Medicare Program Integrity Manual 
Chapter 8  Administrative Actions and Sanctions and 
Statistical Sampling for Overpayment Estimation 
 
Table of Contents 
(Rev. 12333, Issued: 10-26-23) 
 
Transmittals for Chapter 8 
 
8.1  Appeal of Denials 
8.2  Overpayment Procedures 
8.2.1  Overpayment Assessment Procedures 
8.2.1.1  Definition of Overpayment Assessment Terms 
8.2.2  Assessing Overpayment When Review Was Based on Statistical Sampling 
for Overpayment Estimation 
8.2.3  Assessing Overpayment or Potential Overpayment When Review Was 
Based on Limited Sample or Limited Subsample 
8.2.3.1  Contractor Activities to Support Assessing Overpayment 
8.2.3.2  Conduct of Expanded Review Based on Statistical Sampling for 
Overpayment Estimation and Recoupment of Projected Overpayment by 
Contractors 
8.2.3.3 - Reserved for Future Use 
8.2.3.3.1 - Background on Consent Settlement 
8.2.3.3.2 - Opportunity to Submit Additional Information Before 
Consent Settlement Offer 
8.2.3.3.3 - Consent Settlement Offer 
8.2.3.3.4 - Option 1 - Election to Proceed to Statistical Sampling 
for Overpayment Estimation 
8.2.3.3.5 - Option 2 - Acceptance of Consent Settlement Offer 
8.2.3.3.6 - Consent Settlement Budget and Performance 
Requirements for ACs 
8.2.4  Coordination with Audit and Reimbursement Staff 
8.3  Suspension of Payment 
8.3.1  When Suspension of Payment May Be Used 
8.3.1.1  Credible Allegation of Fraud Exists Against a Provider  Fraud 
Suspensions 
8.3.1.2  Reliable Information that an Overpayment Exists  General 
Suspensions  8.3.1.3  Reliable Information that the Payments to Be Made May Not Be 
Correct  General Suspensions 
8.3.1.4  Provider Fails to Furnish Records and Other Requested 
Information  General Suspensions 
8.3.2  Procedures for Implementing a Payment Suspension 
8.3.2.1  CMS Approval 
8.3.2.2  The Notices Involving Payment Suspensions 
8.3.2.2.1  Issuing a Prior Notice versus Issuing a Concurrent 
Notice 
8.3.2.2.2  Content of Payment Suspension Notice 
8.3.2.2.3  Shortening the Notice Period for Cause 
8.3.2.2.4  Mailing the Notice to the Provider 
8.3.2.2.5  Opportunity for Rebuttal 
8.3.2.3  Claims Review During the Payment Suspension Period 
8.3.2.3.1  Claims Review 
8.3.2.3.2  Case Development - Program Integrity 
8.3.2.4  Duration of the Payment Suspension 
8.3.2.5  Terminating the Payment Suspension 
8.3.2.6  Disposition of the Withheld Funds 
8.3.2.7  Contractor Suspects Additional Improper Claims 
8.3.3  Suspension Process for MultiRegion Issues (National Payment 
Suspensions) 
    8.3.3.1  DME Payment Suspensions (MACs and UPICs) 
8.3.3.2  Non-DME National Payment Suspensions (MACs and UPICs) 
8.4  Use of Statistical Sampling for Overpayment Estimation 
8.4.1  Introduction 
8.4.1.1  General Purpose 
8.4.1.2 - The Purpose of Statistical Sampling 
8.4.1.3  Steps for Conducting Statistical Sampling 
8.4.1.4 - Determining When Statistical Sampling May be Used 
8.4.1.5  Consultation With a Statistical Expert 
8.4.1.6  Use of Other Sampling Methodologies 
8.4.2  Probability Sampling 
8.4.3  Selection of Period to be Reviewed and Composition of Universe 
8.4.3.1  Selection of Period for Review 
8.4.3.2  Defining the Universe, the Sampling Unit, and the Sampling 
Frame 
8.4.3.2.1  Composition of the Universe 
8.4.3.2.2  The Sampling Unit  8.4.3.2.3  The Sampling Frame 
8.4.4  Sample Selection 
8.4.4.1  Sampling Methodology  
8.4.4.1.1  Simple Random Sampling 
8.4.4.1.2  Systematic Sampling 
8.4.4.1.3  Stratified Sampling 
8.4.4.1.4  Cluster Sampling 
8.4.4.1.5  Design Combinations 
8.4.4.2  Random Number Selection 
8.4.4.3  Determining Sample Size 
8.4.4.4  Documentation of Sampling Methodology 
8.4.4.4.1  Documentation of Universe and Sampling Frame 
8.4.4.4.2  Reserved for Future Use  
8.4.4.4.3  Worksheets 
8.4.4.4.4  Overpayment/Underpayment Worksheets 
8.4.4.5  Maintenance of Documentation  
8.4.5  Calculating the Estimated Overpayment 
8.4.5.1  The Point Estimate 
8.4.5.2  Calculation of the Estimated Overpayment Amount 
8.4.6  Actions to be Performed Following Selection of Provider or Supplier and 
Sample 
8.4.6.1  Notification of Provider or Supplier of the Review and Selection 
of the Review Site 
8.4.6.1.1  Written Notification of Review 
8.4.6.1.2  Determining Review Site 
8.4.6.2  Meetings to Start and End the Review 
8.4.6.3  Conducting the Review 
8.4.7- Overpayment Recovery 
8.4.7.1  Recovery from Provider or Supplier 
8.4.7.2  Informational Copy to Primary GTL, Associate GTL, SME or 
CMS RO 
8.4.8  Corrective Actions 
8.4.9  Changes Resulting from Appeals 
8.4.9.1  Sampling Methodology Overturned 
8.4.9.2  Revised Initial Determination 
8.4.10  Resources 
8.4.11  Additional Discussion of Stratified Sampling and Cluster Sampling 
8.4.11.1  Stratified Sampling 
8.4.11.2  Cluster Sampling  8.1 - Appeal of Denials 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20) 
 
A claimant dissatisfied with a contractors initial determination is entitled by law and 
regulations to specified appeals. The appeals process allows a provider and/or a 
beneficiary (or representative) the right to request a review or reconsideration of the 
determination to deny a service in full or in part. In this process, Hearing Officers (HOs) 
and ALJs look to the evidence of record and must base their decision upon a 
preponderance of the evidence. If the appeal is of a claim reviewed by a UPIC, then the 
UPIC forwards its records on the case to the AC so that it can handle the appeal. 
 
As conclusory statements may be considered of little or questionable value, it is 
important that reviewers include clearly articulated rationale for their findings. Such 
clearly articulated rationale will continue to be of importance if a denial is appealed 
beyond the ALJ level to the Appeals Council or eventually to federal court. Contractors 
must include a copy of the policy underlying denial in the case file. 
 
A. Use of Medical Specialist 
 
Reviewers may also use medical specialists to lend more weight and credibility to their 
rationale or findings. When an adjudicator must weigh the statements and rationale 
furnished by the appellant provider against the statements and rationale of the reviewer 
(and any information used by the reviewer), the opinion of a specialist in the same area as 
the provider may carry greater weight than the opinion of a non-specialist. 
 
Consequently, UPICs are required to have a medical specialist involved in denials that 
are not based on the application of clearly articulated policy with clearly articulated 
rationale. A review or reconsideration involving the use of medical judgment should 
involve consultation with a medical specialist. Additionally, contractors are encouraged 
to use specialists whenever possible since providers are more likely to accept the opinion 
(and any resulting overpayment) of a specialist in their own area. 
 
B. Documenting Reopening and Good Cause 
 
Reopening occurs when a UPIC conducts a review of claims at any time after the 
initial/review determination (see 42 CFR 405.980, (b).) If reopening and conducting a 
postpayment review occurs within 12 months of the initial/review determination, the 
UPIC does not need to establish good cause. However, the UPIC should document the 
date so there is no confusion about whether good cause should have been established. 
After 12 months, but within 4 years from the date of the initial/review determination, 
contractors must establish good cause. (See Medicare Claims Processing Manual Pub 
100-04, chapter 34 and 42 CFR 405.986. Documenting the date a claim was reopened 
(regardless of the demand letter issue date) and the rationale for good cause when claims 
are reopened more than 12 months from the initial/review determination will lend 
credibility to contractor documentation if the determination is appealed. 
  8.2  Overpayment Procedures 
(Rev. 11032; Issued: 09-30-21; Effective: 10-12-21; Implementation: 11-10-21) 
 
This section applies to Medicare Administrative Contractors (MACs) and Unified 
Program Integrity Contractors (UPICs). 
 
The UPIC shall refer all identified overpayments to the MAC who shall send the demand 
letter and recoup the overpayment. 
 
Contractors should initiate recovery of overpayments whenever it is determined that 
Medicare has erroneously paid. In any case involving an overpayment, even where there 
is a strong likelihood of fraud, contractors shall request recovery of the overpayment. 
 
The UPIC shall refer such overpayments to the MAC only after the investigation has 
been vetted with CMS (see Pub. 100-08, chapter 4, section 4.6). In addition, if a UPIC is 
making a referral to law enforcement, it shall refrain from referring the overpayment 
determination to the MAC during specified times noted in Pub. 100-08, chapter 4, section 
4.9.4. If a large number of claims are involved, contractors consider using statistical 
sampling for overpayment estimation to calculate the amount of the overpayment. (See 
section 8.4 of this chapter.) 
 
Contractors have the option to request the periodic production of records or supporting 
documentation for a limited sample of submitted claims from providers or suppliers to 
which amounts were previously overpaid to ensure that the practice leading to the 
overpayment is not continuing. The MAC may take any appropriate remedial action 
described in this chapter if a provider or supplier continues to have a high level of 
payment error. Offer the provider a consent settlement based on the potential projected 
overpayment amount. 
 
8.2.1  Overpayment Assessment Procedures 
(Rev. 670, Issued: 08-19-16, Effective: 11-23-16, Implementation: 11-23-16) 
 
After an overpayment determination is made concluding an incorrect amount of money 
has been paid, contractors must assess an overpayment.  The assessment options vary 
depending upon the type of sample used when identifying beneficiary claims for 
inclusion in the postpayment review.  Whenever possible, CMS encourages contractors to 
report postpayment savings in terms of: 
 
  Actual overpayment;  
 
  Settlement based overpayment, or 
 
  Extrapolated overpayments. 
 
A.  Example Format of An Overpayment Worksheet (also see Exhibit 46) 
  Provider/Supplier Name   
Provider/Supplier National   
Provider Identification Number 
(NPI) or Provider Transaction 
Access Number (PTAN) 
Reason for Review   
Type of Sample Reviewed:   
Statistical Sampling for 
Overpayment Estimation  
Explanation of Sampling   
Methodology: 
Number of Claims in Sample   
Number of Claims in Universe   
Amount of Overpayment (after   
allowance for deductible and 
coinsurance) 
Claims Reviewed   
Billed Amount   
Allowed Amount   
Rationale for Denial   
1879 Determinations   
1870 Determinations   
Total Actual Overpayment   
Overpayment extrapolated over   
the universe 
 
8.2.1.1  Definition of Overpayment Assessment Terms 
(Rev. 670, Issued: 08-19-16, Effective: 11-23-16, Implementation: 11-23-16) 
 
A.  Actual Overpayment 
 
An actual overpayment is, for those claims reviewed, the sum of payments (based on the 
amount paid to the provider/supplier and Medicare approved amounts) made to a  provider/supplier for services which were determined to be medically unnecessary or 
incorrectly billed. 
 
B.  Projected Overpayment 
 
A projected overpayment is the numeric overpayment obtained by projecting an 
overpayment from statistical sampling for overpayment estimation to all similar claims in 
the universe under review. 
 
8.2.2  Assessing Overpayment When Review Was Based on Statistical 
Sampling for Overpayment Estimation 
(Rev. 670, Issued: 08-19-16, Effective: 11-23-16, Implementation: 11-23-16) 
 
If contractors use statistical sampling for overpayment estimation of claims, they follow 
instructions in section 8.4 of this chapter to calculate the valid projected overpayment. 
They document the sampling methodology when review is based on statistical sampling 
for overpayment estimation.  They notify the provider/supplier of the overpayment and 
refer the case to overpayment staff to make payment arrangements with the 
provider/supplier to collect the overpayment. 
 
8.2.3  Assessing Overpayment or Potential Overpayment When Review 
Was Based on Limited Sample or Limited Sub-sample 
(Rev. 670, Issued: 08-19-16, Effective: 11-23-16, Implementation: 11-23-16) 
 
If a limited sample or limited sub-sample of claims is chosen for review, there are two 
overpayment assessment options for contractors: 
 
  Refer to overpayment staff for recoupment of the actual overpayment for the 
claims reviewed; or 
 
  Conduct an expanded review based on statistical sampling for overpayment 
estimation instructions in section 8.4 of this chapter and recoup the projected 
overpayment. 
 
