CMS-379 Supporting Statement (2007)

Supporting Statement

Financial Statement of Debtor

CMS-379

A. BACKGROUND

Normally, when a Medicare carrier overpays a physician or supplier, the overpayment is associated with a single claim, and the amount of the overpayment is moderate. In these cases, the physician/supplier usually refunds the overpaid amount in a lump sum.

Alternatively, the carrier may recoup the overpaid amount against future payments.

A recoupment is the recovery by Medicare of any outstanding Medicare debt by reducing present or future Medicare payments and applying the amount withheld to the indebtedness. The recoupment can be made only if the physician/supplier accepts assignment since the carrier makes payment to the physician/supplier only on assigned claims.

Sometimes, however, an overpayment to a physician/supplier is exceptionally large, and it cannot be recovered in the normal fashion. The large overpayment usually results from aberrant billing practices, such as billing for more expensive services than were rendered. This is discovered during routine carrier review of a statistically valid sample of claims.

The physician/supplier may be unable to refund a large overpaid amount in a single payment. The carrier cannot recover the overpayment by recoupment if the physician/supplier does not accept assignment of future claims, or is not expected to file future claims because of going out of business, illness or death. In these unusual circumstances, the carrier has authority to approve or deny extended repayment schedules up to 12 months, or may recommend to the Centers for Medicare and Medicaid Services (CMS) acceptance of a compromise settlement proposed by a physician/supplier for repayment of less than the full amount due. Before the carrier takes these actions, the carrier will require full documentation of the physician's/supplier's financial situation. Thus, the physician/supplier must complete the CMS-379, Financial Statement of Debtor.

The CMS-379 was first disseminated to CMS Regional Offices (RO) in April 1983. Prior to that, the carriers used their own locally developed forms to assess the physician's/supplier's financial position.

We are requesting a 3-year extension of Office Management and Budget (OMB) approval of the CMS-379 with no change in substance or burden hours. This form was approved through September 30, 2007 under control number 0938-0270.

B. JUSTIFICATION

1. Need and Legal Basis

Sections 1842(a)(1)(B) and (C) of the Social Security Act and 42 CFR 405.376(g), Attachment 1, provide the authority for collection of this information. Section 42 CFR 405.376(g) requires that, “… In determining whether a claim will be compromised, or collection action terminated, CMS will consider the following factors: …age and health of the debtor, present and potential income, inheritance prospects, possible concealment or fraudulent transfer of assets...”

We include also as Attachment 2 the DOJ Final Rule, the Federal Claims Collection Standards, which was published as 32 CFR Parts 900-904, on November 22, 2000, in the Federal Register, Section 32 CFR 900.1 stipulates that, “… standards for Federal agency use in the administrative collection, offset, compromise, and the suspension or termination of collection activity…” Section 32 CFR 901.8(a) states that, “Agencies should obtain financial statements from debtors who represent that they are unable to pay the debt in one lump sum…” Section 32 CFR 902.2(g) requires that, “To assess the merits of a compromise offer based in whole or in part on the debtor’s inability to pay the full amount of a debt within a reasonable time, agencies should obtain a current financial statement from the debtor, executed under penalty of perjury, showing the debtor’s assets, liabilities, income and expenses.”

2. Information User

In some instances a physician/supplier who is notified of a debt may allege inability to immediately repay the debt in full and may request an extended repayment schedule. Alternatively, the debtor may request a compromise settlement for less than the full amount due. Before establishing an extended repayment schedule or compromise settlement, the CMS’s RO and the carrier must evaluate the provider’s capacity to pay the debt. Accordingly, the provider is requested to complete a “Financial Statement of Debtor” form, CMS-379. A copy of the form is included in Attachment 3.

