MEDICARE COMPLIANCE
Welcome to Synergy’s blog page dedicated to the topic of Medicare compliance. Our team of Medicare experts share their InSights and knowledge on the latest developments and best practices for law firms to stay compliant with the MSP. Stay up-to-date with the latest trends and strategies to ensure that you have the information you need to navigate the complex world of Medicare compliance. Our blogs provide practical tips and advice for ensuring that your clients receive the medical care they need while complying with Medicare’s requirements. Let our experts guide you through the intricacies of Medicare compliance and help you stay on top of the latest developments in this rapidly-evolving field.
January 14, 2021
Rasa Fumagalli, JD, MSCC, CMSP-F
Personal injury settlements involving Medicare beneficiaries will often have conditional payment claims by Medicare and/or Part C plan liens. Since accurate and complete information regarding Medicare’s payments may be unavailable during settlement negotiations, practitioners may find themselves engaged in guesswork. The confusion between Medicare’s interim and final conditional payment figures have also resulted in post-settlement disputes between parties. Lack of information on Part C plan liens also can lead to exposure for double the lien amount. This article will examine the Medicare Secondary Payer (MSP) Act conditional payment obligations/Part C plan liens and provide a roadmap for navigating the recovery process.
Legal Background
The Medicare Secondary Payer (MSP) Act, 42 U.S.C.§1395y(b)(2)(A)(ii) prohibits Medicare from making payment for medical services when “payment has been made or can reasonably be expected to be made under a workers’ compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance.” 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 (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan, or the primary plan’s insured or by other means.” 42 U.S.C.§1395y(b)(2)(B)(ii).
When a primary plan has not made or cannot reasonably be expected to make prompt payment for the service, Medicare may make a payment conditioned upon reimbursement of the payment to the appropriate Medicare Trust Fund. A failure to reimburse the Medicare Trust Fund may result in Medicare filing suit directly for double damages against any or all entities that were responsible for reimbursement of the conditional payments. 42 U.S.C.§1395y(b)(2)(B)(iii); 42 U.S.C.§1395y(b)3. Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) Mandatory Insurer Reporting obligations require the primary plan’s Responsible Reporting Entity to report any liability physical trauma settlement involving a Medicare beneficiary that exceeds $750.00. This “defense” reporting requirement puts Medicare on notice of nearly any settlement involving a Medicare beneficiary.
In a December 5, 2011 Memo, the Centers for Medicare & Medicaid Services (CMS) advised that Medicare Advantage Organizations (MAOs) and Prescription Drug Plans (PDPs) have the same rights of recovery as Medicare under the MSP Act. A detailed discussion of resolution of Part C (Medicare Advantage) liens is beyond the scope of this article but it is very important to make sure that these liens are resolved properly as well since MAOs have become very aggressive with their litigation recovery tactics.
Medicare Coverage Types
Medical payments may be made on behalf of a Medicare beneficiary under a traditional Medicare Part A or B Fee-For-Service plan or under a Medicare Advantage Organization Part C or Part D drug plan. The traditional Part A coverage is the most basic coverage and is limited to a hospitalization benefit. Although it is premium free, there are deductibles and co-payments. Part B coverage provides for expanded services such as outpatient physician visits, diagnostic studies, certain outpatient surgeries and physician-administered drugs. This coverage has a monthly premium associated with it along with co-payments and deductibles. Medicare’s Benefits Coordination and Recovery Center (BCRC) provides information regarding payments made under these plans upon request or through the Medicare Secondary Payer Recovery Portal (MSPRP).
Medicare Part C, or Medicare Advantage plans, are offered by private insurers and provide the same benefits that are offered under Parts A and B as well as additional services such as dental and vision care. These plans have monthly premiums as well as co-payments and deductibles. The plans are paid a fixed amount by Medicare for each Medicare beneficiary enrollee. Medicare Part D plans provide pharmacy prescription drug coverage and are provided by private insurers that are paid by Medicare.
Conditional Payment Recovery Process for traditional Medicare Part A and B
A Medicare beneficiary is responsible for giving Medicare’s Benefits Coordination and Recovery Center (BCRC) notice if he/she is involved in an automobile accident, has a workers’ compensation injury, or takes legal action for a medical claim. This notice is separate and distinct from the Section 111 Mandatory Insurer Reporting Obligation by the defense. The beneficiary may report their claim by calling the BCRC or through the Medicare Secondary Payer Recovery Portal (MSPRP). If a beneficiary has a representative working on his behalf, the BCRC and MSPRP will require the submission of appropriate Proof of Representation and Consent to Release Note documentation. Once the BCRC receives the initial report of the claim, the BCRC will send the beneficiary a Rights and Responsibilities letter that explains the conditional payment recovery process.