8.2.3.1  Contractor Activities to Support Assessing Overpayment 
(Rev. 670, Issued: 08-19-16, Effective: 11-23-16, Implementation: 11-23-16) 
 
A.  Step 1 
 
The first step in assessing an overpayment is for contractors to document for each claim 
reviewed the following: 
 
  The amount of the original claim; 
 
  The allowed amount; 
    The rationale for denial; 
 
  The 1879 determination for each assigned claim in the sample denied because 
the service was not medically reasonable and necessary (or the 1842(1) 
provider/supplier refund determination on non-assigned provider/supplier claims 
denied on the basis of 1862 (a)(1)(A)) (refer to Exhibit 14.1 of this manual); 
 
  The 1870 determination for the provider/supplier for each overpaid assigned 
claim in the sample (refer to Exhibit 14.2 of this manual); and 
 
  The amount of overpayment (after allowance for deductible and coinsurance). 
 
B.  Step 2 
 
Notify the provider/supplier of the preliminary overpayment findings and preliminary 
review findings. 
 
C.  Step 3 
 
If the provider/supplier submits additional documentation, review the material and adjust 
the preliminary overpayment findings, accordingly. 
 
D.  Step 4 
 
Calculate the final overpayment. 
 
E.  Step 5 
 
Refer to the overpayment recoupment staff. 
 
8.2.3.2  Conduct of Expanded Review Based on Statistical Sampling 
for Overpayment Estimation and Recoupment of Projected 
Overpayment by Contractors 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20) 
 
The MACs shall perform the actual recoupment identified by the UPICs. When a UPIC 
or medical review audit determines an extrapolated overpayment the sample claims 
reviewed are adjusted for denial. For history purposes, contractors shall deny the sample 
claims individually in the shared system and shall suppress the sample claims from going 
to HIGLAS. Once the entire extrapolated amount is identified, contractors shall create 
one large account receivable (AR) for the extrapolated amount (including the adjusted 
sample claim amounts) to demand and recoup. 
 
A.  If an expanded review of claims is conducted, contractors shall follow the sampling 
instructions found in section 8.4 of this chapter, obtain and review claims and medical 
records, and document for each claim reviewed:     
  The amount of the original claim; 
 
  The allowed amount; 
 
  The rationale for denial; 
 
o  The 1879 determination for each assigned claim in the sample denied because the 
service was not medically reasonable and necessary (or the 1842(1) provider/supplier 
refund determination on non-assigned provider/supplier claims denied on the basis of 
1862(a)(1)(A)) (refer to Exhibit 14.1 of this manual); 
 
  The 1870 determination for the provider/supplier for each overpaid assigned claim 
in the sample (refer to Exhibit 14.2 of this manual); and 
 
  The amount of overpayment (after allowance for deductible and coinsurance). 
 
B.  Contractors calculate the projected overpayment by extrapolating from the actual 
overpayment to the universe that excludes those claims determined that the 
provider/supplier did not have knowledge that the service was not medically necessary; 
 
C.  Notify the provider/supplier of the preliminary projected overpayment findings and 
review findings; 
 
D.  If the provider/supplier submits additional documentation, review the material and 
adjust the preliminary projected overpayment findings, accordingly; 
 
E.  Calculate the final overpayment; and 
 
F.  Refer to the overpayment recoupment staff. 
 
8.2.3.3 - Reserved for Future Use 
(Rev. 670, Issued: 08-19-16, Effective: 11-23-16, Implementation: 11-23-16) 
 
8.2.3.3.1 - Background on Consent Settlement 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20) 
 
The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 
defines consent settlement as an agreement between the Secretary and a provider of 
services or supplier whereby both parties agree to settle a projected overpayment based 
on less than a statistically valid sample of claims and the provider of services or supplier 
agrees not to appeal the claims involved. The UPICs and the contractor medical review 
units shall submit via secure email the consent settlement to the Primary and Associate 
GTLs before offering a consent settlement to the provider or supplier. If the UPICs or the 
contractor medical review units do not have secure email, the consent settlement shall be 
sent to the Primary GTL and the Associate GTL via hard copy. Upon receipt, GTLs will  forward the consent settlement to the Director of the Division of Benefit Integrity 
Management Operations. The UPICs and the contractor medical review units may contact 
the provider upon approval of the consent settlement. Consent settlement documents 
carefully explain, in a neutral tone, what rights a provider waives by accepting a consent 
settlement. The documents shall also explain in a neutral tone the consequences of not 
accepting a consent settlement. A key feature of a consent settlement is a binding 
statement that the provider agrees to waive any rights to appeal the decision regarding the 
potential overpayment. The consent settlement agreement shall carefully explain this, to 
ensure that the provider is knowingly and intentionally agreeing to a waiver of rights. 
Consent settlement correspondence shall contain: 
 
1.  A complete explanation of the review and the review findings; 
 
2.  A thorough discussion of 1879 and 1870 determinations, where applicable;  
 
3.  The consequences of deciding to accept or decline the consent settlement offer; and  
 
4.  It is rare that a UPIC will offer and develop a consent settlement. 
 
However, when the UPIC offers and develops a consent settlement, the AC or MAC shall 
administer the settlement. 
 
8.2.3.3.2 - Opportunity to Submit Additional Information Before 
Consent Settlement Offer 
(Rev. 377, Issued: 05-27-11, Effective: 06-28-11, Implementation: 06-28-11) 
 
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, section 
935(a)(5) states the provider has the opportunity to submit additional information before 
being offered a consent settlement.  Based on a postpayment review of the medical 
records, the contractor shall communicate in writing to the provider or supplier that: 
 
  The preliminary evaluation of the records indicates there would be an 
overpayment; 
 
  The nature of the problems in the billing and practice patterns identified in the 
evaluation; 
 
  The steps that the provider or supplier can take to address the problems; and 
 
  The provider or supplier has forty-five (45) days to furnish additional information 
concerning the medical records for the claims that have been reviewed. 
 
If after forty-five (45) days, it is determined that there is still an overpayment, then the 
provider or supplier shall receive a consent settlement offer.  If an overpayment is not 
warranted after additional review, then a follow-up letter shall be sent to the provider or 
supplier stating that no additional action is deemed necessary.   
8.2.3.3.3 - Consent Settlement Offer 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20) 
 
After the additional information concerning the medical records for the claims reviewed 
have been assessed and if it is still determined that there was an overpayment, the 
contractor shall offer the provider or supplier the opportunity to proceed with statistical 
sampling for overpayment estimation or a consent settlement. The UPICs and the 
contractor medical review units may choose to present the consent settlement letter to the 
provider or supplier in a face-to-face meeting. The consent settlement correspondence 
shall describe the two options available to the provider or supplier. The provider or 
supplier is given 60 days from the date of the correspondence to choose an option. If 
there is no response, Option 1 shall be selected by default. 
 
8.2.3.3.4 - Option 1 - Election to Proceed to Statistical Sampling for 
Overpayment Estimation 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20) 
 
If a provider or supplier fails to respond, this option shall be selected by default. For 
providers or suppliers who select this option knowingly or by default, thereby rejecting 
the consent settlement offer and retaining their full appeal rights, UPICs and the 
contractor medical review units shall: 
 
  Notify the provider or supplier of the actual overpayment and refer to overpayment 
recoupment staff; and 
 
  Initiate statistical sampling for overpayment estimation of the provider's or suppliers 
claims for the service under review following instructions in the Program Integrity 
Manual, chapter 8, 8.4 
 
If the review results in a decision to recoup the overpayment, the overpayment collection 
shall be initiated within 12 months of the decision. 
 
8.2.3.3.5 - Option 2 - Acceptance of Consent Settlement Offer 
(Rev. 377, Issued: 05-27-11, Effective: 06-28-11, Implementation: 06-28-11) 
 
A provider or supplier accepting Option 2 waives any appeal rights with respect to the 
alleged overpayment. Providers or suppliers selecting Option 2 that have any additional 
claims shall not be audited for the service under review within the same time period. 
 
Model language for the consent settlement documents can be found in PIM Exhibit 15. 
 
8.2.3.3.6 - Consent Settlement Budget and Performance Requirements 
for ACs 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20)   
When supporting UPICs in consent settlements, the ACs shall report these costs in the 
UPIC support activity code 23201. 
 
8.2.4 - Coordination With Audit and Reimbursement Staff 
(Rev. 670, Issued: 08-19-16, Effective: 11-23-16, Implementation: 11-23-16) 
 
MAC MR staff must work closely with their Audit/Reimbursement staff from the 
beginning of the postpayment process to ensure that the universe selected is appropriate 
and that overpayments and underpayments are accurately determined and reflected on the 
provider's cost report.  They furnish the Audit/Reimbursement staff the following 
information upon completion of the postpayment review: 
 
  The sample documentation contained in Pub. 100-08, chapter 3, section 3.5.2; 
 
  The identification of incorrectly paid or incorrectly denied services; and 
 
  All other information required by the Cost Report Worksheets in Pub. 100-08, 
chapter 3, section 3.5.2 and applicable Exhibits. 
 
They also furnish the above information if adjustments are made as a result of appeals. 
 
In most instances, the Audit/Reimbursement staff will: 
 
  Determine the overpayment to be recovered based on MR findings and pursue the 
recovery of the overpayment; and 
 
  Use the information MR provides on their postpayment review findings to ensure 
an accurate settlement of the cost report and/or any adjustments to interim rates 
that may be necessary as a result of the MR findings.  To preserve the integrity of 
Provider Statistical and Reimbursement Report (PS&R) data relative to paid 
claims and shared systems data relative to denied claims, and to ensure proper 
settlement of costs on provider cost reports, the same data must be used when the 
projection is made as was used when the sample was selected. Individual claims 
will not be adjusted.  In the event that a cost report has been settled, 
Audit/Reimbursement staff will determine the impact on the settled cost report 
and the actions to be taken. 
 
Projections on denied services must be made for each discipline and revenue center when 
PPS is not the payment method. 
 
When notifying the provider of the review results for cost reimbursed services, MR must 
explain that the stated overpayment amount represents an interim payment adjustment. 
Indicate that subsequent adjustments may be made at cost report settlement to reflect 
final settled costs. 
  Information from the completed Worksheets 1 - 7 must be routed to the Audit and 
Reimbursement staff. In addition to the actual and projected overpayment amounts, the 
information must provide the number of denied services (actual denied services plus 
projected denied services) for each discipline and the amounts of denied charges (actual 
denied amounts plus projected denied amounts) for supplies and drugs. 
 
Upon completion of the review, furnish the Audit and Reimbursement staff with the 
information listed in the Program Integrity Manual. 
 
8.3  Suspension of Payment 
(Rev. 12127; Issued: 07-21-23; Effective: 08-21-23; Implementation: 08-21-23) 
 
This section applies to Medicare Administrative Contractors (MACs) and Unified 
Program Integrity Contractors (UPICs). 
 
Hereinafter, suspension of payment may be referenced as payment suspension. 
 
Requests for Suspension of Payment (Payment Suspension) may be approved when 
there is reliable information that an overpayment exists, when payments to be made may 
not be correct, or when there is a credible allegation of fraud existing against a provider. 
The process by which the UPIC notifies and coordinates with the MAC to implement a 
CMS-approved suspension of payment shall be documented in the Joint Operating 
Agreement (JOA) between the MAC and the UPIC. The UPICs shall advise and 
coordinate the imposition of a payment suspension with the appropriate MAC when a 
payment suspension has been approved by CMS. The UPIC shall perform the necessary 
medical review and development of overpayments for payment suspensions that have 
received CMS approval, when appropriate. 
 
Medicare authority to withhold payment in whole or in part for claims otherwise 
determined to be payable is found in federal regulations at 42 CFR 405.370-375, which 
provide for the suspension of payments. 
 
All payment suspensions shall be referred to the CMS/Center for Program Integrity (CPI) 
via the Unified Case Management System (UCM) for approval. UPICs shall notify their 
appropriate CPI Business Function Lead (BFL), with a copy to the Contracting Officers 
Representative (COR), of the submission by providing the UCM number via email. 
 
8.3.1  When Suspension of Payment May Be Used 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20) 
 
A payment suspension may be used when there is: 
 
Reliable information that an overpayment exists, but the amount of the overpayment is 
not yet determined; 
 
Reliable information that the payments to be made may not be correct;   
Reliable information that the provider fails to furnish records and other essential 
information necessary to determine the amounts due to the provider; 
 
In cases of suspected fraud, a payment suspension may be used when there is a credible 
allegation of fraud. 
 
These above reasons for implementing a payment suspension are described more fully 
below. 
 
NOTE: If a payment suspension is approved, this edit of withholding of Medicare funds 
takes precedent over any other edits withholding money in the MAC systems. When it is 
time to terminate the payment suspension, the withheld funds must first be applied to the 
Medicare overpayment(s) and any excess is then applied to any other outstanding 
overpayments or debts owed to CMS or HHS in accordance with 42 CFR 405.372(e), 
unless otherwise directed by CMS. 
 
