Thursday, February 25, 2010

Query Access System - Is Plaintiff Authorization Required

I understand that the defendant’s obligation to report is not until after the case settles (and only if it settles). Defendants are allowed (but not required) prior to settlement to access Medicare's Query Access system to find out if the claimant is Medicare eligible. Assuming they need to report at some point in time, the bottom line question is, does the insurance company (defendant) need an authorization signed by my client in order to access the Medicare Query Access System? Several companies are claiming they must have the authorizations signed by our clients before they can get the information from Medicare.

-Ohio Attorney

The defendant (RRE) does not need a release to obtain the five data points to perform the query function to obtain entitlement information. CMS has stated that their response to the RRE will only tell the RRE entitlement status. It will not provide the RRE with why the injured party is entitled, when the injured party became entitled or the SSDI status. The response will only tell the RRE whether there was a match and that the injured party is entitled or that there was no match.

We have seen many RREs requesting that a release be signed. This is absolutely not necessary for the query function or for the submission process.

My best,
Matt Garretson

Should Defense Urge Clients To Forgo Medicare Covered Treatment?

I am currently processing a settlement in which the client is a Medicare recipient. Nevertheless, he has never received Medicare covered medical treatment and has none planned. The defendant is insisting on a provision in the settlement agreement stating that the client agrees not to seek Medicare covered treatment for a period of 30 months. Is there anything in the MSP statute that supports this notion? I don't think so, but how should I respond? I cannot advise this man to forego covered treatment just for the convenience of a defense lawyer who does not understand the statute.

You are correct to believe that the MSP statute does not support the notion that a claimant must agree to forgo any Medicare covered treatment for the 30 month period of time post-settlement simply because the defense misunderstands its Medicare compliance obligations. Instead of having language in the settlement release speaking to a time period in which the claimant may not seek Medicare covered treatment, you should try to keep the release terms couched in currently enacted law under 42 USC §1395y(b) and the associated MSP federal regulations. Furthermore, you should feel comfortable enough to indemnify defense on any future cost of care issues which may arise from Medicare after the settlement. Despite their misguided perception, defense does not have any exposure to Medicare on future cost of care issues. That liability lies with your client and you. Therefore, providing indemnification on that issue provides them with a certain level of comfort while you are not agreeing to any more than the statute would require – that your client verifies and resolves any conditional payment reimbursement obligations.

Colorado Anti-Subrogation Statute Question

Is anybody sufficiently familiar with Colorado law to know OTOH whether they have an anti-subrogation statute like we do? Just hoping...

Colorado Attorney

Our firm focuses exclusively on healthcare compliance (we resolve liens for PI attorneys on a broad basis nationwide). From our research, CO does not have anti-subro currently. There has been a bill introduced that may take them in that direction.

See below:

House Bill 10-1168 Introduced

Proposed addition under Insurance Title of Colorado Statutes

Codifies Made Whole and Common Fund
If insurer disputes they must file motion and court decides

Subrogation is prohibited

Third party settlor cannot add insurer as co-payee on any settlement check

The bill introduced in the House seeks to eliminate all subrogation and permit reimbursement ONLY when the injured insured is made whole (fully compensated for injuries and damages). If the insurer disputes the argument of made whole they may motion the court with underlying jurisdiction to decide whether fully compensated. Such motion must be brought within 60 days after the insurer is notified that the recovery is exceeded by the damages. IF insured receives full compensation (made whole) then insurer MUST reduce for proportionate share of fees and expenses. Also any reimbursement MUST be applied to the lifetime cap of the policy.

Hope this helps. My best,
Tate Johnson, Esq.

Tuesday, February 23, 2010

Do Hospitals Have The Right To Bill Medicare After Four Years?

My client died four years ago as the result of a hospital's medical malpractice. After the malpractice was committed, my client spent three weeks in the same hospital's intensive care unit before she died. Except for a few tests, the hospital never billed Medicare for the three weeks my client spent in the ICU.

We have just settled the case against the hospital and the doctors, though the release has not yet been signed. Does the hospital (four years after the fact) have the right now to bill Medicare for care in the ICU? Would Medicare have a lien against the proceeds for such care? What, if anything, should be done with regard to Medicare?

Thank you for your help.
Massachusetts Attorney

Many times when the tortfeasor in a medical malpractice is the hospital itself, they will not bill Medicare nor will they try to collect from the client or the patient. If they haven't billed the client for the ICU stay, there's a chance they are not going to bill the client.

