are not permitted to conduct negotiations with liability insurers.   If the beneficiary wishes for any other party to receive information regarding his/her MSP recovery case, or 
if any other party wishes to receive such information, the party much have an executed Consent to Release 
before the MSP contractor can share the information. 
40.11  Designations in Settlements 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
In general, Medicare policy requires recovering payments from liability settlements, judgments, awards, or 
other payments, whether the settlement arises from a personal injury action or a survivor action, and without 
regard to how the settlement agreement may stipulate disbursement of any proceeds. This includes situations 
in which a settlement, judgment, award, or other payment does not expressly include damages for medical 
expenses or in situations where multiple settlements have been received related to the same incident. 
Because liability payments are usually based on the injured or deceased individuals medical expenses, 
liability payments are considered to have been made with respect to medical services related to the injury 
even when the settlement does not expressly include an amount for medical expenses. To the extent that 
Medicare has paid for such services, the MSP provisions of the Act require Medicare to seek recovery of its 
payments. See 42 CFR  411.37. 
Medicare may, at is discretion, recognize allocations of liability payments to nonmedical losses when: 
a)  The allocation is based on a court order; 
b)  Issued by a court of competent jurisdiction (a court that has jurisdiction over both the dispute 
regarding the medical items/services at issue and the parties to the case or controversy at issue); 
c)  That considered the merits of the case, including the medical items/services at issue in the case; and 
d)  That considered Medicares interests in the liability recovery at issue. 
If such an order specifically designates amounts that are not related to medical items/services, Medicare 
may, at is discretion, accept the courts designation. 
Medicare generally does not seek recovery from portions of court awards that are designated as payment for 
losses other than medical items/services. 
40.12  Allegation of Pre-existing Conditions 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
In some cases, the amount of the overpayment is questioned on the grounds that services included in the 
calculation were for preexisting conditions and should be omitted from the overpayment calculation. 
When a beneficiary has filed suit for accident-related services, including services relating to exacerbation of 
an underlying condition as the basis for the complaint, the total amount of Medicares payments should be 
used to calculate the amount of Medicares recovery. The fact that the settlement or other documentation 
provides that all parties considered such services to be unrelated to the accident or injuries, does not justify 
omitting them from Medicares recovery. 
 
 
40.13  MSP Contractor Action if a Liability Claim Is Pending and Medicare Benefits 
Were Paid 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If the MSP contractor has specific information from a third party payer, beneficiary, or attorney that an 
insurer had primary payment responsibility for a particular MSP situation, the MSP contractor must search 
all applicable claims history, identify primary payments related to the MSP situation, and recover any 
conditional payments Medicare has made.   The MSP contractor develops all cases where there is no specific information that a MSP situation does exist 
but there is evidence that a MSP situation may exist to determine if a MSP situation does exist. If the MSP 
contractor development establishes that a MSP situation does exist and that there are primary payments to be 
recovered, the MSP contractor must recover the conditional payments identified. 
If a Medicare claim has been paid and there is indication that a liability claim is pending, the MSP contractor 
takes steps to assure that, in the event a liability insurance payment is made, any conditional primary 
Medicare payments are refunded for services related to the injury. If the services were not related to the 
accident, but were used to procure the settlement, the MSP contractor recovers Medicares payments. If the 
services were unrelated to the accident, the MSP contractor will not recover Medicares payments.  
However, the entire amount of a settlement is subject to recovery, whether the liability payment is made at 
the time of settlement, or over a period of time agreed to by the parties in a structured settlement. The MSP 
contractor notifies the beneficiary of Medicares right to reimbursement. If the beneficiary has an attorney, 
the MSP contractor also notifies the attorney and retains a copy of the notification in its files. 
If disbursement has not yet been made to the beneficiary (e.g., beneficiarys attorney is holding monies in an 
escrow account, or a multiple party check is yet unsigned), the MSP contractor attempts to recover 
Medicares portion of the settlement. It is very important that the file reflect that Medicares right to 
reimbursement was asserted before the beneficiary had an opportunity to dispose of the funds. This 
information is especially important if a future request for waiver or compromise is submitted. 
When a liability claim is pending, and Medicare made conditional payments for services rendered before 
settlement, and Medicare is billed after the settlement has been reached, the MSP contractor may recover 
Medicares payment for the additional claims if Medicare did not have knowledge of them at the time of 
settlement. See 42 C.F.R.  411.50-54. 
40.14  Recovery from Liability Insurers 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The fact that a settlement has been made between the beneficiary and the liable party does not, necessarily, 
bind Medicare to that settlement. If the liability insurer was aware of Medicares interest, but Medicare was 
not consulted in the settlement, Medicare may pursue the balance of its claim, over and above any amount 
granted to it in the settlement, against the liability insurer. (See 42 C.F.R.  411.24(i)). 
Section 1862(b) of the Act, as amended in 1984, gives the Government the right to recover Medicare 
payments from liability insurers without regard to whether the insurer has already made a liability insurance 
payment. If the liability insurer does not properly pay Medicare, Medicare has the right to take legal action 
against the insurer and to collect double damages. 
NOTE: When a liability insurer is obligated to make payment to an injured plaintiff who is age 65 or older, 
the insurer has reason to know of Medicares probable interest and to act to ascertain Medicares 
involvement. 
When CMS seeks to recover Medicare conditional payments from an insurance company paying a 
settlement amount owed to the beneficiary, the MSP contractor must send a copy of the letter to the 
beneficiary. Likewise, it must notify the insurer of the fact that the beneficiary was sent a copy of the letter. 
If it knows that the beneficiary has an attorney, it forwards a copy of the letter to the attorney. It retains 
copies for the file. 
40.15  Recovery of Liability or No-Fault Payments from the Beneficiary 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Pursuant to 42 C.F.R.  411.24, if a liability or no-fault insurance payment was made to the beneficiary, the 
MSP contractor recovers the amount of primary benefits Medicare paid in excess of any secondary Medicare 
benefits payable. Regulations permit reducing that amount to allow for the beneficiarys costs in procuring  liability or no-fault benefits only in cases where the claim was in dispute (i.e., the no-fault insurer at first 
would not pay and only after an attorney intervened was payment made). If the beneficiary claims 
procurement costs to obtain liability insurance payments, the MSP contractor secures a breakdown between 
the two; however, the MSP contractor will not seek this additional information if the beneficiary is deceased. 
If a beneficiary is paid by a liability insurer, MSP contractors recover from the beneficiary, Medicares 
primary payment, reduced by a proportionate share of the beneficiarys procurement costs, if any. The MSP 
contractor uses the formula in  40.18 of this Chapter to determine the amount of Medicares claim when 
there are beneficiary procurement costs. 
If a negligent party who carries liability insurance decides to pay a liability claim with their own funds rather 
than submit the claim to the liability insurer, Medicare recovers its benefits from such a payment because it 
is deemed to be a liability insurance payment. Medicare benefits are also subject to recovery from payments 
by a self-insured party. (See Chapter 1,  10 of the Medicare Secondary Payer Manual). 
  
40.16  Calculating Medicares Share of Beneficiary Procurement Costs 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Pursuant to 42 C.F.R.  411.37, the Medicare recovery is reduced when procurement costs are incurred by a 
beneficiary to obtain a third party payment as a result of a settlement, judgment, award, or other payment. 
If the reimbursement is not made, Medicare: 
a)  May bring legal action against any entity required to make or responsible for payment and collect 
double damages; 
b)  May take legal action to recover its benefits from any entity that has received primary payment from 
the NGHP for items and services furnished to an individual for whom Medicare is the secondary payer; 
c)  May join or intervene in any legal action against the NGHP related to the events that gave rise to the 
need for the items or services; and 
d)  Is subrogated to the extent it paid for items or services to the rights of any individual who is entitled 
to receive primary payment from a NGHP. 
Under 42 C.F.R.  411.37, Medicare will recognize a proportionate share of the necessary procurement costs 
incurred by a beneficiary in obtaining a settlement, judgment, award, or other payment. Procurement costs 
are those costs incurred by the beneficiary in obtaining a settlement, judgment, award, or other payment (e.g. 
court costs, attorney fees). If a liability insurer pays a beneficiary, the MSP contractor recovers Medicares 
payment from the beneficiary, reduced by a proportionate share of the beneficiarys procurement costs, if 
any. 
If, under the Prospective Payment System (PPS), Medicare pays a provider, physician, or other supplier 
more than its charges, the MSP contractor does not recover more than the charges from a beneficiarys 
liability settlement. See P.L. 98-21 (97 Stat. 65, April 20, 1983). (Under Medicare regulations, a beneficiary 
who must refund a Medicare payment made to a provider, physician, or other supplier is liable only to the 
extent that the beneficiary benefited from the payment. Since the beneficiary would have had to pay only the 
provider, physician, or other suppliers charges in the absence of Medicare, the beneficiary is not liable for 
refunding more than the charges). The provider, physician, or other supplier is not required to refund the 
excess of the Medicare payment rate over the provider, physician, or other suppliers charges. See Medicare 
Financial Manual, Chapter 3 (Overpayments), Section 110.1. 
To determine beneficiary procurement costs, the MSP contractor asks the attorney to furnish (in writing) the 
costs, including attorney fees, incurred by the beneficiary to procure the settlement, judgment, award, or 
other payment. If these costs appear in excess of the prevailing costs in the area for similar claims, it asks for 
an itemized statement of costs or copy of a contingency agreement, if applicable, or other appropriate  documentation. If the beneficiarys procurement costs are documented, the MSP contractor allows them. 
Should a MSP contractor need advice on what constitutes beneficiary procurement costs in a particular case, 
it should consult CMS.  
The MSP contractor uses the following formula to determine the amount of Medicares claim when there are 
beneficiary procurement costs: 
a)  Determine the ratio of the beneficiary procurement costs to the total amount of the liability insurance 
settlement, judgment, award, or other payment; 
b)  Apply this ratio to the Medicare payment. The product is the Medicare share of the beneficiary 
procurement costs; and 
c)  Subtract the Medicare share of beneficiary procurement costs determined in step 2 from the lesser of 
the total conditional payments or the provider, physician, or other suppliers charges. The remainder is the 
amount to be refunded to the Medicare program. (This amount may be rounded to the nearest dollar). 
NOTE: If Medicare payments equal or exceed the amount of the liability insurance settlement, judgment, 
award, or other payment amount, the MSP contractor recovers the entire liability insurance settlement, 
judgment, award, or other payment, up to the amount of the provider, physician, or other suppliers charges, 
minus the total beneficiary procurement costs. 
40.17  CMS Incurs Procurement Costs 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If CMS must bring suit against the party that received payment because that party opposes CMS recovery, 
the recovery amount is the lower of the following: 
a)  The Medicare payment; or 
b)  The total settlement, judgment, award, or other payment amount, minus the partys total procurement 
cost. 
40.18  Medicare Liability Settlement Claim Reimbursement Summary 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The Medicare Liability Settlement Claim Reimbursement Summary provides a worksheet for use in 
calculating beneficiary procurement costs, Medicares share of the beneficiarys procurement costs, and 
Medicares claim to be recovered as follows: 
MEDICARE LIABILITY SETTLEMENT CLAIM REIMBURSEMENT SUMMARY 
Beneficiary: 
HICN: 
1. Amount of settlement $ 
2. Medicare payments (identified by MSP contractor) $ 
3. Total Medicare payments $ 
4. Attorney fees (% of line 1, if applicable) $  
5. Other procurement costs incurred by the beneficiary (per attorney) $ 
6. Total beneficiary procurement costs (lines 4 + 5) $    
7. Ratio of beneficiary procurement costs to settlement (line 6 / line 1) % 
8. Medicares share of beneficiary procurement costs (line 3 x 7) $  9. Total Provider, Physician, or Other Suppliers Charges $   
10.  Medicares claim to be recovered (the lesser of line 3 or line 9 minus line 8) $    
40.19  Collecting Interest on Medicares Claim 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Medicare assesses interest on MSP debts by exercising common law authority that is consistent with the 
FCCA and implementing regulations. (See 45 C.F.R.  30.18). CMS requires that a beneficiary or other 
entity repay CMS within 60 calendar days of receiving insurance proceeds from a third party payer. (See 42 
C.F.R.  411.24(h)). 
If CMS does not receive a full refund, or adequate proof that no overpayment exists, within 60 calendar days 
of notifying the beneficiary of CMSs demand, the MSP contractor begins assessing interest as of the date of 
the mailing of the demand letter. 
Interest will continue to accrue on delinquent debts until the debt is either paid in full or there is a 
determination to terminate the collection action by CMS. 
The following considerations apply in determining the amount of interest owed on an outstanding MSP debt: 
a)  Interest can be charged only after the responsible entity has been notified of the debt and a demand 
for payment has been made, and has had sixty calendar (60) days in which to make repayment. Interest due 
is calculated beginning from the date of the original demand letter; 
b)  Interest cannot be assessed on deductible and coinsurance amounts; and     
c)  Even though MSP contractors will be requesting repayment of the gross Medicare payment, interest 
can be charged only on the actual Medicare payment or the provider, physician, or other suppliers charges, 
if less. Therefore, these amounts must be separated to determine the amount on which interest will be 
charged. 
40.20  Installment Payments and Multiple-Party Settlement Checks  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If the beneficiary wishes to refund in installments, the MSP contractor follows the instructions found in the 
Medicare Financial Management Manual, Chapter 3,  110.8. 
If a liability insurer sends the MSP contractor a check intended to repay Medicare benefits paid on the 
beneficiarys behalf, but which is made out jointly to Medicare and to other parties (such as the beneficiary 
or representing attorney), the MSP contractor sends a note to the other payee(s) asking them to endorse the 
check and return it to the MSP contractor. It does not endorse the check before endorsement of the other 
payee(s) is received. 
 