NOTE:  For providers that file cost reports, a payment suspension may have little impact. 
If the provider is receiving periodic interim payments (PIP), the interim payments may be 
suspended. If the provider is not receiving PIPs, a payment suspension will affect the 
settlement of the cost report. When an overpayment is determined, the amount is not 
included in any settlement amount on the cost report. For example, if the A/B MAC (A) 
has withheld (suspended) $100,000 when the cost report is settled, the A/B MAC (A) 
would continue to hold the $100,000. This means that if the cost report shows the 
Medicare program owing the provider $150,000, the provider would only receive 
$50,000 until the payment suspension action has been terminated. If the provider owes 
the Medicare program money at settlement, the amount of the suspended payment would 
increase the amount owed by the provider. In most instances, A/B MACs (A) should 
adjust interim payments to reflect projected cost reductions.  The contractors are to limit 
the adjustment to the percentage of potential fraud or the total payable amount for any 
other reasons. For example, if the potential fraud involved five percent of the periodic 
interim rate, the reduction in payment is not to exceed five percent.  Occasionally, 
suspension of all interim payments may be appropriate. 
 
NOTE: If a payment suspension is approved for a home health agency, all Requests for 
Anticipated Payments (RAPs) are to be suppressed (disapproved) in accordance with 42 
C.F.R. 409.43(c)(2). The UPIC shall make this request to CPI as part of its request for a 
payment suspension. 
 
In addition, CMS may suppress RAP payments for program integrity concerns absent a 
payment suspension. If the UPIC determines that a RAP suppression is appropriate they 
shall submit the following information to CMS: 
 
  Are final bills being submitted by the HHA? Yes or No 
  Indicate the volume (dollar and number of claims) of RAPs for the past 12 
months.    A brief summary supporting the request for RAP suppression. 
 
8.3.1.1  Credible Allegation of Fraud Exists Against a Provider - Fraud 
Suspensions 
(Rev. 11032; Issued: 09-30-21; Effective: 10-12-21; Implementation: 11-10-21) 
 
A payment suspension may be used when the UPIC, law enforcement, or CMS 
determines that a credible allegation of fraud exists against a provider or supplier 
(hereinafter referred to as provider). For purposes of section 8.3 et seq., these types of 
payment suspensions will be called fraud suspensions. 
 
Fraud suspensions may also be imposed for reasons not typically viewed within the 
context of false claims. For example: 
 
  The Quality Improvement Organization (QIO) has reviewed inpatient claims 
and determined that the diagnosis related groups (DRGs) have been upcoded. 
 
  The UPIC or MAC may suspect a violation of the physician self-referral ban. 
For this reason, the violation may be considered the cause for a payment 
suspension since claims submitted in violation of this statutory provision 
must be denied and any payments made would constitute an overpayment. 
 
  Even though services are rendered and may be determined as medically 
necessary and reasonable by the Medicare contractor, law enforcement has 
credible allegations of kickbacks. 
 
  Forged signatures on medical record documentation (e.g., Certificates of 
Medical Necessity (CMN), treatment plans, etc.) and/or other 
misrepresentations on Medicare claims or associated forms to obtain 
payment that would result in an overpayment determination. 
 
Whether or not the UPIC recommends a payment suspension to CMS, the final 
determination is determined on a case-by-case basis and requires review and analysis of 
the allegation and facts. The following information is provided to assist the UPIC in 
deciding when to recommend a payment suspension to CPI. 
 
A.  Complaints 
 
There is considerable latitude with regard to complaints alleging fraud, waste, and abuse. 
The providers Medicare history, including the volume and frequency of complaints 
concerning the provider, and the nature of the complaints all contribute to whether a 
payment suspension should be referred to CPI. If there is a credible allegation(s) that a 
provider is submitting or may have submitted false claims, the UPIC may recommend a 
fraud suspension to CPI only after the UPIC has vetted the provider in accordance with 
Pub. 100-08, chapter 4, section 4.6. (If the MAC identifies the potential fraud issue from  a complaint, the MAC shall refer its information to the respective UPIC for 
development). 
 
B.  Requests for Suspension of Payment 
 
For initial UPIC requests to suspend payments, the UPIC shall inform its assigned BFL 
of the potential suspension. The BFL will discuss all findings with the UPIC. After 
informing the BFL about the suspension, the contractor shall submit the payment 
suspension request via the UCM if the contractor determines such action is warranted. 
The Payment Suspension Administrative Action Request (AAR), draft suspension notice, 
and all other relevant documentation that supports the suspension request shall be 
uploaded by the contractor as part of the UCM submission. 
 
The UPIC shall also prepare and submit, if appropriate, a payment suspension referral 
package to CPI via the UCM for all requests received from (but not limited to): 
 
  CMS 
 
  Office of Inspector General (OIG) 
 
  Federal Bureau of Investigation (FBI) 
 
  Assistant United States Attorney (AUSA) 
 
  Other law enforcement agencies 
 
C.  Other Situations 
 
Other situations that may be considered when recommending a fraud suspension to CPI 
include, but are not limited to: 
 
  Provider has pled guilty to, or been convicted of, Medicare, Medicaid, 
TRICARE, or private health care fraud and is still billing Medicare for 
services; 
 
  Federal/State law enforcement has subpoenaed the records of, or executed a 
search warrant upon, a health care provider billing Medicare; 
 
  Provider has been indicted by a Federal Grand Jury for fraud, theft, 
embezzlement, breach of fiduciary responsibility, or other misconduct 
related to a health care program; 
 
  Provider presents a pattern of evidence of known false documentation or 
statements sent to the UPIC or the MAC; e.g., false treatment plans, false 
statements on provider application forms. 
  D.  Good Cause Exceptions 
 
Reference is made in 42 CFR 405.371(b)(1) that allows for good cause exceptions to 
not suspend payments or continue a payment suspension when there are credible 
allegations of fraud. These exceptions may be considered for approval by CMS if any 
apply: 
 
  Law enforcement has requested that a payment suspension not be imposed 
because such action may compromise or jeopardize its investigation; 
 
  CMS/CPI has determined that a beneficiary access to care issue may exist 
and potentially cause a danger to life or health in whole or part; 
 
  CMS/CPI has been determined that other administrative remedies may be 
implemented that would be more effective in protecting Medicare funds 
(such as revocation, prepayment review); or 
 
  CMS determines that the imposition or the continuation of a payment 
suspension is not in the best interest of the Medicare program. 
 
Every 180 calendar days after the initiation of a payment suspension based on credible 
allegations of fraud, CMS is required to evaluate whether there is good cause to terminate 
the payment suspension. Good cause to terminate a payment suspension is deemed to 
exist if the payment suspension has been in effect for 18 months. However, there are two 
exceptions. The first exception is that the case has been referred to and is being 
considered by the OIG for an administrative action such as a civil monetary penalty or 
permissive exclusion, or such administrative action is pending, and the OIG has made its 
request to not terminate the payment suspension in writing. The second exception is that 
the Department of Justice has submitted a written request to extend the payment 
suspension based on the ongoing investigation and its anticipation of filing a criminal or 
civil action or both, or based on a pending criminal or civil action or both. (See 42 CFR 
405.371(b)(2) and 405.371(b)(3).) 
 
CMS/CPI makes the final decision on whether good cause to terminate exists, based on 
the totality of the circumstances. For all fraud suspensions, the UPICs shall submit 
requests to CPI via the UCM within 14 calendar days before the suspension expires. CPI 
will evaluate the request to consider whether good cause to terminate the payment 
suspension exists. 
 
8.3.1.2  Reliable Information that an Overpayment Exists - General 
Suspensions 
(Rev. 11032; Issued: 09-30-21; Effective: 10-12-21; Implementation: 11-10-21) 
 
A payment suspension may be implemented when the MAC, UPIC, or CMS possesses 
reliable information that an overpayment exists. In this situation, the MAC shall refer its  information to the respective UPIC for development of a potential suspension. The UPIC 
shall refer a payment suspension to CPI via the UCM for consideration. For the purposes 
of this section, these types of payment suspensions will be called general suspensions. 
 
EXAMPLE (including but not limited to): Several claimed services identified from 
either a prepayment or post-payment review were determined to be non-covered or 
miscoded. It has been determined that there is a pattern of noncompliant billings (the 
provider has billed this service many times before) and it is suspected that there may be a 
substantial number of additional non-covered or miscoded claims paid in the past. 
 
 
8.3.1.3  Reliable Information that the Payments to Be Made May Not 
Be Correct - General Suspensions 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20) 
 
A payment suspension may be implemented when the MAC or UPIC or CMS possesses 
reliable information that the payments to be made may not be correct. In this situation, 
the MAC shall refer its information to the respective UPIC for development of a potential 
suspension. The UPIC shall refer a payment suspension to CPI for consideration. For the 
purposes of this section, these types of payment suspensions will be called general 
suspensions. 
 
EXAMPLE (including but not limited to): Several claimed services identified from a 
post-payment review were determined to be non-covered or miscoded. It has been 
determined that the provider has not changed its billing behavior and it is suspected that 
there may be a continuance of non-covered or miscoded claimed services to be billed in 
the future. 
 
8.3.1.4  Provider Fails to Furnish Records and Other Requested 
Information - General Suspensions 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20) 
 
A payment suspension may be used when the MAC, UPIC, or CMS possesses reliable 
information that the provider has failed to furnish records and other information 
requested or that is due, and which is needed to determine the amounts due the provider. 
In this situation, the MAC shall refer its information to the respective UPIC for 
development of a potential suspension. The UPIC shall refer a payment suspension to the 
CPI for consideration. For the purposes of this section, these types of payment 
suspensions will be called general suspensions. 
 
EXAMPLE (including but not limited to): During a post-payment review, medical 
records and other supporting documentation are solicited from the provider to support 
payment. The provider fails to submit the requested records after two attempts. The UPIC 
may request a payment suspension due to non-response from the provider. 
  In lieu of imposing a payment suspension, the MAC or UPIC may deny the paid claims 
because the provider failed to provide the requested documentation after two attempts. In 
either case, the MAC or UPIC should determine if the provider is continuing to submit 
claims for the services in question and take appropriate action(s) to correct the behavior. 
 
NOTE: In the above example, if the only reason for the payment suspension is the failure 
by the provider to furnish the requested records, and if the provider does eventually 
provide the requested information, the UPIC shall discuss this matter with CPI for 
guidance. 
 
EXAMPLE (including but not limited to): The provider fails to timely file an 
acceptable cost report. Refer to 42 CFR 405.371(d). (NOTE: Such requests regarding 
the timely filing of an acceptable cost report shall be submitted only to and approved by 
the CMS, Office of Financial Management and not CPI.) 
 
8.3.2  Procedures for Implementing a Payment Suspension 
(Rev. 670, Issued: 08-19-16, Effective: 11-23-16, Implementation: 11-23-16) 
 
8.3.2.1  CMS Approval 
(Rev. 12127; Issued: 07-21-23; Effective: 08-21-23; Implementation: 08-21-23) 
 
If the UPIC believes that a UPIC-initiated Payment Suspension is a viable option for an 
investigation, they shall update UCM appropriately to ensure the case is included on the 
next case coordination meeting agenda for discussion. For national or multi-regional 
suspensions, only the lead UPIC shall discuss the suspension at the case coordination 
meeting. 
 
During the case coordination meeting, if CMS agrees that the criteria for Payment 
Suspension is met, CMS will instruct the UPIC to submit the Payment Suspension 
request(s) with the completed Administrative Action Review (AAR) form to CPI through 
the UCM. The Payment Suspension team member will review the submissions and make 
a formal determination as to whether a Payment Suspension is a viable option. 
 
During the case coordination meeting, the UPIC may receive additional guidance from 
CMS related to subsequent actions related to these investigations. If the UPIC has 
questions following the case coordination meeting, the UPIC shall coordinate with its 
COR, BFL, and/or suspension team member, as needed. 
 
When a payment suspension is approved by CPI, the UPIC shall inform the respective 
MAC of this action and the MAC shall effectuate the suspension of payments to the 
provider unless prior notice of the payment suspension is necessary. When prior notice is 
necessary, the MAC shall effectuate the suspension of payment in concert with the 
established date from the payment suspension notice. The MACs shall ensure that all 
money on the payment floor is not released to the provider after the effective date of the 
suspension and the money is withheld in accordance with the payment suspension rules 
and regulations. MACs shall provide an accounting of the money withheld on day one of  the payment suspension to the UPIC. The UPIC shall enter this amount in the UCM as 
the first monetary entry. 
 
Unless otherwise specified, when a payment suspension is imposed, no payments are to 
be released to the provider as of the effective date of the payment suspension. This 
includes payments for new claims processed, payments for adjustments to claims 
previously paid, interim PIPs. If it is discovered that money is released to the provider 
after the effective date of the payment suspension, the MAC or UPIC shall contact CPI 
for guidance. 
 
