Performant Financial Corporation announced on October 5, 2017, that it was awarded the Medicare Secondary Payer Commercial Repayment Center (CRC) contract for identifying and recovering conditional payments in 2018. Performant has significant experience in assisting government organizations in the prevention and recovery of improper payments. Having served as a Recovery Auditor for CMS in the past, we expect a smooth transition between the current contractor, CGI and Performant in January of 2018. We will keep you advised of further developments.
Although Medicare is a secondary payer when a primary payer is available, the Center for Medicare and Medicaid Services (CMS) often overreaches when seeking reimbursement of conditional payments under the Medicare Secondary Payer statute (MSP). This typically occurs when CMS seeks reimbursement for payment of a bill that includes treatment diagnosis codes that cover both an injury related and a non-injury related condition. Since a workers’ compensation carrier is generally not responsible for treatment of non-injury related conditions, the proper primary payer for the non-injury related treatment is Medicare.
CMS’s overly broad reimbursement claims were the subject of the California Insurance Guarantee Association (CIGA) v Burwell, et al case in the U.S. District Court for the Central District of California (Case No 2:15-cv-01113-ODW-FFM, 1/5/17). The action stemmed from CIGA’s objection to CMS’s three reimbursement demands for payments made on service dates that included both work related and non-work related treatment charges. Although CMS subsequently dropped the demands, CIGA sought a judicial declaration and permanent injunction barring CMS from calculating conditional payments in this way. CIGA argued that this practice was contrary to the MSP and Medicare’s regulations.
CMS moved for summary judgment and a dismissal of the action raising several defenses. It argued that the action was moot since CMS was no longer seeking reimbursement. It also argued that CMS’s practice is based on a reasonable interpretation of the MSP and implementing regulations. The adequacy of CIGA’s pleadings were also challenged as well as their “programmatic attack” on Medicare.
The Court rejected all of CMS’s arguments and denied CMS’s Motion to Dismiss and Motion for Summary Judgement. CIGA’s Motion for Partial Summary Judgment was granted. In rejecting CMS’s argument that the action was now moot, the Court noted that the timing of CMS’s withdrawal of the reimbursement claims supported their conclusion that this was simply a “strategic maneuver” in this claim.
It also disagreed with CMS’s claim that their interpretation of the MSP and implementing regulations was reasonable based on the Court’s review of the relevant language. The Court noted that under the MSP, a primary plan’s reimbursement obligations pertained to an “item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service.” 42 U.S.C. Section 1395 y(b)(2)(B)(ii). The corresponding regulation’s definition of an “item or service” was also reviewed. It provides in pertinent part as follows: “Any item, device, medical supply or service provided to a patient (i) which is listed in an itemized claim for program payment or a request for payment…” 42 C.F.R. Section 1003.101. Given the use of the singular version of the words “item or service” in the MSP and the regulation’s reference to “any item, device, medical supply or service”, the Court determined that one medical treatment should be considered for recovery despite the manner in which the provider bills for the treatment.
The Court also considered the MSP language pertaining to “responsibility to make payment” in its analysis. In citing Caldera v Ins. Co. of the State of Pa., 716 F.3d 861, the Court noted that state law generally determines whether a compensation carrier has a responsibility to make payment with respect to an item or service. In the instant case, California law clearly stated that a compensation carrier is not responsible for treatments that are unrelated to the industrial accident. In light of this, the Court held that when a single charge contains multiple diagnosis codes, the presence of one injury related code does not “ipso facto” make CIGA responsible for full reimbursement of the non-industrial codes. The ability to reasonably apportion between the work related and non-industrial codes in the charge should be considered by CMS.
Although the CIGA case pertains to conditional payments, its arguments may also apply to “future conditional payment” projections that are included in a CMS reviewed Medicare Set-Aside. For example, a compensation carrier’s payment for a physician’s visit that treats an accepted condition yet also lists a denied condition should not be viewed as an acceptance of both conditions. In addition, the CIGA Court’s discussion of the role state law plays in the determination of “responsibility to make payment” in an MSP context provides further support for state law limited projections in the Medicare Set-Aside.
In regards to conditional payment recovery claims, we continue to recommend that parties carefully examine the charges listed in CMS’s Statement of Reimbursement. Since many workers’ compensation laws require parties to secure itemized bills from providers, these bills and supporting medical records may be used to dispute over-inclusive conditional payment recovery claims. The direct right of appeal process is also available and should be used. We will keep you advised of further developments.
On November 17, 2016, the Commercial Repayment Center (CRC) provided a teleconference regarding coordination and recovery of payments made by Medicare related to liability, no-fault or workers’ compensation claims.
