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United States Government Accountability Office: 
GAO: 

Testimony: 

Before the Subcommittee on Oversight and Investigations, Committee on 
Energy and Commerce, House of Representatives: 

For Release on Delivery: 
Expected at 10:00 a.m. EDT:
Wednesday, June 22, 2011: 

Medicare Secondary Payer: 

Process for Situations Involving Non-Group Health Plans: 

Statement of James C. Cosgrove:
Director, Health Care: 

GAO-11-726T: 

GAO Highlights: 

Highlights of GAO-11-726T, a testimony before the Subcommittee on 
Oversight and Investigations, Committee on Energy and Commerce, House 
of Representatives. 

Why GAO Did This Study: 

The Centers for Medicare & Medicaid Services (CMS) is responsible for 
protecting the Medicare program’s fiscal integrity and ensuring that 
it pays only for those services that are its responsibility. Medicare 
Secondary Payer (MSP) provisions make Medicare a secondary payer to 
certain group health plans (GHP) and non-group health plans (NGHP), 
which include auto or other liability insurance, no-fault insurance, 
and workers’ compensation plans. CMS has the right to recover Medicare 
payments made that should have been the responsibility of another 
payer, but CMS has not always been aware of these MSP situations. In 
2007, Congress added mandatory reporting requirements for GHPs and 
NGHPs that should enable CMS to be aware of MSP situations. CMS 
reports that mandatory reporting was pushed back from 2009 to 2011 for 
some NGHPs and from 2009 to 2012 for others, in part due to concerns 
raised by the industry. 

GAO was asked to present background information about the MSP process 
as it pertains to NGHPs. To do this work, GAO reviewed relevant CMS 
documentation, including MSP regulations, manuals, and user guides, 
and conducted an interview with CMS related to mandatory reporting and 
the MSP process. GAO shared the information in this statement with 
CMS. CMS provided technical comments, which GAO incorporated as 
appropriate. GAO has ongoing work examining challenges related to the 
MSP process for NGHPs. 

What GAO Found: 

MSP situations involving NGHPs are triggered by unexpected incidents, 
such as car accidents or work-related injuries, that involve Medicare 
beneficiaries and result in medical expenses for which an NGHP-—rather 
than Medicare-—has primary responsibility for payment. In these 
situations, Medicare becomes a secondary payer. 

Medicare payments for MSP situations involving NGHPs can vary. In most 
MSP situations involving NGHPs, Medicare will initially pay for 
related medical expenses in order to ensure that the beneficiary has 
timely access to needed care, and later seek to recover those 
payments. Once CMS is notified of an MSP situation involving an NGHP—-
by the insurer, the beneficiary, or another party-—Medicare may start 
denying claims or may continue to make payments pending a resolution 
so the beneficiary has continued access to needed medical services. To 
help prevent Medicare from making future payments for MSP situations 
involving NGHPs, a Medicare set-aside arrangement may be created when 
an individual is expected to have future medical expenses related to 
an MSP situation. This is a voluntary arrangement where funds are set 
aside by the primary insurer to pay for related future medical 
expenses. 

The MSP process for situations that involve NGHPs generally includes 
five basic components (see table 1). The process details, and CMS’s 
administrative tasks, can vary based on when in the process CMS is 
notified, the type of insurance involved, and the type of resolution 
reached. CMS contracts with three entities to perform most of its MSP 
activities. 

Table 1: The Basic Components of the MSP Process for Situations 
Involving NGHPs: 

Component: Notification; 
Description: CMS is notified of the MSP situation by the insurer, the 
beneficiary, or another party. This can occur at any time from the 
time of the incident through mandatory reporting. 

Component: Negotiation; 
Description: Negotiation takes place between the NGHP and the injured 
party or his attorney. CMS may provide information to involved parties 
during the negotiation process. 

Component: Resolution; 
Description: A resolution is reached between the NGHP and the injured 
party or his attorney. 

Component: Mandatory reporting; 
Description: As required by mandatory reporting requirements, the NGHP 
reports details of the final resolution to CMS. 

