How it Works: Repaying Medicare Conditional Payments

When someone receiving Medicare benefits is involved in a car accident, a liability claim, or worker’s compensation claim, then the responsibility for medical bills transfers from Medicare to a primary payer (auto insurance, worker’s compensation insurance, other person’s insurance). However, if the primary payer disputes the claim, then Medicare will make conditional payments to the healthcare provider so their beneficiary can receive appropriate care. After the claim is processed, and you receive a settlement, Medicare must be paid back for the conditional payments they made.

MSPRC, or the Medicare Secondary Payer Recover Contractor, will issue several letters notifying their beneficiary that conditional payments were made. Only after a settlement is agreed upon, however, will the MSPRC issue the Final Demand Letter, which must be repaid within 60 days. This Final Demand Letter outlines how much from the settlement must be paid back to Medicare. This number is usually adjusted based on the size of the settlement.

As long as Medicare is kept up to date with the settlement process, chances are you’ll receive the final demand letter within 60 to 120 days. Until then, your settlement funds are held in the attorney’s escrow account. The payment to Medicare, along with any other bills and attorney fees, are paid directly from this account. Once all payments are made, the remaining funds are transferred to the person involved in the accident.

The confusion surrounding how repayments to Medicare work, has sparked a reform.. Currently, there are efforts going through Congress, about this, which if passed, will make the process easier to understand. The SMART Act (H.R. 1063/S.1718), or the Strengthening Medicare and Repaying Taxpayer’s Act, is working toward making the “final” conditional payment amount available prior to settlement in certain cases. This will make it easier to predict how much a client can expect to owe Medicare, and receive after all payments are made.

If you, or a loved one, are facing legal claims involving a car accident, liability, or worker’s compensation, and you need the assistance of an attorney, contact The Coye Law Firm for a free consultation.

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