Reporting Third-Party Tortfeasor Claims and Recovery of Funds Under the Federal Medical Care Recovery Act

Refer to: ORAP

1. PURPOSE.  This circular establishes a uniform Indian Health Service (IHS) policy for identifying and reporting third-party tortfeasor (liability) claims to the Office of the General Counsel (OGC), Department of Health and Human Services (HHS), and for collecting reimbursements owed to the IHS under the Federal Medical Care Recovery Act (FMCRA).  This circular also establishes specific reporting requirements and defines the authorities for the recovery of funds in all third-party tortfeasor claims.  This policy is consistent with Public Law (P.L.) 87-693,42 United States Code (U.S.C) §2651-2653, 28 Code of Federal Regulations (CFR) 43.1- 43.4, and 32 CFR 199.1-199.16.

2. POLICY.  It is the policy of the IHS to comply with all laws and regulations as they relate to reporting third-party tortfeasor claims and to recover funds that are properly owed to the IHS for providing direct care or contract health services.  The IHS will ensure that all potential third-party liability claims are properly identified and reported to OGC (or its designee) for recovery of those funds owed to the IHS for health care services provided when a patient's injury was due to a negligent third-party.

3. AUTHORITIES.  This policy is established in accordance with the Departmental Accounting Manual (DAM) - HHS and the following:
   1. The Federal Medical Care Recovery Act of 1962, as amended, P.L. 87-693 (42 U.S.C. §§ 2651-53; 28 CFR43.1-14; 32 CFR 199.1-16)
   2. The Federal Privacy Act of 1974,5U.S.C. §522a, 42 CFR Part 2,45 CFR Part 5b
   3. The Indian Health Care Improvement Act (IHCIA) of 1976, as amended, P.L. 94-437; P.L. 100-713; P.L. 102-573
   4. The Federal Claims Collection Act of 1982, P.L. 97-258, as amended
   5. The Debt Collection Improvement Act of 1996, P.L. 104-134
   6. The Health Insurance Portability and Accountability Act of 1996 and all implementing regulations at 45 CFR, Parts 160 and 164
   7. The Improper Payments Information Act of 2002, P.L. 107-300

4. BACKGROUND  The FMCRA, passed in 1962, provides a legal basis to recover funds for the delivery of medical services provided to an injured person in third-party liability claims.  Prior to November 23, 1988, all recoveries were retained by the Department of the Treasury.  However, the passage of the Indian Health Care Amendments of 1987, Title II," on November 23, 1988, which was an amendment to the IHCIA, allowed the IHS, to retain recovered funds.  The FMCRA claims provide an additional source of revenue for the IHS, and equivalent time and effort should be committed to properly identifying, reporting, and pursuing the recovery of these funds.

   The IHS has a distinct right of recovery against a negligent third-party for the reasonable value of medical care provided to the injured person.  The only two conditions precedent to such right of recovery are:  (1) the furnishing of medical care to the injured person at the IHS's expense, and (2) circumstances creating a tort liability upon a third-party.  When these two conditions are met, the IHS has a legal and independent right to recover medical costs from the tortfeasor.  Funds may be recovered for the reasonable value of medical care provided to injured persons for direct care services or services paid through contract health care.  The IHS does not have the authority to make legal determinations of tort liability.  All potential third-party liability claims are reported by the IHS to the OGC or its designee.  The OGC is responsible for making determinations of tort liability and asserting all IHS FMCRA claims.

