Requesting the Fixed Percentage Option from the MSPRC for Conditional Payments – A Quick How To

By Jason D. Lazarus, J.D., LL.M., MSCC, CSSC

In November, the MSPRC announced a fixed percentage option for resolving conditional payments where the settlement is $5,000 or less. In those cases, the injury victim can resolve Medicare’s recovery claim by paying Medicare 25% of the total liability settlement instead of using the traditional recovery process. There are certain requirements that must be met in order to utilize this option which I will outline below. Importantly, when exercising this option the injury victim gives up the right to appeal the fixed payment amount or request a waiver of the recovery.

The option is now available. In order to elect this option, the following criteria must be met:

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), and
The total liability settlement, judgment, award, or other payment is $5000 or less, and
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, and
The beneficiary has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident.

When should the request be made to utilize this option? According to CMS, the fixed percentage option request must be submitted before or at the same time notice of settlement documentation is submitted (i.e., when requesting a final demand). If the request is made in response to a conditional payment notice (CPN), it must be received by the response due date referenced in the CPN. There is a “fixed percentage option election document” located in the attorney toolkit on the MSPRC’s website. The document must be completely filled out and mailed to the following address:

MSPRC-Fixed Percentage
P.O. Box 13880
Oklahoma City, OK 73113

A request for the fixed percentage option may be denied if the case does not meet all of the required criteria discussed above. If the request is denied, the beneficiary will receive an explanation of why the request was denied. A regular demand letter is then issued separately. If the request is approved, the beneficiary will receive a bill for repayment of 25% of the total settlement, which must be paid in the timeframe specified on the bill.

While this option is only limited to settlements of $5,000 or less, it is helpful to have this “streamlined” resolution process in those smaller settlements. It is important to keep in mind that once this option is elected; there is no appeal or waiver of the recovery.

CMS HQ Issues 1st Memo Regarding Liability Medicare Set Asides

By Jason D. Lazarus, J.D., LL.M., MSCC, CSSC

Many have been asking for formal guidance regarding Medicare set asides in liability settlements. It seemed as though that was never going to happen. That came to an end in May of this year with the release of a memo from the Region 6 CMS office regarding liability Medicare set asides. Up until last week there was nothing from the Baltimore headquarters for CMS. In the first memo coming from CMS HQ regarding Liability Medicare Set Asides (issued 9/29/11), Charlotte Benson, Acting Director Financial Services Group for CMS, gives us an exception to the need to create a set aside in liability cases. According to the memo, a liability Medicare set aside isn’t necessary when the Medicare beneficiary’s treating physician certifies in writing that all of the care related to the claimed injury has been completed as of the date of the settlement.

The memo says:

“Where the beneficiary’s treating physician certifies in writing that treatment for the alleged injury related to the liability insurance (including self-insurance) “settlement” has been completed as of the date of the “settlement”, and that future medical items and/or services for that injury will not be required, Medicare considers its interest, with respect to future medicals for that particular “settlement”, satisfied. If the beneficiary receives additional “settlements” related to the underlying injury or illness, he/she must obtain a separate physician certification for those additional “settlements.”

When the treating physician makes such a certification, there is no need for the beneficiary to submit the certification or a proposed LMSA amount for review. CMS will not provide the settling parties with confirmation that Medicare’s interest with respect to future medicals for that “settlement” has been satisfied. Instead, the beneficiary and/or their representative are encouraged to maintain the physician’s certification.”

The memo is very important for a number of reasons. First, it is the first official memorandum from the CMS central office in Baltimore to substantively address liability Medicare set asides. Second, it provides a mechanism, if the case facts fit the criteria, to avoid the necessity of creating a liability Medicare set aside. It is a limited exception as the treating doctor must attest in writing that all of the treatment for the released injuries was completed at the time of settlement. Third, it avoids the need to request CMS review of a proposed “zero” liability Medicare set aside and the parties just need to retain a copy of the doctor’s letter/certification.

Despite the foregoing, every lawyer (plaintiff or defense) should read the Sally Stalcup memo regarding liability Medicare set aside arrangements. The memo was issued back in May of this year by the Dallas Region 6 CMS office. The memo, to summarize, indicates that “Medicare’s interests must be protected; however, CMS does not mandate a specific mechanism to protect those interests.” Furthermore, the law “does not require a ‘set-aside’ in any situation.” Nevertheless, the law does require “that the Medicare Trust Funds be protected from payment for future services whether it is a Workers’ Compensation or liability case.” From CMS’s perspective, a set aside is their “method of choice and the agency feels it provides the best protection for the program and the Medicare beneficiary.”