The BCRC will then begin to identify payments that were made in connection with the reported injury. These conditional payments are “interim” payments and are subject to change. The first Conditional Payment Letter (CPL) will include a Payment Summary Form and should be sent to the beneficiary within 65 days of the issuance of the Rights and Responsibilities letter.
A final conditional payment figure may be provided to the beneficiary prior to settlement if the final conditional payment process is initiated through the MSPRP within 120 days of the settlement. This process only allows one conditional payment dispute that must be resolved within that 120-day period. A final time and date stamped conditional payment figure will then be provided and may be relied upon as long as the final settlement agreement is reached within three business days of requesting the final conditional payment amount. The settlement documents must be submitted to the BCRC within 30 calendar days of requesting the final conditional payment amount. If these steps are not complied with, the conditional payment figure is not final.
If the beneficiary only reports a settlement, the BCRC will issue a Conditional Payment Notice (CPN). The CPN will also be issued when the BCRC is notified of the settlement through the Section 111 Mandatory Insurer Reporting. The CPN requires a response within 30 calendar days in order for the beneficiary’s attorney’s procurement cost reduction to be allowed. The underlying charges may also be disputed. After 30 calendar days, the CPN will become a demand letter. Once the “final” demand is issued, interest will begin to accrue for each 30-day period the debt remains unpaid. In order to avoid the accrual and assessment of interest, Medicare suggests that the full demand be paid. If an appeal/ waiver request is granted, Medicare will refund the payment.
Medicare Advantage Plan Recovery claims
Although Medicare Advantage Plans are private insurance plans that provide benefits to Medicare beneficiaries, Medicare views these plans as secondary payers under the MSP Act. To date, the BCRC and MSPRP do not provide information regarding payments made by these plans. Information regarding their payments must be secured from the plans themselves. Unfortunately, the plan information is not always readily available to the practitioners since a beneficiary may not be the best source of information when it comes to the identification of plans. This may be especially true when there is a significant delay between the injury date and the settlement. The BCRC’s inability to provide this plan enrollment may hamper a beneficiary’s ability to address the reimbursement interest of a Medicare Advantage plan.
The Provide Accurate Information Directly Act (PAID) legislation was proposed to remedy this issue. It was added into H.R. 900 “Further Continuing Appropriations Act, 2021 and Other Extensions Act” and signed into law on December 11, 2020. The language requires CMS to provide information upon request regarding a beneficiary’s enrollment in a Medicare Advantage Plan or Medicare Part D plan during the preceding three-year period. The ability to access this information will help practitioners identify reimbursement claims that are associated with their settlements. In the meantime, payments under a Medicare Advantage Plan may be reflected in billing statements. The beneficiary may also find information regarding their Medicare claims by registering on MyMedicare.gov.
Attorneys should be aware that Medicare Advantage plans can bring a private cause of action as an enforcement action for double the amount of the lien if it isn’t satisfied at settlement. This right is provided for in the Medicare Secondary Payer Act. See 42 C.F.R. §422.108(f). The action can be brought against the personal injury attorney or the defendant insurer. The seminal case on this issue is, for now, Humana v. Western Heritage Ins. Co., from late 2016. Humana sued Western Heritage when the plaintiff didn’t reimburse the plan after resolution of the case. The 11th Circuit ruled that Humana was entitled to maintain a private cause of action for double damages pursuant to 42 U.S.C. § 1395y(b)(3)(A) and was therefore entitled to double the claimed lien amount as a matter of law.
When it comes to Advantage plan liens, there is a good chance you may be unaware that a lien exists without your own research. A good practice is to obtain copies of all government assistance program cards and any health insurance cards to see just what the injury victim is receiving in terms of benefits/insurance coverage. Make sure a thorough investigation is done if the client is a Medicare beneficiary for the existence of Part C/Advantage plan liens. The investigation and inquiry should start upon intake and continue throughout representation with the final check occurring before disbursement of settlement proceeds. Failing to do so may expose you and your firm to personal liability for double damages to a Part C Plan or Medicare itself.
Conclusion
Any personal injury settlement that involves a Medicare beneficiary should address the conditional payments, if any, in the settlement. It is important to understand the difference between interim conditional payment amounts and final conditional payment amounts in order to prevent any unexpected consequences post-settlement. Until the changes in the PAID Act are implemented, a practitioner should also be mindful that Medicare Advantage Plan payment information will not be provided by the BCRC. By mastering the framework of conditional payments, the conundrum of Medicare reimbursement can be unraveled.
Want more? Register for this month’s webinar on Unraveling the Conundrum of Conditional Payments here.
