[Code of Federal Regulations]
[Title 42, Volume 2]
[Revised as of October 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR405.376]

[Page 95-96]
 
                         TITLE 42--PUBLIC HEALTH
 
                    CHAPTER IV--CENTERS FOR MEDICARE
                          & MEDICAID SERVICES,
                        DEPARTMENT OF HEALTH AND
                             HUMAN SERVICES
 
PART 405_FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED--Table of 
Contents
 
Subpart C_Suspension of Payment, Recovery of Overpayments, and Repayment 
                        of Scholarships and Loans
 
Sec. 405.376  Suspension and termination of collection action and 
compromise of claims for overpayment.

    (a) Basis and purpose. This section contains requirements and 
procedures for the compromise of, or suspension or termination of 
collection action on, claims for overpayments against a provider or a 
supplier under the Medicare program. It is adopted under the authority 
of the Federal Claims Collection Act (31 U.S.C. 3711). Collection and 
compromise of claims against Medicare beneficiaries are explained at 20 
CFR 404.515.
    (b) Definitions. As used in this section, debtor means a provider of 
services or a physician or other supplier of services that has been 
overpaid under title XVIII of the Social Security Act. It includes an 
individual, partnership, corporation, estate, trust, or other legal 
entity.
    (c) Basic conditions. A claim for recovery of Medicare overpayments 
against a debtor may be compromised, or collection action on it may be 
suspended or terminated, by the Centers for Medicare & Medicaid Services 
(CMS) if;
    (1) The claim does not exceed $100,000, or such higher amount as the 
Attorney General may from time to time prescribe, exclusive of interest; 
and
    (2) There is no indication of fraud, the filing of a false claim, or 
misrepresentation on the part of the debtor or any director, partner, 
manager, or other party having an interest in the claim.
    (d) Basis for compromise. A claim may be compromised for one or more 
of the following reasons:
    (1) The debtor, or the estate of a deceased debtor, does not have 
the present or prospective ability to pay the full amount within a 
reasonable time;
    (2) The debtor refuses to pay the claim in full and the United 
States is unable to collect the full amount within a reasonable time by 
legal proceedings;
    (3) There is real doubt the United States can prove its case in 
court; or
    (4) The cost of collecting the claim does not justify enforced 
collection of the full amount.

[[Page 96]]

    (e) Basis for termination of collection action. Collection action 
may be terminated for one or more of the following reasons:
    (1) The United States cannot enforce collection of any significant 
sum;
    (2) The debtor cannot be located, there is no security to be 
liquidated, the statute of limitations has run, and the prospects of 
collecting by offset are too remote to justify retention of the claim;
    (3) The cost of further collection action is likely to exceed any 
recovery;
    (4) It is determined the claim is without merit; or
    (5) Evidence to substantiate the claim is no longer available.
    (f) Basis for suspension of collection action. Collection action may 
be suspended for either of the following reasons if future collection 
action is justified based on potential productivity, including 
foreseeable ability to pay, and size of claim:
    (1) The debtor cannot be located; or
    (2) The debtor is unable to make payments on the claim or to fulfill 
an acceptable compromise.
    (g) Factors considered. In determining whether a claim will be 
compromised, or collection action terminated or suspended, CMS will 
consider the following factors:
    (1) Age and health of the debtor, present and potential income, 
inheritance prospects, possible concealment or fraudulent transfer of 
assets, and the availability of assets which may be reached by enforced 
collection proceedings, for compromise under paragraph (d)(1) of this 
section, termination under paragraph (e)(1) of this section, and 
suspension under paragraph (f)(2) of this section;
    (2) Applicable exemptions available to a debtor and uncertainty 
concerning the price of the property in a forced sale, for compromise 
under paragraph (d)(2) of this section and termination under paragraph 
(e)(1) of this section; and
    (3) The probability of proving the claim in court, the probability 
of full or partial recovery, the availability of necessary evidence, and 
related pragmatic considerations, for compromise under paragraph (d)(3) 
of this section.
    (h) Amount of compromise. The amount accepted in compromise will be 
reasonable in relation to the amount that can be recovered by enforced 
collection proceedings.

Consideration shall be given to the following:
    (1) The exemptions available to the debtor under State or Federal 
law;
    (2) The time necessary to collect the overpayment;
    (3) The litigative probabilities involved; and
    (4) The administrative and litigative costs of collection where the 
cost of collecting the claim is a basis for compromise.
    (i) Payment of compromise--(1) Time and manner. Payment of the 
amount that CMS has agreed to accept as a compromise in full settlement 
of a Medicare overpayment claim must be made within the time and in the 
manner prescribed by CMS. An overpayment claim is not compromised or 
settled until the full payment of the compromised amount has been made 
within the time and in the manner prescribed by CMS.
    (2) Failure to pay compromised amount. Failure of the debtor or the 
estate to make payment as provided by the comprise reinstates the full 
amount of the overpayment claim, less any amounts paid prior to the 
default.
    (j) Effect of compromise, or suspension, or termination of 
collection action. Any action taken by CMS under this section regarding 
the compromise of an overpayment claim, or termination or suspension of 
collection action on an overpayment claim, is not an initial 
determination for purposes of the appeal procedures under subparts G, H, 
and R of this part.

[43 FR 59381, Dec. 20, 1978, as amended at 57 56998, Dec. 2, 1992. 
Redesignated and amended at 61 FR 63745, 63747, Dec. 2, 1996]