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Settlement documents, such as the release, for cases involving Medicare beneficiaries will often contain puzzling boilerplate Medicare Secondary Payer (MSP) compliance terms. At times, you may also see lengthy addendums to the release that appear to have been copied straight from an MSP Act treatise. When reviewing settlement documents, attorneys should focus on some key terms such as those addressing conditional payments and/or Medicare Advantage Organization (MAO) payments, Section 111 Mandatory Insurer Reporting and the avoidance of cost-shifting post-settlement injury-related care to Medicare.  Provisions regarding the plaintiff’s waiver of their right to pursue the private cause of action under 42 U.S.C. § 1395y(b)(3)(A) are also common. This article will discuss each of these issues to help you better decipher the MSP compliance terms you may encounter in a settlement.

Reimbursement of Conditional Payments / Medicare Advantage Plan (MAP) Payments

The conditional payment reimbursement obligation stems from the Medicare Secondary Payer Act and implementing regulations. While the Act generally prohibits Medicare from making payment for services to the extent that payment has been made or can reasonably be expected to be made promptly under any of the following “(i) workers’ compensation; (ii) liability insurance; (iii) no-fault insurance”, an exception is made when payment is not expected to be made promptly or within 120 days of receipt of the claim.[1]  In such cases, Medicare will make payment, but it is conditioned upon the reimbursement of the payment to the Medicare Trust Fund from a settlement, judgment or award.

Primary payers have an obligation to reimburse the Medicare Trust Fund for any payments made on behalf of a Medicare beneficiary. This obligation is demonstrated by a judgment, payment conditioned upon release of liability, or other means, as enumerated in 42 C.F.R. § 411.22. A failure to reimburse the Medicare Trust Fund may result in Medicare filing suit directly for double damages against any or allentities that were responsible for reimbursement of the conditional payments.[2] Entities may include a beneficiary, provider, supplier, physician, attorney, state agency or private insurer that has received a primary payment.[3] The Centers for Medicare & Medicaid Services (CMS) Memo from December 5, 2011, further notes that Medicare Advantage Organizations (MAOs) and Prescription Drug Plans (PDPs) have the same rights of recovery as Medicare under the MSP Act.

A conditional payment settlement provision will generally place the burden of conditional payment and MAO reimbursements on the injured party.  Since a final conditional payment amount is only available after the case is settled (absent the use of the Final Conditional Payment Process), settlement documents that specify an interim conditional payment amount for reimbursement are problematic.  Considering this, it is important that the injured party be advised that the final conditional payment number may differ from the number listed in the terms. When investigating reimbursement amounts, keep in mind that the MAO reimbursement amount must be secured from the recovery contractor that has been retained by the specific plan. CMS’ conditional payment information only addresses payments made under traditional Medicare, Parts A and B. Given the exposure that attorneys face when conditional payments and MAP reimbursement claims are missed, a process should be implemented to ensure that the reimbursements are made in a timely manner and inappropriate reimbursement claims properly disputed.

                                           Section 111 Mandatory Insurer Reporting

Attorneys may question the appropriateness of provisions involving the sharing of information for Section 111 Mandatory Insurer Reporting. Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) was enacted in order to effectively implement the MSP framework.  This enforcement mechanism notifies Medicare of settlements involving Medicare beneficiaries and began in January of 2011. According to CMS, the Section 111 MSP reporting process is designed to ensure Medicare is properly reimbursed for items and services provided to beneficiaries.

Section 111 reporting is the responsibility of a Responsible Reporting Entity (RRE) to Medicare for liability, no-fault, and workers’ compensation plans and insurers. It is not done by the Plaintiff’s attorney. The RRE must report to Medicare if the plan has an Ongoing Responsibility for Medical (ORM) or if the Total Payment Obligation to the Claimant (TPOC) is greater than the threshold of $750.00 for physical trauma cases. Additionally, the RRE must query the Medicare system regularly to identify when a claimant becomes eligible for benefits while the claim is still open.

Under Section 111 reporting requirements, the RRE must provide the injury victim’s first name, last name, date of birth, gender, Medicare Beneficiary Identifier (MBI), and Social Security Number (or the last five digits). Additionally, the RRE must report International Classification of Diseases, Tenth Revision (ICD-10) diagnosis codes for the illnesses/injuries alleged, claimed or released in the Total Payment Obligation to Claimant (TPOC) settlement, judgment, award, or other payment. The TPOC report must also include the date and amount of the settlement. A failure to report under Section 111 reporting may result in civil money penalties being imposed against the RRE.

Given the Section 111 Mandatory Insurer Reporting obligation, it is appropriate for the defense to include a cooperation provision in the settlement terms. Considering the significant role that ICD-10 codes play in the conditional recovery process, parties should be aligned in their selection of codes as well as the accident dates. One way to do this is by adding specific ICD-10 codes to the settlement terms, being careful not to use vague codes or an excessive number of codes.

