Posted by Tevra Johnson
Question:
Dear Ms. Johnson, I was steered in your direction regarding expertise in the following situation: I wonder if you could point me in the right direction regarding Medicare Liens in asbestos cases and support for the position that such liens are not asserted for exposure prior to December 5th, 1980. Do you know if authority for this position is rooted in statutory law, case law (NJ?), or administrative law? Might it simply be a policy position taken? I appreciate your assistance.
-New Jersey Attorney
Answer:
Thank you for your inquiry, I hope that I may be able to help. With regard to asbestos exposure and Medicare recovery, Medicare’s position is based on their internal policy. The Medicare Secondary Payer provision was established with the Omnibus Reconciliation Act of 1980, and the December 5, 1980 date is used as a guide to determining asbestos exposure after the Medicare Secondary Payer program began. This information can be found on the CMS website, http://www.cms.hhs.gov/. Medicare’s position is as follows:
The Medicare Secondary Payer (“MSP”) liability provisions were effective December 5, 1980. Medicare may pursue recoveries from liability settlements, judgments, or payments when the date of accident, injury, exposure or ingestion was on or after December 5, 1980. Medicare’s claim would be for all Medicare reimbursed services on or after December 5, 1980, which are related to the liability settlement, judgment, or payment. Medicare’s recovery claim is based upon specific Medicare reimbursed services rather than some percentage of the liability settlement, judgment, or payment. Furthermore, Medicare has stated in asbestos recoveries in liability, not Workers’ compensation situation, “If the Asbestos exposure ended before December 5, 1980, Medicare will not pursue recoveries from asbestos liability settlements, since the MSP liability provisions were not effective until that date.”
Please feel free to contact our Asbestos Team Leader, Rebecca Spears rspear@garretsonfirm.com with any additional questions you may have about the Asbestos lien resolution program at GFRG.
Best Regards,
Tevra L. Johnson
Friday, March 27, 2009
Thursday, March 26, 2009
GFRG Client Advisory Update
Posted by John Cattie
(To download a pdf of this advisory, click here.)
Following our prior advisories, Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (the “MMSEA”) imposes reporting obligations on insurers in settlements involving current Medicare beneficiaries. These reporting requirements are causing a lot of anxiety amongst the parties involved in settlements, from the plaintiff-Medicare beneficiaries and their counsel, to the insurance companies and their counsel. As a result, settling counsel should be well-versed in MMSEA developments as it may affect the time it takes to resolve personal injury cases.
The settlement community continues to reach out to GFRG soliciting practical application and interpretation of the new MMSEA requirements. In our continuing effort, this document captures many of the highlights in the recent 180 page CMS MMSEA non-GHP User Guide in addition to a recently published CMS alert concerning time line changes.
The Centers for Medicare and Medicaid Services (“CMS”) has published two documents in recent days which are important to anyone whose practice involves liability (including self-insurance), no-fault or workers’ compensation settlements. Both documents are related to the new reporting requirements under Section 111 of the MMSEA. The first document is the eagerly anticipated Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation User Guide for MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting (the “Guide”). Version 1.0 was published on March 16, 2009. The Guide provides the roadmap as to how reporting under Section 111 will occur. Among other things, it provides detailed explanations related to the following areas:
• What entities are considered to be “Responsible Reporting Entities (“RREs”)”;
o 42 U.S.C. §1395y(b)(8) provides that the “applicable plan” is the RRE and defines “applicable plan” to mean the following laws, plans, or other arrangements, including the fiduciary or administrator for such law, plan, or arrangement: i) liability insurance (including self-insurance); ii) no fault insurance; and iii) workers’ compensation laws or plans;
• How an RRE may use an agent for compliant Section 111 reporting purposes;
o Section 111 allows agents to submit live production files on behalf of an RRE; however, the RRE must register on its own and will be held responsible for the files submitted by the agent;o An agent may include, but are not limited to, data service companies, consulting companies or similar entities that can create and submit Section 111 files to the COBC on behalf of the RRE;
• How an RRE registers and sets up an account with the COBC;
o CMS identifies five steps to the registration process: i) Identify an Authorized Representative, Account Manager and other COBSW Users; ii) determine reporting structure; iii) RRE registration on the COBSW; iv) RRE account setup on the COBSW; and v) return signed RRE profile report;o RRE registration is begun by an Authorized Representative of the RRE and completed by the Account Manager;o While the Authorized Representative must be employed by the RRE, the Account Manager can be either employed by the RRE or an agent of the RRE;
• What are the proper file format standards;
o Claim Input Files and TIN Reference Files are to be transmitted in a flat, ASCII file format;o Query Files are to be transmitted using the ANSI X12 270/271 Entitlement Query transaction set (this software will be supplied to RRE by COBC upon request);
• What the file submission timeline will be;
o During registration, each RRE will be assigned a group numbered 1-12 within each calendar quarter. That group number coincides with a seven day window within which files should be submitted;
• What data needs to be included in a claim input file;
o Each RRE will need to provide at least fifty (50) data elements within the following general areas: i) injured party/Medicare beneficiary information; ii) injury/incident/illness information; iii) self insurance information; iv) plan information; v) injured party’s attorney or other representative information; vi) settlement, judgment, award or other payment information; and vii) additional claimant information (if applicable);
• When an RRE must submit files to maintain Medicare compliance;
o An RRE must submit files four times per year on a quarterly basis during its designated file submission seven day window as assigned during registration;
The Guide, though not a final version, provides substantial guidance as to how an RRE must act to be compliant under Section 111. We know this is not the final version of the Guide because of the alert (“Alert”) published by CMS four days after the Guide was published.
The Alert, published on March 20, 2009, addressed several issues, two of which should be of immediate interest. First, CMS extended the permissible testing period through December 31, 2009. Now RREs are required to begin submitting live production files no later than its assigned timeframe in 1st Quarter 2010. RREs may still submit live production files in the 4th Quarter 2009 as soon as testing is complete. Essentially, CMS has given the industry three more months to prepare for compliant Section 111 reporting.
Second, the Alert provided interim reporting thresholds for RREs. These interim reporting thresholds are as follows:
• For no-fault insurance, there is no de minimus dollar threshold for reporting the assumption/establishment of ongoing responsibility for medicals (“ORM”) or for reporting the total payment obligation to the claimant (“TPOC”) (i.e., a lump-sum settlement amount);
• For liability insurance, there is no de minimus dollar threshold for reporting the assumption/establishment of ORM;
• For workers’ compensation ORM, claims meeting all of the following criteria are excluded from reporting for file submissions due through December 31, 2010:
o “Medicals only”;o “Lost time” of no more than 7 calendar days;o All payment(s) has/have been made directly to the medical provider; o Total payment does not exceed $600.00;
• For liability insurance and workers’ compensation TPOCs, the following dollar thresholds apply:
o For TPOCs, dates of July 1, 2009 through December 31, 2010, amounts of $0.00 – $5,000.00 are exempt from reporting except as specified below.* o For TPOCs, dates of January 1, 2011, through December 31, 2011, amounts of $0.00 – $2,000.00 are exempt from reporting except as specified below.* o For TPOCs, dates of January 1, 2012 through December 31, 2012, amounts of $0.00 – $600.00 are exempt from reporting except as specified below.* o * Where there are multiple TPOCs reported by the same RRE on the same record, the combined amounts must be considered in determining whether or not the reporting exception threshold is met. For TPOCs involving a deductible, where the RRE is responsible for reporting both any deductible and any amount above the deductible, the threshold applies to the total of these two figures.
The Alert also informs us that these thresholds are solely for purposes of Section 111 reporting, and have no applicability to any other obligations or responsibility with respect to the Medicare Secondary Payer (“MSP”) provisions. CMS representatives made this very clear during the “town hall” conference call on Tuesday, March 24, 2009. It was also stressed on the call that these are INTERIM thresholds and may be changed by CMS at any time.
Furthermore, CMS officials stressed that obligations under Section 111 do not, in any way, affect existing payment obligations under the MSP. Specifically, the question about the use of Medicare Set-aside Arrangements (“MSAs”) in a liability context arose again. CMS officials clearly stated that MSA obligations are independent of the Section 111 reporting rules, and that Section 111 does not impose new duties to establish MSAs nor does Section 111 provide new guidance leading us to believe that MSAs are now required in liability settlements.
The Guide and the Alert, both published in recent days, shows how fluid Section 111 compliance guidelines are currently. Some issues, such as the compliance timeline, changed in a matter of four days. Other issues, such as applicability of Section 111 reporting to mass tort settlements, has yet to be settled. The industry is moving rapidly toward Section 111 reporting. We will continue to stay on top of the latest MMSEA news and let you know how your practice may be affected.
Click here for the Guide and the Alert. Click here to visit GFRG's MMSEA page.
(To download a pdf of this advisory, click here.)
