Benefits Q&A: Why Does CMS Say We Owe Them Money?

Question:       

We received a letter/invoice from the Centers for Medicare & Medicaid Services asking us to pay them several thousand dollars. I have never seen anything like this before and can’t figure out how we could possibly owe them money. Why did we receive this? Should we just pay it?

Answer:

The Centers for Medicare & Medicaid Services (CMS) sends this type of letter to employers in the following circumstances:

1. An employee is enrolled in both their employer’s group health plan and Medicare;
2. The employer’s plan is considered “primary” to Medicare. This means that under the law, if an employee has dual coverage, the employer’s plan must pay first. Any non-covered expenses under the employer plan may be paid by Medicare as secondary coverage.
3. CMS believes Medicare incorrectly paid medical expenses that should have been paid by the employer’s group health plan.

In general, the employer’s plan will be considered primary unless the employer has fewer than 100 employees or the individual has end-stage renal disease. (However, Medicare is primary for retirees and COBRA coverage.)

What you should do about the letter depends on whether your group health plan is fully insured or self-insured. If fully insured, you (or your broker if you have one) should send it to your insurance carrier. They should pay it the same as any other covered expense. For self-insured plans, it’s a little more complicated. Your broker should be able to work with you to determine how to get the expense paid through your plan.