While supplies last! Free 2022 Coding Essentials for Infusion & Injection Therapy Services book with every RACmonitor webcast order. No code required. Order now >


In July, the Centers for Medicare & Medicaid Services issued a fact sheet to explain everything physicians and suppliers need to know about the definition and the collection process related to overpayments. It also provides resources where they can learn more. Medicare physicians and suppliers who have not yet gone through this process may find the data within the document useful.

Definition First

A Medicare overpayment is exactly what it sounds like it is-a payment received in excess of amounts due and payable under Medicare statute and regulations. Once an overpayment has been determined, the amount becomes a debt owed to the federal government, and federal law requires that CMS recover all identified overpayments.

There are several reasons that overpayments occur, including the following:

  • Duplicate submission of the same service or claim;
  • Payment to the incorrect payee;
  • Payment for excluded or medically unnecessary services; or
  • A pattern of furnishing and billing for excessive or non-covered services.

Collection and Appeals

A mere overpayment of $10 or more launches the recovery process, and a “demand letter” is sent requesting payment. Interest accrues from the date of the letter if the overpayment is not received by the 31st calendar day from the date of the letter. No response prompts a second demand letter to be sent with the expectation that payment will be received with 40 days of the first demand letter.

If payment isn’t received, the recoupment process begins, which means that the overpayment will be recovered from current payments due or from future claims submitted. If the debt continues to be unpaid and no appeal has been filed, the provider or supplier will receive what’s called an Intent to Refer letter within 120 days. This letter means that the feds are done fooling around and that the overpayment may be eligible for referral to the Department of Treasury for offset or collection.

Luckily, the next step gives a break to physicians or suppliers who simply cannot pay the entire amount of the overpayment in full. It’s called and extended repayment plan.

In the last part of the fact sheet, CMS provides the details of rebuttals and appeals, which include redeterminations and requests for reconsideration, and, in general, what to do when you don’t agree with the overpayment declaration.

All in all, the fact sheet makes it easy to understand the steps that providers and suppliers who receive an “overpayment” verdict from their RACs reviews can take if they disagree with the pronouncement.

For the fact sheet, go to https://www.cms.gov/MLNProducts/downloads/OverpaymentBrochure508-09.pdf

About the Author

Randy Wiitala, BS, MT (ASCP) is a senior healthcare consultant with Medical Learning, Inc. (MedLearn), St. Paul, MN. MedLearn is a nationally recognized expert in healthcare compliance and reimbursement. Founded in 1991, MedLearn delivers actionable answers that will equip healthcare organizations with their coding, chargemaster, reimbursement management and RAC solutions.

Contact the Author


To comment on this article please go to editor@racmonitor.com

HEAT Charges 91 in $295 Million Fraud Schemes


Randy Wiitala, BS, MT (ASCP)

Randy Wiitala, BS, MT (ASCP) conducts CPT coding and chargemaster assessments, reviews provider operations for regulatory agency compliance, evaluates administrative policies and procedures and assists in the development of quality-assurance programs. He's also a frequent seminar presenter, speaking to hospitals, corporations, clinics, state hospital associations and professional organizations. These educational programs cover a variety of areas, such as coding, regulatory compliance and reimbursement for laboratories; chargemaster system management; and APCs. Randy contributes to a number of MedLearn books, as well as the Laboratory Compliance Manager newsletter. He is the project lead on MedLearn's RAC Outpatient Data Analytics. He is a member of the American Society of Clinical Pathologists, the National Certification Agency and Healthcare Financial Management.

You May Also Like

Leave a Reply

Your Name(Required)
Your Email(Required)