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.
Jason D. Lazarus, J.D., LL.M., MSCC, CSSC
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July 8, 2021
Rasa Fumagalli JD, MSCC, CMSP-F
Most attorneys are well aware of the need to resolve Medicare’s conditional payments in connection with a client’s settlement. This obligation stems from the Medicare Secondary Payer (MSP) Act, 42 U.S.C. § 1395y(b)(2)(A)(ii), which 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.” 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 reporting requirement puts Medicare on notice of the settlement.
Once Medicare is notified of the settlement, a final conditional payment sweep will be completed, and a conditional payment demand will be issued. This demand will only address payments that were made under traditional Medicare Parts A and B. If the Plaintiff was enrolled in a Medicare Advantage Plan, conditional payment information must be requested directly from the plan. This step should not be overlooked since Medicare Advantage Plans have the same recovery rights under the MSP Act as traditional Medicare.
The MSP Act and supporting regulations set out limits on the conditional payment amounts that must be reimbursed to Medicare. If Medicare does not have to take legal action to recover, Medicare is only able to recover the lesser of either “the amount of the Medicare primary payment” or “the full primary payment amount that the primary payer is obligated to pay without regard to any payment, other than a full primary payment that the primary payer has paid or will make, or in the case of a primary payment beneficiary, the amount of the primary payment.” 42 C.F.R. 411.24(c)(1). Section 411.37(d) of the regulations provides: “If Medicare payments equal or exceed the judgment or settlement amount, the recovery amount is the total judgment or settlement payment minus the total procurement costs.” If no procurement costs or attorney’s fees are reflected on the final settlement detail documentation provided to Medicare at the time of settlement, Medicare will not reduce the amount of their conditional payment demand. Attorneys should be aware of this should they seek to reduce or waive their fees.
Addressing Conditional Payments in Liability Cases
As a starting point, it is very important to understand that if the Final Demand is not paid timely, interest begins to accrue regardless of appeals or requests to reduce the amount owed to Medicare. There is no tolling of the interest meter while you dispute the amount due. Therefore, it is prudent to make sure that the conditional payment Final Demand is paid timely regardless of how you attempt to reduce the amount owed to Medicare.
The most common method of disputing conditional payments involves a request to remove unrelated charges from the conditional payment demand. The unrelated charges may appear on Medicare’s Payment Summary Form due to a “grouper” error within Medicare’s data collection system. They may also come from comingled billing from the service providers. In cases where the conditional payments are related to the injuries that are being settled, the Plaintiff may end up with very little of a net recovery.
There are two additional conditional payment calculation methods that may be available in certain liability cases. Both the “Self-Calculated Conditional Payment Amount” process and the “Fixed Percentage Option” have specific conditions that must be met before they may be used. The “Self-Calculated Conditional Payment Amount” process is available under the following circumstances: the claim involves an injury caused by physical trauma; the medical treatment was completed at least 90 days before and no further treatment is expected; the total settlement/judgment/award or other payment must be less than $25,000; and the date of the incident must have occurred more than six months prior to the submission of the self-calculated final conditional payment amount. Although the use of this process requires the plaintiff to give up the right to appeal the debt, the plaintiff retains the right to request a waiver of recovery.
The “Fixed Percentage Option” is available for smaller liability settlements. In order to be eligible for this, the following conditions must be met: the liability settlement/judgment/award or other payment must be related to a physical trauma; the total settlement must equal or be less than $5,000; the election of the option must be made within Medicare’s timeframe and prior to the issuance of any conditional payment reimbursement request from Medicare; and there are no other pending settlements, judgments, awards or other payments related to the incident. Additional details regarding the exact processes for both the “Self-Calculated Conditional Payment Amount” and “Fixed Percentage Option” methodologies may be found at the Benefits Coordination and Recovery Center website.