Component: Recovery: 
Description: CMS seeks to recover any MSP payments made. 

Source: GAO analysis of CMS documents. 

[End of table] 

View [hyperlink, http://www.gao.gov/products/GAO-11-726T] or key 
components. For more information, contact James C. Cosgrove at (202) 
512-7114 or cosgrovej@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the Centers for Medicare & 
Medicaid Services' (CMS) Medicare Secondary Payer (MSP) program. MSP 
situations arise when other insurers have the primary responsibility 
to pay for a Medicare beneficiary's medical expenses.[Footnote 1] In 
these situations, Medicare is the secondary payer and is only 
responsible for paying for beneficiaries' Medicare-related health care 
costs that are not covered by the primary insurer. CMS, the agency 
within the Department of Health and Human Services (HHS) that 
administers Medicare, is responsible for protecting the Medicare 
program's fiscal integrity. To safeguard funds, CMS must take steps to 
ensure that it pays only for those services that are the 
responsibility of the Medicare program. Until 1980, Medicare was the 
primary payer in all situations involving Medicare beneficiaries 
except those covered by workers' compensation.[Footnote 2] In 1980, 
Congress enacted provisions that made Medicare a secondary payer in 
all instances to non-group health plans (NGHP)--which include auto or 
other liability insurance, no-fault insurance, and workers' 
compensation plans.[Footnote 3],[Footnote 4] For example, an NGHP is 
the primary payer for medical expenses related to injuries that a 
Medicare beneficiary may sustain in an automobile accident (see figure 
1). In 1981 Congress enacted provisions that made Medicare a secondary 
payer to employer-sponsored group health plans (GHP) in certain 
situations.[Footnote 5] 

Figure 1: An MSP Situation Involving an Auto Liability Insurer: 

[Refer to PDF for image: photograph and accompanying text] 

A Medicare beneficiary is injured in a car accident and goes to the 
hospital. The hospital bills Medicare, although the auto liability 
insurance company is responsible for paying for the beneficiary's 
treatment. Because the beneficiary has not yet reached a resolution 
with the auto liability insurance company, Medicare makes payments to 
the hospital for the care provided. Once the resolution is reached and 
the beneficiary receives a settlement from the auto liability 
insurance company, CMS attempts to recover the amount of Medicare’s 
payments from the beneficiary. 

Source: GAO (text), FEMA/Casey Deshong (photograph). 

[End of figure] 

When MSP situations have occurred, CMS has not always been notified 
that beneficiaries had other insurance that should be the primary 
payer. As a result, Medicare has paid for services that were the 
financial responsibility of another payer. Section 111 of the 
Medicare, Medicaid, and SCHIP Extension Act of 2007[Footnote 6] added 
mandatory reporting requirements for GHPs and NGHPs with respect to 
MSP situations that should enable CMS to be aware of MSP situations. 
With this information, CMS should be able to identify which payments 
were made by Medicare that should have been the primary responsibility 
of another payer, and therefore should be recovered, or situations in 
which CMS should avoid making payments when another payer should be 
primary. Section 111 also included penalties for non-compliance with 
the mandatory reporting requirements ($1,000 fine per day of non- 
compliance per claim). The Congressional Budget Office estimated that 
these provisions for GHPs and NGHPs would save Medicare $1.1 billion 
over 10 years in improper payments that could be recovered or avoided 
by Medicare. 

CMS reports that while the implementation of Section 111 added 
reporting rules for GHPs and NGHPs, it did not eliminate or change any 
existing MSP laws or regulations, or otherwise change CMS's existing 
MSP process. Specifically, prior to mandatory reporting requirements, 
GHPs and NGHPs involved in MSP situations had a legal obligation to 
notify and repay Medicare when they determined that Medicare should 
not have paid first. Likewise, Medicare beneficiaries had an 
obligation to take whatever actions were necessary to obtain any 
payment that could be reasonably expected from an NGHP and to 
cooperate with CMS in any action CMS takes to recover conditional 
payments. These obligations remain, although prior to mandatory 
reporting the parties involved in MSP situations may not have always 
been aware of these obligations. 