5. DEFINITIONS.
   1. Automated FMCRA Reporting System.  The automated FMCRA reporting system is a computerized data system used by the OGC, the Area Office FMCRA Coordinator and Service Unit FMCRA Coordinator, the Service Unit Health Information Management Section, Contract Health Services (CHS), and the Business Office to gather and report information for all FMCRA reimbursement claims.
   2. Contract Health Services.  This refers to health services paid for by the IHS that are provided by non-IHS public or private health care providers (e.g., dentists, physicians, hospitals).
   3. Liability Insurance.  This is specific insurance that provides payment based on legal liability for injuries or illnesses.  Liability insurance includes, but is not limited to, automobile liability insurance, insured and uninsured motorist insurance, homeowner's liability insurance, malpractice insurance, product liability insurance, and general casualty insurance.  It also includes coverage under a State "wrongful death" statute.
   4. Office of the General Counsel.  The OGC is the legal branch of the HHS entrusted with the investigation, determination, assertion, and collection of FMCRA claims.
   5. Resource Patient Management System.  The Resource Patient Management System (RPMS) is an automated system for managing clinical and administrative information in health care facilities.
   6. Right to Recovery.  The FMCRA provides a legal basis to the Federal Government for recovery of the costs of providing medical care to injured persons whose care was necessitated by the negligent act of a third-party.  The "right to recovery" is established when medical care is furnished to the injured person at the IHS's expense, and the injury was caused by a third-party.
   7. Third-party.  This is an individual or a group of individuals who, by an act or the omission of an act, cause injury or harm to another person.
   8. Tort.  A tort is a private or civil wrong or injury, other than a breach of contract, for which the court will provide a remedy in the form of a judgment for damages.
   9. Tortfeasor.  A tortfeasor is one who commits or is guilty of a tort.
   10. Write-off.  A write-off is an asset that has been determined to be uncollectible and is adjusted/recorded in the accounting records as a loss.

