On May 23, 2016, the Centers for Medicare and Medicaid Services (CMS) Coordination of Benefits and Recovery (COBR) Commercial Repayment Center (CRC) published its report to Congress as required by Section 1893(h) of the Social Security Act for Fiscal Year (FY) 2015.
This is the second annual report for the CRC, a national contractor utilized by CMS to identify and recover primary payments mistakenly made by the Medicare program when another entity had primary payment responsibility. The CRC’s work to date has only included the identification and recovery of mistaken primary payments when beneficiaries had coverage through an employer-sponsored Group Health Plan (GHP) arrangement in addition to their coverage under the Medicare program. Because as of October 1, 2015, the CRC began to identify and recover payments mistakenly made by Medicare when a Non-Group Health Plan (NGHP) applicable plan (that is, a Liability insurer, No-Fault insurer, or Workers’ Compensation entity) accepted Ongoing Responsibility for Medical (ORM) and thereby had or has primary payment responsibility, in FY 2016, CMS will expand the CRC’s workload to include the recovery of certain conditional payments where a NGHP applicable plan had or has primary payment responsibility.
As a result, the work process, ability to handle volume, identified mistaken payments, and astounding collections recovery reported here by CRC may be a telling sign of things to come in the NGHP world. If so, watch out self-insureds, liability insurers, no-fault insurers, and workers’ compensation entities or plans, as the CRC is transforming conditional payment recovery from a laissez-faire, slow moving, without deadlines process into a regimented, aggressive, deadline and results driven process.
Group Health Plans and Non-Group Health Plans
The report indicates that “Medicare Secondary Payer (MSP) program involves two broad categories: Group Health Plan (GHP) and Non-Group Health Plan (NGHP). The term “GHP” refers to the arrangement between the employer or other plan sponsor (such as a union or employee health and welfare fund) and the insurer or claims-processing TPA. The term “NGHP” specifically refers to Liability insurance (including self-insurance), No-Fault insurance or Workers’ Compensation. Under the provisions of 42 U.S.C. §1395y(b), the Medicare program can generally only make secondary payments when a payment has been made (or can reasonably be expected to be made) by these GHPs or NGHP applicable plans.”
Data Collection Through Mandatory Insurer Reporting
The report also provides that “CMS routinely collects information about any additional coverage a beneficiary may have or had for a specified period of time. Data collection activities include mandatory insurer reporting, as required by Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Section 111), codified at 42 U.S.C. § 1395y(b)(7) and (b)(8). This data is compiled and updated as necessary. When a medical claim is submitted for payment under Part A or Part B of the Medicare program, Medicare reviews the beneficiary’s records to determine if the Medicare program has primary payment responsibility, or if another entity has that responsibility.”
Identifying Mistaken Payments
In addition, the report also clarifies that “in certain situations after a Medicare claim is paid, CMS may receive new or updated information about health coverage other than Medicare benefits. The CRC reviews new and updated GHP records to determine whether Medicare may have mistakenly paid any claims as the primary payer. Once the CRC identifies mistaken payments, it recovers the payment from the GHP. In addition to recoveries it has initiated, the CRC maintains all open GHP recovery cases (and debts) that were established under previous MSP recovery contractors.”
During the time period for this report, the CRC only reviewed GHP MSP occurrences as they were received and updated to determine whether any primary payments were mistakenly made for a given beneficiary. As of October 1, 2015, the CRC has also been updating NGHP records to determine whether Medicare may have mistakenly paid any claims as the primary payer. In GHP situations, “when the CRC identifies a potential mistaken payment, it issues a Primary Payment Notice (PPN) to the entities that CMS believes had primary payment responsibility (typically the employer or other plan sponsor and the insurer or claims processing TPA).” In NGHP situations, when the CRC identifies a potential mistaken payment, it issues a Conditional Payment Notice (PPN) to the entities that CMS believes had primary payment responsibility (typically the self-insured, liability insurer, no-fault insurer, or workers compensation entity or plan).The notices “request information, but more significantly provide notice of any mistaken payments made by Medicare that may be the responsibility of the GHP or NGHP.”