MSP mandatory reporting requirements have not been fully implemented. 
GHPs began mandatory reporting in January 2009. While NGHPs were 
scheduled to begin mandatory reporting in July 2009, CMS reports that 
this timeline has been pushed back several times, in part due to 
concerns raised by the industry. Mandatory reporting requirements 
began in January 2011 for certain NGHPs, including workers' 
compensation and no-fault insurers. Other NGHPs, including most 
liability insurers, are required to begin reporting in January 2012. 
GAO has ongoing work related to mandatory reporting and the MSP 
process for situations involving NGHPs. 

You expressed interest in obtaining information about the MSP process, 
particularly as it pertains to NGHPs. My statement today will provide 
an overview of Medicare payments for MSP situations involving NGHPs 
and the MSP process for those situations, and will also provide 
illustrations of that process. 

For this statement, we reviewed relevant CMS documentation including 
MSP regulations, manuals, user guides, and information found on the 
CMS Web site and a contractor's Web site related to the MSP process. 
We also conducted an interview with CMS officials concerning mandatory 
reporting and the MSP process. We shared the information in this 
statement with CMS. CMS provided technical comments, which we 
incorporated as appropriate. We conducted our work from May 2011 to 
June 2011 in accordance with all sections of GAO's Quality Assurance 
Framework that are relevant to our objectives. The framework requires 
that we plan and perform the engagement to obtain sufficient and 
appropriate evidence to meet our stated objectives and to discuss any 
limitations in our work. We believe that the information and data 
obtained, and the analysis conducted, provide a reasonable basis for 
any findings and conclusions. 

Medicare Payments and the MSP Process for Situations Involving NGHPs: 

Medicare payments for MSP situations involving NGHPs can vary, 
depending in part on when CMS is notified that an MSP situation 
exists. Generally, the MSP process for situations that involve NGHPs 
includes five basic components--notification, negotiation, resolution, 
mandatory reporting, and recovery--but the details of the process can 
differ depending on the particular situation. 

Medicare Payments: 

Medicare payments can vary in different MSP situations. In most MSP 
situations involving NGHPs, Medicare will initially pay for medical 
treatment related to the incident, and later seek to recover those 
payments. These initial payments sometimes occur because medical 
treatment is provided before CMS is notified of the NGHP MSP 
situation.[Footnote 7] Once CMS is notified that an MSP situation 
exists and an NGHP should be the primary payer, Medicare may start 
denying claims. However, according to CMS, in most NGHP MSP 
situations, even after CMS becomes aware that Medicare is the 
secondary payer, Medicare will continue to make payments while the 
situation is pending resolution so that the beneficiary has access to 
needed medical services in a timely manner. CMS refers to any payments 
made by Medicare for services where another payer has primary 
responsibility for payment as "conditional payments."[Footnote 8] For 
example, an NGHP could dispute that it is responsible for a Medicare 
beneficiary's medical expenses and refuse to pay any claims until the 
matter is investigated and resolved. In those types of situations, 
Medicare would continue to make conditional payments for the 
beneficiary's medical expenses until a resolution can be reached 
between the beneficiary and the NGHP. Once a resolution is reached 
between the beneficiary and the NGHP, Medicare will seek to recover 
any conditional payments made.[Footnote 9] 

Additionally, to help Medicare prevent making any future payments 
related to MSP situations involving NGHPs, when a beneficiary is 
expected to have future medical expenses related to their accident, 
injury, or illness, CMS states that all parties involved in 
negotiating a resolution of those situations have responsibilities to 
protect Medicare's interests. CMS does not require that this be done 
in any specific way, but one way to accomplish this is through a 
Medicare set-aside arrangement--a voluntary arrangement where a 
portion of the proceeds from a settlement are set aside to pay for all 
related future medical expenses that would otherwise be reimbursable 
by Medicare.[Footnote 10] In cases where a Medicare set-aside 
arrangement is created, Medicare will not make payments for medical 
expenses related to the MSP situation until the Medicare set-aside 
arrangement is exhausted. 