6. RESPONSIBILITIES.
   1. Director, Office of Resource Access and Partnerships.  The Director, Office of Resource Access and Partnerships (ORAP), provides leadership to IHS programs on IHS policies regarding the operation and management of the Business Office program.  The Director also is responsible for designing management control systems that use resources to mitigate risks in this functional area.
   2. Area Director.  The Area Director is responsible for:
      1. managing all third-party revenue activities for his/her organizations in compliance with this policy and all applicable legislative, regulatory, or other policy guidelines;
      2. ensuring the implementation of this circular;
      3. establishing reporting mechanisms and inter-office communications;
      4. developing and documenting Area-specific procedures for establishing the processes or systems required by this policy; and
      5. designating an Area Office FMCRA Coordinator.
   3. Area Office FMCRA Coordinator.  The Area Office FMCRA Coordinator is responsible for:
      1. reporting all potential FMCRA claims to the OGC;
      2. providing the requested information and pertinent documentation to the OGC, other attorneys, and insurance companies;
      3. reporting the progress of FMCRA claims Area-wide;
      4. notifying the Service Unit Business Office Manager (BOM) of all FMCRA payments;
      5. providing ongoing training for appropriate personnel on FMCRA policies, procedures, and reporting processes (automated and manual);
      6. maintaining the automated FMCRA reporting system; and
      7. performing a monthly review of the RPMS, "Listing of Visits with Injury Diagnoses" codes:
      1. to ensure that potential claims are entered into the automated FMCRA reporting system on a monthly basis, and
      2. to ensure that the Service Unit FMCRA Coordinators identify potential claims.
   4. Chief Executive Officer.  The Chief Executive Officer (CEO) is responsible for specific oversight of the revenue cycle for the service unit and for implementing procedures and practices that will safeguard the collection of amounts owed to the IHS for health services provided.  This includes developing specific procedures consistent with the requirements of this policy for screening, documenting, reporting, and monitoring third-party tortfeasor claims.  The CEO must also designate a Service Unit FMCRA Coordinator and ensure the timely processing of all potential FMCRA claims.
   5. Service Unit FMCRA Coordinator.  The Service Unit FMCRA Coordinator is responsible for:
      1. reporting all probable FMCRA claims to the Area Office FMCRA Coordinator (using the automated FMCRA reporting system);
      2. monitoring and coordinating the reporting process of potential third-party liability claims at the service unit and providing progress reports to the CEO;
      3. training appropriate personnel in FMCRA policies, procedures, and reporting processes;
      4. performing a monthly review of the RPMS, "Listing of Visits with Injury Diagnoses" (INJ Report) (see Circular Exhibit 2006-02-A); and
      5. ensuring that the "Third Party Report" form (Circular Exhibit 2006-02-B) is properly completed and that all potential claims are entered into the automated FMCRA reporting system.
   6. Service Unit Health Information Management Director.  The Service Unit Health Information Management (HIM) Director (or his/her designee) is responsible for:
      1. ensuring that potential third-party tortfeasor claims are identified and entered into the automated FMCRA reporting system;
      2. communicating and coordinating with the Service Unit FMCRA Coordinator, CHS Supervisor, and the BOM when reporting potential third-party liability claims;
      3. performing (with assigned staff) these functions in a timely manner to ensure the early institution of appropriate third-party action to assist the IHS in its recovery efforts; and
      4. obtaining the proper authorization(s) before disclosing patient health information or medical records to an attorney, insurance company, etc., that may request information on patients.  All disclosures of medical records or health information must he accounted for and reported to the Service Unit FMCRA Coordinator and, subsequently, to the Area Office FMCRA Coordinator.  Since the Service Unit HIM Director is often designated as the Service Unit FMCRA Coordinator, the Service Unit HIM Director will coordinate directly with the Area Office FMCRA Coordinator.
   7. Service Unit Contract Health Services Supervisor.  The Service Unit CHS Supervisor is responsible for:
      1. coordinating and communicating with the Service Unit HIM Director and the Service Unit BOM in identifying potential third-party tortfeasor claims and in reporting all claims to the Service Unit FMCRA Coordinator (through the automated FMCRA reporting system);
      2. performing these functions in a timely manner to ensure the early institution of appropriate third-party action and the recovery of funds for IHS, which includes promptly responding to all requests from the Area Office or Service Unit FMCRA Coordinator, providing information, data, and other documentation as appropriate;
      3. identifying and reporting to the Area Office FMCRA Coordinator all claims in which services were provided at non-IHS facilities, which includes notification (through the FMCRA automated reporting system) of all paid and unpaid purchase orders, or blanket purchase agreements; and
      4. approving and submitting all billing documents to the CHS Fiscal Intermediary for payment.  It must he noted that the Service Unit CHS Supervisor cannot withhold payment to a non-IHS provider because of the possibility of recovery from a third-party tortfeasor.
   8. Service Unit Business Manager.  The Service Unit BOM is responsible for:
      1. coordinating and communicating with the Service Unit HIM Director and the Service Unit CHS Supervisor in identifying potential third-party tortfeasor claims and in reporting all claims to the Service Unit FMCRA Coordinator (via the automated FMCRA reporting system):
      2. performing these functions in a timely manner to ensure the early institution of appropriate third-party action that will assist the IHS in its recovery efforts;
      3. referring all requests or inquiries concerning third-party liability claims to the Area Office FMCRA Coordinator;
      4. with regard to claims asserted (or to be asserted) by the OGC, not furnishing and information or data to anyone (i.e., patients, insurers, attorneys, etc.), including and requests for billing information and notices of payment that may come from these sources (The organization submitting the request should be advised of the name and address of the Area Office FMCRA Coordinator and that all future correspondence must be directed to that person.); and
      5. after a FMCRA claim has been paid and the IHS has received payment, reimbursing funds to any third-party payer (i.e., Medicare/Medicaid) for any payment that was made to the IHS by the third-party payer on the original claim.
   9. Service Unit Clinical Provider.  The Service Unit Clinical Provider is responsible for recording the diagnosis, type of injury, date, or place of occurrence on the Patient Care Component (PCC) Encounter Form and documenting all related clinical information at the time of service.  This includes properly documenting all subsequent visits related to the injury, accident, poisoning, etc.

