Conditional Payments Update: Thousands of letters and notices issued

By Jessica Smythe March 6, 2016

In a brief alert issued on February 11, 2016, the Centers for Medicare and Medicaid Services (CMS) announced that since the October transition of conditional payment recovery from the Benefits Coordination and Recovery Center (BCRC) to the Commercial Repayment Center (CRC), the CRC has issued more than 33,000 conditional payment letters (CPLs) and new conditional payment notices (CPNs).

Without a doubt, the change in contractors from the BCRC to the CRC and the resulting change in the CMS conditional payment collection process were the most important new developments in Medicare compliance since the enactment of the Medicare Secondary Payer Act. In this new process, rolling recovery, CMS may recover conditional payments presettlement from insurers where the insurer is identified as the debtor, usually workers’ compensation and no fault carriers. The change caught the insurance industry by surprise, particularly in those jurisdictions where medicals remained open. Historically, “lifetime medical” jurisdictions enjoyed some insularity from conditional payment recovery since there were no final settlements triggering CMS recovery obligations. With the switch in contractors, all that has changed.

The industry awaited the new CPNs and anticipated filing responses within the narrow 30-day deadline. However, clear direction and information were not received to fulfill this mandate. After the changeover, the CRC was inactive, and conditional payment recovery was conducted as usual. Insurers and self-insured entities questioned CMS about its delay in implementing the new recovery process and began to petition CMS for clarification on the correct method of filing responses to the new CPNs. Most important, insurers were concerned about preservation of their appeal rights pursuant to the SMART Act.

In response to insurers’ concerns, CMS issued the February alert and has also acknowledged the issues that have plagued the delivery of CPNs. The alert stated:

  • CPLs and CPNs have actually been issued (33,000).
  • CMS is “aware that many insurers and WC entities are awaiting CPLs, CPNs, or demand letters.”
  • CMS is actively engaged with the CRC to improve responsiveness to requests for conditional payment information and the handling of correspondence.

The CMS alert indicates there have been issues with the initiation of the new recovery process. For example, some insurers have received no CPLs. For those that have received CPLs, the CRC has been slow to meet response deadlines or provide requested information.

Unfortunately, CMS has a history of implementing changes very slowly. Regardless, insurers should bear in mind that the new process is in place, and they have 30 days to respond to CPNs. This is particularly important in case a specific organization is flooded with demands from the CRC, as was outlined in the February alert. As has always been the case, a primary payer’s obligations are not excused by CMS procedural delays.

In addition, insurers’ designation of a recovery agent may not act as a fail-safe for receipt of CPNs and other correspondence from the CRC. Even in instances where an insurer has designated a recovery agent, the CRC may still persist in sending correspondence directly to the insurer (sometimes to an incorrect address) without a copy to the recovery agent. Correspondence to the correct insurer may also fail in the event a third-party administrator (TPA) does not correctly designate its insured (or sometimes even if the TPA does correctly designate the proper insurer).

ISO Claims Partners continues to carefully monitor the implementation by the CRC of the new rolling-recovery process and will continue to aggressively pursue accountability by CMS and the CRC for proper administration of the new process. ISO Claims Partners is committed to keeping you informed so your organization can best meet the demands of CRC recovery efforts, and we will continue to protect our customers’ interests and advocate on their behalf.


Jessica Smythe

Jessica C. Smythe is assistant vice president, Customer Relationship Management, for ISO Claims Partners. Before joining ISO Claims Partners, Jessica was a North Carolina liability and workers' compensation defense attorney. Her clients included national and international corporations, self-insured companies, insurance carriers, and third-party administrators (TPAs). She is a nationally recognized speaker and trainer on the subject of Medicare compliance, including the impact of Medicare compliance on claim handling and litigation management. Jessica also has also been awarded the designations of Certified Litigation Management Professional (CLMP), Medicare Set-Aside Certified Consultant (MSCC), and Certified Medicare Secondary Payer Professional (CMSP).