Medicare Recoupment Letters: Response Steps and Pitfalls to Avoid

What is a Medicare Recoupment Letter? 

When Medicare determines it has overpaid you or your practice, the Medicare Administrative Contractor (MAC) for your region will issue an overpayment demand or recoupment letter. This notice details the alleged overpayment amount, the stated basis for the determination, and your options—either to acknowledge and repay or to pursue an appeal.

If you believe you have grounds to challenge the determination, you have important choices to make, and timing matters. How you respond—and how quickly—can be critical to protecting your practice and preserving your appeal rights.

What are some reasons for overpayments?

Medicare may determine overpayments for several reasons, including:

• Incorrect coding
• Insufficient documentation
• Lack of medical necessity
• Processing and/or administrative errors

If I disagree with all or part of the overpayment determination, what are my options?

There are five levels of appeal for Medicare:

• Level 1 – Redetermination
• Level 2 – Reconsideration
• Level 3 – Administrative Law Judge (ALJ)
• Level 4 – Medicare Appeals Council (MAC)
• Level 5 – Federal Court 

All levels have timely filing limits, and some have a minimum amount in controversy (AIC) threshold to qualify. Carefully review the appeal instructions in your overpayment letter to ensure you meet all criteria. You can file the appeal yourself or enlist the help of someone else – Medicare calls this helper an “authorized representative.”  If an authorized representative is assisting you with your appeal be sure to complete and return the CMS Appointment of Representative Form (CMS 1696).

Pitfalls to avoid 

Don’t ignore the letter.  Inaction won’t make the letter go away, but it might cause you to miss out on some of your better options.  Don’t delay planning your response when you receive an overpayment demand letter. Interest on your unpaid balance begins accruing on the 31st day following final determination of overpayment. 

• Determine whether your overpayment determination should be appealed. A redetermination request must be submitted within 120 days of the date of the overpayment demand.
• Consider submitting a statement of rebuttal if you are not disputing the overpayment allegation, but you can prove the recoupment would result in financial harm to you or your practice. This is not the same as an appeal.
• Review Immediate Recoupment options if you do not believe an appeal is appropriate and you agree with the overpayment determination. Immediate recoupment may help you avoid paying interest on the overpayment debt. Use caution and judgment when selecting the appropriate Immediate Recoupment options:
  • You may request Immediate Recoupment for the current overpayment demand, and all future overpayments identified OR
  • You may request Immediate Recoupment as a one-time request for the overpayment identified in the demand letter you received. This would encompass the amount addressed in the demand letter.

What if I agree with the decision, but I can’t afford the recoupment or I need more time to pay? What are my options?

If payment poses a substantial hardship, you may consider submitting a rebuttal. If you choose to submit a rebuttal, be aware that this is subject to evaluation by the Medicare Administrative Contractor (MAC) and this must be submitted within 15 calendar days from the date on the demand letter.

If you can make the repayment but need more than 30 days to do so, you may request an Extended Repayment Schedule (ERS). Follow the instructions in the overpayment demand letter to request an ERS.