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CMS Issues Clarification Regarding Effect of Overpayment Debt on Enrollment


PG Alert

February 20, 2018

Anna Stewart Whites (Anna Whites Law Office, Frankfort, KY)
Sharon C. Peters (Lewis Brisbois Bisgaard Smith LLP, Portland, OR)

This Alert is brought to you by AHLA’s Behavioral Health Task Force.

Federal regulations provide that an enrollment application may be denied if the enrolling provider, supplier, or owner has an existing Medicare overpayment.1 A number of states have similar provisions in their Medicaid regulations that provider debt for overpayments may affect enrollment under certain conditions.2

Overpayments are Medicare payments that a provider or beneficiary has received in excess of the amounts due and payable under the statute and regulations. Once an overpayment determination is made, that amount is a debt to the U.S. Treasury.

There has been some confusion as to whether all overpayment debts were grounds for denying enrollment. For this reason, the Centers for Medicare & Medicaid Services (CMS) issued a clarification on January 4, 2018,3 affirming that an overpayment that is subject to a payment plan shall not affect enrollment.

Medicare Administrative Contractors have been known to attempt to use 42 C.F.R. § 424.530(a)(6)(i) to deny enrollment to a provider, even when that provider is compliant with overpayment obligations under a corporate integrity agreement, overpayment agreement, or recoupment demand. The recent clarification confirms that such attempts to justify denial of contracts or credentials to a provider are not supported by Medicare or Medicaid rules.

Debts of prior owners or prior affiliated entities are also reasons for an enrollment bar. CMS denies enrollment for providers or suppliers that were previously affiliated with any organizations that have unpaid Medicare debts and have been terminated from Medicare, or have not yet agreed to a repayment plan.4 A provider denied enrollment on the basis of an unpaid debt it does not owe should review the debt history of the prior owners or affiliated entities to determine whether such cause exists.

CMS outlined that, in accordance with 42 C.F.R. § 424.530(a)(6)(iii), a denial of Medicare enrollment can be avoided if the enrolling provider, supplier, or owner either:

  1. Satisfies the criteria set forth in 42 C.F.R. § 401.607 (relating to claims collection) and agrees to a CMS-approved extended repayment schedule; or
  2. Repays the debt in full. The clarification instructs that when processing a Form CMS-855A, CMS-855B, or CMS-855S initial or change of ownership application, the contractor shall determine whether the provider, supplier, or any of the owners listed in Section 5 or 6 of the application has a delinquent Medicare overpayment that: (i) is at least $1,500 in aggregate; (ii) has not been repaid in full at the time the application was filed; (iii) is not currently being appealed or offset; (iv) is not part of a CMS/Treasury-approved extended repayment schedule; and (v) is not for a bankrupt provider.

CMS also noted that overpayments that are being appealed are not considered a reason for denial of enrollment.

Providers that have been denied enrollment by a contractor based on an overpayment that is being addressed in accordance with federal law may want to cite the new clarification. The clarification affirms that this continues to be an improper basis for enrollment denials.

The effective date of the clarification is April 1, 2018 and it is to be implemented on April 2, 2018.

1 42 C.F.R, § 424.530(a)(6)(i).
2 See, e.g., 907 Ky. Admin. Regs. 6:172 “Provider Enrollment and Disclosure and Documentation for Medicaid Participants”, at Section 2, (7)(a)(7), available at
3 CMS Transmittal 1998, available at
4 79 Fed. Reg. 72500 (Dec. 5, 2014), available at
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