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Group Health Plan Recovery

The MSP provisions of the Social Security Act (found at 42 U.S.C. § 1395y(b)) require Group Health Plans (GHPs) to make payments before Medicare under certain circumstances. For additional information on this topic, please visit the Medicare Secondary Payer page.  If Medicare paid primary when a GHP had primary payment responsibility, CMS will request repayment. This request for repayment is termed GHP recovery.

CMS has made available various documents, flowcharts and other informational materials that will assist you in understanding the GHP Recovery process. You can access this material from the Downloads section near the bottom of this page.

Commercial Repayment Center Recovery Responsibilities

GHP recoveries are the responsibility of Medicare’s Commercial Recovery Center (CRC) and Liability, No-Fault, and Workers’ Compensation recoveries are the responsibility of the Benefits Coordination & Recovery Center (BCRC). There are two exceptions to this rule:

  1. Recovery demand letters issued by the MSP Recovery Audit Contractors (RACs) implemented as a demonstration under the Medicare Modernization Act of 2003.  The RACs continue to be responsible for certain MSP GHP- based recoveries for the States of California, Florida, and New York. The three MSP RACs are Diversified Collection Systems (California), Public Consulting Group (Florida), and Public Consulting Group (New York).
  2. MSP recovery demand letters issued by the claims processing contractors to providers, physicians, and other suppliers.

When to Contact the CRC

All GHP recovery related refund checks, correspondence, and telephone inquiries should be directed to the CRC. Contact the CRC with questions on any of the following topics:

  • Medicare’s recovery rights or the reimbursement process for GHP MSP
  • GHP recovery demand letters
  • GHP related “Notice of Intent to Refer Debt to the Department of Treasury” letters
  • Repaying Medicare for GHP debt

Please see the Contacts page for specific contact phone numbers and mailing address information.

GHP Recovery Process

MSP laws expressly authorize Medicare to recover its mistaken primary payment(s) from the employer, insurer, third party administrator (TPA), GHP, or any other plan sponsor. Once new MSP situations are discovered, the CRC identifies claims Medicare mistakenly paid primary and initiates recovery activities. For additional information on this topic, please visit the Coordination of Benefits page.

If Medicare paid primary when the GHP had primary payment responsibility, the CRC will seek repayment. The typical GHP recovery case involves the following steps:

1. CRC sends Primary Payment Notice (PPN )

The CRC will begin the recovery process by issuing a Primary Payment Notice (PPN) to both the impacted employer and the insurer/TPA. The PPN is a notice to the employer to advise them that CMS has identified instances where Medicare may have mistakenly made a primary payment when other primary insurance exists. Enclosed with this notice is a PPN worksheet that lists Medicare beneficiaries and corresponding coverage dates. The notice requests the employer to review the worksheet, make corrections and additions as necessary, and mail or fax the completed worksheet to the CRC. The PPN:

  • Is considered a courtesy before a demand is issued and is not considered a valid, documented defense to a MSP demand.
  • Seeks to verify that other insurance was primary to Medicare during a specific period of time.
  • Allows Employers and Insurers the opportunity to review and validate beneficiary coverage information submitted to the BCRC before a demand is issued. Corrections made during the PPN stage eliminate the issuance of erroneous demands based upon inaccurate coverage information.
  • Eliminates the extra work involved in reviewing/processing individual demand letters and submitting valid documented defenses for simple coverage corrections.

The following items, related to the Group Health Plan Recovery process and the PPN process are available in the Downloads section at the bottom of this page:

  • CRC Automated Call Flowchart
  • GHP Recovery Process Flowchart
  • GHP Recovery Process Presentation
  • Sample Primary Payment Notice

2. Employer / Insurer / TPA response to PPN

If the employer/insurer/TPA completes and returns the PPN within 45 days of the issue date of the PPN, the CRC will update Medicare records before the demand is issued. Otherwise the CRC will be unable to update Medicare records before the demand is issued and the debtor will have to follow the valid documented defense process associated with the demand letter.

