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Tag Archive for: Conditional Payments

Conditional Payment Collections – Make It Stop!
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Conditional Payment Collections – Make It Stop!

When Medicare makes a payment for medical items, services or expenses that another entity (Primary Plans or Primary Payers[1]) should pay under the Medicare Secondary Payer Act (MSP) [2], 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.cipa@cms.gov.

The CRC contractor is usually the entity in charge of collecting conditional payment reimbursements from commercial Primary Payers prior to any Treasury involvement[3].  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[4].  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.


[1] 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.

[2] 42 U.S.C. § 1395y(b)(2) et seq.

[3] 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.

[4] 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).

Medicare Lien Enforcement – Time to Take Notice
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Medicare Lien Enforcement – Time to Take Notice

In addition to Medicare being a secondary payer to workers’ compensation as it has been since Medicare was established in 1965, the Medicare Secondary Payer Act of 1980, found at 42 U.S.C. §1395y(b) et seq. (MSP) made Medicare secondary to auto, liability (including self-insureds), and no-fault insurance. These entities or insurance plans, including workers’ compensation plans, are referred to in the MSP as primary plans (Primary Plans).

The MSP allows the U.S. to pursue a double damages recovery for two times the amount Medicare conditionally paid toward injury-related medicals when a Primary Plan should have made those payments. Medicare lien enforcement lawsuits seeking conditional payment recovery by the U.S. must be brought within three years “. . . after the date of receipt of notice of a settlement, judgment, award, or other payment . . . .” Conditional payment recovery suits have historically been focused on protecting Medicare’s past interests although technically, conditional payments can also occur after a settlement. There have been conflicting results in courts over whether the double damages remedy applies only to a Primary Plan or extends to those receiving money from a Primary Plan, such as Medicare beneficiaries (Beneficiaries) or their attorneys.

Pursuant to 42 C.F.R. § 411.24(h), reimbursement of Medicare must occur within 60 days and if not, interest may accrue at close to ten percent under 45 C.F.R. § 30.13. Due to this high rate of interest and the looming threat of double damages, the standard in the lien resolution industry is to pay the amount demanded and request a partial refund, unless a resolution can be reached before settlement with the Centers for Medicare & Medicaid Services (CMS), the agency that runs Medicare. CMS is allowed to compromise (reduce) and even waive Medicare recoveries based on various factors listed in several federal statutes and regulations. Under 45 C.F.R. § 30.14(a), a debtor may either pay the debt within the 60-day period from the final demand or be liable for interest during a 120-waiver determination period, while on appeal, or while any formal or informal review of the debt is pending.

We have written about conditional payment/Medicare lien recovery actions by the U.S. pursuant to the MSP before. Cases have been brought against Beneficiaries, their attorneys, and/or Primary Plans on behalf of CMS.

Medicare Lien Recovery Cases Against Beneficiaries and/or their Attorneys.

On June 18, 2018, the Department of Justice announced in a press release that an attorney/law firm entered into an agreement to repay the U.S. $28,000 after failing to ensure that the attorney/law firm client reimbursed Medicare for conditional payments made related to the underlying injury. The law firm had already disbursed the net settlement funds to its client. The law firm of Rosenbaum & Associates in Philadelphia entered into a settlement with the DOJ agreeing to pay the government this money after the U.S. alleged attorney Rosenbaum failed to timely repay MSP debt. The firm additionally agreed to designate a person at the firm to be responsible for paying MSP debts, to train the designated employee to ensure that the firm pays these debts on a timely basis; and to review any outstanding debts with the designated employee at least every six months. Attorney Rosenbaum also acknowledged that he may be liable under the False Claims Act (31 U.S.C. § 3729 et seq.) for wrongful retention of government overpayments arising from the failure to timely repay the MSP debt.

Other cases have confirmed the above-referenced recovery rights of the U.S. to timely Medicare lien reimbursement. For example, a U.S. District Court granted summary judgment for $11,367.78 plus interest against an attorney for a Beneficiary, holding the attorney liable when Medicare’s conditional payments were not addressed/timely reimbursed from a third party settlement because the attorney’s contingency fee was paid from the proceeds of Primary Plan’s (liability) payment. See U.S. v. Harris, 2009 WL 891931 (N.D. W.Va. 2009) aff’d 334 Fed. Appx 569 (4th Cir. 2009). See also, U.S. v. Weinberg, 2002 WL 32356399 (E.D. Pa. 2002)(Partial judgment was entered in favor of the U.S. against the Defendant attorney on the issue of liability).

