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835.5 General 

A benefit overpayment occurs when more than the correct amount of Part A or B 

benefits was paid by the intermediary or carrier. The process of recovering the 

overpayment does not involve the district office unless you are asked to deliver an 

overpayment letter by OPR. This section provides a brief summary of the process to 

help you answer any general questions you may be asked. 

All benefit overpayments are handled in the same general manner except for Part A 

benefit overpayments made to Canadian residents. These are treated as railroad 

retirement annuity overpayments. 

835.10 Liability For Medicare Overpayments 

835.10.1 Provider of Services, Physician or Supplier Liable 

A provider of services, physician, or supplier is deemed to have knowledge of the laws 

and regulations which apply to the payment of Medicare benefits. Therefore, the 

provider or other person is liable for an overpayment made to him if: 

A. The overpayment was caused by a mathematical or clerical error; 

B. The overpayment was due to a duplicate payment which was retained by the 

provider or other person; 

C. The beneficiary did not receive the services (or items) paid for; 

D. The provider or other person accepted payment for services (or items) which he 

knew or should have known were not reasonable or necessary for treatment; 

E. The overpayment resulted from a charge in excess of the reasonable charge; 

F. A provider or other person, not qualified under SSA regulations to perform 

services (e.g., an immediate relative or member of the beneficiary's household), 

accepted payment for services; 

G. A physician or supplier collected a payment on the basis of an assignment 

without disclosing that he had already been paid by the beneficiary. 

835.10.2 Beneficiary Liable 

A beneficiary is liable for repayment of overpayments made direct to him. He is also 

liable for overpayments made to a provider of services, supplier or physician on his 

behalf if he received the services, the services were necessary, the charges were 

reasonable and: 

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A. The overpayment resulted from failure to properly apply the deductible or 

coinsurance; or 

B. The overpayment resulted from benefits paid to the provider of services under 

the guarantee provision of section 1814(e) of the Social Security Act; or 

C. The overpayment resulted from some other cause (e.g., non-entitlement or noncoverage) and the provider or other person acted reasonably in filing for and 

accepting Medicare payments. The provider or other person will be considered 

to have acted reasonably if he: 

1. Had no basis for questioning entitlement or coverage or, if he did, brought 

it promptly to the attention of the intermediary or carrier; and 

2. Complied with all pertinent regulations and had reason to believe the 

services were covered. 

D. The provider or other person was without fault in causing the overpayment 

(effective with notices of payment sent after 10-30-72). 

835.10.3 Dual Liability 

The provider, physician or supplier and the beneficiary are jointly liable for an 

overpayment provided the overpayment was made to the provider or other person for 

services which the beneficiary received, if: 

A. The overpayment was caused by an error regarding entitlement or coverage of 

services and the provider or other person did not act reasonably and with due 

care in filing for and accepting the payment; or 

B. The provider or other person received duplicate payments and turned one 

payment over to the beneficiary. 

835.10.4 Limitation on Beneficiary Liability 

A beneficiary who was without fault (i.e., did not know and could not be expected to 

know that the services were not covered) and whose claim under Part A or Part B has 

been disallowed because the services were not reasonable or necessary for the 

diagnosis or treatment of an injury or illness or because the care was a non-covered 

level of care (i.e., custodial care), shall not be liable for payment. 

If the provider or other person in such a case also exercises due care (i.e., did not know 

and could not be expected to know non-covered services were involved), the Medicare 

program will make payment as if the services were covered. When payment is made, 

the provider and patient will be put on notice so that they cannot again claim lack of 

knowledge in subsequent claims involving similar situations. 

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If the provider did not exercise due care and the beneficiary was without fault, the 

provider would be liable for the services but could appeal both the determination as to 

coverage and "due care". If the provider did not exercise due care and collected from 

the beneficiary, the program would, upon application, reimburse the beneficiary. The 

payment would then be treated as an overpayment to the provider. 

835.15 Recovery Process 

835.15.1 Intermediary's or Carrier's Responsibility 

The intermediary or carrier first determines who is liable for the benefit overpayment, 

releases a letter notifying them of the overpayment and initiates the appropriate 

recovery action. Part A or B overpayments under $50.00 are automatically waived 

regardless of who is determined to be liable. 