The MSP Process: 

The process for MSP situations that involve NGHPs generally includes 
five basic components--notification, negotiation, resolution, 
mandatory reporting, and recovery. However, the details of the 
process, and the administrative tasks that CMS must conduct, can vary 
depending on when in the process CMS is notified, the type of 
insurance involved (liability, no-fault, or workers' compensation), 
and the type of resolution reached. CMS contracts with three entities 
to perform most of its administrative activities within the MSP 
process: the Coordination of Benefits Contractor (COBC); the Workers' 
Compensation Review Contractor (WCRC); and the Medicare Secondary 
Payer Recovery Contractor (MSPRC) (see app. I). 

While the details vary by situation, in general, the roles of these 
CMS contractors within the MSP process are as follows: 

* Notification: The COBC is notified that a beneficiary's accident, 
injury, or illness is an MSP situation and creates a record. 
Notification can come from various sources--including the beneficiary, 
an attorney, a physician, or the NGHP--and can occur at various times 
during the MSP process. While mandatory reporting requires NGHPs to 
report MSP resolutions to CMS through the COBC, NGHPs or other 
involved parties may also provide notification to CMS earlier in the 
process. For example, a beneficiary's attorney could notify CMS of the 
MSP situation involving an NGHP shortly after an accident occurs. 
After the COBC receives notification of the MSP situation, Medicare 
may begin denying claims, or it may continue to make conditional 
payments. 

* Negotiation: Negotiation takes place between the NGHP and the 
injured beneficiary or his representative, such as an attorney. The 
point in the MSP process at which CMS receives notification can affect 
the number and amount of conditional payments made by Medicare and 
whether, and the extent to which, CMS can make information available 
during the negotiation.[Footnote 11] For example, if CMS has been 
notified of the situation early in the process, the MSPRC can provide 
information that may be used during negotiations, informing the 
beneficiary or his representative, about related claims paid by 
Medicare. For workers' compensation situations that involve future 
medical expenses, the WCRC may be involved in reviewing proposed 
Workers' Compensation Medicare Set-Aside Arrangement (WCMSA) amounts. 

* Resolution: The resolution is reached between the beneficiary or the 
beneficiary's attorney and the NGHP.[Footnote 12] The type of 
resolution varies and can include the insurer assuming ongoing 
responsibility for payment of medical claims related to the injury or 
illness, a lump-sum payment, a Medicare set-aside arrangement, or a 
combination of any of these. For resolutions that include a WCMSA, no 
future payments are made by Medicare for medical expenses related to 
the workers' compensation injury or illness until the set-aside is 
exhausted. Additionally, CMS requires the administrator of the WCMSA 
to submit an annual accounting of the set-aside funds to the MSPRC. 

* Mandatory Reporting: CMS requires the NGHP to report the resolution 
to CMS through the COBC. Regardless of whether CMS was notified of the 
MSP situation earlier in the process, after a resolution is reached in 
which the Medicare beneficiary or someone on his behalf receives a 
settlement, judgment, award or other payment from the NGHP, NGHPs are 
required to report information about the MSP situation and its 
resolution to the COBC[Footnote 13] under mandatory reporting 
requirements. 

* Recovery: CMS seeks to recover payments made. After reviewing the 
resolution, the MSPRC calculates the total amount owed to Medicare and 
issues a demand for payment--referred to as a demand letter. This 
letter is typically issued to the beneficiary or his representative, 
but in certain situations may also be issued to the NGHP. Payment is 
due to the MSPRC within 60 days of the date of the demand letter. 
Either payment is received and the case closed, a response is received 
challenging all or part of the demand, or no response is received. 
Debt delinquent more than 180 days is referred to the Department of 
the Treasury for collection action. The beneficiary has the right to 
question, appeal,[Footnote 14] or request a waiver of the amount CMS 
demanded.[Footnote 15] 

The following figures illustrate the MSP process for situations that 
involve an auto liability insurer, a no-fault insurer, and a workers' 
compensation plan: 

Figure 2: Illustration of the MSP Process for a Situation Involving an 
Auto Liability Insurer: 

[Refer to PDF for image: photograph and accompanying process] 

A Medicare beneficiary is injured in a car accident and goes to the 
hospital. The hospital bills Medicare. Medicare pays the hospital. 

