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Conditional Payments: Out with the Old, In with the New

In a nutshell, conditional payments are payments that Medicare makes on the condition that, when the claim settles, Medicare payments related to the claim must be reimbursed to Medicare. But 2012 brought important changes as to how we handle reimbursement of Medicare’s conditional payments.

January 17, 2013 Photo

Many of you have attended one (or more) of my CLM presentations on Medicare compliance. For those of you who have had the forbearance to sit through more than one, you have my heartfelt gratitude. Although I find the topic to be endlessly fascinating, I realize that most normal people do not. It’s OK, I get it—we’re talking about Medicare compliance, for Pete’s sake. With that in mind, I do my best to make the presentation relevant, humorous, and somewhat comprehensible. (The key phrase being, “do my best.”)

I start the year thankful for this opportunity to write a column for Claims Management. In the spirit of my live presentations, I will use this column to impart relevant information to you about Medicare, including practice tips, trends, and new developments. I also plan to share with you “reports from the field,” which will highlight compliance issues, concerns, and solutions brought to me by CLM members from all parts of the country. Being from the South, I feel storytelling must be part of my column, so I will also hopefully share with you some entertaining stories about CLM events.

In the spirit of following the advice of a CLM member who attended my presentation last year, sometimes I need to do a better job of “getting to the point.” So let’s get this column—and this year—off and running.

According to an old adage, “Change is good.” In the world of Medicare compliance, that is certainly true, particularly in the area of conditional payments (sometimes called Medicare “liens”). In a nutshell, conditional payments are payments that Medicare makes on the condition that, when the claim settles, Medicare payments related to the claim must be reimbursed to Medicare. Certainly, this isn’t news to any of you. But 2012 brought important changes as to how we handle reimbursement of Medicare’s conditional payments.

Many times, particularly in the context of liability claims, the issue of which party—plaintiff or defendant(s)—will reimburse Medicare gets obscured by Section 111 reporting issues or whether or not a Medicare Set-Aside (MSA) needs to be done. The conditional payment issue, however, is completely separate from reporting or MSA requirements. For instance, even if we get the reporting done correctly or have an MSA prepared, that does not satisfy our obligation to ensure Medicare is reimbursed properly.

So which party bears the risk if conditional payments are not reimbursed? Can this risk be effectively transferred? The historical paradigm has been to shift this risk to the plaintiff in the form of indemnification language in the release documents. In other words, the plaintiff agrees to indemnify and hold defendants harmless if Medicare’s conditional payments are not reimbursed. This practice developed in large part due to the difficulty and delay in obtaining the conditional payment amount and the common misconception that, if we did not receive notice of a Medicare lien, we should let sleeping dogs lie and not seek this information out.

The challenge inherent in this practice is the Medicare Secondary Payer statute. By virtue of 42 U.S.C. Sec. 1395y(b)(2)(B)(ii), Medicare has a statutory right of reimbursement against a “primary plan, and an entity that receives payment from a primary plan” when the primary plan (specifically, the entity writing the settlement check) settles the claim. Those who receive primary payment and are subject to Medicare’s reimbursement rights may include the beneficiary, provider, supplier, physician, attorney, state agency, or private insurer [42 U.S.C. Sec. 1395y(b)(2)(B)(iii)]. So, in essence, even if we attempt to transfer this risk to the plaintiff, Medicare still has the statutory right to pursue recovery against the carrier, or self-insured entity, among others.

MSPRP Portal

So there’s the rub: Medicare makes it difficult for us to obtain conditional payment information, but if we try to shift the burden to the party who has the easiest access to what payments Medicare has made—specifically, the Medicare beneficiary—we are afforded very little protection in the event payments are not reimbursed.

In an attempt to alleviate some of the delay inherent in collecting conditional payment information, Medicare rolled out its new Medicare Secondary Payer Recovery Portal (MSPRP) in July 2012. Isn’t it always fun to add yet another confusing Medicare acronym to the lexicon?

The Web portal allows qualified users to gain access to conditional payment information, dispute conditional payment charges, and request CMS’ final conditional payment demand online. The portal is available to claimants, insurers, TPAs, attorneys, beneficiaries, and representatives. To use the portal, prospective users must register through CMS’ registration process. Primary payers are limited to 20 users per tax ID number.

The portal allows users to view online conditional payment information. With respect to liability claims, a proof of representation (POR) or consent to release (CTR) must still be submitted to obtain that information. These documents can be found on the MSPRC website (www.MSPRC.info). Workers’ compensation claims do not require submission of these documents in order to gain access to the system.

That change has resulted in faster turnaround times in some situations. However, ICD-9 codes, dates of service, and providers are not currently available for viewing on the portal by primary payers and other third parties. For these users, obtaining this information—which is critical to the actual negotiation of the lien—must still be requested and received via regular mail.

In addition, before you can gain access to the portal, you must first receive the MSPRC case identification number (MSPRC ID) from Medicare. The MSPRC ID will be issued by Medicare via regular mail after the claim is first reported. So before you can gain access to the portal online, you must wait to receive the case ID number in the mail.

The obvious sticking point in gaining access to the portal in liability claims is the POR and CTR must still be obtained from the plaintiff (Medicare beneficiary). It is fair to say that, in some circumstances, plaintiffs may be reluctant to sign a release that gives you the right to investigate payments made on their behalf by Medicare.

This drives home the importance of early, proactive discussions with the plaintiff and/or plaintiff’s counsel about how the lien information is going to be collected, negotiated, and settled. Waiting until the mediation or a week before trial is too late. Once you have confirmation that the plaintiff is a Medicare beneficiary, the subject of the plaintiff’s execution of the POR or CTR should be addressed, if appropriate. At the very least, a plan of action should be put in place addressing each party’s role with respect to Medicare compliance issues and how they will ultimately be handled.   


Jessica Smythe is a national Medicare compliance consultant with Crowe Paradis Services Corp., a member of the Verisk Insurance Solutions group at Verisk Analytics. She has been a CLM Fellow since 2011 and can be reached at jsmythe@cpscmsa.com.


About The Authors
Jessica Smythe

Jessica Smythe is assistant vice president of customer relationship management at ISO Claims Partners, a member of the Verisk Insurance Solutions Group at Verisk Analytics. She has been a CLM Fellow since 2011 and can be reached at jsmythe@iso.com.  

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