Medicare Claims Advisory: Interest Rate Declines for Overpayment, Underpayment

The rate of interest that Medicare will pay you for claims that were underpaid, or collect from you from claims that were overpaid, has dropped to 10.125 percent, effective Oct. 18, 2013, down from the 10.375 percent that has been in effect since July 17, 2013. The Centers for Medicare and Medicaid Services (CMS) announces the latest update in Transmittal 229, Change Request 8516. 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 highest interest rate in the past decade was in early 2001, when it was 14.125 percent, but for most of the years since, the rate has hovered between 10.5 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.