If an injury victim is a Medicare beneficiary or has a reasonable expectation within 30 months of becoming a Medicare beneficiary, a set aside should be considered. If however a treating physician certifies that all treatment for the released injuries is complete as of the date of settlement, then no set aside is necessary. Navigating the MSP related issues at settlement can be difficult as well as confusing. From the lawyer’s perspective, the most important thing is to make sure the injury victim client completely understands the potential impact of settling the case has upon future Medicare coverage of injury related care.

Synergy can make Medicare secondary payer compliance simple by handling these difficult issues for you. We can prepare the Medicare set aside allocation, provide professional Medicare set aside administration via a Medicare Set Aside trust and resolve Medicare conditional payments. Synergy does offer a package discount if you take advantage of any combination of these services. Contact us today to see how can help you.

MSPRC Self Service Phone Feature & Other Important Changes

The MSPRC issued the following announcement recently:

MSPRC Self Service Information Feature

The MSPRC is in the process of adding a new feature to the current Customer Service Line: The Self Service Information Feature. This new automated feature will give callers the ability to get the most up-to-date Demand/Conditional Payment amounts and the dates those letters were issued without having to speak with a Customer Service Representative! The Self-Service Feature will be a convenient way for callers to receive accurate and consistent case information while saving time! Some additional benefits of this new feature include:

Extended Calling Hours – The Self-Service Feature will be made available for additional hours outside of the MSPRC Hours of Operation!

Shorter Wait Time – By using the Self-Service Information Feature, callers will no longer have to experience the wait time associated with speaking to a Customer Service Representative!

Unlimited number of cases inquiries on one phone call – After receiving information on a case through the Self-Service Information Feature, callers are given the option of checking multiple cases on that same call!

The Self-Service Information Feature was scheduled to go live September 30, 2011!

Given all of the information circulating lately about changes at the MSPRC and a new contractor coming in, it is interesting to see things moving so quickly. Why can’t they get conditional payment information out this quick? Maybe the pressure Congress has put on CMS is trickling down to the MSPRC. Maybe it is the Medicare Advocacy Recovery Coalition. Maybe it is the AAJ. Who knows but the better question is whether the new on hold music will be less depressing than before.

In addition, CMS announced on the MMSEA What’s New page of their website the following (posted on 9/29):

“Beginning in October 2011, CMS will implement an option to pay a fixed percentage of certain physical trauma-based liability cases with settlement amounts of $5000 or less. Detailed information on this option will be posted as an ALERT, on or before October 21, 2011, on the MSPRC website at www.MSPRC.info.

Upcoming improvements to the MSP program, expected within the next 3-9 months, include the following:

The implementation of a MSPRC portal, where the beneficiary/representative can obtain information about Medicare’s claim payments, demand letters, etc., and input information related to a settlement, disputed claims, etc.
The implementation of an option that allows for an immediate payment to Medicare for future medical costs that are claimed/released/effectively released in a settlement.
The implementation of a process that provides Medicare’s conditional payment amount, prior to settlement in certain situations.”

CMS Issues Important Memo Regarding Liability Medicare Set Aside

In the first memo coming from CMS HQ regarding Liability Medicare Set Asides, Charlotte Benson, Acting Director Financial Services Group for CMS, gives us an exception to the need to create a set aside. According to the memo, a liability Medicare set aside isn’t necessary when the Medicare beneficiary’s treating physician certifies in writing that all of the care related to the claimed injury has been completed as of the date of the settlement.

The memo says:

“Where the beneficiary’s treating physician certifies in writing that treatment for the alleged injury related to the liability insurance (including self-insurance) “settlement” has been completed as of the date of the “settlement”, and that future medical items and/or services for that injury will not be required, Medicare considers its interest, with respect to future medicals for that particular “settlement”, satisfied. If the beneficiary receives additional “settlements” related to the underlying injury or illness, he/she must obtain a separate physician certification for those additional “settlements.”

The memo is important for a number of reasons. First, it is the first official memorandum from the CMS central office in Baltimore to substantively address liability Medicare set asides. Second, it provides a mechanism, if the case facts fit the criteria, to avoid the necessity of creating a liability Medicare set aside. It is a limited exception as the treating doctor must attest in writing that all of the treatment for the released injuries was completed at the time of settlement. Third, it avoids the need to request CMS review of a proposed “zero” liability Medicare set aside and the parties just need to retain a copy of the doctor’s letter/certification.

Despite the foregoing, every lawyer (plaintiff or defense) should read the Sally Stalcup memo regarding liability Medicare set aside arrangements. The memo was issued back in May of this year by the Dallas Region 6 CMS office. The memo, to summarize, indicates that “Medicare’s interests must be protected; however, CMS does not mandate a specific mechanism to protect those interests.” Furthermore, the law “does not require a ‘set-aside’ in any situation.” Nevertheless, the law does require “that the Medicare Trust Funds be protected from payment for future services whether it is a Workers’ Compensation or liability case.” From CMS’s perspective, a set aside is their “method of choice and the agency feels it provides the best protection for the program and the Medicare beneficiary.”

