Reason for Compromise (What is this?)

CMS is given authority to reduce a Medicare debt, under the Federal Claims Collection Act (FCCA), in some cases where a beneficiary (or beneficiary's estate) is the debtor. Unlike appeals and waivers, compromise is not a right given to the debtor, but is considered at the will of the government.

CMS may consider a compromise of its demand amount in certain situations. These include:

• The beneficiary (or estate) does not have, and probably will not have, the ability to pay the full amount of the claim within a reasonable period of time;
• If there is a likelihood that the beneficiary (or estate) will challenge Medicare's demand in court, and CMS believes that it would be difficult for Medicare to prevail in this case before a court of law; or
• It will cost Medicare more to collect the claim than the amount of its demand.

There are some situations where a compromise is not appropriate. These include:

• If there is a request for Medicare to reduce its demand amount by its share of the attorney's fees and procurement costs. This is done by the BCRC in accordance with 42 CFR §411.37; or
• The issue may be resolved by a timely appeal.

Note: Because a compromise decision is made solely at the absolute discretion of the government, the beneficiary (or estate) does not have any rights to appeal a compromise decision. See 42 CFR §405.926.

January 2023