7. PROCEDURES.
   1. Screening and Reviewing of Potential FMCRA Claims - BOM.  The BOM must identify all potential FMCRA claims and submit such claims to the Service Unit FMCRA Coordinator.  The BOM (or other department head responsible for patient registration) must:
      1. ensure that all patients are screened and/or interviewed for a third-party liability claim during the registration process;
      2. ensure the completion of the "Third Party Report" form - Circular Exhibit 2006-02-B, and if appropriate:
         1. ensure the patient reads and understands the IHS-960 form, "Notice to Patient," Attachment 1,Circular Exhibit 2006-02-B;
         2. ensure the patient reads and signs the IHS-961 form, "Agreement to Assign Claim Upon Request," Attachment 2, Circular Exhibit 2006-02-B;
      3. ensure that all information is inputted into the RPMS, "Patient Registration 7.1" (or the most recent update);
      4. ensure that all information and/or documentation about any third-party (including third-party liability insurance) is obtained from the patient;
      5. ensure that the Medicare secondary payer questionnaire is reviewed for related third-party liability information (All Medicare patients are required to complete the questionnaire.);
      6. ensure that all claims denied or not approved by third-party payers because of other types of third-party liability claims that have been filed and are in progress are reviewed; and
      7. ensure that the RPMS "Listing of Visits with Injury Diagnoses" is reviewed for a possible FMCRA claim.

         (Note:  Although a potential FMCRA claim has been identified and reported to the OGC or its designee, the BOM must continue with standard procedures for the billing and collection of funds from other third-party payers (i.e., Medicare, Medicaid, Private Insurance, etc.) as identified in Part 5, Chapter 1,"Third-party Revenue Accounts Management and Internal Controls," Indian Health Manual (IHM).