To view the memo, click HERE

The memo says:

– See more at: http://www.specialneedsfirm.com/post-detail.php?id=201#sthash.oryEanXX.dpuf

Clients on Medicaid & Medicare Need Special Planning

By Jason D. Lazarus, J.D., LL.M., MSCC, CSCC

Some individuals are “dual eligible” meaning they qualify for both Medicaid and Medicare. In certain cases, a Medicare Set Aside/Special Needs Trust or Pooled Trust Sub-Account may be necessary to preserve the client’s dual eligibility. Medicare Set Asides (“MSA”) are a device used to preserver future Medicare eligibility. When settlement a case it may be prudent to consider setting an MSA when the injury victim is a Medicare beneficiary or reasonably expected to become Medicare eligible within 30 months. A Special Needs Trust or Pooled Special Needs Trust is appropriate for clients receiving Supplemental Security Income (“SSI”) and/or Medicaid benefits. Federal law allows creation of either an SNT or Pooled Special Needs Trust to preserve eligibility for needs based benefits, such as SSI and Medicaid, post settlement of a personal injury claim.

Dual eligibility is not extremely common, but there is a subset of the injury population who will be dual eligible. Understanding who qualifies for both Medicaid and Medicare is vitally important for the personal injury practitioner to insure the injury victim’s benefits are adequately protected. By CMS’s definition, dual eligible clients are those that qualify for Medicare Part A and/or Part B and also qualify for Medicaid programs as well. Medicare coverage can be obtained prior to age 65 if an injury victim qualifies for Social Security Disability. It takes a total of 30 months for someone that is disabled to qualify for Medicare (Medicare coverage begins 24 months after the first SSDI check is received which takes 5 months and includes the month of receipt, so plus 1 month).

Some Medicare beneficiaries have so little income or assets that they also qualify for state programs through Medicaid that pay for certain out of pocket expenses not covered by the Medicare program. There are several different programs that injury victims who qualify for Medicaid may be entitled to that help with expenses not covered by Medicare. In addition, there are services that Medicare does not pay for that can be covered by state Medicaid programs. For example, Medicare does not cover nursing home care beyond one hundred days yet Medicaid does, if one qualifies, cover that care.

The programs that cover out of pocket expenses provide limited Medicaid benefits to those that qualify. Through these programs, Medicaid will pay Medicare premiums, co-payments and deductibles within prescribed limits. There are two different programs. First, is Qualified Medicare Beneficiaries (“QMB”). The QMB program pays for the recipients Medicare premiums (Parts A and B), Medicare deductibles and Medicare coinsurance within the prescribed limits. QMB recipients also automatically qualify for extra help with the Medicare Part D prescription drug plan costs. The income and asset caps are higher[i] than the normal SSI/Medicaid qualification limits. Second is Special Low-Income Medicare Beneficiary (“SLMB”). The SLMB program pays for Medicare premiums for Part B Medicare benefits. SLMB recipients automatically qualify for extra help with Medicare Part D prescription drug plan costs. Again, the income and asset caps are higher[ii] than the normal SSI/Medicaid qualification limits.

Preservation of Public Benefits for those who are Dual Eligible
For injury victims that are Medicare eligible or reasonably likely to be within 30 months, a trial lawyer must carefully consider compliance with the Medicare Secondary Payer Act (“MSP”). For those injury victims receiving needs based benefits such as SSI and Medicaid, planning is necessary to preserve those benefits. Federal law found at 42 U.S.C. 1396p, allows for the creation of either a special needs trust or pooled special needs trust for those meeting the Social Security definition of disability. Assets placed into one of these trusts do not count for purposes of qualifying for needs based benefits. In the remainder of the article I will cover Medicare Set Asides and Special Needs Trust along with the intersection of these two public benefit preservation devices.

About Medicare and Medicare Set Asides
Medicare and Social Security Disability Income (hereinafter SSDI) benefits are not income or asset sensitive. If a client meets the Social Security’s definition of disability and has paid in enough quarters they can receive disability benefits without regard to their financial situation. SSDI is funded by the workforce’s contribution into FICA (social security) or self-employment taxes. Workers earn credits based on their work history and a worker must have enough credits to get SSDI benefits should they become disabled (“fully insured”). Medicare is a federal health insurance program. Medicare entitlement commences 2 years after receipt of the first disability payment from Social Security. Medicare coverage is available without regard to a client’s financial situation.

