Medicare Secondary Payer (MSP) is the term generally used when the Medicare program does not have primary payment responsibility - that is, when another entity has the responsibility for paying before Medicare. See 42 U.S.C. 1395y(b) [section 1862(b) of the Social Security Act], and 42 C.F.R. Part 411, for the applicable statutory and regulatory provisions.
Information for Adjusters regarding MSP Situations
By law, Medicare may not pay for a beneficiary's medical expenses when payment “has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance.”
In most MSP situations involving non-group health plans (NGHPs), Medicare will pay conditionally for medical expenses in order to ensure that the beneficiary has timely access to needed care and later seek to recover those payments. The payment is "conditional" because it must be repaid to Medicare when a settlement, judgment, award, or other payment is made.
The Benefits Coordination & Recovery Center (BCRC) is responsible for ensuring that Medicare gets repaid for any conditional payments it makes related to a workers’ compensation claim. Note: The BCRC will provide conditional payment information to a workers’ compensation entity/carrier or no-fault insurer without a consent to release document. The Medicare Secondary Payer Recovery Portal (MSPRP) is a web-based tool designed to assist in the resolution of Liability Insurance, No-Fault Insurance, and Workers' Compensation Medicare recovery cases. The MSPRP gives users (employees, employers, adjusters, attorneys, insurers/self-insureds and their representatives) the ability to access and update certain case specific information online and monitor the recovery process online.
The typical NGHP recovery case involves the following steps:
1. Reporting the case to the BCRC:
Whenever there is a pending liability, no-fault, or workers’ compensation claim, it must be reported to the BCRC. This is the first step in the MSP NGHP recovery process. Once the case has been reported, the BCRC will collect information from multiple sources to research the MSP situation, as appropriate (e.g., information is collected from claims processors, MMSEA Section 111 Mandatory Insurer Reporting submissions, Initial Enrollment Questionnaire (IEQ), and Worker’s Compensation carriers).
If the BCRC determines that the other insurance is primary to Medicare, they will create an MSP occurrence and post it to Medicare’s records. If the MSP occurrence is related to a NGHP, the BCRC uses that information as well as information from CMS’ systems to identify and recover Medicare payments that should have been paid by another entity as primary payer.
2. BCRC issues a Rights and Responsibilities letter:
After the MSP occurrence is posted, the BCRC will initiate recovery activities against the responsible party and send the beneficiary a Rights and Responsibilities (RAR) letter. The RAR letter explains what happens after a Medicare beneficiary files an insurance or workers’ compensation claim, what information the BCRC needs, and what information the Medicare beneficiary can expect from the BCRC.
The attorney/representative will receive a copy of this communication and others from the BCRC as long as the attorney/representative has submitted a Consent to Release form. With that form on file, the attorney/representative will also be sent a copy of the Conditional Payment Letter (CPL) and Demand Letter. If the attorney/representative wants to enter into additional discussions with any of Medicare’s entities, the beneficiary will need to submit a Proof of Representation document. Note: In some special circumstances, the potential third-party payer can submit Proof of Representation giving the third-party payer permission to enter into discussions with Medicare’s entities. If potential third-party payers submit a Consent to Release form, executed by the beneficiary, they too will receive CPLs and the Demand Letter. It is in the best interest of both sides to have the most accurate information available regarding the amount owed to the BCRC.
3. BCRC identifies Medicare’s interim recovery amount and issues the CPL:
The BCRC begins identifying claims that Medicare has paid conditionally that are related to the case. Medicare's recovery claim runs from the “date of incident” through the date of settlement/judgment/award (where an “incident” involves exposure to or ingestion of a substance over time, the date of incident is the date of first exposure/ingestion).
Within 65 days of the issuance of the RAR Letter, the BCRC will send the CPL and Payment Summary Form (PSF). The PSF lists all items or services that Medicare has paid conditionally which the BCRC has identified as being related to the pending claim.
The CPL explains how to dispute any unrelated claims and includes the BCRC’s best estimate, as of the date the letter is issued, of the amount Medicare should be reimbursed (i.e., the interim total conditional payment amount). The conditional payment amount is considered an interim amount because Medicare may make additional payments while the claim is pending. If there is a significant delay between the initial notification to the BCRC and the settlement/judgment/award, the beneficiary/representative may request an “interim conditional payment letter” which lists the claims paid to date that are related to the no-fault, liability, or workers’ compensation claim.
