(844) 857-0357

Medicare Secondary Payer Reform… Could it be?

By Erica Cooper, Manager of Medicare Services & Compliance

On October 2, 2006 CMS consolidated all conditional payment recovery functions. CMS transitioned from several recovery contractors nationwide to a single contractor in Chickasaw Nations Industry, LLC. (CNI). This branch of CNI is the “Medicare Secondary Payer Recovery Contractor” (MSPRC). Since 2006 the recovery process has improved, but the frustrations involved with resolving Medicare conditional payments still linger. BUT, could change be coming soon? A Federal Court Judge has granted action to proceed in a potential class action suit. The suit will challenge the MSPRC’s recovery procedures.

As explained by Jon L. Gelman:

“The case pending in Arizona questions the authority of the HHS to seek reimbursement in liability claims of conditional payments paid by the Federal government. The plaintiffs are seeking declaratory and injective relief from the HHS procedures. They allege that the HHS has exceeded its authority under the MSP and that the plaintiffs have been denied due process.

The claim challenges the requirement that reimbursement be made within 60, in advance of an appeal or waiver. The case also alleges that the reimbursement claims asserted by HHS are in excess of the actual amount conditionally expended and object to the interest charges on the erroneous amounts asserted.

A motion for class action certification was filed on March4, 2010. Determination of that issue has been held in abeyance as discovery proceeds.

The issues the Court will determine in this case have been identified as follows:

1. Whether the HHS can require prepayment of an MSP recovery claim before the correct amount is determined through administrative appeal procedures; and

2. Whether the HHS can make plaintiff’s attorneys financially responsible if they do not hold or immediately tender the litigation proceeds.

The Court, in permitting discovery to go forward against the HHS, determined the need to ascertain, not only as to the specific plaintiffs, limited in the Administrative Record, but generally:

The frequency the appeal process is actually utilized and whether it is burdensome to beneficiaries; and

The error rate and whether that error rate is extraordinarily high in MSP recovery claims; and

Whether there is a need for current lack of procedural protections for beneficiaries and their attorneys.”


(Hard v. Sebelius, No. cv 09-134 TUC DCB, 2010 WL 1452932 (D. Ariz), Decided April 12, 2010)

The MSPRC has recently held teleconferences that have provided updates regarding the changes to the recovery process. Could this be a result of the case pending in Arizona?

As noted above, one issue that will be addressed by the court is “Whether the HHS can require prepayment of an MSP recovery claim before the correct amount is determined through administrative appeal procedures.”

Prior to the MSPRC demanding repayment of conditional payments, parties are allowed to “dispute” charges that are found to be unrelated on the conditional payment letter (CPL). Disputing charges at this stage prevents interest from accruing. The problem occurred when settlement information was sent in initially and a demand would be processed without the parties having the opportunity to “dispute” any unrelated charges without interest accruing. The MSPRC has attempted to resolve this issue.

The MSPRC has informed the industry that beginning in mid June a “Conditional Payment Notice” (CPN) will be sent out in two situations (1) when they have been put on notice by Section 111 and (2) when they have received settlement information and a CPL has not gone out. Parties will have (30) days to respond with a dispute or settlement information. Failing to respond within (30) days will result in the issuance of a Medicare demand letter.

It is presumed that CMS will consider, that failure to dispute claims at the CPL or CPN level will confirm that parties concede that the claims listed on the CPL payment summary are related to the claim. Will CMS now have justification for the interest that accrues?

The question is what happens if additional claims are added to the demand once parties have disputed the unrelated charges at the CPL level, and the MSPRC has appropriately removed those charges. Can parties dispute unrelated charges at the demand stage that have been added to the payment summary without interest accruing?

The procedural questions concerning the recovery of Medicare conditional payments is appropriately being addressed, but are/will the right questions be asked? The CMS and the MSPRC are clearly motivated to ensure that the recovery process is as efficient as possible procedurally, allowing for many arguments in this regard to possibly be shutdown. But, will CMS modify the Medicare Secondary Payer Act to ensure that it is not so far reaching? The MSP Act is a good law that protects the integrity of the Medicare program, but carrying out the law in a manner that is fair to all involved is what CMS seems to struggle with.

Lien Settlement Solutions can assist your firm in Medicare Compliance and Lien Resolution. Contact us today for more information about our Medicare services and resources at (877) 907-5436 or info@lienss.com. We are the Lawyer’s Complete Solution for Lien Resolution! 

blog subscription buttonSubscribe