A client who is a current Medicare beneficiary or reasonably expected to become one within 30 months should concern every trial lawyer because of the implications of the MSP. The MSP is a series of statutory provisions enacted during the 1980s as part of the Omnibus Reconciliation Act with the goal of reducing federal health care costs. The MSP provides that if a primary payer exists, Medicare only pays for medical treatment relating to an injury to the extent that the primary payer does not pay.

In certain cases a Medicare Set Aside may be advisable in order to preserve future eligibility for Medicare coverage. A Medicare set aside is a tool that allows an injury victim to preserve Medicare benefits by setting aside a portion of the settlement money in a segregated account to pay for future Medicare covered healthcare. The funds in the set aside can only be used for Medicare covered expenses for the client’s injury related care. Once the set aside account is exhausted, the client gets full Medicare coverage without Medicare ever looking to their remaining settlement dollars to provide for any Medicare covered health care. In certain circumstances, primarily in workers’ compensation settlements, Medicare approves the amount to be set aside in writing and agrees to be responsible for all future expenses once the set aside funds are depleted.

While there is no requirement to establish a liability Medicare Set Aside, there is ample reason for evaluating whether one should be established. There are currently no guidelines, polices or procedures for Medicare Set Asides in non-Workers’ Compensation cases. Nevertheless, there are ways to insure that Medicare’s interests were addressed when settling with a Medicare beneficiary. The only known sure fire way to do this is with a Medicare Set Aside.

Planning for Medicaid or SSI Recipients
Unlike SSDI and Medicare, Supplemental Security Income (SSI) and Medicaid are income and asset sensitive public benefits that require planning to preserve. In Florida (and most states), one dollar of SSI benefits automatically brings Medicaid coverage. This is very important, as it is imperative to preserve some level of SSI benefits if Medicaid coverage is needed in the future. SSI is a cash assistance program administered by the Social Security Administration. It provides financial assistance to needy aged, blind, or disabled individuals. To receive SSI, the individual must be aged (65 or older), blind or disabled and be a U.S. citizen. The recipient must also meet the financial eligibility requirements.

Medicaid provides basic health care coverage for those who cannot afford it. It is a state and federally funded program run differently in each state. Eligibility requirements and services available vary by state. Medicaid can be used to supplement Medicare coverage if the client has both programs. For example, Medicaid can pay for prescription drugs as well as Medicare co-payments or deductibles.

A special needs trust (SNT) is required if the client is receiving Supplemental Security Income (SSI) or Medicaid. A SNT is a trust whose corpus or any assets held in the trust do not count as resources for purposes of qualifying for Medicaid or SSI. Thus a personal injury settlement can be placed into a SNT so that the victim can continue to qualify for SSI and Medicaid. Federal law authorizes and regulates the creation of a SNT. 42 U.S.C. §1396p(d)(4)(A)-(C) governs the creation and requirements for such trusts. First and foremost, a client must be disabled in order to create a SNT.

There are 3 primary types of trusts. First is the (d)(4)(A) trust which can only be established for those who are disabled and are under age 65. This trust is established with the personal injury victim’s settlement funds and is established for the victim’s own benefit. Second is a third party SNT which is established and funded by someone other than the personal injury victim (i.e., parent, grandparent, donations, etc. . .) for the benefit of the personal injury victim. The victim still must meet the definition of disability. Third is a (d)(4)(c) trust typically called a pooled trust that may be established by the injury victim with their own funds without regard to age restriction.

The Intersection of Medicare and Medicaid – SNT/MSA
If you have a client that is a Medicaid and Medicare recipient, extra planning may be in order. If it is determined that a Medicare Set Aside is appropriate, it raises some issues with continued Medicaid eligibility. A Medicare Set Aside account is considered an available resource for purposes of needs based benefits such as SSI/Medicaid. If the Medicare Set Aside account is not set up inside a Special Need Trust, the client will lose Medicaid/SSI eligibility. Therefore, in order for someone with dual eligibility to maintain their Medicaid/SSI benefits the MSA must be put inside a Special Needs Trust. In this instance you would have a hybrid trust which addresses both Medicaid and Medicare. It is a complicated planning tool but one that is essential when you have those with dual eligibility.

The Settlement Solutions National Pooled Trust has a sub-account which can be set up as a MSA. This means the assets in the MSA are inside of the pooled special needs trust protecting both Medicaid and Medicare eligibility. There must be a separate non-Medicare pooled special needs trust sub-account which holds monies to pay for the administrative costs and non-Medicare settlement funds. The Medicare Set Aside sub- account can only pay for Medicare covered services related to the injury and can’t be used to pay for any administrative expenses. All administrative expenses must come from the non-Medicare pooled trust sub-account.