Whenever a physician/supplier wants an installment agreement of more than 12 months, the carrier must send the entire package including the documentation prepared by the carrier to the servicing RO for approval. Before an offer to refund an overpayment by installment over a period of more than 12 months may be accepted by the RO, the physician/supplier must sign an agreement providing for regular installment payments. The agreement must specify that all installment payments will be sent directly to the carrier. The RO has authority to approve installments for a period of up to 3 years. The RO will advise the carrier to establish adequate controls to assure that all payments are made regularly. If the provider defaults on a payment, the carrier has the immediate right (but not obligation) to accelerate and recoup the outstanding balance. A compromise offer is a request by a debtor to pay less than the full amount determined by the carrier to be the amount of the overpayment. The carrier must forward all compromise requests to the RO with a recommendation by the carrier. The RO has authority to approve compromise request less than $100,000. The Deputy Chief Financial Officer in CMS’s Accounting Management Group reviews compromise offers for overpayments in excess of $99,999. The Deputy Chief Financial Officer’s recommendation is forwarded to the DOJ, which makes the final decision.

Attachment 4 contains CMS’s Medicare Financial Management Manual instructions on the carrier’s use of form CMS-379.

Listed below is an item-by-item justification for the question asked on the form.

Questions 1 through 6 ask for basic identification, such as name, address, date of birth, and phone number of debtor. The spouse's name and date of birth are also requested. In determining whether a claim will be compromised or repaid over a period of more than 12 months, consideration must be given to the age and health of the debtor and spouse.

Questions 7 through 16 ask about the debtor's and spouse's employment background and income. This information is necessary for the carrier to determine if the physician/supplier will be able to make installment payments on a claim or to fulfill an acceptable compromise. The carrier also must consider if the amount accepted in compromise would be reasonable in relation to the amount earned.

Questions 17 and 18 - Dependents and total income of dependents. Consideration is given to the number of dependents and their income when determining the amount that can be recovered.

Questions 19 through 34 ask the debtor to list all assets, liabilities and foreseeable income. This information is needed to determine if the debtor will be able to satisfy the installment payments or compromise offer, but is unable to repay the debt in less than 12 months or in an amount in excess of the compromise offer. The signature of the debtor and the date signed are required to certify that the information provided is true that the debtor is aware of the penalties for false statements. This is important if the case goes to litigation

3. Improved Information Technology

This is detailed information collected from an individual on an ad hoc basis. Consequently, it does not lend itself to automation.

4. Duplication/Similar Information

This form serves as the only source for collection of this information.

5. Small Business

This form is appropriate for use by small businesses and shouldn’t have a significant economic impact on them.

6. Less Frequent Collection

The CMS-379 is completed whenever a physician/supplier is requesting an extended installment payment or a compromise settlement. The principal purpose for gathering this information is to evaluate the debtor's inability to repay the full overpayment immediately. If the requested information is not furnished, the Government will pursue immediate and full payment of its claim against the debtor.

7. Special Circumstances

There are no special circumstances.

8. Federal Register Notice/Outside Consultation

The 60-day Federal Register notice was published on July 13, 2007, attached. This collection has been used since April 1983. We did not seek outside consultation at this time.

9. Payments/Gifts To Respondents

There were no payments/gifts to respondents.

10. Confidentiality

This form contains no questions of a sensitive nature.

11. Sensitive Questions

This form contains no questions of a sensitive nature.

12. Burden Estimate (Total Hours & Wages)

The CMS-379 is completed by approximately 500 respondents annually. We estimate that the average completion time is 2 hours.

500 Estimated numbers of respondents

x 1 Number of reports filed per respondents

500 Number of reports filed annually

2 Average number of hours per response

1,000 Total burden hours

13. Capital Costs

There are no capital costs.

14. Cost to Federal Government

This form is mailed out by the carrier. The number of request (forms) mailed

annually is approximately 500. Since postage costs $.42 per mailing, the postage cost is $210 (500 forms times $ .42)

The RO or carrier reviewer spends about 1 hour analyzing the CMS-379. The reviewer is equivalent to a GS-13/Step 4 who earns $85,086 per year (Washington-Baltimore Area) or $40.77 per hour ($85,086 divided by 2,087 hours per year).

RO and carrier review and analysis cost is computed as follows:

$40.77 an hour X 500 hours = $20,385.

15. Program Changes

There was no new legislation passed that added new conditions of participation.

16. Publication and Tabulation Dates

These data are not published or tabulated.

17. Expiration Date

CMS would like to display the expiration date.

18. Certification Statement

There are no exceptions to the certification statement.

3. COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS

This collection of information does not employ statistical methods.

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