The Centers for Medicare & Medicaid Services (CMS) has updated the interest rates for Medicare overpayments and underpayments. The authority to charge and pay interest on overpayments and underpayments to Medicare providers, suppliers, health maintenance organizations, competitive medical plans, and healthcare prepayment plans is granted under the Federal Claims Collection Act, 42 CFR 405.378. The most recent updates follow.
- The interest rate from October 18, 2012-January 16, 2013, will be 10.375 percent.
- The interest rate for January 17, 2013-October 17, 2013, will be 10.625 percent.
- The interest rate from October 18, 2013, will be 10.125 percent.
According to CMS, interest accrues from the date of the initial refund request and is assessed for each 30-day period, or portion thereof, that payment is delayed after the initial refund request. Interest assessed for both late payments and installment payments is computed as simple interest using a 360-day year. (Simple interest is interest that is paid on the original principal balance, and after each payment interest accrues on the remaining unpaid principal balance.) Interest is assessed for the full 30-day period, with no proration for payments received during the month.
The interest rate on each of the final determinations will be the rate in effect on the date the determination is made. If periodic but unscheduled payments or credits are made in different calendar quarters, the quarterly rate prevailing at the time of the final determination is charged and remains the same until the debt is liquidated. Interest must be recalculated based on the outstanding balance at 30-day intervals from the date of final determination.
The interest rate charged on overpayments repaid through an approved extended repayment schedule is the rate that is in effect for the quarter in which the determination was made. The rate remains constant unless the provider defaults (misses two consecutive installment payments) on an extended repayment agreement. If the provider defaults on such an agreement, interest on the balance of the debt may be changed to the prevailing rate in effect on the date of the default if that rate is higher than the rate specified in the agreement.