Other options to consider involve payment of the final demand in order to stop the interest on the demand from running (as noted at the start of this section). Once this occurs, the plaintiff may seek a compromise or waiver of the conditional payment debt in order to get Medicare to reduce their conditional payment claim and issue a full or partial refund of the payment. The three statutory provisions that may be used for this are: §1870(c) of the Social Security Act (financial hardship waiver); §1862(b) of the Social Security Act (best interest of the program waiver); and the Federal Claims Collection Act (FCCA) (compromise). The authority to consider beneficiary requests for waivers under §1870(c) of the Act sits with the Benefits Coordination & Recovery Contractor (BCRC), while the authority to waive Medicare claims under §1862(b) and to compromise claims under FCCA, is reserved exclusively to the Center for Medicare and Medicaid Services (CMS). The basis for any waiver request comes from the regulations that provide:
“There shall be no recovery if such recovery would defeat the purposes of this chapter or would be against equity and good conscience.” See 42 U.S.C. § 1395gg(c); 42 C.F.R. 405.355-356; 42 C.F.R. 405.358; 20 C.F.R. 404.506-512; Medicare Secondary Payer Manual, Chapter 7 § 50.
To apply for the “Financial Hardship” waiver, the Medicare beneficiary must file form SSA-632-BK with the BCRC which documents their financial situation. Arguments that may be made in support of this position include showing that the repayment of the conditional payments would deprive the beneficiary of income required for ordinary and necessary living expenses. If someone is dual eligible, meaning they get both Medicaid and Medicare, it is great evidence of financial hardship since people who qualify for Medicaid have very little in the way of assets. That being said, even a 7-figure settlement could still be approved for a financial hardship waiver of the amount owed to Medicare.
The “Best Interest of the Program” waiver request under § 1870(b) of the Social Security Act is made to CMS. This rather vague criteria is nowhere further defined and lies completely at the discretion of CMS. Although this request is separate and distinct from a request for a Compromise under the Federal Claims Collection Act (FCCA), it is beneficial to seek both a request for this waiver and a request for a compromise when seeking a refund from CMS of the amounts the beneficiary has already paid to satisfy the “Final Demand.”
The third and final method for obtaining a refund from Medicare is a Compromise request made to CMS. Authority to grant a Compromise is granted to CMS under the Federal Claims Collection Act (FCCA). 31 U.S.C. § 3711. This section allows Federal agencies the authority to compromise where: the cost of collection does not justify the enforced collection of the full amount of the claim; there is an inability to pay within a reasonable time on the part of the individual against whom the claim is made; or the chances of successful litigation are questionable, making it advisable to seek a compromise settlement.” Medicare Secondary Payer Manual, Chapter 7 § 50.
Conclusion
The resolution of conditional payment reimbursement claims is a time-consuming process. To maximize the plaintiff’s net recovery, it is important to be familiar with the various options for calculating, disputing, and seeking a refund of conditional payments. When addressing conditional payment issues, consider the following best practice tips:
- Confirm the type of Medicare coverage your client was enrolled in from the date of the accident to the date of settlement.
- Make sure the Final Demand is paid within the time period specified in the recovery demand letter.
- Determine if the Self-Calculated Conditional Payment Amount is available in the case.
- Determine if the Fixed Percent Option process is available in the case.
- Determine if the final conditional payment demand should be disputed.
- Provide Medicare with the Final Settlement Details to secure a procurement cost reduction.
- Consider whether a full or partial conditional payment refund may be secured in the case.
May 13, 2021
Rasa Fumagalli JD, MSCC, CMSP-F
The conditional payment recovery process in a workers’ compensation claim is not always smooth. Although the workers’ compensation insurance carrier will generally resolve any conditional payments in an accepted claim, the injured employee and counsel may find themselves in receipt of a post-settlement conditional payment notice or demand that identifies the injured employee as owing reimbursement to Medicare. This article will provide an overview of the conditional payment recovery process and identify ways to help you better navigate this process.
