Understanding Medicare's Recovery Processes

The Medicare Secondary Payer (MSP) Act was enacted to prevent shifting the burden to Medicare to pay for a Medicare beneficiary’s injury-related medical care where a primary workers’ compensation, general liability, and/or no-fault claims payer may be available (herein referred to as “NGHPs” per the CMS NGHP Section 111 User Guide).

Pursuant to the MSP, NGHPs are generally tasked with three major tenants of compliance: 1) reimbursing Medicare for any past conditional payments; 2) reporting claims/settlements with Medicare eligible individuals; and 3) protecting Medicare’s future interest via a Medicare Set-Aside (MSA) or other future medical allocation/mutual agreement to prevent shifting the burden of future injury-related medical care onto the Medicare Trust Fund.

In our view, conditional payments can be the most pressing MSP compliance concern today for NGHPs, because failure to reimburse, delay, or mistakes in the reimbursement process can result in an action for double damages if Medicare/Medicare Advantage files suit to recover. No doubt, the conditional payment recovery process can be daunting for even the most seasoned professional in MSP claims, as NGHPs must pay careful attention to strict response/appeal timeframes, two different recovery contractors, and specific rules around dispute/waiver of asserted conditional payments.

At the fundamental level, it is important to understand the various CMS conditional payment recovery contractors and their roles. There are two CMS contractors that pursue NGHP conditional payment recoveries: the Benefits Coordination & Recovery Contractor (BCRC) and the Commercial Repayment Center (CRC). The BCRC primarily pursues liability and no-fault conditional payment recoveries, as well as post-settlement conditional payment recoveries in workers’ compensation. The BCRC uses MMSEA Section 111 data to maintain the common working file and manages any coordination of benefits issues as they pertain to Medicare beneficiaries. The CRC works off MMSEA Section 111 data reported by NGHPs to initiate conditional payment recoveries in workers’ compensation and no-fault claims for which an NGHP has reported ongoing responsibility for medical.

Reporting of claims/settlements with Medicare beneficiaries to the Centers for Medicare & Medicaid Services (CMS) is required for NGHPs and failure to report can carry potential civil monetary penalties of up to $1,000 per day/per claim. By complying with MMSEA Section 111 reporting requirements, where NGHPs report certain claims/settlement data to CMS, NGHPs provide CMS and its contractors with the data to identify conditional payment recovery opportunities.

Thus, the interaction of Section 111 data and its impact upon conditional payment recoveries is vital to understand. For example, in a workers’ compensation claim where ongoing responsibility for medical might be reported as denied, the parties may receive correspondence from the CRC indicating that the conditional payment amount is zero. However, upon settlement when the NGHP reports the settlement amount via the total payment obligation to claimant (TPOC) Section 111 field, it may trigger the BCRC to conduct a fresh sweep for conditional payments, which can identify a charge that was missed previously, which results in an unanticipated demand post-settlement.  

To further complicate this scenario, the BCRC demand may be issued months after settlement and will be mailed directly only to the Medicare beneficiary. Although the demand may list the beneficiary as the debtor, all parties to the settlement are responsible for the debt pursuant to the MSP. As such, as a best practice, settlement documents should clearly outline who will be responsible for paying the final demand, if any. If the settlement holds anyone other than the beneficiary responsible, that entity must remember to secure an authorization, such as a proof of representation, from the beneficiary and then monitor the Medicare Secondary Payer Recovery Portal post- settlement. Remember, the TPOC will automatically trigger the BCRC to conduct a final sweep of the recovery system, which makes follow up post-settlement critical.

Further, to clear any misconceptions at the settlement table, it is critical to appreciate the two Medicare contractor recovery processes as they pertain to which entity (the beneficiary or the NGHP) the Medicare contractor will pursue recovery against. The CRC pursues recovery against the entity providing medical coverage, most commonly an insurance carrier (NGHP). The BCRC pursues recovery directly against the beneficiary using the settlement terms to guide its recovery action. Confusion may occur when a beneficiary resolves a liability claim that also included underlying no-fault coverage. The BCRC may recover where it receives notice of a TPOC, meanwhile the CRC may recover where it receives notice of an ongoing responsibility for medical during the pendency of the claim.

Thus, it is crucial for parties to identify the contractor pursuing the debt; and determine if the recovery is controlled by an ongoing responsibility for medical or TPOC report.  An attorney representing a Medicare beneficiary in a general liability claim may redirect a BCRC lien to the no-fault carrier, but the attorney needs to understand that the conditional payment recovery is technically against the liability settlement. If available no-fault limits are less than the BCRC demand, the beneficiary may be liable for the additional exposure.

Equally important to understand, resolving a debt with the CRC pre-settlement, or securing a zero dollar CRC letter, does not preclude the BCRC from pursuing one last recovery post-settlement. As noted above, the final sweep by the BCRC may identify charges not previously identified by the CRC. As a final best practice, a pre-settlement lien search with the CRC, and a post settlement lien search with the BCRC, are both recommended to provide peace of mind that all conditional payment exposure has been resolved.