Shark Week May be Over; but the Conditional Payment Recovery Process Continues to Terrorize

Conditional Payments, Medicare, MSP News on August 9, 2018
Posted by Jean S. Goldstein, JD, CMSP

Conditional payments, recovery process, CRC, MSP, Medicare

Shark Week is a magical week; providing some of the most enthralling and illuminating insight into jaw-dropping actions of magnificent beings.  As with previous years, Shark Week 2018 did not disappoint.  Many of us can recall learning in basic grade school science that sharks are a necessary evil to keep the ecosystem in a proper balance.  One can analogize Medicare’s role in the conditional payment recovery process for non-group health plans to the role sharks take on.  In both roles, the key players are conducting a necessary evil, attempting to achieve a balance.  While there may not be a “Medicare Conditional Payment Recovery” televised event, one does not have to tune in very much further than your own claims files to discover some very jaw-dropping actions by Medicare.

At the heart of each conditional payment recovery is the Medicare Secondary Payer Act, which established that Medicare is a secondary payer for medical services or items when other forms of insurance are primary.[1]  Despite being a secondary payer, Medicare also has a statutory right to make payments for treatment or services when payment from a primary payer will not be made promptly.[2] Payments are made on the condition that Medicare can recover the payments made from the primary payer.  In October 2015, Medicare introduced the Commercial Repayment Center (CRC) into the recovery process, whose position has been filled by the current contractor, Performant. The recovery of conditional payments as outlined by Medicare is designed to follow a step by step process, which includes:

  • Reporting – An applicable plan reports ongoing responsibility for medicals (ORM)
  • Conditional Payment Notice/Letter – The Conditional Repayment Center (CRC) identifies conditional payments made by Medicare and issues a conditional payment notice/letter (CPN) to an applicable plan with ORM. There is a 30-day window to dispute charges.
  • Dispute – An applicable plan has one opportunity to dispute a CPN.
  • Demand – If one or more conditional payments remain following the dispute (or if no response to the CPN), a demand letter is issued by the CRC. The demand must be paid within 60 days to avoid interest penalties or an appeal must be made within 120 days from the date the letter has been received.
  • Appeal – Applicable plans may appeal the amount or existence of the debt in part or in full.
  • Interest on the Debt – Interest begins to accrue from the date of the demand letter, if the debt is not resolved in 60 days. If no resolution continues, an “Intent to Refer” (ITR) letter is issued.
  • Referral to Treasury – If any portion of the debt remains delinquent 180 days from the date of the demand letter, collection services by the Department of Treasury may follow.

Once you can wrap your mind around the basic elements and process regarding conditional payment recoveries, the step by step process appears easy to follow.  Except for the fact that there are existing challenges and inconsistencies that are more than enough for any primary payer to feel terrorized, including:

  • A backlog of disputes and appeals, such that CMS’ outlined recovery timeframes are not adhered to;
  • Lost disputes/appeals;
  • Demand letters being issued, while disputes to conditional payment notices are still being processed; and
  • Claims being referred to the Treasury Department for collection while appeals are pending, resulting in concerns of collection efforts and subsequent offsets.

By now, most payers are well aware of the inescapable challenges associated with the recovery process, but with this knowledge, what can be done to address the issues head on?  Interestingly, there are two tips that have been suggested by the Discovery Network for avoiding a shark attack, which are applicable in some ways to the current state of conditional payment recoveries:

  • Swim in a group or at least be sure to have a partner with you; and
  • Stay alert as to what is going on in the surrounding water environment[3].

These are valuable tips, particularly if examined a bit more thoroughly:

Tip #1: Swimming in a group or having a partner with you:

In November 2014, the Centers for Medicare & Medicaid Services (CMS) announced that Responsible Reporting Entities (RREs) were permitted to appoint a Recovery Agent.  A designated Recovery Agent is an entity or organization that will receive copies of all conditional payment recovery correspondence associated with an applicable plan.  Designating a recovery agent ensures that a named entity will receive all conditional payment information timely and effectively be able to respond to all recovery efforts within the required time frames.

A recovery agent is your best bet for a having a partner with you to navigate the murky environment of conditional payment recoveries. 

Tip #2: Stay alert as to what is going on in the surrounding water environment:

Fortunately, the CRC does not attack and surprise their prey, but one can be caught off guard, if not prepared.  Being aware of the current state of the conditional payment recovery process eliminates much of the element of surprise. The current challenges associated with the recovery process are partly due to the transition to a new Contractor.  As with previous contractors, there is always a transitional period, and some of the challenges and obstacles discussed are simply beyond the new Contractor’s control.  Specifically, the Contractor took over a backlog of cases in February from the previous contractor, which had not been responded to.  Therefore, there is a considerable backlog of claims the Contractor is continuing to work through; claims which are very old at this point, and many of which have already been referred to the Department of Treasury.  Moreover, Federal regulations require that debts aged past 180 days be automatically forwarded to the Department of the Treasury, regardless of status of pending appeals.[4]  Certainly, these unnecessary referrals have resulted in additional work for both the Medicare Secondary Payer community and Department of Treasury of staff, particularly if requiring a refund due to improper and untimely offsets.  We can all hope that additional mechanisms will be implemented soon to stop such improper referrals.  For these very reasons, maintaining a heightened state of alertness of the current environment of conditional payment recoveries is paramount.  In doing so, primary payers have the knowledge to effectively and efficiently address Medicare’s recovery efforts and keep themselves safe from larger attacks down the road.

Ultimately, it is difficult to say which event is more captivating: Shark Week or the current state of the Conditional Payment Recovery Process; both cycles are action packed and slightly unpredictable.  Here’s hoping that by Shark Week 2019 the Conditional Payment Recovery Process is filled with less jaw-dropping events, letting Shark Week continue to have all the glory it rightfully deserves.


*Sincere thanks to the Discovery Network for providing some of the most engaging and educational content available.

[1] See 42 U.S.C. 1395y(b)(2)

[2] Id.

[3] Discovery Channel: Science, History, Space, Tech, Sharks, News.

[4] 12 CFR 1208.3