The obligation to address conditional payments stems from the Medicare Secondary Payer Act. It 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.” (42 U.S.C.§1395 y(b)2(a)). The exception to this occurs when payment is not reasonably expected to be made “promptly.” In that situation, Medicare can make payment on the condition that the payment is reimbursed to the appropriate Medicare Trust Fund when the beneficiary receives a settlement, judgment, award, or other payment from a primary plan.
There are two separate conditional payment recovery contractors involved in a workers’ compensation case: Commercial Repayment Center (CRC) and the Benefits Coordination & Recovery Center (BCRC). The CRC is involved in recovery when the debtor is the workers’ compensation plan, while the BCRC is involved when the debtor is the Medicare beneficiary. Both the CRC and the BCRC are only involved in conditional payment recovery when the injured employee is enrolled in the traditional “fee for service” Medicare Parts A and B plans. When an injured employee is enrolled in a Medicare Advantage Plan (Part C) or Prescription Drug Plan (Part D), conditional payment information must be secured from the plan; it will not be provided by the CRC or the BCRC. Since Medicare Part C and D Plans also use the MSP Act as their recovery vehicle, these reimbursement claims should not be overlooked. Part C plans have become very aggressive in their recovery efforts and are successfully using the double damages provision of the Medicare Secondary Payer Act to pursue law firms so it is very important to address these claims as well as conditional payments.
The conditional payment process in a workers’ compensation claim involving a Medicare beneficiary generally begins with the workers’ compensation carrier’s Section 111 mandatory insurer reporting. If the case is accepted, the carrier’s Responsible Reporting Entity (RRE) will report an Ongoing Responsibility for Medical (ORM) for the accepted diagnosis codes to Medicare. This report will result in the CRC initiating a conditional payment search to look for payments made in connection with the reported injuries. If the CRC identifies conditional payments, it will seek recovery from the workers’ compensation plan as the debtor. When the claim settles, the RRE must also make a Section 111 Total Payment Obligation to Claimant (TPOC) report to Medicare. It is important to note that the Section 111 reporting is separate and distinct from the beneficiary’s obligation to report a pending workers’ compensation claim to the BCRC.
Once the TPOC report is made, the conditional payment debt is then transferred to the Medicare beneficiary. This moves the recovery claim from the CRC to the BCRC. This transfer occurs even though the case was accepted by the workers’ compensation carrier. The carrier however will not be able to address any outstanding conditional payments identified by the BCRC without having properly executed authorizations from the beneficiary. The beneficiary’s attorney will also need properly executed authorizations to access conditional payment information from the BCRC.
Conditional payment issues may arise during the transfer of the debt from the CRC to the BCRC. Since the CRC may have an internal policy whereby, they do not pursue recovery in debts below a certain dollar amount, the CRC may issue a close-out letter to the workers’ compensation carrier. This closeout however does not mean that the BCRC will not pursue the remaining balance. The practitioner can avoid the surprise of an open BCRC claim by checking the web-based Medicare Secondary Payer Recovery Portal (MSPRP) a few weeks after settlement to ensure that there are no open conditional payment claims with the BCRC. A comprehensive list of claims will be provided if you search the MSPRP using the date of accident rather than the case number, since the BCRC may have multiple claim numbers for it.
Another issue that may come up post settlement involves the BCRC’s inappropriate attempt to demand conditional payments that were already addressed by the CRC and successfully disputed by the workers’ compensation carrier. This issue can best be resolved by working with the carrier to provide the BCRC with the CRC’s favorable appeal determinations.
The above examples serve to highlight some of the post-settlement conditional payment issues that may come up in a settled case. The following tips may help you to address them:
- Secure executed authorizations from the beneficiary before the case closes to address conditional payment issues.
- Check the MSPR portal post-settlement to ensure that there are no open claims with the BCRC post-settlement.
- Work with the defense to address conditional payments with the BCRC when the carrier accepted responsibility for payment in the settlement terms.
- Remind the injured employee to promptly notify you of any correspondence from Medicare.
Synergy’s team of experts is also available to assist in addressing Medicare Secondary Payer compliance issues in your settlements. Our Medicare team of experts can make sure your files are closed compliantly and help avoid some of the unpleasant scenarios described herein.
