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This section addresses the MSP recoveries that are the responsibility of the MSPRC. While these are the vast majority of cases, a small amount of casework does remain at the Medicare claims processing contractors; see the "General MSPRC Rules" page (link below) for more information on the exceptions. Liability and No-Fault Insurances and Workers' Compensation Background Under the MSP laws (42 U.S.C. § 1395y(b)), Medicare does not pay for items or services to the extent that payment has been, or may reasonably be expected to be, made through a no-fault or liability insurer or through Workers' Compensation (WC). Medicare may make a conditional payment when there is evidence that the primary plan does not pay promptly, conditioned upon reimbursement when the primary plan does pay. Once the MSPRC has information concerning a potential recovery situation, it will identify the affected claims and begin recovery activities. Insurers/WC carriers (as applicable), beneficiaries, and representatives/attorney(s) are required to recognize the obligation to reimburse Medicare during any settlement negotiations. If the beneficiary has an attorney or other representative, he/she must send the MSPRC proper proof of representation in order for the MSPRC to release information to the representative (see the "Representation and Privacy Act or HIPAA" page linked below). The beneficiary/representative is required to notify the Coordination of Benefits Contractor (COBC) when he/she makes a claim against an alleged tortfeasor with liability insurance (including self-insurance), no-fault insurance or against WC. For more information on the COBC notification process, see the "No-Fault and Liability Insurance" and "WC Agency Services" pages of the COB section (linked below). Medicare's recovery claim runs from the "date of incident" through the date of settlement/judgment/award (where an "incident" involves exposure to or ingestion of a substance over time, the date of incident is the date of first exposure/ingestion). Medicare has both a direct priority right of recovery and subrogation rights based upon Federal law; Medicare's recovery claim is superior to the recovery claims of any other entities. Medicare will not honor a settlement that may have been made to prevent Medicare from recovering its payment. Where the beneficiary's claim against the liability insurer, no-fault insurer, or WC was in dispute, Medicare will take the beneficiary's reasonable procurement costs (e.g., attorney's fees) into consideration in determining its recovery claim amount. However, if CMS must bring suit in order to obtain reimbursement, this pro rata reduction is eliminated (see 42 CFR 411.37). Recovery Process When a new MSP "occurrence" comes into existence, the beneficiary/representative must report it to the COBC (see the "No-Fault and Liability Insurance" and "WC Agency Services" pages of the COB section). Once this new information becomes available, the MSPRC will initiate recovery activities against the responsible party. The following describes the recovery process, noting any differences based upon the type of MSP situation. No-Fault Insurance: Notice of Pending Recovery Claim In no-fault situations, there is an expectation that the insurer will pay promptly; as the insurer may have already made payment or even reached the benefit limit, the MSPRC uses a two-step recovery process. First, the MSPRC issues a "pre-demand letter" to the no-fault insurer that includes: 1) the beneficiary's name and Medicare Health Insurance Claim Number; 2) the date of accident/incident; 3) an itemized list of Medicare conditional payments made to date; and 4) any additional information available to the MSPRC. If benefits have been exhausted (for example, for a med-pay policy), the no-fault insurer must provide information on the amount of benefits paid, including to whom payment was made and, when multiple persons were paid, the amount furnished to each. If the no-fault insurer believes that any of the listed claims are not related to the underlying accident/incident, it must notify the MSPRC in writing within 30 days of receiving the pre-demand letter. If the MSPRC does not receive such a defense within 30 days, it will issue a formal demand letter for recovery (see the Recovery Demand Letter section on this page). Conditional Payment Letter The MSPRC begins identifying claims for recovery when it receives notice of a pending no-fault, liability, or WC matter. However, it does not issue a formal recovery demand letter until there is a settlement, judgment or award. If there is a significant delay between the initial notification to the COBC and the settlement/judgment/award, the beneficiary/representative may request an "interim conditional payment letter" listing the claims paid to date that are related to the liability, no-fault or WC claim. This letter does not provide a final conditional payment amount; Medicare might make additional conditional payments while the beneficiary's claim is pending. If