   2. Review of Potential FMCRA Claims - HIM.  The HIM Director or designee must review the appropriate documentation and/or RPMS/PCC reports, identify all potential FMCRA claims, verify source reports, and submit such claims to the Service Unit FMCRA Coordinator.  Documentation for review includes the following:
      1. Listing of Visits with Injury Diagnoses (Circular Exhibit 2006-02-A)
      2. Emergency Room (ER) Logs/Reports
      3. Release of Information (ROI) Documentation
      4. Patient Care Component Forms (Analysis of PCC Documents)
   3. Review of Potential FMCRA Claims - CHS.  The CHS Supervisor must screen and identify all potential FMCRA claims in which health services were authorized by the IHS from other public or private health care providers (e.g., dentists, physicians, hospitals) and submit the claims to the Service Unit FMCRA Coordinator.  The CHS Supervisor will provide:
      1. Notification.  The CHS Supervisor must submit a copy of the "Notification of Referral to Contract Facility" and/or a printout of all potential FMCRA referrals from the "Referral Care Information System" to the Service Unit FMCRA Coordinator.
      2. Supporting Documentation.  All CHS claims identified as potential third-party liability claims must include supporting documentation, i.e., patient data, services provided, payments made, etc., and include a notification of all paid and unpaid purchase orders or blanket purchase agreements.
      3. Approval of Services.  Approval for CHS may not be withheld based on the potential recovery from an alleged third-party tortfeasor.
      4. Alternate Resource.  The potential for recovery cannot constitute an "alternate resource" (like automobile insurance) under CHS regulations.  When CHS is authorized for a potential FMCRA claim, legitimate bills submitted to the IHS must be paid if they are otherwise valid and funds are available.  Payment cannot be withheld pending final determination of any claim the patient may have against a third-party.
   4. Coding Entry.  Patients who are treated for an injury, accident, poisoning, etc., must be properly coded and entered into the PCC/electronic health record (EHR) within 4 days of patient service.
      1. Data Entry.  All PCC data entries must identify the purpose of the visit, external cause of injury (E-Code), the date of injury, and the place of accident/occurrence.
      2. E-Code.  The E-Code is only entered at the first IHS encounter and must not be used for subsequent visits for the same injury, accident, poisoning, etc.  (If a patient was treated first at a non-IHS facility and later at an IHS facility for follow-up medical services, e.g., "remove stitches," the IHS encounter would be coded and entered as a first visit.)
      3. Encounter Form.  After a patient is properly coded and the data entry is completed, a copy of the patient's PCC Encounter Form must be forwarded to the Service Unit FMCRA Coordinator.
   5. Reporting Potential FMCRA Claims.  Patient encounters that have been identified as a potential FMCRA claim must be reported to the Area Office and Service Unit FMCRA Coordinators through the automated FMCRA reporting system.  The Service Unit FMCRA Coordinator will report all potential FMCRA claims to the OGC or its designee (the Area Office FMCRA Coordinator in most cases) and update the automated reporting system within 3 days after a potential claim has been identified.  The OGC or its designee must fax the claim to the insurer or the attorney within 3 days after the final entry has been made in the automated reporting system.
      1. Automated Reporting.  All IHS health care facilities must implement the automated FMCRA Reporting System or equivalent computerized system to report and monitor FMCRA claims. The OGC must have access to the FMCRA automated reporting system.
      2. Status Reports.  The Area Office and Service Unit FMCRA Coordinators shall prepare documented monthly status reports of probable FMCRA claims and submit the reports to the Area Director or CEO, as appropriate (with a copy to the HIM and BOM).
      3. Types of Claims to Report.  A claim must be reported when the patient's injury or illness is the result of a negligent act or omission of a third-party.  The various types of potential FMCRA claims include, but are not limited to:
         1. motor vehicle accidents (MVA), including all single MVA;
         2. falls;
         3. product liability;
         4. animal bites;
         5. electrical shocks;
         6. alleged medical malpractice in non-Federal health care facilities;
         7. food poisoning;
         8. railroad accidents;
         9. exposure to noxious fumes; and
         10. faulty or defective equipment.
      4. Types of Claims Not to Report.  These claims include, but are not limited to:
         1. reimbursement claims for work-related injuries (filed through the Workers Compensation process), and
         2. alleged malpractice in Federal facilities.
   6. Receipt of FMCRA Payment from the OGC.  All FMCRA payments (managed and sent by the OGC or its designee) must be received and processed by the Area Office FMCRA Coordinator.
      1. Endorsement of Receipts.  The Area Office FMCRA Coordinator must ensure that all FMCRA checks, money orders, or drafts received from the OGC are properly endorsed.  The Area Office FMCRA coordinator will then log in all FMCRA receipts and forward the receipts to the Area Office Finance Mail Clerk.
      2. Notice of Payment from the OGC.  A notice of payment should be made by the OGC or its designee to the IHS on all FMCRA claims (preferably electronically, via the FMCRA automated reporting system).  The notification will include the date of payment, the injury date, and the total amount the IHS will receive.
      3. Refund/Reimbursement.  Once funds are recovered by the IHS, the Area Finance Office must process a refund or reimbursement to any third-party payer i.e., Medicare/Medicaid/Private Insurance) for any payment that may have been made to the IHS by the third-party payer on the original claim.  This includes reimbursement to the CHS for expenditures on the original claim.
      4. Reconciliation.  All FMCRA payments received by the IHS must be reconciled with revenue received from third-party payers and prepaid to Service Units.
      5. Receipt Log.  The Area Office Finance Mail Clerk will:
         1. log in (daily) all FMCRA checks, money orders, or drafts;
         2. endorse the closing statement; and
         3. forward all receipts to the Area Office Finance Collection Clerk.  At this point the "Third-party Revenue Accounts Management and Internal Control" policy and procedures will apply for the payment, i.e., adjustment, refund, posting, Advice of Allowance, etc.
      6. Returned Checks for Insufficient Funds.  A FMCRA check that has been returned for insufficient funds must be accounted for by re-establishing the outstanding balance.  The account is then processed through IHS debt-collection procedures.
   7. Payments Received From Third-party Payer.  The IHS is not authorized to endorse FMCRA payment instruments.  All FMCRA payments received directly from any third-party payer must be forwarded to the OGC for proper endorsement and processing. If a check, money order, or draft is received by an Area Office or service unit from a third-party payer, the following procedure must be followed:
      1. Service Unit.  The Service Unit Mail Clerk will log in the check, money order, or draft and forward the payment instrument to the Service Unit Collection Clerk who will log in and forward the payment instrument to the Area Office FMCRA Coordinator.
      2. Area Office.  The Area Office Mail Clerk will log in the check, money order, or draft and forward the payment instrument to the Area Office Collection Clerk who will log in and forward the payment instrument to the Area Office FMCRA Coordinator.  The Area Office FMCRA Coordinator must log in the check, money order, or draft and forward the payment instrument to the OGC within 3 days of receipt.
   8. Unpaid FMCRA Claims.  The OGC retains all authority to compromise (negotiate a lesser amount), settle, waive, or write-off FMCRA claims that have not been paid.
      1. Under $100,000.  All FMCRA claims under $100,000 (exclusive of interest) must be approved by the OGC.  (See 28 CFR 43.3(a).)
      2. $100,000 or More.  All FMCRA claims of $100,000 or more may be compromised, settled, waived, or written-off only with the prior approval of the United States Department of Justice. (See 28 CFR 43.3(b).)

