While the Commercial Repayment Center’s (CRC) conditional payment process has received a lot of coverage in the last eight months, its collections apply only to workers' compensation and no-fault claims. It’s important for insurers not to lose sight of their obligations to determine Medicare conditional payments in liability claims, too. While liability conditional payments can present some unique challenges, there are effective methods to remove the stumbling blocks to claims resolution.
Impediments Resulting from Liability Conditional Payments
- Resolving nuisance value settlements. In a potential low-dollar settlement, conditional payments are often a barrier to resolution, causing an otherwise benign claim to spiral out of control. This causes pro se claimants to seek representation, file suit, and litigate their claims.
- Allocating the insurer’s risk to an adverse party. In liability claims, the claimant—or their attorney—is the gatekeeper for obtaining information, communicating with the Benefits Coordination & Recovery Center (BCRC), and conducting conditional payment activities. To access this information, insurers need authorization: either a Consent to Release (CTR) or a Proof of Representation (POR). Without this, the insurer can be in the dark about conditional payment exposure—and risk having it addressed by an adverse party.
- Lack of information. With workers' compensation claims, the insurer has immediate access to the claimant’s Social Security number (SSN). But this is usually not the case in liability claims. Obtaining the SSN—at least the last five digits for purposes of the Section 111 query process—is critical in establishing Medicare status. And determining Medicare entitlement is the first step in Medicare Secondary Payer (MSP) compliance.
- Multiple insurance types. In liability claims, both no-fault and med-pay coverage can be available concurrently. This coverage exists to pay for medical expenses related to treatment for the underlying claim without regard to fault. When Medicare beneficiaries are involved, this extra coverage can also make resolving claims difficult because Medicare may have dual recovery claims.
- Settlement language. There are many instances when parties insert well-intentioned MSP provisions in liability settlement releases. Yet this can actually cause delays, increase exposure, and hinder settlements. Examples of issues in MSP settlement language that may occur include:
- restrictive provisions around payment time frames that do not allocate enough time regarding potential resolution in the Medicare process (for example, an agreement that states “settlement check to be issued five days from date executed following receipt of a final demand from Medicare,” but generally will take much longer than five days)
- provisions for amounts to be held in trust that are insufficient to reimburse Medicare’s interest and therefore leave a shortfall
- assumptions that hold-harmless and indemnification provisions will insulate an insurer from Medicare exposure or negate the necessity to conduct an investigation with regard to Medicare conditional payments
Removing Impediments to Conditional Payment in Liability Claims
- Use the Medicare Secondary Payer Recovery Portal (MSPRP). The MSPRP is a fantastic tool for conditional payment intelligence gathering that can be used, to a certain degree, without even possessing a POR or CTR. If certain threshold information is known, the portal can be used to determine if a conditional payment letter was issued, the date it was issued, and the current total conditional payment amount. This information is invaluable when evaluating a liability claim for potential resolution.
- Promptly and proactively seek information. Time is not on anyone’s side when it comes to addressing Medicare conditional payments. Unfortunately, parties typically wait until settlement discussions begin to address Medicare conditional payments. But it can take months to discover and then dispute conditional payments in a liability claim. It’s much wiser to investigate conditional payments as soon as a claimant’s Medicare entitlement is determined. Also, in order for an insurer or its agent to get conditional payment information directly, an applicable authorization is needed. It’s advised to seek this early as well.
- Consider options in smaller-value settlements. Potential low-dollar settlements can be a roadblock to resolution. Since Medicare has a right of recovery up to the total settlement amount, smaller settlements can often be consumed by conditional payment recovery—leaving no money for the claimant and no motivation to settle. But there are times when resolving smaller-value claims can be easily accomplished: for example, CMS will not seek recovery for settlements of $1,000 or less. In addition, if a beneficiary has a liability-only settlement of $5,000 or less, the claimant can resolve conditional payments at 25 percent of the total settlement. There is also the option for self-calculation of final conditional payment in settlements of $25,000 or less.
- Dispute and appeal. All too often, parties to a settlement take at face value what Medicare contends it’s owed. This can increase settlement costs or even halt resolution. Dispute and appeal provide a tremendous opportunity to drive down costs, reduce or eliminate exposure, and bring liability claims to resolution.
- Carefully draft settlement language. Attorneys for the insurer need to be careful about what they include in a settlement release with regard to MSP provisions. Sometimes, well-intentioned language can hinder resolving a claim. Here are some tips for developing MSP settlement language:
- Seek legal guidance from an expert licensed to practice law with experience in MSP issues.
- Don’t assume a hold-harmless and indemnification clause will shield an insurer from all liability.
- Don’t rely on settlement language alone to take the place of proactive MSP compliance (for example, conditional payment investigation, analysis, dispute, final demand, appeal, and reimbursement).
- Be careful that your MSP provisions account for potential changes in Medicare amounts (for example, higher final demands than anticipated). Also be careful about including time frames tied to performance of a specific obligation (for example, issuing a settlement check within a certain time that’s contingent upon Medicare acting quickly).
If you have any questions about how to eliminate impediments to settlement of liability conditional payments, please don’t hesitate to contact Shawn Deane, assistant vice president of product development, or Kendell Gracey, assistant vice president of liability claims. ISO Claims Partners has a full array of products and services to suit any liability situation, ensure complete compliance, and bring claims to resolution.