As several of our providers have established extended repayment plans due to SSI adjustments or outlier reconcilliations, we feel it necessary to remind providers how the interest related to the overpayments needs to be treated in the general ledger so that the Medicare Cost Report can be properly prepared.
In accordance with PRM I Section 202.1, interest related to Medicare Overpayments is not allowable. Hence, if you have incurred such interest it needs to be recorded in a seperate general ledger account so that the amount can be identified during Mediare cost report preparation and maintain an adequate audit trail from the cost report to the trial balance.
Disallowing interest on Medicare Overpayments is required for all types of providers regardless of payment system! Please take a few moments and make sure that any interest expense related to overpayments or extended repayment plans is segregated from allowable interest in the general ledger. Suggested account descriptions include:
Interest – Non Allowable
Interest – Related to Medicare Overpayments
If you are incurring allowable interest expense related to other debt during the period that you have any outstounding repayment plans, the intermediary could also use PRM I Section 202.1 to try to disallow all interest unless you can clearly demonstrate that the allowable interest expense would have been necessary even if the overpayment had not occurred.