As Required by Section 1893(h) of the Social Security Act, the United States Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS), Medicare Secondary Payer (MSP) Commercial Repayment Center (CRC) published its third annual report to Congress for FY 2016 in August 2017. Based on the Group Health Plan (GHP) and Non-Group Health Plan (NGHP) recovery work of the CRC, for FY 2016 (October 1, 2015 through September 30, 2016), CMS returned $88.35 million dollars to the Medicare Trust Funds.
The Commercial Repayment Center
The CRC is the national contractor utilized by CMS to identify and recover mistaken Medicare payments through post-payment review. The mission of the MSP CRC is to identify and recover primary payments mistakenly made by the Medicare program when another entity had primary payment responsibility. The MSP CRC is a single contractor with national jurisdiction that became fully operational in the second quarter of FY 2014.
The CRC identifies potential GHP based mistaken payments (that is, situations where Medicare made primary payment when it should have paid secondary to the GHP) and pursues recovery as appropriate. The CRC recovers these mistaken primary payments from the entity that had primary payment responsibility (typically the employer or other plan sponsor, insurer, or claims processing third party administrator (TPA)).
Recovery of NGHP Ongoing Responsibility for Medical Conditional Payments
In FY 2016, CMS expanded the CRC’s workload to include the recovery of certain conditional payments where an applicable plan or NGHP entity such as a liability insurer, no-fault insurer, or workers’ compensation entity had or has Ongoing Responsibility for Medicals (ORM) and therefore has primary payment responsibility. Upon learning that the applicable plan has primary payment responsibility, the CRC identifies and initiates recovery of conditional payments that it believes the applicable plan should have paid.
As with other recovery audit contractors engaged by CMS, in accordance with section 1893(h) of the Act, the CRC is paid on a contingency fee basis. The amount of the contingency fee is a percentage of the mistaken payment that the identified debtor has returned to the Medicare program.
Value of Mistaken and Conditional Payments Identified
In FY 2016, the CRC identified a total of $243.68 million in mistaken and conditional payments for both the GHP and NGHP ORM workload. The CRC processed collections of $117.40 million on behalf of the Medicare program. Taking into account refunded excess collections of $11.10 million, the CRC posted $106.29 million in net collections. Taking into account agency administrative costs of $17.94 million (including contingency fees paid to the CRC), CMS returned $88.35 million dollars to the Medicare Trust Funds as a direct result of this program.
Number of Mistaken and Conditional Payments Identified
The CRC issued 29,717 demand letter packages relating to 34,406 individual beneficiaries, representing $314.73 million in potential mistaken and conditional payments made by the Medicare program during FY 2016. In response to these demand letters, the CRC received information that validated $243.68 million as correctly identified mistaken and conditional payments to be recovered.
GHP and NGHP Recoveries
During FY 2016, a total of $97.61 million of the payments were direct payments (that is, checks received from debtors). During FY 2016, the CRC processed $19.79 million in collections from the Department of the Treasury on delinquent debts. Therefore, CRC processed $117.4 million in total collections. $11.10 million in excess collections were identified and refunded to the identified debtors. Excess collections can occur when the Treasury offsets against a payment due to the debtor by another Federal program at the same time that a debtor makes direct payment to the CRC. Therefore, the CRC’s net collections totaled $106.29 million in FY 2016. In addition $17.94 million were CMS administrative costs, including contingency fees paid to the CRC as well as certain CMS administrative costs and funds paid to support contractors to facilitate CRC work.
