Refunding Overpayments
In the complex world of Medicare billing, overpayments can occur for a variety of reasons. When a provider or supplier identifies an overpayment from Medicare, it is not only a matter of compliance but a legal obligation to report and return the funds. This article outlines the current process for refunding overpayments to the Durable Medical Equipment Medicare Administrative Contractors (DME MACs).
What You Need to Know
An overpayment is any funds received from Medicare that a provider is not entitled to. They may be caused by many factors, including billing errors, incorrect coding, or patient eligibility changes. An overpayment refund can be initiated by the DME MAC (demand letter) or the provider (voluntary refund). Once identified, overpayments become debts owed to the federal government and must be returned promptly.
CMS requires DME MACs to request refunds for non-MSP (Medicare Secondary Payer) overpayments of $25 or more, but refunds under $25 are still accepted. For MSP-related overpayments, all overpayments must be refunded regardless of amount. If a lump-sum refund causes financial hardship, providers may request an Extended Repayment Schedule (ERS), which requires submission of financial documentation and a written request explaining the hardship.
Federal law requires providers to report and return identified overpayments within 60 days of discovery or by the due date of any applicable cost report. Missing this deadline can trigger False Claims Act liability. If you receive a refund request, overpayments will start accruing interest 30 days after a demand letter is sent. If full payment is not received by the 40th day from the date of the initial demand letter, current and future payments from Medicare will be offset until the overpayment is completely recouped.
What This Means for You
Refunding Medicare overpayments to the DME MACs is a critical compliance responsibility. Whether submitting a voluntary refund or responding to a demand letter, acting quickly and following the correct procedures ensures regulatory compliance and minimizes financial risk.
When you receive a demand letter from the DME MAC for an overpayment, you must do one of the following:
- Make an immediate payment or request immediate recoupment/offset
- Submit a rebuttal with supporting documentation
- File an appeal (i.e., a redetermination)
- Request an Extended Repayment Schedule (ERS) for financial hardship
Options for submitting a voluntary refund vary depending on the DME MAC. In general, you must fill out a Voluntary Overpayment Refund Form and submit your payment back to the DME MAC.
Use the following links to find specific overpayment refund instructions and associated forms for each Jurisdiction:
For additional information, you can also review the CMS Medicare Overpayments Fact Sheet.