Post-Settlement Injury Related Care

The MSP Act and supporting regulations specifically state that Medicare is precluded from making payments for services to the extent that payment has been made or can reasonably be expected to be made promptly under any of the following: (i) workers’ compensation; (ii) liability insurance; (iii) no-fault insurance.[4] Given this clear language, workers’ compensation settlements will usually address the post-settlement injury-related care by including the funding of a Workers’ Compensation Medicare Set-Aside (WCMSA) in connection with the settlement. This is appropriate given an employer’s lifetime obligation to pay for the employee’s reasonable, necessary and related medical bills. If CMS’ voluntary review of the WCMSA is available to the parties, the settlement terms may include an agreement to seek review from CMS.

Liability settlements are not the same as workers’ compensation settlements. Although CMS had begun the process of promulgating regulations, the process was aborted. At this time, there is only the language of the MSP Act, and two CMS memos that address liability settlements to provide guidance. Per the May 25, 2011 CMS policy memorandum a/k/a Stalcup memo, “Each (plaintiff) attorney is going to have to decide, based on the specific facts of each of their cases, whether or not there is funding for future medicals and if so, a need to protect the Trust funds.” The second memo is from September 30, 2011 and is known as the Benson memo. It notes that when a treating physician completes a written certification that the injury-related treatment has been completed and no further injury-related care is indicated, Medicare considers its interest, with respect to future medicals for that “settlement” satisfied.  

Absent rules from CMS on liability settlements, the language of the MSP Act and Medicare’s prohibition from making payment in certain situations should be considered. When a liability settlement contains an element of future injury-related treatment, a Medicare beneficiary plaintiff may choose to “set aside” funds from the net settlement for this treatment. This complies with the goal of the MSP Act, which is the preservation of the Medicare Trust Fund. On the other hand, parties may at times just add a settlement provision that indicates there is no intention to cost shift post settlement injury related care to Medicare and that Medicare has no interest in the settlement. The decision of whether to “set aside” funds in a liability settlement is an individual one and depends on the specific facts of the case. When reviewing liability settlement terms that address future injury-related care, watch for contingencies that cannot be met, such as having CMS review a liability MSA.

Private Cause of Action Waiver

It is not unusual to see settlement terms that include the plaintiff’s agreement to waive their right to bring a private cause of action. The private cause of action is related to the obligation to reimburse Medicare for conditional payments and MAO plans for their payments. In order to enforce this obligation, Medicare beneficiaries, and others with standing, may bring an action against a party for double the amount owed to Medicare. This right comes from the MSP Act which states: “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).”[5]

The agreement to waive the private cause of action may not be of consequence when the parties intend to and actually address the conditional payments and MAO payments. The decision of whether or not to agree to this waiver however is up to the plaintiff’s attorney.

Conclusion

Attorneys should focus on key MSP compliance areas when reviewing settlement documents: conditional payments and MAO reimbursements, Section 111 Mandatory Insurer Reporting, and post-settlement injury-related care. Proper understanding and handling of these terms can protect both the firm and the client from future liability. Moreover, MSP compliance experts, such as those at Synergy, can assist in crafting strategies to ensure compliance and mitigate risks. Contact us today.

[1] 42 U.S.C. § 1395y(b)(2)(A)(ii); 42 C.F.R. § 411.20(a)(2).

[2] 42 U.S.C. § 1395y(b)(2)(B)(iii); 42 U.S.C. § 1395y(b)(3).

[3] 42 C.F.R. § 411.24.

[4] 42 U.S.C. § 1395y(b)(2)(A)(ii); 42 C.F.R.§411.20(a)(2)).

[5] U.S.C. § 1395y(b)(3)(A).

By: Rasa Fumagalli, JD, MSCC, CMSP-F | Director of MSP Compliance Services

Let’s talk about something that keeps personal injury attorneys up at night: cash flow. Personal injury firms work hard to win recoveries for clients, but then it’s like a slow drip waiting for those funds to be ready to be disbursed. One of the biggest culprits? Healthcare lien resolution.

These things are a handful. Medicare, Medicare advantage, Medicaid, ERISA plans, hospitals, and private insurance plans – they all want a piece of the pie. And while resolving these liens is crucial to maximize your client’s recovery, it’s also a massive drain of time for your team. Time that could be spent on, you know, actually practicing law.  And most importantly, using your team’s time to resolve more cases for greater value – delivering great client results along with improved efficiency as well as profitability.

Think about it:

• Hours wasted: Your paralegals and lawyers are drowning in to-dos, paperwork, chasing down medical records, and haggling with lienholders.
• Delayed disbursements: While you’re wrestling with liens, your clients are waiting (impatiently) for their money, and your firm’s recognition of revenue is delayed.
• Missed opportunities: That time spent on lien resolution? It’s time you could be spending on increasing the value of existing cases, bringing in new clients and building your business.

