When Medicare makes a payment for medical items, services or expenses that another entity (Primary Plans or Primary Payers) should pay under the Medicare Secondary Payer Act (MSP) , the payments that are made by Medicare are called conditional payments. Under the MSP provisions and its regulations, Medicare is entitled to be reimbursed for its conditional payments. The U.S. Department of Treasury (Treasury) has authority to collect conditional payments after being referred MSP debt cases from the Centers for Medicare & Medicaid Services (CMS), the agency that runs the Medicare program, when Primary Payers/settlement parties fail to timely pay final demands for conditional payments issued by CMS contractors. Treasury collection tools include the Treasury Offset Program, that allows Treasury to divert tax refunds or government benefits that would otherwise flow to Medicare beneficiaries or Primary Plans, as well as Private Collection Agency actions. If conditional payments are not timely paid to Treasury, the U.S. may also file lawsuits directly under the MSP through the Secretary of the U.S. Department of Health and Human Services (Secretary). Appealing the amount of the debt and/or requesting a reduction of the conditional payment demand amount via the compromise process is supposed to stop or at least delay the collections process while the appeal/compromise request is pending.
At the October 2018 educational conference of the National Alliance of Medicare Set-Aside Professionals in Baltimore, during a presentation led by Ted Doyle, V.P. Healthcare Markets for Performant Recovery, Inc., the Commercial Repayment Center (CRC) contractor for CMS, several members of the audience voiced concerns over the CRC prematurely referring conditional payment collections cases to Treasury. The frustration focused on the difficulty of getting prematurely referred debt recalled from Treasury. It seems that even when people take steps to appeal the debt and/or request reductions via the compromise (or waiver) process, collections can sometimes mistakenly proceed. Jacqueline Cipa, the Deputy Director for the CMS Division of MSP Program Operations, recommended diligent follow up by requesting an internal “elevation”/review with the appropriate CMS contractor and suggested that if a Treasury referral error is not corrected, to reach out to her via e-mail at Jacqueline.firstname.lastname@example.org.
The CRC contractor is usually the entity in charge of collecting conditional payment reimbursements from commercial Primary Payers prior to any Treasury involvement. The Benefits Coordination & Recovery Center (BCRC) contractor for CMS, on the other hand, is the only entity to initiate collection attempts for reimbursement of conditional payments from Medicare beneficiaries. Primary Payers such as insurance carriers or Third Party Administrators (TPAs) sometimes use reporting agents for their MSP Section 111 Mandatory Insurance Reporting obligations under the MSP. Those reporting agents are often the ones that are sent conditional payment correspondence, demand letters, intent to refer letters, and potentially, Treasury collection letters. If a reporting agent fails to provide notification to the respective carrier or TPA it reports for, a conditional payment collection could develop and be referred to Treasury before the carrier/TPA knows about it. Under that scenario, a lack of communication between the reporting agent and its client might lead to a referral of conditional payment debt without it technically being premature. However, if a debt is referred to Treasury as a result of an error, the responsible party should take immediate steps to recall the debt. If using a third party for reporting purposes, consider setting up a calendar system to follow up with any reporting agents to help prevent an inadvertent Treasury referral.
Regardless of whether a referral to Treasury has been made or not, it is wise to make a written request for a Redetermination (first level appeal) and to also consider whether a compromise (or even waiver in cases regarding Medicare beneficiaries) might be appropriate. There is a five-level appeal process if a party decides to appeal conditional payment reimbursement debt. The first four levels of appeal are administrative remedies and the fifth is a court based remedy, with a review by a U.S. District (federal) Court. If the matter is timely appealed at any level, collection action through the BCRC, CRC, or Treasury should stop until the respective appeals stage is completed.
A party is timely with its first level of appeal by providing a written request for a Redetermination within 120 days of a final demand. The appeal phase directly after a Redetermination is called a Reconsideration. It must be requested within 180 days of the Redetermination, may include new evidence, and is decided by a Qualified Independent Contractor (QIC). The third level of appeal must be requested within 60 days of the Reconsideration decision, is generally only based on the evidence previously presented during the first two appeal phases (unless good reason is shown why it was left out previously), and is heard before an Administrative Law Judge(ALJ). If the ALJ decision is unfavorable, the fourth appeal level is a request for Council Review within 60 days of the decision and takes place before the Medicare Appeals Council. The final appeal goes before a U.S. District Court and must be filed within 60 days of the Medicare Appeals Council Review. The entire process of exhausting administrative remedies takes a minimum of 420 days and is required before a party is allowed to appear before a federal judge.
Because going to federal court takes so much time and can become quite expensive, especially during the last two stages of appeal, parties have found it beneficial to enter into negotiations with the appropriate CMS contractor/CMS Collection Officer/Regional Office as appropriate for compromises of the conditional reimbursement amounts while the appeals process is taking place. The compromise/negotiation process can be established and run at the same time as the appeals process. Many times, matters can be satisfactorily resolved before having to move to even the second level of appeal. Medivest is available to help parties negotiate conditional payment reimbursement amounts/liens and appeal conditional payment amounts. Please contact us to discuss best practices regarding conditional payment negotiations/appeals.
 Both Group Health Plans and Non Group Health Plans (NGHPs) are Primary Plans under the MSP. Entities in the NGHP category include Liability Insurance (including Self-Insureds), Workers Compensation Plans, and No Fault Insurance.
 42 U.S.C. § 1395y(b)(2) et seq.
 For commercial matters, it is most often the CRC contractor that sends these letters, although for matters prior to October 2015, and more recently during backlogs associated with the changeover to the new CRC contractor, the BCRC has initiated files for some commercial repayment matters. Parties are urged to pay careful attention to which entity sends each letter and to provide development information or other responses and/or requests to the respective entity that sends the letter.
 Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) (P.L. 110-173), found within the MSP at 42 U.S.C. § 1395y(b)(8).