Sunday, January 31, 2016

Reallocating recovery efforts

As a followup to our January 9 posting, there is now some clarification of the division of responsibility between the Commercial Repayment Center (CRC) and the Coordination of Benefits and Recovery Contractor. In a "webinar" presentation entitled Non-Group Health Plan New Workload to the Commercial Repayment Center, CMS has said that the CRC will be responsible for pursuing recovery of Medicare payments from a primary payer as the "identified debtor" when:
  • the recovery efforts commenced after October 15, 2015,
  • the payer notifies CMS that it has ongoing responsibility for medicals (ORM), and
  • this responsibility is not in dispute. 
Thus, in the case of a contested claim for PIP benefits when the responsibility to pay medical expenses is disputed, whether or not litigation has begun, the responsibility for pursuing recovery should continue to be that of the Benefits Coordination and Recovery Center (BCRC).

CMS, in its notices and published materials, distinguishes between two concepts for which it uses its favored acronyms - ORM and TPOC.

ORM means "Ongoing Responsibility for [payment of] Medical." The PIP carrier does have an ongoing responsibility to pay the medical expenses which are related to a particular motor vehicle accident. In some cases, when some medical expenses have been incurred and paid, the payment of others is denied because the carrier takes the position that they are not causally related to the accident. In other cases, the PIP carrier will deny all coverage after a certain date, based on a medical examination and opinion to the effect that the injured person has reached maximum medical improvement and cannot benefit from further treatment. In both cases, it would be improper for CMS to characterize the unrelated medical expenses as ORM. Yet the CRC may well do so.

TPOC means "Total Paid on Claim." It is an acronym used by CMS to refer to a one-time payment, either by settlement or judgment, and clearly will apply to a liability case based on a tort theory. It will also apply to the settlement of a disputed PIP case or to a judgment paid after a jury verdict in favor of the injured party.

In Michigan, of course, the responsibility of the PIP carrier encompasses both ongoing payment of medical expenses and, when a disputed first-party lawsuit is settled or tried, a lump-sum payment made to the plaintiff. After a settlement and payment of a lump sum, the PIP carrier often continues to have a responsibility to pay medical expenses as they are incurred. The CMS categories just do not fit the Michigan system very well.

If the PIP carrier receives a Conditional Payments Notice from the CRC when a claim is being contested or litigated, it must respond and contest it within the time that is provided, in order to avoid having the claim established as a debt owed by the company to CMS. Failure to respond will likely be regarded as a waiver of the defense.

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