Medicare in Personal Injury Claims: Understanding the...

Medicare in Personal Injury Claims: Understanding the Fundamentals Complying with Reporting Requirements and Satisfying Medicare Liens When Settling a Claim

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THURSDAY, MARCH 8, 2012

Presenting a live 90-minute webinar with interactive Q&A

Jeremy T. Burton, Partner, Williams Montgomery & John, Chicago

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Medicare Trial and Settlement Considerations

Williams Montgomery & John Ltd. [email protected]

Trial and Settlement Considerations

Introduction Getting your cases settled Considerations for Plaintiff’s counsel Considerations for Defense counsel Settlement language Negotiating Settlement with the CMS

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Introduction Medicare is a government program providing health care. Under Medicare, the government reimburses health care providers for covered care provided. Until 1980, Medicare was the primary payer of all medical costs except in workers’ compensation cases. After 1980, Medicare is always a secondary payer to liability insurance, self-insurance, no-fault insurance, and workers’ compensation insurance. Medicare is also a secondary payer to group health plan coverage in certain situations.

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Introduction Insurers are not allowed to write policies secondary to Medicare. Such policies would supersede federal law.

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Introduction Since 1980, Medicare beneficiaries, attorneys, insurers, self-insured entities, third party administrators and their agents have been responsible for (1) understanding when there is coverage primary to

Medicare, (2) notifying Medicare when applicable, (3) and for paying appropriately.

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Introduction The new law, Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA Section) “Adds mandatory reporting requirements with respect to Medicare beneficiaries who have coverage under group health plan arrangements as well as for Medicare beneficiaries who receive settlements, judgments, awards or other payment from liability insurance, no-fault insurance, or workers’ compensation.”

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Introduction Implementation dates for the new law were originally January 1, 2009 for group health plans to register and July 1, 2009 for liability insurers to register. Insurers must report claims with settlement dates on or after October 1, 2011. In certain cases where an insurer has ongoing responsibility for medical claims, claims arising after January 1, 2010 must be reported.

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Introduction The new law is designed to enforce the statutes

passed in 1980. It does not substantively change the pre-existing

Medicare law and statutes. It adds new reporting rules. It includes penalties for noncompliance.

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Considerations for Plaintiff’s Counsel Intake Considerations Is the client 65 or older? Receiving Social Security Disability? Suffering from end-stage renal disease? Obtain your client’s Medicare identification card Advise Defense counsel

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Considerations for Plaintiff’s Counsel Lien Concerns

Explain to your client that a substantial portion of their settlement will be payable to Medicare. Inform your client that Medicare costs may have a significant impact on your chances to favorably resolve the case.

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Consideration for Plaintiff’s Counsel Future Medicals Advise your client that Medicare has a right to recover any amount they expend on future medical care. You may want to consider the availability of a special needs trust or other ways to escrow money for future medical costs.

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Considerations for Plaintiff’s Counsel Future Medicals “You should also be aware that if you do not repay Medicare in full, it may decide to recover any amounts you owe (including accrued interest) from any Social Security or Railroad Retirement benefits to which you might otherwise be entitled, or from future Medicare payments.”

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Considerations for Plaintiff’s Counsel Penalty Provisions 42 C.F.R. Sect. 411.24(g) Recovery from parties that receive primary payments. CMS has a right of action to recover its payments from any entity, including a beneficiary provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.

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Considerations for Plaintiff’s Counsel Penalty Provisions U.S. v. Harris, 2009 WL 891931 (N.D.W.Va) The CMS calculated the amount it was owed, after subtracting amounts for attorney’s fees and costs. The CMS made its demand by letter, and after the statutory time elapsed without appeal the government filed suit. The court granted summary judgment to the government and ordered the Plaintiff’s counsel to pay the judgment plus interest.

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Considerations for Defense Counsel Discovery Is the plaintiff a beneficiary? Has the plaintiff received benefits? What has the plaintiff done with respect to the lien?