Following our prior advisories, Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (the “MMSEA”) imposes reporting obligations on insurers in settlements involving current Medicare beneficiaries. These reporting requirements are causing a lot of anxiety amongst the parties involved in settlements, from the plaintiff-Medicare beneficiaries and their counsel, to the insurance companies and their counsel. As a result, settling counsel should be well-versed in MMSEA developments as it may affect the time it takes to resolve personal injury cases.
The settlement community continues to reach out to GFRG soliciting practical application and interpretation of the new MMSEA requirements. In our continuing effort, this document captures many of the highlights in the recent 180 page CMS MMSEA non-GHP User Guide in addition to a recently published CMS alert concerning time line changes.
The Centers for Medicare and Medicaid Services (“CMS”) has published two documents in recent days which are important to anyone whose practice involves liability (including self-insurance), no-fault or workers’ compensation settlements. Both documents are related to the new reporting requirements under Section 111 of the MMSEA. The first document is the eagerly anticipated Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation User Guide for MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting (the “Guide”). Version 1.0 was published on March 16, 2009. The Guide provides the roadmap as to how reporting under Section 111 will occur. Among other things, it provides detailed explanations related to the following areas:
• What entities are considered to be “Responsible Reporting Entities (“RREs”)”;
o 42 U.S.C. §1395y(b)(8) provides that the “applicable plan” is the RRE and defines “applicable plan” to mean the following laws, plans, or other arrangements, including the fiduciary or administrator for such law, plan, or arrangement: i) liability insurance (including self-insurance); ii) no fault insurance; and iii) workers’ compensation laws or plans;
• How an RRE may use an agent for compliant Section 111 reporting purposes;
o Section 111 allows agents to submit live production files on behalf of an RRE; however, the RRE must register on its own and will be held responsible for the files submitted by the agent;o An agent may include, but are not limited to, data service companies, consulting companies or similar entities that can create and submit Section 111 files to the COBC on behalf of the RRE;
• How an RRE registers and sets up an account with the COBC;
o CMS identifies five steps to the registration process: i) Identify an Authorized Representative, Account Manager and other COBSW Users; ii) determine reporting structure; iii) RRE registration on the COBSW; iv) RRE account setup on the COBSW; and v) return signed RRE profile report;o RRE registration is begun by an Authorized Representative of the RRE and completed by the Account Manager;o While the Authorized Representative must be employed by the RRE, the Account Manager can be either employed by the RRE or an agent of the RRE;
• What are the proper file format standards;
o Claim Input Files and TIN Reference Files are to be transmitted in a flat, ASCII file format;o Query Files are to be transmitted using the ANSI X12 270/271 Entitlement Query transaction set (this software will be supplied to RRE by COBC upon request);
• What the file submission timeline will be;
o During registration, each RRE will be assigned a group numbered 1-12 within each calendar quarter. That group number coincides with a seven day window within which files should be submitted;
• What data needs to be included in a claim input file;
o Each RRE will need to provide at least fifty (50) data elements within the following general areas: i) injured party/Medicare beneficiary information; ii) injury/incident/illness information; iii) self insurance information; iv) plan information; v) injured party’s attorney or other representative information; vi) settlement, judgment, award or other payment information; and vii) additional claimant information (if applicable);
• When an RRE must submit files to maintain Medicare compliance;
o An RRE must submit files four times per year on a quarterly basis during its designated file submission seven day window as assigned during registration;
The Guide, though not a final version, provides substantial guidance as to how an RRE must act to be compliant under Section 111. We know this is not the final version of the Guide because of the alert (“Alert”) published by CMS four days after the Guide was published.
The Alert, published on March 20, 2009, addressed several issues, two of which should be of immediate interest. First, CMS extended the permissible testing period through December 31, 2009. Now RREs are required to begin submitting live production files no later than its assigned timeframe in 1st Quarter 2010. RREs may still submit live production files in the 4th Quarter 2009 as soon as testing is complete. Essentially, CMS has given the industry three more months to prepare for compliant Section 111 reporting.
Second, the Alert provided interim reporting thresholds for RREs. These interim reporting thresholds are as follows:
• For no-fault insurance, there is no de minimus dollar threshold for reporting the assumption/establishment of ongoing responsibility for medicals (“ORM”) or for reporting the total payment obligation to the claimant (“TPOC”) (i.e., a lump-sum settlement amount);
• For liability insurance, there is no de minimus dollar threshold for reporting the assumption/establishment of ORM;
• For workers’ compensation ORM, claims meeting all of the following criteria are excluded from reporting for file submissions due through December 31, 2010:
o “Medicals only”;o “Lost time” of no more than 7 calendar days;o All payment(s) has/have been made directly to the medical provider; o Total payment does not exceed $600.00;
• For liability insurance and workers’ compensation TPOCs, the following dollar thresholds apply:
o For TPOCs, dates of July 1, 2009 through December 31, 2010, amounts of $0.00 – $5,000.00 are exempt from reporting except as specified below.* o For TPOCs, dates of January 1, 2011, through December 31, 2011, amounts of $0.00 – $2,000.00 are exempt from reporting except as specified below.* o For TPOCs, dates of January 1, 2012 through December 31, 2012, amounts of $0.00 – $600.00 are exempt from reporting except as specified below.* o * Where there are multiple TPOCs reported by the same RRE on the same record, the combined amounts must be considered in determining whether or not the reporting exception threshold is met. For TPOCs involving a deductible, where the RRE is responsible for reporting both any deductible and any amount above the deductible, the threshold applies to the total of these two figures.
The Alert also informs us that these thresholds are solely for purposes of Section 111 reporting, and have no applicability to any other obligations or responsibility with respect to the Medicare Secondary Payer (“MSP”) provisions. CMS representatives made this very clear during the “town hall” conference call on Tuesday, March 24, 2009. It was also stressed on the call that these are INTERIM thresholds and may be changed by CMS at any time.
Furthermore, CMS officials stressed that obligations under Section 111 do not, in any way, affect existing payment obligations under the MSP. Specifically, the question about the use of Medicare Set-aside Arrangements (“MSAs”) in a liability context arose again. CMS officials clearly stated that MSA obligations are independent of the Section 111 reporting rules, and that Section 111 does not impose new duties to establish MSAs nor does Section 111 provide new guidance leading us to believe that MSAs are now required in liability settlements.
The Guide and the Alert, both published in recent days, shows how fluid Section 111 compliance guidelines are currently. Some issues, such as the compliance timeline, changed in a matter of four days. Other issues, such as applicability of Section 111 reporting to mass tort settlements, has yet to be settled. The industry is moving rapidly toward Section 111 reporting. We will continue to stay on top of the latest MMSEA news and let you know how your practice may be affected.
Click here for the Guide and the Alert. Click here to visit GFRG's MMSEA page.
Life Care Plan and MSA Analysis
Posted by Sylvius Von Saucken
Question:
[I have a liability case where] there is a sizeable life care plan for future medical care costs. Does that in and of itself mean we need to do a MSA analysis?
Answer:
Not necessarily. The life care plan tells us the picture of future costs of care. It is a redacted life care plan that would tell us what Medicare would pay for out of that life care plan. The issue here is the following formula:
FCC+PBS = MSA (where FCC = Future Cost of Care; PBS = Permanent Burden Shift, and MSA = evaluate the need for a MSA/do an MSA report).
Here, there may not be a question that FCCs exist, but since this is a liability case, the question is how much of the settlement was actually allocated to FCCs. In other words, life care plans to argue numbers for settlement is not the same as settling a case where you allocate a specific part of the settlement to pay for FCCs.
Equally, if not more importantly here – is there a Permanent Burden Shift over to Medicare. You can have a $30 million life care plan, but if Medicare is not going to pay for any of it (because the person will not become a Medicare beneficiary, at least for the reasonably anticipated period of time), then the formula does not result in an MSA report needing to be done. Instead, the formula tells us to properly document the file showing that we considered Medicare’s interests and did not find FCC+PBS = MSA.
Question:
[I have a liability case where] there is a sizeable life care plan for future medical care costs. Does that in and of itself mean we need to do a MSA analysis?
Answer:
Not necessarily. The life care plan tells us the picture of future costs of care. It is a redacted life care plan that would tell us what Medicare would pay for out of that life care plan. The issue here is the following formula:
FCC+PBS = MSA (where FCC = Future Cost of Care; PBS = Permanent Burden Shift, and MSA = evaluate the need for a MSA/do an MSA report).
Here, there may not be a question that FCCs exist, but since this is a liability case, the question is how much of the settlement was actually allocated to FCCs. In other words, life care plans to argue numbers for settlement is not the same as settling a case where you allocate a specific part of the settlement to pay for FCCs.
Equally, if not more importantly here – is there a Permanent Burden Shift over to Medicare. You can have a $30 million life care plan, but if Medicare is not going to pay for any of it (because the person will not become a Medicare beneficiary, at least for the reasonably anticipated period of time), then the formula does not result in an MSA report needing to be done. Instead, the formula tells us to properly document the file showing that we considered Medicare’s interests and did not find FCC+PBS = MSA.