the beneficiary/representative believes that any claims should be removed from Medicare's conditional payment amount, he/she must send documentation establishing that the claims are not related to what was claimed and/or were released by the beneficiary. The MSPRC will adjust the conditional payment amount to account for any claims it agrees are not related to what has been claimed/released. Once there is a settlement/judgment/award, the beneficiary/representative should send the settlement/judgment/award documentation, including any release, to the MSPRC. The information sent to the MSPRC must clearly identify: 1) the date of settlement, 2) the settlement amount, 3) the amount of any attorney's fees and other procurement costs borne by the beneficiary (Medicare may only take beneficiary-borne costs into account). The MSPRC will identify related claims for services/items provided up to and including the settlement/judgment/award date and will issue a formal recovery demand letter. Recovery Demand Letter Once a termination date applies to a case (generally the date of settlement/judgment/award), the MSPRC issues a formal demand letter advising the debtor of his/her/its primary payment responsibility. This letter includes: 1) the beneficiary's name and Medicare Health Insurance Claim Number; 2) the date of accident/incident; 3) a summary of conditional payments made by Medicare; 5) the total demand amount; and, in letters to beneficiary-debtors, 6) information on applicable waiver and administrative appeal rights. If the debtor is an insurer or WC carrier that wishes to dispute its obligation to repay Medicare, and benefits have already been paid to the beneficiary or a provider/supplier, the insurer/carrier must provide an explanation of benefits or record of payment. This documentation must include: 1) identification of the item/service at issue; 2) the amount(s) and date(s) of payment; 3) the date(s) of service; and 4) the name of the payee(s). If the amount repaid for any services included on the payment summary is less than the amount that Medicare paid, the insurer/carrier must provide an explanation of how its payment amount was determined. The insurer/carrier must repay the lesser of the amount identified as Medicare's payment or the amount payable under the insurer's/carrier's coverage as primary payer. Checks should be made payable to Medicare. All correspondence, including checks, must include the beneficiary's name and Medicare Health Insurance Claim Number and should be mailed to the appropriate address: MSPRC Auto/Liability
PO Box 33828
Detroit, MI 48232-5828 MSPRC WC
PO Box 33831
Detroit, MI 48232-5831 Assessment of Interest and Failure to Respond Interest accrues from the date of the demand letter but is only assessed if the debt is not repaid or otherwise resolved within the time period specified in the recovery demand letter. Interest is due and payable for each full 30-day period the debt remains unresolved; payments are applied to interest first, principal second. Interest is assessed on unpaid debts even if a beneficiary-debtor is pursuing an appeal or requesting a waiver; the only way to avoid the interest assessment is to repay the demanded amount within the specified time frame. If the waiver/appeal is granted, the beneficiary will receive a refund. Failure to respond within the specified time frame may result in the initiation of additional recovery procedures, including the referral of the debt to the Department of Justice for legal action and/or the Department of the Treasury for further collection actions (see "Referral of MSP Debt to Treasury," linked below). Future Medical Claims and Beneficiary Attestations Medicare's interests must be protected regarding future medical claims. One way to accomplish this is for the beneficiary to set money aside for future medical claims. For more information on WC-related set-asides, see the "WC Agency Services" pages in the COB section. While the MSPRC is not involved in the "future-claims" aspects of cases, note that there is a yearly attestation that beneficiaries who set money aside must send to the MSPRC at the appropriate address listed earlier. Group Health Plan-Based Recoveries Background The MSP provisions of the Social Security Act (found at 42 U.S.C. § 1395y(b)) require Group Health Plans (GHPs) to make payments before Medicare under certain circumstances. The triggering criteria, outlined below, are different depending on the basis for the beneficiary's Medicare entitlement. Beneficiary Entitled Based Upon Age, or "Working Aged" MSP - The beneficiary is covered by a GHP based on his/her own or spouse's current employment status; and
- The employer sponsoring or contributing to the GHP coverage either:
- has 20 or more employees (full- and part-time) on its payroll for each working day in each of 20 or more weeks in the current or preceding calendar year; or
- is sponsoring or contributing to a multi-employer GHP where at least one employer meets the size criterion, unless the GHP has been granted an exception by CMS.