November 12, 2020
By: Rasa Fumagalli, JD, MSCC, CMSP-F
The Centers for Medicare and Medicaid Services (CMS) has been slow in providing detailed guidance in the area of liability settlements that include compensation for future medicals. To date, the guidance consists of the May 2011 CMS Stalcup memo and the September 2011 CMS memo regarding treating physician certifications. Although CMS issued Notice of Proposed Rulemaking regarding Liability Medicare Set-Asides (LMSA) and settlement of future medicals in 2013, it was withdrawn in October of 2014.
In the fall of 2018, the Department of Health and Human Services issued an initial notification of proposed rulemaking related to the Medicare Secondary Payer Act. The most recent abstract of the proposed rule states:
“This proposed rule would clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items, services related to liability insurance (including self-insurance), no-fault insurance, and worker’s compensation settlements, judgments, awards, or other payments. Specifically, this rule would clarify that an individual or Medicare beneficiary must satisfy Medicare’s interest with respect to future medical items and services related to such settlements, judgments, awards, or other payments. This proposed rule would also remove obsolete regulation.”
Since the initial notification in the fall of 2018, the target date for the notice of proposed rulemaking has been continuously postponed. The most recent target date of August 2020 has now come and gone. In light of this, it is unlikely that the notice of proposed rulemaking will occur in 2020.
The absence of formal regulation by CMS does not mean that the MSP Act does not apply to liability settlements that close out future medicals. The MSP Act clearly prohibits Medicare from making payment when “payment has been made or can reasonably be expected to be made under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance.”[1] The exception to this occurs when payment is not reasonably expected to be made “promptly” or within 120 days of receipt of the claim by the primary payer. If Medicare makes payment in this situation, the payment is conditioned upon the reimbursement of the payment to the Medicare Trust Fund. A primary payer’s reimbursement obligation to Medicare may be demonstrated by: “a judgment, a payment conditioned upon the recipient’s compromise, waiver or release (whether or not there is a determination or admission of liability) of payment for items included in a claim against the primary payer or by other means.”[2]
The above provisions may impact a plaintiff’s settlement in the following way. If the plaintiff, a Medicare beneficiary, accepts a settlement that provides funds intended to compensate the plaintiff for future medicals, this is a payment that has been made under a liability plan. Should the plaintiff require future injury-related, Medicare-covered treatment, Medicare is prohibited from making payment for these services. Should an inadvertent payment be made, the Medicare Trust Fund would expect reimbursement. Medicare will be aware of the settlement due to the Section 111 mandatory insurer reporting requirement for any physical trauma liability settlement over $750.00. The Section 111 Total Payment Obligation to Claimant (TPOC) report must also include the injury-related diagnosis codes, since the codes are added to the plaintiff beneficiary’s Medicare Common Working File. This data is used to prevent Medicare from making payments when Medicare is the secondary payer.
The MSP Act and the language used in the abstract of the proposed rule regarding “existing” MSP obligations should be considered by plaintiffs’ attorneys that are handling liability claims for Medicare beneficiaries. If the settlement funds future medicals, then a decision to apportion some of the settlement funds as an LMSA may prevent your client from experiencing future issues with Medicare. A settlement that does not fund future medicals should include an analysis that provides support for the position so that Medicare does not have an interest in the settlement when it comes to future medicals. Although additional guidance by CMS when it comes to LMSAs is pending, we should be careful what we wish for.
[1] 42 U.S.C. § 1395y(b)(2)(a).
[2] 42 C.F.R. § 411.22.
July 9, 2020
By Jason D. Lazarus
Medicare Secondary Payer Compliance for law firms when it comes to “futures” is all about risk mitigation. How do you properly and compliantly close a file when you represent a Medicare beneficiary? The biggest risk a trial lawyer faces when dealing with settlements for a Medicare beneficiary is the denial of future care as a result of Mandatory Insurer Reporting (MIR). If a client does not understand that risk and has a problem with Medicare paying for future injury-related care, then the law firm is exposed to malpractice risks. So how do you protect your law firm and make sure your client can make an informed decision about Medicare compliance issues? The answer is to educate yourself and the client by turning to an expert Medicare compliance partner.
Medicare Futures: The Problem & Risk
Today, there is a very real threat of Medicare denying future injury-related care after the personal injury case is resolved. This can be very easily triggered by the MIR and reporting of injury-related ICD codes which happens automatically now with any settlement of one thousand dollars or greater. Once a denial of care is triggered, a Medicare beneficiary has to go through the four levels of internal Medicare appeals plus a federal district court before ever getting the denial of care addressed by a federal appeals court. This is why it must be of primary concern for the personal injury practitioner to address these issues, particularly in catastrophic injury cases where denial of care could be devastating to the injury victim’s medical quality of life.