 
 
 
40.21  Appeals Procedures for MSP Liability and Waiver Determinations 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
These instructions prescribe procedures to be used in processing appeals of: 1) MSP liability  determinations 
(including Non-Group Health Plan (NGHP) debt, beneficiary debt, and insurer debts created after 4/28/2015 
(following implementation of the Saving Medicare and Repaying Taxpayers Act of 2012); and 2) MSP 
waiver determinations. Since recovering MSP liability determinations involves procedures which vary 
somewhat from those used for general Medicare overpayments, the following recovery instructions are to be 
used in place of the general overpayment instructions found in the Medicare Claims Processing Manual  (Chapter 29, Appeals of Claims Decisions), except where specific references to those sections are provided. 
These instructions supersede any conflicts in the procedures. 
40.22  Initial Determinations 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Initial determinations generate appeal rights. There are three types of initial determinations made within the 
context of the MSP program that generate appeal rights.  
The beneficiary may appeal: 
a)  The existence of the overpayment; 
b)  The amount of the overpayment; and 
c)  A waiver request under 1870(c) of the Act that receives a less than fully favorable CMS decision. 
Effective for recovery demand letters issued on or after April 28, 2015, the rules do not change for GHP-
based recovery demand letters. The rules do change for recovery demand letters issued to applicable 
plans, that is, to liability insurance (including self-insurance), no-fault insurance, or workers compensation 
entities as the identified debtor. Recovery demand letters issued to these entities on or after April 28, 2015, 
are initial determinations and are subject to the regulations in 42 C.F.R.  405.900 et seq. However,  
1870 waiver of recovery is not applicable to demands issued to applicable plans. Consequently,  1870 
waiver of recovery language shall not be included in demands issued to the applicable plan as the identified 
debtor. 
Negotiation of a compromise or suspension or termination of collection action under FCCA by CMS is not 
an initial determination and, therefore, generates no appeal rights. (See 42 C.F.R.  405.926(h)). A waiver 
granted under Section 1862(b) of the Act also generates no appeal rights. 
40.23  Notification of the Right to Appeal 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The beneficiary must be given notice of appeal rights within the document reflecting the initial 
determination. If the beneficiary continues to follow through with the appeal process, notice of the next 
sequential appeal right must be given with each new determination. (See also  40.26). 
 