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Considerations for Defense Counsel Discovery Form A-1 Allows an insurer to determine whether the plaintiff is a Medicare beneficiary. Obtain with interrogatories. Full name, Medicare claim number (HICN), date of birth, social security number and sex.

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Considerations for Defense Counsel Reporting Make certain your client – insurer or self-insured entity is registered to report. If a complaint or discovery lists the date of a plaintiff’s injury or exposure after December 5, 1980, Medicare will require a report.

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Considerations for Defense Counsel Reporting

Plaintiffs cannot claim a settlement, judgment or award does not contemplate medical liability in an effort to circumvent Medicare, even if a court accedes to such a compromise.

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Considerations for Defense Counsel Third Party Administrators The new Medicare reporting requirements are complicated enough that the CMS has anticipated that RREs will hire Third-Party Administrators (TPAs) to handle reporting and payment obligations. 42 U.S.C. 1396y(b)(7)&(8)

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Considerations for Defense Counsel Medicare Penalties Medicare beneficiaries are required to reimburse Medicare within 60 days of receipt of settlement. If Medicare is not reimbursed by the beneficiary, payment becomes the responsibility of the primary payer.

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Why Report The CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment. 42 CFR Sec. 411.24(g) 25

Why Report If Medicare is not reimbursed as required by paragraph (h) of this section, the primary payer must reimburse Medicare even though it has already reimbursed the beneficiary or other party. 42 CFR Sec. 411.24(i) 26

Why Report The United States can collect double damages and attorneys fees against any entity not paying under the new statute. Furthermore, An applicable plan that fails to comply with the Medicare reporting requirements is subject to a civil money penalty of $1,000 for each day of noncompliance with respect to each claimant. 42 USC Sec. 1395y(b)(8)(E)(i)

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Considerations for Defense Counsel New Process (1) Determine the Medicare status of all claimants (2) RRE must report settlements (3) RRE must resolve liens (4) RRE must give consideration to Medicare’s interest in future payments

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Considerations for Defense Counsel ORM/TPOC and Date of Settlement It may be but not always is the check date or payment date, it is the date the obligation is signed, if there’s a written agreement, unless court approval is required. If court approval is required it is the later of the date the obligation is signed or the date of court approval. If there is no written agreement it is the date the payment, or the first payment if there will be multiple payments is issued. See http://www.cms.gov/MandatoryInsRep/Downloads/March11NGHPTranscript.pdf, pg. 15.

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Considerations for Defense Counsel ORM/TPOC and Date of Settlement Application of the December 5, 1980 date is specific to a particular claim/defendant. If exposure for Defendant “BW” ended prior to December 5, 1980 but exposure for other defendants did not, a settlement, judgment, award or other payment with respect to Defendant “BW” would not be reported. Certain representatives of Medicare have indicated they do not intend to follow this rule and so it may be necessary to report client specific claims that fall outside of this rule but otherwise have exposure after December 5, 1980.

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Considerations for Defense Counsel

Medicare Set Asides 1. Medical damages from

the date of injury through the date of settlement.

2. Future medical damages from the date of settlement forward.

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Medicare Set Asides In non-workers’ compensation cases, you are not required to set aside money for future damages to pay for plaintiff’s future medical expenses. There is some disagreement on this topic. Many defense firms are advising clients to set aside funds for future medical expenses. The CMS has confirmed that set asides are not required in liability cases, though they have also noted that they “reserve their right” to both challenge agreements which do not adequately cover Medicare costs and the future right to require set asides in liability cases. You should consider something like a Medicare Set Aside (MSA) for future medical damages. This set aside is required in workers’ compensation cases to “reasonably protect Medicare’s future interests.” If the CMS approves the proposed set-aside all parties will receive “safe harbor” protection from future government collection action.

