Audit & Reimbursement
Section 935 Limitation on Recoupment
1. What is Section 935, Limitation on Recoupment?
Section 1893 (f) (2) Limitation on Recoupment implements a provision of the Medicare Modernization Act (MMA) of 2003 that prohibits recouping Medicare overpayments when an appeal (redetermination and reconsideration) is received from a provider until a final decision is rendered.
2. Which overpayments are subject to Section 935, Limitation on Recoupment?
CMS has determined that the limitation on recoupment under § 1893 (f) (2) applies to the recovery of funds for all Part A and Part B claims for which a demand letter is issued. The following overpayments are subject to the Limitation on Recoupment:
- Post-pay denial of claims for benefits under Medicare Part A which is determined and for which a written demand letter is issued (a letter informing the provider of the overpayment determination as a result of a post payment review of the medical record is subject to the provision).
- Post-pay denial of claims for benefits under Medicare Part B which is determined and for which a demand letter was issued (a letter informing the provider of the overpayment determination as a result of a post payment review of the medical record is subject to this provision).
- Medicare Secondary Payer (MSP) recovery where the provider or supplier received a duplicate primary payment and for which a demand letter was issued (a letter informing the provider of the overpayment determination as a result of a post payment review of claim or billing records is subject to this provision).
- Medicare Secondary Payer (MSP) recovery based on the provider's or supplier's failure to file a proper claim with the third party payer plan, program, or insurer for payment for Part A or B (a letter informing the provider of the overpayment determination as a result of a post payment review of claim or billing records is subject to this provision). The providers can appeal the overpayment as a revised initial determination under the Medicare Claims Appeal process at 42 CFR 401 and 405 or as an initial determination for providers.
- The final Claims associated with an HHA Request for Anticipated Payment (RAP) under Home Health Prospective Payment System (HH PPS), but not the RAP itself.
3. Which overpayments are not subject to the Limitation on Recoupment?
Overpayment arising from beneficiary, cost reports determination, hospice CAP calculations, provider-initiated adjustments, accelerated/advance payments, HHA requests for anticipated payments under HH PPS, and mass adjustments due to system errors are not subject to the Limitation on Recoupment provision. Overpayments that are appealed under the Provider Reimbursement Payment (PRB) process and various other Medicare Secondary Payer (MSP) recoveries are not subject to this provision.
4. How does a provider determine if an overpayment was processed under the 935?
When a claim is adjusted under the 935, a claim account receivable (Claim A/R) will be created and a first demand letter will be issued. A claim level detail report that identifies the 935 claim adjustments will accompany the demand letter. In addition, the Remark Code field on the remittance advice will contain the code N469, which identifies claim adjustments that are subject to 935.
5. How are claim adjustments that are subject to 935 identified on the remittance advice?
Claim adjustments that are subject to 935 are identified on the remittance advice with a N469 code that appears in the Remark Code field.
6. What is a rebuttal?
Providers are given an opportunity to rebut any proposed recoupment action by submitting a statement and/or evidence within 15 days of a demand letter as to why the withhold should not be initiated. The rebuttal letter is not an appeal request and it will not stop the contractor from beginning the recoupment process. The contractor will respond in writing to the rebuttal within 30 days from the receipt date.
7. When is a 935 Claim A/R eligible for offset?
A 935 Claim A/R is eligible for offset on day 41 from the date of the first demand letter if a valid appeal has not been filed. If a valid and timely redetermination is filed by day 30 from the first demand letter, the debt becomes eligible for offset no earlier than 60 days from the notice of the redetermination decision. If a valid and timely reconsideration is filed, recoupment will begin 30 days from the notice of the reconsideration decision.
8. How often is interest assessed on a 935 Claim A/R?
Interest will be assessed on the remaining principal balance of a 935 Claim A/R every full 30-day period from the date of the first demand letter. Interest will continue to accrue when a valid appeal is filed.
9. Are 935 Claim A/Rs eligible for an extended repayment plan (ERP)?
Overpayments resulting from claim adjustments that are subject to 935 are eligible for extended repayment plans. An ERP checklist 
, that identifies the required documents that must be submitted with the ERP request, is mailed with the demand letter.
