Medicare: Conditional Payment Claims, Mandatory Reporting and MSAs

8/6/2019 Medicare: Conditional Payment Claims, Mandatory Reporting and MSAs

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Medicare:Conditional Payment Claims,

Mandatory Reporting and

MSAs

Bennett Pugh and Melisa Zwilling

Carr Allison

100 Vestavia ParkwayBirmingham, Alabama 35216

(205) 822-2006

[email protected]@carrallison.com



2

Medicare Secondary Payer Act� Medicare Secondary Payer Act (MSPA)

enacted in 1980

� Relegated Medicare to ³secondary´ payer status when any other entity could possibly

be considered a primary payer

� Statute applies to workers¶ compensation,automobile or liability insurance, no-faultinsurance and self-insurers



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Three Issues to Consider

� Conditional Payment Claims� Section 111 Mandatory Insurer Reporting

Requirements

� Medicare Set-asides (in appropriatecases)



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Conditional Payment Claims

� Conditional payment claims (CPC) are

NOT the same as Medicare Set-asides.� CPC is asserted by Medicare for expenses

it paid prior to date of settlement or

judgment� Medicare Set-asides are designed to paymedical expenses after date of settlement



5

Medicare¶s Right to Recover

� Federal law takes precedence over any

state law or private contract.� That means Medicare¶s right to recover

may not be limited by a state law or asettlement agreement between parties.

� Medicare¶s right to recover is alwaysparamount to any other entity or individual¶s rights.



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Medicare¶s Recovery of CPCs

� When any case with a Medicare beneficiary settles,

if Medicare has made a CPC, Medicare must bereimbursed.

� Obtaining CPC information can take a few months.

� CPC demand letter will not be issued until Medicarereceives copy of approved settlement documents.

± Payment only due at that time.



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Amount CMS May Recover

� CPC may be reduced for procurementcosts

� Medicare may recover FULL amount of CPC up to total settlement amount even if

claimant only recovered a portion of what would otherwise be due if theclaim had not settled!



8

Interest and Penalties Under the MSPA

� If Medicare is not reimbursed within 60

days from the date of formal demandletter, interest will begin to accrue

� If Medicare has to file a lawsuit to

recover its money, it will collect doubledamages from whomever it sues



9

Private Cause of Action

� MSPA provides for private cause of action

± May be asserted by Medicarebeneficiary



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Statute of Limitations for Medicare to Assert Claim

� 6 years� Begins to run once ³facts material to the

right of action are known or reasonablycould be known´ by the U.S.



11

Challenging Medicare¶s Claim

� In order to challenge a CPC or any other

claim, must exhaust administrativeremedies!

� Medicare may NEVER be sued by anyparty for any reason in connection withthe Medicare Act without first goingthrough administrative remedy process.



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Medicare Set-asides� Medicare Set-aside (MSA) is money for future medical

expenses related to a specific accident or injury

� Neither MSPA nor any other legislation makes MSAsan absolute requirement in any case.

� MSAs are the best and perhaps only way to show thatMedicare¶s interests were adequatelyconsidered/protected at time of settlement

� CMS recommends MSAs in workers¶ compensationcases with Medicare beneficiaries when future medicalbenefits are closed

� Liability cases are handled differently



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� If Medicare¶s interests are not adequatelyconsidered, Medicare may requireexhaustion of entire settlement amount on

medical expenses before it begins payingfor any treatment for the claimant relatedto the injury at issue

� Medicare may also pay medical expensesand request reimbursement



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MSAs in Workers¶ Compensation Cases� CLASS I

± If the claimant is a Medicare beneficiary AND

± the total settlement amount exceeds

$25

,000,

� CMS approval of a MSA should beobtained.



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� CLASS II

± If the total settlement amount is greater than$250,000 AND

± the claimant has ³a reasonable expectation´of becoming a Medicare beneficiary within 30months of the settlement

� CMS approval of a MSA should beobtained.



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Reasonable Expectation of Entitlement

� If the claimant: ± Is currently receiving Social Security Disability

(SSD) benefits

± Has applied for SSD benefits

± Was denied SSD benefits, but is appealing denial

± Is 62.5 years old or older

± Has End Stage Renal disease



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Cases That do not MeetCMS Review Thresholds

� Medicare beneficiaries ± Medicare beneficiaries must always

consider and protect Medicare¶s interestswhen settling claims regardless of

settlement amount� No safe harbor



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� For M edicare beneficiaries, CMS stated:

± ³In other words if the total settlementamount is $25,000.00 or less, the parties to

the settlement are still required to consider Medicare¶s interests. The recommended method to protect M edicare¶s interest isto enter into a M edicare Set Aside

arrangement to protect Medicare¶s interesteven though CMS will not review theproposal.´



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Cases Not Meeting CMS Review Threshold

N on- M edicare Beneficiaries� CMS stated:

± "when a non-Medicare eligible claimant's [workers'compensation] settlement does not meet the 30-

month and $250,000 thresholds, typically thatindividual will completely exhaust his/her settlementby the time Medicare eligibility is reached. Also,according to various members of the [workers'compensation] community, most settlements for these

individuals are in the range of $10,000 to $50,000.Therefore, the amount of money in the settlement thatis actually being provided for an individual's medicalcare normally will be appropriately exhausted beforethe individual becomes a Medicare beneficiary."



