Resolving Medicare Conditional Payment Obligations

Correctly navigating Medicare’s conditional payment resolution process is critical for personal injury attorneys, given the complex legal framework and the substantial risks involved in failure to reimburse. Under the Medicare Secondary Payer Act (MSPA), the Centers for Medicare & Medicaid Services (CMS) have broad powers to recover payments made on behalf of Medicare beneficiaries, including the right to sue trial attorneys directly. Failing to address Medicare’s reimbursement claims correctly can lead to severe financial and legal consequences for personal injury law firms.

MSPA:  The Legal Framework

CMS can recover conditional payments from any entity that touches settlement dollars which are meant to reimburse medical expenses, including attorneys who handle personal injury settlements. The case of U.S. v. Harris starkly illustrates the potential pitfalls. In this case, a personal injury attorney was held liable for Medicare’s conditional payments despite settling a claim and notifying Medicare. The court ruled against the attorney, emphasizing that CMS’s rights under 42 U.S.C. § 1395y(b)(2) extend to recovering from entities that have received payments from primary plans, a personal injury law attorney.

A Labyrinth:  The Medicare Resolution Process

Resolving Medicare’s conditional payments involves several steps:

1. Initial Reporting: Contact the Benefits Coordination & Recovery Contractor (BCRC) before settlement to obtain a Conditional Payment Letter (CPL). This letter is preliminary and should be audited to remove unrelated care.
2. Final Demand: After settlement, Medicare must be informed, and a Final Demand will then be issued. Payment must be made within 60 days to avoid interest accumulation and potential enforcement actions by the DOJ.

Mistakes to Avoid:  Common Pitfalls

There are some common mistakes made by personal injury law firms when it comes to conditional payments.  These mistakes can be costly, and it is best to avoid them:

1. Relying on Conditional Payment Letters: Conditional Payment Letters are not final. Only a Final Demand Letter from Medicare confirms the amount due and is binding. Relying on preliminary figures can lead to significant shortfalls and legal issues, as evidenced by a 2019 case where a Maryland law firm settled a claim which was based upon reliance on incorrect figures in a Conditional Payment Letter.
2. Improper Resolution Channels: Using incorrect methods to resolve conditional payments, such as state court proceedings instead of the required administrative processes, can result in severe repercussions, as seen in a Texas case where a state court ruling was sought to reduce what was owed to Medicare which wasn’t effective.  Instead, the trial attorney was sued by the government for failure to properly reimburse Medicare. 

Reducing What is Owed:  Appeals, Compromises, and Waivers

When dealing with Medicare’s repayment formula, attorneys face a rigid calculation per the applicable regulation. The calculated repayment amount often doesn’t account for case-specific details impacting the recovery such as liability issues or policy limits. To address this fact, attorneys can:

1. Appeal: Navigate through Medicare’s multi-level internal appeal process, which is lengthy, and interest accrues during the appeal.  Or.
2. Request Compromise/Waiver: After paying the Final Demand, attorneys can request a compromise or waiver, potentially leading to a refund. Requests can be made under:
   • Section 1870(c): Financial hardship waiver.
   • Section 1862(b): Best interest of the program waiver.
   • Federal Claims Collection Act: General compromise request.

Conclusion

Effective resolution of Medicare conditional payments requires diligence and adherence to proper processes prescribed by Medicare. Attorneys should avoid relying on preliminary figures, ensure timely and accurate reporting, and use appropriate channels for appeals or compromise/waiver requests. Understanding and navigating Medicare’s complex requirements is crucial to safeguarding against personal liability and ensuring successful settlement outcomes.

Working with specialized lien resolution companies can provide essential expertise and prevent costly mistakes when it comes to Medicare conditional payments.  If you want to find out more, contact us today to Partner with Synergy for lien resolution. 

Written by: Jason D. Lazarus, J.D., LL.M., MSCC | CEO