Medicare Claims Advisory: Interest Rate Declines for Overpayment, 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 10.375 percent, effective July 17, 2013, up from the 10.125 percent that has been in effect since April 17, 2013. The Centers for Medicare and Medicaid Services (CMS) announced the latest update in Transmittal 223, Change Request 8415. 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 Department of Health and Human Services that the private consumer rate has been changed to 10.375 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 10.5 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 (NIR 13, 1/Jan. 9, p. 8).