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Medicare Set Asides Unfortunately, CMS is not in a position to review set asides at this time. As an alternative you can make a Claims Settlement Allocation (CSA). 33

Medicare Set Asides The following standards apply to MSAs in workers’ compensation cases and should be taken into account in other liability cases. A MSA is available where the claimant is currently a Medicare beneficiary and the TPOC is greater than $25,000. Or where the plaintiff will soon be a Medicare beneficiary and the TPOC amount for future medical expenses, disability and lost wages is expected to be greater than $250,000.

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Medicare Set Asides A MSA is not necessary where: 1. The facts of the case demonstrate that the injured

individual is only being compensated for past medical expenses; and

2. There is no evidence that the individual is attempting to maximize the other aspects of settlement to Medicare’s detriment; and

3. The individual’s treating physicians conclude in writing that, to a reasonable degree of medical certainty, the individual will no longer require any Medicare-covered treatments related to the workers’ compensation injury.

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Medicare Set Asides A MSA/CSA must show a good-faith consideration of future medical expenses. Remember that expenses must be related to the injury and in the appropriate case, you may want to consider a second review of medical records to eliminate overpaying for unrelated medical conditions. Is there a need for a trust? Can a Third Party administer the trust?

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Medicare Set Asides “We have continued to say with respect to set-asides or liability situations that set-asides are not required in terms of CMS being involved in any type of determination of how much the set-asides should be. We have also said that our regional offices have the ability to evaluate proposed set-aside amounts for liability if their workload permits them to do so.”

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Medicare Set Asides “This is not the same thing as a blanket statement that liability set asides are simply not required or not appropriate. Regardless of the mechanism, Medicare’s interests need to be protected. The statute says that we don’t make payment where payment has already been made. Whether or not this is protected through setting up a formal set-aside, setting up a formal trust, simply keeping the money and insuring that it’s being [paid] in a priority manner to Medicare until the appropriate funds are exhausted; those are all choices, but we need to make it clear that’s not the same thing as saying – and that we are not in fact saying that liability set-asides aren’t appropriate.” http://www.cms.gov/MandatoryInsRep/Downloads/Jan2810NGHPTranscript.pdf, pg. 17.

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Medicare Set Asides

The CMS has noted their “standard expectation is that they will be pursuing recoveries against settlements received by individual beneficiaries.” However the CMS further notes that “there are limited instances where CMS has gone back to an insurer or to an attorney particularly if, for instance, an attorney for a beneficiary who ignores CMS’s demand, technically, there are some risks under the regulation. Is it any type of standard practice for us to routinely go back to an insurer or attorney or other entity when we’ve issued the demand to the beneficiary? No.”

See http://www.cms.gov/MandatoryInsRep/Downloads/Feb2510NGHPTranscript.pdf, pg. 37.

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Creating Medicare Set Asides

If both sides have obtained medical records in written discovery, you likely have a blue print to create a successful MSA. If both sides have testimony from medical experts regarding permanency and anticipated future medical damages you are in an even better position. If one or both sides have hired an economist to analyze future medical needs, your work is almost complete.

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As a general rule in creating a set aside, your Medicare Allocation Report should include the following. The beneficiary’s name The beneficiary’s address The beneficiary’s social security number The beneficiary’s current age The beneficiary’s life expectancy The date of the injury The state of jurisdiction

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The related diagnoses and ICD-9 Diagnosis Codes An introduction and description of the injury A medical history including relevant doctors’ visits,

examinations, and surgeries Summaries of the relevant doctors’ visits, examinations,

and surgeries Physician diagnoses, prognoses, recommended course

of treatment and if available opinions on possible future surgeries and all future costs.

A list of pre-existing and unrelated conditions

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A summary of the plaintiff’s current functional states and ability to perform activities of daily living.

A summary of the future treatment plan including doctors’ visits, future surgery, and anticipated prescription costs.

A bottom line MSA number.

Your report should also contain the methodology utilized to explain how you calculated the final number, e.g. adjusted life expectancy and discount rate. The more you rely on verifiable medical information, the more protected you and your client will be.