Consider this scenario: You represent a current Medicare beneficiary in a third-party liability case. As part of the workup of the case, you determine the client will need future medical care related to the injuries suffered. This could be determined by either deposing the treating physician or by the creation of a life care plan for litigation purposes. Ultimately, you settle the case. Since the client is a Medicare beneficiary, the defendant will report the settlement under the Mandatory Insurer Reporting law as it is greater than $750.00 in gross settlement proceeds. The defendant puts some language into the release about a Medicare Set-Aside being the injury victim’s responsibility and that they can’t shift the burden. Everyone signs the release and settlement dollars are paid. The file is closed, then forgotten. What happens though if that course of action triggers a denial of future care by Medicare?
Unfortunately, there is no cookie-cutter answer for what to do about Medicare compliance. It is a case-by-case analysis. In some instances, there may be an argument that future medicals aren’t funded at all by the settlement. In other cases, there might be an argument that a reduced amount of future medicals should be set aside to satisfy obligations under the MSP because the case settled for less than full value. There are just too many possibilities to give a simple one size fits all answer. However, what is clear is that doing nothing has its risks. For example, the client who received the denial of care likely will face a lengthy appeal process within Medicare that must be exhausted before having the issue addressed by a federal district court. In that scenario, the client is going to have to decide between paying out of their own pocket for future care or waiting for the care until exhausting all appeals in anticipation of prevailing over Medicare.
While the problem created for the client is a serious one if they are denied care, an equally scary proposition for the trial lawyer is their exposure for malpractice claims in this scenario. Let’s assume that the injury victim who got this denial letter was not properly advised of the risks of failing to set aside money. Would the trial lawyer potentially face a suit for legal malpractice? The answer is most likely they would. There could be all sorts of arguments made about whether they fell below the standard of care, but in the end, this is a known issue and one that is of the law. Worse yet, a trial lawyer and his/her firm could have Medicare breathing down their necks. While we haven’t seen any instances of Medicare pursuing a law firm over failing to set up a Medicare Set-Aside, as discussed earlier, there are recent examples of law firms being pursued by the Department Of Justice (DOJ) related to other aspects of the MSP and failing to have a process internally to ensure compliance with the MSP.
How to be Compliant
If you represent a Medicare beneficiary, you must determine if future medicals have been funded and, if so, advise the client regarding the legal implications of the MSP related to futures. The easiest way to remember the process once you have identified someone as a Medicare beneficiary or someone with the reasonable expectation is by the acronym “CAD”. The “C” stands for consult with competent experts who can help deal with these complicated issues. The “A” stands for advise/educate the client about the MSP implications related to future medical. The “D” stands for document what you did in relation to the MSP. If the client decides that they don’t want an MSA or to set aside anything, a choice they may make, then document the education they received about the issue with them signing an acknowledgment. If they elect to do an MSA analysis, hire a company to do the analysis so that they can help you document your file properly and close it compliantly.
In addition, release language is critical when it comes to the question of documentation of considering Medicare’s future interests. Release language I have seen prepared by defendant/insurers is typically overbearing. Frequently the language cites regulations that are related to workers’ compensation settlements and typically will specifically identify a figure to be set aside. The latter can potentially cause a loss of itemized deductions for the client. Not only is release language an important consideration, so is the method of calculation of the set-aside, potential reduction methodologies, and funding alternatives (lump sum vs. annuity funding). These issues do impact how the release is crafted as well as considerations of whether to submit to CMS for review and approval (which is rarely a good idea). Submission of a liability set aside isn’t required and a settlement should never be made contingent upon CMS review and approval. Some regional offices will not review a liability set aside whiles others will. Since review/approval is voluntary, I typically don’t recommend submission given the lack of appeal process should CMS come back with an unfavorable decision. Furthermore, making a settlement contingent upon CMS review/approval could create an impossible contingency if the settlement is in a jurisdiction where the regional office will not review.
The key to compliance is to start early and not let the defendant-insurer control the Medicare compliance process. At the outset of your case you have to confirm disability eligibility with Social Security and get copies of all insurance as well as government assistance cards. Make sure you understand who is potentially Medicare eligible such as those who are on SSDI, those turning 65, someone with end-stage renal disease (ESRD), Lou Gehrig’s disease (ALS), or a child disabled before age 22 with a parent drawing Social Security benefits. Collaborate with the other side regarding what is being reported under MIR. Be active in mandating the proper ICD codes to be included in the release.
Medicare beneficiaries must understand the risk of losing their Medicare coverage should they decide to set aside nothing from their personal injury settlement for future Medicare-covered expenses related to the injury. It is about educating the client to make sure they can make an informed decision relative to these issues. Beyond education of the client, the most critical issue becomes how to properly document your file about what was done and why. This part is where the experts come into play. For most practitioners, it is nearly impossible to know all the nuances and issues that arise with the Medicare Secondary Payer Act. From identifying liens, resolving conditional payments, deciding to set money aside, the creation of the allocation to the release language, and the funding/administration of a set-aside, there are issues that can be daunting for even the most well-informed personal injury practitioner. Without proper consultation and guidance, mistakes can lead to unhappy clients or, worse yet, a legal malpractice claim.
