The law allows States and local governments to enter into an agreement with the Secretary of Health and Human Services (the Secretary) in order to receive a single bill and pay a lump sum for the total amount of the Supplementary Medical Insurance (Medicare part B) late enrollment premium surcharges (penalties) due from a group of eligible individuals.

The State or local government should contact the CMS Regional Office within its geographic area to request information on how to enter into a premium surcharge billing arrangement. The CMS Regional Office will provide the potential participant with general information, and can provide an informational packet that contains the premium surcharge payment handbook, formal agreement and third party agency information form.

In order to participate in a premium surcharge billing arrangement, States or local governments must provide the CMS Regional Office with a written request that identifies the class of individuals that will be covered under the surcharge billing arrangement. The written request should be accompanied by a signed premium surcharge agreement and completed agency information form. Following the receipt of these documents, CMS will determine whether the arrangement is appropriate and, if so, signs the agreement and returns a copy to the State or local government (surcharge agency).

After a State or local government has entered into a premium surcharge agreement with CMS it will be assigned a 3 character code that will be used for identification and billing purposes. The premium surcharge agency code begins with the letter “P” and is followed by 2 alpha-numeric characters. Whenever a surcharge payer adds a beneficiary to its billing account, this code will appear as a third party buy-in indicator on the beneficiary’s record. The part B premium due will only reflect the basic premium amount. See SM 10802.125 for the entire list of States and local governments that have negotiated premium surcharge agreements.