In U.S. v. Sosnowski, 822 F. Supp. 570 (W.D. Wis. 1993), the U.S. was entitled to recover MSP conditional payments from a Beneficiary and his attorney but was denied the award of double damages because the court interpreted the MSP as only allowing double damages to be assessed against Primary Plans and determined that neither the injured Beneficiary nor the Beneficiary’s attorney was a Primary Plan. If CMS gets more efficient at searching for all possible conditional payment reimbursement options, we could begin seeing more recovery actions and lawsuits against plaintiff attorneys and their Beneficiary clients.

Medicare Lien Recovery Cases Against Estates of Beneficiaries.

Cases in which CMS has proceeded against an estate of a Medicare beneficiary have yielded varying results. For example, CMS was successful in Benson v. Sebelius, 771 F. Supp. 2d 68, 75 (D.D.C. 2011) (Because plaintiff claimed his mother’s medical costs in pursuing his wrongful death action, medical expenses of mother were taken into consideration in calculating and negotiating wrongful death settlement award, and release to landlord where slip and fall occurred included any and all claims and rights including associated medical liens, no error was found when Medicare Appeals Board (in a de novo review) allowed CMS to recover its full medical expenses lien minus its procurement costs from the wrongful death settlement) (citing Mathis v. Leavitt, 554 F.3d 731, 733 (8th Cir.2009) (“Because appellants claimed all damages available under the Missouri wrongful death statute, the settlement, which settled all claims brought, necessarily resolved the claim for medical expenses.”); Cox v. Shalala, 112 F.3d 151, 154–55 (4th Cir.1997) (determining that Medicare was entitled to reimbursement for medical expenses from the proceeds of a wrongful death settlement because the settlement included recovery for decedent’s medical expenses); see also Brown v. Thompson, 374 F.3d 253, 262 (4th Cir.2004) (holding that CMS was entitled to reimbursement from the proceeds of a medical malpractice settlement pursuant to the MSP).

However, when the underlying wrongful death claim made no claim for medical expenses, there is a stronger argument that the Medicare lien does not extend to the estate of a deceased Medicare beneficiary. See Bradley v. Sebelius, 621 F.3d 1330 (11th Cir.2010) (The U.S. was denied the ability to recover Medicare’s conditional payments when no medical expenses of decedent Medicare Beneficiary were claimed in wrongful death action by survivors).

Medicare Lien Recovery Cases Against Primary Plans/Insurance Companies.

In a Northern District of Alabama case, the U.S. was not allowed to bring a direct MSP action (that would have allowed double damages) against a liability insurer that already settled its case and paid the Beneficiary, but had to bring a subrogation action pleading and proving that the liability carrier knew or should have known of Medicare’s conditional payments at the time payment was made to the Beneficiary. In re Silicone Gel Breast Implants Products Liability Litigation (MDL 926), 174 F.Supp.2d 1242; (N.D.Ala.2001), affirmed in part, reversed in part and remanded 345 F.3d 866, certiorari denied 124 S.Ct. 2907, 542 U.S. 946, 159 L.Ed.2d 828.

In Aetna Life Ins. Co., v. Nellina Guerrera et al., No. 3:17-CV-621 (JCH), 2018 WL 1320666, (D. Conn. Mar. 13, 2018), still pending in District Court, grocery store Big Y’s motion to dismiss was denied after Big Y, the alleged tortfeasor in the liability action, settled and paid a Medicare beneficiary, making it a Primary Plan. Aetna, a Medicare Advantage Plan, was allowed to proceed with a MSP private cause of action for double damages against Big Y. However, the court granted motions to dismiss by the Beneficiary and the Beneficiary’s attorney, because it held that the MSP’s definition of Primary Plan did not specifically include them.

Take Aways:

• Because the MSP grants both a direct lien right and a subrogation right to the U.S. to collect Medicare’s conditional payments, parties to a settlement should inquire, evaluate and confirm all injury-related Medicare expenditures for past medicals at the time of settlement.
• Due diligence is required for both the defense and plaintiff side to avoid unnecessary legal exposure.
• Additionally, because the intent of the MSP is to prevent premature billing of Medicare for injury-related future Medicare allowable medicals, parties to settlements should always consider Medicare’s future interests and decide on reasonable actions to protect those interests when such future medicals are compensated in any settlement.[4]


[1] 42 U.S.C. § 1395y(b)(2)(B)(iii).

[2] Id.

[3] At a minimum, the MSP imposes legal responsibility for repayment of conditional payment amounts. Under subsection (b)(2)(B)(ii), “a primary plan and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made . . . .” Furthermore, under subsection (b)(2)(B)(iii) after describing the double damages remedy allowed by the U.S., the statute states, “[I]n addition, the United States may recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity.” The corresponding regulation, Title 42 of the Code of Federal Regulations Section 411.24(g) also explains this right in even more detail, “. . . CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.” Arguments have been made as to whether the language “under this clause” referenced above relates to the reimbursement right or also extends the double damages right of the U.S. against those receiving payment from a Primary Plan. Some courts have restricted double damages awards only to Primary Plans or commercial entities required to make payment under a Primary Plan.