May 11, 2021
Rasa Fumagalli JD, MSCC, CMSP-F
The interplay between the Medicare Secondary Payer Act (MSPA) and Florida’s medical malpractice statute, Fla. Stat §§ 766.207 and 766.209 was addressed in the recent case of Gordon v. Azar, 2021 U.S. Dist.LEXIS 28314, (S. D. Fla. 2021). The issue came before the Court in the context of the parties’ motions for summary judgment.
The motions stemmed from Plaintiff’s medical malpractice claim against Northwest Medical Center (Northwest) involving his leg amputation on or about March 17, 2014. Plaintiff’s injury-related medical treatment was paid for by Medicare. The Medicare Secondary Payer Recovery Contractor (MSPRC) sent a letter to Plaintiff on December 17, 2014, advising him of Medicare’s right to recover the “conditional payments” made by Medicare from any subsequent “settlement, judgment, award or other payment.” The MSPRC sent a follow-up letter to Plaintiff in January of 2015 advising that Medicare had identified $116,319.72 in conditional payments associated with his claim. The letter also requested a copy of the settlement agreement and the closing statement reflecting the actual amount of attorney’s fees and costs if the case settled.
On April 17, 2015, Northwest offered to enter into a voluntary, binding arbitration on the issue of damages. Plaintiff subsequently settled his medical malpractice claim against Northwest for $1,000,000 without filing suit. He gave the MSPRC notice of the settlement on July 2, 2015, and provided a one-page Final Settlement Detail document. It identified the settlement amount, the attorney’s fees, and procurement costs. Plaintiff also asked Medicare to waive its right to reimbursement arguing that Medicare was the primary payer for the treatment regardless of the malpractice. No other arguments were raised.
The MSPRC did not agree to the waiver request. On July 14, 2015, the MSPRC sent Plaintiff a final conditional payment demand for the sum of $75,701.81 after a reduction in procurement costs. Plaintiff unsuccessfully appealed the denial through Medicare’s administrative review process. At the reconsideration request level, Plaintiff argued for the first time that Northwest’s offer to enter into binding arbitration “extinguished” Plaintiff’s ability to seek medical damages from Northwest as a matter of law. Since the damages could not be claimed in connection with the medical malpractice, Medicare was the primary payer for the services. Plaintiff also argued that the settlement did not include any funds for past medical expenses. The Administrative Law Judge (ALJ) rejected these arguments and the Medicare Appeals Council (Appeals Council) subsequently affirmed the ALJ decision. This final decision of the Secretary of the U.S. Department of Health and Human Services was the subject of the Court’s review.
The Court advised that its review of the Secretary’s final decision was limited to whether the correct legal standards were applied by the Secretary in evaluating Plaintiff’s claim and whether the decision was supported by substantial evidence. 42 U.S.C. § 1395ff(b)(1), incorporating 42 U.S.C. §405 (g); 42 C.F.R. §405.1136(f). In examining the evidence, the Court affirmed the Appeals Council decision, denied Plaintiff’s motion for summary judgment, and granted Defendant’s motion for summary judgment.
The Court noted that Florida’s medical malpractice statutes, Fla. Stat §§ 766.207 and 766.209, allow either party to request that an arbitration panel determine the amount of damages in the claim. Regardless of whether the offer to arbitrate is accepted, collateral sources are offset from the recovery, and damages are capped. The Florida statutes define collateral sources as “any payments made to the claimant, or made on his or her behalf, by or pursuant to (a) The United States Social Security Act; any federal, state, or local income disability act; or any other public programs providing medical expenses, disability payments, or other similar benefits, except as prohibited by federal law.” Fla. Stat §§ 766.202.
The relevant federal law, in this case, is the Medicare Secondary Payer Act (MSPA) that prohibits Medicare from making payment for medical services when payment “has been made or can reasonably be expected to be made” by a “primary plan”. 42 U.S.C.§ 1395y(b)(2)(B)(i); 42 C.F.R.§411.52. If the primary payer is unable to pay the bills promptly, Medicare may make payment for the services. The payments are conditioned upon reimbursement to the appropriate Medicare Trust Fund if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service. “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).