The Benefit Coordination and Recovery Center (BCRC) is responsible for collecting payments made by Medicare from a claimant. The CRC is responsible for recovery of conditional payments against an “applicable plan.” An applicable plan is an insurance carrier or workers’ compensation entity that has been identified as responsible for reimbursement for payments made by Medicare. Additionally, an applicable plan may have certain reporting requirements under Section 111 reporting. This may include requirements of “Ongoing Responsibility for Medical” (ORM reporting) or reporting Total Payment Obligation to Claimant (TPOC) to CMS through a sophisticated web portal.
During the teleconference, CRC discussed internal development in processing recovery of claims. Regarding past issues with unrelated diagnosis codes being included in conditional payment notices and letters, CRC advised the “grouper,” which was providing the unrelated treatments, was adjusted and is now providing summary forms (showing payments made by Medicare) with improved accuracy. The manual oversight of the summary forms is still being conducted to monitor the accuracy of the recovery letters. However, resources for the grouper oversight are being reduced based upon the improved accuracy. CRC also advised that it is “caught up” on their processes except for post initial determination replies.
Time Frames: Additionally CRC advised its target time-frames for responding to certain requests:
- 45 days to provide conditional payment information when proper authorization is on file and CRC has the lead information to develop the file
- Reply to Conditional Payment Notices within 30 days
- Reply to Conditional Payment Letter within 45 days
- Reply to post determination dispute within 60 days
- Acknowledge reimbursement of conditional payments within 20 days.
Intent to Refer to U.S. Treasury for Collections: If conditional payments are not reimbursed to Medicare and there is no pending appeal, CRC will refer the debt to collections by the U.S. Treasury Department. The CRC has advised that it will send an intent to refer a debt to collections by the U.S. Treasury department letter as a reminder to itself and the parties there is an outstanding balance related to a claim. These are commonly referred to as “intent to refer” letters. If an intent to refer letter is received, a response should be prepared. A carrier/employer should review the correspondence as this may be an indication that an appeal was not received or an appeal was decided without proper notice by CMS. In the circumstances of accepted claims, reimbursement may have not been received or processed properly.
Web Portal: The CRC highlighted additional functions that will be available in the first quarter of 2017 through the Medicare Secondary Payer Recovery Portal (MSPRP). This included the addition of information regarding conditional payment balance and refund status. Further, the web portal can be used to file an appeal of the initial determination and obtain status updates regarding the redetermination.
Authorization: The CRC encouraged the industry to use the web portal to upload authorizations and to use the web portal to obtain status updates regarding disputes and pending appeals. Authorization for a vendor or third party to communicate on behalf of an applicable plan must be provided on each claim. Additionally, the CRC stressed the importance of proper authorization. Specifically, the CRC advised that in situations where there is a settlement of the liability or workers’ compensation claim and the TPOC is reported to CMS, the BCRC will list the beneficiary as the debtor and request reimbursement from the beneficiary. This process requires special attention by the industry and authorization from the beneficiary in order negotiate the payments made by Medicare will be required.
BCRC will also pursue recovery from the beneficiary when the parties use the final demand and dispute process available on the web portal. This process allows the parties to the claim to obtain a final demand prior to settlement, but involves a highly coordinated process requiring approval of settlement three days from downloading CMS final demand and providing settlement within 30 days thereafter. If the parties do not meet the entire requirements of the process, the downloaded final demand is invalid. Additionally, this process may only be attempted once per claim.
Helpful Tips by CRC: At the end of the presentation, CRC provided some helpful tips in order to allow CRC to process conditional payment searches efficiently:
- Accurate section 111 reporting, including proper ICD9 and ICD10 codes, initiation and termination of ORM
- Sending correspondence to CRC’s proper address
- Attaching letters of authorization to any documents submitted to CRC
- After a TPOC report, the case goes to BCRC and correspondence is sent to the beneficiary and may not be sent to the applicable plan. Authorization from the beneficiary is needed to negotiate conditional payments.
One important take away from CRC’s presentation is the importance of proper authorization by the applicable plan, section 111 reporting entity, the beneficiary, the third party administrators, and MSA vendors in order to expedite and resolve payments by Medicare that require reimbursement. If possible, such terms to cooperate should be included into a claim’s settlement discussions.
Regardless of whether BCRC is pursuing reimbursement for conditional payments against the beneficiary, the Medicare compliance industry as a whole must keep in mind that Medicare is allowed to pursue collection against the applicable plan if the beneficiary does not reimburse Medicare. Therefore, although BCRC may be addressing the beneficiary, the applicable plan is still at risk for reimbursement. We will keep you posted with any further developments.