8.3.2.2  The Notices Involving Payment Suspensions 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20) 
 
The UPICs shall use the following exhibits in this manual as the model notices when 
preparing the draft notices for CMS approval: 
 
  The Notice to Suspend Payments (Refer to Exhibits 16A to 16D) 
  The Notice to Extend the Payment Suspension (Refer to Exhibit 16E) The 
Notice to  
  Terminate the Payment Suspension (Refer to Exhibit 16F) 
 
8.3.2.2.1  Issuing a Prior Notice versus Issuing a Concurrent Notice 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20) 
 
UPICs shall inform the provider of the payment suspension action being taken. When 
prior notice is appropriate, the UPIC shall, in most instances, give at least 15 calendar 
days prior notice before effectuating the payment suspension. Day one begins the 
calendar day after the notice is mailed. 
 
A.  If the Medicare Trust Fund would be harmed by giving prior notice: the UPIC shall 
recommend to CPI not to give prior notice if, in the UPICs opinion, any of the 
following apply: 
 
1.  A delay in implementing the payment suspension will cause the overpayment to 
rise at an accelerated rate (i.e., dumping of claims); 
 
2.  There is reason to believe that the provider may flee the MACs jurisdiction 
before the overpayment can be recovered; 
 
3.  The MAC or UPIC has first-hand knowledge of a risk that the provider will cease 
or severely curtail operations or otherwise seriously jeopardize its ability to repay 
its debts; or 
 
4.  A delay may impact law enforcements investigation. 
 
If CPI approves waiver of the prior notice requirement, the UPIC shall send the provider  notice concurrent with implementation of the payment suspension, but no later than 5 
calendar days after the payment suspension is imposed. If additional time is needed to 
release the notice, the UPIC shall confer with CPI for guidance. 
 
B.  If the reason for the payment suspension request is because the provider failed to furnish 
requested information, the UPIC shall recommend that CPI waive the prior notice. If 
CPI concurs to waive the prior notice requirement, the UPIC shall send the provider 
notice concurrent with implementation of the payment suspension, but no later than 5 
calendar days after the payment suspension is imposed. If additional time is needed to 
release the notice, the UPIC shall confer with CPI for guidance. 
 
C.  If the payment suspension request is a fraud suspension, the UPIC shall recommend to 
CPI that prior notice not be given. If CPI concurs to waive the prior notice requirement, 
the UPIC shall send the provider notice concurrent with implementation of the payment 
suspension, but no later than five calendar days after the payment suspension is 
imposed. If additional time is needed to release the notice, the UPIC shall confer with 
CPI for guidance. 
 
8.3.2.2.2  Content of Payment Suspension Notice 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20) 
 
The UPIC shall prepare a draft notice (in accordance with section 8.3.2.2 of this 
chapter) and send it, along with the recommendation and any other supportive 
information, to CPI for approval. The draft notice shall include, at a minimum: 
 
  The date the payment suspension action will be or has been imposed; 
 
  How long the suspension is expected to be in effect (NOTE: All payment suspensions 
shall be established in 180 calendar day increments.); 
 
  The reason for suspending payment. (For fraud suspensions, the UPIC shall include 
the rationale to justify the action being taken.); 
 
  In most notices, the UPIC shall identify and describe at least five example claims that 
are associated with the reason for the payment suspension, if available. The claim 
examples are to be the most current claims available unless otherwise directed by CMS. 
The notice shall only reference the example claim control number, the amount of 
payment, and the date of service; 
 
  The extent of the payment suspension (i.e., 100 percent payment suspension or partial  
  payment suspension, where less than 100 percent of payments are withheld); 
 
  The payment suspension action is not appealable; 
 
  CMS/CPI has approved implementation of the payment suspension; 
    Documentation that the provider has been given the opportunity to submit a rebuttal  
  statement within 15 calendar days of notification; and 
 
  An address for the provider to mail the rebuttal. 
 
8.3.2.2.3  Shortening the Notice Period for Cause 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20) 
 
At any time, the UPIC may recommend to CPI that the prior notice be shortened during a 
previously approved notice period. Such a recommendation would be appropriate if the 
MAC or UPIC believes that the provider will intentionally submit additional claims prior 
to the effective date of the payment suspension. If CPI approves that the payment 
suspension is to be imposed earlier than indicated in the issued notice, the UPIC shall 
notify the provider in writing of the change and the reason. The UPIC shall draft a notice 
for CPIs approval before releasing the notice to the provider. 
 
8.3.2.2.4  Mailing the Notice to the Provider 
(Rev. 11032; Issued: 09-30-21; Effective: 10-12-21; Implementation: 11-10-21) 
 
After consultation with and approval from CPI, the UPIC shall send the approved 
payment suspension notice (initial, responses to rebuttals, extensions, and terminations) 
to the provider. All such notices shall be sent via USPS certified mail or utilizing other 
commercial mail carriers that allow the tracking of the correspondence to ensure receipt 
by the provider. In the case of fraud suspensions, the UPIC shall send an informational 
copy to the OIG, FBI, or the AUSA for its file, if law enforcement has been previously 
involved and/or has an active investigation/case on the provider. The UPIC shall also 
upload the signed copies of all notices released to the provider into the UCM. 
 
8.3.2.2.5  Opportunity for Rebuttal 
(Rev. 11032; Issued: 09-30-21; Effective: 10-12-21; Implementation: 11-10-21) 
 
If the payment suspension is approved with prior notice, the provider is afforded an 
opportunity to submit to the UPIC a statement within 15 calendar days indicating why 
the payment suspension action should not be imposed. However, this time may be 
shortened or lengthened for cause. (See 42 CFR 405.374(b).) 
 
If the payment suspension is approved without prior notice, the provider is also afforded 
an opportunity to submit to the UPIC a statement as to why the payment suspension 
action should not be imposed. (See 42 CFR 405.372(b)(2).) For purposes of consistency 
for both prior notice and no prior notice, CMS/CPI suggests that a 15 calendar day 
response time be established for the provider. 
 
If a provider submits a rebuttal timely, a timely determination and written response by 
the UPIC is required in accordance with 42 CFR 405.375. If a provider does not 
respond in a timely manner, the UPIC shall submit a written response to the provider 
within 30 calendar days from the receipt date of the rebuttal.   
UPICs shall ensure the following: 
 
  CMS Review  UPICs shall forward the providers rebuttal statement and 
any pertinent information to CPI via the UCM within 1 business day of 
receipt. The UPIC shall evaluate the information presented and then draft a 
response addressing each item mentioned in the rebuttal and submit it to CPI for 
approval via the UCM no later than 10 calendar days from receipt. The UPIC may 
contact CPI for guidance before drafting a response. 
 
  Timing The payment suspension shall go into effect as indicated in the 
notice. 
 
  Review of Rebuttal  Because payment suspension actions are not 
appealable, the rebuttal is the providers only opportunity to present 
information as to why suspension action should not be initiated or should be 
terminated. UPICs shall carefully review the providers rebuttal statement 
and pertinent information, and shall consider all facts and issues raised by the 
provider. If the UPIC is convinced that the payment suspension action should 
not be initiated or should be terminated, it shall consult with the CPI for 
guidance. 
 
  Response  CMS is obligated to consider the initial rebuttal and supportive 
information received from the provider and to make a determination within 
15 calendar days from receipt of the rebuttal. (See 42 CFR 405.375(a).) If a 
full response cannot be drafted in the required timeframe, the UPIC shall 
draft an interim response for release that is approved by CPI. 
 
8.3.2.3  Claims Review During the Payment Suspension Period 
(Rev. 670, Issued: 08-19-16, Effective: 11-23-16, Implementation: 11-23-16) 
 
A payment suspension does not stop submitted claims from processing.  A payment 
suspension only stops the claim payments from being released to the provider.  These 
claim payments will be withheld in an account (which does not accrue any interest) for 
the purpose of applying the withheld funds to any potential overpayment(s) or other debts 
owed to CMS or HHS in accordance with 42 CFR 405.372(e).  (This withholding of 
Medicare payments is for everything payable and releasable to the provider.  It also 
includes adjustments to claims that would result in payments being released to the 
provider, RAPs, etc.)  If a claim is submitted for payment and is partially or fully denied, 
the provider is afforded appeal rights to those denials. 
 
8.3.2.3.1  Claims Review 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20) 
 
While a payment suspension does not stop claims processing, CMS prefers that all claims 
being processed during the payment suspension period be reviewed on a prepayment 
basis for reasonableness and necessity. If fraud-related, the review of claims should also  address whether services were actually rendered as billed. This will ensure that the 
withheld payments only include payable claims to be used in the disposition of the funds 
when the final overpayment(s) are determined. 
 
A.  Claims Review 
 
Once a payment suspension has been imposed, the MACs and UPICs shall follow the 
claims processing and review procedures in accordance with Pub. 100-08, chapter 3. 
MACs and UPICs shall ensure that the provider is not substituting a new category of 
improper billings to counteract the effect of the payment suspension. (If such a situation 
arises, the UPIC shall modify the payment suspension accordingly with CPIs approval.) 
If the claim is determined to not be payable, it shall be denied and the provider afforded 
its appeal rights. For claims that are not denied, the MAC shall send a remittance advice 
to the provider showing that payment was approved but the actual funds not sent. 
 
UPICs are not required to perform 100 percent prepayment review of claims processed 
during the payment suspension period. If prepayment review is not conducted, a post- 
payment review shall be performed on the universe of claims adjudicated for payment 
during the payment suspension, prior to the issuance of the overpayment determination. 
In order to reduce the burden of resources, if only specific claim types (or certain codes) 
are the subject of noncompliance, the UPIC may elect to only place such claims types on 
prepayment or post-payment review. UPICs shall consult with CPI for guidance when 
resources may be better utilized employing statistical sampling for overpayment 
determination(s). UPICs shall use the principles of statistical sampling for overpayment 
estimation found in section 8.4 of this chapter to determine what percentage of claims in 
a given universe of withheld claims payments are payable. In all cases involving a post- 
payment review, the UPIC shall follow the rules of reopening as defined in 42 C.F.R. 
405.980 and inform the provider that the claims are reopened in accordance with the 
regulations when requesting records and supportive information. 
 
B.  Review of Suspected Fraudulent or Overpaid Claims: 
 
The UPIC shall follow procedures in Pub. 100-08, chapter 3, section 3.6 in establishing 
an overpayment. The overpayment consists of all claims in a specific time period(s) 
determined to have been paid incorrectly. The UPIC shall make all reasonable efforts to 
expedite the determination of the overpayment amount. The UPIC shall account for 
binding revised determinations or binding reconsiderations in its overpayment 
determination in accordance with 42 CFR 405.984. 
 
NOTE: Claims selected for post-payment review may be reopened within one year for 
any reason or within four years for good cause. (See 42 CFR 405.980.) Cost report 
determinations may be reopened within three years after the Notice of Program 
Reimbursement has been issued. Good cause is defined as new and material evidence, 
error on the face of the record, or clerical error. The regulations have open-ended 
potential for fraud or similar fault. The exception to the one-year rule is for adjustments 
to DRG claims. A provider has 60 calendar days to request a change in an assignment of  a DRG. (See 42 C.F.R. 412.60(d).) 
 
8.3.2.3.2  Case Development  Program Integrity 
(Rev. 11032; Issued: 09-30-21; Effective: 10-12-21; Implementation: 11-10-21) 
 
The UPIC shall enter all payment suspensions into the UCM. In the Suspension Narrative 
field, the UPIC shall include the items/services affected (i.e., type of item/service and 
applicable HCPCS/CPT codes). The first monetary entry of money withheld in the UCM 
shall reflect the money withheld on Day One of the payment suspension. 
 
8.3.2.4  Duration of the Payment Suspension 
(Rev. 12333; Issued: 10-26-23; Effective: 11-28- 23; Implementation: 11-28-23) 
 
A.  Time Limits for General Suspensions 
 
If CPI approves a general suspension, it will be for a 180 calendar day period. The UPIC 
shall complete its medical review and any subsequent activities (i.e., statistical sampling 
extrapolation, draft overpayment determination notice, etc.) during the initial 180 days of 
a general suspension. CMS expects the medical reviews to be completed and the 
calculation of any potential overpayments to be determined before the end of the initial 
suspension period. Only in rare instances will an extension be granted. 
 
If an extension is required, the UPIC shall request an extension of an additional 180 
calendar days if time is needed to complete the overpayment determination. Only CPI 
may approve the request to extend the period of the payment suspension for up to an 
additional 180 calendar days upon the written request of the UPIC. The request to CPI to 
extend the payment suspension shall provide the following: 
 
  The AAR  Payment Suspension form 
  A draft of the proposed payment suspension extension notice following the 
format noted in section 8.3.2.2 of this chapter (in a word document format); 
  A timeline of the completion of the medical review; and 
  Any other supporting documentation. 
 
