Tuesday, September 23, 2008

Payment witholding if providers who bill to Medicare owe the IRS

If you are in the medical billing industry and you receive Medicare EOB's or Remittance Advice reports that reflect a provider level adjustment code as "WU" please read the following message.

As of October 1, 2008 Medicare can withhold 15% of the providers payments and reimburse the IRS for any outstanding Taxes owed by the provider or facility of services. If you begin receiving WU codes in the PLB03-1 data field you can call the IRS toll free at 1-800-829-3903 number. This information will also be found in the PLB03-2 data field located on the Remittance Advice report.

*Note: Billers can not discuss tax issues with the IRS. Only the physician with the outstanding tax balance can speak with the IRS. Do not contact Medicare as they are instructed to collect by the IRS and will only stop doing so if the levy has been paid or other arrangements are made to satisfy the debt.

You maybe wondering why Medicare would take 15% of your payment and send it to the IRS. Well, the Taxpayer Relief Act of 1997, Section 1024, requires the IRS to reduce certain federal payments, including Medicare payments, to allow collection of overdue taxes.

In July 2000, the Treasury Department’s Financial Management Service and the IRS began the Federal Payment Levy Program (FPLP) which is authorized by Internal Revenue Code Section 6331 (h), as prescribed by Section 1024 of the Taxpayer Relief Act of 1997. Through this program, collection of overdue taxes through a continuous levy on certain federal payments is authorized. This includes federal payments made to contractors and vendors, including Medicare providers, doing business with the government.

IRS may reduce federal payments subject to the levy by 15 percent, or receive payment in full if it is less than 15 percent of the complete Medicare Insurance payment.

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