Changes in Conditional Payments and Reporting Requirements

Medicare Set-Aside Blog on March 5, 2008
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Just this past February, amendments were made the Code of Federal Regulations (CFR) affecting Medicare Set-Aside allocation (MSA) requirements which go into effect on March 24, 2008. Specifically, these changes address conditional payments and reporting requirements for workers’ compensation, liability, and no fault claims. These amendments in addition to the Medicare, Medicaid, and SCHIP Extension Act of 2007 indicate that Medicare is increasingly developing protocol to deal with this previously muddy issue. Although the Extension Act doesn’t go into effect until July 1, 2009, it clearly addresses the issue of reporting claims to Medicare in order to more adequately and comprehensively protect Medicare’s interests.

The amendments made to the CFR also affect current conditional payment reporting. Under the Medicare Secondary Payer Act (MSP), Medicare is always the secondary payer for workers’ compensation, liability, and no fault claims and primary payers are currently required to reimburse Medicare for conditional payments made on the claim. Currently, Medicare has a complete enforcement right against any primary payer and any entity that received payment including a claimant, provider, attorney, etc. When does Medicare need to be notified of a claim? Generally, any claim that affects Medicare’s interests must be reported.

The original version of 42 C.F.R §411.25(a) states “if a primary payer learns that CMS has made a Medicare primary payment for services for which the primary payer has made or should have made primary payment, it must give notice to that effect to the Medicare intermediary or carrier that paid the claim.” When a primary payer actually “learns” of a payment can be fuzzy, at best, and apparently Medicare agreed. The amended version now reads “If it is demonstrated to a primary payer that CMS has made a Medicare primary payment for services for which the primary payer had made or should have made primary payment, it must provide notice about primary payment responsibility and information about the underlying MSP situation to the entity or entities designated by CMS to receive and process that information.” The key word here is demonstrated, which can include a judgment or a payment conditioned upon the beneficiary’s compromise, waiver, and release. Determination or admission of liability is irrelevant.

Additionally, 42 C.F.R. §411.22 now also includes a subsection which states:

(c) The primary payer must make payment to either of the following:

(1) To the entity designated to receive payments if the demonstration of primary payer responsibilities is other than receipt of a recovery demand letter from CMS or designated contractor.

(2) As directed in a recovery demand letter.

Now consider these changes to the CFR in conjunction with the forthcoming Extension Act. One of the features of the act requires primary payers to determine Medicare eligibility for claimants/plaintiffs regardless of whether there is pending settlement and alert Medicare “within a time specified by the Secretary after the claim is resolved through settlement, judgment, award, or other payment.” The exact timing of when Medicare needs to be put on notice is not clear, but expected to be outlined by the Secretary of Health and Human Services in the future.

What does this mean?  Basically, CMS must be the reimbursed party. Failure to reimburse CMS, or reimbursing the beneficiary directly or another entity, is not sufficient under the rules of the MSP. That said, CMS can then proceed with reimbursement against the primary payer without going after the claimant/plaintiff, provider, attorney, etc.

Most insurance carriers are aware of the upcoming changes and penalties imposed by the Extension Act, but considering these recent amendments to the CFR as well, it’s imperative that carriers institute procedures as soon as possible to comply with Medicare’s current requirements regarding conditional payments. Most importantly, carriers should be initiating policies immediately to determine eligibility status for claimants/plaintiffs, reporting claims to the Medicare Coordination of Benefits Contractor, and requesting a list of Medicare’s up-to-date list of conditional payments for a beneficiary. Ultimately, instituting these policies now will save time and money in what is already a complicated process and is in the best interests of all parties.


How can MEDVAL help you?

MEDVAL can investigate eligibility status, report claims to the Medicare Secondary Payer Recovery Contractor (MSPRC), report the claim to the Coordination of Benefits Contractor at CMS, and request the list of current conditional payments as part of its all-inclusive service. MEDVAL is one of the nation’s leading Medicare Set-Aside providers with a specialty in offering you all of the necessary services in house and for a fraction of the cost of our competitors. Call MEDVAL today for more information or to ask about our single-source solution model in this emerging field. 


    MEDVAL     1-888-SET-ASIDE (1-888-738-2743)



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