10. What happens when the provider files an appeal on a 935 Claim A/R that is under an approved ERP?
The appeal supersedes the ERP agreement. Therefore, the ERP will not be considered in default if the provider does not make monthly payments during the appeal period. However, once the appeal decision is rendered, the contractor will notify the provider that it must resume payments or be placed on withhold.
11. What an Immediate Offset Form?
The provider uses the Immediate Offset Form to notify the contractor to begin immediate recoupment on a 935 Claim A/R before it becomes eligible for offset, which is 41 days from the first demand letter date. The timely submission of this form may prevent the assessment of interest, which is charged on the outstanding balance every 30-day period from the date of the demand letter.
12. How long does the provider have to file an appeal under the 935 Statute?
The provider has 120 days from the claim adjustment date to file an appeal. To take advantage of the appeal rights under the Limitation on Recoupment provision, the provider must submit a valid appeal within 30 days from the date of the first demand letter. Recoupment will not be initiated if the appeal request is received within 30 days from the date of the demand letter. If a valid appeal request is received after recoupment has already begun, the contractor will stop recoupment pending the outcome of the appeal determination and retain any amount recovered prior to the receipt of the appeal.
13. How can I stop recoupment on a Claim A/R that was processed under 935?
Recoupment can only be stopped when a valid first or second level appeal is submitted on an overpayment that is subject to 935. Upon receipt of a valid appeal, recoupment activities will be limited from occurring or stopped pending the outcome of the appeal decision.
14. What is a redetermination?
A redetermination is the first level of appeal and it is performed by the Carrier, fiscal intermediary or Medicare Administrative Contractor. During the redetermination, someone other than the individual or group that made the original determination reviews the claim. The redetermination is made in writing and it must be filed within 120 days from the claim determination date. If the redetermination is filed within 30 days from the date of the 935 Claim A/R demand letter, recoupment of the overpayment will be stopped pending the outcome of the redetermination decision. Generally, a decision will be made within 60 days of receipt of the request. The decision will be issued by letter and/or the remittance advice.
15. What is the reconsideration?
The reconsideration is the second level of appeals and it is available for those who are dissatisfied with the redetermination decision. The reconsideration is filed with a Qualified Independent Contractor (QIC), which is a panel of physicians and/or other health care professionals. The reconsideration request must be submitted in writing and it must be filed within 180 days of the receipt of the redetermination. In order to limit recoupment on a 935 Claim A/R, the reconsideration must be filed immediately after the redetermination decision. Generally, a decision will be made within 60 days of receipt of the request. The decision will be issued by letter and it will be sent to all parties.
16. When does recoupment begin or resume after the redetermination decision is rendered?
If the redetermination decision is partially or fully unfavorable, recoupment of the remaining overpayment balance will begin no earlier than 60 days from the date of the revised demand letter. However, the provider will have an opportunity to stop recoupment by filing a reconsideration request with the QIC.
17. When does recoupment begin or resume after the reconsideration decision is rendered?
If the reconsideration decision is partially or fully unfavorable, recoupment of the remaining overpayment balance will begin no earlier than 30 days from the date of the revised demand letter.
18. What is the Administrative Law Judge (ALJ) Hearing?
A request for an ALJ hearing can be made when the appellant is dissatisfied with the reconsideration decision. The request must be submitted in writing and it must be submitted within 60 days of the reconsideration decision date. The ALJ will generally issue a decision within 90 days of receipt of the hearing request. Filing a request for a hearing with the ALJ will not limit recoupment on a 935 Claim A/R.
19. Does limitation on recoupment apply when an appeal is filed with the ALJ?
The limitation of recoupment only applies to the redetermination and reconsideration appeal levels. Filing a request for a hearing with the ALJ will not limit recoupment of an overpayment that is subject to 935.
20. What happens if the ALJ or subsequent levels of administrative appeal reverse the previous appeal decision?
The contractor will have 30 days from the appeal decision date to refund the monies that were recouped and applied to principal and interest. Interest (935), if applicable, will be calculated and included in the refund.
Page Last Updated: Thursday, 15-Jul-2010 09:57:15 CDT
