If you’ve ever gotten a letter from Medicare, you’ve probably found yourself asking two basic questions:
- What does this letter mean?
- What am I supposed to do with it?
Both are good questions.
Since it sometimes feels like Medicare is speaking a foreign language full of three-letter acronyms, we’re here to translate and help you make sense of the letters you receive.
What is a Conditional Payment Letter (CPL)?
The Conditional Payment Letter (CPL) is a snapshot in time of a Medicare lien.
The letter reflects the amount their system believes Medicare has paid as of the date of the letter. The letter includes a ledger of the charges they have paid conditionally for which they will be seeking reimbursement.
This “snapshot” status is important to understand because, theoretically, Medicare could run another query the very next day and locate a new set of charges that just came in from a doctor or hospital. This new set of charges could completely change the lien amount they need to recover.
The CPL is not a bill. It is essentially a heads-up notice from Medicare that there are conditional payments on a particular beneficiary’s claim that you need to be aware of as you move toward settlement. If the CPL arrives long before settlement is possible, you’ll want to request a new version as settlement draws closer to make sure you have the most updated list of charges.
What should you do with a CPL?
Since the CPL is not a bill and has no specific time constraints associated with it, you’re not required to take any action at all.
However, receipt of a CPL affords you the opportunity to begin reviewing the charges Medicare is counting as "conditional" to confirm they are accurate and applicable to the claim you are processing. If any of those charges need to be disputed, you can do so based on the CPL you’ve received.
What is a Conditional Payment Notice (CPN)?
The Conditional Payment Notice (CPN) is similar to the CPL in its basic content, but there are some key differences.
The CPN also identifies charges Medicare has made on behalf of their beneficiary that they believe are related to the claim you are processing. These charges will likewise need to be reviewed for accuracy and disputed if necessary.
However, unlike the CPL, the CPN has a time limit attached to it.
Medicare allows 30 days from the date on your CPN during which you can dispute the charges listed. Once that 30 days elapses, your CPN automatically becomes a Final Demand Letter (FDL).
What should you do with a CPN?
Unfortunately, one of the first things we need to make clear is that you can’t throw the CPN out!
We’ve spoken to many claims adjusters and claims managers in various P&C companies who admit to receiving letters from Medicare that they simply put them in the claim file or even disregard them and throw away. In the case of a CPN, with the clock ticking the moment the letter is mailed, ignoring it will not make it go away.
Receipt of the CPN is the starting gun for your race to investigate every charge Medicare has identified. You should be seeking to confirm the accuracy of each charge and disputing those charges that are inaccurate, not related to the claim, or that you are unable to pay due to exhausting the policy limits (or another legitimate reason).
This investigation and dispute must take place within 30 days. If no action is taken and your dispute isn’t submitted by the deadline, the CPN automatically becomes a FDL.
What is a Final Demand Letter (FDL)?
An FDL is similar to a CPN in that it notifies the claimant (and by extension, the claimant’s insurance company) of the amount Medicare has already paid. This amount is what the insurance company owes as primary payer for a Medicare beneficiary’s medical expenses. However, the difference is that the FDL is actually a bill and it’s due within 60 days.
So, the time to dispute charges is when you’re looking at a CPL or CPN, not a FDL.
What should you do with a FDL?
From the moment the FDL appears, the lien begins to accrue interest. Reimbursement, in full, to Medicare is expected within 60 days or interest will be charged at a current rate of 9.75% APR.
Once the FDL arrives, the best option is to pay the amount demanded. Then, if it becomes necessary, appeal the amount and allow Medicare to reimburse if the appeal is upheld.
The best option when you receive any letter from Medicare
We realize all of this is fairly complicated, and frankly, we’ve only scratched the surface of why you’re receiving these letters, what factors have gone on behind the scenes, and all the processes required to dispute or appeal charges.
If you receive a CPL, CPN or FDL, Flagship Services Group can assist with understanding the information and taking appropriate action.
If you have any further questions on these three important documents or wish to dive deeper into your current Medicare Compliance status, contact us immediately. Flagship works hard to protect your financial assets by mitigating risk and keeping you compliant.