CMS Webinar: Appeal Rights for Applicable Plans

CMS, Medicare Set-Aside Blog, MEDVAL News, MSP News on May 11, 2015
Posted by Erin O'Neill, PA-C, JD

On Tuesday, May 5, 2015, CMS presented a webinar on the Appeal Rights for Applicable Plans. The final rule establishing a formal appeals process for applicable plans in situations where Medicare Secondary Payer Recovery is sought directly from an applicable plan, was effective on April 28, 2015.

Barbara Wright began the call by explaining that previously, an entity meeting the definition of an applicable plan, had no formal appeal rights but had only an informal ability to rebut the information contained within a conditional payment/demand letter. The Strengthening Medicare and Repaying Taxpayers Act of 2012 (The SMART ACT), formalized the appeals process for applicable plans. [The final rule can be found at 80 FR 10611, February 27, 2015, available through this link]

It was explained that the definition of the term “Applicable Plan”, means liability insurance (including self-insurance), no fault insurance or workers’ compensation laws or plans, as identified at 42 USC Section 1395y(b)(8) and 42 CFR 405.902.

The steps of the formal appeals process were outlined as follows:

  1. Initial determination (Demand Letter)
  2. Redetermination by the contractor issuing the Demand Letter
  3. Reconsideration by a Qualified Independent Contractor
  4. Hearing before an Administrative Law Judge (ALJ)
  5. Review by the Departmental Appeals Board’s Medicare Appeals Council
  6. Judicial review in the United States District Court.

It was noted that only demand letters issued after 04/28/15 can be appealed. Prior to 04/28/15, letters issued were not actually initial determinations and the applicable plan had no formal appeal rights. Each demand letter or subsequent appeal determination letter will include instructions on how to proceed to the next level in the appeals process, as well as indicate the time frame required for the response. Importantly, it was pointed out that just because a party may be carbon copied (cc:) on a letter,  this does not give that party the ability to appeal. Only the applicable plan has a right to appeal.

One of the most important points discussed on the call involves claims where there is Ongoing Responsibility for Medical (ORM). It was noted that CMS may pursue recovery from the primary payer even where there as has been no settlement or termination of ORM. Additionally, in claims where the ORM continues for an extended period of time, CMS may issue multiple demand letters. Only the applicable plan can repay the demand but pursuant 42 CFR 405.906, the beneficiary will receive notice of the demand but is not a party. Additionally, the beneficiary will receive notice of any appeal filed by the applicable plan (42 CFR 405.947).

A second very important point discussed was what exactly can be appealed. Only the existence of the debt and the amount of the debt can be appealed. With respect to the debt itself, CMS is not required to establish causation. Also, it was clarified that CMS’ decision regarding who/what entity to pursue recovery from is not subject to appeal. Statements that the applicable plan has already paid the beneficiary or another party are not valid defenses.

Another important point discussed involved the pro rata reduction for attorney’s fees/other costs which has routinely been applied to demands made on the beneficiary. CMS indicated that this reduction was not applicable to demands issued to applicable plan pursuant to 42 CFR 411.37.

Additionally, CMS offered tips and suggestions for applicable plans, regarding the appeals process. These included the following:

  1. Pay attention to all correspondence and have a process in place to review and act properly. Failure to respond to a letter could result in the actual debtor being misidentified. While the decision regarding who/what entity to pursue recovery from is not subject to appeal, important deadlines for a response could be missed.
  2. Use appropriate terms with respect to each level of the appeals process. In other words, if you are at the second level of the appeals process, be sure to label your request a “redetermination”. If your request is labeled incorrectly, this could result in the appeal being dismissed.
  3. Be specific about your appeal request and only address the issue under appeal.
  4. If you are only challenging part of the debt, consider paying the amount you aren’t challenging to stop the accrual of interest on that portion of the demand.

Finally, CMS indicated that November 10, 2014 Technical alert for MSP recovery related correspondence, scheduled to take effect July 13, 2015, has not yet been implemented but will likely be implemented in the near future. As per the Alert, designation of a recovery agent in the TIN reference file fields or DDE fields, will allow the agent to receive recovery related correspondence; however, Proof of Representation (POR) will be required to discuss or appeal a final demand.

CMS has indicated that a copy of the slides utilized in the webinar will be posted on the website; however, the slides have not yet been posted.

A notice outlining the Appeal Rights for Applicable Plans has been posted to, available through this link.

A notice outlining the Technical Alert: Option for RREs to Submit Recovery Agent Information posted to, is available through this link.