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Settlement Language Madison County, Illinois has entered an order in Asbestos cases with helpful suggested settlement language. As part of settlement, Plaintiff’s counsel must complete Medicare Form B in order to finalize any settlement agreement. Medicare Form B requires all of the same information contained in the A-1 form as well as information that Medicare requires such as the diagnosis code for the plaintiff’s illness, the name of the settling defendant, the date of the settlement, the amount of settlement and information on the funding of settlement.

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Settlement Language Releases should be tailored to discuss Medicare obligations. If there are no future medical damages, that should be stated in the release. If possible, obtain indemnification, defense and hold harmless language from the plaintiff’s firm ensuring that a paying RRE will be protected from double paying and double damages. At the very least, all settlement agreements should state who is responsible for investigating Medicare liens, and who is responsible for satisfying any Medicare liens.

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Settlement Language The language of the Madison County order notes that (1) Defendant will not include Medicare on the settlement check. (2) PLAINTIFF'S FIRM agrees to hold in its trust account sufficient funds to pay all Medicare claims or liens relating to such settlement …or has in fact satisfied all Medicare claims or liens in full. PLAINTIFF'S FIRM will notify ... CMS, of any settlement which this Agreement governs and will work to satisfy or otherwise obtain discharge or release of any Medicare claim or lien including "set asides," if any.

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Settlement Language (3) If defendant receives a claim for any unsatisfied Medicare claim … defendant will notify PLAINTIFF'S FIRM … and request from them any evidence that the claim or lien has been satisfied in full … If such evidence is not forthcoming or fails to resolve the claim in full without payment by defendant, defendant may by regular mail notify PLAINTIFF'S FIRM to undertake the principal response to the matter or to arrange payment or other resolution. If the U.S. government or its designee including CMS brings suit, PLAINTIFF'S FIRM will undertake the principal defense of such matter … PLAINTIFF'S FIRM will be liable to defendant for the amount owed or paid by such defendant to the United States Government … for the allegedly unsatisfied Medicare claim or lien plus all attorney fees and out of pocket expenses reasonably necessary …

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Settlement Language But consider Many plaintiff’s firms will refuse an indemnification provision. Some states have ruled finding that a plaintiff’s attorney cannot agree to indemnify an opposing party for unpaid liens. Illinois Adv. Op. 06-10 (2006).

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Other settlement options Medicare has acknowledged that it can be a joint payee on settlement checks. The main issue with such a solution is that it puts the burden on the plaintiff to contest non-suit related charges and it will inevitably delay payment to the plaintiff, especially in cases where significant future medical costs are anticipated. Moreover, drafting a check in such a manner does not absolve a RRE from further following up to ensure that Medicare is reimbursed.

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Other settlement options Tomlinson v. Landers, 2009 WL 1117399 (M.D.Fla.) In Tomlinson the defendant included Medicare on the settlement check. The plaintiff returned the check and requested that Medicare not be included on the check, promising instead that it would hold the defendant carrier harmless for any Medicare liens. The court found that including Medicare on the settlement check was not required under the rules, and further held that due to the disagreement between the parties that the settlement was invalid as the parties never had a meeting of the minds. Tomlinson does not stand for the proposition that Medicare cannot be included on the check when both parties are in agreement.

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Settlement Considerations In the case of a joint and several settlement, where each defendant technically is responsible for the whole settlement, each entity must report the entire settlement, judgment, award or other payment. If each defendant enters into a separate settlement, they are each responsible for reporting the separate settlement, judgment, award or other payment. See http://www.cms.gov/MandatoryInsRep/Downloads/Jan2810NGHPTranscript.pdf, pg. 20

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Settlement Considerations What about cases wherein a discounted settlement does not allow for reimbursement of Medicare due to questionable liability? “Waiver of Rights. The Secretary may waive (in whole or in part) the provisions of this subparagraph in the case of an individual claim if the Secretary determines that the waiver is in the best interests of the program established under this title.” 42 USC Secs. 1395 et seq.

