A debt to the United States is established under the Medicare Secondary Payer Act, owed by insurance companies (including self insurance), for conditional payments which remain outstanding for more than 60 days after a settlement, judgment or award is secured. To prevent this debt from ever occurring, proactive insurance companies (including self insurance) have actively pursued securing an appropriate demand letter from the Medicare Secondary Payer Recovery Contractor (MSPRC) and paying it off. Regrettably, many have not adopted this approach and recently we have fielded an increased number of inquiries over actions taken by the Department of Treasury, including their private debt collector contractors, now that Mandatory Insurer Reporting (MIR) data is being processed.
The MSPRC will automatically refer a debt to the Department of Treasury after 120 days from its Demand Letter. When an insurance company (including self insurance) is proactive, it is easier to track when a MSPRC demand letter is issued and where it went, so it may be paid. In the case of MIR data it is difficult to track such letters. After MIR data is transmitted to the Coordination of Benefits Contractor (COBC) it is immediately processed (each night) and sent to the Recovery Management Accounting System (ReMAS) to search for conditional payments. ReMas can take up to two months to search for such data, and, once compiled, it is processed in the form of a Conditional Payment Notice (CPN) which is sent to the best possible address related to the Tax ID# on file for the beneficiary and insurance company (including self insurance). In each case we have examined the CPN is ignored or received at an address that may no longer be valid. When there is no response, the CPN is converted into a demand letter automatically. At that point, it is transmitted to the Department of Treasury for collection.
Once a debt is transmitted to the Department of Treasury, it is not treated any differently from other debts owed to the United States. Privacy is of utmost concern, so most of the Private Health Information (PHI) is stripped, and an agency Debt# and Trace# are assigned. The Department of Treasury then looks for any fund within its possession it may levy to collect the outstanding debt. It is at this stage we have seen monies owed companies under Federal contracts or tax refunds of any sort are siphoned to pay this debt. If the debt is satisfied in such manner, usually the department within the insurance company (including self insurance) responsible over that particular Federal fund which was taxed will get the notice. If there is no money to levy, the Department of Treasury refers the debt to its stable of private debt collectors.
The Department of Treasury has contracted with the following private collection agencies to secure bad MSP debt:
- Performant Financial Corporation;
- The CBE Group, Inc.;
- ConServe, Inc.; and
- Pioneer Credit Recovery, Inc.
These private entities treat MSP debt like any other private debt it manages. After a letter is mailed seeking recovery (usually to a CFO or CEO), the phone calls start and can be painful. CMS is required to refer all debt over $25 to the Department of Treasury; consequently, the phone calls to executives at insurance companies (including self insurance) usually result in irritation. Further, attempting to explain or defend the debt at that point is challenging.
If your Company is experiencing this issue, please contact us and we will assign the right expert to deal with this issue. We understand the collection process and can help to track down how it was created, so it can be managed. While the debt you are dealing with may only be of a de minimis amount, it is a signal of a potential avalanche to come. The MIR data being processed takes roughly nine months from a reported settlement, judgment or award to run its course. CMS established thresholds for reporting settlements, judgments and awards and what is being observed by the industry are those claims that have had higher TPOC (settlements, judgments and award amounts). As time passes, the TPOCs of over $5,000 will be processed and a substantial increase in letters are expected.
These DOT and private collection letters can be easily avoided if proactive steps are taken before a claim is settled, or otherwise subject to an award or judgment. If not, the letters can be dealt with, but will take time as very little information is provided in such correspondence connecting the debt to a particular claim. Phone calls will be necessary to research the debt and proactive steps may also need to be taken with the MIR data itself, so the situation does not repeat itself.
Please contact us if you receive any letters from the Department of Treasury or any of the private collection contractors. We can assist you to resolve these in a timely manner and work with you to identify gaps in your process to avoid further problems.