MSPRC Posts New Rights and Responsibilities Letter

As part of our ongoing commitment to keep our clients informed of the latest developments concerning the Medicare Secondary Payer Recovery Contractor (MSPRC), the Garretson Resolution Group, Inc. (GRG) is issuing a follow up Client Advisory to our announcement dated 5/31/11. Following our last announcement, MSPRC has posted an Alert Update concerning the re-issuance of Rights and Responsibilities Letters (RAR) on its website. As provided in our 5/31/11 Client Advisory, MSPRC temporarily suspended the issuance of RAR and Demand letters pending their review. Medicare expected to resume issuing RAR letters on 6/10/11. The posting of the new RAR letter signals Medicare is ready to reissue those letters consistent with its estimate [MM1]. Review of the Final Demand Letters is ongoing, with no word of their expected release date.

Below is a summary of the impact of the changes shown on the MSPRC website:

Case Stage:Suspended - Rights and Responsibilities (RAR) letters
Status: Resumed June 10, 2011

Case Stage: RAR letters issued
Status: Conditional Payment (CP) process resumed

Case Stage: Final Demand Letters
Status: None are being issued at this time

Many of the changes to the RAR letter will have little impact on settling parties where Medicare beneficiaries are involved. However, the most notable changes appear to be a direct result of the holding by Judge David C. Bury in Haro v Sebelius[1] which address two core concepts:

1. Medicare (MSPRC) cannot charge interest on any unpaid Medicare overpayments (reimbursement claims) where the beneficiary is actively pursuing an appeal, waiver or compromise. However, if the appeals fail, the interest will be added from date of Final Demand.
2. Medicare (MSPRC) can no longer demand that attorneys withhold from their clients all settlement proceeds prior to making reimbursement to Medicare.

To address the Haro decision, Medicare has removed the following sentence from the RAR letter - Medicare should be repaid before funds are disbursed for other purposes; replacing it with:
“If Medicare determines that it has a recovery claim, you will be provided with a demand letter, which will include applicable appeal and waiver of recovery rights. Medicare will not take any collection action during the pendency of any appeal or waiver request (The applicable law can be found at 42 U.S.C 1395y(b)(2)(A)&(B).) ”

[1] Haro v. Sebelius, Case 4:09-cv-00134-DCB, May 5, 2011; See GRG Client Advisory, Medicare Secondary Payer Reimbursement Procedures After Haro v. Sebelius, May 13, 2011.