Resolution of Conditional Payments Continue to Create Havoc on No-Fault Claims

Posted by Rafael Gonzalez on Aug 20, 2017 8:00:00 AM

Medicare conditional payments are serious business. They continue to challenge claims professionals throughout the country. And if not dealt with timely and appropriately, can create havoc on parties’ attempt to settle a claim, or future reimbursement responsibility.

Reviewing medicaid documentsTake for example this 9-11-2014 accident in Iowa in which the Claimant was leaving the insured business, fell, and broke a hip. Fully aware that the claimant was a Medicare beneficiary, the no-fault insurer accepted ongoing responsibility for medical (ORM). Since there was no negligent act by the business, and therefore no expected liability claim, the only recourse was the $5,000 no-fault med pay policy in place.

Based on their conversations with the claimant, and therefore their awareness that Medicare had paid over $5,000 in medical bills associated with the broken hip, but without any request for payment from Medicare, the insurer issued a $5,000 check to the BCRC on 12-22-2015. Unbeknownst to the insurer, since the BCRC had not established a case, and had not made a final demand for payment, the BCRC deposited the check into their general account, without providing specific credit to the insurer for such payment.

More than 9 months later, without any awareness that the insurer had previously sent its $5,000 policy limits to the BCRC on 12-22-2015, but because the insurer had accepted ORM, and had never terminated ORM despite its policy limit payment, the CRC generated a conditional payment notice (CPN) on 9-13-2016 for $14,713.37. The insurer responded by indicating that no liability existed and that the med-pay policy limits had been exhausted when they paid BCRC the entire $5,000. Having no record of such payment, and therefore disagreeing with the insurer, the CRC generated a final demand (FD) on 11-25-2016 for $14,713.37.

The claims adjuster requested redetermination of the CRC’s FD by once again pointing out that no liability existed and that the med-pay policy limits had been exhausted when the insurer paid the BCRC the entire $5,000. On 2-9-2017, the CRC issued an unfavorable response, indicating that the $5,000 payment to the BCRC was received prior to a final demand and was therefore refunded. As a result, the $14,713.37 remained outstanding.

On 3-1-2017, the claims adjuster requested reconsideration through Maximus, a Qualified Independent Contractor (QIC). On 4-26-2017, Maximus again rejected the insurer’s arguments. Having failed to reimburse the outstanding conditional payments, the CRC issued a notice of intent to refer to US Treasury (ITR) on 5-31-2017. Although three steps late, she then sought our help.

Immediately after being retained by the insurer, Flagship Services Group (FSG) made contact with the CRC to inquire about the refunded $5,000. FSG forwarded the cleared insurer check to the CRC, and requested proof that the insurer $5,000 check was in fact refunded. On 6-7-2017, the CRC indicated to FSG that CRC never refunded the $5,000 check to the insurer. FSG therefore requested the CRC issue a payment received notification and close the case immediately. As a result, the CRC issued a Payment Received letter on 6-26-2017, and a Case Closure letter on 6-27-2017.

There are several lessons here.

First, as we have said again and again on this blog, do not send payment to the BCRC or CRC prior to a final demand. Reimbursement to Medicare is due within 60 days of the final demand, not any time before then.

Second, as we have also reminded again and again on this blog, if ongoing responsibility for medical has ceased, then terminate ORM through the mandatory insurer reporting process. Despite what the evidence, correspondence, or agreement may indicate, if ORM has not been terminated, then the RRE remains responsible for medical care associated with the claim. Knowing when to accept and terminate ORM is an essential component of MSP compliance.

And third, as we have also indicated on this blog on numerous occasions, having Flagship Services Group, experts in conditional payments resolution, to provide Medicare your best argument with your best evidence at the earliest opportunity is paramount to successful resolution of conditional payments. As was evident here, although the claims adjuster meant well, she did not provide all of the available evidence and best arguments to the CRC and QIC. As a result, resolution took 18 months, significantly longer than it should have.

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 info@flagshipsgi.com.

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 rgonzalez@flagshipsgi.com or 813.967.7598.

 

Topics: Conditional Payments, medicare