Medicare Lien Discovered After Resolution of Case
Posted by Mary Skinner
Question:
We have a client that did not tell us she had Medicare. We discovered it after mediation and the case was resolved. We believe there is a $42,000 lien and have written to Medicare for information, but have had no response. What can we do?
Answer:
If you have reported this to the COB (Coordination of Benefits) at 1-800-999-1118 to establish a record and then subsequently sent a request for conditional payments paid along with a HIPAA authorization to the MSPRC, Medicare has 45 days to respond. If it has been longer than 45 days, then I would call the MSPRC at 1-866-677-7220 and have them expedite your request.
In the event that you have not reported it the COB then you will need to do that. Without a record established by the COB, the MSPRC is unable to pull claims and provide you with a conditional payment summary. Unfortunately, until you have Medicare's final demand amount you can not disburse the net settlement proceeds to your client. You can however take attorney fees and expenses. Please let me know if I can be of further assistance.
Question:
We have a client that did not tell us she had Medicare. We discovered it after mediation and the case was resolved. We believe there is a $42,000 lien and have written to Medicare for information, but have had no response. What can we do?
Answer:
If you have reported this to the COB (Coordination of Benefits) at 1-800-999-1118 to establish a record and then subsequently sent a request for conditional payments paid along with a HIPAA authorization to the MSPRC, Medicare has 45 days to respond. If it has been longer than 45 days, then I would call the MSPRC at 1-866-677-7220 and have them expedite your request.
In the event that you have not reported it the COB then you will need to do that. Without a record established by the COB, the MSPRC is unable to pull claims and provide you with a conditional payment summary. Unfortunately, until you have Medicare's final demand amount you can not disburse the net settlement proceeds to your client. You can however take attorney fees and expenses. Please let me know if I can be of further assistance.
Tuesday, March 24, 2009
Lien in Litigation, but Client Demanding Money
Posted by Matthew Garretson
Question:
I have a client who was seriously injured in a motor vehicle accident. After his no fault (ATIC) cuts him off, he uses his Verizon medical insurance and disability policies to continue to get treatment and money. In addition, he borrows money against the settlement which was multiplying at horrific rate courtesy of Law Funders. Verizon may or may not be ERISA (careful reading of 5550 filing shows that at least one of the plans used is not full blown ERISA.)
Following settlement of the MVA, during which I inform client that we will have to pay back money against settlement and I will hold the remainder pending resolution of the ERISA lien, I move by OSC to vacate lien. Client is informed of status and never calls (from date of settlement in June 2008). I have correspondence to him informing of lien and asking him to call. He never does.
For various reasons, motion is to be argued in early April and even then probably won't resolve matter as the motion is discovery (largely) and not substantive.
Here's the problem - after not hearing from the client for more than six months, he calls today demanding that I release the remainder of his money to him. I don't think I can do that. Does anyone think otherwise?
-New York Attorney
Answer:
My hunch is that you have some variation of ABA Model Rule 1.15(d) in NY. "Model Rule 1.15(d): Upon receiving funds...in which a client or third person has an interest, a lawyer shall promptly notify the client or third person [and] a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive..."
Most state bar associations or disciplinary committees have said that this places an obligation to hold funds until the dispute is resolved if you have actual notice of a just claim.
Of course, that places you in an awkward position with the client.
Question:
I have a client who was seriously injured in a motor vehicle accident. After his no fault (ATIC) cuts him off, he uses his Verizon medical insurance and disability policies to continue to get treatment and money. In addition, he borrows money against the settlement which was multiplying at horrific rate courtesy of Law Funders. Verizon may or may not be ERISA (careful reading of 5550 filing shows that at least one of the plans used is not full blown ERISA.)
Following settlement of the MVA, during which I inform client that we will have to pay back money against settlement and I will hold the remainder pending resolution of the ERISA lien, I move by OSC to vacate lien. Client is informed of status and never calls (from date of settlement in June 2008). I have correspondence to him informing of lien and asking him to call. He never does.
For various reasons, motion is to be argued in early April and even then probably won't resolve matter as the motion is discovery (largely) and not substantive.
Here's the problem - after not hearing from the client for more than six months, he calls today demanding that I release the remainder of his money to him. I don't think I can do that. Does anyone think otherwise?
-New York Attorney
Answer:
My hunch is that you have some variation of ABA Model Rule 1.15(d) in NY. "Model Rule 1.15(d): Upon receiving funds...in which a client or third person has an interest, a lawyer shall promptly notify the client or third person [and] a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive..."
Most state bar associations or disciplinary committees have said that this places an obligation to hold funds until the dispute is resolved if you have actual notice of a just claim.
Of course, that places you in an awkward position with the client.
Monday, March 23, 2009
Doctor Billing / Medicare
Posted by Matthew Garretson and Mary Skinner
Question:
Matt, I'm a trial attorney in Miami getting ready to try a PI case. The Chicago treating doctor is claiming an outstanding bill of $47,000 even though he is a Medicare provider who previously billed Medicare and was paid by it and the supplemental insurance carrier. The defense is trying to limit me to only asking the jury for medicals in the amounts paid by Medicare as per Florida law. In other words, even though the doctor is billing for his full bill and says he expects to be paid, my client would not be able to recover his full bill at trial. I am aware of the law change in 2006 allowing providers to bill or lien the liability insurer. I saw your blog on it as well. It is my understanding that if the doctor does bill Medicare then he/she can't still pursue the liability lien. And, further, the doctor can't get clever and pay back Medicare and then take the full bill from the liability recovery. Am I correct?
-Florida Attorney
Answer:
Your understanding on this issue is consistent with mine. Mary Skinner, our Manager of Medicare Services may be able to offer further insight.
-Matt Garretson
You are correct in your understanding. The provider is not permitted to bill Medicare and then seek payment of actual charges, nor can he return the payment and seek actual charges. Doing so is a violation of his provider agreement with Medicare. For your convenience, here is some information that you can present to the provider to alert him to this fact: 40.2 Billing in MSP Liability Insurance Situations and Provider/Supplier Billing in MSP Liability Accident Situations. If you need further assistance please give me a call.
-Mary Skinner
Question:
Matt, I'm a trial attorney in Miami getting ready to try a PI case. The Chicago treating doctor is claiming an outstanding bill of $47,000 even though he is a Medicare provider who previously billed Medicare and was paid by it and the supplemental insurance carrier. The defense is trying to limit me to only asking the jury for medicals in the amounts paid by Medicare as per Florida law. In other words, even though the doctor is billing for his full bill and says he expects to be paid, my client would not be able to recover his full bill at trial. I am aware of the law change in 2006 allowing providers to bill or lien the liability insurer. I saw your blog on it as well. It is my understanding that if the doctor does bill Medicare then he/she can't still pursue the liability lien. And, further, the doctor can't get clever and pay back Medicare and then take the full bill from the liability recovery. Am I correct?
-Florida Attorney
Answer:
Your understanding on this issue is consistent with mine. Mary Skinner, our Manager of Medicare Services may be able to offer further insight.
-Matt Garretson
You are correct in your understanding. The provider is not permitted to bill Medicare and then seek payment of actual charges, nor can he return the payment and seek actual charges. Doing so is a violation of his provider agreement with Medicare. For your convenience, here is some information that you can present to the provider to alert him to this fact: 40.2 Billing in MSP Liability Insurance Situations and Provider/Supplier Billing in MSP Liability Accident Situations. If you need further assistance please give me a call.
-Mary Skinner
Friday, March 20, 2009
Collect Liability Settlement Under Minor Child's Claim?
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
Scenario: A mother was killed by negligent driver, survived by minor child. Minimum Insurance Policy only. Mother had Medicare, unknown whether A,B,C,D. Liens may use up entire settlement for mother. Can we collect liability settlement only under minor child's claim to maximize benefit?
-Recent Seminar Attendee
Answer:
There are several factors to consider. Most importantly Medicare’s policies on allocations in settlements and Medicare’s policies on wrongful death claims.
With respect to allocations in the settlement, Medicare is not bound by an allocation that has not been designated by a court on the merits of the case.
“The only situation in which Medicare recognizes allocations of liability payments to non-medical losses is when payment is based on a court order on the merits of the case. If the court or other adjudicator of the merits specifically designates amounts that are for payment of pain and suffering or other amounts not related to medical services, Medicare will accept the Court's designation.” Medicare Intermediary Manual, § 3418.7.
Thus, Medicare will not be bound by the terms of a private settlement agreement, and may still seek recovery from such a settlement, regardless of its terms.