40.24  Appeals of MSP Liability Determinations 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP liability determinations that may be appealed are listed at  40.24. MSP contractors are responsible for 
processing appeals of these determinations. When processing MSP determination appeals, the MSP 
contractor generally follows the process set forth in the Medicare Claims Processing Manual (Chapter 29, 
Appeals of Claims Decisions). 
a)  Requests for Appeal 
Any writing that the MSP contractor receives indicating dissatisfaction with the initial determination 
constitutes a request for an appeal. Any language about a review, reexamination, investigation or the like is 
deemed an implied request for an appeal. (See for example 42 C.F.R.  405.944). 
b)  Combined Requests for Waiver and Appeal 
If a beneficiary objects to recovery of Medicares claim on the basis of hardship or inequity, the MSP 
contractor treats the objection as a request for waiver, even if it is filed on a document normally used to 
request an appeal.  If the beneficiary simultaneously requests an appeal of the overpayment (either the amount or its existence) 
AND requests waiver, the MSP contractor processes the appeal request before processing the request for 
waiver. 
If the initial overpayment determination is affirmed, then the MSP contractor proceeds with evaluation of 
the waiver request in accordance with the instructions found in  50 of this Chapter. It issues the waiver 
determination.  
Where simultaneous waiver and appeal requests have been made, the MSP contractor sends a brief letter 
acknowledging receipt of the requests. The acknowledgment letter informs the beneficiary that both requests 
will be processed together, although the correctness of the overpayment determination will be determined 
first. After a determination regarding both the overpayment and the waiver request have been made, the 
MSP contractor sends one letter notifying the beneficiary of the determination(s). 
c)  NGHP Insurer Appeal 
Effective for recovery demand letters issued on or after April 28, 2015, for demands issued to the applicable 
plan as the identified debtor, only the applicable plan is a party with reopening or appeal rights. If the 
applicable plan files an appeal, the contractor is required by regulation to provide notice to the beneficiary, 
but the beneficiary has no further involvement with the appeal. See 42 C.F.R.  405.947. 
d)  Steps in Deciding an Appeal 
A person other than the one who made the initial determination must decide an appeal. The objective is to 
make a determination as to whether the initial determination was correct 
As part of the appeal determination, staff may need to conduct medical review of the services in question. 
Therefore, it is important to obtain all related documentation (i.e., emergency room reports, admission 
history, physician orders, nursing notes, and discharge summary) in order to make an informed evaluation. 
e)  Other steps that should be followed: 
i.  Check all mathematical computations for accuracy; 
ii.  Determine whether any new evidence has been produced since the time the initial determination was 
made; if so, that information must be considered; 
iii.  If the beneficiary is appealing a denial of a waiver request, use the criteria found in  50 of this 
Chapter to determine whether the initial determination is correct; 
iv.  Once the determination has been made, send the debtor and authorized parties the letter. The MSP 
contractors letter must include a clear rationale for its determination; and  
v.  The determination contains notification of the second appeal right. This appeal right automatically 
comes into effect when the debtor is dissatisfied with the reconsideration, or review determination and 
makes a written request for such an appeal. See the Medicare Claims Processing Manual (Chapter 29, 
Appeals of Claims Decisions), for the next level of appeal and the time limits for filing for the various levels 
of appeal.  
40.25  Role of MSP Contractors in MSP Liability Appeals Process 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The MSP contractors conduct liability appeals. There are statutory appeal processing timeliness 
requirements which require prompt action on the part of CMS. See 42 C.F.R. 405.950. For processing 
timeliness, the MSP contractor uses the date of receipt in the mailroom as the date of receipt. The date the 
beneficiary filed the request with the MSP contractor is used to determine if the beneficiary filed timely. 
50  Requests for Compromise or Waiver of Medicares Recovery Claim 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21)  50.1  Requests That Medicare Accept Less Than Its Claim  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Medicare may receive a request to accept less than the full amount of its recovery claim. Under Section 
1862(b) of the Act, Medicare may recover up to the full amount of any settlement, judgment, award, or other 
payment received by the beneficiary. In addition, Section 1862(b)(1) of the Act gives the Medicare program 
the right of subrogation for any amounts payable to the program under the MSP provisions of the SSA. 
The FCCA, as amended by the DCIA of 1982, and Section 1870(c) of the Act, gives CMS the right to settle 
claims for reimbursement. 
50.2  Authorities for Agreeing to Compromise or Waiver of Medicares Claim 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
There are three statutory authorities under which Medicare may accept less than the full amount of its claim: 
a)  FCCA (31 U.S.C  3711); 
b)  Section 1870(c) of the Act; and 
c)  Section 1862(b) of the Act. 
Each statute contains different criteria upon which decisions to compromise, waive, suspend, or terminate 
Medicares claim may be made. Likewise, the exercise of each authority is limited to specific entities. See 
42 C.F.R.  411.28 and 405.376. 
50.3  Compromise of Claim, or Suspension or Termination of Collection, Under the 
Federal Claims Collection Act (31 U.S.C.  3711)  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
CMS may agree to compromise a claim for reimbursement under the FCCA, if: 
a)  The individual does not have the present or prospective ability to pay the full amount of the claim 
within a reasonable period; 
b)  It is determined that it would be difficult to prevail in this case before a court of law; or 
c)  The cost of collecting the claim is likely to be more than the amount collected. 
Under the FCCA, CMS has delegated authority to compromise claims up to $100,000. The Department of 
Justice (DOJ) has the authority to compromise claims over $100,000. CMS works with DOJ, through HHS 
OGC, regarding compromise matters where the debt, exclusive of interest, is over $100,000. Legal clearance 
must be obtained from HHS OGC for proposed compromises if the amount of the debt is $100,000 or less 
(exclusive of interest, penalties, and administrative costs, and after all partial payments and collections have 
been deducted, and the difference between the amount offered by the debtor and the amount owed the 
Government is more than $25,000).  
Under the FCCA, agencies have the authority to compromise claims where: 
a)  The cost of collection does not justify the enforced collection of the full amount of the claim; 
b)  There is an inability to pay within a reasonable time on the part of the individual against whom the 
claim is made; or 
c)  The chances of successful litigation are questionable, making it advisable to seek a compromise 
settlement. 
These criteria are provided here for MSP contractor information, since only CMS staff, not MSP contractors, 
are permitted to compromise Medicare claims.  When a beneficiary agrees to a compromise settlement under the FCCA, the beneficiary also agrees not to 
appeal the matter further. 
50.4  Compromise Exercised Only by CMS 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If a beneficiary, attorney, or beneficiarys representative offers to pay Medicare less than the full amount of 
its claim, the MSP contractor informs the inquiring party of their rights to request waiver, appeal, or 
compromise of the claim. It advises them that while MSP contractors may assist them in securing a waiver 
or appeal, MSP contractors are not permitted to compromise claims on behalf of the Government. Then, the 
MSP contractor follows the instructions at  70.3 of this Chapter, which provide that a resolution through 
the FCCA is available through CMS at any time after the MSP contractor is aware that Medicare has made 
conditional payments in a liability situation. 
The FCCA grants Medicare the right to compromise its claims, or to suspend or terminate its recovery 
action. However, only CMS may take this action. Consequently, MSP contractors may not, under any 
circumstances, enter into negotiations (either pre- or post-settlement) with beneficiaries, or their attorneys or 
representatives, to compromise Medicares claim. If beneficiaries, or their attorneys or representatives, wish 
to discuss arrangements by which Medicares claim might be reduced (outside of a formal request for 
Medicare to waive its claim), the MSP contractor either: 1) instructs the party to either make its request for 
compromise in writing, in which case the MSP contractor forwards the request to CMS, or 2) refers the party 
directly to the appropriate staff person at CMS to handle the negotiation. MSP contractors may advise an 
attorney or beneficiary that Medicares conditional payment must be considered during settlement 
negotiations with any third party. 
50.5  Documentation Necessary for Cases Where Compromise is Requested 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If a MSP contractor receives a written request for a compromise of a Medicare overpayment that meets the 
specified criteria above, the request and the case file must be forwarded to CMS. No action can be taken on 
telephone requests, even for pre-settlement compromise. 
50.6  Waivers under Section 1870(c) of the Act  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP contractors have authority to consider beneficiary requests for waivers under Section 1870(c) of the 
Act. However, the authority to waive Medicare claims under Section 1862(b) of the Act, and to compromise 
claims or to suspend or terminate recovery action under the FCCA, is reserved exclusively to CMS staff. 
Distinctions between waiver, partial waiver, and compromise are important, and are found at Chapter 1,  20 
of the Medicare Secondary Payer Manual, where each term is defined. 
A beneficiary may offer to refund to the MSP contractor less than the full amount of Medicares claim. 
Medicare may accept such an offer either as a compromise under the FCCA, or as a waiver under Section 
1870(c) of the Act. 
Medicare claims (see Chapter 1,  20 of the Medicare Secondary Payer Manual, for definition) that do not 
involve the FCCA could be considered for waiver based on economic hardship or equity and good 
conscience. The MSP contractor handles waiver requests. Waivers granted under this authority may not be 
appealed because they are granted at CMSs discretion. See 42 C.F.R.  405.926(h). 
50.7  Beneficiary Right to Request Waiver of Medicares Claim  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The MSP contractor must inform the beneficiary that he or she has the right to request waiver of adjustment 
or recovery of the overpayment, and/or to appeal the existence of an overpayment, the amount of the  mistaken payment, or the denial of waiver of conditional payment. This notice (right to request appeal 
and/or waiver of recovery) must be given at the time repayment is requested from the beneficiary.  
50.8  Beneficiary Must Submit Waiver Request in Writing 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The beneficiary must request a waiver in writing. Once the waiver request has been received, the contractor 
sends the beneficiary and attorney a letter: 1) acknowledging that the waiver request has been received by 
CMS; and 2) informing that CMS will send a letter advising of the requests outcome once a determination 
has been reached.  
50.9  Timely Processing of Waiver Determinations 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Waiver determinations should be completed within 120 calendar days from the date a waiver request is 
received (and date stamped) in the MSP contractor mailroom or entered into the MSP portal. 
50.10  Steps for Waiver Determination under Section 1870(c) of the Act 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
a)  Collect All Pertinent Data 
The MSP contractor will collect all supporting documentation necessary for the waiver determination, 
including: 
i.  Beneficiary procurement costs; 
ii.  Accident-related out-of-pocket medical expenses incurred; and 
iii.  Expenses and income information that demonstrate financial hardship (if the beneficiary is alleging 
financial hardship). 
b)  Apply Waiver Criteria 
The MSP contractor determines whether the beneficiary meets the criteria for waiver determinations under 
Section 1870(c) of the Act (see also 42 C.F.R.  405.355 and 20 C.F.R.  404.506-512). 
Section 1870(c) of the Act provides that CMS may waive all or part of its recovery in any case where an 
overpayment under Title XVIII of the Act has been made with respect to a beneficiary: 
i.  Who is without fault, and/ 
ii.  When adjustment or recovery would either: 
A.  Defeat the purpose of title II or title XVIII of the Act, or 
B.  Be against equity and good conscience. 
iii  Based on the CMS application of the SSA definition of fault, found at 20 C.F.R.  404.507, CMS 
deems that beneficiaries are without fault. 
  c)  Determine if a full or partial waiver is warranted. 
50.11  Allowing Out-of-Pocket Expenses in Waiver Determinations 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Out-of-pocket expenses should be considered in determining if a full or partial waiver is warranted. Out-of-
pocket expenses are defined as those medical expenses for which a beneficiary has paid or is responsible to 
pay incurred for injuries directly related to the accident and that are not covered by insurance (including 
Medicare), settlement proceeds, or court- awarded damages.  A waiver of all or part of the out-of-pocket expenses may be granted only if the following criteria have been 
met. In determining the amount of out-of-pocket expenses to be waived, each case must be considered on its 
own merits. The MSP contractor must not automatically assume that out of pocket expenses should be 
waived. 
The following documentation should be considered proper proof of the expenses paid: 
a)  Notarized/sworn statement which attests to the validity of the expenses;  
b)  Canceled checks (which correlate to bills received); 
c)  Receipts for services furnished; and 
d)  Copies of bills demonstrating services furnished. 
The following are types of out-of-pocket expenses that may support granting a waiver: 
a)  Housing renovation - beneficiarys residence had to be modified to accommodate beneficiary 
because of an accident-related injury e.g., addition of a ramp to accommodate a wheel chair;  
b)  Adult diapers - where the accident caused loss of bladder use; 
c)  Prescriptions for medication needed as a result of an accident-related injury; 
d)  Private duty nursing or custodial care not covered by Medicare; 
e)  Coinsurance and deductibles not covered by supplemental insurance; and 
f)  Expenses for dental work caused by the accident. 
MSP contractors should not consider: 
a)  Funeral expenses; or 
b)  Travel for relatives (even if accident-related). 
50.12  Factual Data in Determining Whether a Full or Partial Waiver is Warranted 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Other factual data that MSP contractors should use in determining if a full or partial waiver is warranted are: 
a)  Age of beneficiary; 
b)  Beneficiarys assets; 
c)  Beneficiarys monthly income and expenses; and 
d)  Physical or mental impairments. 
 
 
 
