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Limitations on Hospital/Provider Liens When the Plaintiff is on Medicare

One of the most difficult issues trial counsel must resolve involves addressing hospitals/providers liens for Medicare clients.   Recently the Centers for Medicare and Medicaid Services (CMS), via the Medicare Learning Network (MLN), released policy memo SE17018 which provides excellent and concise answers to most of these issues. This memo addresses when a hospital/provider should bill, how much they can bill, and when they must withdraw their claim against the plaintiff.

Hospitals/Providers are increasingly telling trial counsel that they cannot bill Medicare in third party liability (TPL) situations.  Although providers, physicians, and other suppliers must bill liability insurance rather than bill Medicare, after the “promptly period” they can submit bills to CMS.  The “promptly period” is a 120-day period that begins to run when the hospital/provider submits a bill to an insurer, files a lien against the plaintiff, provides the service or discharges the plaintiff from the hospital, whichever is earliest.  After this 120 days has expired the hospital/provider has the option of either submitting the claim to CMS or maintaining their claim against the plaintiff.  They cannot do both.

According to the memo:

“Billing both Medicare and maintaining a claim against the liability insurance/beneficiary’s liability insurance settlement is not permitted.” Id. A2; Medicare Secondary Payer Recovery Manual Chapter 2, Section 40.2(B).

The expiration of the “timely filing period” is another vital event to place in trial counsel’s calendar.  The “timely filing period” is one calendar year from the date of service, and the existence of liability insurance does not toll or extend this filing period.  This is critcal information for the trial attorney as once the “timely filing period” has passed the hospital/provider must withdraw their claim against the plaintiff.

According to the memo:

“The existence of a liability insurance or potential liability insurance situation does not change or extend Medicare’s timely filing requirements…. claims/liens against the liability insurance/beneficiary’s liability insurance settlement (with certain exceptions) be withdrawn once the timely filing period has expired.” Id. A4


Claims/liens against … liability settlement must be dropped once Medicare’s timely filing period has expired Id. A2


“CMS’ liability insurance billing policy is that providers are required to drop their claims/liens and terminate all billing efforts to collect from a liability insurer or a beneficiary once the Medicare timely filing period expires[.]” Id. A5

In complex cases where litigation takes longer than one year, trial counsel should be able to use this memo to have the hospitals/providers withdraw their claims. Additionally, in cases that do resolve within the one year “timely filing period”, this memo along with Chapter 2 of the Medicare Secondary Payer Recovery Manual provides separate limitations on the recovery rights of hospitals and providers.

If the hospital/provider does submit a bill to Medicare then they are forever limited to the Medicare approved payment amount. This is true even if the hospital/provider has their bill denied by CMS, or even if they refund to Medicare the amount they were paid.

According to the memo:

“Is limited to the Medicare approved amount … once they have billed Medicare, even if they return any payment received from Medicare.” Id. A6, A2, See; Medicare Secondary Payer Recovery Manual Chapter 2, Section 40.2(D).

Finally, if the hospital/provider did not submit a bill to Medicare, but rather after the expiration of the “promptly period” asserted a claim against the plaintiff, then their claim must be reduced by procurement costs.

According to the memo:

“May charge actual charges but is limited to the amount available from the settlement less applicable procurement costs (for example, attorney fees, other litigation costs).” Id. A6; See Also, Medicare Secondary Payer Recovery Manual Chapter 2, Section 40.2(D).

Understanding and calendaring the “promptly period” and “timely filing period” is essential for trial attorneys who represent Medicare beneficiaries.  The billing departments of most hospitals and providers are staffed with individuals who do not recognize the significance of the Medicare billing guidelines.  It is common for these groups to assert unenforceable repayment demands, and knowing how best to turn these rules to your client’s benefit will result in a significant increase to the injury victim’s net recovery.


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