Gina Cox No Comments

You have probably heard the buzz about the changes Medicare has made with the Commercial Repayment Center (CRC) and No-Fault and Workers Compensation claims.

But what about Medicare LIABILITY claims?

The short answer is that Medicare’s handling of liability claims has not changed.

Communication breakdown

For liability claims, the RRE doesn’t report a Medicare-related claim until the time of settlement. The reporting side (under Section 111) does NOT communicate that report to the recovery side within Medicare, so Medicare does not automatically send out Conditional Payment Letters (CPLs), Conditional Payment Notices (CPNs) or Final Demand Letters (FDLs) for liability claims like they do now for no-fault claims.

This arrangement presents two distinct challenges:

  • Since reporting does not occur until the settlement phase, the RRE may begin settlement negotiations without knowledge of the conditional payments Medicare has made and will expect to be repaid, leaving them with no other option than to agree to a settlement that fails to account for the Medicare lien.
  • Additionally, since the reporting side does not communicate with the recovery side, the adjuster who complies with Section 111, but doesn’t follow up on recovery, is not fully compliant. And CPLs and CPNs are not sent out automatically, so adjusters erroneously assume that since they did not receive any lien information, there must not be one.

Why these problems need to be avoided

In the first case, if your settlement amount is determined without knowledge of a Medicare lien, the settlement may inadequately cover the lien amount, and leave the claimant with less than expected to cover medical bills. If the insurance company disburses the settlement before resolving the lien, they may have to pay out additional money to cover the Medicare lien. Therefore, the insurer’s paid costs will end up increasing on that claim, possibly prompting an increase in reserves across the board to cover the potential errors in future claims. If the conditional payments were considered prior to settlement, they could have been factored in, resulting in a more accurate initial settlement amount.

In the second case, the federal government can legally bring action against any parties involved to protect Medicare’s interests. It’s the insurer that Medicare will actively come after when enforcing recovery of conditional payments.

Don’t forget the non-compliant RRE can end up responsible for hefty penalties, up to double the lien value, plus interest for the length of time they remain out of compliance.

In both cases, the P&C carrier that fails to understand and implement a solid compliance strategy risks significant financial losses.

How you can avoid the liability claim compliance trap?

The easiest and most effective method for avoiding noncompliance is to rely on a Medicare compliance partner, like Flagship Services Group, to assist with every Medicare-related liability claim.

Our process eliminates the confusion in processing liability claims by including the following vital steps:

  1. We proactively contact Medicare prior to settlement to request a CPL, so that your adjusters go into settlement negotiations better informed.
  2. We review all charges on the CPL to be sure they are related to the claimant’s injury, and dispute any unrelated charges.
  3. Following settlement, we request a Final Demand Letter from Medicare, which serves as your official “bill” for the conditional payment recovery process.
  4. We facilitate recovery and obtain a Case Closure Letter that ensures you can close out your case, with confidence of 100% compliance on that claim

If you struggle with remaining fully compliant with Medicare’s confusing regulations regarding liability and no-fault claims, contact Flagship for more information and to discuss your options.


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