Medicare Conditional Payment Services

Below the practitioner will find a general overview of what to expect in the Medicare Conditional Payment reconciliation process. This process is applicable to both workers’ compensation and liability settlements although liability settlements have additional options not available in workers’ compensation which are discussed below.

My office recommends that the Medicare conditional payment investigation and reconciliation process commence well before settlement discussions are concluded or well in advance of trial as these can be complicated procedures and a settlement could be delayed as a result. My goal in every situation is to keep the amount of the Medicare conditional payment repayment obligation as low as possible, so that the maximum recovery remains with your client.

Note: This process DOES NOT reconcile Medicare Part C (Medicare Advantage Plans) or Medicare Part D (Prescription dug) liens. This must be reconciled independently as you would any other group health lien.

To request service please complete and return the Medicare Conditional Payment Request.

General Process

The Medicare Secondary Payer Act (MSP) gives rise to Medicare conditional payments. The MSP is found at Section 1862(b) of the Social Security Act 42 U.S.C. 1395y(b). Applicable regulations are found at 42 CFR Part 411(1990) et seq. The MSP provides that Medicare may not make payment on behalf of a beneficiary for medical services or prescription drug therapy charges where payment has been made or can reasonably be expected to be made under a workers' compensation law or plan of the United States or a State or under a liability policy or automobile no-fault coverage or group health policy. Under this authority Medicare has a priority right of recovery from the primary payer, as well as, from parties in receipt of third-party payments such as a beneficiary, provider, supplier, physician, attorney, state agency or private insurer pursuant to 42 CFR 411.25(g).

The investigation of Medicare Conditional Payments follows a prescribed series of steps. Notifying the Coordination of Benefits Contractor (COBC) and requesting a file be opened is the first step. The " Consent to Release" authorization is required to be signed by the Medicare beneficiary in order to commence the process. If reconciliation of the Medicare conditional payments is requested then in addition to the Consent To Release form the "Proof of Representation" authorization must be signed by the Medicare beneficiary.

Upon receipt of the request the COBC will reference it to the Claimant's Medicare record and assign the case to a Medicare recovery contractor (MSPRC) which will begin the process of assembling interim conditional payments and release of a " Rights and Responsibility Letter" to the Medicare beneficiary and any authorized individual's listed on the Proof of Representation authorization. The Rights and Responsibility Letter provides general information on Medicare's rights, as well as, beneficiary and representative responsibilities. It does not, however, provide any actual conditional payment information.

The MSPRC will then issue conditional payment information by way of a Payment Summary Form (PSR) concerning interim conditional payment amounts automatically as soon as an interim conditional payment amount is available. Once all claims have been retrieved from the Medicare systems and determined, at least in the opinion of the MSPRC, to be related to the reported claim the MSPRC will issue one or more Conditional Payment Letters or "CPL". Note, if Medicare has been notified that a settlement, judgment of this claim has been reached a Conditional Payment Notice or "CPN" is issued in lieu of the CPL( see further discussion on CPN below). The MSPRC will issue one or a series of these CPLs and PSFs providing the details of conditional payments developed. The Claimant and any authorized individuals will receive this letter's within 65 days of the issuance of the Rights and Responsibilities Letter.

THE CPL and PSF ARE ADVISORY ONLY AND ARE SUBJECT TO CHANGE AS THE MSPRC CONTINUES TO INVESTIGATE THE CONDITIONAL PAYMENTS.

If the Medicare beneficiary has registered under http://www.mymedicare.gov you may monitor the process. It is necessary that the Medicare beneficiary provide his or her password in order to enter the system. Once the CPL/PSFs are issued reconciliation of any disputed entries found on the interim CPL/PSF's may commence. This is an ongoing process and depending on the degree of disagreement as to disputed entries may take a period of time to resolve.

Updated CPL/PSF amounts are generally not available until at least 90 days after the initial CPL/PSF is issued. CMS' systems retrieve additional Medicare paid claims for each established case once every 90 days. The updated CPL/PSF information will appear automatically on the beneficiary's "mymedicare.gov" account. However, any final settlement, judgment, award or other payment that is reached should be reported as soon as possible so that the MSPRC can take steps to expedite the Final Demand Letter (see discussion below).

Once the settlement has been finalized the " Final Settlement Detail Document" needs to be completed and sent to the MSPRC. This document includes the total settlement amount, itemization of procurement costs including attorney fees and costs, and date of settlement.

