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Medicare Revamps the Conditional Payment Process

By on February 26, 2016 in Medicare, Uncategorized with 0 Comments

By Nancy Johnson, Esq.

Many of you have been contacted by petitioners’ attorneys about their inability to obtain conditional payments over the past several months due to a revision in Medicare protocols and processes.  This article gives an overview of the changes to the process and we will provide more information as the full extent of the changes come to light.

Workers’ compensation carriers were required to report compensation claims to Medicare online since 2009 under Section 111 of the Medicare Act.   However, Medicare allowed both the petitioners’ attorneys and the carriers to seek conditional payment information by reporting a claim, providing proof of representation and utilizing the Medicare portal.  Conditional payments were coordinated through Medicare’s Benefit Coordination & Recovery Center (BCRC).

Medicare has now created a new entity to determine when it paid medical bills that should have been paid by a compensation carrier:  the Commercial Repayment Center (CRC).  This entity is responsible for seeking payment for recoveries initiated after October 1, 2015 while the BCRC will continue to handle open claims prior to that date.

The focus of the CRC is different:  rather than creating an itemization of payments and divulging it to the first party who requests it, the CRC will have direct contact with the carriers regarding obligations it believes they owe.

An overall description of the process is set forth at https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/InsurerServices/Insurer-NGHP-Recovery.html

The process indicates that when Medicare learns that a beneficiary has workers’ compensation insurance through a carrier report or a beneficiary report, it updates its records and then begins identifying claims it believes were paid based upon the type of injury or illness alleged.  The search will include claims from the date of injury forward.

The CRC will then issue a Conditional Payment Notice (CPN) to the carrier.  The notice will advise the carrier that certain actions must be taken within 30 days of the date on the notice or the CRC will automatically issue a demand for payment.  The notice will list all of the claims and advise the carrier how to dispute items that are not related to the case.  A courtesy copy will be sent to the beneficiary and his attorney.  If a carrier has designated a specific recovery agent, they will also receive a copy of the notice.

Note: If a beneficiary or his or her attorney or other representative reports a no-fault insurance or workers’ compensation situation before the carrier submits a Section 111 report, the CRC will send the carrier a Conditional Payment Letter (CPL). The CPL provides the same information as a CPN, but there is no specified response timeframe. When this occurs, the applicable plan is encouraged to respond to the CPL to notify the CRC if it does not have ongoing responsibility for medical treatment (ORM) and will not be reporting ORM through Section 111 reporting or if the applicable plan would like to dispute relatedness.

The carrier has 30 days to challenge the claims in the CPN.  The carrier may contact the CRC or use the portal to dispute the charges.

Medicare will then issue a demand for payment to the carrier and request reimbursement within 60 days of receipt of the letter.  If the CRC agrees that some items need to be removed, they are omitted from the demand letter.

The carrier then has 120 days from receipt of the demand letter to file an appeal.  It appears that when Medicare seeks recovery from a carrier, only the carrier has appeal rights.  The beneficiary cannot appeal.  An attorney or a vendor may act on behalf of a carrier (plan) with proof of representation. See https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/InsurerServices/Downloads/Appeal-Rights-for-Applicable-Plans.pdf.  Medicare has its own appeal process and it clearly states it is not required to establish causation to prove a debt. https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/InsurerServices/Downloads/Applicable-Plan-Appeals-Presentation.pdf

If no appeal is initiated, the carrier makes payment and the CRC will send a letter that the debt was resolved but that new claims may be demanded if the carrier is obligated to provide ongoing medical.

Interest accrues from the date of the demand letter and if the debt is not resolved within 60 days, the interest is applied every 30 days.  If the carrier fails to make payment, the matter is referred to the Department of Treasury for collection.