4. BCRC issues a Conditional Payment Notification (CPN):
If a settlement, judgment, award, or other payment has already occurred when the case is first reported, a CPN will be issued. This notice provides conditional payment information and advises the beneficiary on what actions must be taken. The beneficiary has 30 calendar days to respond. The following items must be forwarded to the BCRC if they have not previously been sent:
- Proof of Representation/Consent to Release documentation, if applicable;
- Proof of any items and/or services that are not related to the case, if applicable;
- All settlement documentation if the beneficiary is providing proof of any items and/or services not related to the case;
- Procurement costs and fees the beneficiary paid; and
- Documentation for any additional or pending settlements, judgments, awards, or other payments related to the same incident.
If a response is received within 30 calendar days, it will be reviewed and the BCRC will issue a demand (request for repayment) as applicable. If a response is not received in 30 calendar days, a demand will automatically be issued without a proportionate reduction for fees or costs.
5. Dispute Process:
If the beneficiary/representative believes that any claims included on CPL/PSF or CPN should be removed from Medicare's interim conditional payment amount, documentation supporting that position must be sent to the BCRC. The BCRC will adjust the conditional payment amount to account for any claims it agrees are not related to what has been claimed/released.
Allow 45 calendar days for the BCRC to review the submitted disputes and make a determination. During its review process, if the BCRC identifies additional payments that are related to the case, they will be included in a recalculated Conditional Payment Amount and updated CPL. If CMS determines that the documentation provided at the time of the dispute is not sufficient, the dispute will be denied. The beneficiary/representative will receive a letter explaining Medicare’s determination once the review is complete.
6. BCRC issues a Demand Letter:
When there is a settlement, judgment, award, or other payment, the beneficiary/representative should notify the BCRC. The information sent to the BCRC must clearly identify: 1) the date of settlement, 2) the settlement amount, and 3) the amount of any attorney's fees and other procurement costs borne by the beneficiary (Medicare may only take beneficiary-borne costs into account).
The BCRC will apply a termination date (generally the date of settlement, judgment, award, or other payment) to the case. The BCRC will identify any new, related claims that have been paid since the last time the CPL was issued up to and including the settlement/judgment/award date. Once this process is complete, the BCRC will issue a formal recovery demand letter advising the debtor (Medicare beneficiary, claimant or insurer) of the amount of money owed to the Medicare program. The amount of money owed is called the Demand Amount. The Demand Letter includes the following information:
- The beneficiary’s name and Medicare Health Insurance Claim Number (HICN);
- Date of accident/incident;
- A summary of conditional payments made by Medicare;
- The total Demand Amount, and, in letters to Medicare beneficiary-debtors; Information on applicable waiver and administrative appeal rights.
7. Assessment of Interest and Failure to Respond
Interest accrues from the date of the demand letter, but is only assessed if the debt is not repaid or otherwise resolved within the time period specified in the recovery demand letter. Interest is due and payable for each full 30-day period the debt remains unresolved; payments are applied to interest first and then to the principal. Interest is assessed on unpaid debts even if a beneficiary-debtor is pursuing an appeal or requesting a waiver. The only way to avoid the interest assessment is to repay the demanded amount within the specified time frame. If the waiver/appeal is granted, the beneficiary will receive a refund.
Failure to respond within the specified time frame may result in the initiation of additional recovery procedures, including the referral of the debt to the Department of Justice for legal action and/or the Department of the Treasury for further collection actions.
Checks should be made payable to Medicare. All correspondence, including checks, must include the beneficiary's name and Medicare HICN and should be mailed to the appropriate address.
8. Referral of debt to the Department of Treasury
For MSP purposes, if a debt remains outstanding more than 60 calendar days after the demand letter date, it will be considered ‘delinquent’. This can occur:
- If a less than full payment has been made
- If there is no valid documented defense for any outstanding amount, including no response by the debtor
The debtor is notified of delinquency through an Intent to Refer letter (a notice of the BCRC’s intent to refer the debt to the Department of Treasury Offset Program for further collection activities). Note: CMS may also refer debts to the Department of Justice for legal action if it determines that the required payment or a properly documented defense has not been provided. The law authorizes the Federal government to collect double damages from any party that is responsible for resolving the matter but which fails to do so.
The Intent to Refer letter provides 60 calendar days for a response to be sent to the BCRC before the debt is referred to Treasury. Responses include:
- Sending payment to the BCRC
- Sending written responses/defenses to the BCRC