(4 CFR Parts 101-105) issued jointly by the General Accounting Office and the Department of Justice that generally prescribe claims collection standards and procedures under the FCCA for the Federal government.

(b) Scope. Except as provided in paragraphs (c) through (f) of this section, the regulations in this subpart describe HCFA's procedures and standards for the collection of claims in any amount, and the compromise of, or the suspension or termination of collection action on, all claims for money or property that do not exceed $20,000 exclusive of interest, arising under any functions delegated to HCFA by the Secretary.

(c) Amount of claim. HCFA refers all claims that exceed $20,000, exclusive of interest, to the Department of Justice or the General Accounting Office for the compromise of claims, or the suspension or termination of collection action.

(d) Related regulations—(1) Department regulations. DHHS regulations applicable to HCFA that generally implement the FCCA for the Department are located at 45 CFR Part 30.

(2) HCFA regulations. The following regulations govern specific debt management situations encountered by HCFA and supplement this subpart:

(i) Claims against Medicare beneficiaries for the recovery of overpayments are covered in 20 CFR 404.515.

(ii) Adjustments in Railroad Retirement or Social Security benefits to recover Medicare overpayments to individuals are covered in §§ 405.350405.356 of this chapter.

(iii) Claims against providers, physicians, or other suppliers of services for overpayments under Medicare and for assessment of interest are covered in §§ 405.374 and 405.376 of this chapter, respectively.

(iv) Claims against beneficiaries for unpaid hospital insurance or supplementary medical insurance premiums under Medicare are covered in § 408.110 of this chapter.

(v) State repayment of Medicaid funds by installments is covered in § 430.48 of this chapter.

(e) Collection and compromise under other statutes and at common law.

(2) Affect any rights that HCFA may have under common law as a creditor.

(f) Fraud. The regulations in this subpart do not apply to claims in which there is an indication of fraud, the presentation of a false claim, or misrepresentation on the part of a debtor or any other party having an interest in the claim. HCFA forwards these claims to the Department of Justice for disposition under 4 CFR 105.1.

(g) Enforced collection. HCFA refers claims to the Department of Justice for enforced collection through litigation in those cases which cannot be compromised or on which collection action cannot be suspended or terminated in accordance with this subpart or the regulations issued jointly by the Attorney General and the Comptroller General.

[48 FR 39064, Aug. 29, 1983, as amended at 52 FR 48123, Dec. 18, 1987]

(2) Offsets against monies owed to the debtor by the Federal government where possible.

(b) Collection in lump sums. Whenever possible, HCFA attempts to collect claims in full in one lump sum. However, if HCFA determines that a debtor is unable to pay the claim in one lump sum, HCFA may instead enter into an agreement to accept regular installment payments.

(c) Collection in installments. Generally, HCFA requires that all claims to be satisfied by installment payments must be liquidated in three years or less. If unusual circumstances exist, such as the possibility of debtor insolvency, an installment agreement that extends beyond three years may be approved.

(1) Debtor request. If a debtor desires to repay a claim in installments, the debtor must submit

(1) A request to HCFA; and

(ii) Any information required by HCFA to make a decision regarding the request.

(2) HCFA decision. HCFA will determine the number, amount and frequency of installment payments based on the information submitted by the debtor and on other factors such as(1) Total amount of the claim; (ii) Debtor's ability to pay; and (iii) Cost to HCFA of administering an installment agreement.

(d) Collection by offset. (1) In conformity with 4 CFR 102.3, HCFA may offset, where possible, the amount of a claim against the amount of pay, compensation, benefits or other monies that a debtor is receiving or is due from the Federal government.

(2) Under regulations at §§ 405.350405.356 of this chapter, HCFA may initiate adjustments in program payments to which an individual is entitled under title II of the Act (Federal Old Age, Survivors, and Disability Insurance Benefits) or under the Railroad Retirement Act of 1974 (45 U.S.C. 231) to recover Medicare overpayments.

§ 401.613 Compromise of claims.

