About Medicare Conditional Payments
Medicare is a government program that provides health insurance benefits to those above 65 years of age, the disabled, and those with end-stage renal disease. 42 U.S.C. § 1395c. Prior to 1980, Medicare generally paid for medical services whether or not the Medicare beneficiary was also covered by another health plan. The MSP statute, enacted in 1980 to reduce skyrocketing federal health care costs and protect the integrity of the Medicare system, makes Medicare the secondary payer for medical services provided to Medicare beneficiaries whenever payment is available from another primary payer.
The MSP requires Medicare beneficiaries exhaust all available insurance coverage before looking to Medicare’s coverage.
To that end, the MSP statute prohibits , Medicare from making any payment to a beneficiary for medical expenses if payment has been made, or can reasonably be expected to be made promptly under an automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance. 42 U.S.C. § 1395y(b)(2)(A)(i). If Medicare does make a payment, it is considered to be a “conditional payment” and if any other party later becomes responsible for payment of services already paid for by Medicare, then Medicare must be repaid.
This statutory framework creates a strong recovery right for Medicare, and is often said that Medicare has a “super lien.” Medicare can seek repayment of their “conditional payments” from any party associated with the settlement of the personal injury action, including the attorneys. Therefore satisfying Medicare’s “super lien” is often a stumbling block to settlement of the underlying action.
To avoid this stumbling block and increase the speed with which a personal injury case can be resolved there is a process for dealing with Medicare’s interest. When a Medicare enrollee files a claim for personal injuries, or hires an attorney to do so notice must be given to Medicare.
Once the underlying personal injury action has resolved settlement information needs to be provided to the Benefits Coordination and Recovery Center. Medicare will then issue Final Demand which must be repaid within 60 days or interest will begin to accrue.
Our service includes the audit and verification of conditional payments for cases that originate from a specific personal injury incident. The process includes reporting to the Centers for Medicare and Medicaid Services, the audit and dispute of Conditional Payment Summaries, the request for Final Demand, and this service includes 1st & 2nd level administrative appeals.
Medicare Conditional Payments Glossary
When a Final Demand, Final Determination, or Final Compromise has been reached, but there are errors in the calculation of the lien on the part of the lien holder, an appeal is submitted, identifying the error and requesting a correction. In most cases, an appeal request is submitted only after the Final Determination has been made if there are unrelated claims or an incorrect calculation of the final lien. Appeal decision timeframes can vary by lien holder. Medicare requests a minimum of 60 days for a response to any appeal requests.
The review of the Medicare Conditional Payment Summary to ensure there are no errors, duplicates or unrelated treatment is included.
The Benefits Coordination and Recovery Center. This is Medicare’s recovery contractor.
When a lien has been established by Medicare, a compromise can be proposed as an attempt to reduce the lien beyond the standard reduction for procurement costs. A compromise may be granted if the case meets the consideration requirements by CMS.
Medicare payment for services for which another payer may later become responsible.
The Center for Medicare and Medicaid Services
The Conditional Payment Summary which itemizes all the benefits provide that CMS believes are related to ongoing litigation.
The letter issued by BCRC once they have been notified of settlement. The amount demanded in this letter must be repaid within 60 days.
A health benefit plan for the aged and disabled administered by CMS. To qualify for Medicare a beneficiary needs to be 65 or older, disabled (if under age 65), or suffering from End Stage Renal Disease (permanent kidney failure).
Medicare consists of:
Part A – Inpatient Hospital/Skilled Nursing Facility benefits
Part B – Outpatient care, doctor visits, and supplies
Part C – Medicare Advantage
Part D – Prescription Drug benefit
The Medicare Secondary Payer Act
Medicare Secondary Payer Recovery Portal. An online tool used to communicate directly with BCRC about specific open cases.
Qualified Independent Contractor. These organizations conduct 2nd level appeals (Reconsideration) for CMS and are outside BCRC.
The first level of administrative appeal filed with BCRC following the issuance of a Final Demand. The deadline for filing is 120 days
The second level of administrative appeal filed with the appropriate QIC following the issuance of a Redetermination from BCRC
The process of notifying, verifying, and negotiating a lien until final resolution is reached. This may include the pursuit of compromises, appeals or waivers until the lien holder produces their final offer for recovery.
The process of determining if Medicare has a repayment obligation and confirmation that such obligation has been fully and finally satisfied.
In very special cases where a Medicare lien cannot be repaid by a beneficiary, a waiver request may be submitted to Medicare. This request is made by using form SSA-632-BK and describing the financial situation along with the reason for the inability to reimburse Medicare after an overpayment.
Medicare Conditional Payments FAQ
How long does Medicare Conditional Payment resolution usually take?
Approximately 2 weeks after the claim has been reported to “COBC” the file will be transferred to BCRC who will then begin preparing an itemization of all bills paid by Medicare, called a Conditional Payment Summary (“CPS”). Within 65 days from receiving the file BCRC will send the first CPS to the beneficiary or their agent. This information may be available sooner on the MSPRP
Once the underlying personal injury action has resolved settlement information needs to be provided to BCRC via fax, mail or portal. Approximately 21-45 days later BCRC will issue their Final Demand to the beneficiary or agent. This amount must be repaid within 60 days or interest will begin to accrue.
How much must be repaid to Medicare?
The amount that must be repaid to satisfy Medicare’s interest is determined by application of the appropriate reduction regulation.
- C.F.R. 411.37(c): Medicare payments are less than the judgment or settlement.
- Add (Attorney’s Fees) and (Costs) = Total Procurement Costs
- (Total Procurement Costs) / (Gross Settlement Amount) = Ratio
- Multiply (Lien Amount) by (Ratio) = Reduction Amount
- (Lien Amount) – (Reduction Amount) = Medicare’s Final Demand Amount
- C.F.R. 411.37(d): Medicare payments are equal to or exceed the judgment or settlement.
- Add (Attorney’s Fees) and (Costs) = Total Procurement Costs
- (Gross Settlement Amount) – (Total Procurement Costs) = Medicare’s Final Demand Amount
It is possible that Medicare’s Final Demand results in zero recovery for the beneficiary. If this is the case, or the amount of the Final Demand is substantial Synergy has a Medicare Final Demand Refund service. (make that a hyperlink to the refund page)
Who is responsible to repay Medicare?
Everyone who was party to the resolution of the underlying personal injury matter is equally liable to repay Medicare’s Final Demand.
- “The United States may recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity.” 42 U.S.C. § 1395y(b)(2)(B)(iii)
- “CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.” 42 C.F.R. §411.24(g)
What happens if Medicare is not repaid?
The plaintiff has 60 days from the date of the Final Demand to issue payment to Medicare or interest will begin to accrue. If the Final Demand remains unpaid, short of litigation, Medicare will transfer the matter to the Department of Treasury so that plaintiff’s future Social Security Benefits can be garnished. Should litigation be required by Medicare the attorney fee and costs reduction will be inapplicable as that reduction is based upon the idea that Medicare is repaid without the requirement of litigation. Additionally, though rarely exercised by CMS themselves, there is the Private Cause of Action which allows CMS to double the amount of the Final Demand if not repaid within 60 days.