With respect to Medicare, in a wrongful death/survivorship action, it can only recover from the survivorship portion. Medicare Secondary Payor rules (42 USC § 1395y(b)(2), 42 CFR §§ 411.24, 28) limit recovery to medical expenses incurred by the decedent. Medicare recovery does not extend to state-created rights for the decedent’s family to recover for his or her wrongful death, unless the state statutes provide that medical expenses are recoverable by the beneficiaries as part of their claims under the state’s wrongful death statute. While Medicare does not expressly limit its right of recovery to exclude wrongful death portions of an award, Medicare is only recovering for medical expenses paid. To that extent, Medicare’s recovery right will follow the estate within which those same medical expenses are claimed as a measure of damages. To the extent that the state statutes provide for the measure of damages in both a survival action and a wrongful death action, Medicare will follow the state’s law.
Question:
Scenario: A mother was killed by negligent driver, survived by minor child. Minimum Insurance Policy only. Mother had Medicare, unknown whether A,B,C,D. Liens may use up entire settlement for mother. Can we collect liability settlement only under minor child's claim to maximize benefit?
-Recent Seminar Attendee
Answer:
There are several factors to consider. Most importantly Medicare’s policies on allocations in settlements and Medicare’s policies on wrongful death claims.
With respect to allocations in the settlement, Medicare is not bound by an allocation that has not been designated by a court on the merits of the case.
“The only situation in which Medicare recognizes allocations of liability payments to non-medical losses is when payment is based on a court order on the merits of the case. If the court or other adjudicator of the merits specifically designates amounts that are for payment of pain and suffering or other amounts not related to medical services, Medicare will accept the Court's designation.” Medicare Intermediary Manual, § 3418.7.
Thus, Medicare will not be bound by the terms of a private settlement agreement, and may still seek recovery from such a settlement, regardless of its terms.
With respect to Medicare, in a wrongful death/survivorship action, it can only recover from the survivorship portion. Medicare Secondary Payor rules (42 USC § 1395y(b)(2), 42 CFR §§ 411.24, 28) limit recovery to medical expenses incurred by the decedent. Medicare recovery does not extend to state-created rights for the decedent’s family to recover for his or her wrongful death, unless the state statutes provide that medical expenses are recoverable by the beneficiaries as part of their claims under the state’s wrongful death statute. While Medicare does not expressly limit its right of recovery to exclude wrongful death portions of an award, Medicare is only recovering for medical expenses paid. To that extent, Medicare’s recovery right will follow the estate within which those same medical expenses are claimed as a measure of damages. To the extent that the state statutes provide for the measure of damages in both a survival action and a wrongful death action, Medicare will follow the state’s law.
ERISA Lien
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
With ERISA, is the lien automatic, or it doesn't take effect until the notice is given and it has to be given before settlement?
-Recent Seminar Attendee
Answer:
Once a plan has put you on notice, there are several considerations to determine the plan’s strength.
First, identify whether the plan is self-funded or insured. After determining the status of the plan, obtain a copy of the Summary Plan Description. It is the plain language summary of the plan. Under ERISA, the sufficiency of the plan language controls the right of recovery.
Reviewing the SPD will allow you to determine the plan’s strength. The Specific Fund Doctrine from Sereboff v. Mid Atlantic applies to all ERISA liens. It states that the plan must specify the fund to be enforced. Identify if the language states:
1. That the plan can recover specifically from the settlement or award?
2. That the plan can recover only up to the amount it paid in benefits?
If these requirements are not met, you can stop your analysis. If these requirements are met, you must consider the applicability of other defenses which will be dependent on your jurisdiction and plan language.
There are several defenses to consider. The Made Whole Doctrine bars liens or subrogation until the client has been “made whole” from his injury. Some jurisdictions have adopted the “Made Whole” Rule as a default rule of ERISA plan interpretation where the plan is silent on the matter. The Common Fund Doctrine requires the plan to contribute to attorney fees. Under Sereboff, a lien is enforceable against the settlement of the injured beneficiary on whose behalf benefits were paid. They are not enforceable against the settlements of others.
Question:
With ERISA, is the lien automatic, or it doesn't take effect until the notice is given and it has to be given before settlement?
-Recent Seminar Attendee
Answer:
Once a plan has put you on notice, there are several considerations to determine the plan’s strength.
First, identify whether the plan is self-funded or insured. After determining the status of the plan, obtain a copy of the Summary Plan Description. It is the plain language summary of the plan. Under ERISA, the sufficiency of the plan language controls the right of recovery.
Reviewing the SPD will allow you to determine the plan’s strength. The Specific Fund Doctrine from Sereboff v. Mid Atlantic applies to all ERISA liens. It states that the plan must specify the fund to be enforced. Identify if the language states:
1. That the plan can recover specifically from the settlement or award?
2. That the plan can recover only up to the amount it paid in benefits?
If these requirements are not met, you can stop your analysis. If these requirements are met, you must consider the applicability of other defenses which will be dependent on your jurisdiction and plan language.
There are several defenses to consider. The Made Whole Doctrine bars liens or subrogation until the client has been “made whole” from his injury. Some jurisdictions have adopted the “Made Whole” Rule as a default rule of ERISA plan interpretation where the plan is silent on the matter. The Common Fund Doctrine requires the plan to contribute to attorney fees. Under Sereboff, a lien is enforceable against the settlement of the injured beneficiary on whose behalf benefits were paid. They are not enforceable against the settlements of others.
Form 5500
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
As to Form 5500, which boxes do I want to see checked on line 9 or schedule A? Thank you.
-Recent Seminar Attendee
Answer:
Review of these items will allow you to determine if you are dealing with an insured plan which is subject to state defenses. You are looking for the “Insurance” boxes to be checked.
Question:
As to Form 5500, which boxes do I want to see checked on line 9 or schedule A? Thank you.
-Recent Seminar Attendee
Answer:
Review of these items will allow you to determine if you are dealing with an insured plan which is subject to state defenses. You are looking for the “Insurance” boxes to be checked.
Lien Reduction Policies
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
What is the status of lien reduction policies?
-Recent Seminar Attendee
Answer:
There are several lien reduction considerations in private liens. The best place to start is to determine the type of plan. First, identify whether the plan is self-funded or insured. Self-funded plans which pay for healthcare out of the employers assets are exempt from state insurance regulation and defenses. They are governed solely by ERISA and state law defenses are not available. Insured plans are governed by ERISA and the state insurance plan. If you are dealing with an insured plan, state law defenses are available to reduce or defeat the lien. To determine whether the plan is self-funded or insured request and review the plan’s annual report to the Department of Labor which has to declare the plan’s funding status.
Further reduction tactics include, review of the Specific Fund Doctrine for applicability, the Made Whole Doctrine, the Common Fund Doctrine and case law. Under Sereboff, a lien is enforceable against the settlement of the injured beneficiary on whose behalf benefits were paid. They are not enforceable against the settlements of others. All of these strategies are explained in our article, Beware the ERISA Healthcare Lien.
Question:
What is the status of lien reduction policies?
-Recent Seminar Attendee
Answer:
There are several lien reduction considerations in private liens. The best place to start is to determine the type of plan. First, identify whether the plan is self-funded or insured. Self-funded plans which pay for healthcare out of the employers assets are exempt from state insurance regulation and defenses. They are governed solely by ERISA and state law defenses are not available. Insured plans are governed by ERISA and the state insurance plan. If you are dealing with an insured plan, state law defenses are available to reduce or defeat the lien. To determine whether the plan is self-funded or insured request and review the plan’s annual report to the Department of Labor which has to declare the plan’s funding status.
Further reduction tactics include, review of the Specific Fund Doctrine for applicability, the Made Whole Doctrine, the Common Fund Doctrine and case law. Under Sereboff, a lien is enforceable against the settlement of the injured beneficiary on whose behalf benefits were paid. They are not enforceable against the settlements of others. All of these strategies are explained in our article, Beware the ERISA Healthcare Lien.
Made Whole Doctrine
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
Can you tell us what the Status of the Make Whole Doctrine is in the Second Circuit?
-Recent Seminar Attendee
Answer:
There currently exists a circuit split among the Courts of Appeals in deciding whether the Made Whole Doctrine should be applied as the default rule in ERISA subrogation. The Second Circuit recognizes the application of the Made Whole Doctrine, but it has never applied it in the context of ERISA.
Question:
Can you tell us what the Status of the Make Whole Doctrine is in the Second Circuit?
-Recent Seminar Attendee
Answer:
There currently exists a circuit split among the Courts of Appeals in deciding whether the Made Whole Doctrine should be applied as the default rule in ERISA subrogation. The Second Circuit recognizes the application of the Made Whole Doctrine, but it has never applied it in the context of ERISA.
Medicare Advantage and Lien Enforcement
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
Do Medicare Advantage Payers have same rights in terms of lien enforcement as does Traditional Medicare (Part A and B)? In other words, are they absolved from notification and statute of limitations as Traditional Medicare is?