A. When the provider of services, physician or supplier is liable - The intermediary 

or carrier will notify the provider or other person of the overpayment and request 

refund, if refund not reserved within a specified period action is taken to offset the 

overpayment against any future benefits due the provider or other person. If 

recovery of a Part A overpayment cannot be made from the provider of services, 

the intermediary will refer the case to CMS. If recovery of a Part B overpayment 

cannot be made from a physician or supplier, the Medicare Part B carrier will 

refer the case to RRB. 

B. When the beneficiary is liable - The intermediary or carrier will notify the 

beneficiary of the overpayment, will offset the overpayment against any future 

unassigned payments due the beneficiary and, if necessary, will ask for a refund. 

If a Part A overpayment is not recovered from the beneficiary, the intermediary 

will refer the case to CMS. If a Part B overpayment is not recovered from the 

beneficiary, the Medicare Part B carrier will refer the case to RRB. 

C. Dual liability - The intermediary or carrier will send an overpayment letter first to 

the provider of services, supplier or physician. If the overpayment is not 

recovered within 60 days, the intermediary or carrier will ask the beneficiary for a 

refund. Any payments due the beneficiary will be withheld pending recovery from 

the provider of services or other person. If recovery of a Part A overpayment 

cannot be made from either the provider of services or the beneficiary, the 

intermediary will refer the case to CMS. If recovery of a Part B overpayment 

cannot be made from either the supplier or physician or the beneficiary, the 

Medicare Part B carrier will refer the case to RRB. 

D. What the overpayment letter should contain - The overpayment letter sent by the 

intermediary or carrier to the provider of services, physician, supplier or 

beneficiary should: 

1. Clearly identify the overpayment by showing the name and address of the 

provider or other person, the dates of services, the nature of the services, 

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the date and amount of the check(s) and to whom it was paid and the 

amount of the overpayment. 

2. Clearly explain why the payment was incorrect. 

3. Furnish the amount of the overpayment. 

4. Request a refund. 

5. Notify the beneficiary that unless a refund is made, the overpayment may 

be deducted from other Medicare benefits due or monthly annuity 

payments. 

6. Inform a beneficiary of his right to a reconsideration or review of the 

overpayment decision. 

7. Include an explanation of the waiver provision. 

E. When the beneficiary requests that recovery be waived - If a beneficiary requests 

that a Medicare overpayment be waived or states conditions that might qualify 

him for waiver, the intermediary or carrier should refer the case to CMS (Part A 

overpayment) or RRB (Part B overpayment) immediately. 

F. When beneficiary or physician is deceased 

1. Beneficiary liable - The intermediary or carrier should withhold the 

overpayment from any amount payable on the beneficiary's account to a 

relative or to the beneficiary's estate. If an amount is payable on the 

beneficiary's account to any other person or organization, that amount 

cannot be withheld. 

If a Part A overpayment cannot be recovered by withholding, the 

intermediary should immediately refer the case to CMS. If a Part B 

overpayment cannot be recovered by withholding, the Medicare Part B 

carrier should immediately refer the case to RRB. Any information 

received concerning an estate should be included with the referral. 

2. Physician liable - The Medicare Part B carrier should withhold the 

overpayment from any other Medicare payment due the physician's 

estate. If the overpayment cannot be recovered by withholding, the carrier 

should refer the case to RRB immediately with any information received 

about an estate. 

G. When the beneficiary is entitled to welfare payments - The intermediary or carrier 

will contact the state welfare department to determine whether that agency will 

refund an overpayment for which a beneficiary receiving or entitled to welfare is 

liable, if: 

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1. A Part A overpayment was caused by: 

a. Failure to properly assess the deductible or coinsurance; 

b. Payment for non-covered services; or 

c. Payment for services after benefits have been exhausted. 

2. A Part B overpayment was caused by failure to properly assess the 

deductible. 

If the state welfare department will not refund the overpayment, the 

intermediary will refer the case to CMS, or the Medicare Part B carrier will 

refer the case to RRB without taking any further recovery action. A record 

of any contact made with the welfare department should be included with 

the material referred to CMS or RRB. 

