Staying Ahead of New CMS Conditional Payment Recovery Policies

CMS made two recent announcements that have changed their conditional payment recovery practices.

January 15, 2016 Photo

The Centers for Medicare and Medicaid Services (CMS) made two recent announcements that have changed their conditional payment recovery practices. Understanding how this impacts compliance with the Medicare Secondary Payer Act (MSP) is not only vital to remaining compliant, but also helpful in expediting settlements with Medicare beneficiaries.

Contractor Changes

CMS has engaged a new contractor to recover conditional payments before settlement, judgment, or award. Workers’ compensation and no-fault entities will be most impacted by this new contractor. As of Oct. 5, 2015, the Commercial Repayment Center (CRC) started to process information about recovery cases from Medicare, Medicaid, and SCHIP Extension Act (MMSEA) Section 111 data. Responsible reporting entities (RREs) reporting on or after that date will find that all claims involving ongoing responsibility for medical (ORM) without total payment obligation to claimant (TPOC) information are being evaluated for outstanding conditional payment obligations unless previously reported to the Benefits Coordination & Recovery Center (BCRC). Because of this, RREs that deal with ORM will have to navigate between the two CMS contractors that share responsibility for recovering conditional payments—the BCRC and CRC. Knowing the difference is critical.

The CRC will issue conditional payment notices (CPNs) when a recovery amount is owed. The RRE must respond to the CPN within 30 days. If a CPN is not responded to (e.g., disputed) within the allowed time frame, a demand will issue and a debt will be established to the government by the RRE. This departure from CMS’ prior practices—where it sought conditional payment recovery only after a settlement, judgment, or award—increases exposure for primary plans. The CPN is triggered only by the RRE’s responsibility to pay medicals, as the CRC requires no resolution of the case. CMS will look to recover for the period from the date of injury to the present unless an ORM termination date is entered. To reduce exposure, RREs must be vigilant in populating ORM termination dates. This ensures that the Medicare Trust Fund does not over collect. Demand letters accrue interest from the letter date unless payment is made within 60 days.

The BCRC will continue to issue conditional payment letters (CPLs) and final demands when the claim is self-reported to the BCRC. CPLs are different from CPNs in that CPLs will not require a due date for response, and a demand will not issue until a settlement occurs. Over time, the BCRC will handle mostly liability claims because of the higher nature of self-reporting that occurs for liability claims. The BCRC is not going away and will remain unaffected by the CRC and its corresponding changes.

Here are some potential impacts and strategies for handling:

  • Recognize and understand the correspondence received from CMS. Is the correspondence from the BCRC or the CRC?
  • If the correspondence is from the CRC, does the letter contain a 30-day due date for response?
  • If yes, an immediate response needs to be made. The CPN should be evaluated for ICD-9/ICD-10 codes that are unrelated to the alleged injury, as well as any applicable statute of limitations or state law defenses.
  • If no response is provided to the CRC during the 30-day due date response window, a demand will issue.
  • If the demand is not reimbursed within 60 days, interest will begin to accrue on the debt (current rates are 10.25 percent).
  • Should the parties desire to further appeal the demand, paying the amount due to CMS while the appeal is pending will stop the interest from accruing further. After the appeal is finalized, any amount overpaid to Medicare will be reimbursed back to the payer.

Disappearing Challenges

Parties entering into settlements with Medicare beneficiaries are all too familiar with long wait times when finalizing conditional payment amounts. There also has been uneasiness in not having a final demand amount until after a settlement occurs. These challenges potentially will disappear based on a Nov. 9, 2015, CMS alert. Effective Jan. 1, 2016, parties will be able to obtain a final demand prior to settlement.

How will it work? At any time 120 days prior to a settlement, judgment, or award, the parties should notify CMS of the expected settlement date and amount. During this time, conditional payment information will be available on the Medicare Secondary Payer Recovery Portal (MSPRP). Payments by CMS for items and services must be posted to the portal no later than 15 days from the date they are made.

Within 65 days from notice, a “statement of reimbursement amount” will be available for download, which can be considered the final demand as long as you are in the “protected period.” The protected period means 65 days after CMS has received notice of your settlement, judgment, or award but before the 120-day period of when the settlement was to occur as stated by the parties. Keep in mind that CMS has the authority to extend the 65-day period for an additional 30 days but only for exceptional circumstances, which should be rare.

The portal will provide a final demand that is time and date stamped because it is critical the settlement occur within the next three business days for the demand to be valid. While three business days seems quick, the parties can redownload to have another three days but must do so before the expiration of the 120-day period.

To take advantage of being able to obtain a pre-settlement final demand, the following will need to occur:

  • At least 65 days prior to the anticipated settlement, notify CMS of the expected settlement date and amount.
  • Make sure that you are an authorized user of the MSPRP or work with a vendor that is an authorized user. The pre-settlement final demand can be obtained only through the MSPRP.
  • Download the final statement of reimbursement amount within three business days of the settlement.
  • Submit settlement information through the MSPRP within 30 days of requesting the final conditional payment amount  
About The Authors
Heather Sanderson

Heather Sanderson, Esq., is president of Sanderson Firm PLLC.

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