§ 433.320 Procedures for refunds to CMS. ( a ) *Basic requirements.* ( 1 ) The agency must refund the Federal share of overpayments that are subject to recovery to CMS through a credit on its Quarterly Statement of Expenditures (Form CMS-64).
( 2 ) The agency must credit CMS with the Federal share of overpayments subject to recovery on the earlier of— ( i ) The Form CMS-64 submission due to CMS for the quarter in which the State recovers the overpayment from the provider; or
( ii ) The Form CMS-64 due to CMS for the quarter in which the 1-year period following discovery, established in accordance with § 433.316, ends.
( 3 ) A credit on the Form CMS-64 must be made whether or not the overpayment has been recovered by the State from the provider.
( 4 ) If the State does not refund the Federal share of such overpayment as indicated in paragraph (a)(2) of this section, the State will be liable for interest on the amount equal to the Federal share of the non-recovered, non-refunded overpayment amount. Interest during this period will be at the Current Value of Funds Rate (CVFR), and will accrue beginning on the day after the end of the 1-year period following discovery until the last day of the quarter for which the State submits a CMS-64 report refunding the Federal share of the overpayment.
( b ) *Effect of reporting collections and submitting reduced expenditure claims.* ( 1 ) The State is not required to refund the Federal share of an overpayment at the end of the 1-year period if the State has already reported a collection or submitted an expenditure claim reduced by a discrete amount to recover the overpayment prior to the end of the 1-year period following discovery.
( 2 ) The State is not required to report on the Form CMS-64 any collections made on overpayment amounts for which the Federal share has been refunded previously.
( 3 ) If a State has refunded the Federal share of an overpayment as required under this subpart and the State subsequently makes recovery by reducing future provider payments by a discrete amount, the State need not reflect that reduction in its claim for Federal financial participation.
( c ) *Reclaiming overpayment amounts previously refunded to CMS.* If the amount of an overpayment is adjusted downward after the agency has credited CMS with the Federal share, the agency may reclaim the amount of the downward adjustment on the Form CMS-64. Under this provision— ( 1 ) Downward adjustment to an overpayment amount previously credited to CMS is allowed only if it is properly based on the approved State plan, Federal law and regulations governing Medicaid, and the appeals resolution processes specified in State administrative policies and procedures.
( 2 ) The 2-year filing limit for retroactive claims for Medicaid expenditures does not apply. A downward adjustment is not considered a retroactive claim but rather a reclaiming of costs previously claimed.
( d ) *Expiration of 1-year recovery period.* If an overpayment has not been determined uncollectable in accordance with the requirements of § 433.318 of this subpart at the end of the 1-year period following discovery of the overpayment, the agency must refund the Federal share of the overpayment to CMS in accordance with the procedures specified in paragraph (a) of this section.
( e ) *Court-approved discharge of bankruptcy.* If the State recovers any portion of an overpayment under a court-approved discharge of bankruptcy, the agency must refund to CMS the Federal share of the overpayment amount collected on the next quarterly expenditure report that is due to CMS for the period that includes the date on which the collection occurs.
( f ) *Bankruptcy petition denied.* If a provider's petition for bankruptcy is denied in Federal court, the agency must credit CMS with the Federal share of the overpayment on the later of— ( 1 ) The Form CMS-64 submission due to CMS immediately following the date of the decision of the court; or
( 2 ) The Form CMS-64 submission for the quarter in which the 1-year period following discovery of the overpayment ends.
( g ) *Reclaim of refunds.* ( 1 ) If a provider is determined bankrupt or out of business under this section after the 1-year period following discovery of the overpayment ends and the State has not been able to make complete recovery, the agency may reclaim the amount of the Federal share of any unrecovered overpayment amount previously refunded to CMS. CMS allows the reclaim of a refund by the agency if the agency submits to CMS documentation that it has made reasonable efforts to obtain recovery.
( 2 ) If the agency reclaims a refund of the Federal share of an overpayment— ( i ) In bankruptcy cases, the agency must submit to CMS a statement of its efforts to recover the overpayment during the period before the petition for bankruptcy was filed; and
( ii ) In out-of-business cases, the agency must submit to CMS a statement of its efforts to locate the provider and its assets and to recover the overpayment during any period before the provider is found to be out of business in accordance with § 433.318.
( h ) *Supporting reports.* The agency must report the following information to support each Quarterly Statement of Expenditures Form CMS-64: ( 1 ) Amounts of overpayments not collected during the quarter but refunded because of the expiration of the 1-year period following discovery;
( 2 ) Upward and downward adjustments to amounts credited in previous quarters;
( 3 ) Amounts of overpayments collected under court-approved discharges of bankruptcy;
( 4 ) Amounts of previously reported overpayments to providers certified as bankrupt or out of business during the quarter; and
( 5 ) Amounts of overpayments previously credited and reclaimed by the State.
[54 FR 5460, Feb. 3, 1989, as amended at 77 FR 31512, May 29, 2012]