This new process imposes significant burdens on carriers as they will be expected to ensure all Medicare beneficiary claims are reported, scrutinize the demands for payment to verify which diagnosis codes are related to the claim and timely dispute them.  However, the Medicare website acknowledges that the carriers may retain vendors and agents to work out conditional payment obligations if an authorization is received that meets its specifications.  https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/InsurerServices/Downloads/2015-Insurer-Services-Whats-New-Archive.pdf

The exact nature of the process and the degree to which it excludes petitioners’ attorneys from acting on their clients’ behalf to resolve conditional payment issues is unknown at this point.  Many petitioners’ attorneys are frustrated because the Medicare offices are no longer allowing them to report workers’ compensation claims to initiate the conditional payment process.  They are being told by Medicare representatives that only the carrier can report and develop the case.  This appears contrary to the information on the CMS website that both a beneficiary and the carrier may report the claim to trigger the CRC to open a file, compile conditional payments and send them to the carrier for consideration for payment.  See https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/InsurerServices/Insurer-NGHP-Recovery.html

Another concern is whether outstanding conditional payments should hold up settlement of the underlying workers’ compensation case.  At a recent meeting of the New Jersey State Bar, there was no consensus how the conditional payment issue should be handled if a carrier fails to fulfill its obligations to communicate with the CRC and if the workers’ compensation settlement must be held up for resolution of the conditional payment process.  Some petitioners’ attorneys argued that they should be allowed to settle their claims without conditional payments being resolved since Medicare was not looking to the beneficiary for payment.  Other attorneys suggested that they will file motions for penalties if the carrier does not comply.  The Division of Workers’ Compensation does not yet have a formal policy and the State Bar Executive Committee proposed to present a seminar on the topic at the Mid Year Bar meeting in May 2016.

The impact upon resolution of New Jersey workers’ compensation cases is problematic.  Once can foresee serious complications in denied occupational claims where there may be multiple employers and carriers involved.  How will the CRC handle apportionment of liability and demands for payment amongst multiple employers and carriers involving the same petitioner?  The answer is anyone’s guess.  In addition, the settlement of the compensation case and the negotiation of the conditional payment obligations may be on two wholly separate timelines and the petitioners’ attorneys and judges are not going to want to delay resolution of the compensation matters.  However, settlement of the compensation case may prejudice the carrier since it will lose access to a motivated petitioner or petitioner’s attorney who may be needed to provide information to assist an appeal when liability for payments is disputed.

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John H. Geaney

About the Author

About the Author:

John H. Geaney, an executive committee member and shareholder with Capehart Scatchard, began an email newsletter entitled Currents in Workers’ Compensation, ADA and FMLA in 2001 in order to keep clients and readers informed on leading developments in these three areas of law. Since that time he has written over 500 newsletter updates.

Mr. Geaney is the author of Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters & Employers. The manual is distributed by the New Jersey Institute for Continuing Legal Education (NJICLE). He also authored an ADA and FMLA manual as distributed by NJICLE. If you are interested in purchasing the manual, please contact NJICLE at 732-214-8500 or visit their website at www.njicle.com.

Mr. Geaney represents employers in the defense of workers’ compensation, ADA and FMLA matters. He is a Fellow of the College of Workers’ Compensation Lawyers of the American Bar Association and is certified by the Supreme Court of New Jersey as a workers’ compensation law attorney. He is one of two firm representatives to the National Workers’ Compensation Defense Network. He has served on the Executive Committee of Capehart Scatchard for over ten (10) years.

A graduate of Holy Cross College summa cum laude, Mr. Geaney obtained his law degree from Boston College Law School. He has been named a “Super Lawyer” by his peers and Law and Politics. He serves as Vice President of the Friends of MEND, the fundraising arm of a local charitable organization devoted to promoting affordable housing.

Capehart Scatchard is a full service law firm with offices in Mt. Laurel and Trenton, New Jersey. The firm represents employers and businesses in a wide variety of areas, including workers’ compensation, civil litigation, labor, environmental, business, estates and governmental affairs.

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