[4] Sally Stalcup, MSP Regional Coordinator, Region VI (May 25, 2011 Handout) at 3 (“. . . IF there was/is funding for otherwise covered and reimbursable future medical services related to what was claimed/released, the Medicare Trust Funds must be protected”).

Florida Medicaid (AHCA) Liens Do Not Reach Post Settlement Medicals
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Florida Medicaid (AHCA) Liens Do Not Reach Post Settlement Medicals

Unlike the Medicare Secondary Payer Act[1] that grants lien rights to the U.S. government to be reimbursed for past as well as future injury-related Medicare allowable medical items, services and expenses (Medicals), on July 5, 2018 the Florida Supreme Court (Court) ruled that Florida Medicaid liens extend only to past payments for Medicals and not to future payments for same. This decision resolved a conflict between two Florida District Courts of Appeal. In 2016, Florida’s First District Court of Appeal (1st DCA) affirmed an Administrative Law Judge’s (ALJ) ruling that the state’s Medicaid Agency, the Agency for Health Care Administration (AHCA), was allowed to lien both past and future medical portions of a Florida Medicaid recipient’s tort recovery.[2] However, in 2017, the 2nd DCA ruled in Willoughby v. Agency for Health Care Administration, 212 So. 3d 516 (Fla. 2d DCA 2017), that the AHCA was not allowed to lien future medical portions of a Florida Medicaid recipient’s tort recovery.

While Giraldo v. Agency for Health Care Administration, 2018 WL 3301563 (Fla. July 5, 2018) is technically not final because the time for the filing a motion for rehearing has not passed, it seems likely the decision will not change. Four judges concurred with the Opinion by Judge Lawson and one concurred in part on the substantive decision and dissented “in part” only regarding the weight of evidence used in calculating the past Medicals. Even if the court had remanded the case for additional factfinding regarding the value of past Medicals, the holding that a Florida Medicaid lien is limited to past Medicals should stand.

The Court held that the federal Medicaid Act’s “ceiling” provision[3] was clear in prohibiting a state Medicaid agency such as Florida’s AHCA, from placing a lien on the future medical expenses portion of a Medicaid recipient’s tort recovery.  The Court mentioned its decision seemed to also be compelled by the U.S. Supreme Court decisions in Alhborn and Wos, but because the language of the federal Medicaid Act was clear, there was no need to perform a separate analysis of the Ahlborn and Wos decisions.  The Court then remanded the case with instructions to the 1st DCA to direct the ALJ to reduce AHCA’s lien amount to $13,881.79 from $321,720.16. At the administrative hearing level, the estate of the deceased injured party presented uncontradicted evidence establishing $13,881.79 as the settlement portion allocated to the past medical expenses. Because the Court determined that there was no reasonable basis in the underlying record to reject the amount allocated for the past medicals, it held no further factfinding was required.

Quashing the decision of the 1st DCA and approving the Willoughby decision of the 2nd DCA, the Court held that the federal Medicaid law restricted Florida’s AHCA to lien only the past medical expenses portion of a Medicaid beneficiary’s third-party tort recovery to satisfy its Medicaid lien.

Take Away

Florida attorneys that have injured clients that are enrolled in Medicaid should be on high alert regarding reimbursement demands from AHCA. Attorneys with clients on Medicaid or possibly dual enrolled in both Medicare and Medicaid should investigate the existence of any liens and demand to be treated fairly by the respective government agency when negotiating conditional payment reimbursement/lien resolution.


[1] 42 U.S.C. §1395y(b) et seq.

[2] Giraldo v. Agency for Health Care Administration, 208 So. 3d 244(Fla. 1st DCA 2016).

[3] 42 U.S.C. § 1396a(a)(25)(H) “. . . [T]o the extent that payment has been made under the State plan for medical assistance for health care items or services furnished to an individual, the State is considered to have acquired the rights of such individual to payment by any other party for such health care items or services.”

Medicare Conditional Payment Recovery Report FY 2017 by CMS for MSP CRC Contract
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Medicare Conditional Payment Recovery Report FY 2017 by CMS for MSP CRC Contract

In its recent annual report to Congress, the Centers for Medicare & Medicaid Services (CMS) stated that during fiscal year (FY) 2017 ending September 30, 2017, its Medicare Secondary Payer Commercial Repayment Center contractor (CRC), obtained $131.78 million in net recoveries for conditional and mistaken payments made by Medicare that should have been paid by primary payers such as Group Health Plans (GHPs), or liability insurers (including self-insureds), no-fault insurers or workers’ compensation entities/plans (the latter group collectively called Non-Group Health Plans or NGHPs, and all recoveries described above will be referred to as Medicare conditional payment recoveries).