As for Medicare, you should still contact Medicare. While the hospital may not have billed for their charges it is very possible and most likely that the doctors, if they were not a defendant in the case, would have submitted claims for their services. Hence there would be claims out there for which Medicare would seek reimbursement. If there are not any claims out there, then Medicare will provide a discharge for a zero interest. That ensures that you satisfied Medicare's interest and complied with federal statutes.

Hope this helps!

My best,
Elizabeth Vish

Monday, February 22, 2010

Follow up to post on 2/15/2010 - ERISA Employee Health Plan Language

I appreciate your prompt and concise response. Thanks for the good information. However, it does raise many questions but one in particular that I am stuck on:

You say below that Sereboff holds in part that the Plan must “…………………2) specify that recovery must be limited to a specific portion of said fund.” Many plans I see now a day say that they are entitled to proceeds from a settlement or judgment on a third party matter no matter how that settlement or judgment is described. In other words, they are saying that if your plaintiff/their beneficiary have a PI claim against a third party and there is ANY recovery in that suit or claim, they are entitled to their money. Is there a case out there that says this second part is not met by the plan if the language in the plan is too broad as I have tried to describe above? Juries will sometimes not award all of the medical bills asserted ($40,000.00) and only award a small sum for those damages ($5,000) but give significant damages for pain and suffering ($25,000) and lost wages (25,000). In this type of scenario where the total recovery is $55,000 but only a small portion of the medical bills were recovered are they entitled to recover their entire payout?

Thanks for any input you can give on this.

That is great a question. First, with regard to the second prong of equitable remedy, there are not any cases which hold that because the plan seeks any and all recoveries it is not seeking a specific portion. Courts have held that this specific portion requirement applies to the amount sought rather than characterization of the recovery. For example, language stating that the plan seeks recovery “up to the amount of benefits paid” or for those “benefits paid” will meet the requirement. Although use of such broad language could arguably be challenged as not being appropriate and equitable such a challenge will not be applied to the equitable remedy requirements of Sereboff.

Second, if a plan’s language limits itself to recovery of medical expenses than such allocations can be useful in combating their reimbursement right. However, as you mention in your follow up, they often include broad and all encompassing rights. Unfortunately, in these situations even a court ordered allocation with regard to damages cannot prevent a plan’s recovery if they have an equitable lien and strong plan language. Allocation among individuals is a different story.

Michael Russell

Medicare Estate Recovery

Our client is the surviving son of a woman who died in a nursing home after falling several times. We have reached a settlement and the defendant now asserts that Medicare has a lien on the proceeds for all amounts. Medicare might have paid for her stay in the nursing home, as well as for treatment for her repeated falls.

When decedent died, a probate estate was opened, and Medicaid forced the sale of her home to satisfy its interest for payments made. Medicare did not. In Missouri, it is the survivor who makes a claim for the death, and the jury is allowed to consider the loss of consortium, support, care, comfort, etc. The estate of the decedent is NOT the plaintiff, even if a probate estate was opened, as in this case.

Can Medicare now assert a lien against the survivor's interest when they knew or should have known that it had a claim against the estate of the decedent for the care it provided?

Thanks for your assistance!
Missouri Attorney

Yes. Medicare has a priority right to recovery for any injury related claims they may have paid. According to Medicare's policy MSP Manual, "a beneficiary’s death does not materially change Medicare’s interest in recovering its payments made on behalf of the beneficiary while alive. Upon death, the estate of the beneficiary comes into existence by operation of law.” An executor or administrator whose sole purpose is to conclude all business and financial matters that still remained at death manages it. Medicare’s interest in the outcome of a third party liability claim is one of these matters. Therefore, Medicare’s claim is properly asserted against the estate.

Having said that, unlike Medicaid, who can recover from the estate for all payments made, injury and non injury related. Medicare's seeks reimbursement only for claims that are from the date of injury thru the date of settlement, and only for the injuries attributed to your claim.

Mary Skinner

Wednesday, February 17, 2010

Is There A Statue of Limitations To Repaying Medicare?

I have a PI case in which our client was in a Motor Vehicle Accident in 1995. We settled the case in 2000. Our office was proceeding through the process of getting a final repayment amount from Medicare. In 2001 Medicare quit communications with our office and our client. The attorney who was handling this case refunded the monies we were holding in our trust account to the client in 2004. In August, 2009 both our client and our office received a demand letter from CMS. Is there any kind of statute of limitations with regards to repaying Medicare if they let eight years pass before demanding money?