The lesson to take away regarding Medicare compliance is to strategically deal with these issues pre-settlement. If a client is a Medicare beneficiary, then make sure you know which ICD codes will be reported under the Mandatory Insurer Reporting law and evaluate with the client the possibility of a set-aside. Discuss with competent experts the proper steps for MSP compliance. Potentially use the set aside as an element of damages to help improve settlement value. Properly word the release if a set aside is being used to make sure the client doesn’t get saddled with inappropriate language or lose itemized deductions.
Synergy’s Medicare Expert Case Evaluation Service: Mitigating the MSP Risk
If you represent a client who is Medicare-eligible and is treating for their injuries, I recommend a Medicare Expert Case Evaluation (MECE) when you resolve the case. As part of the MECE, a Synergy Medicare Compliance expert will consult with your client regarding Medicare future interest protection mechanisms and the risk of doing nothing. After being advised, your client can make an informed decision about what they would like to do, and you can document your file accordingly.
For $1,000.00, the MECE service includes:
- Unlimited client consultation
- Template communications to your client
- Customized acknowledgment form to document your file
- Settlement documentation consultation for MSP compliance
If an MSA allocation report is desired after consultation with the client, the cost of the MECE is applied towards the $2,500 charge for a Medicare Set Aside allocation report.
Conclusion
The whole system is flawed when it comes to Medicare. You take all the risks, you do all the work, you bear all the costs and, after you win, you must address the Medicare Secondary Payer Act. Synergy flips that paradigm on its head and fixes the broken system. Our team will create a comprehensive plan to allow you to close your file compliantly by addressing Medicare’s “future interest,” freeing you up to take on the next battle. You can focus on what you do best and everyone wins.
If you have a client who is Medicare eligible that is going to require future accident-related care, a Medicare Set-Aside should be considered and a MECE completed. There are numerous ways to deal with Medicare Secondary Payer compliance (without a set-aside) to ensure both your firm as well as your clients are protected. It just requires expert analysis with Synergy’s help.
April 29, 2020
United States of America vs. Carrigan & Anderson, PLLC, Stephen P. Carrigan: U.S. Attorney brings suit against personal injury lawyer and his firm over failing to pay back Medicare for conditional payments
By Jason D. Lazarus, J.D., LL.M., MSCC, CSSC
In yet another example of Medicare compliance-related issues, a Houston law firm and its managing partner have been sued by the government for failing to pay back Medicare conditional payments. This is a unique situation though as plaintiff counsel did properly report the settlement to Medicare and attempted to resolve it, albeit through improper channels. In March of 2020, the United States Attorney in Texas filed suit on behalf of the Centers for Medicare and Medicaid Services (CMS) against the firm and the managing partner to recover the unpaid conditional payments plus interest, fees, and costs. While it has become commonplace for the Department of Justice to pursue lawyers and law firms for failing to reimburse Medicare conditional payments in the recent past, those were situations where Medicare’s right to reimbursement were completely ignored. Here that was not the case; instead, the law firm notified CMS’ Benefits Coordination & Recovery Center (BCRC) of the lawsuit and communicated with them about settlement but ultimately the firm disagreed with the final demand amount. Instead of requesting an appeal, the matter was addressed in Texas state court. It is a cautionary tale in terms of following proper procedures if one does decide to challenge the amount owed to Medicare under the Medicare Secondary Payer Act (MSP).
Attorney Stephen P. Carrigan and his firm represented Tomas Tijerina in a personal injury lawsuit related to a car accident in April of 2014. In April of 2016, Mr. Carrigan’s firm notified the BCRC about Tijerina’s accident, his resulting injuries, and lawsuit to recover damages. In March of 2017, Carrigan properly notified BCRC that the personal injury case had been settled for $70,000.00. The next month, in April, BCRC sent out an Initial Determination with a payment summary detailing the $46,244.74 that Medicare was claiming as required reimbursement. That same month, Carrigan filed a motion in Texas state court challenging the amount asserted by Medicare and notified Medicare of the pending action in state court. In July of 2017, Medicare issued its Final Demand letter for $47,343.05 which included the related medical expenses plus statutory accrued interest. In August of 2017, Carrigan sent Medicare an order issued by the state court that reduced Medicare’s Conditional Payments by 90% down to $4,700 along with a check for the $4,700.