Like last year, the NGHP – Medicare conditional payment recoveries represented a larger percentage of the CRC’s overall conditional payment recoveries, and the report indicated that continued reduction of GHP recoveries was again due to the “maturity of the mandatory reporting instituted under Section 111 [of the Medicare Secondary Payer statute’s[1]] Medicare, Medicaid, and SCHIP Extension Act of 2007″ [2] (Section 111 Reporting), as well as the CRC’s “resolution of pending available recoveries.”

The $131.78 million net was larger than both FY 2016’s net of $88.35 million and FY 2015’s net of $125.05 million.  Because the newest CRC contractor, Performant Recovery, Inc. (Performant), just took over the CRC recovery contract on February 12, 2018, these reported recoveries reflect efforts of the former CRC contractor.  Performant has promised more efficiency in its collection process and better coordination with the Benefits Coordination & Recovery Contractor (BCRC), the entity that receives both notifications of NGHP settlements, judgments, awards or other payments (settlements) from beneficiaries and their representatives, as well as Section 111 Mandatory Insurance Reporting information about injuries, settlements and responsibility for payments from Responsible Reporting Entity (RRE) insurance carriers.  One indication that CMS and/or Performant may be keeping a closer eye on conditional payment recoveries and working more efficiently is that the FY2017 payment recovery report was available on the CMS website in the first quarter this year as opposed to the third quarter a year ago.

CMS’s continued expansion of Medicare conditional payment recoveries into NGHP categories with Performant in the CRC driver’s seat should mean even higher Medicare conditional payment recoveries moving forward.


[1] 42 U.S.C. §1395y(b).

[2] 42 U.S.C. §1395y(b)(8) et seq. (P.L. 110-173).

CRC Conditional Payment Recovery Report FY 2016
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CRC Conditional Payment Recovery Report FY 2016

In August of 2017, the Medicare Secondary Payer Commercial Repayment Center, also known as the MSP CRC or CRC for short, prepared its annual recovery report for Congress relating to Medicare Secondary Payer Statute (MSP)[1] conditional payment recoveries for fiscal 2016.  The CRC determined, largely from responses to over 29,700 demand letters, that $243.68 million of conditional payments made in FY 2016 were “correctly identified” for further recovery efforts.  The CRC reported returning over $88.35 million of these identified conditional payment dollars to the Medicare Trust Funds.[2]   This number was based on net collections of $106.29 million minus administrative and CRC contractor costs of $17.94 million.  Because recovery efforts for these conditional payments will continue in the future, the recovery amounts associated with the FY 2016 conditional payments will likely increase over time.

While the amount returned to the Medicare Trust Funds decreased from $125.05 million for FY 2015 conditional payments to $88.35 million for FY 2016 payments, this reduction should not be seen as a trend. The decrease between FY2015 and FY2016 was mainly from reduced Group Health Plan (GHP) recoveries resulting from “maturity of mandatory reporting” under Section 111 of the Medicare Secondary Payer (MSP) Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) and the CRC’s “resolution of pending available recoveries.”

The CRC is the generic name for the contractor hired by the Centers for Medicare & Medicaid Services (CMS) to be responsible for identifying and recovering primary payments made by Medicare when another entity had primary payment responsibility for medical items or services, including prescription drug expenses (“Medical Bills”), pursuant to the MSP.  The CRC became fully operational in 2014 under the company known as CGI Federal and initially focused its post-payment review and recovery efforts in the GHP field.

In FY 2016, CMS expanded CRC’s recovery efforts to also include recovery of conditional payments made by Medicare when a Non-Group Health Plan entity such as a liability insurer (including self-insurance), no-fault insurer, or workers’ compensation entity (NGHP) had primary payment responsibility or ongoing payment responsibility for Medical Bills.  In October 2017, CMS announced that Performant Recovery, Inc., an experienced auditing and recovery contractor for both CMS and the Department of Treasury, and a subsidiary of publicly traded Performant Financial Corporation, will be taking over the CRC contract beginning February 12, 2018.  Recovery claims against Medicare beneficiaries will still be performed by the Benefits Coordination & Recovery Center (BCRC), the same group that CMS uses to collect Section 111 reporting data.  Performant, as the new CRC contractor, recently promised to coordinate its communication with the BCRC.

According to CMS, in 2011, Medicare spent $549.1 billion dollars while covering covered 48.7 million people.  The money used to run the program comes from the Medicare Trust Funds.