Arizona Attorney

Under the statute of limitations (28 U.S.C. 2415), Medicare has six (6) years and three (3) months to recover Medicare’s claim. The statute of limitations begins at the time Medicare is made aware that the overpayment exists.

Medicare’s overpayment does not come into existence until a judgment award or settlement offer is accepted. It is at the point of settlement that Medicare’s conditional payments are considered to be overpayments. Medicare’s claim come into existence by operation of law 42 U.S.C. 1395Y(B)(2)(B)(I) when payment for medical expenses that Medicare conditionally paid for has been made by a third party payer.

In your situation, the date of settlement was 2000, the clock started ticking on Medicare's SOL when you notified Medicare of the settlement. Considering that you and your client have received a demand letter from Medicare, it must be addressed promptly to avoid collection efforts by Medicare, such as garnishment of your clients Social Security benefits and/or double damages for you.

Section 42 CFR 411.23 states that a beneficiary must cooperate in any action taken by the Centers for Medicare and Medicaid Services in recovering conditional payments. Failure to do so or not protecting the Medicare program during and after settlement negotiations may result in CMS taking action against the beneficiary to collect the mistaken payment.

In the event that reimbursement is not made to Medicare as required by 42 USC 1395y(b)(2)(B)(I), action may be brought against any entity responsible for payment (and may collect double damages from insurance companies), or any entity that has received a third-party settlement. Under 42 CFR 411.24(g), this includes attorneys whose fees are paid from settlement proceeds. Please refer to US v. Sosnowski, et. al. where judgment was entered against a beneficiary and his attorney for failing to reimburse Medicare after receiving settlement proceeds on a personal injury case.

CMS has a direct right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency, or a private insurer that has received a third party payment, 42 CFR 411.24.

Having said this, the best way to address the situation is to request a post-settlement compromise of Medicare's interest. When submitting your request, craft a compelling story; provide them with the facts of the case and supporting documentation for your argument. All post-settlement compromise requests must be in writing and sent to the MSPRC Medicare Contractor), they will forward your request to the CMS Regional office. The MSPRC contractor does not have the authority to compromise. The authority to compromise a Medicare claim is reserved exclusively for the CMS home office or regional offices. Any agreement for a compromise settlement under the Federal Claims Collection Act ("FCCA") may not be appealed.

I hope this was helpful. Should you need further guidance please contact me.

Mary Skinner

Tuesday, February 16, 2010

Use Of MSAs In Workers’ Compensation Settlements

I am settling a workers’ compensation case for $100,000 and closing out medicals in a disputed claim. My client is 66 and on Medicare. Is it acceptable to have the Insurer fund a MSA with an amount that they "deem" sufficient (without CMS review) and agree in the settlement documents to supplement the MSA account if CMS later finds that more funds were necessary to be in compliance? Is this sufficiently protecting Medicare's interest?

Current law (42 USC 1395y(b)) and guidance about the use of MSAs in Workers’ Comp settlements (via CMS Policy Memos) tells us that settling parties have to properly consider and protect Medicare’s interests at the time of settlement. Those interests are two fold, past interests and future interests. The MSA question arises as part of properly considering and protecting Medicare’s future interests. Unlike handling Medicare’s past interests, where Medicare may seek recovery from any entity that MAKES/RECEIVES a primary payment, when properly considering and protecting Medicare’s future interests, Medicare will only pursue any entity that RECEIVES a primary payment. Based on this, it is the claimant’s (and claimant’s attorney’s) responsibility to ensure that the MSA is properly funded and MSA proceeds are properly spent, not the insurer’s responsibility. While submitting a MSA proposal to Medicare is voluntary, that MSA must still properly consider and protect Medicare’s future interest. If those future interest issues are not handled appropriately, Medicare will look to your client and you, not the insurer.

Under your fact pattern, the insurer would fund the MSA with an amount it deems appropriate, and will agree to supplement that MSA should CMS later find that it was under funded. The penalty for failure to properly consider and protect Medicare’s future interests (i.e., properly funding a MSA when appropriate) is Medicare revoking the claimant’s Medicare card for a certain amount of time until Medicare determines, in its sole discretion, that its future interests have been satisfied. Practically speaking, that means your client would lose Medicare benefits and have to pay out-of-pocket for future care until Medicare restores their benefits.