50.13  When Recovery Would Defeat the Purpose of Title II or Title XVIII 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
This means recovery would defeat the purpose of benefits under these titles, i.e., would cause financial 
hardship by depriving a beneficiary of income required for ordinary and necessary living expenses. This 
depends upon whether the beneficiary has an income or financial resources sufficient for more than ordinary 
and necessary expenses, or is dependent upon all of their current benefits for such needs.  
A beneficiarys ordinary and necessary expenses include:  a)  Fixed living expenses, such as food, clothing, rent, mortgage payments, utilities, maintenance, 
insurance (e.g., life, accident, and health insurance, including premiums for supplementary medical 
insurance benefits under Title XVIII), taxes, installment payments, etc.; 
b)  Medical, hospitalization, and other similar expenses not covered by Medicare or any other insurer; 
c)  Expenses for the support of others for whom the beneficiary is legally responsible; and 
d)  Other miscellaneous expenses which may reasonably be considered necessary to maintain the 
beneficiarys current standard of living. 
50.14  Examples of Financial Hardship in Waiver Determinations  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Following are examples of determining financial hardship on a Medicare beneficiary: 
a)  The beneficiary has spent the settlement proceeds and the only remaining income from which the 
beneficiary could attempt to satisfy Medicares claim would be from the money that is needed for the 
beneficiarys monthly living expenses. Waiver may be appropriate under this aspect of the waiver criteria. If 
documented and appropriate monthly expenses consume the entire amount of money available, a full waiver 
may be warranted. A partial waiver may be appropriate if the beneficiary retains at least some (for example 
$25.00) discretionary income each month; 
b)  The demonstrated beneficiary income and resources are at a poverty level standard, such as being in 
an SSI pay status. A beneficiary may demonstrate proof of SSI pay status by requesting the Form SSA-2458, 
Benefit Verification, from a SSA office. If Medicares claim would have to be satisfied from income and 
resources that meet an established level of poverty, waiver may be appropriate. However, preexisting 
financial hardship alone may be an insufficient basis for granting a waiver. All factors, not just the existence 
of poverty, must be weighed before a waiver decision can be made; or  
c)  An unforeseen severe financial circumstance existing at the time Medicares claim comes into 
existence can also constitute financial hardship. If a beneficiary has become legally financially responsible 
for an unforeseen obligation, has acted in good faith at all times with respect to Medicares claim, and has 
no other financial resources to meet this legal obligation, waiver may be warranted. For example, waiver 
would be appropriate if a beneficiarys grandchildren became the legal responsibility under a will or trust 
that came into existence upon the sudden death of the beneficiarys child (the parent of the grandchildren). 
NOTE: The MSP contractor should assume in all waiver examples that the attorney has already taken 
attorney fees from the settlement proceeds, and the beneficiary does not have to pay the attorney from the 
settlement figure shown. Also, it should assume that the settlement proceeds are being retained in an escrow 
account by the attorney and have not been spent. In cases where the funds have already been spent by the 
beneficiary, the beneficiarys monthly financial situation and the likelihood of recouping the monies will be 
significant factors. 
In the following situations, Medicares full recovery would create the kind of financial hardship in which 
granting waiver would be appropriate. 
a)  Facts: The beneficiary was injured in a slip and fall accident. A liability suit awarded a settlement of 
$4,500 to the beneficiary. The attorneys fees were $1,500. The beneficiary incurred $1,700 in allowable, 
properly documented out-of-pocket medical expenses. The beneficiary is left with $1,300, but there will be 
future medical expenses that are not likely to be covered by Medicare. The beneficiary submitted 
documentation indicating Social Security benefits are received and there is still a monthly shortfall of $200. 
Medicares recovery after reducing for Medicares share of the beneficiarys procurement costs is $537. 
Analysis: While Medicares claim is very small, so is the settlement. The money the beneficiary would use 
to repay Medicare could be used to pay the additional medical expenses and pay the beneficiary for out-of- pocket expenses. The beneficiary is already experiencing financial hardship. Medicares recovery would 
produce additional financial hardship. 
Action: Grant full waiver. 
b)  Facts: The beneficiary sustained serious injuries from a fall on a bus. The beneficiary sued the bus 
company and received a settlement of $5,000. Medicare made conditional payments of $6,369. Attorneys 
fees total $1,667. After reducing its claim to share in the beneficiarys procurement costs, Medicares net 
conditional payments total $3,333. (When Medicares payments exceed the amount of the settlement, 
Medicares recovery becomes the amount of the settlement, less total beneficiary procurement costs). The 
beneficiarys monthly income and expenses are equal. The beneficiary incurred non-covered out-of-pocket 
medical expenses of $3,000, of which $1500 is properly documented. 
Analysis: After reducing for beneficiary procurement costs, Medicare is entitled to recover $3,333.33, the 
remainder of the settlement funds. If the beneficiary repaid Medicare the total amount owed after reduction 
for beneficiary procurement costs, there would be no funds left with which to pay out-of-pocket medical 
expenses. Repayment to Medicare would create a financial hardship with respect to the out-of-pocket costs. 
Therefore, Medicare may further reduce its claim to avoid causing a financial hardship for the beneficiary. 
Action: Grant a partial waiver of the amount owed. 
50.15  Recovery Would Be Against Equity and Good Conscience 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
In addition to the factors and parameters of 42 C.F.R.  405.376, equity and good conscience is applied to 
Medicare overpayment recoveries when required, based on the totality of the circumstances in a particular 
case. In applying the standard of equity and good conscience factors to consider include, but are not limited 
to, the following: 
a)  The degree to which the beneficiary contributed to causing the overpayment; 
b)  The degree to which Medicare and/or its MSP contractors contributed to causing the overpayment; 
c)  The degree to which recovery or adjustment would cause undue hardship for the beneficiary; 
d)  Whether the beneficiary would be unjustly enriched by a waiver or adjustment of recovery; and 
e)  Whether the beneficiary changed their position to their material detriment as a result of receiving the 
overpayment or as a result of relying on erroneous information supplied to the beneficiary by Medicare. 
Below are several Medicare overpayment situations when application of equity and good conscience is 
likely to result in a waiver of adjustment and recovery: 
a)  The beneficiary made a personal financial decision, based on written information from an official 
CMS source, that the overpayment was correct, and recovery would change the beneficiarys position for the 
worse. 
b)  Recovery of the full overpayment amount is contraindicated by especially compelling mitigating 
facts and circumstances of the beneficiarys case. 
c)  Facts: The beneficiary sustained injuries in an automobile accident. Medicare made conditional 
payments in the amount of $7,500 on the beneficiarys behalf. The beneficiary later filed suit for the injuries 
and damages suffered as a result of the accident and received a $5,000 settlement. There were no attorneys 
fees, thus Medicares claim is $5,000. The beneficiary requested a waiver of the overpayment. The 
beneficiary submitted documentation demonstrating that the money received was used to replace the 
automobile that was totaled in the accident. 
Analysis: If Medicare seeks full recovery, the beneficiary will likely have to sell the replacement vehicle to 
repay Medicare. The beneficiarys vehicle was the only means of transportation used for a part-time job to  supplement income as well as transportation to doctors etc. Selling the vehicle to repay Medicare would 
cause the beneficiary to be placed in a worse position than before the accident, which would be against 
equity and good conscience. 
Action: Either full or partial waiver may be granted. Obviously, Medicare may seek its entire recovery. 
However, since the beneficiarys documentation indicates that the entire $5,000 was needed to replace the 
car, full waiver would be more appropriate. 
NOTE: Using the settlement money to replace the totaled car was considered appropriate only because loss 
of the beneficiarys car was complete. It would be inappropriate to grant waiver simply because the 
beneficiary chose to purchase a car from the proceeds. 
d)   Facts: The beneficiary sustained multiple injuries in an automobile accident, including a permanent 
injury that will preclude employment ever again. Monthly income equals monthly expenses. Medicares 
conditional payments were $8,500. The beneficiary received a liability insurance payment of $5,000 (which 
was the limit of the policy). No attorney was retained. Therefore, Medicares recovery becomes $5,000. The 
beneficiary incurred allowable, properly documented out-of-pocket medical expenses of $4500.  
 
Analysis: Since the beneficiary is now unable to work, the ability to absorb the out-of-pocket medical 
expenses has greatly diminished. Since a valuable right, i.e., the right to be gainfully employed, is a change 
in ones position, it would be against equity and good conscience for Medicare to recoup its entire recovery. 
In accordance with  40.15, since Medicare stands to recover 100 percent of the settlement amount, it may 
waive 100 percent of the out-of-pocket costs. It would not be feasible to pursue recovery of the remaining 
$500. 
Action: Grant full waiver.  
50.16  When the Beneficiary Fails to Meet Either Waiver Criterion under Section 
1870(c)  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
When the beneficiary requests a waiver, but does not meet either of the two stated criteria, the request for 
waiver should be denied. The following examples illustrate such circumstances: 
a)  Facts: The beneficiary broke a leg and is now unable to work. Medicares conditional payments total 
$7,000. The beneficiary received a settlement of $20,000. After reducing Medicares claim to allow for 
beneficiary procurement costs, Medicare should recover $4,667. The total beneficiary monthly income is 
$1,004 (interest income and social security benefits), with monthly expenses of $585. Out-of-pocket 
incurred expenses total $870 and the beneficiary has requested a full waiver. 
Analysis: Wavier criteria is not met because the beneficiary has not shown that daily living expenses could 
not be met, nor that repayment would be unfair. This determination is based upon the information provided, 
which documents that the beneficiary is able to meet daily living expenses, and has excess funds ($285 
excess per month), even without the settlement received. Moreover, the beneficiary received a large enough 
settlement to pay the non-covered out-of-pocket expenses and to repay Medicare without incurring a 
financial hardship. Repayment under these circumstances is equitable. 
Action: Waiver request is denied. 
b)  Facts: The beneficiary was unemployed before injury that triggered Medicare conditional payments. 
However, the accident has reduced the probability that the beneficiary will ever be able to work again. 
Medicares recovery is $11,000. No attorney was used in procuring the settlement, nor were there other 
beneficiary procurement costs. Therefore, no beneficiary procurement costs were subtracted from the 
amount of Medicares recovery. The beneficiary received a $55,000 settlement. Documented out-of-pocket 
medical expenses equal $10,000. Monthly expenses are $2,068 and monthly income is $1150 ($771 social 
security benefits, $344 unemployment, and $35 interest income).  Analysis: The beneficiary has a monthly shortfall of $918, which appears to constitute a financial hardship. 
However, this financial hardship existed before the accident. Repaying Medicare must be the circumstance 
that causes financial hardship. Preexisting financial hardship alone is not a sufficient reason to grant waiver. 
Additionally, after repaying Medicare and paying for out-of-pocket expenses, the beneficiary retains 
$33,221 of the settlement proceeds. Repayment of Medicares claim will not deprive the beneficiary of any 
valuable right or put the beneficiary in a worse position than before the accident. For this reason, repaying 
Medicare is not against equity and good conscience. 
Action: Waiver request is denied. 
50.17  Potential Waiver Indicators 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Waiver decisions are rarely, if ever, straightforward and uncomplicated. However, there are a few indicators 
to consider. The following are just examples and are in no way conclusive determinations of whether waiver 
should or should not be granted. Every waiver decision must be made on the merits of the facts in the case in 
question. 
Indicators that support granting full or partial waiver include: 
a)  Medicares recovery exceeds settlement amount (this is often true with small settlements); 
b)  Beneficiary sustained the type of permanent injuries, or has documented lost wages, or became 
unemployed; 
c)  There are non-covered out-of-pocket accident related expenses; and 
d)  Beneficiarys living expenses are equal to or higher than income. 
Indicators that support denying waiver (where financial hardship is alleged) include: 
a)  Medicare asserted its right to recover before the settlement proceeds were disbursed (and there is 
correspondence in the case file which provides documentation of Medicares timely assertion); 
b)  Beneficiary receives a large settlement; 
c)  Beneficiarys income exceeds ordinary living expenses; 
d)  After repaying Medicare and allowing for out-of-pocket medical costs (if such allowances are 
necessary), the beneficiary will be left with a substantial amount of the settlement proceeds; and 
e)  Beneficiary has substantial assets. 
50.18  Waiver under Section 1862(b) of the Act 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
This section of the Act grants the Secretary the right to waive MSP liability recoveries if doing so would be 
in the best interests of the program. Authority to grant waivers under this section of the Act may be 
exercised only by CMS staff. Waivers granted under this authority may not be appealed because they are 
granted at CMSs discretion. (See 42 C.F.R.  405.926(h)). 
60  MSP Accounts Receivable (AR) Procedures 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
60.1  General 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Since recovering MSP debts involves procedures which vary somewhat from those used for general 
overpayments, the following recovery instructions are to be used in place of the general financial  management instructions found in the Medicare Financial Management Manual, Chapter 3, except where 
specific references to those sections are provided in this Chapter.  
60.2  Collection of MSP Debts  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP contractors have primary responsibility for collecting all MSP debts and are expected to pursue 
recovery of all accounts receivable (AR) to the fullest extent possible, regardless of the identity of the 
debtor. MSP Contractors shall follow all financial reporting requirements contained in the Medicare 
Financial Management Manual (CMS Pub. 100-06), Chapter 5. However, when ARs cannot be collected, an 
appropriate write-off is required. 
Debts that are over 180 calendar days delinquent (240 calendar days old for MSP debts) will be 
systematically classified as Currently not Collectible (CNC). The CNC debt will not be recognized as an 
active AR for financial statement reporting purposes, because to do so would overstate the true economic 
value of the assets on the financial statements. While CNC debts are not reported as an AR on the financial 
statements, Medicare contractors must continue appropriate recovery efforts for these debts until they are 
recommended and approved by CMS for Write-Off/Closed.  
60.3  Identification of MSP Write-off/Closed Accounts 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Generally, MSP contractors may recommend write-off for debts which are reported as part of their ending 
AR balance. ARs that have been referred (but not transferred) to another location remain the responsibility 
of the MSP contractor. 
NOTE: These instructions apply only to established ARs (i.e., MSP accounts receivable are not established 
until a settlement, judgment or award has been reached and a demand letter is issued.). They shall not be 
used to close MSP liability/no-fault/workers compensation leads where no settlement, judgment, award or 
other payment exists and no recovery demand has been issued. 
60.4  Write-off/Closed Definition  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The definition of Write-off/Closed refers to an AR on which collection activity and servicing of the debt has 
been terminated. The MSP contractor maintains records of the debts written off as closed. However, the 
debts are not to be used for future offset or interest accruals. 
60.5  Documentation Required for Write-off/Closed 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
For a debt to be considered for write-off, the MSP contractor must maintain, and be able to provide upon 
demand, all documentation related to the debt. 
 
