New Medicare Conditional Payment Case: Federal Court Requires Cms to Perform Surgery on its Primary Plan Reimbusement Demands

February 27, 2017

Doctors often treat Medicare beneficiaries for accident-related injuries (for which a “primary” auto or workers’ compensation carrier must reimburse Medicare) and unrelated maladies at the same visit. Billing for the visit cites multiple diagnosis codes, but a single charge for treatment of both an accident-related back injury and unrelated hypertension, or gout for example.

This may be efficient for the doctor and patient, but it’s been a pain in the neck for primary plans because until now CMS has demanded reimbursement for the total charge…gout and all. This can make primary payors’ blood boil. They get stuck with both related and unrelated charges, paying for high blood pressure treatment in addition to the back injury. 

But some relief may be at hand. Last month a California Federal District Judge required CMS to take a scalpel to such single medical expense charges with multiple diagnosis codes. In CIGA v Burwell 2017 U.S. Dist. LEXIS 1681, (an astute and well-reasoned opinion) Judge Wright noted that primary plans are only required to reimburse CMS for an “item or [individual] service” for which the primary plan bears responsibility. In light of this itemized, statutory directive, he ordered CMS to slice out unrelated charges before demanding reimbursement from primary plans.

CMS protested: How are we supposed to figure out how much of a single charge is attributable to the related injury as opposed to other maladies? The Judge was unsympathetic: CMS that’s your problem – it may be more difficult than your current procedure, but it must be done.

This is a great decision for workers’ compensation carriers or bodily injury carriers (primary plans) required to reimburse Medicare. It could save plans big money, while also being fair to all. Let’s hope this type of common sense spreads….