Medicare & Medicaid Lien Resolution: Oklahoma Guide

When your client has Medicare or Medicaid, you are running two resolution workflows alongside the liability claim. Miss either one, and you risk personal exposure for disbursing settlement proceeds before the government’s recovery right is satisfied. This guide covers the Medicare conditional payment process through MSPRC, the OHCA Third-Party Liability unit workflow, and the allocation and reduction arguments available to minimize what you pay out.

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Quick Reference: Contacts and Key Numbers

Note on the MSPRC portal: The current NGHP online portal is at https://www.cob.cms.hhs.gov/MSPRP/. Older CMS documentation may reference www.msprc.info, which is no longer active.

Note on Medicare COB number: Older firm forms reflect 1-800-999-1118 as the COB contractor number. The current Medicare Intake Form reflects 855-798-2627. Use the current number and verify if you receive no response.

The Medicare Secondary Payer Framework

Under the Medicare Secondary Payer (MSP) statute, liability insurance is the primary payer for accident-related care when there is a pending liability claim. Medicare pays secondary: it covers the provider’s bill on a conditional basis while the liability claim is pending, then asserts a recovery right against your settlement proceeds. That recovery right is not optional. Once the case settles, you must satisfy the Medicare conditional payment claim before disbursing to your client.

The CMS recovery contractor for liability and no-fault cases is the Medicare Secondary Payer Recovery Contractor (MSPRC). MSPRC is distinct from the Coordination of Benefits Contractor (COB), which handles initial claim notification. You will deal with both.

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Medicare Conditional Payment: Step by Step

Step 1: Identify Medicare Status at Intake

Any client who is 65 or older, or receiving Social Security disability benefits, may be a Medicare beneficiary. Ask at intake. Get the Medicare Health Insurance Claim Number (HIC number) from the client’s Medicare card. Complete your Medicare intake form with: client name, date of birth, Social Security number, Medicare HIC number, Part A effective date, date of loss, and nature of injury. The HIC number will be required on every MSPRC correspondence.

Step 2: Notify the COB Contractor

Call the Medicare Coordination of Benefits Contractor at 855-798-2627 to report the pending liability claim. Document the call: date, name of the representative, and confirmation number if one is provided. This step opens the Medicare file and puts the COB on notice that a third-party liability recovery may be available.

Step 3: Establish Representation with MSPRC

Fax the client’s signed Consent to Release and your signed Proof of Representation to MSPRC at 1-833-844-1540. Both documents are CMS standard forms. Until MSPRC receives the representation packet, it will communicate only with the beneficiary directly, not with your office. Confirm receipt with a follow-up fax if you do not receive a response within two to three weeks.

Step 4: Obtain and Review the Conditional Payment Itemization

Once representation is established, request an itemization of all conditional payments made by Medicare in connection with the injury. Review this list carefully: MSPRC commonly includes payments for treatment of conditions that are unrelated to the accident. Any unrelated charge is contestable. Write to MSPRC identifying each disputed item, attaching supporting medical records showing the treatment was for a pre-existing or unrelated condition, and requesting removal from the conditional payment amount. Do this before settlement if possible; it is harder to dispute after a final demand is issued.

Step 5: Request Procurement Cost Reduction at Settlement

When settlement is reached, send MSPRC a procurement cost reduction fax at 1-833-844-1540, or by mail to NGHP, P.O. Box 138832, Oklahoma City, OK 73113. The fax should include:

• Client’s HIC number
• A copy of the preliminary settlement statement
• Your attorney’s fee percentage
• Total case costs

MSPRC calculates Medicare’s proportional share of your attorney fees and costs and deducts that amount from the conditional payment before issuing its final demand. This is the procurement cost reduction, and it is standard practice. If you do not request it, MSPRC will issue a final demand for the full conditional payment amount without the reduction.

Step 6: Pay the Final Demand Before Disbursing

MSPRC issues a final demand letter reflecting the conditional payment amount minus the procurement cost credit. Pay that amount from settlement proceeds before disbursing anything to your client. Federal law imposes double damages exposure on anyone who receives proceeds from a settlement involving Medicare and fails to satisfy the conditional payment lien. Do not disburse and hope to deal with it later.