Overall, I believe setting up the MSA for the amount determined by the insurer to be sufficient may sufficiently protect Medicare’s future interest, but only with the caveat that should Medicare revoke your client’s Medicare card in the future for failure to properly fund the MSA, then the insurer will be responsible for all injury-related medical expenses otherwise covered by Medicare until such time when Medicare restores your client’s Medicare benefits. Because the insurer has no liability to Medicare on these future interest issues, it really has no incentive to ensure the MSA is properly funded. Therefore, it will blindly accept the work product provided by the MSA Allocation house with whom it contracts and then fund the MSA for that amount, whether it is sufficient or not. Therefore, if the safeguard of subsequent funding by the insurer is built into the settlement docs, this may be a sufficient way of considering and protecting Medicare’s future interest. If not, your client may face significant problems with Medicare in the future without the ability to seek additional recovery from the insurer.

A more appropriate method for protecting Medicare’s interests would be for you to seek a plaintiff-oriented MSA Allocation that would provide a more realistic allocation amount for future injury-related care. Since the exposure to Medicare on future interest issues goes directly to your client and you, you should be “driving the boat” on the MSA issues as opposed to the defense. If the insurer is willing to supplement the MSA in the future should Medicare find the original MSA lacking, it should be willing to fund it appropriately from the start.

Hope this helps…
John Cattie

Monday, February 15, 2010

ERISA Employee Health Plan Language

We have received a very small judgment in a PI case. There is a no fault medical lien and of course our expenses and fees to be paid per our contract. The ERISA carrier says that they have a lien for the total amount of their payments and it has priority over these liens. What is the priority if any of ERISA carrier's right of reimbursement?

An ERISA employee health plan will be governed according to the terms of its plan language. From our perspective as a third-party provider of lien resolution services, the most pivotal step in resolving Private/ERISA liens is the plan evaluation. The language in a plan will dictate the priority, if any, of the reimbursement interest and will identify the scope of that interest.

First, ERISA plans are limited to seeking appropriate equitable relief. 29 U.S.C. 1132(a)(3)(B). An ERISA plan has a right of reimbursement which sounds in equity if the plan language imposes a constructive trust or equitable lien upon a third party recovery. To qualify as equitable the plan language MUST 1) specify that recovery will be made from an identifiable fund and 2) specify that recovery must be limited to a specific portion of said fund. If either of these requirements are not met in the plan language, the plan does not have an equitable right to recovery and thus they do not have a reimbursement interest under ERISA. See Sereboff, 126 S.Ct. 1869 (2006).

Second, ERISA plans which are funded through an insurance provider may be subject to state law defenses through the “savings clause” of ERISA 1144(b)(2)(A) (if the state law is found to regulate insurance). ERISA plans which are self-funded through the assets of the employer or a trust of similar nature will preempt state law but may be subject to federal common law defenses. Whether or not a defense will apply will be controlled by the language of the plan as well. In addition, the plan’s funding status should be identified in the plan language; although this alone should not be relied upon.

Third, as a general matter, the plan language will specifically state what type of priority it possesses.

In conclusion, to properly identify and assess a plan’s interest and what priority such an interest may have it is absolutely necessary to obtain a copy of the Summary Plan Description from the year in which benefits were provided. Under 1024(b)(b), your client has the right to request this and any other document under which the plan is operated or established. The request should be directed to the administrator of the plan and they are required to comply.

If you obtain the plan language I would be happy to give it a quick review and provide my general thoughts on the strength or priority. Thanks.

Michael D. Russell

Sunday, February 14, 2010

Medical Providers Billing Settlement Instead of Submitting Claims to Medicare

If a provider chooses to bill the liability insurance settlement, rather than submitting the claim to Medicare, does it have to reduce its lien by a pro-rata share of the "procurement costs?" The way the reg reads, it is ambiguous to me. Says they may collect their total charges up to the amount of the settlement less any applicable procurement costs. Does that mean if legal costs are 40% of the total settlement that every provider who chooses to file a lien has to accept a 40% reduction? Or does it mean their lien just doesn't attach to the part of the whole settlement that is going to the plaintiff's lawyer? EG, if a lien is $100,000, the settlement is $1,000,000 and the procurement costs are $400,000, does the provider get to collect $100,000 or $60,000?
Thanks in advance for your input.