To learn more about the Settlement Solutions National Pooled Trust click HERE

To learn more about the MSA sub-account click HERE

[i] Resources must be at or below twice the standard allowed under the Supplemental Security Income (SSI) program and income at or below 100% of the Federal poverty level.

[ii] Resources must be at or below twice the standard allowed under the SSI program and income exceeding the QMB level, but less than 120% of the Federal Poverty Level.

Liability Medicare Set Asides: Region 6 Memo Provides a Little Clarity

By Jason D. Lazarus, J.D., LL.M., MSCC

Synergy has gotten inquiries regarding a memo issued in May of this year by Sally Stalcup, the MSP Regional Coordinator for CMS (Region 6 – Dallas RO). The memo addresses Medicare set-asides in liability cases. While it is informative and gives a glimpse of the thoughts of some at CMS regarding liability Medicare set asides, it isn’t law. The memo is simply one CMS Regional Coordinator’s viewpoint. Until CMS issues formal guidance or there is law regarding Medicare set asides, we are left with nothing definitive to hang our hat on in terms of how to deal with Medicare’s “future interest”. Nevertheless, I will highlight the important portions of the memo below and try to add some clarity.

The memo starts out with an important statement. Ms. Stalcup indicates that the “information provided is only intended to be a general summary” but it isn’t “intended to take the place of either the written law or regulations.” While Ms. Stalcup encourages readers to review statutes, regulations and other materials issued by CMS on this subject, that is impossible as there is nothing that specifically addresses liability Medicare set asides. She limits the applicability of the memo to the states covered by the Region 6 office which are Oklahoma, Texas, New Mexico, Louisiana and Arkansas.

The central premise of the memo is laid out immediately that when settling a case involving a Medicare beneficiary, “Medicare’s interests must be protected; however, CMS does not mandate a specific mechanism to protect those interests.” While she acknowledges that the law doesn’t require a “set-aside” in any particular situation, she indicates that the Medicare Trust Fund must be protected from payment for future services whether they arise from a Workers’ Compensation settlement or liability settlement because there is no distinction in the MSP. She goes on to say that a “Set-aside is our method of choice and the agency feels it provides the best protection for the program and the Medicare beneficiary.”

She goes on to identify what she believes is the legal underpinnings of the need to address Medicare’s future interests. She states that “Section 1862(b)(2)(A)(ii) of the Social Security, Act [42 USC 1395 y(b)(2)], precludes Medicare payment for services to the extent that payment has been made or can reasonably be expected to be made promptly under liability insurance. This also governs Workers’ Compensation. 42 CFR 411.50 defines the term “liability insurance”. Any time a settlement, judgment or award provides funds for future medical services, it can reasonably be expected that those monies are available to pay for future services related to what was claimed and/or released in the settlement, judgment, or award. Thus, Medicare should not be billed for future services until those funds are exhausted by payments to providers for services that would otherwise be covered and reimbursable by Medicare. If the settlement, judgment, award .y [sic] are not funded there is no reasonable expectation that third party funds are available to pay for those services.”

CMS does not have a formal process to review and approve Medicare set asides like they do in Workers’ Compensation cases according to Ms. Stalcup which we already know. CMS review of proposed liability Medicare set asides is determined on a case by case basis by the appropriate regional office. For example, the Atlanta Regional office routinely refuses to review liability Medicare set asides we have submitted. Their typical response is that “[d]ue to resource constraints, CMS Is not providing a review of this proposed liability Medicare set aside arrangement.” The form letter goes on to say “this does not constitute a release or a safe harbor from any obligations under any Federal law, including the MSP statute.” (Emphasis added). In bold print the letter warns, “All parties must ensure that Medicare is secondary to any other entity responsible for payment of medical items and services related to the liability settlement, judgment or award.” Nevertheless, Ms. Stalcup states in her memo that “CMS does expect the funds to be exhausted on otherwise Medicare covered and otherwise reimbursable services related to what was claimed and/or released before Medicare is ever billed” regardless of whether a set aside is reviewed/approved by CMS.

As is the case in Medicare conditional payments obligations, she emphasizes that allocations made in a settlement agreement to different categories of damages is ineffective in terms of getting around the obligation to set funds aside. The memo states that the “fact that a settlement/judgment/award does not specify payment for future medical services does not mean that they are not funded.” Further, the “fact that the agreement designates the entire amount for pain and suffering does not mean that future medicals are not funded.” While Medicare has been challenged and lost in the 11^th Circuit on the issue of its failure to recognize allocations by a court order other than on the merits of the case (see Bradley v. Sebelius), Ms. Stalcup holds the CMS line on this issue and states that the “only situation in which Medicare recognizes allocations of liability payments to nonmedical losses is when payment is based on a court of competent jurisdiction’s order after their review on the merits of the case.” “If the court of competent jurisdiction has reviewed the facts of the case and determined that there are no future medical services Medicare will accept the Court’s designation.” The lesson from these statements is that CMS will not stand for attempts to shift damages to non-Medical categories and will not recognize allocations unless via a court order on the merits of the case. While this may force issues of damages to be tried and clog the court system, CMS continues to take this ridiculous position.