 
60.6  Bases for Termination of Collection 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Title 42 C.F.R.  401.621 sets forth several bases for the termination of collection action on debts. The 
criteria set forth in this instruction for Write-off/Closed are based upon CMSs consideration of a 
combination of the bases set forth in this regulation rather than any single basis. In some situations, an AR 
could be written off as closed as of three years from the original demand date solely based upon the statute 
of limitations for initiating litigation. In other situations, this would not be true because the statute may have 
been suspended for some period or started a new due to a particular event, but CMS may have still 
determined that write-off as closed is appropriate because of the likelihood of recovery and/or the cost of  recovery, age, or the application of some other factor. In other instances, CMS may determine that collection 
action beyond three years is appropriate, in part due to the Governments offset authority. 
60.7  Criteria for MSP Based Debts to Qualify for Write-off/Closed 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
In accordance with the Digital Accountability and Transparency Act of 2014 (DATA Act) which amended 
the DCIA of 1996, MSP AR which are 120 calendar days delinquent must be referred to Treasury for cross-
servicing, which includes referral to the Treasury Offset Program. Where a MSP contractor has issued a 60-
day notice of CMSs intent to refer the AR to Treasury, the AR may not be recommended for Write-
off/Closed until the AR has been referred to Treasury and after lengthy recovery attempts Treasury returns 
the debt to agency (to CMS).  
a)  Debt Close Out Reports 
The contractor shall submit two (2) separate quarterly debt close out reports. These reports shall be 
submitted to CMS no later than the first day of the second month of each quarter (i.e., November 1, 
February 1, May 1, and August 1). These reports shall not include debts with a combined principal and 
interest balance less than $25. CMS will determine which referred debts shall be written off as closed and 
shall notify the MSP contractor as appropriate. 
The first report shall include debts that are not eligible for Treasury referral (for example, beneficiary fraud, 
deceased provider), referred to as Non-Return to Agency (RTA), and RTA debts that are non-RU 
(uncollectable)/RN (not in business) debts (other than bankruptcy debts) with principal balances up to 
$100,000 and RU/RN debts with principal balances up to $500,000. The debts listed on this report will be 
reviewed and approved by CMS. 
The second report shall include non-RTA and non-RU/RN debts (other than bankruptcy debts) with a 
principal balance greater than $100,000 and RU/RN debts with a principal balance greater than $500,000. 
HHS OGC will provide legal advice on the debts listed on this report. 
b)  Referral for Cross Servicing 
No debt shall be recommended for Write-off/Closed without having first been referred for cross-servicing 
(see above in this section) and subsequently returned to agency (CMS) by Treasury, unless one of the 
exceptions set forth below exists. Regardless of the existence of an exception, an approval for Write-
off/Closed will not be granted in all instances. 
With the above limitations, debts which can be recommended for Write-off/Closed without having first been 
referred to Treasury for cross-servicing are: 
i.  Debt equaling $100 or less (principal and interest) in which there is no Tax Identification Number 
(TIN); 
ii.  Debt is less than $25 (principal and interest), where no adjustment/recovery has occurred in the past 
60 days. Write-off of this type of debt is automated in HIGLAS and it does not require CMS approval. 
iii.  Debt in which the debtor is deceased (**Remember that the deceased beneficiary is not the debtor in 
a wrongful death action). 
iv.  MSP contractor cannot find a Tax Identification Number (TIN) and development for the TIN has 
been unsuccessful. (Write-off of this type of debt is automated in HIGLAS if the debt balance is $1,000 or 
less, and it does not require CMS approval).   
v.  Debts that are discharged/forgiven by the bankruptcy court are to be recommended for Write-
off/Closed.  vi.  Debts greater than 10 years old, regardless of amount, shall be recommended and submitted to CMS 
for termination of collection action and Write-off/Closed. 
NOTE: Debts excluded from cross-servicing do not qualify for Write-off/Closed without having CMS 
approval. 
c)  Litigation, CMS Identified Exclusion and Pending Bankruptcy 
Debtors currently excluded from consideration for Write-off/Closed due to litigation in which the 
Department of Health and Human Services/CMS is a party or debts excluded due to a CMS Identified 
Exclusion will be communicated to MSP contractors via a joint signature memorandum. (See  70 of this 
Chapter). 
Debts involved in a pending bankruptcy cannot be recommended or approved for Write-off/ Closed. If there 
are questions about the documentation regarding discharge, MSP contractors shall consult CMS. 
All debts which are excluded from DCIA referral due to litigation or a CMS identified exclusion are also 
subject to exclusion from Write-off/Closed absent specific instructions. 
d)  MSP Beneficiary Debt 
For MSP beneficiary debt, Medicare reserves its right to recoup from (1) future Medicare paid claims where 
the payment is issued directly to the beneficiary, or (2) the beneficiarys Social Security (SS) benefit 
payments. However, as a practical matter, this is generally an insufficient manner of recovery, particularly 
as the Social Security Administration does not generally accept the referral of debts less than $1,000. 
Additionally, beneficiaries often delay consideration of repayment until all appeals have been exhausted. 
Therefore, before recommending a beneficiary debt for Write-off/Closed, the MSP contractor shall follow 
appropriate debt referral procedures (see Section 70). In the event the debt is actively being appealed, 
respond to the appeal. After the appeal has been completed, if there remains a balance owing, refer the debt 
to Treasury for cross-servicing after issuance of a proper intent to refer letter. 
e)  Write-off/Closed of Less than Full Amount is Not Permitted 
MSP contractors may not recommend Write-off/Closed of less than the full amount of an outstanding debt. 
See  70.3 of this Chapter for definition of the term debt. 
60.8  Data Requirements and Format for Recommendations for Write-off/Closed  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The request for Write-off/Closed requires the submission of a Debt Close-Out Report (a completed 
checklist) that entails detailed information regarding the debts that are being closed out. Some of the fields 
on the checklist to be completed by MSP contractor are as follows: 
a)  MSP contractor name and number; 
b)  Type of MSP Debt - GHP or NGHP (including liability, no-fault, and workers compensation); 
c)  Beneficiary name; 
d)  Name of debtor; 
e)  Existing AR amount;  
f)  Basis for recommendation. 
g)  TIN for debtor, if available. There must always be a TIN for a provider, physician, other supplier, or 
beneficiary debt. (The TIN is the Employer Identification Number (EIN) or Social Security Number (SSN). 
NOTE: The debtor is the individual or entity to whom/which the last recovery demand was issued. Where 
the demand was issued to an individual in his/her capacity as legal counsel or representative of any type, the  debtor is the beneficiary, provider, physician, other supplier, or other individual or entity being represented. 
Where recovery is being pursued from the attorney or other representative in his/her own right, the debtor is 
the attorney or other representative. 
Where the TIN is unavailable, the MSP contractors Write-off/Closed recommendation shall leave this field 
blank. 
The MSP contractors Chief Financial Officer (CFO) must sign debt close-out reports. The CFOs signature 
constitutes his/her certification to all information/statements contained in the recommendation. 
The MSP contractor shall send the recommendations for the approval of Write-off/Closed no later than the 
first day of the second month of each quarter (November 1, February 1, May 1, and August 1). The 
recommendation may be sent electronically via secured email but it shall still include the validation 
statement signed by the contractors CFO. 
60.9  Write-off/Closed Debts Which Have Been Returned by Treasury or Recalled by 
CMS and CMS Has Determined that No Further Collection Attempts are Appropriate 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
During the collection process, Treasury either collects debts or makes a final determination as to the status 
of the debts. Certain types of returned debts that are considered uncollectable can be eligible for Write 
Off/Closed. The MSP contractor shall submit write-off requests to CMS for approval. 
Treasury returns debts to CMS for the following reasons:  
a)  In Bankruptcy  
b)  Uncollectible  
c)  Out of Business  
d)  Dispute Timer Expired  
e)  Miscellaneous Dispute  
f)  Manual Return to Agency  
g)  Recall Approved  
h)  Complaint  
i)  Paid in Full  
k)  Satisfied through Payment Agreement  
l)  Satisfied through Compromise 
CMS will send monthly reports of these debts to the MSP contractors for final resolution. The reports will 
state the reasons Treasury returned the debts.  
There are status codes in HIGLAS for each of the reasons the debts were RTA. The RTA reports, prepared 
by CMS, will reflect the new status codes. If Treasury returns debts and HIGLAS 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 HIGLAS 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 within 30 
calendar days after receipt.  
NOTE: There will be instances when debts will be returned to agency due to unresolved issues. RTA status 
is not a guarantee that the debt will be approved for Write-off/Closed.  Further information regarding this guidance is found in the Medicare Financial Manual, Chapter 4, Section 
70.17, and provides a detailed description of current status codes for debts returned by Treasury. 
60.10  Debts Returned by Treasury as Uncollectable (RU) or Out of Business (RN)  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The MSP 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 MSP contractors will know 
that Treasury considers the debts uncollectible or out of business.  
The MSP 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 Chapter 4,  70 of the Medicare Financial Management 
Manual (CMS Pub. 100-06)).  
The MSP contractors shall also consider whether all other appropriate actions to collect debts have been 
taken before recommending debts for Write-off/Closed, including the procedures in Chapter 4,  70 of the 
Medicare Financial Management Manual (CMS Pub. 100-06)).  
60.11  Write-off/Closed Approval Process 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
CMS is responsible for approval or denial of all recommendations for Write-off/Closed for MSP AR made 
based upon the criteria set forth in this Chapter. 
When in receipt of a Write-off/Closed recommendation for a debt in which the debtor is deceased CMS will 
determine the category of the debt. For example, wrongful death, medical malpractice, etc. Prior to approval 
CMS will also determine if the estate is closed. Debts shall not be closed when the debtor is deceased and 
the estate is still open or for a wrongful death matter where the wrongful death settlement, judgment, or 
award is awarded to other than the beneficiarys estate. 
For the debts that have been recommended for Write-off/Closed, the MSP contractor shall consider the 
following:    
1.  For such debts, changes shall not be made to the AR for Write-off/Closed until written approval by 
CMS is received. 
 
2.  For such debts, receipt of this approval authorizes the MSP contractor to write-off the AR as closed, 
and to update the AR and associated case in all appropriate systems. Where CMS does not approve a 
recommended Write-off/Closed for a particular debt, CMS will annotate this clearly on the returned 
form. 
 
