By Jennifer C. Jordan, Esq., General Counsel, MEDVAL, LLC
In an effort to resolve Congressional concerns about the cost of MSP recovery efforts compared to the recoveries themselves, CMS started creating policies in the fall of 2011 to reduce the agency’s involvement in low dollar liability settlements.
$300 Threshold for Recovery Exemption
Starting September 6, 2011, if a Medicare beneficiary receives a lump sum liability insurance (including self-insurance) settlement of $300 or less, Medicare will not recover from that settlement so long as the injury was physical trauma based and not due to ingestion, implantation or exposure, the beneficiary does not expect to receive any other related settlements, judgments, awards or other payments and no demand letter has been issued by Medicare. This threshold does not apply to cases in which the insurer is paying or has paid all medical bills directly on an ongoing basis [see http://www.msprc.info/forms/$300%20Threshold%20%20for%20Some%20Liability%20Insurance.pdf].
Fixed Percentage Option
Effective November 7, 2011, CMS implemented a fixed percentage option for the repayment of conditional payments in certain circumstances. This option allows Medicare beneficiaries who receive certain types of liability insurance (including self-insurance) settlements of $5,000 or less to pay Medicare 25% of his or her total gross liability insurance settlement, not adjusted for procurement costs, in resolution of his or her conditional payment obligation. All of the following criteria must be met in order to elect this option:
1. The liability insurance (including self-insurance) settlement, judgment, award or other payment is for a physical trauma based injury and not related to ingestion, exposure, or medical implant;
2. The total liability settlement, judgment, award, or other payment is $5,000 or less;
3. The beneficiary elects the option within the required timeframe and Medicare has not issued a demand letter or other request for reimbursement related to the incident; and
4. The beneficiary has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident.
To request the fixed percentage option, a written request must be submitted prior to or with the documentation for the Notice of Settlement and mailed to MSPRC - Fixed Percentage, Post Office Box 138880, Oklahoma City, OK 73113. Model language for such a request is available on the MSPRC website [http://www.msprc.info/forms/Fixed%20Percentage%20Election%20Model%20Language.pdf]. Should the request be made in response to a Conditional Payment Notice, it must be received by the response date in that notice. Once a Conditional Payment Letter has been issued, the fixed percentage option is no longer available. Once elected and approved, the beneficiary may not seek an appeal or waiver of recovery.
If the request is approved, the beneficiary will receive a bill for the amount due and instructions with a timeframe to make payment. If rejected, the beneficiary will receive an explanation and the case will then be processed using the traditional recovery process. The beneficiary will receive a regular demand letter, and procurement cost deductions will again be available.
For further details, see http://www.msprc.info/forms/Fixed%20Percentage%20Option%20Information.pdf.
Self-Calculate Final Conditional Payment Amount Prior to Settlement
Beginning February 21, 2011, CMS implemented an option permitting certain Medicare beneficiaries the ability to self-calculate Medicare’s conditional payment amount prior to settlement. As with other recent policies, the option is available only to liability insurance (including self-insurance) settlements and not workers’ compensation or no-fault claims and only when involving a physical trauma based injury and not ingestion, implantation or exposure. The dollar threshold was established at $25,000 or less and the date of incident must have occurred at least six months prior to the submission of the self-calculated amount to Medicare for review. The beneficiary must demonstrate that treatment has been completed and that no further treatment is expected through written physician attestation or a written certification by the beneficiary that there was no treatment for at least the 90 days prior to submission and that there is no further care expected. The election of this option bars the beneficiary from appealing the amount or existence of this debt, but the right to pursue waiver of recovery will remain.
It is imperative that the liability insurance situation has been reported to COBC prior to making this election. Until COBC has opened a record, no CMS contractor has the ability to process conditional payment related requests. Once a conditional payment letter is received, each line item must be marked with a “Y” or “N” to indicate which services are or are not believed to be related to the insurance claim. For those items marked with an “N”, an explanation must be provided. If it is known that additional care was received after the CPL was issued, then it must be added to the list with as much detail as possible, inclusive of the date of service, provider name and the Medicare allowed amount, which may be obtained from MyMedicare.gov. The calculation is then mailed with the Self-Calculated Conditional Payment Amount model language document found at http://www.msprc.info/forms/Self-Calculated%20Conditional%20Payment%20Amount%20Model%20Language.pdf, the Payment Summary Form with all marks and Total noted, and supporting physician attestation if applicable to MSPRC – Self-Calculated Conditional Payment, Post Office Box 138880, Oklahoma City, OK 73113.
Within 60 days MSPRC will send notice of its determination. If it agrees, the beneficiary will receive a letter stating that the amount is considered final as long as settlement occurs within 60 days from the date of the letter and that the settlement is less than $25,000. If it disagrees, yet the beneficiary was eligible for the process, it will counter with the amount it determines appropriate. Upon settlement, the beneficiary is expected to send the first and last page of the settlement agreement showing the total amount of the settlement and the date it was signed, proof of the procurement costs, and the MSPRC’s letter to the same post office box used for the request. Upon receipt, MSPRC will adjust for procurement costs and issue a demand for payment within 20 days.
For further details, see http://www.msprc.info/forms/Option%20to%20Self%20Calculate%20Your%20Final%20Conditional%20Payment%20Amount.pdf.
COMMENTARY: While a nice gesture on CMS’ part, this process does not appear to alleviate the time involved in resolving the conditional payment obligations. Prior to evoking this option, the CPL must already have been requested and as we all know, obtaining a response to that request in 60 to 90 days is a challenge in and of itself. It appears as if the same amount of back and forth with MSPRC remains in disputing unrelated claims on the CPL, so it is unclear what advantage this process brings given that the beneficiary must give up the ability to appeal to utilize it. Because at the time of this writing the process was not yet available, we will leave it for time to tell what advantages the process will afford. Meanwhile, note that CMS mentioned in the announcement that it will continue to improve and refine this process, therefore input and comments in future teleconferences were encouraged and very likely will be necessary.
© Copyright 2012 LexisNexis. All rights reserved. This article was excerpted from The Complete Guide to Medicare Secondary Payer Compliance, 2012 Edition (now on sale at the LexisNexis Bookstore).