Recovering Mistaken Payments
Once the CRC has identified mistaken payments made by Medicare which are the responsibility of a primary payer, “the CRC then issues a letter that demands repayment (called a “Demand” letter) from the entities that should have paid as primary. This Demand notifies the identified debtors of the existence of the debt and includes claim specific information. The Demand also includes instructions for how to repay or rebut the debt, and consequences of failure to resolve the debt within the identified timeframe. In response to the Demand, identified debtors may make payment to Medicare. Interest is assessed on any unresolved balance after 60 days (interest accrues from the date the Demand is issued, but is not assessed unless there is an outstanding balance 60 days after issuance of the Demand). If any portion of the debt remains unresolved, the CRC will notify the identified debtor of Medicare’s intent to refer the debt to the Department of the Treasury for collection. Failure to resolve the debt after that notice is issued results in referral of the debt to the Department of the Treasury for collection.”
MSP CRC FY 2015 Results
The report highlights:
[I]n FY 2015, CRC issued 31,968 Demand letter packages relating to 41,847 individual beneficiaries, representing $585.19 million in potential mistaken payments made by the Medicare program. In response to these Demand letters, the CRC received information that validated $292.2 million as correctly identified mistaken payments, representing an increase of almost 25% over the $234.2 million identified in FY 2014. The CRC processed collections of $154.29 million on behalf of the Medicare program, which represents an increase of almost 140% over the $64.4 million in collections processed in FY 2014. Taking into account refunded excess collections of $4.69 million; the CRC posted $149.6 million in net collections. This is an increase of over 150% compared to the $59.3 million in net collections in FY 2014. Considering agency administrative costs of $24.55 million (including contingency fees paid to the CRC), CMS realized a return of $125.05 million dollars to the Medicare trust funds as a direct result of this program, an increase of 147% over the return of $50.6 million for FY 2014.
[ . . . ]
[T]he CRC’s net collections totaled $149.6 million in FY 2015. This amount includes mistaken payments identified through the end of FY 2015 (collection efforts will continue into FY 2016 for mistaken payments identified in FY 2015). A total of $144.21 million of these payments were direct payments (that is, checks received from debtors). During FY 2015 the CRC processed $10.08 million in collections from the Department of the Treasury on delinquent debts. In addition, $4.6 million in excess collections were identified and refunded to the identified debtors.
The Commercial Repayment Center and NGHP Recovery
The report continues:
As with other recovery contractors engaged by CMS and in accordance with the Tax Relief and Health Care Act, the CRC is paid on a contingency fee basis. The amount of the contingency fee is a percentage of the mistaken payment that the identified debtor has returned to the Medicare program. The CRC negotiated its specific contingency fee at the time of the contract award, and may only collect its fee once payment has been applied to a specific debt. In the event that excess collections have been made and a refund must be made to the identified debtor, the CRC must refund the contingency fee related to those collections.
As was started in October of 2015, during FY 2016,
[T]he CRC workload will expand to include the recovery of certain NGHP conditional payments where an applicable plan (a self-insured, liability insurer, no-fault insurer, or workers’ compensation entity or plan) had or has primary payment responsibility. The CRC will recover directly from the applicable plan as the identified debtor when the applicable plan reports that it has ORM or otherwise notifies CMS of its primary payment responsibility.
The identified and recovered amounts reported here by the CRC during FY 2015 are impressive. They may also be a telling sign of things to come in the NGHP world. If so, watch out self-insureds, liability insurers, no-fault insurers, and workers’ compensation entities or plans, as the CRC is transforming the conditional payment recovery world. Given the better information captured through mandatory reporting, the increase in the number of entities and individuals reporting such claims and thereby complying with the MSP law, now seeking pre-settlement reimbursement of such mistaken Medicare payments if ORM has been accepted, and the contingent nature of the fee awardable to the CRC for such recovery, the CRC is about to change 35 years of conditional payment resolution history in the no-fault, med-pay, PIP, and workers compensation industries. As always, Optum Settlement Solutions will continue to keep you updated on all activities associated with the CRC and its attempts to recoup conditional payments prior to settlement from self-insureds, no-fault insurers, liability carriers, and workers compensation plans when ORM has been accepted or established.