That brings us to March of 2020 where the U.S. Attorney, Ryan Patrick, filed suit against Carrigan and his firm in the United States District Court for the Southern District of Texas. Central to the lawsuit is the issue of the Texas state court lacking jurisdiction to adjudicate Medicare’s recovery of conditional payments under federal law. In the complaint, Mr. Patrick pointed to sovereign immunity and the fact that the Texas state court lacked subject matter jurisdiction related to conditional payments made under the MSP. He outlined that proper challenges, disputes, or attempts to reduce/avoid reimbursement due to Medicare for conditional payments must go through the administrative appeal process set out in the Medicare Act and regulations. According to the complaint, only after exhaustion of those administrative remedies can a claim be made to a United States District Court, which has exclusive subject matter jurisdiction to hear claims under the MSP. There is plenty of case law on that point and it is a winning argument. The complaint also laid out the liability for an attorney who fails to reimburse Medicare under 42 U.S.C. § 1395y(b)(2)(B)(ii); 42 C.F.R. § 411.24(g).
It is very likely that the suit by the government will be successful and the attorney will be liable for the full lien amount plus interest, fees, and costs. The fact that the state court had no jurisdiction and based its order on applying Ahlborn, a Medicaid lien decision, to a Medicare conditional payment means there is little likelihood that the federal district court will respect the state court’s ruling. Sovereign immunity and preemption by federal law alone prevents the state court ruling from being given any consideration at all by the federal court. This all could have been avoided by paying the final demand and then seeking a compromise/waiver. By doing so, you avoid the interest meter from continuing to run and eliminate the need to engage in lengthy appeals involving exhaustion of administrative remedies within Medicare. If Medicare grants a compromise or waiver, they issue a refund back to the Medicare beneficiary. There are three viable ways to request a compromise/waiver. The first is via Section 1870(c) of the Social Security Act which is the financial hardship waiver and is evaluated by the BCRC.[1] The second is via section 1862(b) of the Social Security Act which is the “best interest of the program” waiver and is evaluated by CMS itself.[2] The third way is under the Federal Claims Collection Act and the compromise request is evaluated by CMS.[3] If any of these are successfully granted, Medicare will refund the amount that was paid via the final demand or a portion thereof depending on whether it is a full waiver or just a compromise.
The critical takeaway is that an attorney must use the proper channels for challenging conditional payments owed to Medicare. There are multiple considerations before deciding to appeal or seek a compromise/waiver of conditional payments. Certain steps are necessary to resolve a conditional payment which includes audit/verification of the amount after receiving the conditional payment letter and securing a final demand by providing final settlement details to Medicare. Failure to resolve a conditional payment exposes a trial lawyer to personal liability for the amount of the conditional payment and the government does pursue lawyers individually if they fail to reimburse Medicare, so be very careful when it comes to dealing with Medicare as you do not want to become a cautionary tale. You and your firm never want to be in this position or have the possibility of a double damages claim by the government. The key here is to work with competent experts when it comes to Medicare compliance. Synergy specializes in protecting law firms against this sort of precise scenario by being your Medicare compliance expert partner.
To read the opinion, click HERE.
[1] 42 U.S.C. § 1395gg
[2] 42 U.S.C. § 1395y
[3] 31 U.S.C. § 3711
March 2, 2020
The 11th Circuit Court of Appeals weighed in on the question of whether the Medicare statute, which provides a three-year timeline to the government to request repayment, applies to a private entity providing Medicare benefits (Medicare Advantage plans). The Court’s answer is that the claims filing provision does not bar a claim and that the timeline is not a precondition to filing suit.
Basic primer on Medicare. When Medicare pays for accident-related treatment, it is entitled to be paid by the primary payor. Its payment is made as a conditional payment, conditioned on repayment when other funds become available. In the case of an accident, that could be medical payments coverage, bodily injury coverage or an uninsured/underinsured coverage. If Medicare seeks reimbursement and is denied, the United States can sue the primary plan to recover its payment. If the cause of action is successful, Medicare can be awarded double damages.
Section 1395y(b)(2)(B)(iii) contains a three-year statute of limitations that requires the government to sue within three years of the date that Medicare receives notice of a primary payer’s responsibility to pay.
(iii) Action by United States
… An action may not be brought by the United States under this clause with respect to payment owed unless the complaint is filed not later than 3 years after the date of the receipt of notice of a settlement, judgment, award, or other payment made pursuant to paragraph (8) relating to such payment owed.
(vi) Claims-filing period
Notwithstanding any other time limits that may exist for filing a claim under an employer group health plan, the United States may seek to recover conditional payments in accordance with this subparagraph where the request for payment is submitted to the entity required or responsible under this subsection to pay with respect to the item or service (or any portion thereof) under a primary plan within the 3-year period beginning on the date on which the item or service was furnished.
A few sections down lies § 1395y(b)(3)(A), which provides a private cause of action available to Medicare beneficiaries and other private entities if a primary plan fails to provide primary payment or reimbursement. This section does not contain a statute of limitations.
(A) Private cause of action
There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).