Take Aways:

  • It makes sense that Group Health Plans have been more compliant with promptly paying Medical Bills they have primary responsibility for and/or promptly reimbursing Medicare for conditional payments when the potential for double damages claims exist under the public cause of action provisions of the MSP by CMS[3] and under the private cause of action provisions of the MSP by Medicare Advantage Plans (MAPs) (or their assignees).[4]  Additionally, potential civil monetary penalties under Section 111 of the MMSEA of $1,000 for each day of noncompliance for each individual for which a report is to be submitted.[5]
  • It will be interesting to see how the recently awarded contract to an experienced government collector like Performant that takes effect February 12, 2018 [as referenced in our prior blog], the continued expansion of both Medicare and MAP recoveries into NGHP categories (along with the reviews of Liability Medicare Set-Asides (LMSAs) potentially beginning as early as the summer of 2018 by the newly awarded Workers Compensation Review Contractor (WCRC), Capitol Bridge, LLC[6], along with the potential for better communication and integration of data exchanges between Performant and the BCRC, may affect conditional payment recoveries in the years to come.

[1] 42 U.S.C. § 1395y(b)(2)

[2]  There are two trust funds; the first is called the Hospital Insurance Trust Fund and is funded by payroll taxes, income taxes on Social Security benefits, interest on trust fund investments, Medicare Part A premiums, and from people not eligible for premium-free Part A.  The second trust fund is called the Supplementary Medical Insurance Trust Fund and is funded by Congress, Medicare Part B premiums, Medicare prescription drug coverage (Part D) premiums, along with interest earned on the trust fund investments. Additional information is available here.

[3] 42 U.S.C. § 1395y(b)(2)(B)(iii).

[4] 42 U.S.C. §1395y(b)(3)(A).

[5]  42 U.S.C. § 1395y(b)(7)(B)(ii).

[6] On September 1, 2017, CMS announced the contract for WCRC for $60 million for one year with options for four one-year extensions to Capitol Bridge, LLC. Two other bidders protested the award but those bid protests were denied on December 12, 2017.  The original December 22, 2016 RFP announced the potential of anywhere from 600 to 11,000 additional LMSA reviews in addition to the WCMSA reviews expected.  On February 13, 2017, CMS amended the RPF with both a Statement of Work and Responses to Questions from bidders, making it clear that the additional reviews included both LMSAs and No-Fault MSAs (NFMSAs), again referenced the potential for 11,000 reviews, and indicated that “All LMSA/NFMSA processes shall mimic existing processes nearly identically through the establishment of threshold values.”

 

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CMS Acknowledges Conditional Payment Processing Backlog

On February 9, 2016, the Centers for Medicare and Medicaid Services (CMS) posted a notice on their website acknowledging that they were experiencing a backlog in processing Conditional Payment Letters (CPLs) and Conditional Payment Notices (CPNs). They stated that their Commercial Repayment Center (CRC) has issued 33,000 CPLs and CPNs since the October 5, 2015 transition to CRC and that they are actively engaged with the CRC to improve responsiveness and eliminate the backlog.

CMS has undergone quite a few changes recently regarding its conditional payment processing. On October 5, 2015, they transitioned responsibility for conditional recovery activities in Non-Group Health Plan (NGHP) situations to a newly formed group called the CRC. The Benefits Coordination and Recovery Contractor (BCRC) will continue to do recovery activities directly from the beneficiary.

Also on October 5, 2015, CMS began issuing CPNs, instead of their usual CPLs when the BCRC is notified of a settlement, judgment or award from a beneficiary, his or her attorney or other representative, or by Section 111 reporting.

To view a little cheat sheet I put together regarding past CMS Medicare Secondary Payer contractors Click here.

To view the February 9, 2016 CMS notice click here.

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CMS Issues a Final Rule on Conditional Payment Appeals

On February 27, 2015, CMS issued a final rule in the Federal Register that implements a required provision of the Strengthening Medicare and Repaying Taxpayers Act (the SMART Act). This provision establishes a formal right of appeals process for applicable plans regarding conditional payments.

This new appeals process applies to initial CMS determinations issued on or after April 28, 2015 where CMS is pursuing conditional payment recovery from applicable plans. Instead of adopting a new process, this new rule adopts the same multilevel appeals process for applicable plans that is currently allowed for conditional payment recovery claims from beneficiaries.

This multilevel appeals process for applicable plans includes these steps:

  • A redetermination by the contractor issuing the recovery demand
  • A reconsideration by a Qualified Independent Contractor (QIC)
  • An Administrative Law Judge (ALJ) hearing.
  • A review by the Departmental Appeals Board’s (DAB) Medical Appeals Council (MAC)
  • An eventual judicial review

For further analysis see the notice in the February 27, 2015 Federal Register.