60.12  Financial Reporting for MSP Write-off/Closed  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The following reporting is required for write-off debts closed by MSP contractors: 
a)  Associated interest for Write-off/Closed MSP contractors shall use the amount of interest currently 
carried in HIGLAS.  
b)  On Form CMS-M751 and MC751, the amount that CMS has approved for Write-off/Closed, 
including principal and interest, is recorded on line 6a (M751) and line 4d (MC751), bad debt. The CMS 
written approval for Write-off/Closed is sufficient support for the subsequent write-off, including any 
increase in the interest, as long as the principal remains the same.  c)  The MSP contractor shall document in the remarks section of Form CMS-M751 and MC751 each 
quarter the amounts (principal and interest) that were written off as closed as a result of implementation of 
these instructions. 
60.13  Date for Establishment of MSP AR 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP ARs must be established as of the date of the recovery demand letter or the payment receipt date (see 
instructions for voluntary/unsolicited refunds within the Medicare Financial Management Manual (CMS 
Pub. 100-06), Chapter 4,  10). 
MSP contractors shall not delay establishment of the AR until payment is received. 
70  Medicare Secondary Payer (MSP) Debt Collection and Treasury Referral 
Activities 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
 
70.1  General 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Upon MSP debts becoming eligible for referral to Treasury for cross-servicing, MSP contractors shall 
implement the DCIA actions for all types of MSP debts and their associated debtor(s). 
The contractor shall review and refer all eligible debts to Treasury during the weekly HIGLAS debt referral 
cycle. CMS has attempted to identify sections specific to HIGLAS users or sections revised to incorporate 
HIGLAS functionality with the operationally defined processes. 
70.2  Background 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The DATA Act which amended the DCIA requires Federal agencies to refer eligible delinquent debt to a 
Treasury designated Debt Collection Center (DCC) for cross servicing and/or Treasury Offset Program 
(TOP). The CMS is mandated to refer all eligible delinquent debt, over 120 calendar days delinquent, to 
Treasury for cross-servicing. The CMS has the option of referring debt before it becomes 121 calendar days 
delinquent but only after the MSP contractor has notified the debtor of CMSs intent to refer the debt to 
Treasury for cross-servicing. Delinquency status occurs when a debt is still owed (either in full or partially) 
and is at least one day after the repayment date given within the demand letter. For example, a GHP demand 
dated 12/1/05 gives the debtor 60 calendar days to respond, or interest will be accrued and assessed from the 
date of the demand. If the debt is still unresolved as of 2/2/06 (63 days after the date of demand) the debt is 
considered 3 days delinquent. (See  70.4 of this Chapter for further clarification of delinquency). 
70.3  Debt and Debtor Definitions 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
For GHP-based debt where the demand was issued to the employer/ other plan sponsor, insurer, third party 
administrator, GHP, or other plan sponsor, the debt includes all of the claims in a demand letter to a debtor 
for a particular beneficiary, even if a single cover letter has been issued to the debtor for multiple 
beneficiaries claims.  
For DPP recovery demands to a provider, physician, or other supplier, the debt includes all claims in the 
recovery demand letter regardless of the number of beneficiaries involved. 
For liability, no-fault, and workers compensation, the debt includes all claims in the recovery demand letter, 
minus Medicares pro-rata share of the beneficiarys procurement costs and attorney costs/fees when the 
beneficiary is the identified debtor. This pro rata reduction is only applicable to procurement costs incurred 
by the beneficiary, and only applicable to recovery from the beneficiary. The pro rata reduction for attorney 
fees and other costs is not applicable to demands issued to applicable plans as the identified debtor.  The Debtor is an individual to whom or an entity to which the last recovery demand was issued. Where 
the demand was issued to an individual in his/her capacity as legal counsel or representative of any type, the 
debtor is the beneficiary, provider, physician, other supplier, or other individual or entity being represented. 
Where recovery is being pursued from the attorney or other representative in his/her own right, the debtor is 
the attorney or other representative. 
Identified debtor is the debtor identified in the most recently issued demand letter. It does not change the 
fact that other individuals/entities may have legal obligations with respect to the debt, including any other 
individual or entity that may have previously received a demand letter. Where an individual, such as an 
attorney, received the last demand letter in his/her capacity as a representative, the individual/entity being 
represented is the identified debtor. 
Jointly and Severally Liable Debtors is a reference to multiple entities having equal responsibility for 
repayment of a debt.  
70.4  Debt Selection and Verification  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP contractors shall select eligible delinquent debts from their existing debt (open AR balances) for 
issuance of a DCIA ITR to Treasury letter. The ITR will advise the debtor of CMSs intention to refer the 
debt to Treasury for further collection, if left unresolved. 
The MSP contractors must review and update debt information as necessary. For purposes of DCIA debt 
selection/referral criteria, a MSP debt becomes delinquent: (1) If the debt has not been paid in full by the 
payment date specified in the agencys initial written notification (i.e., the agencys first demand letter), 
unless other payment arrangements have been made, or (2) If at any time after such notification, the debtor 
defaults on a repayment agreement. 
Specific to MSP, the term delinquent is defined as an outstanding debt for which any of the following 
apply: (a) full payment has not been made, (b) no response from the debtor regarding the debt, or (c) no 
valid documented defense to the debt. All validated debt for which no valid defense has been presented to 
the MSP contractor with full supporting documentation is considered to be legally enforceable. 
For purposes of debt selection and referral, any dollar threshold includes both outstanding principal and 
outstanding interest. See the Medicare Financial Management Manual (CMS Pub. 100-06), Chapter 4. 
70.5  Debt Selection Criteria 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
All outstanding/open delinquent MSP debts shall be reviewed. Debts may be for Part A and/or Part B 
services and specific to GHP, liability, no-fault, and WC cases. Debts that do not meet all the criteria set 
forth in Section 70.6 shall be excluded from referral. 
NOTE: MSP contractors shall not refer debts of those debtors that have entered into an approved extended 
repayment schedule (ERS) unless they default on the agreement. Debts under an ERS are considered current 
unless or until the debtor defaults. (See the Medicare Financial Management Manual (CMS Pub. 100-06), 
Chapter 4. 
70.6  Debt Excluded from Referral  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Debts excluded from referral include: 
a)  Debts in appeal (pending at any level); 
b)  Debts where the debtor is in bankruptcy or, in the case of an insurance company, in State Ordered 
liquidation proceedings (See  80 of this Chapter);  c)  Debts under a fraud and abuse investigation, if the MSP contractor has received specific instructions 
from the investigating unit (i.e., Office of Inspector General or HHS Office of the General Counsel) not to 
attempt collection; 
d)  Debts where the identified debtor received the last demand letter is the employer/ other plan sponsor 
and the employer/ other plan sponsor is a Federal agency; 
e)  Debts where the debtor is deceased; 
f)  Debts where CMS has identified a specific debt or group of debtors as excluded from DCIA referral; 
g)  Debts where there is a pending written request for a waiver or compromise; 
h)  Debts less than $25.00 (principal and interest); and 
i)  Debts of $100.00 or less (principal and interest) where NO Tax Identification Number (TIN) is 
available. (Cross-Servicing Technical Bulletin dated February 13, 2004 (Number 04-03) states: Treasury 
will only accept debts of $100.00 or less (principal and interest) if the TIN is provided). 
NOTE: In the event the waiver or compromise decision is unfavorable to the debtor, the MSP contractor 
shall continue the debts on to debt referral. 
NOTE: For debts of $100.00 or less (principal and interest) and having NO TIN, MSP contractors shall 
access and search their database to identify if there is a TIN for a debtor of the same name and address. If 
the TIN can be matched to the debtor, follow the DCIA referral process. If the MSP contractor is NOT able 
to identify the TIN of the debtor by searching its database, document efforts taken to find the TIN and 
follow instructions regarding write-off. MSP contractors are reminded that the term TIN includes either the 
Employer Identification Number (EIN) of an entity or a SSN (for a beneficiary debtor). 
70.7  Monitoring Debts Excluded From the DCIA Referral Process  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP contractors shall monitor and report on debts that were selected for potential referral but met one of the 
exclusions to the DCIA referral process. MSP contractors shall monitor and determine any change in the 
status of such debts which would lift the exclusion and make the debt subject to referral (for example, if a 
debtor loses an appeal and still refuses to make payment or if CMS eliminates a litigation exclusion or a 
CMS-identified exclusion). MSP contractors shall refer a previously excluded debt to Treasury within 
fifteen (15) calendar days after the date of a status change, unless there are instructions to the contrary. 
70.8  Validation of Possible Eligible Debts for Referral 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP contractors are reminded that if one or more of the claims in a specific debt were covered by a MSP 
GHP settlement, those claims released in the settlement may not be included in the ITR letter and must be 
handled appropriately. 
NOTE: MSP contractors shall follow all CMS communications specific to litigation or negotiation activities 
as conveyed by CMS and ensure compliance with all instructions. For Non-GHP debts; MSP contractors 
shall confirm notice of settlement, judgment, award or other payment had been received on a liability, no 
fault or workers compensation case and a recovery demand letter was issued. 
For DPP debts: The demand shall not have been issued unless insurer information had already confirmed the 
existence of a duplicate payment. 
For ALL Debt types: MSP contractors shall bring closure (e.g., apply and/ or respond) to all checks related 
to an established debts, posed defenses, waiver requests or compromise requests to a debt prior to the 
sending of an ITR to Treasury letter or the eventual referral to Treasury for cross- servicing, including the 
TOP.  MSP contractors shall document all actions taken on a debt after the demand (e.g., posting check, adjusting 
for a defense, etc.) in the HIGLAS system. MSP contractors shall maintain all incoming correspondence and 
copies of outgoing correspondence within a case file. MSP contractors that maintain case files and 
correspondence electronically shall ensure case retrieval or recreation take place within two (2) business 
days of a request. 
70.9  Issuance of the ITR to Treasury Letter 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Once MSP contractors have identified and validated all eligible delinquent debts having a balance 
remaining, they shall send an ITR to Treasury letter with all appropriate attachments to the identified debtor  
(See  70.3 of this Chapter for identified debtor definition.) MSP contractors shall send ITR letters via first 
class mail, return receipt requested, to the identified debtor or joint and several debtor combination.  
Use of the ITR letter is mandatory (including the payment summary form and/or claims detail from the 
original demand letter properly annotated showing payments and/or valid documented defenses).  
In the case of a GHP debt the MSP contractor shall: 
a)  Send the ITR letter to the identified debtor;  
b)  Enclose a copy of the payment summary form and/or claims detail with a proper accounting of all 
services/portion of the debt still owed Medicare; and 
c)  Provide a courtesy copy to the insurer/ TPA (for other than federal employer situations). 
NOTE: When the ITR letter is issued and the amount of the debt has been previously reduced from the 
original demand letter, MSP contractors shall appropriately annotate the payment summary form and/or 
claims detail. The debtor must be able to understand the figures referenced in the ITR letter. Consequently, 
screen prints or other annotations to the case file are insufficient. 
For liability, no-fault, and workers compensation cases, the MSP contractor shall: 
a)  Send an ITR to the identified debtor. Address the ITR letter to the identified debtor, with a copy to 
any authorized representative (if applicable). (See section 70.3 of this Chapter for debtor definition); and 
b)  Enclose a copy of the payment summary form and/or claims detail with a proper accounting of all 
services/portion of the debt still owed Medicare. 
MSP contractors shall issue a separate ITR letter for each debt, and shall issue a separate ITR letter to each 
debtor who may be joint and/or severally liable on the debt. Multiple debts may not be aggregated or 
otherwise combined in a single ITR letter. An ITR letters shall be debt specific.  
NOTE: MSP contractors shall issue an ITR letter to allow the debtor to respond in the required timeframe 
contained in the letter and still, if necessary, refer the debt prior to or by the time it reaches 120 calendar 
days delinquency. 
 