-Oklahoma Attorney

Here is my understanding: The pro rata offset is applied to the full settlement amount, not the individual provider charge or “lien.” In other words, the providers may collect actual charges from the net proceeds to the client/beneficiary after the pro rata offset has been taken. In your scenario, the provider would be able to collect the actual charges of $100,000. It is important to note that the providers cannot seek or attempt to collect those charges until settlement has been made. Attempting collection prior to settlement is considered “billing the beneficiary” which is not allowed. Hope this helps…

My best,
Matt Garretson

Friday, February 12, 2010

Is A CMS Questionnaire Required?

I have been a solo practitioner 1969. I am a member of AAJ and represent plaintiffs in civil cases only. Recently, I received a “CMS questionnaire” from an insurer for the first time referencing the federal law and claiming that the law imposes mandatory reporting requirements on insurers with respect to claimants who receive compensation from liability insurance with respect to medical expenses or a release of medical liability for medical expenses. Basically, the questionnaire asks if the claimant has ever been enrolled in Medicare Part A or B and also whether the claimant has ever applied for Social Security Disability benefits. Is this truly a mandatory requirement now which must be honestly answered for all personal injury claimants before cases can be settled with a liability insurer? Thanks for your help in this matter.

Massachusetts Attorney

You are not the only one getting such "CMS questionnaires" from an insurer. The reason you are receiving such a document from the insurer is because under the MMSEA statute (42 USC 1395y(b)(8)), the insurance company may have to report certain information to Medicare once a claim is settled. That reporting obligation arises in those cases where the injured individual is a current Medicare beneficiary at the time of settlement. The insurance company, generally referred to as a Responsible Reporting Entity or RRE, faces a $1,000 per day per claimant penalty under the statute if they are found to be out of compliance, so this obligation definitely has gotten their attention.

Therefore, in an effort to maintain compliance with Medicare, the RRE needs to determine if the injured individual is a current Medicare beneficiary. CMS has set up a Query Access system allowing an RRE to determine an injured individual's Medicare entitlement status based on the electronic submit of limited data. That data is as follows: 1) the person's Medicare number (aka HICN) or Social Security number; 2) the first letter of the person's first name; 3) the first 6 characters of the person's last name; 4) gender; and 5) date of birth. Using this limited information; Medicare will advise the RRE whether that individual is a Medicare beneficiary. If so, the RRE knows it will have to report the settlement. If not, absent contrary information, the case will not have to be reported unless that entitlement status changes to a 'yes' before settlement. If a case is reportable under the MMSEA, the RRE must report at least 50 data points to Medicare, and it can be as many as 131 data points. The RRE will not be in compliance with Medicare unless it reports to Medicare in a timely manner.

With regards to the request for Social Security information, the RRE is trying to determine whether the injured individual may require a Medicare Set Aside (MSA) to be established as a part of the settlement. Due to an abundance of misinformation currently in the marketplace, some RRE's mistakenly believe that the new MMSEA reporting statute obligates them to establish MSAs as a part of the settlement. While currently enacted law requires the settling parties to consider Medicare's interests, the use and propriety of a MSA in a liability settlement is really limited, and should be based on the case-specific facts. For more information about MSAs, I refer you to our MSA White Paper on our website.

To your question about whether is it required that you complete this "CMS questionnaire", I would say that it is not a requirement. However, practically speaking, until the RRE is satisfied that it is Medicare complaint, it will be very reluctant to settle a case, let alone disburse settlement proceeds. We advise plaintiff firms to cooperate with defense on these issues and help them to satisfy their reporting obligations by 1) providing the limited information mentioned above to enable the RRE to determine the injured individual's Medicare entitlement status, and 2) collaborate with the RRE on the data points to be reported to Medicare. We go as far as to suggest stipulating to the data that would be reported to Medicare as a part of the settlement agreement. We have seen that the MMSEA questions have had a chilling effect on the settlement continuum for those parties not willing to cooperate on these Medicare compliance issues. To that end, providing defense with appropriate information which is not overbroad is highly suggested.

For more information about MMSEA compliance, please talk with Marlene Wilson, our Director of MMSEA compliance. She can be reached at (866) 694-4446.

My best,
John Cattie

Tuesday, February 9, 2010

From Feb. 4, 2010 TTLA Webinar - Medicare Compliance Concerns

I enjoyed your informative seminar on Medicare. However; I was not able to get in a question but would appreciate if you could give me your thoughts. Your seminar and materials I have seen from your firm talk about dealing with Medicare through the MSPRC or CMS. We have received a subrogation and/or reimbursement interest letter from INGENIX on behalf of AARP MEDICARECOMPLETE PLUS that they are entitled to the same treatment and rights as Medicare. Is that true? Thanks.