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CMS Announces a Self-Calculated Final Conditional Payment Amount Option to Obtain Conditional Payment Amounts Prior to Settlement

CMS announced another significant MSP program improvement this week. Starting in February 2012, it will implement an option that will allow Medicare beneficiaries or their representatives to obtain final conditional payment amounts for liability insurance settlements prior to settlement. This should be welcome news for the settlement community and the supporters of the MARC Coalition, who have been calling for this for years. The announcement posted below can also be found here:

“Self-Calculated Final Conditional Payment Amount” Option

The Centers for Medicare & Medicaid Services (CMS) will be implementing an option that will allow certain Medicare beneficiaries to obtain Medicare’s final conditional payment amount prior to settlement. This option will be available in February 2012, for certain settlements involving physical trauma based injuries where treatment has been completed. Under this option, the beneficiary or his representative will calculate the amount of Medicare’s conditional payment amount using information received from the Medicare Secondary Payer Recovery Contractor (MSPRC), the MyMedicare website, or other claims information available to the beneficiary. The MSPRC will review this amount and, if finding the amount accurate, will respond with Medicare’s final conditional payment amount within 60 days. To secure the final conditional payment amount, the beneficiary must settle within 60 days after the date of Medicare’s response.
In order to use this option, ALL of the following criteria must be met:

  1. The liability insurance (including self-insurance) settlement will be for a physical trauma based injury (the settlement does not relate to ingestion, exposure, or medical implant);
  2. The total liability settlement, judgment, award, or other payment will be $25,000 or less;
  3. The Date of Incident occurred at least six months before the beneficiary or his representative submits his proposed conditional payment amount to Medicare;
  4. The beneficiary demonstrates that treatment has been completed and no further treatment is expected either through a written physician attestation or by certifying in writing that no medical treatment related to the case has occurred for at least 90 days prior to submitting the proposed conditional payment amount to Medicare

Explicit instructions on how to use this process will be posted on the Medicare Secondary Payer Recovery Contractor’s website at www.msprc.info by January 15, 2012. CMS will leverage existing processes to the greatest extent possible. This is an initial step to provide beneficiaries and their representatives with Medicare’s conditional payment amount prior to settlement. CMS plans to expand this option as it gains experience with this process.

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Wilson v. State Farm Delaying Settlement Payment for Conditional Payment Determination is not Bad Faith

Insurance carriers have an obligation, under the Medicare Secondary Payer Statute, to make sure to address Medicare liens prior to settlement. Typically, this process can take a few months from the time the amount is requested from Medicare until the amount is resolved. Unfortunately, as a result, it can delay the settlement. That’s how the current system works, but these delays can cause problems.

In Wilson v. State Farm, the plaintiff, an auto accident victim, refused to give State Farm permission to discuss the lien with Medicare and asked them to deposit the agreed upon $50,000 policy limit into an escrow account from which the Medicare lien would be paid. As an alternative, State Farm offered to include Medicare as a payee on the check. The plaintiff rejected this offer. So State Farm decided to await Medicare’s determination of the value of its lien and then issue separate checks to Medicare and the Plaintiff.

Shortly thereafter, the plaintiff filed a lawsuit claiming that State Farm acted in bad faith by delaying the $50,000 settlement payment. Two months later State Farm learned the amount of the Medicare lien and issued payments to both Medicare and the plaintiff the following day.

The U.S. District Court held that State Farm did not act in bad faith stating, “for State Farm to consider these obligations seems responsible”. The court further concluded that “to comply with federal law and to protect its own legitimate interest against overpayment is reasonable and certainly is not in bad faith”…”especially when Plaintiff apparently refused to cooperate with Defendant’s attempts to pay the claim more quickly”.

While this decision seems innocuous because it doesn’t change current practices, it does point out the precarious position carriers are in with the current system of having to settle a claim before the conditional payment amount can be determined.

This is one reason why there is so much support for H.R. 1063, the Strengthening Medicare and Repaying Taxpayers Act (SMART Act), which was recently introduced in Congress. It contains provisions that would allow parties to obtain conditional payment amounts prior to settlement.

To view the previous Medivest blog on the SMART Act click here
To view the Wilson v. State Farm decision by the U.S. District Court, Western District of Kentucky at Louisville click here

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MSPRC Resumes Issuance of Rights & Responsibilities Letter

On June 10, 2011, the Medicare Secondary Payor Recovery Contractor (MSPRC) resumed the process of issuing their Rights & Responsibilities (R&R) Letters.