After outlining the relevant statutes, the Court considered Plaintiff’s argument that Northwest’s offer to enter binding arbitration “extinguished” Plaintiff’s ability to seek medical damages from Northwest as a matter of law since collateral sources were offset from the recovery. In describing this argument as convoluted, the Court next considered Defendant’s argument that because conditional payments must be reimbursed to Medicare after Plaintiff receives a settlement or award, they could not be considered “collateral source payments” that Plaintiff was entitled to keep. Conditional payments are unlike private medical insurance benefits that can be retained by Plaintiff.
Since the Florida Supreme Court had not specifically addressed the relationship between the MSPA and Florida’s medical malpractice statutes, the Court looked to the cases that were cited by the defense in support of its position. The Court found the reasoning in Joerg v. State Farm Mut. Auto. Ins. Co. 176 So.3d 1247 (2015) and Pollo Operations, Inc. v. Tripp. 906 So.2d 1101 (FLA.3d DCA 2005) persuasive. These cases had recognized Medicare’s priority of reimbursement from settlements or awards and determined that conditional payments were not a “collateral source” subject to the Florida common law evidentiary collateral source rule. The instant Court also noted that Florida’s medical malpractice statute specifically excluded consideration of collateral source payments that are “prohibited by federal law.” Furthermore, the MSPA regulations provide that “Medicare benefits are secondary to benefits payable by a primary payer even if State law or the primary payer states that its benefits are secondary to Medicare benefits or otherwise limits its payments to Medicare beneficiaries.” 42 U.S.C.§411.32.
The Court next turned to Plaintiff’s argument that the $1,000,000.00 liability settlement did not include funds for medical expenses. Since Plaintiff failed to provide any evidence in support of this position, despite Medicare’s repeated requests for support for this position, the Court found the Appeals Council’s assessment was supported by substantial evidence.
Plaintiff’s argument that Northwest is not a primary plan with a demonstrated responsibility to pay for Medicare-covered services was also rejected by the Court. The parties’ settlement in and of itself established the requirement of a demonstrated responsibility under the MSPA.
In affirming the Appeals’ Council decision, the Court found the Appeals Council decision was supported by substantial evidence and applied the correct legal standards.
Conclusion
The Gordon decision contains numerous references to Plaintiff’s failure to provide Medicare with evidence to support the position that the settlement did not include past medical expenses as a damaged element. Had credible evidence been provided, it is possible that Medicare may have agreed to a waiver of its payments. While it is clear that Medicare’s conditional payment recovery rights are unlike those of other insurance plans, a credible apportionment of damages in a settlement may help limit issues with Medicare post-settlement. Proper framing of arguments by Medicare conditional payment experts like Synergy can increase the likelihood of getting a compromise or waiver granted by Medicare.
April 15, 2021
Rasa Fumagalli JD, MSCC, CMSP-F
Medicare Secondary Payer (MSP) compliance settlement terms utilized by defendants are often overly broad in nature. The recent opinion, Kupolati v. Village of Timber Creek Association, 2021 N.J. Super. Unpub. LEXIS 7 (App. Div. Jan. 5, 2021) and Abate v. Wal-Mart Stores, No. 1:17-cv-288-SPB, 2020 WL 7027481 (W.D. Pa. Nov. 30, 2020) (mem.), highlight the problems that may arise when MSP compliances issues are overlooked or misunderstood during settlement discussions. These cases highlight the need for collaboration between the parties as it relates to Medicare Secondary Payer terms at settlement.
In Kupolati, the Superior Court of New Jersey, the appellate division was asked to review the defendant’s appeal from the trial court’s order that granted Plaintiff’s motion to enforce her settlement agreement with the Village of Timber Creek Association (Association). The Superior Court affirmed the trial court’s order.
