Friday, April 24, 2009

GFRG Issues Client Advisory Update on Use of Rated Ages in Workers' Comp MSAs

Posted by John Cattie

CMS has posted an update on its website regarding the use of rated ages in Workers’ Comp MSAs. The update reads as follows:

“Effective immediately, submitted rated ages that do not conform to CMS' standards for acceptable proof of Rated Age, which includes being independent, on the letterhead of an insurance carrier or settlement broker, and includes a statement from the submitter that all rated ages obtained on the claimant have been included, will be priced using actual age and CMS will not consider re-pricing the workers' compensation case using the new or corrected rated age information provided by submitters.”

This update reinforces its Memo published on August 25, 2008 when its position regarding the proper use and disclosure of rated ages was originally promulgated. Those practitioners who prefer submitting Workers’ Comp MSAs to CMS for review and approval need to do so carefully. Unless the submitted rated ages are deemed to meet CMS’ standards for acceptable proof of Rated Age, the MSA proposal is likely not going to be approved, and CMS will request a higher amount to satisfy its future interest.

GFRG closely follows the CMS website in order to keep the legal community up-to-date with currently existing Medicare policies and procedures. GFRG is available to discuss this recent development, or any other MSA concerns you may have.

To read the CMS update, click here.

Monday, April 20, 2009

ERISA claim by non-profit employer

Posted by Matthew Garretson

Matt, I have a nurse who worked for Boys Town National Hospital. I have a document which shows them to be a non-profit entity. Is it true that a non-profit organization cannot assert and ERISA claim against the employee? Thanks in advance for your help.

-Nebraska Attorney

As the Supreme Court noted in Sereboff v. Mid Atlantic Medical Services, 547 U.S. 356, 361 (2006), “[a] fiduciary may bring a civil action under s. 502(a)(3) of ERISA ‘(A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan. 29 U.S.C. 1132(a)(3).” Therefore, to the extent Boys Town National Hospital is a fiduciary under ERISA and the claim it seeks to assert is to enforce provisions of ERISA or the terms of the ERISA Plan in issue, Boys Town National Hospital should be able to “assert an ERISA claim”, on behalf of the Plan, against this former employee/plan participant. The fact that Boys Town National Hospital may be a non-profit entity does not appear to be of any consequence to the determination of whether it is a fiduciary seeking to enforce ERISA rights. Certainly, non-profit employers and employee organizations are not exempt by that status from establishing or maintaining employee benefit plans under ERISA. What is relevant, for purposes of determining whether Boys Town is a fiduciary, is whether Boys Town exercises any discretionary authority regarding management/ administration of the Plan in issue or with respect to the disposition of said Plan’s assets. Where the plan sponsor/employer (or, for example, a plan administrator, a third-party administrator, …) maintains discretionary authority it will be considered a fiduciary to the plan. This determination, however, can only be made based upon all the facts and circumstances of the case.

Hope this helps.

Friday, April 17, 2009


Posted by Matthew Garretson

We need to know the answer to the following questions:

In a wrongful death case, where minor children of the decedent have collected social security benefits since the death, does the federal government have subrogation rights to this money?
If there is subrogation on the past benefits paid, what it the best way to contact the federal government and work out a settlement on the repayment?

If there is subrogation on the past benefits paid, if the minors collect a large sum of money (after paying back the past subrogation), will it affect the payment of social security benefits going forward in the future?

-Texas Attorney

Happy to help… There is no subrogation right to Social Security survivor's benefits (these benefits are paid as an “entitlement” due to a decedent's work history).

Going forward the receipt of assets will not affect these Social Security survivor benefits.
“Countable” assets (in excess of $2,000) only affect Social Security Income (“SSI”) which is a benefit for blind, aged or disabled people who have little or no income (and usually accompanies Medicaid). However, Social Security Disability Insurance and Social Security Survivor’s benefits are entitlement benefits that a worker has, in effect, paid for through contributed funds via FICA (the stuff coming out of the paychecks each month).

Hope that helps. We have an educational package we often send to claimants that addresses these issues. Please let me know if you’re interested.

Thursday, April 16, 2009

Medicare Subrogation

Posted by Mary Skinner

Does a hospital (or any Medicare provider for that matter) have to bill Medicare in a standard MVA case? I take it that they don't. I used to get the response that they weren't "allowed" to bill Medicare but now it just seems to be simply that they won't bill Medicare.

Matt, I have a copy of something you posted in ‘06 saying that providers could now "bill" the liability settlement proceeds. You responded to a subsequent post saying that providers can "bill" or "place a lien" upon the liability policy (I'm assuming you were using those terms interchangeably) and that the strategy at the end would be to tell the provider it must submit to Medicare or take a reduced "Medicare-like" rate or the client won't take the settlement.