ONLY AFTER THE SETTLEMENT HAS BEEN APPROVED OR A JUDGMENT ENTERED AND THE "FINAL SETTLEMENT DETAIL DOCUMENT" IS RECEIVED BY THE MSPRC WILL THE MSPRC FINALIZE ITS RECOVERY CLAIM.

This means you must advise your client that you will not be able to guarantee what the FINAL Medicare conditional payment recovery amount will be at the time of settlement. Upon receipt of the Final Settlement Detail Document MSPRC will send the practitioner a Final Demand Letter indicating the amount of recoupment the MSPRC is seeking from the settlement. Interest begins to accrue on this amount 60 days after issuance of the Final Demand Letter regardless of whether the practitioner is disputing or has filed an appeal to the Medicare recovery amount claimed. Appeals follow the normal adjudicatory Medicare appeals process.

Conditional Payment Notice "CPN"

What happens if MSPRC receives notification via the MMSEA Section 111 reporting process that a settlement, judgment, award or other payment has already occurred?

In this situation a " Conditional Payment Notice" or "CPN" is issued in lieu of the CPL. The CPN provides conditional payment information AND advises the beneficiary what action must be taken. The CPN is issued because the MSPRC has been notified of a settlement, judgment, award or other payment thru the MMSEA Section 111 reporting process rather than from the beneficiary or beneficiary's representative.

The CPN allows for review of the conditional payment information in a similar vein as with the CPL. However, unlike a CPL, if there is a claim payment on the CPN not related to the case being reported normal dispute proceedings within a condensed time-frame are to be followed. The MSPRC will allow up to 30 days for a response to a CPN and the response must include the following information (unless already submitted);

  1. All proof of representation documents
  2. Proof of any items and/or services that are not related to the reported claim
  3. All settlement documentation
  4. Itemization of any procurement costs and fees paid by the beneficiary
  5. Documentation of any additional or pending settlement, judgment, award or other payment related to the same incident

Note that like a CPL, conditional payments may increase after the issuance of a CPN if Medicare paid for additional items and or services related to the claim.

If a response to the CPN is received within the 30 day window the MSPRC will review it and issue a Final Demand Letter. If a response is not received within the 30 day window MSPRC will issue a Final Demand Letter requesting repayment of all conditional payments related to the reported case without proportionate reduction for procurement fees or costs.

What is the "Proof of Representation" form?

This is the form wherein the Medicare beneficiary has authorized someone else to act on his or her but ONLY WITH RESPECT TO OBTAINING MEDICARE CONDITIONAL PAYMENT INFORMATION AND/OR RECONCILIATION OF CONDITIONAL PAYMENTS . The designated individual may receive or submit information/requests on behalf of the Medicare beneficiary, including responding to requests from the MSPRC, receiving a copy of the Final Demand Letter if Medicare has a recovery claim, and negotiate the final repayment amount.

What is the "Consent To Release" form"?

This is the form wherein the Medicare beneficiary authorizes someone else to receive certain information from the MSPRC for a designated period of time. This release does not give the designated individual the authority to act on behalf of the Medicare beneficiary and therefore that individual cannot negotiate or reconcile CPL amounts.

What is the "Final Settlement Detail Document"?

This form is completed ONLY after the settlement or judgment has been approved or entered. It provides the total amount of the settlement or judgment, procurement fees and costs, any medical payments or PIP benefits paid in addition to the liability settlement amount, as well as, the actual date of settlement. Once this form is received by the MSPRC a Final Demand Letter will be issued by the MSPRC.

Special Programs for Liability Settlements only

Liability settlements with Medicare Conditional Payments have three unique options not available with workers’ compensation settlements:

  1. $300 exemption. This will apply to homeowners, automobile, product liability, malpractice, and uninsured or underinsured motorist liability insurance.

    Under this exception Medicare will not recover pursuant to 42 U.S.C. '1395y (b)(2) against a plaintiff’s lump sum settlement, judgment, award or other payment if the following conditions are met:

    1. The plaintiff’s settlement, judgment, award or other payment releases a physical traumabased incident/injury/accident/illness (this does not include alleged ingestion, implantation or exposure-based incident, injury, accident or /illness e.g.,asbestos, pharmaceutical or environmental, etc.), and
    2. The plaintiff obtains a liability insurance (including self-insurance) settlement, judgment, award, or other payment for a Total Payment Obligation to Claimant (TPOC) of $300 or less.

