Spotting the Pitfalls in Medicare Treasury Claims

Understanding Medicare Treasury claims and learning how to avoid them

September 26, 2023 Photo

The increasing number of U.S. Department of Treasury actions regarding delinquent Medicare Part A and B conditional payment claims is a growing challenge facing non-group health plans (NGHPs). A recent report from the Centers for Medicare & Medicaid Services (CMS) found, in part, that Treasury collections jumped from $55 million in 2020 to $82 million in 2021, a 47% increase. With Treasury collections on the rise—and real dollars at risk—insurers must better understand Treasury actions and build strategies to reduce risk.

The important first step is understanding how Treasury claims arise in the first place. In general, this happens when a CMS conditional payment demand is not timely paid or resolved and becomes delinquent. When CMS issues a conditional payment demand, the debtor has 60 days to issue payment. If payment is not issued within the 60-day period, then the debt is considered delinquent by CMS and, if it remains delinquent for more than 120 days, CMS can refer the debt to Treasury.

When CMS refers a delinquent debt to Treasury, it is sent to the Treasury’s Bureau of the Fiscal Service. From there, the claim may be assigned to one of five private collection agencies (PCAs) for handling. Currently, the PCAs being used by Treasury are The CBE Group, Inc.; ConServe, Inc.; Pioneer Credit Recovery, Inc.; Coast Professional, Inc.; and Transworld Systems, Inc.

In terms of collection activity, there are basically three avenues Treasury can pursue:

•    Treasury may use, as noted above, a PCA to pursue the debtor. The PCA typically seeks recovery through phone calls and letters to the debtor.

•    Treasury may refer the matter to the Treasury Offset Program (TOP), which is operated by the Bureau of the Fiscal Service. As part of this automated program, TOP will use the debtor’s Tax Identification Number (TIN) or Social Security Number (SSN) to attempt to intercept federal and state payments to collect delinquent debts owed to federal and state agencies. Outgoing federal payments are reviewed against the TOP database to determine if the individual or entity receiving payment has a debt in that database. If there is a debt in the TOP database, where the name and TIN/SSN of the entity or individual receiving payment matches the debt and the payment is eligible for offset, the payment will be offset to satisfy the debt.

•    Treasury may use the State Reciprocal Program (SRP) which is essentially the state component of Treasury’s TOP. Under this approach, states can enter into agreements with Treasury where TOP may offset federal payments to satisfy state debts and states may offset payments for delinquent debts owed to the federal government.

An interesting question that is often asked is whether Treasury claims can be disputed. In evaluating this question, it is first important to recognize that, when a claim is referred to Treasury, it is already delinquent and typically beyond the timeframe for a Medicare appeal under the Medicare administrative appeals process. Further, Treasury does not have a formal appeals process.

Notwithstanding these complications, in my experience, I have had success in getting Medicare to accept a Treasury dispute in certain situations on a case-by-case basis. In these situations, it was not Treasury that actually reviewed the dispute, but rather Treasury forwarded the dispute back to CMS for handling.

Against this backdrop, there are steps insurers can take to reduce potential Treasury claims. A key step is to proactively address CMS conditional payment claims. This involves ensuring CMS correspondence is identified, reviewed, responded to, and resolved in a timely manner. This could involve the use of Medicare Open Debt Reports, Section 111 data, recovery agents, or other means to proactively identify Medicare conditional payment recovery cases to ensure timely resolution.

Additionally, having a sound understanding of how CMS’ conditional payment recovery process works, including how CMS uses its Section 111 reporting program to drive its collection pursuits, is critical. Both the CMS conditional payment appeal process and Treasury referrals have strict timeframes; therefore it is essential to carefully review all timelines referenced in correspondence from CMS or its contractors and respond to Medicare demands within the allotted timeframe. Finally, it is crucial that CMS payment requests are promptly analyzed, reviewed, disputed (if applicable), and repaid.

When the dust settles, Treasury claims present significant potential liability for insurers and underscore the importance of having practices in place to address and resolve CMS conditional payments in a timely manner.


About The Authors
Shawn Johnson, J.D.

Shawn Johnson, J.D. is legal director, casualty solutions at Verisk.

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