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.
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
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.
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