Questionable Payment Arrangements (Rev. 1, 10-01-03)

by  Find-A-Code
July 17th, 2015

A. Developing Questionable Payment Arrangements

Contractors (both FIs and Carriers) should assume that an arrangement in which Medicare payment is being sent or is to be sent to an address other than the physical location of the provider/supplier is consistent with the requirements of §30.2 in the absence of evidence to the contrary. However, develop the facts of any case in which:

• The contractor becomes aware that it is mailing or asked to mail the provider/supplier’s payments to the address of another person or organization; and

• It is likely the other person or organization is not qualified to receive payments under one of the exceptions in §30.2.1 or is a financial institution. (See §30.2.5.)

Contractors must develop the facts of the case, e.g., where it appears that the contractor is mailing or asked to mail the provider provider/supplier’s payments to the address of a company known to be engaging in factoring.

B. How to Develop Questionable Payment Arrangements

Discretion must be used in determining the procedure to follow in developing questionable payment arrangements. Contractors should ascertain the reason for the special address. Once it is determined that payments due the provider/supplier are being made to another party (although in the name of the provider), the contractor must ascertain whether any of the exceptions in §30.2.1 apply. After initial contact with the provider/supplier, the contractor may find the other party to be the best source of information about the arrangement. The contractor should establish the crucial elements of the arrangement by obtaining a copy of the formal agreement, if any, between the parties, copies of pertinent correspondence, and/or signed statements of the parties. The failure of the provider/supplier to cooperate in furnishing the necessary information (or in giving any necessary authorization for others to furnish information) is grounds (see §30.2.15) for terminating the provider/supplier’s participation in the program and revoking its right to receive assigned payment.

C. Change of Address

If the contractor determines that a person or organization is ineligible to receive payments due a provider/supplier, routinely mailing the provider/supplier’s payments to that person or organization’s address should be discontinued. However, such a mailing address is acceptable if:

• The parties to the arrangement have given written assurances that the person or organization to whose address the check is mailed will not convert the check to its own use and control, or if the organization is a financial institution, that the requirements of §30.2.5 are met; and

• The purpose of the arrangement makes the assurances credible.

An acceptable mailing arrangement could exist, e.g., when the provider/supplier wants its checks mailed for bookkeeping purposes to a business agent who is ineligible to receive the payment, and both the agent and the provider state in writing that the agent will forward the checks to the provider’s bank for deposit in a business account from which the provider/supplier is free to withdraw any deposited funds.

D. Reviewing Endorsements on Checks

In any case where the contractor, after developing the facts, continues to mail the provider’s payments to an address which may be that of another person, but still doubts that the arrangement is inconsistent with these instructions, review (after a reasonable interval) endorsements on the returned checks for indications that the checks are being negotiated under a power of attorney. When someone negotiates a provider/supplier’s checks under a power of attorney, the provider/supplier’s name is typically printed on the back of the check with the endorsee’s signature below, followed by “p.p.” or “p.p.a.” or “p.o.a” (for per procuration, per power of attorney, or power of attorney).

Pub 100-04 Medicare Claims Processing Manual

References:

Questionable Payment Arrangements (Rev. 1, 10-01-03). (2015, July 17). Find-A-Code Articles. Retrieved from https://www.findacode.com/articles/questionable-payment-arrangements-rev-1-10-01-03-27274.html

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