Notification: 
The beneficiary’s attorney notifies CMS soon after the car accident 
because she will be requesting a listing of Medicare conditional 
payments to use during negotiations with the auto liability insurer 
(the NGHP in this example). Medicare continues to make conditional 
payments while a resolution is being negotiated. This notification 
occurred soon after the car accident. 

Negotiation: 
The beneficiary’s attorney receives information from CMS detailing the
Medicare conditional payments made. The beneficiary’s attorney uses 
this information in negotiations with the auto liability insurer. 

Resolution: 
A resolution is reached between the beneficiary’s attorney and the 
auto liability insurer and the auto liability insurer provides the
injured beneficiary with a lump sum payment. 

Mandatory reporting: 
The auto liability insurer reports details of the resolution to CMS.[A] 

Lump sum payment: 
CMS issues a demand letter to the beneficiary, and the beneficiary 
provides a check to CMS for the demand amount. 

Recovery: 
CMS seeks to recover from the beneficiary’s lump sum payment any
conditional payments made by Medicare. 

Source: GAO (process), FEMA/Casey Deshong (photograph), Art Explosion 
(illustrations). 

[A] Mandatory reporting for liability insurers who settle with injured 
beneficiaries with lump sum payments, such as the auto liability 
insurer in this figure, will be required beginning January 1, 2012. 

[End of figure] 

Figure 3: Illustration of the MSP Process for a Situation Involving No-
Fault Insurance: 

[Refer to PDF for image: photograph and accompanying process] 

A Medicare beneficiary falls down and twists her ankle while visiting 
a neighbor’s yard sale. The neighbor’s homeowner’s insurance policy 
includes no-fault medical coverage and the Medicare beneficiary 
submits her medical bills to the neighbor’s insurer. 

Notification: 
CMS receives notification of the MSP situation when the NGHP reports 
the resolution. The injured beneficiary did not notify CMS at the time 
of her injury because she was unaware of any rules related to primary 
and secondary insurance. This notification occurred during mandatory 
reporting. 

Negotiation: 
The neighbor’s insurer receives the Medicare beneficiary’s medical bills
and considers whether it should be responsible for paying the claims. 

Resolution: 
A resolution is reached where the neighbor’s insurer accepts 
responsibility to be the primary payer for the beneficiary’s medical 
bills up to the policy limit. 

Mandatory reporting: 
The neighbor’s insurer reports details of the resolution to CMS. 

Payment: 
None to beneficiary. 

Recovery: 
CMS checks to see if Medicare has made payments related to treatment
of the beneficiary’s ankle. In this case, no payments were made, so no
recovery is necessary. 

Source: GAO (process), Art Explosion (illustrations). 

[End of figure] 

Figure 4: Illustration of the MSP Process for a Situation Involving 
Workers' Compensation: 

[Refer to PDF for image: photograph and accompanying process] 

A Medicare beneficiary slips at work and sustains a head injury. While
Medicare pays the beneficiary’s initial medical expenses, soon 
thereafter the employer’s workers’ compensation (WC) plan assumes 
primary responsibility for payment while a resolution is negotiated. 

Notification: 
The WC plan notifies CMS of the beneficiary’s injury during the 
negotiation process as it is assuming primary responsibility for 
payment of the beneficiary’s medical expenses and it anticipates that 
the resolution will include a Workers’ Compensation Medicare Set-Aside 
Arrangement (WCMSA) to pay for future medical expenses, which the 
beneficiary’s attorney will want CMS to review and approve. This 
notification occurred during negotiation. 

Negotiation: 
The WC plan negotiates with the beneficiary’s attorney regarding the
amount of funds needed to cover past and future medical expenses 
related to the injury. The beneficiary’s attorney and the WC plan
receive information from CMS detailing the Medicare conditional
payments made.The beneficiary’s attorney submits the details of the
proposed WCMSA amount for CMS review and approval. 

