Medicare Compliance: Best Practices for Personal Injury Firms

Medicare compliance is not optional. It is an obligation that directly impacts your clients and your firm. The Medicare Secondary Payer Act (MSPA) makes Medicare the payer of last resort. That means Medicare must be reimbursed for any payments it made related to a personal injury settlement and must be protected from future costs that should be covered by that settlement.

Medicare compliance failures have led to law firms facing civil penalties, government audits, and malpractice claims. The good news is that compliance is manageable with a clear process and expert support.

Why Medicare Compliance Matters

• Legal exposure: Firms have been forced to repay Medicare and face regulatory compliance requirements for ignoring conditional payments.
• Client protection: Improper handling could lead to a client’s loss of future Medicare coverage or denial of injury-related care.
• Professional responsibility: The Department of Justice has held attorneys personally liable for failing to reimburse Medicare.
• Reputation: Compliance missteps damage client trust and referral relationships.

Every lawyer handling injury cases involving current or soon-to-be Medicare beneficiaries must understand the MSPA’s implications.

Core Compliance Steps

1. Identify and Screen Early
   Establish a process to flag any client who:

• Is currently on Medicare
• Is receiving Social Security Disability Insurance (SSDI)
• Has applied for SSDI or is likely to become eligible within 30 months
  
  

Confirm Medicare status and document eligibility. Early identification drives every other compliance step.

2. Resolve Conditional Payments
   Request a conditional payment letter from the Benefits Coordination & Recovery Contractor (BCRC). Audit it carefully. Resolve it before disbursement. Never release funds based on a conditional payment letter alone. Wait for the final demand. Use compromise and waiver requests when appropriate to attempt to reduce the amount owed.
3. Address Future Medicals (Medicare Set-Asides)
   If a settlement funds future medical care, Medicare’s “future interests” should be considered. This involves analyzing whether a Medicare Set-Aside (MSA) is appropriate.

• Not every case requires one.
• If future medicals are not funded, document why.
• If an MSA is considered, calculate and document the reasoning.
• Always educate the client about the risks of not setting funds aside.

The key is documentation. If the client declines to set funds aside, have them sign an acknowledgment confirming they were advised and informed.

4. Release Language
   Defense counsel often adds Medicare-related language that is inaccurate or overly broad.

• Avoid agreeing to any requirement that the client “shall not apply for Medicare” or “must establish an MSA.”
• Use concise, neutral language acknowledging compliance with the MSPA without creating unnecessary obligations.
• Never make settlement contingent on CMS approval of a liability MSA.

5. Collaborate and Verify Reporting
   Mandatory Insurer Reporting (MIR) requires insurers to report settlements involving Medicare beneficiaries. Errors in reported ICD codes or accident dates can lead to care denials or duplicate conditional payment demands.

• Coordinate with defense counsel on what will be reported.
• Confirm ICD codes reflect only injury-related conditions compensated for in the settlement.

6. Avoid Federal Court
   Most Medicare disputes can be avoided with proactive planning. A well-documented, collaborative process prevents disagreements that hold up resolution of the case.
7. Educate and Document
   Follow the “CAD” principle:

• Consult with a qualified Medicare compliance expert.
• Advise the client on how Medicare may be impacted by the settlement.
• Document all communications, recommendations, and client decisions.

Proper documentation protects the client and your firm.

Common Compliance Mistakes

• Disbursing before receiving a final demand.
• Missing Part C (Medicare Advantage) or Part D (Prescription Drug) liens.
• Accepting defense-drafted release language without review.
• Failing to identify Medicare status early.
• Lacking documentation when a client declines a set-aside.
• Not coordinating ICD codes with the defense during reporting.

Each of these can create issues for your client and for your firm.

MSP Consequences

Government oversight and enforcement has increased relating to the MSP. Law firms have been fined for failing to repay conditional payments, even when settlement proceeds had already been distributed. There is precedent that attorneys remain responsible for ensuring Medicare is reimbursed. 

With futures it is very much a gray area.  In Aranki v. Burwell, the court confirmed there’s no legal requirement to create an MSA—but Medicare can still deny care if its interests aren’t protected. These cases illustrate the nuance of MSP compliance and the importance of documenting the reasoning behind each decision.

Building a Compliance System in Your Firm

To achieve total Medicare compliance, create a repeatable internal process:

• Train your staff on identifying Medicare beneficiaries.
• Appoint a compliance lead responsible for MSP obligations.
• Maintain templates for client advisement and documentation.
• Partner with an MSP expert for conditional payment and MSA analyses.
• Audit every file involving Medicare before final disbursement.

Conclusion

Medicare compliance protects your clients and your practice. It demonstrates diligence, reduces malpractice exposure, and strengthens settlement integrity. It also positions your firm as a trusted partner for co-counsel and referral sources.

Compliance is not about red tape. It is about safeguarding your client’s future medical care and your professional credibility. With the right process and expertise, you can close every case knowing you did it right.  If you don’t want to create your own process, Synergy’s Medicare Compliance experts help trial lawyers nationwide protect their clients’ recoveries, ensure full MSPA compliance, and eliminate post-settlement exposure.