(a) Amount of compromise. HFCA requires that the amount to be recovered through a compromise of a claim must

(1) Bear a reasonable relation to the amount of the claim; and

(2) Be recoverable through enforced collection procedures.

(b) General factors. After considering the bases for a decision to compromise a claim under paragraph (c) of this section, HCFA may further consider factors such as

(1) The age and health of the debtor if the debtor is an individual;

(2) Present and potential income of the debtor; and

(3) Whether assets have been concealed or improperly transferred by the debtor.

(c) Basis for compromise. Bases on which HCFA may compromise a claim include the following

(1) Inability to pay. HCFA may compromise a claim if it determines that the debtor, or the estate of a deceased debtor, does not have the present or prospective ability to pay the full amount of the claim within a reasonable time.

(2) Litigative probabilities. HCFA may compromise a claim if it determines that it would be difficult to prevail in a case before a court of law as a result of the legal issues involved or inability of the parties to agree to the facts of the case. The amount that HCFA accepts in compromise under this provision will reflect

(1) The likelihood that HCFA would have prevailed on the legal question(s) involved;

(ii) Whether and to what extent HCFA would have obtained a full or partial recovery of a judgment, depending on the availability of witnesses, or other evidentiary support for HCFA's claim; and

(iii) The amount of court costs that would be assessed to HCFA.

(3) Cost of collecting the claim. HCFA may compromise a claim if it determines that the cost of collecting the claim does not justify the enforced collection of the full amount. In this case, HCFA may adjust the amount it accepts as a compromise to allow an appropriate discount for the costs of collection it would have incurred but for the compromise.

(d) Enforcement policy. HCFA may compromise statutory penalties, forfeitures, or debts established as an aid

(a) Time and manner of compromise. Payment by the debtor of the amount that HCFA has agreed to accept as a compromise in full settlement of a claim must be made within the time and in the manner prescribed Dy HCFA. Accordingly, HCFA will not settle a claim until the full payment of the compromise amount has been made.

(b) Effect of failure to pay compromise amount. Failure of the debtor to make payment, as provided by the compromise agreement, reinstates the full amount of the claim, less any amounts paid prior to the default.

(c) Prohibition against grace periods. HCFA will not agree to inclusion of a provision in an installment agreement that would permit grace periods for payments that are late under the terms of the agreement.

§ 401.617 Suspension of collection action.

(a) General conditions. HCFA may temporarily suspend collection action on a claim if the following general conditions are met

(1) Amount of future recovery. HCFA determines that future collection action may result in a recovery of an amount sufficient to justify periodic review and action on the claim by HCFA during the period of suspension.

(2) Statute of limitations. HCFA determines that

(i) The applicable statute of limitations has been tolled, waived or has started running anew; or

(ii) Future collections may be made by HCFA through offset despite an applicable statute of limitations.

(b) Basis for suspension. Bases on which HCFA may suspend collection action on a particular claim include the following—

(1) A debtor cannot be located; or
(2) A debtor-

(i) Owns no substantial equity in property;

(ii) Is unable to make payment on HCFA's claim or is unable to effect a compromise; and

(iii) Has future prospects that justify retention of the claim.

(c) Locating debtors. HCFA will make every reasonable effort to locate missing debtors sufficiently in advance of the bar of an applicable statute of limitations to permit timely filing of a lawsuit to recover the amount of the claim.

(d) Effect of suspension on liquidation of security. HCFA will liquidate security, obtained in partial recovery of a claim, despite a decision under this section to suspend collection action against the debtor for the remainder of the claim.

8 401.621 Termination of collection action.

(a) General factors. After considering the bases for a decision to terminate collection action under paragraph (b) of this section, HCFA may further consider factors such as—

(1) The age and health of the debtor if the debtor is an individual;

(2) Present and potential income of the debtor; and

(3) Whether assets have been concealed or improperly transferred by the debtor.