Virginia Attorney

Thanks for your question and your kind words. It was my pleasure to attempt to present some clarity with respect to the Medicare compliance questions. Health plans such as AARPMEDICARE COMPLETE PLUS plans are Medicare Part C plans. Although these plans often try to assert the same recovery rights as traditional Medicare Part A or B, Medicare Part C plans, for subrogation purposes, are treated akin to a private plan rather than traditional Medicare. That is because Medicare Part C is not covered within the meaning of the MSP statute (42 U.S.C. 1395y(b)). A very good summary of the laws that do apply to Medicare Part C is contained in the (attachment - click here) U.S. District Court’s ruling in Primax Recoveries v. Yarmosh (U.S.D.C. D. Ct Case No. 3:03CV01931), in which the Court holds that Medicare HMOs are not able to imply a private cause of action to recover funds paid under such plans (through bootstrapping the MSP statute). Instead, the Court held that there is no private cause of action for a Medicare+ Choice HMO (Part C) under the Medicare Part C statute (42 U.S.C. 1395mm(e)(4). Rather, the Court found the HMO’s remedy, if any, is under state contract law. Id., 790; see also Nott v. Aetna U.S. Healthcare, Inc., 303 F. Supp. 2d 565 (E.D. Pa. 2004).

To that end, one must look to the actual plan language itself to determine the plan’s reimbursement rights. Depending on the plan language (which could be strong or weak), the plan may have a right of reimbursement or it may not have a right of reimbursement. Thus, it becomes imperative to review the plan language as opposed to lumping Medicare Part C plans in with traditional Medicare when it comes to reimbursing for injury-related care.

I have copied John Cattie and Michael Russell on this email, each of whom works with me in addressing these issues. Should you have any further questions of John, Michael and/or me, please do not hesitate to ask.

Our best,
Sylvius von Saucken

Monday, February 8, 2010

Time Frame for MSPRC Correspondence

I have a client who has a large Medicare lien. We settled the case on the premise that a jury would have attributed 30% of fault to our client. After settlement we sent a letter to MSPRC advising of the settlement, our costs and expenses. The lien amount was only reduced by 10% with no reduction for our fees and expenses. I sent a letter of appeal citing the statutes which require reduction for procurement costs. We paid the full amount of the lien under protest to avoid interest charges. I just received a letter advising the full amount of the lien had been paid and the file was closed. I called to ensure the appeal was on file. I was advised the request for "compromise" had been sent to the regional office. She went on to advise that the regional office has no time limit by which these compromise requests must be processed. She also refused to give me any contact information for the regional office. Do you know if there is a time limit on this? I understood I had filed an "appeal" not a "compromise request" do I need to re submit an "appeal"? Any assistance would be appreciated. Thank you.

Kansas Attorney

Unfortunately, what you are experiencing is not uncommon. Under the current process, all correspondence is scanned in Detroit and put in "buckets" based on how the correspondence is either labeled or the language in the first one or two sentences of the letter.

When the MSPRC miscalculates the final demand amount then a request for "redetermination" must be made. Based on the facts you provided it appears that when you requested an "appeal" the MSPRC labeled your letter as a “compromise" and forwarded it to the Regional Office in Kansas City. The CSR you spoke with at the MSPRC was correct in that there are no time limits associated with a compromise request; however, it has been our experience that it usually takes approximately 30-60 days for a decision.

Although; this is an unfortunate situation all is not lost. I suggest calling the MSPRC again and ask to speak to a supervisor and explain the situation, that you want Medicare to make a "redetermination" of their final demand based on their error of not correctly applying the procurement offset. The MSPRC can and should pull your letter and work it at the MSPRC level, it does not need to be done by the Regional Office. Also request that she expedite your request due to their error. The timeframe for a redetermination decision is 60 days from the date of receipt.

Should you need the contact information for the Kansas City Regional Office, please contact me directly and I will be happy to provide you with it.

Mary Skinner

Friday, February 5, 2010

Does a MVA effect SSDI Payments?

If a plaintiff is receiving Social Security Disability payments as a result of being disabled in a motor vehicle accident, and receives a settlement from the driver of the other vehicle to end the plaintiff's lawsuit, does the SSA have a lien on the lawsuit settlement?

