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Avoid an Overpayment at Reconciliation

User Roles:





Program Components:

Interim Payment


An overpayment occurs when the sum of all interim payments received for an application exceeds the sum of the Reconciliation payment request. During the Interim Payment process, Cost Reporters submit interim costs to CMS' RDS Center by either manual Data Entry on the RDS Secure Website or by Connect:Direct to RDS Center Connect:Direct through CMS Extranet. Cost Reporters prepare and report aggregated costs by Benefit Option by month. Refer to Prepare Cost Data in the RDS User Guide for guidelines and step-by-step instructions for preparing cost.

Submitted interim cost reports are eligible to be included in an interim payment request. It is critical for costs to be reported accurately for Qualifying Covered Retirees (QCRs) throughout the plan year to avoid an overpayment at Reconciliation. Refer to Submit Interim Costs in the RDS User Guide for guidelines and step-by-step instructions for submitting interim costs.

There are many scenarios that can lead to an overpayment. The following information explores the most common reasons for an overpayment and explains how to avoid being in an overpayment situation at Reconciliation. CMS' RDS Center understands that not all overpayments can be avoided. However, looking closely at data can dramatically reduce the unnecessary ones.

CMS' RDS Center has identified the following reasons as the most common circumstances causing a Plan Sponsor to be in an overpayment situation at the completion of Reconciliation:

  • Doubling costs occurs when a Plan Sponsor is reporting for the same months after the first payment request has been completed.

  • The most common reason for the overstating Gross Retiree Costs error is including costs that are not covered by Medicare Part D, therefore making them ineligible for RDS subsidy during interim payments.

  • The reduction in retirees error results from a Plan Sponsor failing to process and send in retiree updates during the plan year.

  • Underestimating Cost Adjustments during interim payments occurs when a Plan Sponsor does not make changes to their Cost Adjustment methodology from one plan year to the next when the Cost Adjustment percentage has increased.

  • Underreporting Threshold Reduction and Limit Reduction occurs for a couple of reasons: 1) Plan Sponsors do not understand the definition of Threshold Reduction, and 2) Plan Sponsors are not reporting the correct Threshold Reduction and Limit Reduction during interim payments.

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