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Negotiating Settlement with the CMS Conditional Payment Estimate We are writing to advise you that Medicare has identified a claim or number of claims for which you have primary payment responsibility and Medicare has made primary payment. The Medicare Secondary Payer provisions of the statute, 42 CFR 1395y(b)(2), precludes Medicare from paying for a beneficiary’s medical expenses when payment “has been made or can reasonably be expected to be made … under no-fault insurance”.

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Negotiating Settlement with the CMS However, Medicare may pay for a beneficiary’s covered medical expenses conditioned on reimbursement to Medicare from proceeds received pursuant to a third party liability settlement, award, judgment, recovery or from any entity responsible for making primary payment. Medicare must recover these payments from the entity responsible for payment or when payment has been made from the entity/individual who has received payment for these claims.

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Negotiating Settlement with the CMS Enclosed is an itemization of conditional payments made by Medicare on behalf of the Medicare beneficiary referenced above. Currently, Medicare has paid _______ in conditional payments related to your claim.

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Negotiating Settlement with the CMS Final Demand Letter We are writing to you because we recently learned that you have made a liability claim relating to an illness, injury, or incident occurring on or about _____ and obtained a recovery. We have determined that you are required to repay the Medicare program _______ for the cost of medical care it paid relating to your liability recovery. (The term “recovery” includes a settlement, judgment, award or any other type of recovery.

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Negotiating Settlement with the CMS Right to Request a Waiver - you have the right to

request that the Medicare program waive recovery of the amount you owe in full or in part. Your right to request a waiver is separate from your right to appeal our determination, and you may request both a waiver and an appeal at the same time. The Medicare program may waive recovery of the amount you owe if you can show that you meet both of the following conditions:

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Negotiating Settlement with the CMS 1. This overpayment (for purposes of re questing waiver of recovery, the amount you owe is considered an overpayment) was not your fault, because the information you gave us with your claims for Medicare benefits was correct and complete as far as you knew; and when the Medicare payment was made, you thought that it was the right payment; AND 2. Paying back this money would cause financial hardship or would be unfair for some other reason.

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Negotiating Settlement with the CMS Right to Appeal - You also have the right to appeal our determination if you disagree that you owe Medicare as explained in Part I of this letter, of if you disagree with the amount that you owe Medicare ______ as explained in Part II of this letter. To file an appeal, you should send us a letter explaining why you think the amount you owe Medicare is incorrect and/or any reason(s) why you disagree with our determination. 120 days from receipt of letter.

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Negotiating Settlement with the CMS Counsel should be familiar with whether their request is for a complete waiver, a compromise allocation or a full commutation before contacting any Medicare representative. In the case of a compromise request, counsel should be familiar with 42 CFR § 411.47 which governs compromise settlements in workers’ compensation cases and is currently the best tool available for an argument reducing a Medicare payment in a liability case. That section states:

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Negotiating Settlement with the CMS 42 CFR § 411.47 proposes a ratio analysis. If a settlement does not apportion the sum granted, the portion to be considered as payment for medical expenses is computed as follows: Determine the ratio of the amount awarded to the total amount that would have been payable … if the claim had not been compromised. Multiply that ratio by the total medical expenses incurred as a result of the injury or disease up to the date of the settlement.

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Negotiating Settlement with the CMS Similar language governs the plaintiff’s counsel’s recovery under 42 C.F.R. Sec. 411.37(c) Determine the ratio of the procurement costs to the total judgment or settlement payment. Apply the ratio to the Medicare payment. The product is the Medicare share of procurement costs.

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E X P O S U R E , I N G E S T I O N A N D I M P L A N T A T I O N C L A I M S

CMS UPDATES 63

EXPOSURE, INGESTION AND IMPLANTATION CLAIMS

DOI – The Date of Incident. (The Date of Incident for an automobile accident is the date of the accident.) For exposure claims, the DOI is the date of first exposure. For ingestion claims, the DOI is the date of first ingestion. For claims involving implants, the DOI is the date of the implant.

