Practice Management Alert

The future of overpayment payback looks a little bit brighter thanks to a new CMS rule effective Oct. 1, 2004. In fact, you could save a full month's worth of interest.
 
This rule means a significant change for providers because a month's worth of interest on a large overpayment can make a "sizable difference," says Nancy Braymer, a health insurance specialist with CMS. Medicare's interest rate is now 11.75 percent, which translates to $58.75 of interest per month on a $500 overpayment.
 
How it works: CMS calculates interest based on 30-day periods, and up until now the agency assessed a full month's interest on partial periods (any number of days in a given 30-day period), Braymer says. So if you didn't pay back an overpayment within the first 30 days, but instead waited until the 45th day, CMS would bill you for two month's worth of interest - one for the first 30 days and one for the 15-day partial period.
 
Savings: If you return an overpayment on the 45th day under the new rule, CMS will only charge you one month's interest for the first 30 days. The agency won't assess a second month's interest until after 60 days.
 
Editor's note: To read the new rule online, visit www.access.gpo.gov/su_docs/fedreg/a040730c.html.