Medicare Claims Advisory: Interest Rate Increases for Overpayments, Underpayments

The rate of interest that Medicare will pay you for claims that were underpaid, or collect from you for claims that were overpaid, has risen to 10.625 percent, effective Jan. 17, 2013, up from the 10.375 in effect since Oct. 18, 2012, but down from rates in place for most of last year (11 percent as of July 18 and 10.875 percent as of April 18). The Centers for Medicare and Medicaid Services (CMS) announced the latest update in Transmittal 217, Change Request 8201. Medicare Regulation 42 CFR §405.378 provides for the assessment of interest at the higher of the current value of funds rate (1 percent for calendar year 2013) or the private consumer rate as fixed by the Department of the Treasury. The Treasury has notified the U.S. Department of Health and Human Services that the private consumer rate has been changed to 10.625 percent. The highest interest rate in the past decade was in early 2001, 14.125 percent, but for most of the years since, the rate has hovered between 10.50 percent and 12 percent. The interest rate fluctuations have taken on even greater importance to clinical laboratories, pathology practices, and other Medicare providers because their period of exposure to attempts by CMS to recover any overpayments plus interest has been extended from three years to five years, effective Jan. 2, 2013, under the “fiscal cliff” tax law (NIR 13, 1/Jan. 9, p. 8).