Medicare conditional payment

What it is

When a liability insurer is expected to pay for an injury but hasn't yet, Medicare pays the client's bills conditionally so care isn't delayed. Those payments must be repaid when the case resolves. Medicare's right of recovery comes from the Medicare Secondary Payer provisions, 42 U.S.C. 1395y(b)(2).

The federal rule

Under 42 CFR 411.24, a beneficiary or other party who receives a liability payment must reimburse Medicare within 60 days. If Medicare isn't repaid, it can recover from the insurer that paid, even though the insurer already paid the beneficiary. Medicare's recovery is reduced by a proportionate share of the procurement costs (attorney fees and costs) the beneficiary bore, under 42 CFR 411.37.

In practice, the Benefits Coordination & Recovery Center sends a conditional payment letter listing the claims Medicare has paid. The firm can dispute unrelated charges through the Medicare Secondary Payer Recovery Portal. After settlement details are reported, Medicare issues a final demand. CMS says interest accrues from the date of the demand letter for each 30-day period the debt remains unresolved, and unresolved debts are eventually referred to the Treasury.

Why it matters to a plaintiff firm

Disbursing without resolving Medicare's claim exposes the client, the firm and the insurer. Firms ask about Medicare status at intake, open the recovery case early, scrub the conditional payment list for unrelated care, and hold the demanded amount in trust until the final demand is paid. Our procurement cost calculator shows the 411.37 math.