Resolution: 
A resolution is reached between the beneficiary’s attorney and the WC 
plan in which the beneficiary receives a small lump sum settlement to 
cover past medical expenses, and a WCMSA account is established to cover
future medical expenses. The beneficiary has his attorney administer 
the WCMSA. 

Mandatory reporting: 
The WC plan reports details of the resolution to CMS. 

Set-aside/Lump-sum payment: 
Attorney and Beneficiary: CMS issues a demand letter to the beneficiary
and his attorney, and the beneficiary provides a check to CMS for the 
demand amount. 

Recovery: 
CMS seeks to recover from the beneficiary’s lump sum settlement the 
Medicare payments made. Medicare will not make future payments for 
medical expenses related to the MSP situation until the WCMSA funds 
are exhausted. The attorney provides CMS with annual accounting reports
for the WCMSA until the funds are exhausted. 

Source: GAO (process), Art Explosion (illustrations). 

[End of figure] 

In addition to the steps outlined in the MSP process description, CMS 
provides oversight of the MSP activities completed by each of the MSP 
contractors, such as by reviewing regular reports produced by the 
contractors on their workload and performance. CMS is also responsible 
for administering the MSP program and establishing the MSP process, 
and officials do so through activities such as developing program 
policy and guidance. CMS also maintains Web sites related to parts of 
the MSP process, from which NGHPs and beneficiaries can obtain 
information about their responsibilities in MSP situations involving 
NGHPs. 

Mandatory reporting should enable CMS to be aware of MSP situations 
involving NGHPs and better ensure that it only pays for medical care 
that is the responsibility of the Medicare program. As noted earlier, 
GAO has ongoing work related to mandatory reporting and the MSP 
process for situations involving NGHPs. Specifically, we are examining 
what aspects of the MSP process for situations involving NGHPs are 
presenting challenges for CMS and NGHPs, and how mandatory reporting 
is expected to affect CMS's MSP workload, costs, and Medicare savings 
associated with NGHP situations. 

Mr. Chairman, this concludes my prepared statement. I would be happy 
to answer any questions you or other members of the subcommittee may 
have. 

Contacts and Acknowledgments: 

For further information about this statement, please contact James C. 
Cosgrove at (202) 512-7114 or CosgroveJ@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this statement. Kathleen M. King, Director; 
Gerardine Brennan, Assistant Director; Laurie Pachter; Christina 
Ritchie; Lisa Rogers; Jessica C. Smith; and Jennifer Whitworth were 
key contributors to this statement. 

[End of section] 

Appendix I: CMS MSP Contractors: 

The Centers for Medicare & Medicaid Services (CMS) contracts with 
three entities to perform most of the activities within the MSP 
process: 

* Coordination of Benefits Contractor (COBC): The COBC collects, 
manages, and maintains information in the CMS data systems about other 
health insurance coverage for Medicare beneficiaries and initiates MSP 
claims investigations. The COBC processes information submitted by 
various parties, including beneficiaries, their attorneys, physicians, 
and NGHPs. The information the COBC collects is available to other CMS 
contractors, and it also maintains a national database, the Workers' 
Compensation Case Control System (WCCCS), to store claimant data about 
submitted Workers' Compensation Medicare Set-Aside Arrangement (WCMSA) 
proposals. 

* Workers' Compensation Review Contractor (WCRC): The WCRC evaluates 
proposed WCMSA amounts and projects future medical expenses related to 
workers' compensation accident, injury, or illness situations that 
would otherwise be payable by Medicare. The WCRC generally only 
reviews proposed WCMSA amounts for current Medicare beneficiaries in 
excess of $25,000.[Footnote 16] 

* Medicare Secondary Payer Recovery Contractor (MSPRC): The MSPRC uses 
information updated by the COBC as well as information from CMS' 
systems to identify and recover Medicare payments that should have 
been paid by another entity as primary payer. Once a resolution has 
been reached between the beneficiary and the NGHP, the MSPRC 
calculates the final amount owed to Medicare and issues a demand 
letter to the beneficiary or other individual authorized by the 
beneficiary.[Footnote 17] 

[End of section] 

Footnotes: 

[1] Medicare is the federally financed health insurance program for 
persons age 65 or over, certain individuals with disabilities, and 
individuals with end-stage renal disease. 