If approved for an extension, the period of time shall not exceed 180 calendar days. 
General suspensions shall not continue beyond 360 calendar days. However, there may 
be an occasion when the information gathered by the UPIC during its review supports a 
change from a general suspension to a fraud suspension. Only with CPI approval may the 
category of the type of payment suspension be transitioned from a general payment 
suspension to a fraud suspension. If the transition from a general payment suspension to a 
fraud payment suspension is approved, the provider must be informed of the new 
development by the UPIC with a CPI-approved notice. Additionally, the provider must be 
afforded the opportunity for rebuttal. 
 
B.  Exceptions to Time Limits for Fraud Suspensions 
  If a payment suspension is based on credible allegations of fraud, the payment suspension 
may continue beyond 360 days with a written request for an extension from law 
enforcement. An extension may be warranted if there has not been a resolution of law 
enforcements investigation of the potential fraud. After 18 months, good cause not to 
continue a payment suspension is deemed to exist unless certain criteria are satisfied. 
(See 42 C.F.R. 405.371(b)(3).) To extend a fraud suspension beyond 18 months: 
 
  The Department of Justice must submit a written request for an extension. 
Requests must include: 1) the identity of the person or entity under the 
payment suspension, 2) the amount of time needed for continuation of the 
payment suspension in order to conclude the criminal or civil proceeding or 
both, and 3) a statement of why and/or how criminal and/or civil actions may 
be affected if the payment suspension is not granted. 
 
  The OIG must submit a written request to extend the payment suspension 
because the case is being considered by the OIG for an administrative action 
(e.g., permissive exclusions, CMPs) or such action is pending. However, this 
exception does not apply to pending criminal investigations by OIG.\ 
 
C.  Provider Notice of the Extension 
The UPIC shall obtain CPI approval for the extension request and draft notice, and shall 
notify the provider if the suspension action has been extended. The UPIC shall prepare a 
draft extension notice (in accordance with section 8.3.2.2 of this chapter) and submit it 
via the UCM, along with any other supportive information, to CPI for approval at least 60 
calendar days before the payment suspension is set to expire. The draft notice shall 
follow the model language provided in the exhibits and shall include, at a minimum: 
 
  The date the payment suspension will be extended (NOTE: The date is to be 
the same date the payment suspension was to expire); 
 
  The reason for extending the payment suspension; and 
 
  That CMS has approved the extension of the payment suspension. 
 
Upon approval of the notice from CPI, the UPIC shall provide a copy of the signed notice 
to CPI via the UCM.  
 
8.3.2.5  Terminating the Payment Suspension 
(Rev. 11032; Issued: 09-30-21; Effective: 10-12-21; Implementation: 11-10-21) 
 
The UPIC shall recommend to CPI that the payment suspension be terminated prior to 
the payment suspension expiring. The UPIC shall provide this request via the UCM at 
least 14 calendar days prior to the anticipated payment suspension expiration date. No 
action associated with the termination shall be taken without the explicit approval of CPI. 
The UPIC shall prepare a draft termination notice (in accordance with section 8.3.2.2  of this chapter) and send it, along with a draft overpayment notice(s) and any other 
supportive information, to CPI for approval. 
 
The UPIC shall recommend to CPI that a suspension be terminated when any of the 
following occur: 
 
  The basis for the payment suspension action was that an overpayment may 
exist or money to be paid may be incorrect, and the UPIC has determined the 
amount of the overpayment, if any. 
 
  The basis for the payment suspension action was that a credible allegation of 
fraud exists against the provider, and the amount of the overpayment has 
been determined. 
 
  The basis for the payment suspension action was that payments to be made 
may not be correct, and the UPIC has determined that current payments to be 
made are now correct, and any associated overpayments have been 
determined. 
 
  The basis for the payment suspension action was that the provider failed to 
furnish records, and the provider has now submitted all appropriate requested 
records. 
 
When the payment suspension is terminated, the disposition of the withheld funds shall 
be achieved in accordance with 42 CFR 405.372(e) and the payment suspension edit 
withholding the providers funds is removed in the MAC system accordingly. Upon 
approval of the termination notice by CPI, the UPIC shall provide a copy of the signed 
notice via the UCM to CPI. 
 
8.3.2.6  Disposition of the Withheld Funds 
(Rev. 10228; Issued: 07-27-20; Effective: 08-27-20; Implementation: 08-27-20) 
 
The MAC and UPIC shall maintain an accurate, up-to-date record of the dollar amount 
withheld and the claims that comprise the withheld amount. The MAC and UPIC shall 
keep a separate accounting of payment on all claims affected by the payment suspension. 
They shall keep track of how much money is uncontested and due the provider. The 
amount needs to be known as it represents assets that may be applied to reduce or 
eliminate any overpayment. (See section 8.2 of this chapter.) The MAC and UPIC shall 
be able to provide, upon request, copies of the claims affected by the payment 
suspension. The MAC shall coordinate the issuance of the demand for the 
overpayment(s) and termination of the payment suspension with respect to approved 
action by CPI. The MAC shall apply the amount withheld first to the Medicare 
overpayment(s) and then apply any excess money to reduce any other obligation to CMS 
or to DHHS, unless otherwise directed by CMS. The MAC shall remit to the provider all 
monies held in excess of the amount the provider owes. If the provider owes more money 
than what was withheld as a result of the payment suspension, the MAC shall initiate  recoupment action, unless otherwise directed by CMS. See 42 CFR 405.372(e). 
 
8.3.2.7  Contractor Suspects Additional Improper Claims 
(Rev. 11529; Issued: 07-28-2022; Effective: 08-30-2022; Implementation: 08-2022) 
 
If the payment suspension is in the process of being terminated or has been terminated, 
and the UPIC believes that the provider will continue to submit noncovered, 
misrepresented, or potentially fraudulent claims, the UPIC shall consider implementing 
or recommending other actions as appropriate (e.g., education, prepayment review, 
revocation, a new suspension of payment). 
 
8.3.3  Suspension Process for Multi-Region Issues (National Payment 
Suspensions) 
(Rev. 670, Issued: 08-19-16, Effective: 11-23-16, Implementation: 11-23-16) 
 
8.3.3.1  DME Payment Suspensions (MACs and UPICs) 
(Rev. 12333; Issued: 10-26-23; Effective: 11-28- 23; Implementation: 11-28-23) 
 
For national payment suspensions involving durable medical equipment (DME) suppliers 
that are enrolled in multiple jurisdictions, the following is applicable for DME MACs and 
UPICs: 
 
  When CMS suspends payments to a DME supplier, all payments to the 
supplier are suspended in all DME jurisdictions if the same Tax Identification 
Number is used. The information (whether based on fraud or non-fraud) that 
payments should be suspended in one DME jurisdiction is sufficient reason 
for payment suspension decisions to apply to the other locations.  
 
  The UPIC that requests the national payment suspension to CPI shall become 
the Lead UPIC for the payment suspension if the payment suspension is 
approved. The Lead UPIC is responsible for informing the other UPICs (non-
lead UPICs) of the payment suspension being initiated and for the 
coordination of the payment suspension activities. CMS suggests that monthly 
contractor calls be held to communicate the current activities of the national 
suspension by each of the contractors.  
 
  The Lead UPIC is responsible for coordinating and reporting to its BFL, with 
a copy to the COR, whether the non-lead UPICs are compliant with the 
payment suspension timeframe and activities.  
 
  All non-lead UPICs are responsible for determining an overpayment(s) for its 
jurisdiction. Non-lead UPICs shall take into account the findings of the Lead 
UPIC and take appropriate measures (prepayment review, etc.) to protect and 
safeguard Medicare Trust Fund dollars from being inappropriately paid.  
 
For UPIC-initiated DME payment suspensions:    
  Each UPIC shall be responsible for ensuring that the payment suspension edit 
has been initiated in its respective DME MAC jurisdiction and has 
communicated this to the lead UPIC. If non-lead UPIC determines that 
medical review would not be appropriate in their jurisdiction for subject 
provider, non-lead UPIC shall notify and request permission from their BFL 
to opt out of the medical review.  
 
  The Lead UPIC shall create both a CSE record, if not already created, to track 
the investigative activities and a PSP record to track the activities specific to 
the payment suspension in UCM. The lead UPIC shall check the lead 
checkbox. Non-lead UPICs shall not create a separate PSP and is responsible 
for timely updating the lead UPICs PSP with monthly escrow amounts within 
their jurisdictions, as well as adding any pertinent comments and/or 
documentation.  
 
Non-lead UPICs shall create a CSE and the appropriate administrative action 
records to track their activities. 
 
8.3.3.2  Non-DME National Payment Suspensions (MACs and UPICs) 
(Rev. 12333; Issued: 10-26-23; Effective: 11-28- 23; Implementation: 11-28-23) 
 
For national payment suspensions involving national providers (such as chain hospitals, 
chain Skilled Nursing Facilities, franchised clinics, laboratories, etc.) that are enrolled in 
multiple jurisdictions, the following may be applicable for MACs and UPICs:  
 
  When CMS suspends payments to a national provider, all payments to the 
national provider are suspended in all jurisdictions if they share the same Tax 
Identification Number. The information (whether based on fraud or non-fraud) 
that payments should be suspended in one jurisdiction is sufficient reason for 
payment suspension decisions to apply to the other locations.  
 
  The UPIC that requests the national payment suspension to CPI shall become 
the Lead UPIC for the payment suspension. The Lead UPIC is responsible 
for informing the other UPICs (non-lead UPICs) of the payment suspension 
being initiated and for the coordination regarding the payment suspension 
activities. CMS suggests that monthly contractor calls be held to communicate 
the current activities by each of the contractors.  
 
  The Lead UPIC is responsible for coordinating and reporting to its BFL, with 
a copy to the COR, whether the non-lead UPICs are compliant with the 
payment suspension timeframe and activities.  
 
  All non-lead UPICs are responsible for determining an overpayment(s) for its 
jurisdiction. Non-lead UPICs shall take into account the findings of the Lead 
UPIC and take appropriate measures (prepayment review, etc.) to protect and  safeguard Medicare Trust Fund dollars from being inappropriately paid.  
 
For UPIC-initiated non-DME national payment suspensions:  
 
  Each UPIC shall be responsible for ensuring that the payment suspension edit 
has been initiated in its respective MAC jurisdiction and has communicated 
this to the Lead UPIC. If non-lead UPIC determines that medical review 
would not be appropriate in their jurisdiction for subject provider, non-lead 
UPIC shall notify and request permission from their BFL to opt out of the 
medical review.  
 
  The Lead UPIC shall create both a CSE record to track the investigative 
activities and a PSP record to track the activities specific to the payment 
suspension in UCM. The lead UPIC shall check the lead checkbox. Non-
lead UPICs shall not create a separate PSP and is responsible for timely 
updating the lead UPICs PSP with monthly escrow amounts within their 
jurisdictions, as well as adding any pertinent comments and/or documentation.  
 
Non-lead UPICs shall create a CSE and the appropriate administrative action 
records to track their activities.  
 
8.4 - Use of Statistical Sampling for Overpayment Estimation 
(Rev. 906, Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
This section applies to UPICs, RACs, the SMRC, and MACs (including DME MACs), 
hereinafter referred to as contractors.  With regard to RACs and the SMRC, RACs and 
SMRC are required to receive CMS COR approval through each step of the statistical 
sampling process as certain steps/requirements may not be applicable or used in all 
instances.  
 
8.4.1  Introduction 
(Rev. 377, Issued: 05-27-11, Effective: 06-28-11, Implementation: 06-28-11) 
 
8.4.1.1  General Purpose 
(Rev. 906, Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
The purpose of this section is to provide instructions for contractors on the use of 
statistical sampling in their reviews and estimation of overpayments to be recovered by 
recoupment, offset, or otherwise. The intent of these instructions is to ensure that a 
probability sample drawn from the sampling frame of the target population yields a valid 
estimate of an overpayment in the target population.  This means that every element in 
the sampling frame has a non-zero probability of being selected.  It is important to note 
that this is consistent with methodologies such as stratification and cluster sampling as 
needed to warrant statistically sound inferences from the sample. Reviews conducted by 
the contractors to assist law enforcement with the identification, case development, 
and/or investigation of suspected fraud or other unlawful activities may use sampling  methodologies that differ from those prescribed herein.  However, in those cases, the 
methodologies used shall be well-accepted methodologies amongst statisticians, and 
complete explanation shall be provided for why the methodology used was the 
appropriate methodology in the situation. 
 
These instructions are provided so that a sufficient process is followed when conducting 
statistical sampling to project overpayments. Failure by a contractor to follow one or 
more of the requirements contained herein does not necessarily affect the validity of the 
statistical sampling that was conducted or the projection of the overpayment. An appeal 
challenging the validity of the sampling methodology must be predicated on the actual 
statistical validity of the sample as drawn and conducted and must demonstrate actual 
error in the methodology that affects the overpayment amount. Failure by the contractor 
to follow one or more of the requirements contained herein may result in review by CMS 
of their performance, but should not be construed as necessarily affecting the validity of 
the statistical sampling and/or the projection of the overpayment. 
 