Medicare Set-Aside Considerations in Liability Cases

Workers’ compensation Medicare Set-Asides (WCMSAs) are well-established, with formal CMS review thresholds and submission procedures. For liability settlements, CMS has taken the position that it does not require formal liability Medicare Set-Asides and will not review them. The distinction matters: in a liability settlement, your obligation is to satisfy the conditional payment lien for past care. Future medical allocation is a different question, and CMS has not imposed a mandatory liability MSA framework.

In high-value catastrophic injury cases where the settlement is structured to compensate future medical needs and your client is or will be a Medicare beneficiary, document that Medicare’s future interest was considered in the settlement structure. CMS has expressed interest in this issue without imposing formal rules. Verify current CMS guidance on liability MSAs before finalizing settlement in any case with significant Medicare-covered future care needs.

Medicaid: OHCA Third-Party Liability Workflow

Oklahoma’s Medicaid program is administered by the Oklahoma Health Care Authority (OHCA). OHCA’s Third-Party Liability (TPL) unit handles subrogation in PI cases. Like Medicare, the OHCA lien is not self-executing: you must identify it, contact the TPL unit, and resolve it before disbursing. Missing the OHCA lien exposes you to liability for the full subrogation amount.

Step 1: Identify Medicaid Status at Intake

Ask every client whether they have or have had Medicaid coverage. This includes clients who have since acquired other coverage: if Medicaid paid for any of the accident-related care, OHCA has a recovery interest. Obtain the client’s Medicaid ID number (OHCA ID). This number is required on all OHCA correspondence.

Step 2: Send Subrogation Request to OHCA TPL

Fax a subrogation inquiry to the OHCA Third-Party Liability unit. Include a signed Oklahoma Standard Authorization to Use or Share Protected Health Information (PHI) for the client. Your fax should include: client name, date of birth, Social Security or Medicaid ID number, date of injury, and nature of injury.

OHCA TPL Lien Calculation Fax: (405) 530-3404. For general TPL information, fax (405) 530-3478. OHCA lien line: (405) 522-6205. Toll-free: (800) 522-0114. Email: liens@okhca.org. Mailing address: OHCA, 4345 N. Lincoln Blvd., Oklahoma City, OK 73105. (OHCA website: oklahoma.gov/ohca.html. OHCA Call Center: 405-522-6205 or 800-522-0114, Option 1. Verify current TPL contact information before relying on these numbers, as agency contact details change periodically.)

OHCA advises a 30-day turnaround for subrogation responses. In practice, turnaround has historically been closer to 10 days. Plan for 30 days in your case timeline.

Step 3: Review and Negotiate the Subrogation Amount

When OHCA responds with its subrogation figure, compare the itemization against your medical timeline. OHCA’s recovery right is limited to care for which third-party liability exists: care caused by the accident. Challenge any unrelated charges in writing.

Under 12 O.S. § 994.2, OHCA’s net recovery is reduced by the attorney fees and case costs attributable to the recovery. The computation works proportionally: OHCA’s share of total attorney fees equals (OHCA recovery / total settlement) times total attorney fees. Use the worksheet in 12 O.S. § 994.3 to calculate the net amount owed after the procurement cost deduction. Present OHCA with the computation and request its written agreement to the reduced amount before finalizing distribution.

Step 4: Obtain OHCA Authorization to Sign the Settlement Check

After the settlement is reached, you will need OHCA’s authorization before signing the settlement check. Fax the authorization request to 405-530-3444 (note: this is a different fax number than the subrogation inquiry fax). Include a copy of the settlement check and the OHCA fax cover sheet showing the current subrogation amount. In your request, commit in writing to forwarding OHCA’s check within 10 working days of receiving authorization.

This step surprises attorneys who assume the subrogation negotiation is the final step. It is not. OHCA requires authorization before you sign the check. Do not deposit the settlement check into your trust account before receiving that authorization.

Step 5: Disburse and Close

Once OHCA’s authorization is received, sign the check, deposit it into the client trust account, and forward OHCA’s net recovery (after procurement cost reduction) within the 10-day window you committed to. Keep copies of the authorization letter, your disbursement, and proof of delivery to OHCA.