This is where the Medicare Advantage plan enters. In 1997, Congress enacted Medicare Part C or “Medicare Advantage” program (also known as MAP, Med A, MA, MAO). These plans are administered by private insurance companies that provide Medicare benefits for fixed fees from the Center for Medicare and Medicaid Services. 42 U.S.C. § 1395w-22(a)(4) states that a Medicare Advantage plan may charge a primary plan when a payment “is made secondary pursuant to section 1395y(b)(2).” This established that Medicare Advantage plans can sue under the MSPA to recover from primary plans if they do not pay. These plans must use the MSPA’s private cause of action versus the government cause of action.
In the MSPA Claims v. Kingsway Amigo, 2020 U.S. App. LEXIS 4554 (February 13, 2020), the Court found that there is nothing within the statutory language or structure to suggest the Medicare Advantage plan must comply with the claims filing provision as a prerequisite to seeking reimbursement. The decision starts with a warning as the second sentence of the opinion acknowledges that the case “turns on a careful examination of the often-convoluted rules governing the federal Medicare program.” The court painstakingly reviews the statutory structure of the Medicare statute even with a little levity; the opinion states “Okay, time for a deep breath and a summary.”
The Court found that the dependent “notwithstanding” clause and the permissive term “may” in the actual text of the MSP claims filing provision means that Medicare Advantage plans are not required to bring suit as a prerequisite in the 3-year period. Specifically stating, “[w]ords in a statute must be interpreted according to their ordinary meaning and “may” cannot, by any rendering, mean “must.” The Court finds that when a statute uses the word “may,” it “implies that what follows is a permissive rule and that it does not create a separate bar that private Medicare Advantage plans must overcome in order to sue.
The importance of this decision can’t be overstated. With no statute of limitations, the private cause of action provisions that MAO’s have been using so aggressively to recover are even more powerful. Insurers are becoming increasingly more fearful of failure to repay MAOs and this can lead to delays in resolution of a settlement when there are potential Medicare conditional payment or advantage plan liens. In addition, personal injury lawyers can be the targets of these types of private causes of action as well which in turn gives trial lawyers another thing to worry about when it comes to lien resolution. Because of these sorts of issues, now more than ever, insurers may want to directly pay MAO liens back directly and demand indemnification.
To avoid these types of scenarios and alleviate concerns, work with Synergy as your partner in bringing to resolution all liens asserted by Medicare Advantage plans, Medicare supplement plans and traditional Medicare outside of litigation. We also offer lien reduction services for many other lien types including ERISA, FEHBA, Military, Disability and Medicaid.
January 17, 2020
By Jason D. Lazarus, J.D., LL.M., MSCC, CSSC
Failure to Pay Equals Personal Liability
The government takes its reimbursement rights seriously and is willing to pursue trial lawyers who ignore Medicare’s interest. On March 18, 2019, the United States Attorney for the District of Maryland announced that a Maryland personal injury law firm had agreed to pay the United States $250,000 to settle allegations that the firm failed to reimburse Medicare for payments made on behalf of its client. As part of the settlement, the firm “also agreed to (1) designate a person at the firm responsible for paying Medicare secondary payer debts; (2) train the designated employee to ensure that the firm pays these debts on a timely basis; and (3) review any outstanding debts with the designated employee at least every six months to ensure compliance.”
This is the second such settlement in last year. Back In June of 2018, the U.S. Department of Justice announced a settlement with a Philadelphia personal injury law firm involving failure to reimburse Medicare. The firm agreed to start a “compliance program” and the DOJ stated that this “settlement agreement should remind personal injury lawyers and others of their obligation to reimburse Medicare for conditional payments after receiving settlement or judgment proceeds for their clients.”
Consequently in today’s complicated regulatory landscape, a comprehensive plan for Medicare compliance has become vitally important to personal injury practices. Lawyers assisting Medicare beneficiaries are personally exposed to damages and malpractice risks daily when they handle or resolve cases for Medicare beneficiaries. A prime example of the risk and personal liability is U.S. v. Harris, a November 2008 opinion.[1] In Harris, a personal injury plaintiff lawyer lost his motion to dismiss against the U.S. Government in a suit involving the failure to satisfy a Medicare subrogation claim. The plaintiff, the United States of America, filed for declaratory judgment and money damages against the personal injury attorney owed to the Centers for Medicare and Medicaid Services by virtue of third party payments made to a Medicare beneficiary.[2] The personal injury attorney had settled a claim for a Medicare beneficiary (James Ritchea) for $25,000.[3] Medicare had made conditional payments in the amount of $22,549.67. After settlement, plaintiff counsel sent Medicare the details of the settlement and Medicare calculated they were owed approximately $10,253.59 out of the $25,000 settlement.[4] Plaintiff counsel failed to pay this amount and the Government filed suit.
