On September 16, 2009, the Centers for Medicare & Medicaid Services (CMS) issued a final rule implementing section 935 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) which provides for payment of interest to a provider whose overpayment is reversed on appeal and limits CMS’s ability to recoup certain overpayments during earlier stages of the appeals process. CMS published the proposed rule almost three years earlier on September 22, 2006, and issued Transmittal 141 that same month.

Providers have 120 days in which to timely file a first level appeal. However, the final rule provides that Medicare contractors can begin recoupment no earlier than 41 days from the date of the initial overpayment demand. Similarly, although providers have 180 days in which to timely file a second level appeal, recoupment can be initiated or resumed on the 60th calendar day after the date of the redetermination decision unless a valid request for reconsideration is filed. At both levels, if a request for redetermination or reconsideration is timely filed, CMS must stop recoupment. Despite these protections at the lower stages of the appeals process, recoupment may either commence or continue following a Qualified Independent Contractors’ (QIC) decision that upholds, in full or in part, an overpayment determination. Therefore, CMS has the ability to recoup alleged overpayments despite the appeal progressing through the Administrative Law Judge, Medicare Appeals Council or federal court levels of the appeal process.

Finally, under the final rule, if an overpayment determination is overturned in an administrative or judicial appeal above the QIC level of appeal, CMS is liable for interest on recouped overpayments. Before the passage of the MMA, CMS stated that it was "liable for interest charges if it did not pay within 30 days of an underpayment determination." CMS anticipates the costs in implementing this final rule to be from $1 to $10 million per year in additional interest payments.