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Allocation Arguments: Limiting Government Liens to the Past Medical Portion

The core allocation argument: Medicare and Medicaid paid for past medical care. They did not pay for your client’s future medical expenses, lost wages, pain and suffering, or other non-medical damages. The government’s right to recover is limited to the portion of the settlement that compensates for the care they paid. When your settlement includes significant non-medical components, push for a written allocation and negotiate MSPRC’s and OHCA’s recovery down to the past medical share.

Present MSPRC and OHCA with a settlement allocation that breaks out past medical, future medical, lost income, and general damages by dollar amount. The allocation should be consistent with your demand letter and mediation history. An allocation supported by documentation is a far stronger negotiating position than asking MSPRC or OHCA to simply accept a reduced number.

12 O.S. § 994.1 and the Douglas v. Cox Argument

12 O.S. § 994.1 appears in the OSCN database as “Repealed” (CiteID 455373). This section was enacted as part of the 2009 tort reform package that the Oklahoma Supreme Court struck in Douglas v. Cox Retirement Properties, Inc., 2013 OK 37, on logrolling grounds. With 994.1 repealed, the argument is available that the statutory framework governing OHCA’s proportional recovery from a settlement is no longer in effect, leaving practitioners free to press allocation arguments without a statutory ceiling on how the lien can be reduced.

Section 994.1 was formally repealed. After Douglas v. Cox Retirement Properties, Inc., 2013 OK 37 struck the 2009 tort reform package on logrolling grounds, the legislature formally repealed 994.1 in the 2013 First Extraordinary Session (Laws 2013, 1st Extr. Sess., SB 4, c. 14, § 1, emerg. eff. September 10, 2013). This is a legislative repeal, not merely a court invalidation. With 994.1 gone, the statutory framework governing OHCA’s proportional recovery from a settlement operates under 994.2 and 994.3 alone, and practitioners are free to press allocation arguments without a 994.1 ceiling.

Make-Whole Doctrine

Under the make-whole doctrine, a subrogee’s right to recover from settlement proceeds is subordinate to the injured party’s right to be fully compensated for the loss. If the total settlement falls short of your client’s provable damages, and paying the government lien in full would leave your client under-compensated, the make-whole doctrine supports reducing or eliminating the lien recovery. This argument is strongest in policy-limits cases where the defendant’s coverage is inadequate for the full damages.

The make-whole doctrine is a recognized equitable principle in Oklahoma. Its application to the federal Medicare lien is contested: some federal circuits have held that federal law preempts state make-whole arguments against Medicare, while others allow them. For OHCA Medicaid liens, the state-law make-whole argument is on stronger ground. Present the argument, document your damage picture in detail, and negotiate.

Collateral Source Treatment and Write-Off Analysis

Medicare and Medicaid payments are collateral sources. The defendant does not get credit for your client’s government coverage. This matters in two distinct ways when you are working with liened medical bills:

Billed amounts and the lien admissibility rule: Under 12 O.S. § 3009.1, medical bills are generally limited to the amount actually paid. But the statute contains a critical exception: if a medical provider has filed a lien in the case for an amount in excess of what was paid by Medicare or Medicaid, the excess (up to the lien amount) is admissible as evidence of damages. This means that for providers who have filed a statutory lien under 42 O.S. § 43, the billed amount remains in play. Coordinate your lien strategy with your damages presentation: a filed lien preserves the higher billing amount as an admissible damage element.

UM/UIM proceeds and lien attachment: In Kratz v. Kratz, 1995 OK 63, 905 P.2d 753, the Oklahoma Supreme Court held that hospital liens filed under 42 O.S. § 43 do not attach to uninsured motorist proceeds. The Kratz reasoning: the hospital lien statute reaches proceeds from the tortfeasor, not from the client’s own UM coverage. Some practitioners argue parallel reasoning for Medicare and Medicaid liens: if the settlement includes both liability proceeds and UM/UIM proceeds, the government lien should attach only to the liability portion. This argument has not been definitively resolved for Medicare or Medicaid liens specifically; the Medicare preemption question complicates it further. It is a viable argument to raise in the right case, particularly where UM proceeds form a significant share of the total recovery.

For a complete paid-vs-incurred analysis, including the 12 O.S. § 3009.1 decision tree and the current legislative landscape, see the paid-vs-incurred decision tree.

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Common Pitfalls and Timing Traps