835.15.2 Responsibility of CMS 

A. HIB overpayment - CMS receives all cases in which an overpayment of HIB 

benefits has not been recovered by the intermediary from a provider of services 

or beneficiary. After determining who is liable for the overpayment, CMS handles 

to completion all cases in which the provider is solely liable. 

If a QRRB or DQRRB is liable for repayment of the overpayment, CMS refers the 

case to RRB for consideration of waiver or recovery from benefits payable under 

the Railroad Retirement Act. 

B. SMI overpayment - CMS will not handle Part B overpayments for QRRBs or 

DQRRBs unless RRB requests that recovery be made from benefits payable by 

SSA, because the annuity is not in current pay status. However, all cases in 

which a physician or supplier of services is liable for repayment should be sent to 

CMS for handling. 

835.15.3 Responsibility of RRB 

The chances of recovering a Medicare overpayment are better if recovery action is 

taken soon after the notice of overpayment is received. Therefore, MS gives preferred 

handling to Medicare overpayment cases. 

A. General - RRB is responsible for the waiver or recovery of a Part A overpayment 

in any case in which the beneficiary is liable for repayment. RRB will have 

complete jurisdiction over such overpayments. However, if waiver is not 

applicable, and RRB cannot recover the overpayment because the annuity is not 

in current pay status, the case may be referred to SSA for recovery if benefits are 

payable by that agency. 

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B. Responsibility of MS (Medicare Section of Operations) - MS reviews all cases 

referred to Operations to determine if the amount of the overpayment is correct 

and if all action taken has been correct. If there are any problems or questions, it 

will act to correct or clarify them. Once MS has determined that all the necessary 

actions have been completed correctly, they will pursue collection. 

835.20 Waiver 

835.20.1 When Waiver May Apply 

Recovery of a Medicare overpayment from a beneficiary or from any survivor eligible for 

benefits on his earnings record may be waived if: 

A. The individual against whom the recovery would be made was without fault in 

causing the overpayment; and 

B. Recovery would: 

1. Deprive the overpaid person of income that is reasonably necessary for 

ordinary living expenses, or 

2. Deprive the person of funds needed within a year for hospital or medical 

care reasonably necessary for his health. 

3. Be against equity and good conscience in accordance with Section 

1870(c) of the Social Security Act. 

835.20.2 Finding of Without Fault 

A. General - A finding of without fault is required in all cases before waiver may be 

considered. 

The term fault as used in "without fault," applies to the overpaid person 

(beneficiary, provider of services, supplier or physician) and to the individual from 

whose benefits the overpayment is to be recovered (a survivor entitled to benefits 

on a deceased beneficiary's wage record). The fact that the overpayment may 

have been caused by an administrative error will not, in itself, establish "without 

fault." A "without fault" determination may be possible with information in file 

without further investigation. 

The following guidelines are used in determining whether a beneficiary is without 

fault in causing an overpayment: 

1. A beneficiary is not expected to maintain a personal record of utilization. 

2. A beneficiary is not usually expected to know the correct deductible 

amount. 

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3. A beneficiary is not usually expected to know which services are not 

covered by Medicare unless he has been advised in writing that a service 

is not covered. 

B. When an overpaid person is at fault - The person liable for an overpayment is 

usually at fault when the overpayment resulted from: 

1. An incorrect statement by the person that he knew or should have known 

was false; or 

2. Failure of the person to give information that he knew or should have 

known was material; or 

3. Acceptance by the person of a payment that he knew or should have 

known was incorrect. 

C. When an overpaid person is without fault 

1. Reliance on misinformation from an official source - The person liable for 

the overpayment will be found to be without fault if the overpayment 

occurred solely because the individual relied on misinformation from an 

official source. If the overpaid person is found to be "without fault" 

because of reliance on misinformation from an official source, recovery of 

the overpayment will be deemed to be against equity and good 

conscience. 