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When the injured party is a Medicare beneficiary and the date of incident is on or after

December 5, 1980, liability insurance is primary to Medicare.

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Application of the December 5, 1980 date is specific to a particular claim/defendant. If exposure for Defendant “X” ended prior to December 5, 1980 but exposure for other defendants did not, a settlement, judgment, award or other payment with respect to Defendant “X” would not be reported. NGHP User Guide, Ver. 3.2,, p. 115

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Initially, certain representatives of Medicare indicated they did not intend to follow this rule and that it may be necessary to report client specific claims that fall outside of this rule but otherwise have exposure after December 5, 1980.

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The CMS on October 11, 2011 announced the following: The Centers for Medicare & Medicaid Services has consistently applied the Medicare Secondary Payer (MSP) provision for liability insurance (including self-insurance) effective 12/5/1980. As a matter of policy, Medicare does not assert a MSP liability insurance based recovery claim against settlements, judgments, awards or other payments, where the date of incident (DOI) occurred before 12/5/1980.

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Medicare in their October 11, 2011 announcement indicated that where continued exposure or ingestion exists – Medicare focuses on the date of last exposure or ingestion for purposes of determining whether the exposure or ingestion occurred on or after 12/5/1980.

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For implant cases, the date of last exposure is used for ruptured implants and for non-ruptured implants, the date the implant was removed is the date of last exposure. Medicare notes that the term exposure refers to a claimant’s physical exposure to the harm rather than a defendant's legal exposure to liability.

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Medicare will assert a recovery claim when: ONE Exposure, ingestion or the alleged effects of an implant on or after 12/5/1980 is claimed, released, or effectively released.

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Medicare will assert a recovery claim when: TWO A specified length of exposure or ingestion is required in order for the claimant to obtain the settlement, judgment, award, or other payment, and the claimant’s date of first exposure plus the specified length of time in the settlement, judgment, award or other payment equals a date on or after 12/5/1980. This also applies to implanted medical devices.

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Medicare will assert a recovery claim when: THREE A requirement of the settlement, judgment, award, or other payment is that the claimant was exposed to, or ingested, a substance on or after 12/5/1980. This rule also applies if the settlement, judgment, award, or other payment depends on an implant that was never removed or was removed on or after 12/5/1980.

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Medicare will not assert a recovery claim when: All exposure or ingestion ended, or the implant was removed before 12/5/1980; and Exposure, ingestion, or an implant on or after 12/5/1980 has not been claimed and/or specifically released; and There is either no release for the exposure, ingestion, or an implant on or after 12/5/1980; or where there is such a release, it is a broad general release (rather than a specific release), which effectively releases exposure or ingestion on or after 12/5/1980. The rule also applies if the broad general release involves an implant.

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“Effective Releases” Medicare seems to contradict itself on the issue of whether they will assert or not assert recovery when exposure is “effectively released.” Most commenters on this view it as an issue of known or alleged exposure.

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Where exposure or ingestion is claimed in the complaint or through discovery, Medicare is likely to pursue recovery where a settlement does not contemplate that exposure but release “effectively releases” the exposure. The kind of release Medicare is okaying is one where exposure after December 5, 1980 is not raised in the case, is unknown, but is “effectively released.”

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For this reason, it is imperative for settling counsel, especially defendants to review the complaint, answers to interrogatories and deposition testimony for any suggestion of exposure after December 5, 1980. That information should also be provided to the client. If there is evidence of exposure after that date, report to Medicare. If there is no evidence, then reporting is most likely not necessary.

