Federal Payment Levy Program

Background:

In July 2000, the Internal Revenue Service (IRS), in conjunction with the Department of the Treasury, Financial Management Service (FMS), started the Federal Payment Levy Program (FPLP) which is authorized by Internal Revenue Code Section 6331 (h), as prescribed by the Taxpayer Relief Act of 1997 Section 1024.

Through this program, the IRS can collect overdue taxes through a continuous levy on certain Federal payments. Medicare payments are eligible for levy.

CMS is supporting the FPLP by focusing on implementation through HIGLAS. Contractors on the legacy CMS shared systems will participate in FPLP when transitioned to HIGLAS.

FPLP Legislation:

H.R. 6331 - The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA)

• MIPPA was recently enacted by Congress in July 2008 that requires CMS to take all necessary steps to participate in the FPLP for Non-Tax (Administrative) debt effective the start of FY09.

Key Provisions of the Legislation

• Medicare Fee-For-Service (FFS) payments to providers will be offset by a maximum of 15% to satisfy payment of delinquent Federal Tax Debt and 100% to satisfy payment of Administrative Offsets for Federal Non-Tax Debt.
• All (100%) of Medicare FFS payments will be subject to FPLP by 2012.

CMS Implementation:

CMS is supporting the FPLP through the Non-Treasury Disbursing Office (NTDO) method, which is used by Federal agencies that do not make payments through a Treasury FMS Disbursing Center.

• CMS Medicare Part A and Part B Fee-For-Service (FFS) payments disbursed by contractors are made through private banks.

The NTDO involves establishing interfaces between the disbursing agency and the Treasury FMS to exchange payment, debtor, and collection data. The offset occurs at the disbursing agency and any monies collected are remitted to the Treasury FMS.

FPLP Compliance and Status:

CMS began participating in the FPLP effective October 6, 2008 for Medicare FFS payments made through HIGLAS.

CMS completed FPLP withholding functionality for all the current HIGLAS Medicare contractors on November 7, 2008.

As of April 24, 2009, we have realized a cumulative total of over $23 million in tax levy offsets through HIGLAS, on behalf of FPLP.

Next Steps:

• Additional Medicare contractors will be rolled out in conjunction with future MAC transitions to HIGLAS.
• FPLP functionality will be expanded at a future date for recoupment of Administrative Offsets for Federal Non-Tax Debts as mandated by Section 189 of the MIPPA legislation.