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Collection Letters from the Treasury Department

By: Peter Belsito, Esq.

The issue of conditional payments has received more press lately for one very good reason:  Medicare’s collection contractor, the Medicare Secondary Payer Recovery Contractor, or MSPRC, has improved their processes and is vigorously enforcing their right to recover conditionally made payments under 42 U.S.C. 1395y, the Medicare Secondary Payer Statute.

It is important to note that the term ‘conditional payment’ is used by the MSPRC to refer payments that must be repaid when (or if) the workers’ compensation, liability, auto or no fault claim is settled.  See 42 U.S.C. 1395y.  After a claim is settled, these payments are termed ‘overpayments’ by Medicare and payment must be made within 60 days or interest accrues. 42 C.F.R. 411.24(k)(ii).  Ideally, the best time to investigate a possible Medicare lien or dispute the amount owed to Medicare is six months prior to settlement.  This allows CPSC ample time to dispute the amount owed by medical or legal means without delaying the settlement process.

Unfortunately, we do not live in an ideal world and Medicare debts, particularly on older files, do accrue interest and do get referred to the Department of Treasury (Treasury).  There are several reasons why a debt may remain unpaid and subsequently referred to the Treasury for collection action.  See 31 U.S.C. 3711, the Debt Collection Improvement Act of 1996.  One reason for this is that the MSPRC will send the letter of intent to refer a case to Treasury to the claimant who may or may not understand its implications.  If the claim was settled prior to October 2006, Medicare’s conditional payment collection process was managed by several regional contractors who lost their contract due to poor record keeping.  See The Government Accounting Office’s August 2004 report, GAO-04-783.  Unfortunately, a Medicare debt that has not been enforced due to oversight through a collection contractor must still be addressed by the debtor.  Many of these files are coming back to haunt parties who thought the matter was resolved months or years ago.

Regardless of how a debt has reached the stage where collection action has begun, the matter needs to be resolved.  If you are reading this newsletter, you know at least one MSA vendor who can guide you through this process with minimal cost.

If you or your client receives a letter from the MSPRC giving notice that the debt is being referred to Treasury or a designated agent, please call CPSC immediately.  The debt is still with the MSPRC and we may still dispute the debt, if appropriate.   You have only 120 days from the date that the Final Demand for repayment was issued before the debt is transferred to Treasury.  At this point, Treasury has the authority to administratively offset any federally funded benefits, usually Social Security Disability payments to the claimant, in order to recoup the debt.  See 31 U.S.C. 3711.  Once the debt is referred to Treasury, the opportunity to dispute the validity of the debt has not past.   However, disputing the debt with Treasury is a long and difficult process.  Further, interest will continue to accrue during this process, which often takes months.  Most importantly, offsets from the claimant’s federal benefits may also continue during the dispute with Treasury.    

In order to assist with a past-due debt, CPSC will need specific information relating to the underlying claim.  Most importantly, we will need a consent to release information form signed by the claimant which authorizes CPSC to discuss the issue with Medicare.  Secondly, we will want any and all correspondence to and from Medicare, or any of its contractors, that relate to the claim.  This includes any correspondence from the Department of Treasury as well as the name and contact information of the agent assigned to the file.   We also need pleadings, such as the claim petition (or complaint) and answer.   Finally, we will also need information concerning the underlying claim: this includes: 1. Settlement information including the date settlement was reached, total settlement amount as well as attorney fees and legal expenses; 2. A letter from the carrier explaining the accepted and denied injuries; and 3. A list of payments made by the carrier to providers, if applicable.

At CPSC, we realize that the Medicare Secondary Payer Statute can seem like an unwanted interloper between you and your settlement.  Ignoring the unwanted guest in this case will not make it go away.  However, it is never too late to handle Medicare’s interest on a claim, regardless of when it was settled.  All in all, there two things to keep in mind when handling a claim where the claimant is also a Medicare beneficiary:

• The earlier you address the issue of conditional payments, the better; and
• It is never too late to handle a Medicare debt so as to minimize your (or your client’s) exposure and reduce the over all cost of the settlement.

Conditional Payment Investigation and Negotiation: The Other Half of True MSP Compliance.

While demanding an advocate’s Medicare Set Aside (“MSA”) is crucial to MSP Compliance, it is only half of the Medicare Compliance challenge. Conditional payments, Medicare’s payment of Medicare services for covered individuals, must be investigated in order to understand the extent of your liability under the statute.

Without investigation and discovery of Medicare’s Conditional Payments on a particular claim, you could run the risk of miscalculating the necessity of CMS submission or being blindsided by a Medicare lien post-settlement.

At CPSC, we not only investigate your conditional payment obligations but also include this service at no extra charge. Some of our competitors don't pursue conditional payment investigations at all. Most of our competitors make discovery of this liability optional.

In addition, we believe that merely reporting the amount Medicare claims they are owed in conditional payments is not enough. We believe true Medicare compliance demands an advocate's approach to seeking opportunities for negotiation and cost mitigation. While Medicare provides its conditional payment information in good faith, errors can be found in several aspects for their calculations. A few examples from our successful negotiations reveal the value in reviewing the rationale behind the numbers.

At CPSC, we take a very aggressive approach to conditional payments. Our conditional payment investigation and reduction program is a proprietary process. We focus on investigating the amount claimed and negotiating with CMS based upon legal principles outlined in the Code of Federal Regulations, the Medicare Intermediary Manuals, as well as State and Federal Law.

We have a talented team of attorneys, nurses, and former conditional payment recovery contractors who collaborate to maximize savings on these claims. With a contingent fee basis, our clients have nothing to lose and everything to gain.

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