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Avoiding the snares of the Treasury Offset Program

When a Medicare conditional payment case is referred to the U.S. Department of Treasury for collection, the Debt Management Services office in Birmingham, Alabama, and their four current Private Collection Agencies (PCAs) begin to collect the referred amount of “delinquent and legally enforceable debt.” These agencies have the same authority as the Centers for Medicare and Medicaid Services (CMS), and their efforts consist of sending demand letters and making phone calls. For insurers, these phone calls can be time consuming and frustrating—with calls hitting everyone from adjusters, to accounts payable, to the head of claims, and up to the C-Suite.

When Medicare refers a claim to the Treasury for a conditional payment debt, the PCAs will initiate Treasury collections. If a Tax Identification Number (TIN) associated with the debtor company is attached to the referral, the debt is immediately entered into the Treasury Offset Program (TOP), and it is in this program that the Treasury most often collects money from debt referral.


What funds are available to TOP to offset for MSP debt from insurance companies and self-insured entities such as private companies, state and local governments, agencies, colleges and universities, and any other “federal debtor?” The answer is generally any payment that the federal government, thus, the Department of the Treasury, is paying to that entity.

  • For insurance companies and self-funded companies, funds available to TOP could include payment from contracts/services provided the federal government, refunds for taxes or fees overpaid, subrogation issues such as payment from General Services for their responsibility in accidents involving government vehicles or property.
  • For state and local governments and agencies, offsets could be against any payment from the federal government to include but not be limited to funds for any such payment not associated with means tested programs, (food stamps, Medicaid, assistance to needy families). Examples include federal money earmarked for a new ambulance, prekindergarten classes, capital projects, and more.
  • For colleges and universities, offsets can take money from research funds, professor grants, some student funding, and other educational priorities.

One difficulty is that offsets may not be detected for long periods of time. Paperwork from the Treasury advising of such actions is often as cryptic: The initial demand letters can confuse recipients, whether small operations, large multilocation/subsidiary operations, or governments.

As onerous as this process is to a company, college, or government entity, its effect on the Medicare recipient when they’re considered the debtor, such as in most liability cases, in some workers' compensation, and in No-Fault cases, can be devastating. When a case makes its way to the Treasury and lists an individual as the “debtor,” there’s always a social security or Health Insurance Claim Number (HICN) associated with individuals who consistently end up in the TOP if they don’t make payment in full to a demand. The most vulnerable in our society are often the elderly, who will see a 15 percent reduction in their social security check.

We work diligently to prevent MSP conditional payment cases from ending up in collection or offset process at the Treasury. We know it’s far easier to resolve these issues before, during, and after the settlement process and to ensure that Medicare compliance is achieved. If things do take a turn for the worse, we can work with Treasury for you to resolve the issues. Our team of experts will review the demand and determine if it is legitimately owed or simply a mistaken demand created by Medicare. For more information on how we can help, contact Shawn Deane, vice president of Medicare / Medicaid compliance & policy, at or (978) 825-8150.

Walter Johnson

Walter Johnson is senior lien analyst for ISO Claims Partners, a Verisk business. You can reach Walter at

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