[2] Workers' compensation is a law or plan of the United States, or 
any state, that compensates employees who get sick or injured on the 
job. 

[3] Omnibus Budget Reconciliation Act of 1980, Pub. L. No. 96-499, § 
953, 94 Stat. 2599, 2647 (codifed, as amended, at 42 U.S.C. § 1395y). 

[4] Liability insurance is insurance that provides payment based on 
legal liability for injury or illness or damage to property. It 
includes, but is not limited to, automobile liability insurance, 
uninsured motorist insurance, underinsured motorist insurance, 
homeowners' liability insurance, malpractice insurance, product 
liability insurance, and general casualty insurance. No-fault 
insurance is insurance that pays for medical expenses for injuries 
sustained on the property or premises of the insured, or in the use, 
occupancy, or operation of an automobile, regardless of who may have 
been responsible for causing the accident. 42 U.S.C. § 411.50(b). 

[5] Omnibus Budget Reconciliation Act of 1981, Pub. L. No. 97-35, § 
2146, 95 Stat. 357, 800. Although persons age 65 or older are eligible 
for Medicare coverage, some are employed and may receive health 
insurance coverage through an employer-sponsored GHP. 

[6] Pub. L. No. 110-173, § 111, 121 Stat. 2492, 2497, adding 42 U.S.C. 
§1395y(b)(7-8). 

[7] This differs from the MSP process for GHPs, in which CMS primarily 
seeks to prevent mistaken payments by determining whether a Medicare 
beneficiary has other insurance through a GHP that should be primary 
to Medicare before any payments are made. This is because, unlike 
NGHPs, GHPs have an established and ongoing obligation to pay for 
health care as a primary payer. 

[8] The payment is "conditional" because it must be repaid to Medicare 
when the Medicare beneficiary receives a settlement, judgment, award, 
or other payment from the NGHP. 

[9] This assumes a resolution in which the Medicare beneficiary or 
someone on his behalf receives a settlement, judgment, award or other 
payment from the NGHP. 

[10] In situations where a Medicare set-aside arrangement is used, the 
responsibility for managing the Medicare set-aside funds is not 
established by CMS and instead can fall to various parties, including 
the beneficiary themselves or a third-party administrator, such as an 
attorney. 

[11] If an NGHP immediately agrees to assume ongoing responsibility 
for a beneficiary's medical expenses, current and future, then there 
may not be a negotiation component to the MSP process. 

[12] Resolution may also be reached by trial. 

[13] The data NGHPs are required to submit includes information to 
identify the beneficiary; information about the injury, accident, or 
illness; information concerning the policy or insurer; information 
about the injured party's representative or attorney; and settlement 
or payment information. 

[14] Medicare beneficiaries have administrative appeal rights with 
respect to a MSP recovery claim against them that include five levels. 
The first level of appeal is to a CMS contractor. The second level of 
appeal is to an independent contractor to review the decision made at 
the first level of appeal. The third level of appeal is to an 
administrative law judge and must meet a minimum monetary threshold. 
The fourth level of appeal is with the Departmental Appeals Board 
before the Medicare Appeals Council. The fifth level is with the 
federal district court and has a minimum monetary threshold. 

[15] The debt is not referred to Treasury if there is open 
correspondence related to the debt or if there is a pending appeal or 
waiver request. 

[16] The WCRC also reviews proposed WCMSA amounts for injured 
individuals whose total settlement amounts are valued greater than 
$250,000 and where there is a reasonable expectation that the injured 
individuals will become Medicare beneficiaries within 30 months of the 
date of the settlement. 

[17] This assumes a resolution in which the Medicare beneficiary or 
someone on his behalf receives a settlement, judgment, award or other 
payment from the NGHP. 

[End of section] 

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