As a result of a decision in a class action lawsuit brought by Medicare beneficiaries, the Centers for Medicare and Medicaid Services (CMS) is changing its harsh collection practices under the Medicare Secondary Payer (MSP) program, even while it is appealing the court's decision.
The Medicare Secondary Payer (MSP) statute allows the United States to bring an action to recover payments if Medicare is not properly reimbursed. In Haro, et al. v. Sebelius (No. CV 09134 TUC DCB, D.Ariz. May 9, 2011), a group of Medicare recipients who had received "conditional" Medicare benefits and later received personal injury settlements from secondary payers, challenged Medicare's practice under the MSP program of demanding immediate reimbursement, within 60 days, prior to the resolution of any appeal or request for a waiver of the reimbursement sought by Medicare. They also challenged Medicare's threat of holding the attorney financially responsible if the attorney does not withhold funds from his or her client until the MSP claim has been paid, as well as CMS's use of scare tactics accompanying pre-decisional reimbursement demands, including: imposition of exorbitant interest on unpaid claims; threats of cessation of the beneficiary's Social Security or Railroad Retirement payments, and collection referrals to federal law enforcement agencies.
In a May 9, 2011, decision, the U.S. District Court for the District of Arizona held that these collection practices exceed the agency's statutory authority. Although CMS filed a notice of appeal on June 30, 2011, the Center for Medicare Advocacy reports that the federal agency has also revised two of its MSP collection letters to comply with the district court's orders.
First, a newly revised "rights and responsibilities" letter omits the statement made in earlier letters that Medicare should be repaid before funds are disbursed for other purposes. It adds a statement that Medicare will not take any collection action if an appeal or waiver request is pending. "This change is significant," the Center for Medicare Advocacy writes, "because the demand for immediate repayment has had a chilling effect on beneficiaries' right to contest the MSP claim."
Second, CMS has revised its "demand" letter -- sent by the MSP contractor to the beneficiary after the insurance claim has been resolved by settlement or judgment -- to state that repayment of the MSP claim within 60 days is "requested." This replaces mandatory language in earlier letters. The letter also clarifies that Medicare will not initiate any recovery action while an appeal or waiver request is pending. "Although it states that collection of unpaid Medicare debts may include Treasury offsets against monies payable by federal agencies," the Center for Medicare Advocacy reports, "it no longer mentions termination of Social Security, Railroad Retirement, or future Medicare payments, and states that notice of any intended collection action will be provided."
These revised letters and other MSP letters can be found at: https://www.msprc.info/index.cfm?content=includes/letters/letters
The Center notes that in addition to the revisions of the MSP form letters, CMS has also undertaken a review of Chapter 7 of the Medicare Secondary Payer Manual since the Haro decision.
For the full text of this decision, go to: https://attorney.elderlawanswers.com/full-text-opinion-in-haro-v-sebelius-no-cv-09134-tuc-dcb-dariz-may-9-2011-9327
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