Medicare Conditional Payment Appeal Considerations for Workers’ Compensation and No-Fault/Liability Payers: Navigating the Multi-Level Appeals Process

The Strengthening Medicare and Repaying Taxpayers (SMART) Act of 2013 established, among other items, a formal multi-level appeals process whereby primary plans (workers’ compensation, general liability, and no-fault payers/plans, herein referred to as “primary plans”) may appeal conditional payment debts asserted against them by the Centers for Medicare & Medicaid Services (CMS).

In total, there are five (5) levels of appeal, and each level presents its own criteria and deadlines:

Level 1 – MAC Redetermination (BCRC or CRC)

Level 2 – Qualified Independent Contractor (QIC) Reconsideration

Level 3 – Administrative Law Judge (ALJ)

Level 4 – Medicare Appeals Council (Council) Review

Level 5 – U.S. District Court Judicial Review

Numerous conditional payment disputes are resolved in the first or second levels of appeal. Thus, the most common type of dispute involves a primary plan’s request to remove unrelated conditional payment line-item charges from Medicare’s conditional payment demand at Level 1 with the CMS Contractor.

It is no secret that CMS’ contractors utilize a “grouper” algorithm to determine whether a Medicare beneficiary’s medical treatment is related to their workers’ compensation, liability, or no-fault claim. Medicare has previously acknowledged that the “grouper algorithm” regularly produces errors in conditional payment demands, which is why primary plans should carefully monitor Medicare conditional payment correspondence for unrelated charges and dispute where applicable.

Primary plan appellants who exhaust their first and second level conditional payment administrative appeal rights may, of course, proceed with a third level (Administrative Law Judge or ALJ) appeal. However, even though the ALJ is required to issue a decision within 90 days (per 42 CFR § 405.1016(a)), many insurance carriers are surprised to learn that ALJs, on average, issue a decision after 1,430 days (nearly 4 years). In fact, the average processing time for an ALJ decision has increased year-over-year since 2009, and it is likely to continue to increase through 2021 given the ongoing COVID-19 pandemic. However, at times primary payers may get lucky and the ALJ hearing/case resolution may occur more rapidly. Just recently, Sanderson Firm was able to have an ALJ hearing docketed within 6 months of filing the request for appeal, allowing the conditional payment lien dispute to resolve much more quickly than anticipated.

This quick scheduling may be an anomaly; therefore, what does this ever-growing waiting period and common “grouper algorithm” error mean for primary payers facing a Medicare conditional payment lien that they wish to dispute at levels beyond the CMS contractor?

First, workers’ compensation and other primary payers should aim to present a thorough, well-written appeal (including all appropriate supporting documentation) at the initial appeal stages to minimize settlement delays. While some primary plans may prefer to draft their initial appeal(s) at the BCRC/CRC contractor level in-house (typically by those unfamiliar with the Medicare Secondary Payer process) to reduce outsourcing costs, such cost-savings are quickly offset if the primary payer is unable to obtain a favorable decision (not to mention lost time—potentially years—and the inability to close out a claim file due to an outstanding Medicare conditional payment lien).

Second, assuming the conditional payment dispute has reached the ALJ stage, primary plans should consider paying the conditional payment demand amount to stop interest from accruing on the outstanding lien. If the primary plan “pays in protest” (before filing an ALJ request) and the ALJ decision is unfavorable, then the primary plan will not be responsible for any interest that has accrued on the debt during the ~4 year waiting period (note – payment in protest will not prejudice the insurance carrier’s conditional payment argument).

Finally, insurance carriers must prepare to be patient once positioned at the ALJ stage. Insurance carriers cannot, for example, avoid the standard administrative appeals process via filing a complaint in federal court (See Mouradian v. United States Government, 2018 U.S. Dist. Lexis 163106).

Given the above considerations, primary plans will greatly benefit from familiarizing themselves with Medicare’s conditional payment recovery appeals process afforded to them by The SMART Act of 2013. Primary plans should be aware of these conditional payment appeal rights and take advantage of them, to ensure that it is not overpaying for items and services unrelated to the workers’ compensation, general liability, or no-fault claim. For questions related to conditional payment appeals, please contact me at brendon@sandersoncomp.com.