Section 935 Recoupment Basics

Recoupment is the act of recovery by a Medicare contractor—such as National Government Services or by a recovery audit contractor (RAC)—of any outstanding Medicare debt by reducing present or future Medicare remittance advice payments and applying the amount withheld to the indebtedness. It applies to the recovery of funds for all Medicare Part A and Medicare Part B claims for which a demand letter is issued.

The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003, Section 935 amended Title XVIII of Social Security Act to add a new paragraph to Section 1893(f)(2)(a), which required the Centers for Medicare & Medicaid Services (CMS) to change:

• how it recoups certain overpayments to providers, physicians, suppliers; and
• how it pays interest to provider, physician, supplier whose overpayment is reversed at subsequent administrative or judicial levels of appeal.

Previously, if a provider elected to appeal an overpayment determination prior to enactment of Section 935 of the MMA, it did not affect Medicare’s ability to recover the debt. Section 935 of the MMA amended that process to protect providers during the initial stages of the appeal process at both the first and second levels of appeal by limiting the recoupment process while the appeal process is underway. Provider appeal rights and the time frames for filing an appeal have not changed.