Are most hospitals electing not to bill Medicare in these situations? If so, do they truly have a "lien" of some nature (and not just an unpaid account) and how do they perfect it? As a practical matter are people having success with getting these providers to accept significantly reduced amounts at the end? What is the leverage on our end to get them to do so? With all due respect, I wouldn't think that just saying that the client won't settle would be very effective as I would think the hospital would just continue to wait out the claimant and hold out for a bigger payoff. Any advice or comments would be appreciated.

-Ohio Attorney

I have seen an increase in the number of hospitals that are opting not to bill Medicare and file a hospital lien, however, in many instances they are filing the lien for actual charges after Medicare denies the claim as “Medicare not primary,” which they cannot do. Once they submit a claim, it negates their right to go after actual charges.

When a Medicare provider of services learns that a beneficiary received services that may be payable by a payer primary to Medicare, the provider is required to pursue payment from the primary payer for a period of 120 days following the date of treatment. At the end of the 120 day period, if the insurer has not made payment, the provider may choose to bill Medicare or continue to wait for payment from a future insurance settlement. If the provider chooses to bill Medicare, then it becomes the Medicare Secondary Payer Recovery Contractors responsibility to recover Medicare’s payment if a settlement occurs at some point in the future. The provider of service is not required to send the bill to Medicare if they choose to pursue payment from a possible future insurance settlement.

-Mary Skinner

Friday, April 10, 2009

Knowingly ignoring a Medicare or Medicaid Lien

Posted by Matthew Garretson

What sanctions, penalties or any other punishment can a lawyer expect for knowingly failing to pay a Medicaid or Medicare lien and distributing the proceeds of a settlement without telling the client of the responsibility to pay?

-Kansas Attorney

Medicaid penalties are generally determined on a state-by-state basis. Generally, states require attorneys to give notice to the Department when pursuing a tort claim for a Medicaid beneficiary. If Medicaid is ignored, they typically have right to pursue Def’d directly (and, b/c of this issue, most defendants will, in turn, seek indemnification in settlement agreements). Some states can pursue collection from attorney. (Model Rule 1.15 probably comes into play too). As for the clients, they have the obligation in every state to report a “change of financial condition” every 30 days – They have to report the settlement or face penalties in some jurisdictions for fraud… that usually ties back to the tort recovery department…

Medicare has the “double damages” plus interest…unfortunately for the attorney, he or she has direct liability for reimbursement if Medicare is not fully satisfied. The two most notable case I am aware of is United States of America v. Henry L. Sosnowski, D.J. Weis, and Home Mutual Insurance Company, Defendants. The Office of General Counsel (OGC) may bring suit against the attorney or the Medicare beneficiary for recovery for the full amount of the Medicare Secondary Payer (MSP) claim. Furthermore, MSP can send the case to the Department of Treasury for collection. Also, MSP and OGC may seek double damages and interest. (see below) If really spun up, MSP may disregard the settlement and pursue reimbursement “over-and-above” the amount granted to it in the settlement agreement (also see below).

Medicare assesses interest on MSP debts by exercising common law authority that is consistent with the Federal Claims Collection Act (FCCA) and implementing regulations (see 45 C.F.R. § 30.13). The CMS requires that a beneficiary or other entity repay the CMS within 60 days of receiving insurance proceeds from a third-party payer (see 42 C.F.R. § 411.24(h)). If the CMS does not receive a full refund, or adequate proof that no overpayment exists, within 60 days of notifying the beneficiary of the CMS's demand, the intermediary will begin assessing interest as of the date of mailing of the demand letter. 45 C.F.R. § 30.14(a) provides that a debtor may either pay the debt, or be liable for interest on the uncollectible debt while a waiver determination, appeal, or a formal or informal review of the debt is pending. Therefore, assessment of interest may not be suspended solely because further review may be requested. It should be noted, however, that you may repay the debt to avoid accruing charges, but retain your right to dispute, appeal, or request waiver of the debt. If you succeed in the appeal or waiver request, Medicare will refund the amount waived. If the beneficiary requests a waiver or an appeal of the overpayment determination, he or she will be held responsible for the interest on the debt if the agency prevails and a refund is later collected (see 45 C.F.R. § 30.14(a)). In cases of joint and several liability among two or more debtors, Federal regulations at 42 C.F.R. § 401.623 prohibit the CMS from allocating the burden of claims payment among the debtors. The CMS will proceed with collection action against one debtor even if other liable debtors have not paid their proportionate shares. Therefore, if one of the joint debtors owes Medicare, the intermediary may assess interest on the debt. Regulations at 45 C.F.R. § 30.13(a) provide for assessing the higher of the private consumer rate (PCR) or the current value of funds (CVF) rate of interest on overpayments and underpayments. Interest will continue to accrue on delinquent debts until the debt is either paid in full or there is a determination to terminate the collection action by the CMS Central Office or Regional Office.