I represent a quasi state entity that serves the role of an excess insurer in medical malpractice cases (two tier cap, the first being satisfied by the physician and the second tier being satisfied by this quasi state entity). Is that entity an RRE?
-Recent Seminar Attendee
Answer:
Part C plans differ from traditional Medicare in some important ways. First, while Part C plans are given the same recovery rights as traditional Medicare, there is no affirmative statutory lien created for Part C plans. Rather, the applicable statutes and regulations state only that Part C plans “may” assert a recovery right. This is different from the MSP statute (42 USC 1395y), which grants traditional Medicare an automatic statutory interest in third-party liability cases.
Also, Medicare must be given affirmative notice of a third-party liability claim or settlement. There is no requirement under the MSP statute that Part C plans be given similar notice. However, the contract language of the individual plan may. Thus, while Part C plans have the same enforcement rights as Medicare, the rules governing the notice and assertion of a lien are much more akin to those governing private liens.
Another key distinction exists which affects the way Part C claims can be identified and addressed. Medicare’s recovery arm, CMS, maintains records on all third-party liability cases involving traditional Medicare recipients. However, CMS does not maintain similar record for Part C recipients. As such, there is no single source through which to verify coverage, payments, and reimbursement rights.
Question:
Do Medicare Advantage Payers have same rights in terms of lien enforcement as does Traditional Medicare (Part A and B)? In other words, are they absolved from notification and statute of limitations as Traditional Medicare is?
I represent a quasi state entity that serves the role of an excess insurer in medical malpractice cases (two tier cap, the first being satisfied by the physician and the second tier being satisfied by this quasi state entity). Is that entity an RRE?
-Recent Seminar Attendee
Answer:
Part C plans differ from traditional Medicare in some important ways. First, while Part C plans are given the same recovery rights as traditional Medicare, there is no affirmative statutory lien created for Part C plans. Rather, the applicable statutes and regulations state only that Part C plans “may” assert a recovery right. This is different from the MSP statute (42 USC 1395y), which grants traditional Medicare an automatic statutory interest in third-party liability cases.
Also, Medicare must be given affirmative notice of a third-party liability claim or settlement. There is no requirement under the MSP statute that Part C plans be given similar notice. However, the contract language of the individual plan may. Thus, while Part C plans have the same enforcement rights as Medicare, the rules governing the notice and assertion of a lien are much more akin to those governing private liens.
Another key distinction exists which affects the way Part C claims can be identified and addressed. Medicare’s recovery arm, CMS, maintains records on all third-party liability cases involving traditional Medicare recipients. However, CMS does not maintain similar record for Part C recipients. As such, there is no single source through which to verify coverage, payments, and reimbursement rights.
Medicare and Allocation
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
Plaintiff and defendant have been tentatively agreed to settle a personal injury case for $16,500 for approaching a year and a half. It is a case of highly contested liability and very questionable injuries. Medicare has identified conditional payments in the range of $200,000 for conditions that are near certain plaintiff will be unable to establish causation for. Thus far, all attempts to "negotiate" with Medicare have been unfruitful. I am aware that it is normal Medicare practice to not give a final settlement demand until after the primary tort case has been settled. For obvious reasons, both plaintiff and defendant are reluctant to enter into a firm settlement agreement in this case without some agreement in hand from Medicare. Any suggestions as to how to make Medicare see the light? It is my understanding that Ahlborn is inapplicable to Medicare cases. I have been advised that there is a section in the Medicare handbook whereby Medicare will recognize a Court ordered allocation, and will assert their reimbursement claim only against that portion of the recovery having been allocated to medical expenses. I have also been advised that Medicare has recently been interpreting this as applying only in the case of a federal court allocation, which would be of absolutely no assistance to us. Any suggestions as to how to deal with Medicare on this problem would be greatly appreciated.
-Recent Seminar Attendee
Answer:
Medicare does not recognize Ahlborn; however it has always been Medicare’s policy to accept a court-ordered allocation on the merits of the case.
Medicare's manual states that Medicare is bound by an allocation that has been designated by a court on the merits of the case.... "The only situation in which Medicare recognizes allocations of liability payments to non-medical losses is when payment is based on a court order on the merits of the case. If the court or other adjudicator of the merits specifically designates amounts that are for payment of pain and suffering or other amounts not related to medical services, Medicare will accept the Court's designation." Medicare Intermediary Manual, § 3418.7.
Recently, we have seen Medicare challenge any allocation they believe was done after the fact in an effort to avoid any reimbursement claims. They really want to see that it was done based upon judicial fact-finding on the merits of the case. Your facts are a good starting point in demonstrating that you are not allocating after the fact to avoid Medicare.
Question:
Plaintiff and defendant have been tentatively agreed to settle a personal injury case for $16,500 for approaching a year and a half. It is a case of highly contested liability and very questionable injuries. Medicare has identified conditional payments in the range of $200,000 for conditions that are near certain plaintiff will be unable to establish causation for. Thus far, all attempts to "negotiate" with Medicare have been unfruitful. I am aware that it is normal Medicare practice to not give a final settlement demand until after the primary tort case has been settled. For obvious reasons, both plaintiff and defendant are reluctant to enter into a firm settlement agreement in this case without some agreement in hand from Medicare. Any suggestions as to how to make Medicare see the light? It is my understanding that Ahlborn is inapplicable to Medicare cases. I have been advised that there is a section in the Medicare handbook whereby Medicare will recognize a Court ordered allocation, and will assert their reimbursement claim only against that portion of the recovery having been allocated to medical expenses. I have also been advised that Medicare has recently been interpreting this as applying only in the case of a federal court allocation, which would be of absolutely no assistance to us. Any suggestions as to how to deal with Medicare on this problem would be greatly appreciated.
-Recent Seminar Attendee
Answer:
Medicare does not recognize Ahlborn; however it has always been Medicare’s policy to accept a court-ordered allocation on the merits of the case.
Medicare's manual states that Medicare is bound by an allocation that has been designated by a court on the merits of the case.... "The only situation in which Medicare recognizes allocations of liability payments to non-medical losses is when payment is based on a court order on the merits of the case. If the court or other adjudicator of the merits specifically designates amounts that are for payment of pain and suffering or other amounts not related to medical services, Medicare will accept the Court's designation." Medicare Intermediary Manual, § 3418.7.
Recently, we have seen Medicare challenge any allocation they believe was done after the fact in an effort to avoid any reimbursement claims. They really want to see that it was done based upon judicial fact-finding on the merits of the case. Your facts are a good starting point in demonstrating that you are not allocating after the fact to avoid Medicare.
Medicare Conditional Claim
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
In cases where we set up the claim early on, Medicare has denied payment for services to beneficiaries stating that third party liability policy of defendant is primary insurance. In cases with disputed liability, how does one avoid this problem?
-Recent Seminar Attendee
Answer:
The claim is most likely not being coded as a conditional claim. The provider needs to resubmit the claim as conditional claim. Additionally, if this is a MVA and Med pay is involved then a letter of exhaustion along with the PIP payout needs to be provided to the provider so that the exhaustion date can be included on the claim. Regardless of liability, if there is third party liability then all claims need to be submitted to Medicare conditionally.
Question:
In cases where we set up the claim early on, Medicare has denied payment for services to beneficiaries stating that third party liability policy of defendant is primary insurance. In cases with disputed liability, how does one avoid this problem?
-Recent Seminar Attendee
Answer:
The claim is most likely not being coded as a conditional claim. The provider needs to resubmit the claim as conditional claim. Additionally, if this is a MVA and Med pay is involved then a letter of exhaustion along with the PIP payout needs to be provided to the provider so that the exhaustion date can be included on the claim. Regardless of liability, if there is third party liability then all claims need to be submitted to Medicare conditionally.
Medicare Set Asides in Liability Settlements
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
Is there any update (as of Feb. 2009) to set-aside expectations or requirements for liability cases?
-Recent Seminar Attendee
Answer:
We recently published the following guidance that may be helpful to you:
“Dealing with Misinformation Regarding Medicare Set Asides in Liability Settlements”
Several attorneys have contacted our firm in the last couple weeks telling us that a defendant/insurer is requiring a Medicare Set Aside be established in a liability settlement. In each of these instances, the defendants/insurers told plaintiffs counsel that “this new Medicare law means ‘set asides’ are now required in liability settlements.” We hope the overview below will help add some clarity (and give you a plan of action) if a defendant tells you that a Medicare Set Aside is required in your liability settlement.
The new law these defendants are referring to is the Medicare, Medicaid and SCHIP Extension Act of 2007 (“MMSEA”). MMSEA requires defendants to report certain information regarding settlements with Medicare beneficiaries to the Secretary of Health and Human Services. The implementation of MMSEA in July of this year indeed poses some new challenges to those practitioners settling single event and mass tort personal injury claims. The nature of these challenges, however, appears to be exaggerated now that some settlement consulting companies have distributed missives stating that the MMSEA requires Medicare Set Aside Arrangements (“MSA”) in liability settlements.