70.10  Responding to Correspondence as a Result of the Issuance of the ITR Letter  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP contractors that receive a response to an ITR letter that challenges the amount of the debt, shall reply 
by standard U.S. mail using the appropriate letters. All replies to one of the jointly and severally liable 
debtors shall also be copied and sent to the non-responding joint and severally liable debtor.  
The MSP contractor shall inform the debtor or debtors of the amount that remains subject to referral where a 
debtor establishes that the debt or part of the debt should not be referred to Treasury due to one of the  exclusions. (The response should indicate what amount will be excluded from referral at this time and what 
amount continues to be subject to referral). 
MSP contractors shall reply to ITR responses (i.e., posed defenses) within 30 calendar days of receipt and 
update all appropriate systems (including HIGLAS) accordingly and timely. 
In the event the response from the debtor or debtors is an actual repayment (either in part or in full), the 
MSP contractor shall apply the check to the debt within 20 calendar days of its receipt and update all 
applicable internal and shared system financial/debt tracking systems. 
MSP contractors shall answer all inquiries resulting from the ITR letter. MSP contractors shall bring closure 
to all checks or posed defenses to a debt prior to any actual referral of the debt to Treasury for cross-
servicing via the HIGLAS system. 
NOTE: For debtors that have administrative appeal rights and/or the right to request a waiver of recovery 
under Section 1870 of the Act, the MSP contractor shall evaluate whether any written reply constitutes an 
implied appeal (if the time period for an appeal has not expired) or a request for a waiver has not previously 
been requested. 
70.11  MSP Contractor Actions Subsequent to Treasury Referral 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP contractors shall cease active recovery efforts once a debt is referred to Treasury. However, MSP 
contractors shall maintain and track debts in HIGLAS. Interest shall continue to accrue on all debts referred 
to Treasury for cross-servicing. HIGLAS furnishes the MSP contractor with routine reports of debts 
transmitted to Treasury as of a certain date. 
If Treasury or an entity acting on its behalf (Private Collection Agencies (PCAs) recovers on an MSP debt, 
notification of the recovery will be sent to the MSP contractor.   
All MSP contractors shall copy and send to Treasury all waiver or compromise requests received directly 
from the debtor after the debt has been referred to Treasury. 
70.12  DCIA Treasury Collection 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Collections from Treasury as a result of cross-servicing efforts are received by CMS 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 PCA including installment payments on 
Treasury approved ERSs or payments from offsets from the TOP. Treasury provides the CMS with a 
collection report generated from the IPAC system.  
70.13  Intra-governmental Payment and Collection System  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
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 outstanding 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 MSP contractors.  
70.14  Collection/Refund Spreadsheet 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21)  The MSP contractors will receive Treasury collections twice a month via the HIGLAS Collection Report 
and/or the Collection/Refund Spreadsheet. The collections are generally forwarded to the MSP contractors 
within a week from the date of the IPAC collection.   
For each debt listed on the Collection/Refund Spreadsheet, MSP contractors shall apply the collection to 
principal and interest amounts as indicated on the Collection/Refund Spreadsheet. For collection of interest 
only, MSP 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, if the collection 
will satisfy the principal debt, MSP 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 and allow posting of the collection in MSP contractor systems, which require collections be 
applied first to interest accrued and the balance to principal. Once accrued interest is adjusted to the amount 
of interest collected, MSP contractors are able to post the amount of principal collected as indicated on the 
Collection/Refund Spreadsheet. 
If a principal balance remains after posting the collection, interest, if appropriate, shall continue to accrue on 
the remaining principal balance. MSP contractors shall use the current date as the date of collection to post 
the Treasury collections to their systems. 
MSP contractors shall complete the Collection/Refund Spreadsheet and return the completed spreadsheet to 
CMS within 15 business days of receipt. 
Note: Any principal balance that remains in MSP contractor systems, after posting the collection activity, 
will be carried forward. Interest shall continue to accrue, as applicable, on any outstanding principal 
balances until notified by CMS that the debt is paid in full or compromised.  
70.15  Debt Paid in Full 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
A debt is generally considered paid in full if applied collections reduce the debt balance (including both 
principal and interest) to zero in HIGLAS. If the principal balance of the debt in HIGLAS 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. There have been instances where a debt has been collected by Treasury, and the collection received in 
one IPAC was reversed in a subsequent IPAC.  
70.16  Treasury Approved ERS 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Treasury has authority to approve ERS up to 60 months without requesting CMS approval. The ERS 
requests in excess of 60 months shall be referred to CMS for approval. 
The periodic payments on the approved ERS received by Treasury or its PCAs will be forwarded to CMS on 
an IPAC collections report along with other collections. 
MSP 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  
70.14 of this Chapter. MSP contractors shall continue to accrue interest on the remaining principal balance 
of the debt. 
Debts that are in a Treasury approved ERS and not yet classified to CNC shall be reported as current on the 
Forms CMS H/M 751. Debts in CNC classification shall remain in CNC and continue to be reported as 
delinquent on the Forms CMS C/MC 751. Debts in CNC classification shall remain in CNC and continue to 
be reported as delinquent. 
70.17  Excess Collections 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21)  There may be instances where amounts collected 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 MSP contractors recouping the same debt by internal withhold, or when a portion of the debt 
originally referred is reduced due to a partial valid documented defense. 
70.18  Applying an Excess Collection 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP contractors shall apply an appropriate portion of the collection to the debt in order to bring the balance 
to zero. The Collection/Refund Spreadsheet shall be annotated with the portion of the collection that was 
posted to the debt. MSP contractors shall then determine if the debtor has any other outstanding debts, 
including interest, to which the excess collection may be applied. 
70.18.1  If the Debtor Has Other Outstanding Debt  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If the debtor has other outstanding debt, the excess collection shall then be applied to the oldest active debt 
first (then next oldest), that has not yet been referred to Treasury. If the only other outstanding debt is 
currently at Treasury, the excess collection shall then be applied to the oldest debt first. The breakout of 
principal and interest on the Collection/Refund Spreadsheet does not apply when the excess collection is 
applied to another outstanding debt. MSP 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. If the collection is applied to other debt(s), the MSP contractor 
shall update HIGLAS.  If the excess collection is applied to another debt currently at Treasury, the MSP 
contractor shall use HIGLAS update reason code AD to post the excess collection to the other debt(s). The 
MSP contractor shall annotate HIGLAS with the actions taken regarding the excess collection. 
70.18.2  If the Debtor Has No Other Outstanding Debt 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If there are no other outstanding debts, the excess portion of the collection, after bringing the debt 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: (1) the MSP contractor shall annotate the spreadsheet as partially complete, 
(2) return the spreadsheet to CMS; and 3) CMS may allow additional time for processing the refund. See 
Medicare Financial Manual, Chapter 4, Section 70.14.8.2. Once the refunds are processed, the completed 
Collection/Refund Spreadsheet shall be forwarded to CMS. A copy of the Collection/Refund spreadsheet, 
with annotations regarding the refund, shall be kept in the debtor file for audit trail purposes. The MSP 
contractor shall make appropriate adjustments HIGLAS to reflect the refund activity. 
70.18.3  Additional Instructions for MSP Excess Collections 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
If the debtor is an employer, and the payment creating the excess collection on a specific employer debt is 
made by an Insurer, the Insurer is deemed to be acting as an agent of the employer. If the amount paid 
exceeds the sum due on the individual debt for which payment was made, the excess monies have to be 
applied to the same combination of employer/Insurer only. If there is no other outstanding debt for that same 
combination of Employer/Insurer, the MSP contractor shall issue a refund.  
If an employer has outstanding debts, and the monies were received from that employer, the excess 
collection can be applied to other debts of the same employer regardless of the employer/insurer 
combination. If there is no other outstanding debt for that employer, the MSP contractor shall issue a refund. 
70.19  Disputed Treasury Debts  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21)  MSP contractors shall update HIGLAS as well as its records when reviewing a valid defense or appeal or 
request for reopening, either submitted directly to the contractor by the identified debtor or via a Treasury 
Action Form (TAF) from Treasury. 
If Treasury discovers an error, receives information that establishes a valid dispute or appeal, or receives 
information that would exclude all or part of a debt from DCIA referral, the MSP contractors shall receive a 
TAF along with any supporting documentation. 
The TAF is not a resolution of a debt by Treasury; it is a request for the MSP contractor to review the 
documentation and provide a decision.  The MSP contractors shall, after review of the TAF and supporting 
documentation, initiate any required actions including debt recalls or adjustments. MSP contractors shall 
update all systems, including HIGLAS, if the decision so warrants within 30 calendar days. MSP contractors 
shall notify Treasury of their decision, following the instructions on the TAF. 
If an MSP contractor discovers an error, receives a direct repayment, directly receives information from the 
debtor establishing a valid documented defense or appeal, or otherwise receives information that would 
exclude all or part of a debt from DCIA referral, the contractor shall update HIGLAS with status updates 
and changes to the dollar amount. 
MSP contractors may receive correspondence stating the insurer or employer has paid the 
provider/physician or other supplier. In this situation, the contractor shall ask for proof of payment. The 
insurer or employer still owes any interest that accrued up until the date it paid the provider, physician, or 
other supplier. If it paid the provider, physician, or other supplier before Medicare issued its demand, then 
proof of such payment is a valid documented defense for the entire debt. However, if the insurer or employer 
paid the provider, physician, or other supplier after Medicare issued its demand letter, the employer or 
insurer still owes any interest which had accrued and was due at the time of the payment to the provider, 
physician, or other supplier. (Proof of payment may include a remittance advice, an EOB (explanation of 
benefits), cancelled checks and/or spreadsheets/computer print-outs on the insurers letterhead that establish 
that the insurer in fact paid the provider, physician, or other supplier.)  
NOTE: If a debt is recalled/returned from Treasury due to a bankruptcy notification, the Medicare contractor 
shall follow bankruptcy procedures. 
70.20  Financial Reporting for Collections 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP contractors shall follow the instructions as outlined in Chapter 5,  270 of the Medicare Financial 
Management Manual (CMS Pub. 100-06). The MSP contractor shall report and post all activities related to 
MSP debts according to CMS guidelines and instructions. 
MSP contractors shall document all accounting actions taken on any debt, whether the debt is actively being 
collected by the MSP contractor or by Treasury/PCA/TOP. MSP contractors shall follow all applicable 
financial reporting requirements defined in Chapters 4 and 5 of the Medicare Financial Management Manual 
(CMS Pub. 100-06) and in  70 of this Chapter. 
 