To clarify what is considered future medical portions of a recovery and how to know whether a settlement includes them, the memo gives some examples. “Consider the following examples as a guide for determining whether or not settlement funds must be used to protect Medicare’s interest on any Medicare covered otherwise reimbursable, case related, future medical services. Does the case involve a catastrophic injury or illness? Is there a Life Care Plan or similar document? Does the case involve any aspect of Workers’ Compensation? This list is by no means all inclusive.” An important part of the memo addresses what is “case related” medical expenses. CMS’s view is that this includes “more than just services related to the actual injury/illness which is the basis of the case.” “Because the law precludes Medicare payment for services to the extent that payment has been made or can reasonably be expected to be made promptly under liability insurance, Medicare’s right of recovery, and the prohibition from billing Medicare for future services, extends to all those services related to what was claimed and/or released in the settlement, judgment, or award. Medicare’s payment for those same past services is recoverable and payment for those future services is precluded by Section 1862(b)(2)(A)(ii) of the Social Security Act.”

The memo does address CMS’s view of plaintiff counsel’s obligations in regard to future Medicare covered services incurred by the client. “We do however urge counsel to consider this issue when settling a case and recommend that their determination as to whether or not their case provided recovery funds for future medicals be documented in their records. Should they determine that future services are funded, those dollars must be used to pay for future otherwise Medicare covered case related services.” CMS will not issue opinion letters or sign off on determinations of whether or not there is a recovery of future medical services triggering the need to protect the Medicare Trust Fund. The memo puts the determination of these issues in the lap of the attorney handling the claim. According to Ms. Stalcup, each “attorney is going to have to decide, based on the specific facts of each of their cases, whether or not there is funding for future medicals and if so, a need to protect the Trust Funds.” “They must decide whether or not there is funding for future medicals. If the answer for plaintiffs counsel is yes, they should to [sic] see to it that those funds are used to pay for otherwise Medicare covered services related to what is claimed/released in the settlement judgment award.”

So what does this all mean? It means what I have been saying for quite some time. CMS believes that the obligation to protect Medicare’s future interests is the same in Workers’ Compensation cases as it is in liability settlements. This is despite the fact that no formal guidance exists for liability Medicare set asides and CMS routinely refuses to review/ approve them either. Nevertheless, counsel is supposed to make sure that funds recovered for future Medicare covered services related to the injury be spent on that care before Medicare ever pays a dime. The question for attorneys representing a Medicare beneficiary is what do I do to comply with what CMS expects? The answer is, in my opinion; educate the client on the risks of failing to set aside the money for future Medicare covered services. Mandatory insurer reporting of settlements with Medicare beneficiaries commences on 1/1/12 with reporting going back to settlements occurring on 10/1/11. Medicare will know every facet of a settlement with a Medicare beneficiary once the reporting goes into effect as the ICD9 codes for all of the care will be reported to Medicare along with a massive amount of information about the claim that is being settled. This will give Medicare the ability to flag a Medicare beneficiary’s number and refuse to pay for Medicare covered services related to the injury. Accordingly, the Medicare eligible injury victim must understand that this risk is present when they settle their case. Your closing statement should be amended to address this issue, you should consider using a waiver if the client refuses and you should develop a comprehensive CYA letter to address these issues with a client when a settlement is reached.

While what I have laid out above is great in theory, the problem is that defendants are routinely including “kitchen sink” language in their releases to address Medicare. This language frequently shifts the burden of creating a Medicare set aside to the injury victim and counsel or identifies an arbitrary amount to be set aside. The latter practice is dangerous because those releases typically have the injury victim acknowledge a responsibility to set funds aside while picking an arbitrary (usually small) amount to be set aside. This is simply bad practice and exposes the injury victim as well as plaintiff counsel since if CMS ever refused to pay for Medicare covered services related to the injury there would be no way to justify the amount of the set aside. A better practice is to actually do an MSA analysis, which may or may not include getting a formal MSA allocation done. There are certain instances where an MSA may be unnecessary based upon factors present in the case such as a private primary health insurance policy, Workers’ Compensation coverage for future medical or where there is no future Medicare covered expenses related to the injury. These should be identified and the release language specifically tailored to that exception but with an indication that Medicare’s future interests where considered with nothing needing be set aside. If the case requires the full-blown MSA analysis, it should be done and the cost of doing so passed along as a client cost. Most MSA allocations reports cost approximately $2,000 – $3,000, which is a small price to pay for proper analysis of the client’s exposure.