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Medicare has indicated where the only evidence of post December 5, 1980 exposure is the release, they will not pursue recovery. We look at what’s claimed or released … and we have carved out this one exception where the only basis … for us looking to … primary payment responsibility was a broad general release. We have said in that situation we won’t pursue a recovery plan. See http://www.cms.gov/MandatoryInsrep/Downloads/10192011NGHP.pdf

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Another issue to consider is whether a policy which expired prior to December 5, 1980 can be liable to Medicare in a case where exposure does not terminate on that date and the settlement by virtue of the policy does not cover subsequent exposure.

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In such a case. The CMS has indicated that it has a recovery claim against that settlement. …let’s say a policy ended in 1979, but nonetheless that party was sued and part of the beneficiary’s complaint was I continued to be exposed at this location through such and such. If that insurer settles with them, we have a recovery claim against that settlement. It’s not based on when their legal liability ended for the particular exposure that’s claimed our recovery claim is looking to what was claimed or released… . See http://www.cms.gov/MandatoryInsrep/Downloads/10192011NGHP.pdf

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The claimant was exposed to a toxic substance in his house. He moved on 12/4/1980. The claimant did not return to the house. Exposure ended before 12/5/1980.

The claimant was exposed to a toxic substance in his house. He moved on 12/4/1980. The claimant makes monthly visits to the house because his mother continues to live in the house. Exposure did not end before 12/5/1980.

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The claimant was exposed to a toxic substance while he worked in Building A. He was transferred to Building B on 12/4/1980, and did not return to Building A. Exposure ended before 12/5/1980. The claimant was exposed to a toxic substance while he worked in Building A. He was transferred to Building B on 12/4/1980, but routinely goes to Building A for meetings. Exposure did not end before 12/5/1980.

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The claimant had a defective implant removed on 12/4/1980. The implant had not ruptured. Exposure ended before 12/5/1980. The claimant had a defective implant that was never removed. Exposure did not end before 12/5/1980.

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S E C T I O N 1 1 1 R E P O R T I N G

CMS UPDATES 84

SECTION 111 REPORTING

The administrator of any liability insurance plan must report money paid pursuant to any settlement, judgment, award or other payment. 42 USC 1395y(b)(8)(F). Liability insurance is defined as coverage that indemnifies or pays on behalf of the policyholder or self-insured entity against clams of negligence, inappropriate action, or inaction which results in injury or illness to an individual or damage to property.

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A primary plan, and an entity that receives payment from a primary plan, shall reimburse [Medicare] for any payments made … if it is demonstrated that such primary plan has or had a responsibility to make payment …. A primary plan’s responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver or release … 42 USC Sec. 1395 y(b)(2)(A)(ii)

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The CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment. 42 CFR Sec. 411.24(g)

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If Medicare is not reimbursed as required by paragraph (h) of this section, the primary payer must reimburse Medicare even though it has already reimbursed the beneficiary or other party. 42 CFR Sec. 411.24(i)

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The United States can collect double damages and attorneys fees against any entity not paying under the new statute. Furthermore, An applicable plan that fails to comply with the Medicare reporting requirements is subject to a civil money penalty of $1,000 for each day of noncompliance with respect to each claimant. 42 USC Sec. 1395y(b)(8)(E)(i)

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Implementation dates for the new law were originally January 1, 2009 for group health plans to register and July 1, 2009 for liability insurers to register. Insurers originally were required to report all claims with settlement dates on or after October 1, 2011. In certain cases where an insurer has ongoing responsibility for medical claims, claims arising after January 1, 2010 must be reported.

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The date of a Settlement is the date of the payment obligation was established. It may be but not always is the check date or payment date, it is the date the obligation is signed, if there’s a written agreement, unless court approval is required. If court approval is required it is the later of the date the obligation is signed or the date of court approval. If there is no written agreement it is the date the payment, or the first payment if there will be multiple payments is issued. •See http://www.cms.gov/MandatoryInsRep/Downloads/March11NGHPTranscript.pdf, pg. 15.