Section 224 of the Social Security Act (42 U.S.C. 424a) requires that if an individual receives SSDI payments and workers compensation payments during a given month, his/her SSDI payments are reduced by a certain dollar value for that month based on a formula that takes into account work history and other factors for reduction. This statute, however, excludes by its operation and meaning third party settlements because the reduction is intended to avoid double payments to a Social Security Disability Insurance (under Section 223 of the Social Security Act) beneficiary where that person receives periodic payments in the form of SSDI and from a workers’ compensation or similar program. (See excerpt below).

In interpreting these rules, the Program Operation Manual System (POMS) directs SSDI case workers to exclude any third party settlements from these SSDI offset rules.

As a result, liability cases which have no workers’ compensation component to them are not off settable – so there is no SSDI offset for a liability case.

That is not, however, the same as saying there can be no SSDI reduction in a liability case. For example, 42 U.S.C. 1395y(b)(2) (aka The Medicare Secondary Payer Act) provides that Medicare beneficiaries are required to reimburse Medicare for injury-related medical expenses paid by Medicare on a conditional basis for which recovery has been made as part of a third party settlement. In that instance, where the beneficiary and his/her attorney fails to properly resolve Medicare’s statutory claims, SSDI benefits can be reduced as part of a Taxpayer Recovery Offset Program (TROP) initiative.

Overall, SSDI does not have a lien which attaches to liability settlements. As can be seen from a review of the statutes and regulations, SSDI offsets occur in workers’ compensation. cases because of the intent to avoid a payment for lost wages from SSDI, and a duplicate payment for lost wages from workers’ compensation. The same cannot be said of liability cases, in which a different paradigm and rationale for recovery exist. At the same time, any case involving a Medicare beneficiary must be handled with care, as following the MSP Act, plaintiffs’ attorneys have an affirmative duty to verify and resolve Medicare’s conditional payment reimbursement obligations arising from date of injury to date of settlement. Where those obligations are not met, the same fate might await a client’s SSDI payments, albeit for different reasons that SSDI offset.

Please let me know if you have any follow up questions. Thanks.
Michael D. Russell

Thursday, February 4, 2010

Medicare Procurement Offset

How does Medicare handle expenses when they come off the top? Is there a dollar for dollar reduction or are expenses ignored and only % fee reduction applied?

-Missouri Attorney

Medicare will recognize expenses even if they come off the top. The procurement reduction would not be in the form of a dollar for dollar reduction, but rather a pro-rata share reduction. The formula used by Medicare is as follows:

1. Amount of settlement $__________________
2. Medicare payments $__________________
3. Attorney fees $__________________
4. Other procurement costs incurred $__________________
5. Total procurement costs (lines 3 + 4) $__________________
6. Ratio of procurement costs to settlement (line 5 / line 1) _________________%
7. Medicare’s share of procurement costs (line 2 x line 6) $__________________
8. Medicare’s claim to be recovered (line 2 minus line 7)$____________________

It is important to note that if Medicare payments equal or exceed the amount of the liability insurance payment, judgment or settlement amount, Medicare recovers the entire liability insurance payment, total judgment or settlement payment up to the providers’ charges, minus the total procurement costs.

I hope that helps…

My best,
Carol Brown

Wednesday, February 3, 2010

Is Reduction Fees and Costs, Regulation or Statute?

Does anyone know if the 1/3 reduction for fees and costs is by regulation or statute? Someone just told me that Medicare is claiming that it is not automatic and depends of the settlement dollars.

NJ Attorney

The procurement reduction is found in 42 CFR 411.37





411.37 - Amount of Medicare recovery when a third party payment is made as a result of a judgment or settlement.

(a) Recovery against the party that received payment (1) General rule

Medicare reduces its recovery to take account of the cost of procuring the judgment or settlement, as provided in this section, if (i) Procurement costs are incurred because the claim is disputed; and (ii) Those costs are borne by the party against which CMS seeks to recover.

(2) Special rule. If CMS must file suit because the party that received payment opposes CMS's recovery, the recovery amount is as set forth in paragraph (e) of this section.

(b) Recovery against the third party payer. If CMS seeks recovery from the third party payer, in accordance with 411.24(i), the recovery amount will be no greater than the amount determined under paragraph (c) or (d) or (e) of this section.

(c) Medicare payments are less than the judgment or settlement amount.

If Medicare payments are less than the judgment or settlement amount, the recovery is computed as follows: (1) Determine the ratio of the procurement costs to the total judgment or settlement payment.