While I applaud Sally Stalcup’s efforts to clarify things with respect to liability Medicare set asides, application of what she suggests is a little more difficult in the real world. What happens with the $25,000 policy limits settlement where future Medicare covered services are $200,000? How do you deal with that situation? There are ways in my opinion to deal with this situation using a reasonable reduction formula, but CMS does not recognize any type of reduction formula. How do you deal with a defendant that does not understand the responsibilities under the MSP and confuses issues of Medicare conditional payment reimbursement and Medicare set-asides? CMS does not offer formal guidance or approvals on these issues so how do you deal with defense counsel or the insurer’s insistence upon unnecessary language or set asides? As I have written before, we need definitive law, an appellate procedure and protections of all parties’ rights in the MSP process. While change appears to be coming in the reform of the MSP in relation to Medicare conditional payments, that isn’t the case for Medicare set asides. Hopefully at some point in the near future, someone will take up the matter with Congress so legislation can be introduced. Until then, we have to deal with this the best way we can.

To review the memo click HERE

Medicare’s “New” Demand Letters: How Have They Changed?

By Jason D. Lazarus, J.D., LL.M., MSCC, CSSC

On May 25^th, the MSPRC temporarily suspended issuing demand letters. The suspension was apparently due to the Haro v. Sebelius decision from Arizona wherein Medicare was enjoined from certain collection practices. What ensued was a review and changes to its Rights and Responsibilities letters as well as its demand letters. On June 27^th, Medicare resumed issuing demand letters and posted samples of the new letters on its website. The new letter contains a few notable changes.

The first notable change is the addition of language relating to Medicare recovery actions while an appeal or waiver request is pending. The letter indicates that Medicare will not begin a recovery action when an appeal or waiver is pending. This is in conformity with the Haro decision.
Second, there is language that has been added regarding avoidance of the assessment of interest. According to the letter, if a waiver or appeal is requested/filed then the responsible party may choose to repay Medicare the full amount or the amount it believes Medicare is owed within 60 days to avoid any interest. The letter does warn that “interest accrues on any unpaid balance, which may include any amount you are determined to owe once a decision is reached on your request for waiver of recovery or appeal.” Therefore if it is desired to avoid any interest at all, the full amount should be paid while the appeal/waiver request is pending. The letter does state that “if you receive a waiver of recovery or if you are successful in appealing our decision, Medicare will refund any excess amounts you have paid.” Again, this conforms with Haro.
Third and last, is the addition of a notice provision procedure prior to a recovery action being instituted by Treasury. The letter states that if “Medicare intends to take collection action (including referral to Treasury), you will be provided with appropriate notice.” “This notice will include information concerning appropriate steps to avoid such actions.”

The changes are subtle but are nevertheless important. The process of resolving Medicare conditional payments is timely and isn’t cost effective for most personal injury firms. Synergy can help resolve Medicare conditional payments freeing up valuable times and resources to litigate/settle cases. Contact us today to see how we can help with lien resolution.

To view the new sample demand letter click HERE

To see other information on Medicare condtional payment recovery issues, visit the MSPRC’s website by clicking HERE

Hancock v. Share: Can you create a Structured Settlement for a Minor which pays out Past Age of Majority? Of course you can!

By Jason D. Lazarus, J.D., LL.M., MSCC

Traci Hancock, as mother and natural guardian of Marisa Hancock appealed an order entered by Judge Smith approving, in part, a proposed settlement agreement. The grounds of the appeal was that the trial court erred in refusing to approve a structured settlement that paid out past age of majority. The 5^th DCA in Florida reversed the Judge’s decision.

In Hancock, Traci Hancock was appointed guardian over the property of an injured minor, Marisa Hancock. The property of the guardianship was proceeds from a personal injury lawsuit. Traci Hancock as guardian filed a petition seeking approval of a settlement agreement on behalf of the minor. The proposed settlement agreement provided for payment to Traci Hancock for services as guardian, to Marisa’s counsel for their services in the personal injury lawsuit and the guardian ship proceedings and to Marisa for her tort damages. The petition stated that it was in Marisa’s best interest that the lawsuit be settled and that Marisa’s proceeds would be used to purchase “annuity for the benefit of the minor child.” The proposed structured settlement annuity paid out over a 27 year period.