On the heels of a recent court decision in Arizona (see Haro v. Sebelius), the MSPRC announced a temporary suspension of R&R letters and Demand letters.  This led many to speculate that the Haro decision played a role in the review the MSPRC was conducting on the letters.  In the Haro Case, the US District Court of Arizona held, in part, that CMS couldn’t collect disputed amounts from beneficiaries or attorneys.

The new R&R letter certainly appears to supports that opinion. The new wording in the letter specifically states “Medicare will not take any collection action during the pendency of any appeal or waiver request.”  There are several additional changes to the letter, however the suspension of the collection efforts during an appeal is the most noteworthy.

To read the updated Rights and Responsibilities Letter, please click here.

MSPRC Announces R&R Review Complete; Suspension Continues.

On May 26, 2011, we informed you that the MSPRC announced a temporary suspension from issuing both the Rights and Responsibilities (R&R) and the Demand Letters because both of those letters were under review.

Today, the MSPRC announced, on their website, that:

  • Demand Letters – There is no change.  The demand letters are still being reviewed by the MSPRC and are still suspended until the review is completed.
  • R&R Letters – The review is complete, but the suspension will continue until the revised letters are made available on 6/10/11.

It is important to understand that nothing really changed with this announcement except that the MSPRC completed the R&R Letter review and expects R&R Letters to resume on June 10, 2011.

Stay tuned.

The official MSPRC 5/31/2011 announcement reads as follows:

ALERT UPDATE: Issuance of the Demand letters is temporarily suspended – Review of the Rights and Responsibilities letter is complete
The Demand letter for liability insurance (including self-insurance), no-fault insurance and workers’ compensation has been temporarily suspended while this letter is under review. The MSPRC is still working cases, and Demand letters will be mailed out once this review is complete. Review of the Rights and Responsibilities letter (“RAR”) is complete. Issuance of the RAR is anticipated to resume on June 10, 2011. A copy of the revised RAR will be made available by that time on this website.

MSPRC Announces Temporary Suspension of Rights and Responsibilities and Demand Letters

A few days ago the Medicare Secondary Payer Recovery Contractor (MSPRC) posted the following ALERT on its website:

News and Updates Alert: Issuance of the Rights and Responsibilities (RAR) and Demand letters has been temporarily suspended
Issuance of the Rights and Responsibilities (“RAR”) and Demand letters has been temporarily suspended while these letters are under review. The MSPRC is still working cases, and the RAR and Demand letters will be mailed out once appropriate revisions have been made.”

The MSPRC is a Medicare contractor with the responsibility of protecting the Medicare trust fund by identifying and recovering payments Medicare made when another entity had primary payment responsibility. The current contract is held by Chickasaw Nation Industries, Inc.

The RAR letter is the letter the MSPRC sends to the claimant, with a copy to the claimant’s counsel, when they learn that the claimant has made a claim against a workers’ compensation or other insurance plan. The letter explains the obligation to reimburse Medicare for conditional payments, asks for legal representation information, asks for information about the claim and the insurance carrier, asks that settlement information be forwarded if a settlement occurs, and explains that a conditional payment letter will be sent within 60 days showing conditional payments Medicare has made on the claimants behalf.

Demand letters are sent to claimants and insurers to formally advise the debtor of the amount of money due the Medicare program. They state the amount owned and that the debtor has 60 days to respond or the matter might be turned over to the US Department of Justice for legal action and/or the Department of Treasury for other collection action.

There is no official word as to why the MSPRC is reviewing these letters. But it seems likely that it is because of the court decision recently reached in Haro v. Sebelius (see www.medivestblog.com May 16, 2011) where the U.S. District Court of Arizona ruled, in part, that CMS cannot collect disputed amounts from beneficiaries or attorneys.

The impact of this suspension will depend on how long it lasts. We have been experiencing a slowdown in MSPRC response times lately so our hope is that this additional delay is short-lived.
Medivest will provide updates as soon as we receive information that this temporary suspension is lifted.

To view the MSPRC Alert click here
To view the May 16, 2011 Haro v. Sebelius blog click here

Haro v. Sebelius: Court Orders CMS to Stop Certain Medicare Secondary Payer (MSP) Collections Practices

On May 5, 2011, the Arizona US District Court (Court) ordered the Centers for Medicare and Medicaid Services (CMS) to stop demanding of beneficiaries “payment of a MSP reimbursement claim with threats of commencing collection actions before there is a resolution of an appeal or waiver request” and to stop “demanding that attorneys withhold proceeds from their clients pending payment of disputed MSP reimbursement claims”.

