May 5th, 2015: CMS Hosts Webinar on Applicable Plan Appeals; Announces Plans to Collect Conditional Payments in ORM Situations
Heather Sanderson
May 6, 2015

Yesterday, CMS held a webinar on the applicable plans newly created right of appeal that went into effect on April 28, 2015. Because of the Strengthening and Repaying Taxpayers (SMART) Act, CMS was required to develop regulations outlining how an applicable plan (workers’ compensation, liability, automobile insurance, no-fault insurance, including self- insurance law or plans) would exercise this right.

As anticipated, CMS amended rules that previously only accommodated beneficiary rights to appeal. These rules were expanded to now allow the applicable plan to also exercise the right to appeal conditional payment demands asserted by CMS. Two important pieces to be taken away from this development are: 1) timelines of up to 5 years for appeal will not change; and 2) applicable plans may only exercise the right of appeal if a determination is made against them. Determinations against the beneficiary where the beneficiary is the identified debtor do not trigger this right to appeal, although, the applicable plan can secure a proof of representation (POR) to do so.

Surprising for most on the call were two important policy decisions by CMS. First, CMS shall assert its right to recovery of conditional payment in Ongoing Responsibility for Medical (ORM) situations, even when no ORM Termination exists. Because ORM could stay open for an extended period of time, CMS could assert multiple demand letters while medicals remain open. Second, if the applicable plan is the identified debtor, the applicable plan cannot take a pro rata reduction of attorneys’ fees and costs from the overall demand as a beneficiary could.

Franco Signor commentary: We are pleased to see CMS complete the implementation of the SMART Act. We had predicted CMS would eventually begin to assert its right to recovery in ORM situations for obvious reasons. However, no- fault and workers’ compensation claims also had administrative headaches with conditional payment letters that could not be paid under prior processes in place since CMS was previously not collecting conditional payments in ORM situations. This added liability to the books which the State of Texas complained about to CMS. At least parties can now move forward to clear these conditional payment liabilities where future medicals cannot be closed and ORM situations remain. What remains however, is the ability to terminate ORM for certain administrative closures. We are working through the Medicare Advocacy and Recovery Coalition (MARC) for an answer and will advise. As this new policy of CMS will greatly affect the industry, please consider joining MARC.

Heather Schwartz Sanderson, Esq., MSCC, CHPE, CLMP, CMSP
Chief Legal Officer
Franco Signor LLC

May 27, 2015 – Establishing Appeal Rights for Applicable Plans, Including Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation Laws or Plans Presentation Now Available