(b) Basis for termination of collection action. Bases on which HCFA may terminate collection action on a claim include the following

(1) Inability to collect a substantial amount of the claim. HCFA may terminate collection action if it determines that it is unable to collect, or to enforce collection, of a significant amount of the claim. In making this determination, HCFA will consider factors such as

(i) Judicial remedies available;

(ii) The debtor's future financial prospects; and

(iii) Exemptions available to the debtor under State or Federal law.

(2) Inability to locate debtor. In cases involving missing debtors, HCFA may terminate collection action if

(i) There is no security remaining to be liquidated;

(ii) The applicable statute of limitations has run; or

(iii) The prospects of collecting by offset, whether or not an applicable statute of limitations has run, are considered by HCFA to be too remote to justify retention of the claim.

(3) Cost of collection exceeds recovery. HCFA may terminate collection action if it determines that the cost of further collection action will exceed the amount recoverable.

(4) Legal insufficiency. HCFA may terminate collection action if it determines that the claim is legally without merit. (5) Evidence unavailable. HCFA may terminate collection action if(1) Efforts to obtain voluntary payment are unsuccessful; and

(ii) Evidence or witnesses necesary to prove the claim are unavailable.

§ 401.623 Joint and several liability.

(a) Collection action. HCFA will liquidate claims as quickly as possible. In cases of joint and several liability among two or more debtors, HCFA will not allocate the burden of claims payment among the debtors. HCFA will proceed with collection action against one debtor even if other liable debtors have not paid their proportionate shares.

(b) Compromise. Compromise with one debtor does not release a claim against remaining debtors. Furthermore, HCFA will not consider the amount of a compromise with one debtor to be a binding precedent concerning the amounts due from other debtors who are jointly and severally liable on the claim.

8 401.625 Effect of HCFA claims collection decisions on appeals.

Any action taken under this subpart regarding the compromise of a claim, or suspension or termination of collection action on a claim, is not an initial determination for purposes of HCFA appeal procedures.

§ 403.200 Basis and scope.

(a) Provisions of the legislation. This subpart implements, in part, section 1882 of the Social Security Act. The intent of that section is to enable Medicare beneficiaries to identify Medicare supplemental policies that do not duplicate Medicare, and that provide adequate, fairly priced protection against expenses not covered by Medicare. The legislation establishes certain standards for Medicare supplemental policies and provides two methods for informing Medicare beneficiaries which policies meet those standards:

(1) Through a State approved program, that is, a program that a Supplemental Health Insurance Panel determines to meet certain minimum requirements for the regulation of Medicare supplemental policies; and

(2) In a State without an approved program, through certification by the Secretary of policies voluntarily sub

mitted by insuring organizations for review against the standards.

(b) Scope of subpart. This subpart sets forth the standards and procedures HCFA will use to implement the voluntary certification program.

GENERAL PROVISIONS

§ 403.201 State regulation of insurance policies.

(a) The provisions of this subpart do not affect the right of a State to regulate policies marketed in that State.

(b) Approval of a policy under the voluntary certification program, as provided for in § 403.235(b), does not authorize the insuring organization to market a policy that does not conform to applicable State laws and regulations.

§ 403.205 Medicare supplemental policy.

(a) Except as specified in paragraph (d) of this section, "Medicare supplemental policy” (policy) means a health insurance policy or other health benefit plan

(1) That a private entity offers to a Medicare beneficiary; and

(2) That is primarily designed, or is advertised, marketed, or otherwise purported to provide payment for expenses incurred for services and items that are not reimbursed under the Medicare program because of deductibles, coinsurance, or other limitations under Medicare.

(b) Unless otherwise specified in this subpart, the term "policy" includes both policy form and policy.

(1) "Policy form" means the form of health insurance contract that is approved by and on file with the State agency for the regulation of insurance. (2) "Policy" means the contract— (i) Issued under the policy form; and (ii) Held by the policyholder. (c) Medicare supplemental policy includes the following

(1) An individual policy. (2) A group policy.

(d) Medicare supplemental policy does not include any of the following health insurance policies or health benefit plans

(1) A policy or plan of one or more employers for employees, former employees, or any combination thereof.