Formal Appeal Rights for Conditional Payments for Applicable Plans

CMS, Medicare Set-Aside Blog, MSP News, News and Events on April 24, 2015
Posted by Kimberly Wiswell

For Medicare Secondary Payer (MSP) recovery demand letters issued on or after April 28, 2015 to liability insurance (including self-insurance), no-fault insurance, or a workers’ compensation entity as the debtor, these entities will now have formal appeal rights.

On February 27, 2015, the Centers for Medicare & Medicaid Services (CMS) issued a final rule implementing certain provisions of the Strengthening Medicare and Repaying Taxpayers Act of 2012 (the SMART ACT). This final rule establishes a formal appeals process for applicable plans in situations where the Secretary seeks Medicare Secondary Payer (MSP) recovery directly from the plan. The rule becomes effective April 28, 2015, and applies to demand letters issued on or after April 28, 2015.

Prior to the implementation of this regulation, if an MSP recovery demand was issued to the beneficiary as the identified debtor, the beneficiary alone had formal administrative appeal and judicial review rights. Any recovery demands issued to the applicable plan as the identified debtor had no formal administrative appeal rights or judicial review. While CMS’ recovery contractor addressed any dispute raised by the applicable plan, prior to this final rule, there was no formal multi-level appeal process in place. This new appeals process parallels the existing process for claims-based beneficiary and other appeals for both non-MSP and MSP, and is used for appeals involving both pre-payment denials as well as overpayments.

This new multi-level appeal process includes:

  • An “initial determination” (the MSP recovery demand letter),
  • A “redetermination” by the contractor issuing the recovery demand,
  • A “reconsideration” by a Qualified Independent Contractor,
  • A hearing before an administrative law judge (ALJ),
  • A review  by the Departmental Appeals Board’s Medicare Appeals Council, and
  • Judicial review in the United States District Court.

The MSP recovery demand letter and any subsequent appeal determination will specify any timeframe or other requirement to proceed to the next level of appeal.

The applicable plan may appeal the amount of the debt and/or the existence of the debt, however does not permit applicable plans to appeal the issue of who is the responsible party/correct debtor. (Medicare’s decision regarding who or what entity it is pursuing recovery from is not subject to appeal.)

Proper proof of representation must be submitted in writing prior to or with a request for each appeal in order for an attorney, agent or other entity to file an appeal on behalf of an applicable plan or act on behalf of an applicable plan with respect to an appeal that has been requested.

A new document titled Appeal Rights for Applicable Plans has been posted to, available through this link:

The SMART Act also includes a provision requiring Medicare to notify the beneficiary who received the items or services at issue if the insurer or workers’ compensation entity requests an appeal regarding the demand letter. However, the notice will be informational only and does not require any action on the part of the beneficiary who receives the notice, nor will they be a party to the appeal.

A new document titled Appeals Process for Insurers and Workers’ Compensation Entities and Required Notice to Medicare Beneficiaries that includes a sample copy of the letter being sent to the beneficiaries has been posted to, available through this link:

The final rule can be found at 80 FR 10611, February 27, 2015, available through this link:

Additionally, CMS will be presenting a webinar on the “Applicable Plan” Appeals Process on 04/28/15 at 1:00 pm.