Medicare Secondary Payer Recovery

MSP recovery is divided into two main categories -- Group Health Plan (GHP) and Non-Group Health Plan (NGHP) recoveries.

Group Health Plan (GHP)

An explanation of the process is best shown through an example. Suppose ACME Insurance provides GHP coverage for several businesses, including AAA Manufacturing. AAA Manufacturing employs several Medicare beneficiaries who are considered by Medicare to be "working aged." Occasionally, these employees' medical visits are billed to Medicare instead of their primary payer -- ACME Insurance. Over time, the MSPRC gathers up these claims and when the value of the case (an Employer / Insurer combination) reaches a minimum dollar amount the MSPRC demands the money from the employer, AAA Manufacturing. The threshold dollar amount varies but has been as low as $20,000.00.

Before mid-2008, the MSPRC sent the demand and all of the claims facsimiles to the employer and to the insurer. Since that time, as part of a cost-cutting measure, the MSPRC only sends the demand and a demand summary to the employer, while the insurer continues to get the entire package of information. CMS has received conflicting requests from employers about sending full packages to the employers. Some companies and their employees do not want personal health information shared with their employer and they do not want to receive the full demand. This has caused some issues for employers, since the MSPRC sends the demands to the insurer of record that appears on the Common Working File (CWF) maintained by the Coordination Of Benefits Contractor (COBC). If the employer's insurer changed since the employer last reported to the COBC, then the full demand including the claims facsimiles are have to be recovered from the previous insurer and shipped to the current insurer. In some instances, the MSPRC may reissue the demand to the new insurer. The best solution is to keep records current with the COBC. Contact the MSPRC for assistance and guidance.

There are three responses available to an employer / insurer to a GHP demand: 1. Pay the claim, 2. Submit a defense or 3. Be referred to the U.S. Treasury for collections. The first option can be optimized and last option is self-explanatory, but an employer may wonder why they have to submit so many defenses in the past. The answer to that lies with the previous reporting mechanism to the COBC. COBC received information through the Voluntary Data Sharing Agreements (VDSAs), data match and leads generated through patient intake processing at providers. Approximately, one-third of the defenses would have been avoided if employers and insurers provided more timely and accurate information to the COBC.  The number of times an insurer should have to submit a defense should be drastically reduced by MMSEA Section 111 Mandatory Insurer Reporting.

The highlights of the GHP process are given below and discussed in more detail in related articles

  1. MSPRC discovers an opportunity to recover funds by following a "lead" added by the COBC to CWF
  2. The MSPRC Creates a Case containing claims that Medicare inappropriately paid on behalf of an employer's Medicare eligible employees
  3. When the total dollar value of the case exceeds a threshold, then the case is demanded
  4. The company responds to the demand if they are self-insured, otherwise the insurer responds with either
    1. Payment
    2. Defense
  5. The MSPRC applies the payment to the claims, forwards duplicate primary payments* to the claims processor or accepts the defense
  6. If payment is not made within 60 days of demand, the MSPRC sends an Intent To Refer (ITR) to Treasury letter to the debtor and interest begins to accrue
  7. If payment is not made within 60 days of the ITR, then the debtor is referred to Treasury for collections.
*Duplicate Primary Payment (DPP) occurs when both the insurer and Medicare paid for a medical claim.  The provider was paid twice.  In these situations, the MSPRC alerts the MAC (intermediary) to recover Medicare's payment from the provider.  No further action is required by the insurer.

Non-Group Health Plan (NGHP)

Non-Group Health Plan recoveries are for payments, judgements or awards to Medicare beneficiaries for injuries sustained in an incident were compensation has been made through a liability settlement, worker's compensation settlement or coverage under no-fault insurance.

In the past, Medicare learned of settlements through attorneys when they reported the case to the COBC or through providers during the patient intake process; however, with the implementation of Section 111, Mandatory Insurer Reporting (MIR), Medicare will discover settlements through insurers. Attorneys that have not reported run the risk of discovery and potential penalties if they did not report there cases. The MSPRC sends a demand to the beneficiary upon Notice Of Settlement (NOS).

No-fault recoveries occur when the provider incorrectly bills Medicare for claims related to the accident. Generally, demands are issued upon no-fault benefit exhaust but that may change with MIR.

The highlights of the NGHP process for a lump sum settlement involving an attorney are given below and discussed in more detail in related articles (click on links).  Recovery for ongoing (e.g., no-fault and workers' compensation set asides) and lump sum settlement not involving an attorney are discussed in the MSP Overview.

  1. COBC send a Right to Recovery letter and a blank Consent to Release Right to Represent form to the person that reported the pending case
  2. Obtaining a valid authorization for a deceased beneficiary is more difficult than for a living beneficiary.
  3. MSPRC discovers an opportunity to recover funds by following a "lead" added by the COBC to CWF or more often through correspondence with a beneficiary or the beneficiaries representative. The first contact is generally the receipt of the authorization
  4. If the authorization is valid, the MSPRC will send a Conditional Payment Letter (CPL)
  5. Conditional Payment Letter contains an estimate of Medicare's related payments
  6. Beneficiary or representative may dispute the claims as unrelated or add claims that were not included
  7. MSPRC receives a Notice Of Settlement
  8. MSPRC issues a demand that includes all of the payments that have accrued up until the settlement, reduced by the beneficiary's procurement costs (e.g., attorney fees).
  9. Beneficiary or representative can appeal the demand in the following ways
    1. Appeal
    2. Waiver or
    3. Compromise
  10. If payment is not made within 61 days of demand, the MSPRC sends an Intent To Refer (ITR) to Treasury letter and interest begins to accrue with the following exceptions:
    1. The case has a pending appeal, wavier or compromise
    2. The MSPRC discovers there is un-opened correspondence that has to be reviewed first
  11. If payment is not made within 60 days of the ITR, then the debtor is referred to Treasury for collections.