The Centers for Medicare and Medicaid Services (CMS) transitioned a portion of their Non-Group Health Plan (NGHP) conditional payment recovery work to the Commercial Repayment Center (CRC) as of October 5, 2015. The Benefits Coordination and Recovery Center (BCRC) remained responsible for the conditional payment recovery involving NGHPs in actions that were initiated prior to October 5, 2015. The transition to the CRC occurred several months after CMS implemented a direct right of appeal for conditional payment recovery actions directed towards an “applicable plan”. The direct right of appeal, mandated by the SMART Act, was effective as of April 28, 2015.
The transition of the NGHP conditional payment recovery work to the CRC has been less than smooth at times. Although CMS’ October 5, 2015 Alert regarding the transition to the CRC noted it was intended to improve claims payment accuracy in MSP situations, the CRC has been plagued with:
- data migration errors
- workflow process breakdowns
- miscommunication of file information to clients
- extreme delays in processing conditional payment notifications
- conditional payment notices that include multiple charges unrelated to the reported injury
- appeals to these erroneous charges being denied without a formal review
- final demands being generated when disputes are pending review and determination
The ripple effect of the struggling contractor’s problems has been felt by many in the MSP community. These issues and possible solutions have been the subject of numerous recent discussions between the NuQuest team and the CRC management team. In discussions with the CRC, we were advised that:
- The overly broad conditional payment notices were due to an error in their Tier 2 filter setting. This has since been corrected, and all new conditional payment notices will be given an additional review by CRC’s quality control analysts.
- Conditional payment notices and demands that have already been sent should be disputed through the direct appeal process. We have been assured that going forward; CRC’s review of the disputes will be thorough.
We will continue in our efforts to resolve issues with the CRC by meeting with them regularly and will keep you posted.
Settlement negotiations oftentimes overlook the logistics of the parties’ Medicare conditional payment reimbursement agreement. More often than not, the party drafting the contract, will use general boiler plate releases that pertain to all liens. It is only after the settlement documents have been executed and a demand for payment of the settlement funds made, that the manner of the reimbursement becomes an issue. Further complications may arise from confusion regarding the proper venue for the resolution of these disputes. Two recent Medicare Secondary Payer compliance cases highlight these issues.
In Karpinski v. Smitty’s Bar, Inc., 2016 Cal. App. LEXIS 277 ( April 12, 2016), the California Appellate Court considered Karpinski’s motion to enforce the parties’ settlement agreement pursuant to Section 664.6 of the California Code of Civil Procedure. Smitty’s objected to the motion arguing that Medicare and the State of California had liens on the settlement amount. It also argued that satisfaction of the liens was a statutory and contractual condition precedent to payment of the settlement funds. In reviewing the terms of the settlement agreement, the Court noted that nothing in the settlement terms made repayment of the liens, a contractual condition precedent to Smitty’s obligation to pay the settlement funds. The terms of the contract required Karpinski to honor his obligations pertaining to the liens and also provided a remedy should he fail to honor the obligations. The Court also rejected the statutory condition precedent arguments and affirmed the trial court’s judgment.
The Mikiewicz v Hamorski and Erie Insurance Exchange (2016 U.S. Dist. LEXIS 58859 (May 3, 2016) case similarly involved a motion to enforce a settlement agreement between the parties. The agreement however was contingent upon the satisfaction of certain conditions precedent in order to receive the settlement funds. One of the conditions pertained to the reimbursement of Medicare’s conditional payments. A dispute arose as to the proper venue for the hearing on the motion to enforce the settlement agreement. Mikiewicz filed a motion to enforce the agreement in the Lackawanna Court due to Erie Insurance’s failure to pay the settlement funds. Erie Insurance moved to remove the case to the United States District Court for the Middle District of Pennsylvania arguing that federal jurisdiction was appropriate since the claim involved the Medicare Secondary Payer Act (MSPA). Mikiewicz moved to remand the action back to the Lackawanna County Court.
In remanding the action back to the Lackawanna County Court, Judge Mariano found Erie’s actions “objectively unreasonable”. According to Judge Marian, there was nothing in the MSPA or the Medicare statute that demonstrated that the MSPA completely pre-empts state law.
The Karpinski and Mikiewicz cases both illustrate the types of conditional payment issues that may arise after a settlement agreement has been reached. Rather than relying on boilerplate releases, each party to the settlement should have a clear understanding of their respective obligations when it comes to negotiating and satisfying the liens in the case. Conditional payment reimbursement as a condition precedent to the payment of the settlement may be negotiated as a term of the agreement. Alternatives may also include the parties’ agreement to hold a portion of the settlement funds in escrow while the conditional payment issues are being resolved. The additional attention to the conditional payment details during settlement negotiations is well worth the effort.
For a more complete analysis of the cases, please click the attached link.