8.4.1.2 - The Purpose of Statistical Sampling 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
A statistical sample is used to estimate the amount of overpayment(s) made on claims.  
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), 
mandates that before using extrapolation (i.e., projection, extension, or expansion of 
known data) to determine overpayment amounts to be recovered by recoupment, offset, 
or otherwise, there must be a determination of sustained or high level of payment error, 
or documentation that educational intervention has failed to correct the payment error.  
By law, the determination that a sustained or high level of payment error exists is not 
subject to administrative or judicial review. In this chapter, details are provided on the 
use of statistical estimation (sometimes, especially in legal contexts, referred to as 
extrapolation) to determine overpayment amounts.  
 
8.4.1.3 - Steps for Conducting Statistical Sampling 
(Rev. 11962; Issued: 04-21-23; Effective: 05-22-23; Implementation: 05-22-23) 
 
The major steps in conducting statistical sampling are --  
 
(1) Identifying the provider/supplier;  
(2) Identifying the period to be reviewed;  
(3) Defining the universe (target population) and the sampling unit, and constructing 
the sampling frame; 
(4) Assessing the distribution of the paid amounts in the sampling frame to determine 
the sampling design; it is very likely that the distribution of the overpayments will not 
be normal.  However, there are many sampling methodologies (for example, use of 
the Central Limit Theorem) that may be used to accommodate non-normal 
distributions.  The statistician should state the assumptions being made about the 
distribution and explain the sampling methodology selected as a result of that 
distribution.   (5) Performing the appropriate assessment(s) to determine whether the sample size is 
appropriate for the statistical analyses used, and identifying, relative to the sample 
size used, the corresponding confidence interval;  
(6) Designing the sampling plan and selecting the sample from the sampling frame;  
(7) Examining each of the sampling units and determining if there was an 
overpayment or an underpayment; and  
(8) Estimating the overpayment. When an overpayment has been determined to exist, 
the contractor shall follow applicable instructions for notification and collection of 
the overpayment, unless otherwise directed by CMS. 
 
For each step, the contractor shall provide complete and clear documentation sufficient to 
explain the action(s) taken in the step and to replicate, if needed, the statistical sampling. 
 
8.4.1.4 - Determining When Statistical Sampling May Be Used 
(Rev. 12127; Issued: 07-21-23; Effective: 08-21-23; Implementation: 08-21-23) 
 
The contractor shall use statistical sampling when it has been determined that a sustained 
or high level of payment error exists.  The use of statistical sampling may be used after 
documented educational intervention has failed to correct the payment error.  For 
purposes of extrapolation, a sustained or high level of payment error shall be determined 
to exist through a variety of means, including, but not limited to:  
 
-  high error rate determinations by the contractor or by other medical reviews 
compared to similar service providers;  
-  provider/supplier history (i.e., prior history of non-compliance for the same or 
similar billing issues, or historical pattern of non-compliant billing practices); 
-  CMS approval provided in connection to a payment suspension; 
-  information from law enforcement investigations;  
-  allegations of wrongdoing by current or former employees of a provider/supplier; 
and/or 
-  audits or evaluations conducted by the OIG.   
 
If the contractor believes that statistical sampling and/or extrapolation should be used for 
purposes of estimation, and it does not meet any of the criteria listed above, it shall 
consult with its BFL, with a copy to the COR, as defined in PIM Chapter 4, 4.7  
Investigations, prior to creating a statistical sample and issuing a request for medical 
records from the provider/supplier.  Examples of this may include, but are not limited to: 
billing for non-covered services, billing for services not rendered, etc. Extrapolation 
should not be used when the above criteria is not met unless prior approval is given by 
the COR and BFL. 
 
When an overpayment is identified by data analysis alone, the contractor shall consult 
with its BFL, with a copy to the COR. In addition, if CMS approves the data driven 
overpayment, the contractor shall also consult with its BFL, with a copy to the COR, on 
whether statistical sampling and extrapolation are necessary to identify the overpayment.   
  Additionally, a UPIC shall consult with the appropriate MAC on whether an extrapolated 
overpayment is more efficient in processing a data-driven overpayment before requesting 
recoupment from the MAC. 
 
Once a decision has been made that statistical sampling may be used, factors also to be 
considered for determining when to undertake statistical sampling for overpayment 
estimation instead of a claim-by-claim review, include, but are not limited to: the number 
of claims in the universe and the dollar values associated with those claims; available 
resources; and the cost effectiveness of the expected sampling results. 
 
8.4.1.5 - Consultation With a Statistical Expert 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
The sampling methodology used in estimations of overpayments must be reviewed and 
approved by a statistician or by a person with equivalent expertise in probability 
sampling and estimation methods.  This is done to ensure that a statistically appropriate 
sample is drawn, and that appropriate methods for estimating the overpayments are 
followed.  The contractor shall obtain from the statistical expert a written approval of the 
methodology for the type of statistical sampling to be performed. Regardless of whether 
this sampling methodology is applied routinely and repeatedly, each time a sample size 
calculation or estimation is performed, a detailed methodology (See Section 8.4.7.1.) 
should be submitted by the statistical expert to the corresponding contractor.    
 
Prior to releasing a findings letter or overpayment demand letter, the contractor shall have 
the statistical expert review the results of the sampling and any other subsequent 
overpayment estimation or extrapolation.  The contractor shall verify that the statistical 
findings have been reviewed and agreed to by the contractor. 
 
If questions or issues arise, the contractor shall also involve the statistical expert. 
 
At a minimum, the statistical expert (either on-staff or consultant) shall meet one of the 
following criteria:  
 
  Have significant coursework in probability and estimation methodologies, and at 
least 10 years of experience applying methods of statistical sampling and 
interpreting the results. 
  Possesses a Bachelors degree (e.g., B.A., B.S.) in statistics or in some related 
field (e.g., psychometrics, biostatistics, econometrics, mathematics) with 
significant coursework in probability and estimation methodologies, and at least 6 
years of experience applying methods of statistical sampling and interpreting the 
results. 
  Possesses a Masters degree (e.g., M.A., M.S.) in statistics or in some related field 
with significant coursework in probability and estimation methodologies, and at 
least 4 years of experience applying methods of statistical sampling and 
interpreting the results.    Possess a Doctoral degree in statistics or in some related field with significant 
coursework in probability and estimation methodologies, and at least 1 year of 
experience applying methods of statistical sampling and interpreting the results. 
 
If the contractor does not have staff with sufficient statistical experience as outlined here, 
it shall obtain such expert assistance prior to conducting statistical sampling. 
 
8.4.1.6 - Use of Other Sampling Methodologies 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
Once it is has been determined that statistical sampling may be used, nothing in these 
instructions precludes CMS or its contractor from relying on statistically sound sampling 
methodologies employed by other law enforcement agencies, including but not limited to 
the OIG, the DOJ, and/or the FBI.  In these cases, a full explanation shall be provided 
explaining why the methodology was used and why it was statistically appropriate in the 
circumstances. 
 
Where it is foreseen that the results of a contractors review may be referred to law 
enforcement or another agency to support litigation or other law enforcement actions, the 
contractor shall discuss specific litigation and/or other requirements as they relate to 
statistical sampling with its statistical expert prior to undertaking the review to ensure 
that the review will meet their requirements and that such work will be funded 
accordingly. 
 
8.4.2 - Probability Sampling 
(Rev. 11962; Issued: 04-21-23; Effective: 05-22-23; Implementation: 05-22-23) 
 
Regardless of the method of sample selection used, the contractor shall follow a 
procedure that results in a probability sample.  For a procedure to be classified as 
probability sampling, the following two features must apply: 
 
  It must be possible, in principle, to enumerate a set of distinct samples that the 
procedure is capable of selecting if applied to the target universe.  Although only 
one sample will be selected, each distinct sample of the set has a known 
probability of selection.  It is not necessary to actually carry out the enumeration 
or calculate the probabilities.  All that is required is that one could, in principle, 
write down the samples, the sampling units contained therein, and the relevant 
probabilities; and 
 
  Each sampling unit in each distinct possible sample must have a known probability of 
selection.  In the case of statistical sampling for overpayment estimation, one of the 
possible samples is selected by a random process according to which each sampling 
unit in the target population receives its appropriate chance of selection.  The 
selection probabilities do not have to be equal but they should all be greater than zero.  
In fact, some designs bring gains in efficiency by not assigning equal probabilities to 
all of the distinct sampling units.   
Once a procedure and design that satisfies these above properties has been selected, 
execution of the probability sampling may occur.  If a particular probability sampling 
design is properly executed, i.e., defining the universe, the sampling frame, the sampling 
units, using proper randomization, accurately measuring the variables of interest, and 
using the correct formulas for estimation, then assertions that the sample or that the 
resulting estimates are not statistically valid cannot legitimately be made.  In other 
words, a probability sample and its results are always valid.  However, because of 
differences in the choice of a design, the level of available resources, and the method of 
estimation, some procedures lead to higher precision (smaller confidence intervals) than 
other methods.  A feature of probability sampling is that the level of uncertainty can be 
incorporated into the estimate of overpayment as is discussed below. 
 
8.4.3 - Selection of Period to be Reviewed and Composition of Universe 
(Rev. 377, Issued: 05-27-11, Effective: 06-28-11, Implementation: 06-28-11) 
 
8.4.3.1 - Selection of Period for Review 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
Following selection of the provider or supplier, the contractor in conjunction with a 
statistical expert shall determine the time period and the number of days, weeks, months, 
or years for which sampling units will be reviewed.  For RACs and SMRC, CMS will 
approve the time period. The target universe shall be selected based on these criteria.  
The scope of the review is determined by considering several factors that include, but are 
not limited to: 
 
  How long the pattern of sustained or high level of payment error is believed to 
have existed, 
 
  The volume of claims that are involved, 
 
  The length of time that a national coverage decision or local coverage 
determination has been in effect, 
 
  The extent of prepayment review already conducted or currently being 
conducted, 
 
  The dollar value of the claims that are involved relative to the cost of the 
sample, 
 
  The applicable time periods for reopening claims (see Pub. 100-04, chapter 34, 
section 10.6), 
 
  A clear specification of the specific data elements to be used for defining the 
date (type of date, e.g., day, month, year).   
  As examples: If dates of service are used, specify, as needed, whether the dates 
are line service dates or claim service dates, the first day of the billing statement 
or the ending date of service, etc. If a span of dates is used, clarify the criteria 
used when the span overlaps the boundary of one of the other criterion date 
ranges.  If paid dates or receipt dates are used, clarify the role of the adjusted 
claims.  
 
All case documentation, including the overpayment demand letter and 
methodology, should consistently reflect the same date range and specify the 
same type of date.   
 
NOTE:  When sampling claims that are paid through cost report (as opposed to claims 
paid under a PPS reimbursement methodology), all claims reviewed must be 
drawn from within a providers/suppliers defined cost reporting year.  If the 
period under review is greater than one year, it is important to select a 
separate sample for each cost-reporting year. 
 
8.4.3.2 - Defining the Universe, the Sampling Unit, and the Sampling 
Frame 
(Rev. 11962; Issued: 04-21-23; Effective: 05-22-23; Implementation: 05-22-23) 
 
The universe is the target population that contains all claims/claim lines potentially under 
review and is used to construct the sampling frame. 
 
The sampling frame lists all sampling units which may be selected by the statistical 
sampling software, and further refines the review criteria from the claims/claim lines 
listed in the universe. The sampling unit may be the claim line, or may be a higher-level 
unit such as: 
 
1.  The claim/claim number, or 
2.  A cluster of claims/claim lines associated with a patient, or 
3.  A cluster of claims/claim lines associated with a treatment day, or  
4.  Any other sampling unit appropriate for the issue under review.  
 
The auditor may refine the selection criteria during the construction of the sampling 
frame, for example: 
 
1.  Excluding claims/claim lines that have been subject to a prior review, or 
2.  Excluding claims/claim lines for which there was no payment, or 
3.  Excluding claims/claim lines which cannot be assigned to a sampling unit due to 
missing information. 
 
The extrapolation estimate of total overpayments is an estimate of total overpayment for 
sampling units in the sampling frame. 
  All information needed to recreate the sampling frame and sample shall be included in 
the case documentation. 
 
Other approaches to constructing the universe and sampling frame are possible depending 
on the specific circumstances.  One possibility is that the sampling frame may be created 
first (for example, a list of beneficiaries) and then the universe corresponding to the 
sampling frame may be constructed by querying claims history for the matching claims.  
Regardless of the process that is followed, the documentation in the case file must 
include a list of all sampling units in the sampling frame, all the universe elements that 
are incorporated into those sampling units, and the elements in the universe.  It must be 
possible to assemble the sampling units from the universe during the replication process. 
 
