CMS Alert Reminds the Industry Regarding Escalation of Debt to the Treasury Department
Heather Sanderson
August 7, 2015

CMS issued an alert on August 5th which states the following:

On May 9, 2014, the President signed into law the Digital Accountability and Transparency Act (DATA Act). One outcome of this legislation will be to reduce the timeframe for the referral of delinquent debt to the Department of Treasury (“Treasury”) for both Non Group Health Plan (including self-insurance, liability, no-fault, and workers’ compensation) and Group Health Plan from 180 to 120 days after the payment is due. This change will be effective October 1, 2015.

Debtors will continue to be notified of the intent to refer the debt to Treasury’s Offset Program for further collection activities, if the debt is not paid within 60 days.

Franco Signor Commentary: As of October 1, 2015, conditional payment demand recoveries will be sent to the Treasury Department sixty (60) days earlier than they are today.   This legislation appears to conflict with recently added language by both the House and Senate Appropriations Bill Reports requiring CMS to focus CMS on addressing issues with erroneously sent MSP claims to the Treasury. The House Report Language can be found at pages 89-90 of this report (click here) (similar language is in the Senate report).  It makes sense for CMS to expedite legislation to collect bad debt (past due conditional payments); however, we would hope the appropriations language will improve upon sending those demand letters that are valid.  Today, many demand letters go to addresses that are not valid, and primary plans responsible for such payments are unaware until contacted by Treasury.  This must be corrected.

The Appropriations language states: Medicare Secondary Payer (MSP) Claims.—The Committee notes concern that CMS erroneously refers disputed MSP claims to the Treasury Department to seek repayment of secondary payer funds from small and large businesses and insurers for health care payments subject to a secondary source of payment. In some cases the responsibility for or amount of payment is disputed. Rather than permit entities with disputed claims due process and an opportunity to resolve their differences with the Agency, CMS regularly refers the debts to the Treasury for collection as ‘‘final claims.’’ The Committee requests CMS to provide an update in the fiscal year 2017 budget request on the process CMS uses prior to submitting such claims and alternative steps that could be used to prevent erroneous referrals to the Treasury.

As October quickly approaches, it is recommended that disputes on conditional payment demands be asserted aggressively before the demand is sent to the Treasury. Pursuant to the DATA Act and consistent with the Appropriations language, if the conditional payment demand is a “final claim” it will be sent to the Treasury within 120 days. Once the demand lies with the Treasury, not only has interest begun to accrue, but disputes are easier to assert with the BCRC than the Treasury as the BCRC specializes in MSP claims.

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