“MSA” has become a buzzword in the settlement community due to various memoranda from the Centers for Medicare and Medicaid Services (“CMS”). As a part of the “Patel memorandum” issued in 2001, CMS expressed its preference for practitioners to use MSAs as the suggested means for considering Medicare’s interest in workers’ compensation settlements. Subsequent memoranda further elaborated on the proper application of MSAs in workers’ compensation settlements. However, CMS has yet to address the use of MSAs in liability settlements in a similar manner. This lack of guidance has created uncertainty among practitioners involved in liability settlements.
When MMSEA was announced, some opined that Medicare would now begin requiring liability settlements to include MSAs starting July 1, 2009 and/or that such guidance is expected shortly from CMS. Such an interpretation of MMSEA misses the mark. CMS has not offered any formal guidance on the issue of liability MSAs and we believe such guidance will not be coming in the near future. Moreover, CMS has repeated in its last five “town hall” teleconferences that MMSEA’s settlement-reporting requirements are not intended to replace or change CMS’s recovery practices, including MSA guidance. Quite simply, the MMSEA is not designed to be a “Trojan horse” for liability MSAs.
In fact, the sole purpose of Section 111 of the MMSEA is to ensure that settling parties fully comply with the Medicare Secondary Payer requirement – That is, conditional payments must be verified and resolved in all liability, workers compensation and no- fault settlements. In this regard, if you are already verifying and resolving Medicare’s reimbursement claim in all your settlements, it is business as usual for you and your clients. This new law (to date) has nothing to do with identifying Medicare-covered future costs of care, which leads to MSA issues and analysis.
The history of the Medicare Secondary Payer (“MSP”) statute supports this conclusion. On Dec. 5, 1980, the MSP statutes as we know them today were modified to take into account Medicare’s conditional payment recovery rights. It was not until twenty-three years later, under Section 301 of the Medicare Modernization Act, when additional enforcement provisions were added to the MSP statute, focusing compliance on plaintiffs’ attorneys and their Medicare-entitled clients. Now, Congress has closed the loop with Section 111 of the MMSEA by placing a reporting obligation on self-insured defendants and/or insurance carriers. CMS’ February 3, 2009 MMSEA guidance emphasizes the fact that Section 111 did not change or remove any existing MSP rules, but adds to existing MSP requirements. As a result, for plaintiffs and their attorneys, the obligation is still to “verify and resolve” Medicare’s conditional payments, but for defendants, the sole obligation (through MMSEA) is to verify Medicare entitlement and inform CMS.
Nonetheless, whether promoted by a misunderstanding, self interest, or an extraordinary abundance of caution for their clients, a few settlement consulting companies unfortunately may have dragged the train out of the station and placed it on no clear track. We are aware that some insurers have gone beyond the rather unambiguous settlement reporting requirements associated with the new MMSEA and have begun mandating MSAs as a “default rule” in larger liability settlements (e.g. such as settlements of $750,000 and more). As one practitioner recently put it to me, “perhaps the momentum may be irreversible at this point.” In this regard, while we disagree with any interpretation that compliance with the MMSEA requires a customary use of MSAs in all larger liability settlements, we realize that we need to help our clients through this morass.
If you are settling cases with insurance companies that (understandably) are trying to protect themselves in the midst of this confusion, the Garretson Firm Resolution Group (“GFRG”) offers a few services that may help address the situation. As a preliminary step, however, you might diffuse the situation by informing the defendant that your firm has a formal Medicare compliance process in place, including the verification and resolution of Medicare’s reimbursement claim. You also may provide the defendant with our analysis of the state-of-affairs with respect to this issue. (We are commonly pulled into phone calls and are willing to discuss this topic with all parties). Should the issue remain after these preliminary efforts, we may be able to assist further by:
• Providing an analysis of the facts of your case against the existing CMS rules/guidance to produce a recommendation letter. (At a minimum, the recommendation letter allows you to document and memorialize the fact that you are considering Medicare’s interest at the time of settlement);
• Conducting a full Liability Medicare Set Aside (Liability MSA) evaluation (which may be necessary in a limited set of facts and/or to counter balance the proposed MSA provided by the defendant). A Liability MSA evaluation has two primary components: a) an analysis of the client’s future Medicare-covered injury-related care; and b) a determination of the appropriate allocation (if any) in the settlement to future medicals. (A “white paper” discussing this analytical process is available upon request);
• Submitting (if necessary under a very limited set of facts) Liability MSA proposals to CMS for approval.
Industry misinformation has injected Liability MSA requirements into the national discussion. While we do not believe “MMSEA equals Liability MSA,” we realize we all may be trying for some time – as cowboy wisdom goes - to stuff feathers into a pillowcase during a wind storm.
Question:
Is there any update (as of Feb. 2009) to set-aside expectations or requirements for liability cases?
-Recent Seminar Attendee
Answer:
We recently published the following guidance that may be helpful to you:
“Dealing with Misinformation Regarding Medicare Set Asides in Liability Settlements”
Several attorneys have contacted our firm in the last couple weeks telling us that a defendant/insurer is requiring a Medicare Set Aside be established in a liability settlement. In each of these instances, the defendants/insurers told plaintiffs counsel that “this new Medicare law means ‘set asides’ are now required in liability settlements.” We hope the overview below will help add some clarity (and give you a plan of action) if a defendant tells you that a Medicare Set Aside is required in your liability settlement.
The new law these defendants are referring to is the Medicare, Medicaid and SCHIP Extension Act of 2007 (“MMSEA”). MMSEA requires defendants to report certain information regarding settlements with Medicare beneficiaries to the Secretary of Health and Human Services. The implementation of MMSEA in July of this year indeed poses some new challenges to those practitioners settling single event and mass tort personal injury claims. The nature of these challenges, however, appears to be exaggerated now that some settlement consulting companies have distributed missives stating that the MMSEA requires Medicare Set Aside Arrangements (“MSA”) in liability settlements.
“MSA” has become a buzzword in the settlement community due to various memoranda from the Centers for Medicare and Medicaid Services (“CMS”). As a part of the “Patel memorandum” issued in 2001, CMS expressed its preference for practitioners to use MSAs as the suggested means for considering Medicare’s interest in workers’ compensation settlements. Subsequent memoranda further elaborated on the proper application of MSAs in workers’ compensation settlements. However, CMS has yet to address the use of MSAs in liability settlements in a similar manner. This lack of guidance has created uncertainty among practitioners involved in liability settlements.
When MMSEA was announced, some opined that Medicare would now begin requiring liability settlements to include MSAs starting July 1, 2009 and/or that such guidance is expected shortly from CMS. Such an interpretation of MMSEA misses the mark. CMS has not offered any formal guidance on the issue of liability MSAs and we believe such guidance will not be coming in the near future. Moreover, CMS has repeated in its last five “town hall” teleconferences that MMSEA’s settlement-reporting requirements are not intended to replace or change CMS’s recovery practices, including MSA guidance. Quite simply, the MMSEA is not designed to be a “Trojan horse” for liability MSAs.
In fact, the sole purpose of Section 111 of the MMSEA is to ensure that settling parties fully comply with the Medicare Secondary Payer requirement – That is, conditional payments must be verified and resolved in all liability, workers compensation and no- fault settlements. In this regard, if you are already verifying and resolving Medicare’s reimbursement claim in all your settlements, it is business as usual for you and your clients. This new law (to date) has nothing to do with identifying Medicare-covered future costs of care, which leads to MSA issues and analysis.
The history of the Medicare Secondary Payer (“MSP”) statute supports this conclusion. On Dec. 5, 1980, the MSP statutes as we know them today were modified to take into account Medicare’s conditional payment recovery rights. It was not until twenty-three years later, under Section 301 of the Medicare Modernization Act, when additional enforcement provisions were added to the MSP statute, focusing compliance on plaintiffs’ attorneys and their Medicare-entitled clients. Now, Congress has closed the loop with Section 111 of the MMSEA by placing a reporting obligation on self-insured defendants and/or insurance carriers. CMS’ February 3, 2009 MMSEA guidance emphasizes the fact that Section 111 did not change or remove any existing MSP rules, but adds to existing MSP requirements. As a result, for plaintiffs and their attorneys, the obligation is still to “verify and resolve” Medicare’s conditional payments, but for defendants, the sole obligation (through MMSEA) is to verify Medicare entitlement and inform CMS.
Nonetheless, whether promoted by a misunderstanding, self interest, or an extraordinary abundance of caution for their clients, a few settlement consulting companies unfortunately may have dragged the train out of the station and placed it on no clear track. We are aware that some insurers have gone beyond the rather unambiguous settlement reporting requirements associated with the new MMSEA and have begun mandating MSAs as a “default rule” in larger liability settlements (e.g. such as settlements of $750,000 and more). As one practitioner recently put it to me, “perhaps the momentum may be irreversible at this point.” In this regard, while we disagree with any interpretation that compliance with the MMSEA requires a customary use of MSAs in all larger liability settlements, we realize that we need to help our clients through this morass.
