Final

Issued by: Centers for Medicare & Medicaid Services (CMS)

Issue Date: February 18, 2016

Program Area: Vendor Management, Payments, and Collections (VMPC)

Question: As an Issuer, we received an Initial Invoice Letter (i.e., an invoice) dated March 15, 2016 for the March payment cycle. However, we have since submitted data for the April payment cycle and we believe that our payment in April will exceed the amount of our March Initial Invoice Dunning Letter. Instead of paying the amount in the Initial Invoice Letter, can we wait for this amount to be netted from the April payment without incurring interest or administrative fees?

Answer: The CMS netting process established pursuant to 45 CFR 156.1215 only occurs once every 30 calendar days at the time the monthly payment amount is finalized for each Issuer and their affiliates under the same taxpayer identification number. Additionally, the timing of netting varies based on the program type - Advance Payments of the Premium Tax Credit (APTC), Cost-sharing Reductions (CSR), Federally-facilitated Marketplace (FFM) User Fees, Risk Adjustment (RA) User Fees, RA, Reinsurance (RI), and Risk Corridors (RC). APTC, CSR, FFM user fee and RA User Fee charges are netted from payments 15 calendar days after the date of the Initial Invoice Letter. RA and RC charges, as well as RI contribution amounts owed, are netted from payments 30 calendar days after the date of the Initial Invoice Letter. For example, an APTC, CSR, FFM User Fee or RA User Fee amount included in an Initial Invoice Letter dated March 15, 2016 that has not been paid by March 30, 2016 will be netted against any payments owed to the Issuer during the April payment cycle on April 15, 2016. An RA, RI or RC amount included on an Initial Invoice Letter dated March 15, 2016 that has not been paid by April 15, 2016 will not be netted during the April payment cycle. Rather, because CMS permits Issuers 30 calendar days to pay the RA, RI and RC amounts reflected in the Initial Invoice Letters, the netting of these amounts would not occur until the May payment cycle. CMS encourages Issuers to pay the amounts due as reflected in the Initial Invoice Letter, rather than waiting for the next month's netting process. If the full amount is not paid within 30 calendar days from the date of the Initial Invoice Letter, the amount owed will be considered a debt, per 45 CFR 156.1215(c). At that point, pursuant to 45 CFR 30.18, CMS can assess interest, administrative costs and late payment penalties. To avoid these penalties, Issuers are encouraged to make timely payments of all Initial Invoice Letters rather than waiting for amounts due to be netted from the following month's payment. In cases where Initial Invoice Letter payments and CMS netting overlap, CMS will refund excess receipts as part of the following month's netting process.

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