Medicare: The Date Claims are Reported gets “Clarified”, the Result is Mud Soup

Medicare: The Date Claims are Reported gets “Clarified”, the Result is Mud Soup

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The Problem:

The parties reach an agreement to resolve a case at mediation. However, payment of the settlement funds will not occur immediately. The reason for the funding delay may vary—perhaps it’s due to the way the deal is structured, or because certain conditions must be met prior to funding, such as resolution of outstanding lien issues. Regardless of the reason, the bottom line remains: the actual settlement payment may not be made for some time.

Under the SMART Act, the liability carrier has a legal obligation to report the settlement to CMS. Specifically, the carrier must report the “total payment obligation to the claimant” (TPOC), including both the amount and a corresponding “date” of the payment obligation. Historically, that date has been interpreted as the date the settlement was “determined.” [See Section 111 NGHP User Guide, Chapter III, Section 6.5.1; Chapter V, Appendix A]. For many reporting entities, that has meant the date the case resolved—often, the date of mediation.

Once CMS receives a TPOC report, it initiates the Secondary Payer Act process to recover conditionally paid Medicare claims that fall within the TPOC. This frequently results in CMS issuing recovery demands to the Medicare beneficiary and their counsel before the settlement funds have even been received. The problems that stem from this—delays, demands, and confusion—tend to snowball. We at The Lien Project regularly help plaintiffs and their counsel untangle the resulting mess.

CMS has recently issued a new Non-Group Health Plan (NGHP) Section 111 Policy Alert [HERE], in which it “clarifies” to reporting entities that the date to be reported in the TPOC is not when the amount is agreed upon, but rather the date the funds are released to the claimant.

Obviously, “determined” and “released” are not synonymous and represent very different points in the settlement process. This change in reporting protocol is likely to have a significant impact on how the Secondary Payer Act recovery process unfolds.

For example, when a case settles—say, at mediation—the parties have essentially locked in the amount of past medical special damages as of that date. Under past practice, that was also the effective lien valuation date, since the TPOC date was the date the case settled. However, if the new reporting rule means the TPOC date is the date funds are released (often months later), then CMS may include additional conditional payments in the lien amount—payments that were made after the agreement but before the actual disbursement.

This creates a real risk that CMS liens will now include care that occurred after settlement—and was never contemplated or accounted for in the negotiation. That additional exposure can create unfair outcomes, especially if not caught early.

The Takeaway:

Plaintiff’s counsel must be vigilant about what the liability carrier is reporting to CMS throughout the entirety of the claim—from the opening of the file through the reporting of settlement and payment. The Lien Project has previously written on the importance of proper diagnostic coding for CMS lien purposes. Now, you can add the “TPOC date” reported by the carrier to your CMS lien and settlement process checklist.

Ultimately, the best results come from starting early and thinking ahead about how CMS will be handled—past, present, and future. A proactive approach can help guide a better settlement outcome and avoid costly surprises post-resolution.

Explore More Resources with Lien Project Network

For a deeper dive into lien resolution strategies, settlement planning, and reimbursement challenges, explore our educational modules. Lien Project Network serves as a trusted resource for plaintiff attorneys, providing insights on financial planning, public benefits, and structured settlements in the context of lien management.

Need Assistance? Work With The Lien Project, PC

If you need expert legal assistance in navigating lien resolution, reimbursement claims, or settlement planning, our team at The Lien Project, PC is ready to help. As an LPN member, you earn credits that can be applied toward lien reduction and resolution services provided by The Lien Project, PC, allowing you to offset up to $900 per year. Your investment in continuing education through Lien Project Network not only enhances your lien resolution skills but also reduces the cost of engaging legal experts when needed.

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