8.4.3.2.1 - Composition of the Universe 
(Rev. 11962; Issued: 04-21-23; Effective: 05-22-23; Implementation: 05-22-23) 
 
A.  Part A Claims: For providers/suppliers reimbursed through cost report, the universe 
of claims from which the sample is selected shall consist of fully and partially 
adjudicated claims obtained from the shared systems that meet the criteria in the 
definition of the universe.  For such claims, use the service date to match findings to the 
cost report.   
 
For providers/suppliers reimbursed under PPS, the universe of claims from which 
the sample is selected will consist of all fully and partially paid claims submitted 
by the provider/supplier for the period under review.  Sampling units with no final 
payment made at the time of sample selection should not be included in the 
sampling frame.  Claims with no payment may be included in the universe from 
which the sampling frame is constructed and should be excluded when 
establishing the sampling frame.   
 
B.  Part B Claims: The universe shall consist of all fully and partially paid claims 
submitted by the provider/supplier for the period selected for review and for the sampling 
units to be reviewed.  For example, if the review is of Physician X for the period January 
1, 2002 through March 31, 2002, and laboratory and other diagnostic tests have been 
selected for review, the universe would include all fully and partially paid claims for 
laboratory and diagnostic tests billed by that physician for the selected time period.  For 
some reviews, the period of review may best be defined in terms of the date(s) of service 
because changes in coverage policy may have occurred.  Sampling units with no final 
payment made at the time of sample selection should not be included in the sampling 
frame.  Claims with no payment may be included in the universe from which the same 
frame is constructed.  
 
8.4.3.2.2 - The Sampling Unit 
(Rev. 11962; Issued: 04-21-23; Effective: 05-22-23; Implementation: 05-22-23) 
 
Sampling units are the elements that are selected based on the chosen method of 
statistical sampling.  They may be an individual line(s) within claims, individual claims,  or clusters of claims (e.g., a beneficiary).  For example, possible sampling units may 
include specific beneficiaries seen by a physician during the time period under review, or 
claims for a specific item or service.  In certain circumstances (e.g., multi-stage sampling 
designs), other types of clusters of payments may be used.   
 
Certain sampling theorems require an assumption that sampled items are identically and 
independently distributed (iid).  In sampling from a finite universe without replacement, 
there is always a certain amount of dependence because the probability of selection 
changes with each unit that is selected.  However, correlations of characteristics in the 
target population do not imply dependence in sampling.  Sampling units may be 
correlated because they come from the same location, the same provider/supplier, the 
same time period, or any number of other reasons.  In this context, independence means 
the selection of one sampling unit does not influence, or gives no information about, the 
outcome of another selection.  Overpayments are not random variables.  They are fixed 
values, though unknown prior to sampling.  Therefore, regardless of any correlation that 
may exist between sampling units, the outcome, or overpayment, of any particular unit 
does not change based on the outcomes of other units. 
 
Unlike procedures for suppliers, overpayment estimation and recovery procedures for 
providers/suppliers and non-physician practitioners who bill Part A MACs, in a non-PPS 
environment, must be designed so that overpayment amounts can be accurately reflected 
on the providers cost report.  Therefore, sampling units must coincide with an estimation 
methodology designed specifically for that type of provider/supplier to ensure that the 
results can be placed at the appropriate points on the cost report.  The sample may be 
either claim-based or composed of specific line items.  For example, home health cost 
reports are determined in units of visits for disciplines 1 through 6 and lower of costs 
or charges for drugs, supplies, etc.  If claims are paid under cost report, the services 
reviewed and how those units link to the provider/suppliers cost report must be known.  
The contractor shall follow the instructions contained in section 8.4 et seq., but use the 
projection methodologies provided in Pub. 100-08, Exhibits 9 through 12, for the 
appropriate provider type.  Pub. 100-08, Exhibits 9 through 12, are to be used only for 
claims not paid under PPS. 
 
8.4.3.2.3 - The Sampling Frame 
(Rev. 11962; Issued: 04-21-23; Effective: 05-22-23; Implementation: 05-22-23) 
 
The sampling frame is the set of all the possible sampling units from which the sample is 
selected.  As examples, the frame may be a list of all beneficiaries receiving items from a 
selected supplier, a list of all claims for which fully or partially favorable determinations 
have been issued, or a list of all the line items for specific items or services for which 
fully or partially favorable determinations have been issued. 
. 
8.4.4 - Sample Selection 
(Rev. 377, Issued: 05-27-11, Effective: 06-28-11, Implementation: 06-28-11) 
 
8.4.4.1 - Sampling Methodology  (Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
The contractor shall identify the sampling methodology to be followed. There are various 
ways a probability sample can be generated.  The most appropriate method will depend 
on factors such as, the target universe and the resources available for sampling. (Refer to 
section 8.4.1.5 of this chapter regarding consultations with a statistical expert to 
determine the appropriate methodology.)  
 
8.4.4.2 - Random Number Selection 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
The contractor shall identify the source of the random numbers used to select the 
individual sampling units, if used.  The contractor shall also document the program and 
its algorithm or table, when available, that is used; this documentation becomes part of 
the record of the sampling and must be available for review.  The contractor shall 
document any starting point if using a random number table or drawing a systematic 
sample.  In addition, the contractor shall document the known seed value if a computer 
algorithm is used.  The contractor shall document all steps taken in the random selection 
process exactly as done to ensure that the necessary information is available for anyone 
attempting to replicate the sample selection. 
 
There are a number of well-known, reputable software statistical packages (SPSS, SAS, 
etc.) and tables that may be used for generating a sample.  One such package is RAT-
STATS, available through the HHS-OIG website. It is emphasized that the different 
packages offer a variety of programs for sample generation and do not all contain the 
same program features or the same ease in operation.  For any particular problem, the 
contractors statistician or systems programmer shall determine which package is best 
suited to the problem being reviewed. 
 
8.4.4.3 - Determining Sample Size 
(Rev. 11962; Issued: 04-21-23; Effective: 05-22-23; Implementation: 05-22-23) 
 
The size of the sample (i.e., the number of sampling units constituting the sample) will 
have a direct bearing on the precision of the estimated overpayment, but it is not the only 
factor that influences precision.  It is neither possible nor desirable to specify a minimum 
sample size that applies to all situations.   
 
In addition to the above considerations, real-world economic constraints shall be taken 
into account.  As stated earlier, sampling is used when it is not administratively feasible 
to review the entire target population.  In determining the sample size to be used, the 
contractor shall also consider its available resources. That does not mean, however, that 
the resulting estimate of overpayment is not valid, so long as proper procedures for the 
execution of probability sampling and overpayment estimation have been followed.  
Some challenges to the validity of the sample that are sometimes made include whether -- 
(1) The probability sample was chosen and drawn in a statistically appropriate way from 
the target population or (2) The particular sample size is too small to yield meaningful  results.  Such challenges are without merit when presented in isolation from any 
reference to the actual sampling methodology used, and when presented without a 
complete account of the actual sampling methodology used. 
 
8.4.4.4 - Documentation of Sampling Methodology 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
The contractor shall maintain complete documentation of the sampling methodology that 
was followed. 
 
8.4.4.4.1 - Documentation of Universe and Sampling Frame 
(Rev. 11962; Issued: 04-21-23; Effective: 05-22-23; Implementation: 05-22-23) 
 
An explicit statement of how the universe is defined and elements included shall be made 
and maintained in writing.  Further, the sampling frame and specific details as to the 
period covered, definition of the sampling unit(s), identifiers for the sampling units (e.g., 
claim numbers, carrier control numbers), and dates of service and source shall be 
specified and recorded in the contractors record of how the sampling was done.  If the 
sampling frame does not contain the elements used to define the universe because the 
sampling unit does not permit it, then an electronic copy of the universe will be kept by 
the contractor. 
 
A record shall be kept of the random numbers used (if used) in the sample and how they 
were selected.  Documentation shall be kept in sufficient detail so that the sampling 
frame can be re-created should the methodology be challenged.  The contractor shall keep 
an electronic copy of the sampling frame. 
 
8.4.4.4.2 - Reserved for Future Use 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
8.4.4.4.3 - Worksheets 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
The contractor shall maintain any formal worksheets used by reviewers.  The worksheets 
may include, but are not limited to data and information, such as: 
 
  Name and identification number of the provider or supplier; 
 
  Name and title of reviewer; 
 
  The HICN/MBI, the unique claim identifier (e.g., the claim control number), and 
the line item identifier; 
 
  Identification of each sampling unit and its components (e.g., UB-92 or attached 
medical information); 
    Stratum and cluster identifiers, if applicable; 
 
  The amount of the original submitted charges (in column format); 
 
  Other information required by cost report worksheets in Pub. 100-08, Exhibits 9 
through 12; 
 
  The amount paid; 
 
  The amount that should have been paid (either over or underpaid amount); and 
 
  The date(s) of service. 
 
8.4.4.4.4 - Overpayment/Underpayment Worksheets 
(Rev. 377, Issued: 05-27-11, Effective: 06-28-11, Implementation: 06-28-11) 
 
Worksheets shall be used in calculating the net overpayment.  The worksheet shall 
include data on the claim number, line item, amount paid, audited value, amount 
overpaid, reason for disallowance, etc., so that each step in the overpayment calculation 
is clearly shown.  Underpayments identified during reviews shall be similarly 
documented. 
 
8.4.4.5 - Maintenance of Documentation 
(Rev. 11962; Issued: 04-21-23; Effective: 05-22-23; Implementation: 05-22-23) 
 
The contractor shall maintain all documentation pertinent to the calculation of an 
estimated overpayment including but not limited to the statistician-approved sampling 
methodology, universe, sampling frame and formal worksheets.  The documentation must 
be sufficient to allow for any future replication and/or validation by an administrative or 
judicial body. 
 
8.4.5 - Calculating the Estimated Overpayment 
(Rev. 11962; Issued: 04-21-23; Effective: 05-22-23; Implementation: 05-22-23) 
 
The results of the sampling unit reviews are used to calculate an estimate of the 
overpayment amount. In most situations, the lower limit of a one-sided 90 percent 
confidence interval should be used as the amount of overpayment to be demanded for 
recovery from the provider/supplier. This conservative procedure incorporates the 
uncertainty inherent in the sampling design and works to the financial advantage of the 
provider/supplier. That is, it yields a demand amount for recovery that is very likely less 
than the true amount of overpayment, and it allows a reasonable recovery without 
requiring the tight precision that might be needed to support a demand for the point 
estimate. However, the contractor is not precluded from demanding the point estimate 
where high precision has been achieved, and when there are statistically sound reasons 
for the demand. 
  Standard methods for calculating a one-sided 90 percent confidence interval, such as 
those based on the central limit theorem or others found in standard statistics texts and 
journals, are generally acceptable. It may not be feasible to guarantee 90 percent 
coverage in all circumstances (i.e., that the lower bound of the 90 percent confidence 
interval is below the true overpayment in 90 percent of audits) due to the use of 
theoretical assumptions underlying standard statistical methods. Nonetheless, application 
of these methods is generally appropriate. 
 
In some cases, the point estimate or the lower bound of the estimate for the total 
overpayment in the sampling frame may be greater than the total payment in the sampling 
frame. This is expected to occur frequently when the true error rate is high. Nonetheless, 
the use of the lower bound to calculate the demand amount continues to operate in 
accounting for uncertainty in the estimate and providing a methodology that is generally 
favorable toward the provider. If the point estimate of overpayment is greater than the 
total payment in the sampling frame, but the lower bound is less than total payment, then 
the lower bound may be demanded. If the lower bound of the estimated overpayment is 
greater than total payment, the demand amount shall be reduced from the lower bound to 
the total payment amount in the sampling frame to avoid demanding more than originally 
paid. 
 
The result of each sampling unit review shall be recorded, except that a sampling units 
overpayment shall be set to zero if there is a limitation on liability determination made to 
waive provider/supplier liability for that sampling unit (per provisions found in section 
1879 of the Social Security Act (the Act)) or there is a determination that the 
provider/supplier is without fault as to that sampling unit overpayment (per provisions 
found in section 1870 of the Act). Sampling units for which the requested records were 
not provided are to be treated as improper payments (i.e., as overpayments). Sampling 
units that are found to be underpayments, in whole or in part, are recorded as negative 
overpayments and shall be used in calculating the estimated overpayment. 
 
8.4.6 - Actions to be Performed Following Selection of Provider or 
Supplier and Sample 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
The instructions in this section dealing with notification and determination of location of 
the review do not supersede instructions for contractors that are using statistical sampling 
for overpayment estimation as part of an investigation, either planned or on-going, into 
potential Medicare fraud. 
 
8.4.6.1  Notification of Provider or Supplier of the Review and 
Selection of the Review Site 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
The contractor shall first determine whether it will be giving advance notification to the 
provider or supplier of the review.  Although in most cases the contractor conducting the 
review shall give prior notification, the provider/supplier is not always notified before the  start of the review.  When not giving advance notice, the contractor shall obtain the 
advance approval of the BFL/COR.  When giving advance notice, the contractor shall 
provide written notification by certified mail with return receipt requested (retain all 
receipts). 
 