Beneficiary Entitled to Medicare Based Upon Disability - The beneficiary is covered by a GHP based on his/her own or a family member's current employment status; and
- The employer providing the GHP coverage either:
- has 100 or more employees on its payroll for 50% or more of its regular business days during the preceding calendar year; or
- is sponsoring or contributing to a multi-employer GHP where at least one employer meets the size criterion (no exceptions).
Beneficiary Eligible for or Entitled to Medicare Based Upon End Stage Renal Disease (ESRD) - The beneficiary is:
- eligible for or entitled to Medicare based upon ESRD; and
- covered by a GHP for any reason (that is, regardless of employer size and regardless of employment status); and
- Medicare was not previously the primary payer for the individual based upon age or disability entitlement; and
- Fewer than 30 months have elapsed since the beneficiary became eligible to enroll in Medicare based on the ESRD, even if he/she did not do so at that time.
If Medicare paid primary when a GHP had primary payment responsibility, the MSP laws expressly authorize Medicare to recover its mistaken primary payment(s) from the employer, the insurer, the third party administrator (TPA), the GHP, or any other plan sponsor. Once new MSP situations are discovered (see the "Coordination of Benefits" section, linked below), the MSPRC identifies claims Medicare mistakenly paid primary and initiates recovery activities. Recovery Process If Medicare paid primary when the GHP had primary payment responsibility, the MSPRC will seek repayment by issuing a recovery demand letter to the employer and copy the insurer/TPA (if known). The demand letter includes information on the claims for which repayment is demanded, including claims detail. The demand letter explains how to resolve the debt either by repayment or presentation and documentation of a valid defense. An employer may authorize an insurer/TPA to respond on its behalf but may not transfer responsibility for a debt to the insurer/TPA. Additionally, if the insurer/TPA submits a check or a response but has not submitted documentation establishing its authority to act on behalf of the employer to resolve the debt, responses will only be addressed to the employer. Please note that in some instances an insurer/TPA has a defense that does not necessarily absolve the employer of responsibility for the debt (e.g., that the insurer/TPA did not cover/administer at the time of the claim). Historically, a GHP debtor could receive multiple demand letters for debts arising during the same time period because each claims processing contractor only recovered claims it paid. The MSPRC will aggregate claims from all of these contractors into one demand letter, simplifying administration for both the MSPRC and the debtor. Claims will still be segregated by beneficiary, but the change should simplify the administrative burden on the debtor. Checks should be made payable to Medicare. All correspondence, including checks, must include the beneficiary's name and Medicare Health Insurance Claim Number and should be mailed to: MSPRC GHP
PO Box 33829
Detroit, MI 48232-5829 Assessment of Interest and Failure to Respond Interest accrues from the date of the demand letter but is only assessed if the debt is not repaid or otherwise resolved within the time period specified in the demand letter. Interest is due and payable for each full 30-day period the debt remains unresolved; payments are applied to interest first, principal second. Failure to respond within the specified time frame may result in the initiation of additional recovery procedures, including the referral of the debt to the Department of Justice for legal action and/or the Department of the Treasury for further collection actions (see "Referral of MSP Debt to Treasury," linked below). Employers and insurers/TPAs can reduce the likelihood of Medicare's having a recovery claim against them by entering into one of the available voluntary data-sharing arrangements with CMS. These arrangements make both CMS and the GHP aware of the correct payer order before claims are paid, resulting in fewer recovery claims. The MSPRC is not involved in these agreements; please see the "Employer Services" and "Insurer Services" pages in the COB section (linked below) for more information.
Page Last Modified: 08/21/2008 9:51:56 AM
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