At the hearing to approve, Judge Smith asked counsel for Marisa whether she would be able to “get her cash out of the annuity when she turns 18” and counsel replied no. Judge Smith entered an order approving the settlement of the lawsuit but refusing to authorize the purchase of a structured settlement annuity. The court’s grounds for denying the structured settlement were that the “Guardian of the property has no authority to bind the assets of the ward beyond the age of majority pursuant to Florida Statute 744.441(19).” Traci Hancock alleged that Judge Smith “erred, as a matter of law, in denying her request to approve the structured port of the settlement agreement.” The 5^th DCA agreed.

In its decision, the 5^th DCA found that Judge Smith erred in his conclusion that 744.361(6)(c) required the court to ensure that upon reaching age 18 the ward’s proceeds of her lawsuit would be available to her. The 5^th DCA also found error with Judge Smith’s reliance upon Guardianship of Bernstein v. Miller. Bernstein involved the creation of irrevocable trusts that didn’t pay out until age 30 for two minor children to manage inheritance from their deceased father. The 4^th DCA struck down the trial court’s creation of the irrevocable trusts because it violated section 744.441(19) of the Florida Statutes which authorizes the creation of irrevocable trusts which extend beyond the disability of the ward only if the trust is created in connection with tax planning. The 5^th DCA in Hancock indicated that since this matter didn’t involve any trust documents, the limitation set forth in 744.441(19) wasn’t an issue.

The 5^th DCA found that a trial court is authorized to approve a proposed annuity contract under 744.441(21) provided there is a finding that it is “appropriate for, and in the best interest of, the ward.” In the instant case, all of the parties and even Judge Smith agreed that the proposed annuity contract was in Marisa’s best interest. Accordingly, the 5^th DCA held it was error by the court to refuse to approve the structured settlement. While this has always been the common practice, court’s approving structured settlements for minors where the money was paid out post age of majority, some court’s questioned whether there was a legal basis to do so. Judge Smith in Volusia count was one of those judges and now the 5^th DCA has answered the question and put it to bed.

To view the opinion click HERE

What to Look For When Hiring a Medicare Compliance (MSA) Vendor

By B. Joshua Pettingill & Jason D. Lazarus

The hiring of a Medicare Set Aside (“MSA”) allocation vendor is an important decision when settling a worker’s compensation or liability matter. The future medical costs included in the allocation report can make or break a case. If the MSA allocation is too high, it may hurt the chances of settling the case. If the allocation is too low due to improper calculation of the future medical care covered by Medicare, CMS is not going to approve the MSA. Failure to obtain CMS approval of an allocation can cause a contingent settlement to disintegrate.

Hiring the right MSA vendor is critical to successful conclusion of a case involving a Medicare beneficiary where an MSA will be implemented. Here are ten questions to help guide your decision making process when searching for a MSP compliance partner:

Does the MSA allocation vendor do work for plaintiffs or insurance companies?
Are the vendor’s owners & employees certified Medicare set aside consultants (MSCC)?
What other qualifications and designations do their allocators have?
Does the vendor have proper E & O coverage?
Has vendor ever been sued as a result of the work performed?
Does the vendor more than one person who reviews the MSA before the final report is completed?
Does the vendor handle liability claims differently than worker’s compensation claims?
What is their average turnaround time to hear back from CMS?
What calculations are included in the analysis?
Can they provide a funding analysis of the MSA using a structured settlement?

You should be very leery of vendors who make outrageous claims such as, “guaranteed acceptance by CMS”. There are MSA vendors who continue to market using these false claims. The problem with this practice is the MSA allocation amount may be overly inflated so CMS will approve it automatically. This can cost the insurance carrier more in terms of settlement dollars. More importantly, an overinflated MSA allocation amount will result in less upfront cash for the plaintiff.

You should also avoid MSA vendors who advertise “lowest defensible allocations”. When a MSA is prepared, there is a very strict methodology that must be employed to comply with CMS guidelines. If the MSA is being submitted to CMS for approval, the Medicare contractor evaluating the allocation is going to review all of the accompanying documentation for both medical treatment and prescriptions. If the allocation amount is too low, they are going to flag the report and revise the amount upward. Once that happens, you are at the mercy of CMS. There is no formal appeal process if CMS comes back with a significantly higher number in place of the artificially low number submitted by an MSA vendor.

A properly calculated MSA allocation should have a rational basis in the medical records and bills attributable to the injury related care prior to settlement. It is imperative to hire a firm who has the experience, knowledge and ability to guide you through all of the pre-settlement, settlement and post-settlement issues that may arise with Medicare Secondary Payer compliance. More importantly, the right experts can insure you and your client are fully protected so you do not have to worry about unforeseen litigation after the claim has been resolved.

To learn more about how Synergy can help with Medicare Secondary Payer compliance and Medicare Set Asides, click HERE.