Second, regardless of whether advance notice is provided, the contractor shall determine 
where to conduct the review of the medical and other records: either at the 
providers/suppliers site(s) or at the contractors office. 
 
 
 
 
8.4.6.1.1 - Written Notification of Review 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
The contractor shall include at least the following in the notification of review: 
 
  An explanation of why the review is being conducted (i.e., why the provider or 
supplier was selected), 
 
  The time period under review, 
 
  A list of claims that require medical records or other supporting documentation, 
 
  A statement of where the review will take place (provider/supplier office or 
contractor site), 
 
  Information on appeal rights, 
  An explanation of how the sampling results will be used to estimate the total 
overpayment if claims are denied upon review and an overpayment is determined 
to exist, and 
 
  An explanation of the possible methods of monetary recovery if an overpayment 
is determined to exist. 
 
When advance notification is given, providers and suppliers have 30 calendar days to 
submit (for contractor site reviews) or make available (for provider/supplier site reviews) 
the requested documentation.  The contractor shall advise the provider or supplier that for 
requested documentation that is not submitted or made available by the end of 30 
calendar days, the contractor will start the review and will deny those claims for which 
there is no documentation.  The time limit for submission or production of requested 
documentation may be extended at the contractors discretion. 
 
NOTE:  The contractor need not request all documentation at the time of notification of 
review; for example, the contractor may decide to request one-half of the documentation  before the contractor arrives, and then request the other half following the contractors 
arrival at the provider/suppliers site. 
 
When advance notification is not given, the contractor shall give the provider or supplier 
the written notification of review when the contractor arrives at their site. 
 
8.4.6.1.2 - Determining Review Site 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
A.  Provider/Supplier Site Reviews 
 
Provider/supplier site reviews are performed at the providers or suppliers location(s). 
Considerations in determining whether to conduct the review at the office of the provider 
or supplier include, but are not limited to, the following: 
 
  The extent of aberrant billing or utilization patterns that have been identified, 
 
  The presence of multiple program integrity issues, 
 
  Evidence or likelihood of fraud or abuse, and 
 
  Past failure(s) of the provider or supplier to submit requested medical records in a 
timely manner or as requested. 
 
B.  Contractor Site Reviews 
 
The contractor site reviews are performed at a location of the contractor. 
 
8.4.6.2 - Meetings to Start and End the Review 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
In-person meetings to start and end the review are encouraged, but are not required or 
always feasible.  If the contractor holds an in-person meeting at the start of the review, 
the contractor shall explain both the scope and purpose of the review as well as discuss 
what will happen once the review is completed.   The contractor shall attempt to answer 
all questions of the provider/supplier related to the review. 
 
During an exit meeting, the contractor may discuss the basic or preliminary findings of 
the review.  The contractor shall give the provider/supplier an opportunity to discuss or 
comment on the claims decisions that were made.  The contractor shall also advise the 
provider or supplier that a demand letter detailing the results of the review and the 
statistical sampling will be sent if an overpayment is determined to exist. 
 
8.4.6.3 - Conducting the Review 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
  Following the contractors receipt of the requested documentation (or the end of the 
period to submit or make available the requested documentation, whichever comes first), 
the contractor shall start its review of the claims.  The contractor may ask for additional 
documentation as necessary for an objective and thorough evaluation of the payments 
that have been made, but the contractor need not hold up conducting the review if the 
documents are not provided within a reasonable time frame. The contractor shall use 
physician consultants and other health professionals in the various specialties as 
necessary to review or approve decisions involving medical judgment. The review 
decision is made on the basis of Medicare law, CMS rulings, regulations, national 
coverage determinations, Medicare instructions, and regional/local contractor medical 
review policies that were in effect at the time the item(s) or service(s) was provided. 
 
The contractor shall document: (1) All findings made so that it is apparent from the 
contractors written documentation if the initial determination has been reversed, and (2) 
The amount of all overpayments and underpayments and how they were determined. 
 
The contractor is encouraged to complete its review and calculate the net overpayment 
within 90 calendar days of the start of the review (i.e., within 90 calendar days after the 
contractor has either received the requested documentation or the time to submit or make 
available the records has passed, whichever comes first).  However, there may be 
extenuating circumstances or circumstances out of the contractors control where the 
contractor may not be able to complete the review within this time period (e.g., the 
contractor has made a fraud referral to the OIG and is awaiting the latters response 
before pursuing an overpayment). 
 
The contractors documentation of overpayment and underpayment determinations must 
be clear and concise.  The contractor shall include copies of the local coverage 
determination and any applicable references needed to support individual case 
determinations.  Compliance with these requirements facilitates adherence to the provider 
and supplier notification requirements. 
 
8.4.7 - Overpayment Recovery 
(Rev. 377, Issued: 05-27-11, Effective: 06-28-11, Implementation: 06-28-11) 
 
8.4.7.1 - Recovery From Provider or Supplier 
(Rev. 12127; Issued: 07-21-23; Effective: 08-21-23; Implementation: 08-21-23) 
 
Once an overpayment has been determined to exist, the UPIC shall provide its BFL, with 
a copy to the COR, a summary of the investigation, any prior history (if applicable), the 
medical review results (including denial reasons), and the extrapolated overpayment 
amount in a format agreed upon by CPI for all extrapolation requests not associated with 
a Payment Suspension.  
 
If the CPI agree that an extrapolated overpayment is appropriate, the UPIC shall include 
the case on the next case coordination meeting agenda for discussion and final approval. 
During the case coordination meeting, the UPIC may receive additional guidance from  CMS related to subsequent actions associated with the investigations.  If the UPIC has 
subsequent questions following the case coordination meeting, the UPIC shall coordinate 
with its COR and/or BFL, as needed.   
 
The contractor shall include in the overpayment demand letter information about the 
review and statistical sampling methodology that was followed. Only MACs shall issue 
demand letters and recoup the overpayment. In the Final Review Results sent to the 
provider/supplier, the contractor shall include information about the review and statistical 
sampling methodology that was utilized for estimation. 
 
The explanation of the sampling methodology that was followed shall include all of the 
following: 
 
  A description of the universe, the sampling frame, and the sampling methodology, 
 
  A definition of the sampling unit, 
 
  The sample selection procedure followed, and the numbers and definitions of the 
strata and size of the sample, including allocations, if stratified, 
 
  The time period under review, 
 
  The overpayment estimation, the overpayment estimation methodology, and the 
calculated sampling error; and  
 
  The amount of the actual overpayment/underpayment from each of the claims 
reviewed. 
 
The contractor shall also include a list of any problems/issues identified during the 
review and any recommended corrective actions. 
 
8.4.8 - Corrective Actions 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
The contractor shall take or recommend other corrective actions it deems necessary and 
consistent with the contractors authority (such as payment suspension, imposition of 
civil money penalties, institution of pre- or post-payment review, additional edits, etc.) 
based upon its findings during or after the review. 
 
8.4.9 - Changes Resulting From Appeals 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
If the decision issued on appeal contains either a finding that the sampling methodology 
was invalid or reverses the revised initial claim determination, the contractor shall take 
appropriate action to adjust the estimation of overpayment with the revised input of the 
statistical expert who created the initial methodology or the revised input of another  statistical expert supplied by the contractor should the creator of the initial methodology 
no longer be available. 
 
8.4.9.1 - Sampling Methodology Overturned 
(Rev. 12127; Issued: 07-21-23; Effective: 08-21-23; Implementation: 08-21-23) 
 
If the decision issued on appeal contains a finding that the sampling methodology was 
invalid, there are several options for revising the estimated overpayment based upon the 
appellate decision: 
 
  A.  If the decision issued on appeal permits correction of errors in the sampling 
methodology, the contractor shall revise the overpayment determination after 
making the corrections.  The contractor shall consult with its BFL, with a copy to 
the COR, to confirm that this course of action is consistent with the decision of the 
MAC, Qualified Independent Contractor (QIC), Administrative Law Judge (ALJ), 
Medicare Appeals Council (the Council) within the Departmental Appeals Board 
(DAB), or Federal District Court. 
 
  B.  The contractor may elect to recover the actual overpayments related to the 
sampled claims and then initiate a new review of the provider or supplier.  If the 
actual overpayments related to the sampling units in the original review have been 
recovered, these individual sampling units shall be eliminated from the sampling 
frame used for any new review.  The contractor shall consult with its BFL, with a 
copy to the COR, to confirm that this course of action is consistent with the 
decision of the MAC, QIC, ALJ, the Council or Federal District Court. 
 
  C.  The contractor may conduct a new review (using a new, valid methodology) for 
the same time period covered by the previous review.  If this option is chosen, the 
contractor shall not recover the actual overpayments on any of the sample claims 
found to be in error in the original sample. Before employing this option, the 
contractor shall consult with its BFL, with a copy to the COR, to verify that this 
course of action is consistent with the decision of the MAC, QIC, ALJ, Council, or 
the Federal District Court. 
 
8.4.9.2 - Revised Initial Determination 
(Rev. 906; Issued: 09-26-19; Effective: 01-02-19; Implementation: 01-02-19) 
 
If the decision on appeal upholds the sampling methodology but reverses one or more of 
the revised initial claim determinations, the estimate of overpayment shall be recomputed 
and a revised estimation of the overpayment issued. 
 
  Transmittals Issued for this Chapter 
 
Rev #  Issue Date  Subject  Impl Date  CR# 
R12333PI 10/26/2023  Updates of Chapter 4 and Chapter 8 in  11/28/2023 13404 
Publication (Pub.) 100-08, Including Adding 
Guidance Regarding Handling of Freedom 
Information Act (FOIA) Requests 
R12127PI 07/21/2023  Updates of Chapters 4, Chapter 8, and  08/21/2023 13281 
Exhibits in Publication (Pub.) 100-08, 
Including Adding Additional Clarification to 
Ongoing Direction 
 
R11962PI 04/21/2023  Updates of Chapters 4 and 8 in Publication  05/22/2023 13173 
(Pub.) 100-08, Including Point of Contact 
Clarification and Update to Statistical 
Sampling Terminology 
R11797PI 01/19/2023  Updates of Chapters 4 and 8 in Publication  02/21/2023 13066 
(Pub.) 100-08, Including an Update to the 
Statistical Sampling Process, in Addition to 
Various Other Minor Updates 
R11529PI 07/28/2022  Update of Chapter 3 in Publication (Pub.)  08/30/2022 12827 
100-08, Including Update to Medicare 
Program Integrity Contractor Post-Payment 
Review Process, and Update of Chapter 8 
Pub. 100-08, Including Revision to When 
Contractor Suspects Additional Improper 
Claims 
R11032PI 09/30/2021  Updates to Chapters 1, 3, 4, 5, 8 and 9 of  11/10/2021 12375 
Publication (Pub.) 100-08 
R10984PI 09/09/2021  Updates to Chapters 1, 3, 4, 5, 8 and 9 of  11/10/2021 12375 
Publication (Pub.) 100-08  Rescinded and 
replaced by transmittal 11032 
R10383PI 10/09/2020  Updates to Chapters 4, 5, 8, 15, and Exhibits  11/10/2020 11999 
of Publication (Pub.) 100-08 
R10228PI 07/27/2020  Updates to Chapters 1, 2, 3, 4, 5, 6, 7, 8, 10,  08/27/2020 11884 
11, and Exhibits of Publication (Pub.) 100-08 
R10184PI 06/19/2020  Updates to Chapters 4, 6, and 8 of  07/21/2020 11812 
Publication (Pub.) 100-08 
R902PI  09/27/2019  Updates to Chapters 3, 4, 8, 15, and Exhibits  10/28/2019 11425 
of Publication (Pub.) 100-08  Rev #  Issue Date  Subject  Impl Date  CR# 
R906PI  09/26/2019  Guidance Regarding the Use of Statistical  01/02/2019 10067 
Sampling for Overpayment Estimation 
 
R828PI  09/28/2018  Guidance Regarding the Use of Statistical  01/02/2019 10067 
Sampling for Overpayment Estimation  
Rescinded and Replaced by Transmittal 906 
 
R778PI  03/16/2018  Updates to Payment Suspension Notice  05/16/2018 10475 
R687PI  11/10/2016  Extrapolated Overpayments  12/12/2016 9713 
R670PI  08/19/2016  Update of Payment Suspension Instructions  11/23/2016 9396 
R377PI  05/27/2011  Program Integrity Manual Reorganization of  06/28/2011 6560 
Chapters 3 and 8 
R71PI  04/09/2004  Rewrite of Program Integrity Manual (except  05/10/2004 3030 
Chapter 10) to Apply to PSCs 
R03PIM  11/22/2000  Complete Replacement of PIM Revision 1.  NA  1292 
R01PIM  06/2000  Initial Release of Manual  NA  931 
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