Understanding Medicare Compliance in Personal Injury Settlements

If your client is on Medicare, Medicare compliance must be part of your resolution strategy. Failing to address the Medicare Secondary Payer Act (MSP) can trigger denials of future care, government recovery actions, or worse, personal liability for your law firm. 

Here’s what you need to know, and what you should be doing about it. 

Why the MSP Matters 

Medicare is a secondary payer. That means it only pays for injury-related care if no other insurer is responsible. When a personal injury case settles and Medicare has already paid for related treatment, the government wants its money back. These are called conditional payments. 

However, that isn’t the end of the matter.  If a settlement includes compensation for future medical care, the Centers for Medicare & Medicaid Services (CMS) expects the injured party to use that money before billing Medicare. Failing to consider Medicare’s future interests can lead to Medicare denying coverage for future care. 

Two Key Compliance Risks 

1. Conditional Payment Recovery 
   Medicare can recover what it paid before settlement. Errors in resolution can cause serious compliance risks for personal injury firms. 

1. Future Medicals and Set-Asides 
   Settlements that include future medicals may require considering Medicare’s future interests.  One way to consider Medicare’s interests is with a Medicare Set-Aside (MSA)—a portion of funds set aside to pay for future Medicare-covered services. While not legally required in liability cases, CMS policy strongly encourages this. The risk? Medicare might deny care and your client could claim malpractice against your firm for failing to advise them. 

How the Government Enforces the MSP 

Trial lawyers are being held accountable related to mistakes in terms of MSP compliance. Recent Department of Justice actions include: 

• A $250,000 settlement with a law firm that failed to repay conditional payments. 

• A firm required to start a compliance program and assign a specific employee to handle MSP obligations. 

• Cases where the DOJ pursued lawyers even when co-counsel failed to repay Medicare. 

Making mistakes related to these obligations isn’t just risky for your client—it’s risky for your practice. 

Best Practices for Trial Lawyers 

1. Screen Every Client 
   Identify Medicare beneficiaries or those reasonably expected to become eligible within 30 months. This includes clients on SSDI. 

1. Follow the CAD Protocol 

• Consult with experts to address conditional payments and possible futures. 

• Advise your client about Medicare’s rights and what might happen if they don’t protect them. 

• Document the file, especially if the client declines to set aside funds. 

1. Control the MIR Narrative 
   Collaborate with defense counsel to ensure accurate ICD codes and dates of accident are properly reported. Incorrect data can trigger denial of care or new demands from Medicare. 

1. Reject Bad Release Language 
   Many defense-prepared releases include overreaching or outright inaccurate Medicare language. Avoid agreeing to anything not supported by law. 

1. Don’t Disburse Too Early 
   Always wait for Medicare’s final demand, not just a conditional payment letter, before disbursing funds. 

Educate Clients and Protect Your Firm 

Make sure your client understand Medicare’s rights to reimbursement.  In addition, your client needs to understand the risk of doing nothing when it comes to futures. Document your advice.  

Final Thought 

Medicare compliance is not optional. Trial lawyers must take proactive steps to protect both their clients and their firms. You don’t need to be a compliance expert, but you should work with one. 

Want to avoid costly mistakes and closes cases compliantly? Synergy is the nation’s leading MSP compliance partner for law firms. We can help you get it right, every time.