Medicare Reimbursement: What Happens When You Overpay Medicare?

Did you ever wonder why Medicare and its agencies (MSPRC, CMS, COBC) are not held accountable when they owe a beneficiary money?  The MSPRC will require you and your client to wait 10-14 weeks for reimbursement.  

However, when you owe the government money there are severe consequences for late payments.  For instance, interest accrues.  Penalties will be imposed and even severance of benefits can result from a plaintiff-beneficiary’s failure to pay a Medicare lien.  Even the attorney can be liable for interest on the unpaid MSPRC lien.   What can the legal community, especially plaintiffs’ attorneys, do to avoid Medicare penalties?

Lien Resolution and Appeals Can Lead to Lien Reimbursement

My company, Lien Resolution Services, had a case where we completed lien resolution with Medicare and the MSPRC had issued a final lien demand.  Once a final lien demand is issued the plaintiff must pay Medicare in full within 60 days, otherwise interest on any remaining balance accrues at a rate of 11.25% per year.  As the plaintiff’s attorney, you do have the right to file an appeal or waiver (within 120 days); however, you nonetheless must pay the amount owing to the MSPRC within the 60-day time frame.  Keep in mind a response on any appeal or waiver usually takes well beyond the 60 day payment time frame.

In this case, we paid the full amount of the lien within the required time frame.  In the meantime, we successfully appealed lien, reducing it down by almost $10,000, or, 75 percent.  This meant that Medicare owed our client $10,000.  Most of the time, a lien reimbursement check takes about six weeks to process from the MSPRC accounting department.  The MSPRC official time frame remains 10-14 weeks for a reimbursement check.

At Lien Resolution Services, we are familiar with the practices at Medicare we always follow-up to make sure that actions are completed within the requisite time frames.  We followed up in this instance only to find out that the MSPRC had not only been late in preparing the reimbursement check, but also that it had failed to process the check.

At this point it had been almost 6 weeks since the reimbursement had been agreed to by the MSPRC.  It had been 10 weeks since LRS sent the Medicare lien dispute.  We requested a discussion with a MSPRC supervisor.  Unfortunately, he told us that there was no way to rectify the mistake and that it would take another 6 weeks to issue the check.  Based on the current rules and regulations, this is the best possible outcome.  Too bad the client had to wait for his money.

The MSPRC and Lien Resolution’s Double-Standard

This is where the double-standard becomes relevant: What happens to the interest the Federal Government collects on that money that rightfully belongs to the client?  The MSPRC received it promptly from the client.  The client did not let it sit in his own account, accumulating interest for 12 weeks.  But the MSPRC will have had this money that does not belong to it in its accounts for nearly a quarter of the year.  It will collect interest.

I asked the representative from MSPRC about the interest that had accrued and if our client would be reimbursed for that loss.  He thought I was funny.  Needless to say there should be some way to hold MSPRC accountable for these kinds of errors.  I have considered a lawsuit under the Federal Tort Claims Act.

The FTCA and Medicare – Would it Work?

But there are many issues.  For example, at what point does a grace period end?  This reimbursement is based on a mistake.  Someone at the MSPRC mistakenly included charges unrelated to the lawsuit and settlement.  This mistake occurs 99% of the time.  It is the reason why LRS disputes so many Medicare liens (we can help resolve your Medicare liens too).  The failure to print a reimbursement check is also based on a mistake.  The MSPRC is a large, partially outsourced, bureaucratic machine.  It is vastly understaffed – another reason why the Responsible Reporting Entities (“RREs”) reporting deadlines have been pushed back to October 1, 2010. 

Then you must consider the cost-benefit analysis of such a lawsuit.  In this case, the interest on $10,000 probably would not come close to paying for a lawsuit.  The system is never “fair.”  As a plaintiff’s attorney or a beneficiary you must remain vigilant when dealing with the MSPRC.  Notify the COBC early.  Negotiate with the MSPRC often.  Review and dispute liens multiple times.  This process is time consuming and a drain on your resources, but it is necessary.

Marcy Spitz
Co-Founder Lien Resolution Services
This Blog/Web Site is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

7 comments on “Medicare Reimbursement: What Happens When You Overpay Medicare?

  1. […] after the lien has been satisfied.  Additionally, you may feel that you have overpaid the Medicare lien, or that Medicare claimed too large of a lien.  Please see Marcy Spitz’s discussion of […]

  2. […] successful appeal will lead to reimbursement in a 10-14 week timeframe after the MSPRC agrees to the […]

  3. My firm has worked with MSPRC on thousands of recovery case’s throughout the years, and you are leaving out some very important points to you’re argument. First, before reimbursment is requested by the msprc, settlement details must be submitted, so in all likelihood you would have already received the conditional payment letter, this is the time to resolve any disputed claims, not AFTER the demand amount was already issued. The key to dealing with the MSPRC is to work out the reimbursment abount before sending settlement information. Secondly, intrest accrues within 60 days of the demand letter being issued on any RELEATED claims, if an appeal of unreleated claims is granted, unreleated claims will be removed and so will the interest. Sometimes we will get some claims added when a demand is issued that are unreleated, and we will pay the demand amount, advise our client of the situation and wait for the refund which is a long process but hey, its the government! its not like we can take our buissness elsewhere! Medicare will get their money back and thats that. Any firm dealing with medicare’s recovery process should do the research, if all the steps are followed thourghly, the process will go smoothly in most cases, it just takes time. I think the MSPRC does a good job for the most part,just ask any firm (like us) who dealt with the previous recovery contractor(s) before the MSPRC, in some instances, we didn’t even have a phone number to call someone when we has an issue…just my 2 cents. Will

    • Will,

      Thank you for your comment, but please keep in mind the scope of this entry is meant to be very narrow. Nonetheless, I’d like to respond to many of your excellent points:

      We absolutely advocate working out and removing unrelated conditional payments in advance of the Final Lien Demand. However, as you pointed out, sometimes (and increasingly more often) the MSPRC adds unrelated or questionable claims between the last Conditional Payment Letter and the Final Lien Demand. This is the situation to which Marcy referred.

      You again are correct regarding the interest rule. It only applies to related claims. However, there are many times when questionable claims are involved. Sometimes, the MSPRC may call these unrelated following a appeal, but what if they do not? You will owe that interest. We try to teach others to protect themselves in these situations.

      Lastly, the settlement notification process is extraordinarily important. It is true that many firms wait to notify the MSPRC of settlement – but beginning October 1, 2010, when Section 111 of the MMSEA finally goes into effect, your clients may not have the luxury of working out their liens prior to notification. In that circumstance, the reimbursement process will again come into play. For this reason, every attorney must start the lien resolution process as early as possible.

      You’re right about the pre-MSPRC days. Perhaps the best example of the issues involved are the cases where no one has informed attorneys that the MSPRC now controls that file. I cannot begin to explain how often new clients come to us with unanswered letters they had sent to previous contractors.

      Thanks again for the comment. Sharing strategies is the key to keeping us all sharp!

      Ryan J. Weiner
      Lien Resolution Services

  4. […] The above-noted options are the most commonly used, additional, more complex methods may be utilized in some circumstances.  After you successfully reduce a Medicare lien, your client may be entitled to reimbursement.  Please see Marcy Spitz’s excellent argue on the concerns and processes of Medicare Reimbursement. […]

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