Generally, reliance on misinformation may be involved in overpayments 

resulting from payment for supplies or services which are not covered by 

Medicare. Reliance on the advice or information given to the individual 

must have some reasonable basis and must be restricted to information 

from an agent or agency of the U.S. Government, including 

intermediaries and carriers. 

Generally, misinformation is not considered to be involved when duplicate 

checks are issued on the basis of the same claim or if information is 

provided on the basis of erroneous or incomplete records which the 

individual did not question. However, an individual may sometimes be 

found to be without fault in such circumstances. 

2. Overpayment discovered more than 3 calendar years after notice of 

payment sent - In the absence of evidence to the contrary, the provider of 

services, supplier or physician is deemed to have been without fault in 

causing an overpayment if the overpayment was discovered more than 3 

calendar years after the year in which the notice of payment was sent. 

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835.20.3 Beneficiary Claims that Recovery Would Deprive Him of Necessary 

Income 

Headquarters may request that the field office obtain a completed Form DR-423 from 

the debtor if the individual claims it would be a hardship to repay the overpayment. A 

Form DR-423 will not be requested if there is an indication that the beneficiary is 

receiving or entitled to welfare payments. 

Waiver of recovery against an estate may not be considered on the basis of this 

provision, even though waiver would have been proper on that basis during the lifetime 

of the overpaid person. The estate cannot be considered to need income for ordinary 

and necessary living expenses. 

835.20.4 Beneficiary Would Be Deprived of Funds for Health Care 

The need for hospital or medical care must be real and tentatively planned to occur 

within a year, and the commitment of the funds must be real and not conjectural to be 

considered in determining whether adjustment or recovery would deprive the person of 

funds needed within a year for hospital or medical care reasonably necessary for his 

health. The individual need not have begun the needed treatment or care, but he must 

have made the necessary plans to do so. He may have arranged for the treatment 

when it is medically appropriate or when he has accumulated the necessary cash to 

defray the expenses. A statement (one or two sentences long) from the physician in 

charge or from a similarly authorized medical source is needed to indicate (a) whether 

the treatment and/or care is needed and (b) the estimated cost. Note that expenses 

already incurred for medical care, hospitalization, etc., are also taken into consideration. 

835.20.5 Against Equity and Good Conscience 

A. General - Under the Social Security Act, recovery of an overpayment will be 

considered to be against equity and good conscience where the beneficiary, 

relying on benefit payments or on a notice that such payments would be made, 

relinquished a valuable right or changed his position for the worse. In reaching 

such a determination, the individual's financial circumstances are irrelevant. 

B. When "against equity and good conscience" applies - Recovery of an 

overpayment will be deemed to be "against equity and good conscience" if the 

overpaid person is found to be "without fault" because of reliance on erroneous 

information from an official source. 

Recovery of an overpayment from a beneficiary who is without fault is also 

deemed to be against equity and good conscience if: 

1. The overpayment was made for items or services not medically necessary 

or for the expenses of custodial care; and 

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2. The overpayment was discovered more than 3 calendar years after the 

year in which the notice of payment was sent. 

In addition, a provider under Part A, or a physician or other supplier who 

accepted assignment under Part B cannot, after refunding an overpayment for 

medically unnecessary or custodial care services, charge the enrollee who is 

without fault after 3 calendar years have expired. 

835.20.6 Notice of Waiver 

If the overpayment is waived, the person liable for the overpayment is notified of the 

decision by BRC. 

835.25 Recovery from Beneficiary's Estate 

When liability for recovery rests with an estate, BRC requests that the field office check 

with the probate court in the area where the overpaid person died or with the nearest 

relative to determine whether an estate has been opened and, if so, the name and 

address of the administrator of the estate, the identity and location of the court of 

jurisdiction, the expected closing date of the estate and the assets and liabilities of the 

estate. If the estate is closed or was not administered, check to see who received the 

assets of the estate and the amount of those assets. 

835.30 Forged Medicare Benefit Checks 

When the payee of a Part B benefit check alleges that he did not endorse the check, 

The Palmetto GBA will develop the forgery claim and route it to the CMS regional office 

for investigation. Forward any Part B benefit check forgery claims received in the field 

office to the Chief of Medicare programs who will forward them to the appropriate 

destination. 

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