The underlying facts of the case show that the plaintiff injured herself when she slipped and fell on a sidewalk near her home. She subsequently agreed to accept the sum of $180,000.00 in exchange for a signed general release that waived any claims against the Association.
The general release that was sent over by the defense included the release of past and any future Medicare conditional payments under the Medicare Secondary Payer Act. Plaintiff’s counsel however objected to the general release since it addressed claims that were “now existing or which may accrue, including any claims asserted or which could have been asserted in any lawsuit, on account of and in any manner arising out of or related to an event …. occurring on or about 3/20/2015 at Village of Timber Creek.”
The defense terms also included a provision requiring the plaintiff’s treating physician to certify that she would not require any additional treatment or monitoring. This request was never discussed during the settlement negotiations.
The plaintiff moved to enforce the settlement without the objectionable provisions while the defendant requested enforcement with the provisions. In granting the plaintiff’s motion, the trial court considered “standard practice” when it comes to general releases. It found that the defendant failed to show that the inclusion of the treating physician’s certification regarding future treatment in the terms of a settlement release was standard practice. Similarly, the defense’s inclusion of a general release of a non-party insurer was not considered to be standard practice.
On appeal, the defendant argued that the trial court should have heard evidence since there was a genuine issue of fact as to the settlement terms, or in the alternative enforced the defendant’s version of the settlement terms. The appellate court noted that the plaintiff met her burden of establishing the agreement to settle the case through her attorney’s certification of his version of the settlement conference. The attorney certified that the parties never discussed the physician’s certification during the conference, nor did they agree to generally release the insurer. Since defense counsel never denied the plaintiff’s version of the settlement conference, the court found that there was no genuine issue of fact that would warrant a hearing.
The court next considered whether the objectionable provisions regarding the general release of the insurer and physician certification were consistent with industry customs. The court noted an agreement may be supplemented with terms common to an industry “if each party knows or has reason to know of the usage and neither party knows nor has reason to know that that the other party has an intention inconsistent with the usage.” Restatement (Second) of Conts. § 221 (Am. Law Inst. 1981) In evaluating this argument, the court determined that the terms were not consistent with industry customs since the defendant failed to present any competent evidence to support this. The court also affirmed the trial court’s interest award.
A review of the Abate opinion shows a similar motion to enforce a settlement agreement, albeit from the defense. In Abate, the plaintiff was offered the sum of $250,000.00 to settle her claim from injuries she sustained from a falling ladder at Wal-Mart. Although the plaintiff signed the settlement release, she claimed that she was never allowed to review the agreement and did not authorize the terms. The Court granted the defendant’s motion after reviewing the evidence in the case.
The facts of the case show that the parties engaged in settlement discussions in October and November of 2019. Settlement documents were executed at the end of November. Subsequently, the Centers for Medicare & Medicaid Services (CMS) issued a final conditional payment demand that Plaintiff’s counsel sent to the defense.
The plaintiff then sent the court an ex parte letter alleging that she had been “bullied” into signing the settlement release. In December of 2019, the court held a conference with the parties to address the plaintiff’s correspondence. During the conference, the plaintiff was represented by a new attorney. Her former counsel testified that the plaintiff had been advised about her net settlement after attorney’s fees and the Medicare lien was deducted. He also testified that he explained the release language to her and his request for a written certification from the treating physician that no further injury related treatment would be required. This was requested so that Medicare’s interest would be taken into account. He further noted that it is “typical for them to do that thing. We’ve encountered that in the past.”
In granting the defendant’s motion to enforce the settlement agreement, the court determined that the plaintiff’s former counsel had the express authority to accept the settlement offer in the case. The settlement terms were also sufficiently definite and supported by adequate consideration. There had also been no showing of fraud, duress or mistake that would support setting the agreement aside.