The solution? Outsource it.

Look, I get it. We attorneys like to control every aspect of a case. But outsourcing healthcare lien resolution is a game-changer for personal injury law firms. Here’s why:

• Expertise: Specialized lien resolution firms like Synergy have dedicated teams with deep knowledge of subrogation laws and negotiation tactics.  It is all about knowing the inside baseball.  They’ll usually get you better results than you could on your own.
• Efficiency: Companies, like Synergy, have streamlined systems to handle the entire process painlessly and efficiently, freeing up your staff.
• Faster resolution: This means quicker disbursements to your clients, which keeps them happy and boosts your firm’s cash flow velocity.

Bottom line: Outsourcing healthcare liens is a win-win. You get faster resolution, improved efficiency, and happier clients. And let’s face it, wouldn’t you rather be focusing on winning cases than battling with healthcare insurance companies and their subrogation recovery agents over liens?

Written by: Jason D. Lazarus, J.D., LL.M., MSCC | CEO

Resolving liens effectively is critical in protecting your client’s net recovery when settling personal injury cases. Lien identification, verification, and audit are critical steps in ensuring that all potential claims are addressed and safeguarding your client’s net settlement. Here’s how to tackle these crucial processes.

Lien Identification Process

It all stars with the initial case assessment at intake.  Start by gathering detailed information about healthcare providers, insurers, and other potential lienholders, including government programs (Medicare, Medicaid), private health insurance, and workers’ compensation.  Collect and review all medical documentation to identify entities that may assert a lien.

Next, post intake you should obtain copies of health insurance policies and any insurance company correspondence to understand coverage and subrogation claims.  Request itemized statements from healthcare providers to identify potential lien charges.  Use the Medicare Secondary Payer Recovery Portal (MSPRP) and state Medicaid offices to identify any liens being asserted by government benefit programs. Verify potential liens with private insurers using Explanation of Benefits (EOB) statements.  Identify any liens from ERISA plans, FEHBA plans, military healthcare providers, and workers’ compensation carriers.

Lien Verification Process

Start with confirming potential lienholder claims. Contact all potential lienholders to confirm lien existence and amounts.  Obtain formal lien documentation, including detailed billing statements and legal notices.  Match lienholder claims with client medical records to verify accuracy.  Review insurance policy provisions or plan documents to confirm lienholder rights to recovery.

Lien Audit

Once you have completed the verification process, next up is auditing claims made by lienholders.  Best practices are to organize all gathered information into a comprehensive lien spreadsheet or database.  Establish criteria for the audit, such as accuracy of claimed amounts, compliance with legal requirements, relatedness and consistency with the client’s injuries.

In performing the audit, identify discrepancies or unsupported claims.  Ensure all claims adhere to state and federal laws, including notification and filing requirements.  Address any discrepancies with lienholders, providing supporting evidence.

Documentation/Record-Keeping & Client Communication

As part of your resolution process, you should have a policy on maintaining Records.  Keep a detailed lien log and archive all correspondence with lienholders.  Regularly update clients on lien status and any negotiations or disputes.

Conclusion

Implementing effective processes for lien identification, verification, and audit is essential for ensuring good lien resolution practice. A structured approach reduces the risk of future claims, enhances client satisfaction, and protects your firm from potential costly mistakes.

For a more detailed guide on a comprehensive process download our white paper titled “Comprehensive Processes for Managing Lien Resolution:   Identification, Verification, and Audit” by clicking HERE.  If you are ready to work with an expert lien partner, contact Synergy today for a CONSULTATION about outsourcing lien resolution.

Written by: Jason D. Lazarus, J.D., LL.M., MSCC | CEO

The decision to outsource lien resolution is pivotal in a personal injury practice as it can significantly improve both the efficiency of the firm and financial outcome of a client’s case. With varying complexities and regulatory requirements, understanding which healthcare liens benefit from external expertise and which can be managed internally is crucial. Here’s a breakdown to guide your decision-making process:

Liens Suitable for Outsourcing

The following liens may benefit from hiring outside lien resolution experts to resolve them for a variety of reasons:  Medicare conditional payments; Medicare Advantage liens; Medicaid liens, ERISA plan liens; Federal Employee Health Benefits Act (FEHBA) liens; military plan liens, private health and hospital/provider liens.  All of these liens involve complex regulatory schemes or complicated legal issues that make them much more difficult to resolve without the requisite specialized knowledge.  For example, Medicare has specific prescribed timelines and regulatory requirements as well as multiple methods for requesting a compromise or waiver.  Medicaid varies greatly from state to state as it is governed by Medicaid third party liability statutes.  ERISA plans have their own unique set of challenges for trial lawyers.  These nuances for different lien types makes it challenging to resolve without specialized experts who understand all of the complicated issues that come with specific types of liens. 

