42 U.S.C. § 1396m — Withholding of Federal share of payments for certain medicare providers

(a) Adjusting Federal matching payments. Under this section, the Secretary may adjust the Federal matching payment to a State for medical-assistance expenditures for care or services furnished during a quarter by either of these: (1) An institution that: (A) has or previously had an agreement with the Secretary under section 1395cc of this title; and (B) is an institution from which the Secretary has been unable to recover Medicare overpayments, or from which the Secretary has been unable to obtain the information needed to determine whether, and how much, Medicare overpayment it received; or (2) A person who: (A) previously accepted payment based on an assignment under section 1395u(b)(3)(B)(ii) of this title and, during the year immediately before the quarter, either filed no Medicare payment claims or filed claims totaling less than the Medicare overpayments made to that person; and (B) is a person from whom the Secretary has been unable to recover overpayments received in violation of the assignment’s terms, or from whom the Secretary has been unable to obtain the information needed to determine whether, and how much, Medicare overpayment that person received. (b) Reductions in payments to and by States. Subject to the rest of this section, the Secretary may reduce the payment to a State under this subchapter for a quarter by the smaller of these two amounts: the Federal matching share of payments to the institution or person described in subsection (a), or the total Medicare overpayments to that institution or person. The Secretary may require the State to reduce its payment to that institution or person by the same amount. (c) Notice. Before making an adjustment to the State’s payment or requiring an adjustment to the institution’s or person’s payment under subsection (b), the Secretary must give adequate notice of at least 60 days to the State agency and the institution or person. (d) Regulations. The Secretary must issue regulations establishing procedures to carry out this section. The procedures must: (1) determine the amount of the payment that the institution or person would otherwise receive under this section and treat that amount as a setoff against Medicare overpayments; and (2) ensure that the institution or person receives back amounts withheld under this section that are ultimately found to exceed the Medicare overpayments and that otherwise would have been payable under this subchapter. (e) Restoring recovered amounts to trust funds. The Secretary must restore to the trust funds established under sections 1395i and 1395t of this title, as appropriate, amounts recovered under this section as setoffs against Medicare overpayments. (f) States not liable for withheld payments. Despite any other provision of this subchapter, an institution or person may not recover from a State any amount for medical care or services under this subchapter that the State agency withheld because of the Secretary’s order under subsection (b). This section does not define “overpayment,” “assignment,” or “Federal matching share.”