The court next considered the contract provision that required the plaintiff to “warrant and agree” that she has “satisfied Medicare’s interest” by securing a written certification from her treating physician that was consistent with the CMS Memorandum dated September 30, 2011 (CMS Memo). This report had not been obtained since the plaintiff was still treating. In light of this, the plaintiff argued that the settlement release was unenforceable and missing a “required component.” The court rejected this argument noting that the essence of the agreement was Walmart’s agreement to pay money in exchange for the plaintiff’s agreement to terminate the litigation and release claims. It also reviewed the CMS Memo noting that it did not “require” that a settling Medicare beneficiary obtain a letter certifying the completion of treatment.
Conclusion
Medicare Secondary Payer compliance obligations impact both parties to a settlement. Failing to address these issues before crafting a release can lead to the parties fighting in court over the inclusion of Medicare-related settlement terms. Although settlement terms are usually drafted by the defense, the MSP terms may consist of numerous boilerplate provisions that have no bearing on the actual settlement, and inclusion of them could be problematic for the Medicare beneficiary. Careful attention should be paid to the following key MSP compliance areas when it comes to the settlement documents:
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- Get an agreement on what ICD codes will be reported pursuant to Section 111 Mandatory Insurer Reporting. Section 111 Total Payment Obligation to Claimant (TPOC) reporting will identify the diagnosis codes that are being released in connection with the settlement. A discussion and agreement between the parties as to the correct accident date(s) and diagnosis codes will prevent any post-settlement MSP compliance issues.
Practice Tip: Get an agreement in writing regarding what codes will be reported by the defendant to make sure that unrelated care or non-compensated injury claims aren’t reported incorrectly.
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- The conditional payment reimbursement obligations in the release should be consistent with the settlement discussions.
Practice Tips: A practitioner should be mindful that interim conditional payment numbers from the Benefits Coordination & Recovery Center may change once the case settles and it is reported with the final settlement detail as well as when the defense completes the Section 111 Mandatory Insurer Reporting in the claim. In addition, a practitioner should proactively identify any Medicare Advantage Plans that may have made injury-related payments in order to avoid any unexpected post settlement recovery claims.
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- Settlement terms that address future injury-related treatment should be consistent with the settlement discussions.
Practice Tips: A unilateral requirement in the settlement terms that the plaintiff obtains a written certification from a treating physician that the plaintiff has completed his treatment and does not require any more treatment is inappropriate. A better course of action is to have a discussion of the MSP Act and its potential impact on a settlement with the plaintiff prior to the settlement conference. This would allow the plaintiff to determine what course of action, if any, they prefer to take while understanding the risks/benefits of each approach.
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- Watch for settlement terms that do not apply, such as a requirement that CMS review a Liability Medicare Set-Aside. Similarly, a settlement with an estate for a wrongful death action should never have any boilerplate language regarding future medicals.
A proactive approach to MSP compliance will result in smoother settlements every time. Collaboration with the other side when it comes to Medicare compliance settlement terms will save a lot of time and potentially prevent any arguments about the enforceability of the settlement. Here, “an ounce of prevention is worth a pound of cure.”
February 23, 2021
Rasa Fumagalli, JD, MSCC, CMSP-F
The Centers for Medicare & Medicaid Services (CMS) agency has made significant improvements over the years in their online self-service tools for Medicare beneficiaries, their representatives, insurers, and recovery agents. Beneficiaries may obtain detailed information regarding their claims by registering on the MyMedicare.gov website. If the beneficiary has a third-party claim, he or she can access the Medicare Secondary Payer conditional payment information from their MyMedicare page or by entering the Medicare Secondary Payer Recovery Portal (MSPRP). Click here to see the MSPRP User Guide.
Today, the MSPRP allows beneficiaries and their representatives to self-report claims, upload Proof of Representation and Consent to Release forms, obtain conditional payment information and submit disputes to CMS. The MSPRP also allows the beneficiary or his representative to make an electronic payment of the conditional payment demand through Pay.gov, a secure government-wide collection portal. With the current delays that the USPS is experiencing, this is a useful alternative. Additional details regarding the process may be obtained here: https://go.cms.gov/2ZICL2N
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