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On September 30, 2011, One day before the new reporting requirements were set to go into effect, the CMS issued a Revised Implementation Timeline

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The reporting date for Settlement Payments is determined by the amount of the settlement. Starting on October 1, 2011, all settlements over $100,000 must be reported. Starting on April 1, 2012, all settlements over $50,000 must be reported. Starting on July 1, 2012, all settlements over $25,000 must be reported. 93


Starting on October 1, 2012, all settlements over the “minimum threshold” must be reported. The minimum thresholds are as follows: Until December 31, 2012, settlements of under $5,000 are exempt from reporting. Between January 1, 2013 and December 31, 2013, settlements of under $2,000 are exempt from reporting. Between January 1, 2014 and December 31, 2014, settlements of under $600 are exempt from reporting. After January 1, 2015, all settlements must be reported.

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Medicare beneficiaries who receive a liability settlement, judgment, award or other payment have an obligation to refund associated conditional payments within 60 days of receipt of such settlement, judgment, award, or other payment. If Medicare is not reimbursed by the beneficiary, payment becomes the responsibility of the primary payer.

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A D D I T I O N A L C M S A N N O U N C E M E N T S

CMS UPDATES 96

ADDITIONAL CMS ANNOUNCEMENTS

The $300 Threshold Under pressure from several sources, Medicare has relented and announced it is not financially viable for the government to seek recovery of settlements of $300 and under.

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If the following criteria are met, MSPRC will not recover against a settlement, judgment, award or other payment. (1) The recovery is related to a trauma-based incident (not a case involving ingestion, implantation or exposure) (2) The recovery is $300 or less. (3) The beneficiary has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident. (4) Medicare has not previously issued a recovery demand letter.

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The $300 threshold does not apply where an insurer is paying or has paid medical bills directly or on an ongoing basis. Keep in mind that the $300 threshold is a recovery threshold rather than a reporting threshold. See: http://www.msprc.info/forms/300%20Threshold%20on%20Liability%20Settlements.pdf

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http://www.msprc.info/forms/300 Threshold on Liability Settlements.pdf�

http://www.msprc.info/forms/300 Threshold on Liability Settlements.pdf�


The Fixed Percentage Option Starting on November 7, 2011 the CMS has announced a Fixed Percentage Option which gives beneficiaries who have a settled a cases for $5,000 or less the ability to resolve Medicare’s claim by paying Medicare 25% of the settlement instead of using the recovery process.

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For the Fixed Percentage Option to apply, the following criteria must be met. (1) The liability insurance (including self-insurance settlement is for a physical trauma based injury. This means that it does not relate to ingestion, exposure, or medical implant.

(2) The total liability insurance settlement, judgment, award or other payment is $5000 or less.

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For the Fixed Percentage Option to apply, the following criteria must be met. (3) The beneficiary elects the option within the required timeframe and Medicare has not issued a demand letter or other request for reimbursement related to the incident.

(4) The beneficiary has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident. 102


For the Fixed Percentage Option to apply, the request must be submitted before or at the same time Notice of Settlement documentation is submitted. If the request is made in response to a Conditional Payment Notice, it must be received by the response due date referenced in the CPN.

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If the Fixed Percentage Option is elected and approved, the beneficiary may not seek an appeal or waiver of recovery. See http://www.msprc.info/forms/Fixed%20Percentage%20Option%20Information.pdf

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http://www.msprc.info/forms/Fixed Percentage Option Information.pdf�




MSPRC Self Service On September 30, 2011 the CMS announced a Self-Service Information feature which gives callers the ability to get the most up-to-date Demand and Conditional Payment amounts.

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In order to access the Self-Service Functions use: • The Case Identification number • The beneficiary’s date of birth • The first five letters of the beneficiary’s last name. • The last four digits of the beneficiary’s Social

Security Number.

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CMS UPDATES

JEREMY BURTON WILL IAMS MONTGOMERY & JOHN LTD

[email protected] (312) 443-3286

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mailto:[email protected]�

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