Property and Casualty insurers often struggle with the reimbursement compliance process to Medicare as primary payers for Conditional Payments. The compliance process is extensive and includes reports, requests and rebuttals. However, the risks and potential consequences of non-compliance are generally unacceptable to P&C insurers. A lack of knowledge, experience and expertise in managing Conditional Payments can create substantial exposure for P&C insurance companies as the regulations change and become more expansive.
The Medicare Secondary Payer (MSP) Act became federal law in 1980. MSP stipulates that Medicare is, by law, the “secondary payer" in personal injury claims involving Medicare beneficiaries. This statute was passed by Congress to provide a route for recovery of health care payments made by Medicare, on behalf of Medicare beneficiaries, when a primary payer already exists. In those circumstances, the primary payer is obligated to reimburse Medicare for payment of legitimate health care expenses, upon claim closure or settlement.
Medicare’s Benefits Coordination & Recovery Center (BCRC) makes an initial determination as to which items or services, if any, are related to a Medicare beneficiary, and an initial Conditional Payment (CP) lien is sent to the primary payer upon their request. This CP lien itemizes the health care charges Medicare has paid on behalf of the Medicare beneficiary. P&C insurers are then expected to reimburse Medicare for legitimate Conditional Payments if the insurer provided any payment (i.e. settlement, judgment, award, other) to the beneficiary.
Conditional Payment liens frequently overstate the legitimate amounts owed by the primary payer. These discrepancies, such as duplicate charges, unrelated treatments, excess fees and other less common unrelated expenses, can result in Conditional Payment liens that cost individual insurers hundreds of thousands, and even millions, of dollars in excess charges.
Because 1) Medicare beneficiary claims are a relatively small percentage of most P&C insurers total personal injury claims, 2) the Medicare rate for health care services is generally significantly lower than the rate to private insurers, and 3) rebutting a Conditional Payment lien can be time consuming and complex, it is common practice for claim adjusters to simply reimburse Medicare the total amount of the Conditional Payment lien to settle and close the file on a timely basis. However, in so doing the insurer is usually overpaying Medicare by substantial amounts on an annual aggregate basis.
At the opposite end of the spectrum, when Conditional Payments are not paid because the adjuster 1) never requested the Conditional Payment lien, 2) turned it over to the claimant’s attorney to negotiate with Medicare and the negotiation never occurred or 3) did not identify the claimant as a Medicare beneficiary, Medicare can, and does, impose severe penalties for non-compliance, and that includes double damages plus accrued interest.
Additionally, many adjusters unintentionally 1) fail to secure closure documents from Medicare, or 2) settle the case without requesting a Final Demand Letter (FDL) from Medicare which would provide updated medical expenses related to the injury. In both cases, new Conditional Payment expenses may have been incurred and accrued, and the insurer can be obligated to pay double damages on those subsequent expenses, plus interest. Such situations can create significant exposure for P&C insurers.
With implementation of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA), the genesis of the Section 111 Reporting obligation, Medicare usually knows the parties involved in most claims and can match that information against unpaid Conditional Payment liens to identify non-compliant insurers. To that end CMS has created the Commercial Repayment Center (CRC) to assist them in identifying P&C insurers who are delinquent in reimbursing Medicare for Conditional Payments made when they were the primary payer.
Medicare compliance is the exclusive focus for Flagship Services Group. We have the expertise, experience and resources to analyze and effectively rebut Conditional Payment liens thereby ensuring that 1) the insurer is 100% compliant, but 2) pays only what is legitimately owed to Medicare…and not a penny more!
Flagship’s teams of medical, legal and claims professionals manage thousands of Medicare claims and Conditional Payments annually. We have the expertise, experience and resources necessary to navigate the tricky road of Medicare compliance. Flagship is the only Medicare compliance company that 1) guarantees 100% compliance and removes the Medicare claims management headache from adjusters’ desks.