3. CRC issues demand

Utilizing MSP information gathered by the BCRC and from the PPN response, the CRC issues a demand letter for payment to the Employer and sends a copy, with claim detail to the insurer/TPA (if known).

Employer demand packet will include:

  • Summary of payment due on a beneficiary-by-beneficiary basis
  • Demand summary
  • Medicare’s paid claim summary

Insurer copy of demand packet will include:

  • Summary of payment due on a beneficiary-by-beneficiary basis
  • Demand summary
  • Medicare’s paid claim summary
  • Claim facsimile(s)

The demand letter explains how to resolve the debt, either by repayment or presentation, and documentation of a valid defense. The Insurer/TPA is to repay Medicare the lesser of its total primary payment obligation or the amount that Medicare paid. The Insurer/TPA must provide a valid documented defense for the portion of the demand that is not being repaid. The following items related to the Recovery Demand letter process are available in the Downloads section at the bottom of this page:

  • GHP Demand Letter
  • GHP Valid Defense Instructions
  • GHP Interest Calculation Tool
  • W-9 Form

4. Insurer/TPA responds with a Refund check and Explanation of Payment and/or Valid Documented Defenses

A response should be sent to the CRC within 60 days of the demand letter date.  Responses to demand letters include:

  • Sending payment to the CRC (Please see the Reimbursing Medicare page)
  • Sending written responses/defenses to the CRC

An employer may authorize an insurer or TPA to respond on its behalf, but may not transfer responsibility for a debt to the insurer or TPA. Additionally, if the insurer or TPA submits a check or a response but has not submitted documentation establishing its authority to act on behalf of the employer to resolve the debt, responses will only be addressed to the employer. Please note that in some instances an insurer or TPA has a defense that does not necessarily absolve the employer of responsibility for the debt (e.g., the insurer or TPA did not cover/administer at the time of the claim).

Historically, a GHP debtor could have received multiple demand letters for debts arising during the same time period because each claims processing contractor only recovered claims it paid. The CRC will aggregate claims from all of these contractors into one demand letter, simplifying administration for the debtor and the CRC. Claims are segregated by beneficiary, but this process simplifies the administrative burden on the debtor.

5. Assessment of Interest and Failure to Respond

Interest accrues from the date of the demand letter, but is only assessed if the debt is not repaid or otherwise resolved within the time period specified in the demand letter. Interest is due and payable for each full 30-day period the debt remains unresolved; payments are applied to interest first and then to the principal.

Failure to respond within the specified time frame may result in the initiation of additional recovery procedures, including the referral of the debt to the Department of Justice for legal action and/or the Department of the Treasury for further collection actions.

6. Referral of debt to the Department of Treasury

For MSP purposes, if a debt remains outstanding more than 60 days after the demand letter date, it will be considered ‘delinquent’. This can occur:

  • If a less than full payment has been made
  • If there is no valid documented defense for any outstanding amount, including no response by the debtor

The debtor is notified of delinquency through an Intent to Refer letter (a notice of the CRC’s intent to refer the debt to the Department of Treasury Offset Program for further collection activities). Note: CMS may also refer debts to the Department of Justice for legal action if it determines that the required payment or a properly documented defense has not been provided. The law authorizes the Federal government to collect double damages from any party that is responsible for resolving the matter but which fails to do so.

The Intent to Refer letter provides 60 days for a response to be sent to the CRC before the debt is referred to Treasury. Responses include:

  • Sending payment to the CRC
  • Sending written responses/defenses to the CRC

Note:  All responses must include appropriate supporting documentation, including a copy of the Intent to Refer letter or initial demand letter.

Contact the Department of the Treasury (or its contractor if you have received correspondence from an entity under contract to the Department of the Treasury) to respond to recovery claims that have been referred to the Department of the Treasury.