If you are settling cases with insurance companies that (understandably) are trying to protect themselves in the midst of this confusion, the Garretson Firm Resolution Group (“GFRG”) offers a few services that may help address the situation. As a preliminary step, however, you might diffuse the situation by informing the defendant that your firm has a formal Medicare compliance process in place, including the verification and resolution of Medicare’s reimbursement claim. You also may provide the defendant with our analysis of the state-of-affairs with respect to this issue. (We are commonly pulled into phone calls and are willing to discuss this topic with all parties). Should the issue remain after these preliminary efforts, we may be able to assist further by:
• Providing an analysis of the facts of your case against the existing CMS rules/guidance to produce a recommendation letter. (At a minimum, the recommendation letter allows you to document and memorialize the fact that you are considering Medicare’s interest at the time of settlement);
• Conducting a full Liability Medicare Set Aside (Liability MSA) evaluation (which may be necessary in a limited set of facts and/or to counter balance the proposed MSA provided by the defendant). A Liability MSA evaluation has two primary components: a) an analysis of the client’s future Medicare-covered injury-related care; and b) a determination of the appropriate allocation (if any) in the settlement to future medicals. (A “white paper” discussing this analytical process is available upon request);
• Submitting (if necessary under a very limited set of facts) Liability MSA proposals to CMS for approval.
Industry misinformation has injected Liability MSA requirements into the national discussion. While we do not believe “MMSEA equals Liability MSA,” we realize we all may be trying for some time – as cowboy wisdom goes - to stuff feathers into a pillowcase during a wind storm.
MMSEA and Defendants Obtaining Information
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
How will be defendant obtain the info required by the MMSEA? Under MMSEA, will all defendants (even uninsured) have the duty to determine if plaintiff is entitled to Medicare benefits?
-Recent Seminar Attendee
Answer:
The requirements of MMSEA are explained in our article, Act II: Reporting Obligations for Settling Insurers where Medicare is a Secondary Payer: The Medicare, Medicaid and SCHIP Extension Act of 2007.
Question:
How will be defendant obtain the info required by the MMSEA? Under MMSEA, will all defendants (even uninsured) have the duty to determine if plaintiff is entitled to Medicare benefits?
-Recent Seminar Attendee
Answer:
The requirements of MMSEA are explained in our article, Act II: Reporting Obligations for Settling Insurers where Medicare is a Secondary Payer: The Medicare, Medicaid and SCHIP Extension Act of 2007.
MMSEA and Notice Agent Reporting Obligation
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
Assume a liability settlement is reached on 1/31/09 with a defendant. The settlement will soon be executed, and proceeds are to be distributed within 60 days by 4/1/09. The settling claimant, who was catastrophically injured in the event giving rise to the claim, has recently qualified for Social Security disability, but will not eligible for Medicare for 24 months and has not received Medicare benefits to date. What, obligation, if any, does the defendant have as a “responsible reporting entity” to “consider Medicare’s interest” in such a settlement and/or to report information in this circumstance if MMSEA’s reporting requirements do not become effective until 7/1/09? Even if there is no reporting obligation, is there any process currently in existence through which an RRE could voluntarily report information?
-Recent Seminar Attendee
Answer:
The MMSEA adds a notice agent reporting obligation that begins on July 1st, 2009. For reporting obligations, RRE’s will not be required to report anything prior to the July initiation date. Furthermore, Medicare does not have a current system in place that allows reporting prior to date.
Question:
Assume a liability settlement is reached on 1/31/09 with a defendant. The settlement will soon be executed, and proceeds are to be distributed within 60 days by 4/1/09. The settling claimant, who was catastrophically injured in the event giving rise to the claim, has recently qualified for Social Security disability, but will not eligible for Medicare for 24 months and has not received Medicare benefits to date. What, obligation, if any, does the defendant have as a “responsible reporting entity” to “consider Medicare’s interest” in such a settlement and/or to report information in this circumstance if MMSEA’s reporting requirements do not become effective until 7/1/09? Even if there is no reporting obligation, is there any process currently in existence through which an RRE could voluntarily report information?
-Recent Seminar Attendee
Answer:
The MMSEA adds a notice agent reporting obligation that begins on July 1st, 2009. For reporting obligations, RRE’s will not be required to report anything prior to the July initiation date. Furthermore, Medicare does not have a current system in place that allows reporting prior to date.
MSA Administration Fees
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
What types of fees are incurred in administering a MSA?
-Recent Seminar Attendee
Answer:
Administration fees can vary by provider and the level of service. Our sister company, Affiance Partners specializes in such administration and offers two Medicare Set-Aside administration options. The Custodial Account Service includes an Affiance Identification Card, future injury related expenses validated and paid through account, all required maintenance, reports and CMS compliance provided for life of account and toll free telephone support for a set up fee of $1950 and $750 annually with 3% COLA. The Self Administration Option includes detailed self-administration accounting instruction, toll free telephone support, workbook to track medical expenses paid from MSA, review of workbook prior to submitting to CMS for compliance for $750.
Question:
What types of fees are incurred in administering a MSA?
-Recent Seminar Attendee
Answer:
Administration fees can vary by provider and the level of service. Our sister company, Affiance Partners specializes in such administration and offers two Medicare Set-Aside administration options. The Custodial Account Service includes an Affiance Identification Card, future injury related expenses validated and paid through account, all required maintenance, reports and CMS compliance provided for life of account and toll free telephone support for a set up fee of $1950 and $750 annually with 3% COLA. The Self Administration Option includes detailed self-administration accounting instruction, toll free telephone support, workbook to track medical expenses paid from MSA, review of workbook prior to submitting to CMS for compliance for $750.
Obtaining Optimal Results
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
Do you have a checklist/ timeline that goes through the various steps to get thing done right and within 100 days? Is there something like query access available to the plaintiff's attorney? Does the outsourcing mean that this becomes an iterm of cost and not fees?
-Recent Seminar Attendee
Answer:
We do have internal protocol that we follow in order to obtain optimal results. Below are some highlights from our internal protocol that have been featured as a practice tip:
Within a couple weeks of contacting COBC on newly settled cases, you should receive a letter from the MSPRC. Keep in mind that the first task of the MSPRC on new submissions is to identify all payments and generate a conditional summary. In this regard, the best recommendation this author has is to utilize a rifle shot approach - When you respond to the MSRPC provide them all the documentation requested along with the exact detail they need to push your case through the bottleneck, including the exact window of time involved (date of injury to date of settlement) and the exact ICD 9 codes related to the injury and settlement.
Further information is available in our article, Medicare’s Reimbursement Claim, the Only Constant is Change.
Under MMSEA, there will be query availability, but it’s our understanding that this functionality will only be available to RRE’s for entitlement inquiries. Currently, something like query access is not available to the plaintiff’s attorney.
Outsourcing allows for improved fees based on volume and mix of cases and leveraging economies of scale. Whether healthcare lien resolution is considered a cost or a fee is dependent on the language in your fee agreement.
Question:
Do you have a checklist/ timeline that goes through the various steps to get thing done right and within 100 days? Is there something like query access available to the plaintiff's attorney? Does the outsourcing mean that this becomes an iterm of cost and not fees?
-Recent Seminar Attendee
Answer:
We do have internal protocol that we follow in order to obtain optimal results. Below are some highlights from our internal protocol that have been featured as a practice tip:
Within a couple weeks of contacting COBC on newly settled cases, you should receive a letter from the MSPRC. Keep in mind that the first task of the MSPRC on new submissions is to identify all payments and generate a conditional summary. In this regard, the best recommendation this author has is to utilize a rifle shot approach - When you respond to the MSRPC provide them all the documentation requested along with the exact detail they need to push your case through the bottleneck, including the exact window of time involved (date of injury to date of settlement) and the exact ICD 9 codes related to the injury and settlement.
Further information is available in our article, Medicare’s Reimbursement Claim, the Only Constant is Change.
Under MMSEA, there will be query availability, but it’s our understanding that this functionality will only be available to RRE’s for entitlement inquiries. Currently, something like query access is not available to the plaintiff’s attorney.
Outsourcing allows for improved fees based on volume and mix of cases and leveraging economies of scale. Whether healthcare lien resolution is considered a cost or a fee is dependent on the language in your fee agreement.
Reporting Lien/Subrogation Amount
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
Is there a timeframe between plaintiff's request to insurer for their lien/subrogation amount and when that information is required to be provided back to the plaintiff and are there penalties for failure to provide that information in the State of Missouri?
-Recent Seminar Attendee
Answer:
Missouri is an anti-subrogation state with regard to health insurance and medical benefits. Missouri’s anti-subrogation law is pre-empted in the case of ERISA-covered, self-funded health plans.