8. INTERNAL CONTROL AND REVIEW.
   1. Internal Control Standards.  All FMCRA functions/transactions must meet the general and specific internal control standards established by legislation, regulation, and policy.
   2. Area-specific Procedures.  Each Area Office FMCRA Coordinator (in consultation with the respective service unit's Finance Office, and the OGC) may develop and establish Area-specific procedures for performing his/her FMCRA operations. Area-specific procedures must be within the parameters and requirements of this circular.
   3. Management Reviews/Evaluations.  The CEO or his/her designee must perform the following periodic reviews to ensure that the general and specific internal control standards are met.  As appropriate, these reviews will include a check for proper authority, justification, reason, timeliness, and individual responsibility.  The reviews include:
      1. Monthly Status Report.  Perform a review of the monthly status report from the FMCRA Coordinator, and initiate appropriate corrective action plan or follow-up as warranted.
      2. Open Claims.  Perform a monthly review of all open FMCRA claims (by visit date and/or amount) to ensure that appropriate action has been taken or is in progress.
      3. Payments Collection Log.  Using a random sampling methodology, perform an independent quarterly review of the FMCRA payments collection log to ensure proper posting and reconciliation with Treasury deposits.
      4. Listing of Visits with Injury Diagnosis.  Select a random sample of the RPMS "Listing of Visits with Injury Diagnoses" codes, and perform a quarterly review to ensure that all potential cases have been identified and entered into the automated FMCRA reporting system.  This review must include a check for proper documentation of all follow-up activities in the medical records.
   4. Segregation of Duties.  Segregation of duties must be established for:
      1. receiving and logging in FMCRA collections,
      2. posting receipts, and
      3. adjusting or deleting FMCRA claims.
   5. Access to Systems.  Access to the automated FMCRA reporting system will be controlled by the OGC and the Office of Information Technology.  Also, access to the automated FMCRA reporting system for the purpose of deleting a FMCRA claim is limited to the OGC and the Area Executive Officer or his/her designee.
   6. Ethical Conduct.  All IHS employees are prohibited from performing any transactions for their immediate family and/or self in accordance with the IHS ethics policy.

9. RECORDS/DOCUMENTATION.
   1. Health and Medical Records.  All health care and medical record files must be managed in compliance with IHS policy and all legislation or regulations related to patient health data or information.  Access to medical records is limited to authorized personnel in performance of their official duties in accordance with IHS procedures.
   2. Disclosure of Patient Information.  Proper authorization must be obtained prior to disclosing patient health information to attorneys, insurance companies, etc., that may request it. All disclosures of health information or medical records must be accounted for either electronically (via the ROI - RPMS software package) or manually.
   3. Documentation.  The FMCRA Coordinators at the Area Office and service unit are responsible for obtaining all related documentation for each FMCRA claim and maintaining FMCRA claim files.  The BOM, HIM Director, and CHS Supervisor must submit all pertinent documents to their FMCRA Coordinator as appropriate and/or requested.
   4. Maintenance and Disposition.  All FMCRA records, including electronic records, are OGC records and as such will be retained and maintained by the OGC for an indefinite duration (treated as permanent records).  This is pursuant to the System of Records, Issuance 09-90-0062, Administrative Claims, HHS, Office of the Secretary, OGC.  All related records shall be maintained by the IHS and disposed of in accordance with Part 5, Chapter 15,"Records Management Program," IHM.

10. SUPERSEDURE.  This circular supersedes IHS Circular No. 80-06, Reporting and Payment Requirements Under the Federal Medical Care Recovery Act "Third Party Tortfeasor Cases," dated September 25, 1980.

11. EFFECTIVE DATE.  This circular becomes effective on the date of signature.