 
 
70.21  Accrual of Interest 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
MSP contractors shall note that interest accrues from the date of the original demand letter to the debtor(s). 
The additional information about interest accrual is included in the letter so that the debtor(s) will know how 
much it must repay if it does not make repayment immediately upon receipt of the ITR letter.  MSP contractors may receive a request for a waiver of interest. This issue is not within Medicare 
contractor jurisdiction. Any such request must be in writing, and must explain why the debtor believes that 
the interest should be waived. Such requests must be forwarded to CMS with a copy of the case file. CMS 
will review any such requests.  When CMS makes a decision, it will communicate the decision to the MSP 
contractors.  The MSP contractors shall take all actions necessary to implement the decision and update all 
appropriate records and systems. 
MSP contractors shall not refer requests for waiver of interest on cases in which the debtor has supplied to 
the contractor proof of actual receipt date of settlement proceeds. (For example, a copy of the settlement 
check, front and back.) If repayment to Medicare is not made by the due date in the recovery demand letter 
or within 60 calendar days from the date the beneficiary receives the settlement proceeds, whichever is later, 
then interest accrues from the date of the demand letter or the date of the receipt of the settlement proceeds, 
whichever is later. 
80  Bankruptcy/State Insurer Liquidation Actions and Medicare Secondary Payer 
(MSP) Debt 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
 
80.1  General 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Action must be taken to safeguard the Medicare Trust Funds when an MSP debtor files a bankruptcy 
petition (voluntary); creditors of an MSP debtor petition the bankruptcy court to order the MSP debtor 
bankrupt (involuntary); or an MSP debtor is ordered liquidated by a State Government. 
80.2  Types of Bankruptcy Proceedings 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Types of Federal bankruptcy filings that may involve Medicare MSP debtors include: 
a)  Chapter 7  Debtors or creditors file under this chapter to obtain discharge of debtors debts 
(liquidation). Companies that file under this chapter generally close (the debtor ceases operations and 
disposes of the assets over a period of time). A court-appointed trustee accumulates the assets of the debtor, 
sells them and distributes the money among those whom the debtor owes (creditors). 
b)  Chapter 9 - This type of bankruptcy involves municipalities such as a hospital district. This chapter 
provides for re-organization and debt restructuring to be developed and approved, much like Chapter 11. 
c)  Chapter 11  Debtor files under this chapter to re-organize his business. The purpose of this chapter 
is to restructure company finances so that the debtor can continue to operate. To emerge from Chapter 11 the 
debtor submits a Reorganization Plan. This Plan indicates the amounts and schedules for payments to 
creditors. Creditors vote on the Plan and the bankruptcy court must confirm the creditors decision. 
Recovery amounts may vary. The Bankruptcy Code provides for the discharge of any remaining debts. 
d)  Chapter 13  Debtors are individuals (including sole proprietorships) with regular income. Generally 
the debtor must file a debt adjustment plan within 15 days after filing (it is better to file a proof of claim as 
early as possible after the filing date). This chapter allows the debtor to keep property and to pay debts over 
time, usually between three to five years. 
80.3  State Ordered Insurer Liquidations 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The State may order insurers, incorporated or otherwise organized, that do business in that State to be 
liquidated under certain circumstances. Generally, this occurs following:  a)  A determination by a State agency (e.g., Insurance Commission) that an insurer is insolvent or 
operating in financially hazardous manner; and 
b)  An order by a State Court that the insurer be liquidated. The assets of the insurer are sold and the 
proceeds are used to pay claims against the debtor as ordered by the Court. 
80.4  Importance of Various Dates in Bankruptcy/Liquidation Proceedings 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The filing date (i.e., the date a petition of bankruptcy is filed with the U.S. Bankruptcy Court or the date a 
petition for insolvency (liquidation) is filed with a state court) distinguishes pre-petition services from post-
petition services. Events that occur on or before the petition date are pre-petition. Events that occur after the 
petition date are post-petition. 
Initially, creditors file claims for pre-petition services. Creditors often update their pre-petition claims as 
additional debts are identified. 
At various points during the process, the bankruptcy court may allow creditors to file claims for post-
petition service. 
Ultimately, a debtor will be discharged (released from the jurisdiction of the bankruptcy court). Generally 
the discharged entity is fully responsible for the debts arising from post-discharge services, unless the court 
makes other arrangements. 
80.5  Difference between Automatic Stay, Relief, and Discharge 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The Automatic Stay goes into effect when the bankruptcy petition is filed. It gives the debtor/entity a break 
from the creditors collection efforts. The stay is not permanent. In certain circumstances the creditor can 
ask for relief from the stay.  Relief from the Stay is petitioned by the creditor and shall be granted only by 
the court. The Discharge from bankruptcy occurs at the end of the court process and closes the bankruptcy.  
It voids any judgment to the extent that it is a determination of the liability of a debtor/entity for a pre-
petition debt. The effect of the discharge is to totally prohibit debt collection activities against the debtor as 
specified in the discharge papers by the court. 
80.6  Affiliates  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Businesses (including insurance companies) often have complex legal structures. It is not uncommon for a 
business entity to have multiple subsidiaries using different business names, called Affiliates.  A 
bankruptcy/liquidation proceeding may involve all affiliates or only certain affiliates. Affiliates, if any, 
should be listed on the bankruptcy petition. An affiliate is not automatically part of the bankruptcy unless the 
petition states that the affiliate is part of the bankruptcy. 
80.7 Notice of Bankruptcy/Liquidation 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Upon notice that DOJ and/or HHS OGC is pursuing a bankruptcy claim on behalf of Medicare, the MSP 
contractor will gather information regarding debts where demand letters have been sent, and for cases where 
the entity in bankruptcy/liquidation is involved (e.g., as the WC or liability insurer), but demands have not 
yet been sent. All due dates will be specified in CMSs e-mail requests. 
The CMS anticipates that DOJ/HHS OGC may periodically request updates and additional information and 
will try to get as much time as possible for ROs and contractors to gather and report such updated 
information.  If a MSP contractor receives notification of a bankruptcy/liquidation or potential bankruptcy/liquidation 
situation from other than CMS, MSP contractors must report any bankruptcy/liquidation information 
immediately to CMS. MSP contractors are responsible to ensure that CMS is made aware of all non-
provider, physician, or other supplier bankruptcy/liquidation notifications received by the MSP contractor. 
When the MSP contractor receives a defense to an MSP recovery demand letter and the entity in 
bankruptcy/liquidation is the debtor (as opposed to the debtors insurer, for example), the MSP contractor 
shall determine if the bankruptcy/liquidation is already known to CMS. If it has been previously identified, 
the MSP contractor shall follow prior guidance. 
Reminder: The RO that has jurisdiction for the state in which the debtor/entity files bankruptcy usually is the 
designated lead. MSP contractors will be notified of any exceptions as they occur. 
The MSP contractor will update and maintain a list of known bankrupt debtors and liquidated debtors. 
80.8  MSP Contractor Role in Bankruptcy/Liquidation 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The MSP contractor shall identify all MSP debts/cases/ARs specific to the bankruptcy/liquidation 
debtor/entity. 
Reminder: If during the course of other business, the MSP contractor identifies additional debts/cases/ARs 
for a debtor/entity on a pending bankruptcy or adjudged bankruptcy, the MSP contractor shall take 
appropriate action with respect to the debt. As questions arise for a particular case, the contractor shall refer 
such questions to the CMS. 
If the bankruptcy/liquidation had not been previously identified, the MSP contractor shall take the following 
actions: 
a)  The MSP contractor shall request a copy of the petition for bankruptcy/liquidation from the 
debtor/entity. 
b)  If the MSP contractor does not receive a copy of the filing, the contractor shall notify the debtor that 
the posed defense is not valid and the proper documentation must be submitted. 
c)  When the proper bankruptcy documentation is received, the MSP contractor shall update all internal 
systems (including HIGLAS) and financial reports with the bankruptcy status. 
NOTE: Please note that the term defense here does not invalidate the debt but merely refers to a defense to 
Treasury referral and our active pursuit of recovery through other venues other than the bankruptcy court. 
Also note that in no way does the bankruptcy notice alleviate the debtor of its responsibility to repay 
Medicare. All debts for pending bankrupt debtors remain open on the MSP contractors systems and 
financial reports. 
d)  MSP contractors shall cease new MSP recovery demand letters to the bankrupt debtor. 
e)  MSP contractors shall identify all existing open debts/ARs for that specific debtor. Do not refer any 
new debts to Treasury. 
f)  MSP contractors shall recall any debts that were previously referred to Treasury for that specific 
debtor. 
g)  MSP contractors shall report the debts on its financial statements within the appropriate bankruptcy 
detail line of the Form CMS-751 reports. 
NOTE: When a bankruptcy notification is received from Treasury, via a Treasury Action Form, at CMS, 
CMS will update HIGLAS to reflect the bankruptcy status. CMS will send the information back to the MSP 
contractor.  REMINDER: The MSP contractor does not need to send a recall to Treasury; all updates to HIGLAS are 
automatically referred to Treasury. 
NOTE: When a debtor/entity that is in Chapter 7 converts to Chapter 11 (an unusual occurrence), MSP 
contractors must contact CMS for further instructions. 
NOTE: In the event that a MSP contractor has or receives notice of Chapter 13 bankruptcy, the MSP 
contractor shall work with their RO and the HHS OGC for their region (There are many factors to be 
considered). 
NOTE:  In the case of State Ordered Liquidation, MSP contractors shall consult with your RO and the HHS 
OGC for your region before proceeding further. 
NOTE: Once the bankruptcy has been finalized, consult with CMS before proceeding further. 
80.9  Discharge of Bankruptcy/Liquidation Debts 
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Debts involved in a pending bankruptcy/liquidation cannot be recommended or approved for Write-
off/Closed.  Debts that are discharged/forgiven by a U.S. Bankruptcy Court/State Court are to be 
recommended for Write-off/Closed on the next quarters Write-off/Closed report.  If there are questions 
about the documentation requirements regarding discharge, the MSP contractor must obtain advice from 
CMS. 
80.10  Actions Dismissed by the U.S. Bankruptcy Court  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
Occasionally, the U.S. Bankruptcy Court dismisses a bankruptcy action because the debtor does not qualify 
for bankruptcy or for some other reason. When there is a dismissal, with the advice of regional counsel, the 
RO and MSP contractor can usually treat the case as if the bankruptcy action never occurred and continue 
the normal recovery process. 
80.11  Appeals Requests Citing Bankruptcy Defense  
(Rev. 10629; Issued: 03-23-21; Effective: 04-19-21; Implementation: 04-19-21) 
The MSP contractor shall refer all appeal requests with a bankruptcy defense to the CMS RO that has been 
designated to review bankruptcy matters; the MSP contractor can obtain the appropriate RO bankruptcy 
contact from its local RO.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Transmittals Issued for this Chapter 
 
Rev #  Issue Date  Subject  Impl Date  CR# 
R11775MSP 12/30/2022  Automation of the Medicare Duplicate Primary Payment  10/03/2022 12687 
(DPP) Process 
R11741MSP 12/09/2022  Automation of the Medicare Duplicate Primary Payment  10/03/2022 12687 
(DPP) Process - Rescinded and replaced by 
Transmittal11775 
R11557MSP 08/17/2022  Automation of the Medicare Duplicate Primary Payment  10/03/2022 12687 
(DPP) Process  Rescinded and replaced by Transmittal 
11741 
R11411MSP 05/12/2022  Automation of the Medicare Duplicate Primary Payment  10/03/2022 12687 
(DPP) Process- Replaced by Transmittal 11557 
R10629MSP  03/23/2021  Update Internet Only Manual (IOM) Chapter 7 Medicare  04/19/2021 11332 
Secondary Payer (MSP) Recovery Manual