      This means the $300 threshold does NOT apply to cases where an insurer e.g., group health carrier, is paying or has paid the plaintiff’s medical bills directly or on an ongoing basis, and
    3. There are no multiple settlements, judgments, awards, or other payments for the same underlying claim, which total more than $300 e.g., workers’ compensation, un/underinsured motorist coverage e.g., the plaintiff has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the accident or injury, and
    4. MSPRC has NOT previously issued a Final Demand Letter.
  2. $5000 Settlement or Less Fixed Percentage Option

    This option provides the plaintiff with a simplified process to resolve the Medicare conditional payment obligations without having to wait for a Conditional Payment Letter prior to settling the case.

    If the case meets all of the following criteria the repayment of Medicare conditional payments is set at 25% of the total liability settlement instead of using the current recovery process.

    In order to elect this option all of the following criteria must be met:

    1. The liability insurance (including self-insurance) settlement is for a physical trauma based injury. This means that the option is not available for ingestion, exposure or medical implant type claims.
    2. The gross liability settlement, judgment, award or other payment is $5000 or less. Gross settlement is not to be reduced for attorney fees or costs. Nor is the settlement amount to be reduced by any Medicare conditional payment amount.
    3. The plaintiff elects the option within the required time frame and before Medicare has issued a Final Demand Letter or other request for reimbursement related to the incident.
    4. The Fixed Percentage Option request must be submitted before or at the same time Final Settlement Detail Document
    5. The election of this option may not be made in response to a Conditional Payment Letter. If the request is made in response to a Conditional Payment Notice or "CPN", it must be received by the response due date referenced in the CPN.
    6. The plaintiff has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident.

    When the Fixed Percentage Option is elected and approved the plaintiff gives up the right to appeal the fixed payment amount or request a waiver of recovery for the fixed payment amount.

    If the request is approved the plaintiff will receive a bill for the amount due which will equal 25% of the total liability insurance (including self-insurance) settlement, judgment, award or other payment. Payment must then be received within the time frame specified on the bill.

    If the Fixed Percentage Option is denied because it does not meet all the required criteria the plaintiff will receive an explanation of why his or her request was denied. The case will then be processed using the traditional recovery process. Attorney fees and expenses, if applicable, will be used to issue a traditionally calculated demand amount. A regular Final Demand Letter will follow under separate cover.

  3. Self-Calculating Option for Settlements of $25,000 or less

    This option involves plaintiff and/or their representative self-calculating the final conditional payment amount. Note: In order to use this option the case must already have been reported to the COBC and the plaintiff has already been issued a current conditional payment letter (CPL) and have a bona fide settlement amount established of $25,000 or less.

    All of the following eligibility criteria must be met in order to use this option.

    1. The liability insurance (including self-insurance) settlement is for a physical trauma based injury. This means that the option is not available for Ingestion, exposure or medical implant type claims.
    2. The gross liability settlement, judgment, award or other payment is expected to be and ultimately is $25,000 or less. Gross settlement is not to be reduced or attorney fees or costs. Nor is the settlement amount to be reduced by any Medicare conditional payment amount.
    3. The date of accident occurred at least six months prior to the submission e.g. it must be six months from the date of accident to the date the plaintiff or his or her representative submits the selfcalculated final conditional payment amount to Medicare for review.
    4. A written physician certification or attestation by the plaintiff attesting to:
      1. No medical treatment related to the plaintiff’s case has occurred for at least 90 days prior to submitting the self-calculated final conditional payment amount to Medicare, and
      2. The plaintiff expects no further care related to his or her case.

The MSPRC will advise whether it agrees or disagrees with the self-calculated amount. If the MSPRC agrees with the amount it will send the plaintiff a letter advising that the amount is considered final, as long as the case is settled within 60 days of the date of MSPRC’s letter advising of the agreement, and the case settles for $25,000 or less. If the MSPRC disagrees and the plaintiff is otherwise eligible for the process, the MSPRC will issue a Medicare amended final CPL. This CPL will advise the plaintiff of the amount the MSPRC has calculated and considers final, as long as the case is settled within 60 days of the date of MSPRC’s letter advising of the agreement, and the case settles for $25,000 or less.

When the Self-Calculated Option is elected and approved the plaintiff gives up the right to appeal the amount or existence of the Medicare conditional payment amount, however, the right to pursue waiver of recovery is preserved.