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Medicare's Currently Not Collectible Overpayments


CMS identifies billions of dollars in Medicare overpayments to health care providers each year. In fiscal year (FY) 2010, overpayments totaled $9.6 billion. However, not all overpayments are recovered. Overpayments for which the provider has not made a repayment for at least 6 months after the due date on the Medicare demand letter are classified as "currently not collectible" (CNC) and are not reported on CMS's annual financial statements. These overpayments are not reported on the financial statements because they are likely not to be recovered. This report provides information about CNC overpayments.


We requested details from CMS about CNC overpayments in FY 2010 and summary financial data for FYs 2007 to 2010. CMS provided most of the data from its Healthcare Integrated General Ledger Accounting System (HIGLAS). We also surveyed CMS and all its claims processing contractors to identify (1) hindrances to debt collection and (2) strategies to reduce the number and dollar amount of overpayments that become CNC.


CMS reported $543 million in new CNC overpayments across all contractors in FY 2010. However, CMS provided detailed information on $69 million in CNC overpayments for only seven contractors. Citing contractor transitions, CMS did not provide detailed data for the remaining 32 contractors. For 54 percent of CNC overpayments associated with the seven contractors, the provider type was missing in HIGLAS. For the seven contractors, 97 percent of FY 2010 CNC overpayments were not recovered. According to contractors, inaccurate provider contact information delays or prevents some overpayment demand letters from reaching providers. In addition, CMS and contractors reported that expanding the types of provider identifiers used to recover payments could improve debt collection efforts.


CMS should: (1) ensure that the HIGLAS variable for provider type is populated for all overpayments, (2) ensure that demand letters are mailed to the contacts and addresses identified by the provider, and (3) use tax identification numbers and provider transaction access numbers in addition to national provider numbers for the collection of overpayments. CMS partially concurred with our first recommendation, did not concur with our second recommendation, and concurred with our third recommendation.