A motion to dismiss filed by plaintiff counsel was denied by the United States District Court for the Northern District of West Virginia despite plaintiff counsel’s arguments that he had no personal liability. Plaintiff counsel argued that he could not be held liable individually under 42 U.S.C. 1395y(b)(2) because he forwarded the details of the settlement to the government and thus the settlement funds were distributed to his clients with the government’s knowledge and consent. The court disagreed. The court pointed out that the government may under 42 U.S.C. 1395y(b)(2)(B)(iii) “recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity.” Further, the court pointed to the federal regulations implementing the MSPS which state that CMS has a right of action to recover its payments from any entity including an attorney.[5] Subsequently, the U.S. Government filed a motion for summary judgment against plaintiff counsel. The United States District Court, in March of 2009, granted the motion for summary judgment against plaintiff counsel and held the Government was entitled to a judgment in the amount of $11,367.78 plus interest.[6]
Resolution of the Government’s interests concerning conditional payment obligations is simple in application but time-consuming. The process of reporting the settlement starts with contacting the Benefits Coordination Recovery Contractor (BCRC).[7] This starts prior to settlement so that you can obtain and review a conditional payment letter (CPL).[8] These letters are preliminary and cannot be relied upon to satisfy Medicare’s interest. However, they are necessary to review and audit for removal of unrelated care. Once settlement is achieved, Medicare must be given the details regarding settlement so that they issue a final demand. Once the final demand is issued, Medicare must be paid its final demand amount regardless of whether an appeal, compromise or waiver is sought.[9] Paying the final demand amount within sixty days of issuance is required or interest begins to accrue at over ten percent and ultimately it is referred to the U.S. Treasury for an enforcement action to recover the unpaid amount if not addressed.[10]
Resolution of Conditional Payments – Appeal, Compromise or Waiver
The repayment formula for Medicare is set by the Code of Federal Regulations. 411.37(c) & (d) prescribe a reduction for procurement costs and that is it.[11] The formula does not take into account liability related issues in the case, caps on damages or policy limits. The end result can be that the entire settlement must be used to reimburse Medicare. The only alternatives are to appeal, which requires you to go through four levels of internal Medicare appeals before you ever get to step foot before a federal judge or compromise/waiver. There is plenty of case law requiring exhaustion of the internal Medicare appeals processes which means that Medicare appeals are lengthy as well as an unattractive resolution method.[12] What makes them even more unattractive is the fact that interest continues to accrue during the appeal so long as the final demand amount remains unpaid.
An alternative resolution method is requesting a compromise or waiver post payment of the final demand. By paying Medicare their final demand and requesting compromise/waiver, the interest meter stops running. If Medicare grants a compromise or waiver, they actually issue a refund back to the Medicare beneficiary. There are three viable ways to request a compromise/waiver. The first is via Section 1870(c) of the Social Security Act which is the financial hardship waiver and is evaluated by the BCRC.[13] The second is via section 1862(b) of the Social Security Act which is the “best interest of the program” waiver and is evaluated by CMS itself.[14] The final is under the Federal Claims Collection Act and the compromise request is evaluated by CMS.[15] If any of these are successfully granted, Medicare will refund the amount that was paid via the final demand or a portion thereof depending on whether it is a full waiver or just a compromise.
[1] U.S. v. Harris, No. 5:08CV102, 2009 WL 891931 (N.D. W.Va. Mar. 26, 2009), aff’d 334 Fed. Appx 569 (4th Cir. 2009).
[2] Id. at *1.
[3] Id.
[4] Id.
[5] See 42 C.F.R. 411.24 (g).
[6] U.S. v. Harris, No. 5:08CV102, 2009 WL 891931 at *5.
[7] See https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Attorney-Services/Attorney-Services.html
[8] See https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Attorney-Services/Conditional-Payment-Information/Conditional-Payment-Information.html
[9] Id.
[10] 42 C.F.R. 411.24(m).
[11] 42 C.F.R. 411.37(c) &(d).
[12] A perfect example of this is Alcorn v. Pepples out of the Western District of Kentucky. In Alcorn, the court held that “Alcorn’s claim with respect to the Secretary arises under the Medicare Act because it rests on the repayment obligations set forth under 42 U.S.C. § 1395y. She therefore must exhaust the administrative remedies established under the Medicare Act before this court may exercise subject matter jurisdiction over her claim.” Alcorn v. Pepples, 2011 U.S. Dist. LEXIS 19627 (W.D. Ky. Feb. 25, 2011).
[13] 42 U.S.C. § 1395gg
[14] 42 U.S.C § 1395y
[15] 31 U.S.C. § 3711
BLOGS
READY TO SCHEDULE A CONSULTATION?
The Synergy team will work diligently to ensure your case gets the attention it deserves. Contact one of our legal experts and get a professional review of your case today.