Liens Typically Not Appropriate for Outsourcing

However, some liens may be better resolved in-house due to their specific characteristics or the nature of the relationship with the lienholder.  The following types of liens are typically better handled in-house:  Small liens of $2,000 or less; local provider liens; worker’s compensation liens; Medicaid estate recovery liens; child support liens and pre-settlement funding liens.  All of these involve either inefficiencies or specific characteristics that don’t make them good candidates for outsourcing.  For example, a local provider a law firm has an ongoing relationship might not benefit from a third-party lien resolution company negotiating with them.  Workers’ compensation liens, Medicaid estate recovery liens, child support liens and pre-settlement funding liens are all governed by state specific laws which are better addressed by those most familiar with that state’s applicable laws. 

Conclusion

Deciding whether to outsource lien resolution involves evaluating the type of lien, its complexity, and your firm’s expertise. By understanding which liens benefit from specialized handling and which can be resolved in-house, you can optimize cost-efficiency and client satisfaction. This strategic approach ensures that lien resolution is handled effectively, whether by leveraging external expertise or utilizing internal resources.

If you would like to read more on this subject click HERE to download our white paper titled “A Guide To Resolution:  Which Liens to Outsource and Those to Keep In-House.  If you are ready to get started with outsourcing today and want to partner with Synergy, contact us TODAY. 

Written by: Jason D. Lazarus, J.D., LL.M., MSCC | CEO

Navigating ERISA liens can be a daunting task, given the complexity of the Employee Retirement Income Security Act (ERISA) and its impact on self-insured health plan reimbursement. Although a comprehensive exploration of ERISA is beyond this blog, understanding some key strategies can help in resolving ERISA liens effectively.

ERISA Overview

Enacted in 1974, ERISA aims to protect employee benefit plan participants by enforcing standards of conduct for plan managers and ensuring plan funds are secure. However, its application in lien resolutions often draws criticism, particularly concerning the practical protection it offers.

ERISA and Health Plans

ERISA governs most employer health plans, with notable exceptions including government and certain religious plans. ERISA health plans generally include subrogation clauses, requiring reimbursement for injury-related expenses paid by the plan. Section 502(a)(3) of ERISA allows these plans to seek equitable relief for enforcement, often through equitable liens or constructive trusts. The law’s intricacies, slightly clarified by the Supreme Court, reveal that the statute in its application is far from straightforward.

Key Supreme Court Rulings

1. Sereboff v. Mid Atlantic Medical Services, Inc. (2006): The Supreme Court confirmed that ERISA plans could enforce reimbursement provisions under equitable principles, affirming the power of self-funded plans to claim recovery via equitable liens.
2. U.S. Airways, Inc. v. McCutchen (2013): The Court reinforced that written ERISA plan terms take precedence over equitable doctrines like “make whole” and “common fund.”

Select Strategies for Lien Reduction

While there are many tactics you can use to possibly reduce an ERISA lien, here are a few key ones to consider: 

1. Determine Plan Funding Status: Identify whether the plan is self-funded or fully insured. Self-funded plans are governed by ERISA and are harder to reduce under Supreme Court precedent, while fully insured plans generally will be subject to state law or common law principles. Review the Summary Plan Description (SPD) and Master Plan to determine funding status.
2. Utilize ERISA Section 1024(b)(4): Request plan documents directly from the plan administrator, not from third-party administrators or recovery contractors. This legal right via the document request helps assess the strength of the plan’s claim and identify potential leverage points, such as challenging the applicability of equitable principles.
3. Examine Plan Language: Look for ambiguities or specific provisions in the plan’s reimbursement clauses. Ambiguities can be used as leverage to reduce the amount owed to the lien holder.
4. Leverage Equitable Doctrines: If the plan language does not explicitly reject doctrines like “make whole” or “common fund,” use these principles to argue for lien reduction. Make arguments based on partial reimbursement or proportional sharing of legal costs.
5. Address Equitable Defenses: Use defenses like unjust enrichment or undue hardship to argue against full reimbursement, where applicable.

Conclusion

Effectively addressing ERISA liens requires a deep understanding of the plan’s funding status, precise examination of plan documents, and strategic application of legal and equitable arguments. The US Supreme Court’s ruling in McCutchen emphasized the importance of plan language, making it crucial to use Section 1024(b)(4) requests to your advantage. By leveraging these strategies, you can begin to navigate ERISA liens more effectively and potentially achieve optimal reductions in a claimed ERISA lien.

Working with specialized lien resolution companies can provide essential expertise and prevent costly mistakes when it comes to ERISA liens.  If you want to find out more, contact us today to Partner with Synergy for lien resolution. 

Written by: Jason D. Lazarus, J.D., LL.M., MSCC | CEO