Medicare Adds Resources to Collect Overdue Conditional Payments
Roy Franco
April 5, 2013

The Centers for Medicare & Medicaid Services (CMS) is entitled to immediate reimbursement when responsibility of the primary plan is demonstrated.  See 42 U.S.C. §1395y(b)(2)(B)(ii).  A primary plan is defined as the workmen’s compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan) or no-fault insurance.  Responsibility is demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) for payment of items or services included in a claim against the primary plan or its insured.  When these elements are met, the primary plan must pay back CMS, unless the obligation has been satisfied by the Medicare beneficiary.   There are no exceptions.

CMS has struggled with identifying reimbursement situations.  Since the early 1980’s, it has implemented over 24 special projects to improve collections.  Now, the data that is flowing into the Coordination of Benefits Contractor because of the Medicare & Medicaid Schip Extension Act (MMSEA) or Section 111.  Until recently, CMS attempts to collect would be hit or miss, but with MMSEA Section 111, it will be precise and a matter for the Medicare databases to manage.

The reason this is now a relevant issue is that the first wave of data reported has been processed and we are seeing evidence of how conditional payments that are owed to Medicare are being recovered.  The matters are being referred to the Department of Treasury, and if there is money, Treasury can attach it to satisfy the debt.  If not, the matter is being referred to the Medicare Secondary Payer Recovery Audit Contractor, Performant Recovery Inc., for collection.  Either way, the issue is treated as a valid and owing debt to the U.S. Government.

What is causing these events to occur is the Parties’ lack of understanding about the three separate parts which make up Medicare Secondary Payer compliance.  There is no doubt the industry has spent vast resources on one of those elements, MMSEA Section 111 reporting, and with regards to workers’ compensation claims, has implemented Medicare Set Asides to “protect” Medicare’s interest.  However, the usual element missing when a case  is settled, particularly for workers’ compensation matters, are the outstanding conditional payments owed to Medicare.  If this issue is not resolved at time of settlement then liability will continue to accrue on Medicare’s books.

We will continue to see the number of letters increase from the Department of Treasury and Recovery Audit Contractors, like Performant Recovery Inc., because the MMSEA Section 111 data reported takes about nine months to process.  Since CMS limited reporting based on thresholds when it started to take data in on January 1, 2011 for Total Payment Obligation to Claimants, we can easily see why this would be the case.  (See Table below). There are certainly less $100K plus settlements, as compared to $5,000 plus settlements.

TPOC Threshold TPOC Date Report Period MMSEA Sec. 111 Data Process Date
$100,000.01 10/1/2011 – 12/31/2011 1Q 2012 9/2013
$100,000.01 1/1/2012 -3/31/2012 2Q 2012 1/2014
$50,000.01 4/1/2012 – 6/30/2012 3Q2012 5/2014
$25,000.01 7/1/2012 – 9/30/2012 4Q2012 9/2014
$5,000.01 10/1/2012 – 12/31/2012 1Q2013 1/2015
$5,000.01 1/1/2013 – 3/31/2013 2Q2013 5/2015
$5,000.01 4/1/2013 – 6/30/2013 3Q2013 9/2015

It is a challenge to tie a Department of Treasury Letter or Performant Recovery Letter back to the related liability or workers’ compensation claim.  When CMS sends over the data to the Department of Treasury, the debt is assigned a debt number.  All other references to the claim are removed, including the beneficiary’s name.  If Treasury has used self help to pay for the claim, hours can be spent on the phone to track down the basis, only to learn that because the debt has been paid; the back-up supporting the claim is no longer available.

There is a simple way to avoid this issue.  Audit your TPOC files to determine if the conditional payment record has been closed.  We can work with your self- administration or third party administration program to perform this audit and identify this exposure.  Our clients who have gone through this process have reported favorable results and peace of mind regarding this pending exposure.  Call us today!