The fact that a settlement has been made between the beneficiary and the liable party does not, necessarily, bind Medicare to that settlement. If the liability insurer was aware of Medicare's interest, but Medicare was not consulted in the settlement, Medicare may pursue the balance of its claim, over and above any amount granted to it in the settlement, against the liability insurer (see 42 C.F.R. § 411.24(I)).

Probably more than you wanted, but I had it at my fingertips…

My best,
Matt Garretson

Thursday, April 9, 2009

GFRG Client Advisory Update 4/9/09: RRE Reporting of Multiple TPOC Amounts

To download a pdf of this advisory, click here.

On April 7, 2009, CMS published an alert (the “Alert”) related to the Medicare, Medicaid, and SCHIP Extension Act of 2007 (“MMSEA”). This alert provides guidance as to how an entity deemed to be a Responsible Reporting Entity (“RRE”) under the MMSEA will report multiple Total Payment Obligation to the Claimant (“TPOC”) amounts on the Claim Input File for Section 111 Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation reporting.

Version 1.0 of the Non-Group Health Plan User Guide (the “User Guide”) defines three values for the Action Type (Field 3) on the Claim Input File Detail record:

0 = Add
1 = Delete
2 = Update/Change
3 = Update for additional, separate TPOC Report

Due to input from RREs, Value 3 listed above has been removed. RREs indicated to CMS officials that a frequent situation may arise whereby an Add file is submitted indicating a TPOC Amount and Date and, subsequently, an Update file is submitted to report a different, additional TPOC Amount and Date for the same claim, reflecting a settlement for lost wages. Version 1.0 of the User Guide did not provide flexibility to the RRE to subsequently update one of those specific TPOC Amounts and/or Dates.

Instead, CMS has modified the reporting requirements for multiple settlement amounts. CMS has removed Value 3, and has added four additional TPOC Amount and corresponding TPOC Date fields at the end of the Claim Input File Auxiliary Record layout. CMS has also added a corresponding Funding Delayed Beyond TPOC Start Date field. These new fields only need to be submitted if the RRE has more than one, distinct, additional TPOC to report for a claim. The changes will be reflected in the next version of the User Guide.

These TPOC reporting changes may affect your practice. These changes allow more flexibility to the RRE when reporting multiple TPOC Amounts and/or Dates. However, incorrectly reported TPOC Amounts and/or Dates may confound settlements, effectively increasing your workload without producing additional revenue for your efforts.

With the publication of the Alert, CMS continues to amend previously reporting Section 111 compliance guidelines. Some issues, such as multiple TPOC amount reporting, are changing while other issues, such as applicability of Section 111 reporting to mass tort settlements, have 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.

To read the alert, click here.

Tuesday, April 7, 2009

GFRG Client Advisory Update 4/7/09: WCMSA Prescription Drug Pricing

Posted by John Cattie

To download a pdf of this advisory, click here.

On April 3, 2009, the Centers for Medicare and Medicaid Services (“CMS”) issued a memorandum (the “Memo”) related to Medicare Set-aside Arrangements (“MSAs”) for Workers’ Compensation (“WC”) settlements. This memorandum promulgates CMS procedures for pricing future prescription drug treatment costs/expenses as they relate to Workers’ Compensation MSA proposals (“WCMSAs”).

Effective June 1, 2009, CMS will begin pricing future prescription drug treatment costs/expenses in WCMSAs independently. If the WC injuries in the WCMSA warrant the need for prescription drugs for the ongoing treatment of the WC related injury, CMS will apply the average wholesale price of the prescription drug to calculate the prescription drug amount. CMS will disregard any other pricing, discounting or calculation methods when determining the accuracy of the prescription drug amounts contained in WCMSA proposals.

Furthermore, CMS may apply brand name average wholesale prices instead of generic brand wholesale prices. The Memo advises that, if the WCMSA proposal does not contain an amount for prescription drug treatment and CMS determines prescription drug treatment is warranted, it will default to pricing using the average wholesale price for brand name drugs. If the WCMSA proposal contemplates the use of generic drugs, and no generic drug is available to treat that condition, CMS will default to pricing using the average wholesale price for brand name drugs to determine the adequacy of the prescription drug amount.

This Memo provides clarity as to how CMS calculates amounts related to prescription drugs. It also serves to warn practitioners that, in creating WCMSAs, the parties should be careful to properly consider Medicare’s interests as it relates to prescription drugs. WCMSA proposals which gloss over the applicable prescription drugs may be found to be insufficient, thus leading to additional costs to properly consider Medicare’s interests for you and your clients.

To view the Memo in its entirety, click here.