Question:
Is there a timeframe between plaintiff's request to insurer for their lien/subrogation amount and when that information is required to be provided back to the plaintiff and are there penalties for failure to provide that information in the State of Missouri?
-Recent Seminar Attendee
Answer:
Missouri is an anti-subrogation state with regard to health insurance and medical benefits. Missouri’s anti-subrogation law is pre-empted in the case of ERISA-covered, self-funded health plans.
Sample Retainer Agreement Provision
Posted by Matthew Garretson and Elizabeth Vish Shad
Question:
How can we get a copy of that sample provision for a retainer agreement that you showed?
-Recent Seminar Attendee
Answer:
Below is the sample provision:
We understand that current laws with regards to (Healthcare Providers) may require all parties involved in this matter to compromise, settle, or execute a release of Healthcare Providers’ separate claim for reimbursement / lien for past and future payments prior to distributing any verdict or settlement proceeds. We agree that the law firm may hire separate experts / case workers who assist with resolving any Healthcare Providers’ reimbursement claims or liens for past and/or future injury-related medical care. The expense of any such service shall be treated as a case expense and deducted from our net recovery and shall not be paid out of the law firm’s contingent fee in this matter.
Question:
How can we get a copy of that sample provision for a retainer agreement that you showed?
-Recent Seminar Attendee
Answer:
Below is the sample provision:
We understand that current laws with regards to (Healthcare Providers) may require all parties involved in this matter to compromise, settle, or execute a release of Healthcare Providers’ separate claim for reimbursement / lien for past and future payments prior to distributing any verdict or settlement proceeds. We agree that the law firm may hire separate experts / case workers who assist with resolving any Healthcare Providers’ reimbursement claims or liens for past and/or future injury-related medical care. The expense of any such service shall be treated as a case expense and deducted from our net recovery and shall not be paid out of the law firm’s contingent fee in this matter.
The Common Fund Doctrine, ERISA case, Stop Loss Policy
Posted by Matthew Garretson and Elizabeth Vish Schad
Question:
1)What jurisdictions recognize the Common Fund Doctrine?
2) What if you have provided an ERISA plan with written notice of your involvement in a case and they have failed to respond? In my case it has been over 30 days-can you disburse funds directly to a client without accounting for their purported lien or subrogation interest?
3) Please define a Stop Loss policy and give me a list of the companies who write these policies?
-Recent Seminar Attendee
Answer:
The Common Fund Doctrine is the default rule. Every circuit essentially applies the default rule except the 5th. With respect to notice to the plan, their rights are controlled by contract, so their failure to respond is not that harmful to them (assuming they have good language]. Under 29 U.S.C. 1024 and 1132, they have to provide it to you within 30 days. So demand a copy for the year of injury along with ALL attached schedule A’s. It’s very important to request these documents because failure to produce can result in them facing penalties.
Under the terms of ERISA, the plan administrator must provide the beneficiary with a copy of the SPD upon written request. Any administrator which fails to comply with the request in a timely manner risks incurring a penalty of $100 for each day the SPD is not delivered to the beneficiary. Thus, as soon as notice is received of a potential lien, the attorney should immediately issue a written request for this document, along with the Form 5500, to the plan administrator.
Regarding Stop Loss, we don’t have a list. Below is some info:
Stop-loss contracts are not covered by ERISA. While a self-funded plan remains “self-funded” even if it buys stop loss insurance, that insurance coverage is subject to state law and state regulation. Don’t let a stop-loss provider itself convince you that they’re grounded in ERISA – they’re not! Only the ERISA plan is – they are two separate entities.
Always make sure that the ERISA plan is involved in any stop-loss reimbursement issue. They must take part and release their subrogation claim. Stop-loss carriers then typically have to get reimbursed by the ERISA plan, since they’re the ones who have the contract.
• When a stop-loss insurer gets involved, they create a contract with the ERISA plan – but not with your client.
• Most, if not all, stop-loss policies actually disavow any legal relationship with the client.
• But when it suddenly suits the stop-loss carrier – like, say, when they stand to gain financially – they will try to assert a contractual claim against your client’s settlement and cloak themselves in ERISA and try to assert a lien.
• But don’t be fooled – there is no contract between your client and the stop-loss carrier.
• Make sure you get a copy of BOTH the stop loss policy and the SPD (which I discussed above) and see exactly what rights the stop-loss carrier has and doesn’t have – then stick to your guns.
• Stop-loss carriers love to claim that they have the same rights as the plan. Make them provide you with some authority that says so – you might be surprised at how desperate they become.
• The ERISA plan MUST be on board with any reimbursement right. If a stop-loss carrier is trying to recover independent of the ERISA plan, that’s a RED FLAG!
Question:
1)What jurisdictions recognize the Common Fund Doctrine?
2) What if you have provided an ERISA plan with written notice of your involvement in a case and they have failed to respond? In my case it has been over 30 days-can you disburse funds directly to a client without accounting for their purported lien or subrogation interest?
3) Please define a Stop Loss policy and give me a list of the companies who write these policies?
-Recent Seminar Attendee
Answer:
The Common Fund Doctrine is the default rule. Every circuit essentially applies the default rule except the 5th. With respect to notice to the plan, their rights are controlled by contract, so their failure to respond is not that harmful to them (assuming they have good language]. Under 29 U.S.C. 1024 and 1132, they have to provide it to you within 30 days. So demand a copy for the year of injury along with ALL attached schedule A’s. It’s very important to request these documents because failure to produce can result in them facing penalties.
Under the terms of ERISA, the plan administrator must provide the beneficiary with a copy of the SPD upon written request. Any administrator which fails to comply with the request in a timely manner risks incurring a penalty of $100 for each day the SPD is not delivered to the beneficiary. Thus, as soon as notice is received of a potential lien, the attorney should immediately issue a written request for this document, along with the Form 5500, to the plan administrator.
Regarding Stop Loss, we don’t have a list. Below is some info:
Stop-loss contracts are not covered by ERISA. While a self-funded plan remains “self-funded” even if it buys stop loss insurance, that insurance coverage is subject to state law and state regulation. Don’t let a stop-loss provider itself convince you that they’re grounded in ERISA – they’re not! Only the ERISA plan is – they are two separate entities.
Always make sure that the ERISA plan is involved in any stop-loss reimbursement issue. They must take part and release their subrogation claim. Stop-loss carriers then typically have to get reimbursed by the ERISA plan, since they’re the ones who have the contract.
• When a stop-loss insurer gets involved, they create a contract with the ERISA plan – but not with your client.
• Most, if not all, stop-loss policies actually disavow any legal relationship with the client.
• But when it suddenly suits the stop-loss carrier – like, say, when they stand to gain financially – they will try to assert a contractual claim against your client’s settlement and cloak themselves in ERISA and try to assert a lien.
• But don’t be fooled – there is no contract between your client and the stop-loss carrier.
• Make sure you get a copy of BOTH the stop loss policy and the SPD (which I discussed above) and see exactly what rights the stop-loss carrier has and doesn’t have – then stick to your guns.
• Stop-loss carriers love to claim that they have the same rights as the plan. Make them provide you with some authority that says so – you might be surprised at how desperate they become.
• The ERISA plan MUST be on board with any reimbursement right. If a stop-loss carrier is trying to recover independent of the ERISA plan, that’s a RED FLAG!
Friday, March 13, 2009
Uninsured Employer, Workers’ Compensation/MSAs
Posted by John Cattie
Question:
Can an uninsured employer elect to just pay the injured employee’s palliative care/pain management on an ongoing basis and, therefore, avoid the hassles and expenses of setting up a MSA? Or is it required to do a MSA no matter what?
Employer in my case thinks that it can pay on an ongoing basis, but it doesn’t think that it can put together a large lump sum. Of course there is the question of whether the employer will always be around and solvent during the employee’s relatively long life expectancy. Please advise at your convenience.
-Indiana Attorney
Answer:
An uninsured employer can certainly choose to keep meds open and continue to pay those on an ongoing basis. If this is to happen, then an MSA would not be necessary as there would be no permanent burden shift of future care obligations to Medicare. I would be happy to elaborate further on a call if you wish.
Question:
Can an uninsured employer elect to just pay the injured employee’s palliative care/pain management on an ongoing basis and, therefore, avoid the hassles and expenses of setting up a MSA? Or is it required to do a MSA no matter what?
Employer in my case thinks that it can pay on an ongoing basis, but it doesn’t think that it can put together a large lump sum. Of course there is the question of whether the employer will always be around and solvent during the employee’s relatively long life expectancy. Please advise at your convenience.
-Indiana Attorney
Answer:
An uninsured employer can certainly choose to keep meds open and continue to pay those on an ongoing basis. If this is to happen, then an MSA would not be necessary as there would be no permanent burden shift of future care obligations to Medicare. I would be happy to elaborate further on a call if you wish.
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