In the underlying cases, the plaintiffs were injured, received medical services conditionally paid for by Medicare, and subsequently received settlement proceeds from a liability insurance company.  CMS, followed its longstanding procedure and sent a demand letter to the plaintiffs and the plaintiffs-attorneys notifying them that the reimbursement claim must be paid within 60 days or interest of 13.375% would accrue and collection actions would be initiated.  Interestingly, each Plaintiff disputed CMS’s conditional payment reimbursement claim.  Plaintiff attorneys were additionally told that Medicare’s claim must be paid up front out of the settlement proceeds before any distribution occurs.

60 Day Requirement – The Court found CMS’s 60-day requirement to collect reimbursement claims from beneficiaries “neither rational nor consistent with the statutory scheme providing for waiver and appeal rights.”  In other words, the Court seems to be saying that it makes no sense to essentially say to the plaintiff, “you can appeal this but, but you have to pay it in sixty days.”  So, the Court ruled that “collection activities are precluded against beneficiaries, pending resolution of waiver requests or appeals…”

Recovery Actions Against Attorneys – The Court found that:

  • Congress never expressly made attorneys responsible for reimbursements to Medicare.
  • CMS cannot force an attorney to turn over to CMS what is essentially the injured persons property.
  • Collection actions against attorneys are also precluded, pending resolution of waiver or appeals.
  • CMS may not preclude plaintiffs-attorneys from disbursing undisputed portions of proceeds to their beneficiary clients.

Class Action Case – The Court certified this as a class action case defining the class broadly as persons who are or will be subject to MSP recovery, and from whom defendant has demanded or will demand payment of MSP claims before there have been determinations of the correct amounts through the waiver or appeal process.

The Court said that it “found no case which considered the propriety of direct recovery actions against attorneys”.  It seems to me that U.S. v. Harris addresses this issue.  Regardless, this is going to be much discussed case, with impact, so stay tuned to industry legal analysis to come and perhaps an appeal by CMS.

Click here to read the order.

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MSPRC Announces Changes in Conditional Payment Procedures

The Medicare Secondary Payer Recovery Contractor (MSPRC) recently announced some significant changes in its procedures for handling Conditional Payments that became effective for cases established on or after October 1, 2009. Under the new process, obtaining conditional payment information begins, as before, with notifying Medicare’s Coordination of Benefits Contractor (COBC). But, after that, a series of new documents will be used which will help to streamline the entire process, as follows:

    1. Rights and Responsibilities Letter – This letter replaces the previous Right to Recovery Letter and is sent to the Beneficiary, the Beneficiary’s representative and the workers’ compensation/no-fault carrier (if the MSPRC has the correct contact information).

    2. Interim Conditional Payment – The MSPRC will issue interim conditional payment amounts automatically within 65 days from the date of the Rights and Responsibilities Letter to the Medicare beneficiary and any other authorized individuals. The fact that this is automatic (that is, it does not have to be requested) is a significant improvement and streamlines the whole process.

    3. Online Updates – Once the MSPRC has mailed out the Conditional Payment Letter, they will post the information on the MyMSP tab on the www.mymedicare.gov website. It will be updated weekly with any newly processed claims so the claimant, his attorney or other representative can keep track of medical bills that were paid by Medicare.

    4. Proof of Representation, Consent to Release, Carrier Letter of Authorization – There are three new documents authorizing others to review conditional payment information as follows:

    4A. Proof of Representation – This document is required to be submitted in order for the Medicare beneficiary’s representative to act on the beneficiaries behalf. CMS views this exchange of information as a “two way street” where the representative may interact with the MSPRC on behalf of the beneficiary, in order to resolve Medicare’s Recovery Claim.

    4B. Consent to Release – This document is submitted when the representative is only to receive certain information from the MSPRC for a limited period of time and is not authorized to act on the behalf of the beneficiary. CMS views this exchange of information as a “one way street” the representative can only receive information from the MSPRC but cannot act on the beneficiary’s behalf.

    4C. Carrier Letter of Authorization – In situations where a Workers’ Compensation or No-Fault Carrier retains a third party (such as Medivest) to deal with the MSPRC regarding conditional payment claims, a Carrier Letter of Authorization is required.

Interestingly, the MSPRC requires a Consent to Release document from a liability insurer, to provide conditional payment information but does not require it from a workers compensation carrier.These changes can be found, in much more detail, at the MSPRC website at http://www.msprc.info under eight different documents:

    • Alert – Rights and Responsibilities
    • Alert – Proof of Representation
    • Alert – Interim Conditional Payment
    • Rights and Responsibilities Letter
    • Rights and Responsibilities Brochure
    • Consent to Release – Model Language
    • Proof of Representation – Model Language
    • Proof of Representation vs. Consent to Release PowerPoint

This new process is a significant improvement that should expedite the resolution of the Medicare’s conditional payment recovery claims and therefore improve the entire settlement process.