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� For settlements, still consider a MSA if future medical treatment is needed, or atleast indicate with individuals with areasonable expectation which do not quitemeet the $250,000 threshold, in settlementdocuments that a portion of the money is

being paid for future medical expenses.� CMS will not review and approve though.



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� Medicare will NOT issue opinionletters concerning the need or not for

a MSA.� Therefore, if case does not meet the

review thresholds, should not submit

it to CMS.



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Determining Amount for MSA

� MSA accounts consist only of money to cover

expenses that Medicare would otherwise pay� Allocation reports helpful to determine amount

CMS will likely require for MSA.� Allocation amount based on workers¶

compensation fee schedule or actual/usual andcustomary charges, whichever is appropriate inthe state



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Settlement of Cases Prior toObtaining CMS Approval

� No amount included in settlement

documents is binding on CMS unless CMSapproves that amount

� Parties must provide CMS withdocumentation that the account has beenfunded as C M S approved , in order tofinalize the CMS process and ensure nofuture problems



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Obtaining CMS Approval of Set-aside Amount

� Files submitted to Workers¶ CompensationReview Center (WCRC) for recommendation to CMS Regional Office(RO) as to adequacy of amount submitted

� RO actually issues ³determination letter´

� Usually takes a few months to obtainapproval



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� No appeals process if CMS rejectsthe amount of the initial proposal

� Obvious mistakes, such asmathematical errors, may becorrected by contacting the Regional

Office



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State Court, Board or Commission Approved Settlements

� Medicare will generally honor decisions but onlyif issued after a hearing on the merits of a caseby a court of competent jurisdiction.

� Medicare will not simply accept documentsapproved by any such body if they merelyincorporate the parties¶ settlement agreement

� Medicare will not accept a settlementagreement, even if approved in the state, if itdoes not adequately address Medicare¶sinterests



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Workers¶ Comp and Third Party Cases

� MSA is required in cases involving a workers¶comp claim and a third party claim if the workers¶comp carrier is being relieved of the obligation topay future medical expenses.

� Must go through same process for approval as

cases involving only workers¶ compensationclaims



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Liability Only Cases� Key difference between workers¶ comp

and liability cases

± In workers¶ comp cases, state law usuallymandates lifetime payment of all futuremedical expenses related to a work injury

± In liability cases, responsibility to pay futuremedical expenses is a product of a settlementagreement itself, not a requirement of statelaw



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� CMS does not require MSAs or prior approval of settlements in liability cases

� Using a MSA for Medicare beneficiariesand obtaining CMS review and approval, if available, is a good way to guarantee nofuture problems with Medicare



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� Regional Offices are vested withsubstantial discretion regarding reviewof liability cases involving Medicare

beneficiaries ±Some will review and some will not.

No standard guidelines to determine if

RO will review.� No formal CMS review process for

liability cases



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� If settling a liability case with a claimant who is aM edicare beneficiary likely to need futuremedical care and the settlement agreement

includes payment of money for such futuretreatment,

± Parties may designate in the Release a portion of thesettlement money to cover such expenses OR

± A MSA may be used.

� If parties are not able to determine reasonableamount, allocation report may be helpful.



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Case # 1Issues� Preliminary Lien Letter of $0 but Conditional

Payment Letter of $8,365.90??

� MSA Submission?

� Reporting Required??



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Case #1Conditional Payments

� Providers have between 15-27 months tosubmit billing to Medicare, depending on date

of service� Preliminary lien letter amount can change!!

� CPL sent after Medicare receives executedsettlement documents

� Best protection is a MSA trust agreement todeal with post settlement contingencies



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Case #1MSA Submission

� Class 1 claimant and WCRC will review only if total settlement is over $25,000!

� TSA includes past or present indemnitysettlement, medical settlement, repayment of liens, plaintiff attorney fees and cost

� Does NOT include incremental indemnity and

medical payments� Denied claim with no payments allows for $0

allocation



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Case #1Reporting

� TPOC claim since no payments made to or onbehalf of claimant

� Settled 1.12.10

� Section 111 User Guide exempted TPOC claimsif settled before 10.1.10

� Now exemption for TPOC liability claims if settled before 10.1.11

� 42 CFR 411.25(a) requires notice to Medicare



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Case #2Issues

� No conditional payment if claimant is not aMedicare beneficiary at the time of settlement

� MSA Needed??

� No reporting required if claimant is not aMedicare beneficiary at the time of settlement



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Case #2MSA

� Class II claimant since he applied for SSD

� CMS will review it if total settlement amount isover $250,000

� The partied still must consider and protectMedicare¶s interests in the settlement



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Case # 2MSA� The parties can designate a reasonable amount

for future medical care

� Consider age and future treatment needs of theclaimant

� Reflect it in settlement agreement

� Allocation NOT

required, but could be helpful if parties can not agree, complicated medicalpicture or high dollar settlement



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Bennett Pugh and Melisa C. Zwilling

Carr Allison

100 Vestavia ParkwayBirmingham, Alabama 35216

Phone: (205) 822-2006

Fax: (205) [email protected]@carrallison.com

Medicare: Conditional Payment Claims, Mandatory Reporting and MSAs

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