Amount Returned to the Medicare Trust Funds
$97,610,837.58 (direct payments resulting from mistaken and conditional payments)
+ $19,785,432.43 (collections from US Treasury on delinquent debts)
$117,396,270.01 (total CRC processed collections)
- $11,102,862.55 (excess collections refunded to identified debtor)
$106,293,407.46 (total CRC net collections)
- $17,942,794.24 (CMS administrative fees, CRC contingency fees)
$88,350,613.22 (total reimbursement to the Medicare Trust Funds due to CRC work)
$144,206,681.40 (direct payments resulting from mistaken and conditional payments)
+ $10,079,801.36 (collections from US Treasury on delinquent debts)
$154,286,482.76 (total CRC processed collections)
- $4,691,087.63 (excess collections refunded to identified debtor)
$149,595,395.13 (total CRC net collections)
- $24,548,192.35 (CMS administrative fees, CRC contingency fees)
$125,047,202.78 (total reimbursement to the Medicare Trust Funds due to CRC work)
$56,392,598.00 (direct payments resulting from mistaken and conditional payments)
+ $7,562,973.02 (collections from US Treasury on delinquent debts)
$63,955,571.02 (total CRC processed collections)
- $4,691,087.63 (excess collections refunded to identified debtor)
$59,264,483.39 (total CRC net collections)
- $8,664,030.05 (CMS administrative fees, CRC contingency fees)
$50,600.453.34 (total reimbursement to the Medicare Trust Funds due to CRC work)
About Medicare Conditional Payments
42 CFR Section 411.21 indicates that Medicare conditional payments are payments made by Medicare for medical treatment where a primary payer (insurer or self-insurer) has or may have an obligation to make such payment. Primary payers must reimburse Medicare for conditional payments it has made. 42 USC Section 1395y indicates that primary payers include group health providers, workers’ compensation, liability and no-fault insurers and self-insured entities, as well as physicians, attorneys, hospitals, or clinics that receive payment from a primary payer must make reimbursement.
42 USC Section 1395y also indicates responsibility as a primary payer arises even if liability for the medical expense is contested. Such a responsibility can be demonstrated by entry of a judgment or by payment conditioned on a release or waiver of payment, even if liability is denied. 42 CFR Section 411.24 indicates Medicare has a direct right of action against all primary payers responsible for making payment. And, Medicare has a direct right of action against any person or entity that received a primary payment, including the Medicare beneficiary, medical provider, physician, attorney, state agency or private insurer.
About Medicaid Liens
42 USC Section 1396a mandates that all reasonable measures to ascertain legal liability for Medicaid payments and reimbursement of same be taken. The state or agency administering a Medicaid plan must take all reasonable measures to ascertain the legal liability of third parties to pay for care and services paid by Medicaid. Federal law also provides that in any case where such a legal liability is found to exist after medical assistance has been made available on behalf of the individual, the state or local agency must seek reimbursement for such assistance to the extent of such legal liability. 42 U.S.C. Section 1396a(a)(25).
The 2013 Strengthening Medicaid Third Party Liability Act, effective October 1, 2017, allows state Medicaid agencies or the insurers/managed care organizations contracted with to provide such benefits to seek reimbursement from any responsible third party of all payments made from the entirety of settlement, judgment, award funds, not just a portion thereof.
About Flagship Services Group
Flagship Services Group is the premier Medicare compliance services provider to the property & casualty insurance industry. Our focus and expertise has been the Medicare and Medicaid compliance needs of P&C self-insureds, insurance companies, and third party administrators. We specialize in P&C mandatory reporting, conditional payment resolution, and set aside allocations. Whether auto, liability, no-fault, or work comp claims, we have assembled the expertise, experience and resources to deliver unparalleled MSP compliance and cost savings results to the P&C industry. To find out more about Flagship, our folks, and our customized solutions, please visit us at www.flagshipservicesgroup.com. To speak with us about any of our P&C MSP compliance products and services, you may also contact us at 888.444.4125 or firstname.lastname@example.org.
About Rafael Gonzalez
Rafael Gonzalez, Esq. is President of Flagship Services Group. He speaks and writes on mandatory insurer reporting, conditional payment resolution, set aside allocations, CMS approval, and MSA and SNT professional administration, as well as the interplay and effect of these processes and systems and the Affordable Care Act throughout the country. Rafael blogs on these topics at Medicare Compliance for P&C Insurers at www.flagshipservicesgroup.com/blog. He is very active on LinkedIn, Twitter, Instagram, and Facebook. He can be reached at email@example.com or 813.967.7598.