(2) Apply the ratio to the Medicare payment. The product is the Medicare share of procurement costs.

(3) Subtract the Medicare share of procurement costs from the Medicare payments. The remainder is the Medicare recovery amount.

(d) Medicare payments equal or exceed the judgment or settlement amount.

If Medicare payments equal or exceed the judgment or settlement amount, the recovery amount is the total judgment or settlement payment minus the total procurement costs.

(e) CMS incurs procurement costs because of opposition to its recovery.

If CMS must bring suit against the party that received payment because that party opposes CMS's recovery, the recovery amount is the lower of the following: (1) Medicare payment.

(2) The total judgment or settlement amount, minus the party's total procurement cost.

My best,
Carol Brown

Tuesday, February 2, 2010

TRICARE Recovery Limit

Libby,I enjoyed your seminar today and appreciate your speaking with me afterwards. As I stated, I have the following scenario:

- $400,000 in medical expenses
- $200,000 total available coverage
- 30,000 is the tortfeasor liability limits
- $170,000 is UIM limits
- TRICARE lien claim is $100,000
- VA lien is $67,000

Medicare lien (for amounts spent after SS Disability status) $_____?____


1.My research suggests that TRICARE’s recovery is limited to a claim on the $30,000, not bases on $200,000 because the payment was for treatment by a non-military facility. Therefore; they are entitled to recovery only under FMCRA which does not seem to allow liens on UM/UIM benefits (recovery from person liable in tort, or his insurer). Although recovery under 10 USC 1095 would allow recovery of UM/UIM, (recovery from third party payers) that law does not apply since TRICARE's payment was not for treatment at a military facility. My resource, in addition to the plain language, is presentation material from the 2007 UBO/UBU TRICARE Conference. A Cornell Law Institute document also referenced the distinction.

The TRICARE rep has no idea what I'm talking about. Has your office addressed this issue before?

2.Do you have any suggestions about how to deal with all lien holders to best ensure my client gets a good portion of his settlement?

Thanks so much.
Charlotte Attorney

Michael Russell, an attorney in our office, recently addressed your first question for another attorney:

I believe the analysis to this question is actually twofold. First and foremost, you are correct in your assertion that the United States does NOT have a right to the proceeds of first party insurance proceeds under the Federal Medical Care Recovery Act [1(a)., 42 U.S.C.A. 2651(a)]. The Court in Government Employees Ins. Co. v. Andujar, 773 F.Supp. 282, held that the United States did not have a direct right to UM proceeds under FMCRA. The FMCRA only gives the government the right to recover from the tortfeasor. In this case neither the injured party nor their insurer, were considered tortfeasors and thus the government did not have a right to recover on any settlement from the Uninsured/Underinsured motorist portion of an auto policy.

While, there is no direct right under FMCRA there MAY be a right under the express terms of the insurance policy and applicable state law. This second prong of the analysis requires an evaluation of the policy itself. If the government can qualify as an "insured" or "third party beneficiary" under the terms of the policy then they will have a right to these proceeds. In the aforementioned Andujar case the Court looked at the specific provisions of the policy. Because it was determined that GEICO's automobile policy could not be interpreted to include the government as an "insured" (policy actually specifically excluded the government from this classification), the Court held that the government could not recover the proceeds under this alternative theory. Thus in your case I would recommend that you obtain the policy for further analysis. If and when you obtain the policy, we would be more than happy to review the express provisions and determine whether the government could be considered an "insured" with potential rights to the proceeds.

For your second question, I consulted with one of our analysts. Medicare is always first. Their recovery right is strongest. They may compromise due to the policy limits or other extenuating circumstances but they will not compromise for the sake of VA and TRICARE. For reductions from VA and TRICARE, the analyst said he has had more luck securing reductions from the VA. He recommends starting there. He said VA and TRICARE each have a compromise process. Ask the caseworker at the VA and TRICARE for a compromise worksheet to fill out. Fill out that worksheet and write a letter (the compelling story I talked about yesterday) describing why you are requesting a reduction and why it's appropriate. In that letter you will need to include the information that is on the worksheet. The caseworkers at VA and TRICARE might have some additional tips...sometimes they can become your advocate.

I hope this helps!
Please let me know if you have any other questions.

My best,
Elizabeth Vish

Monday, February 1, 2010

Tricare Insured Plaintiff

Is there a Duty to Notify Tricare before disbursing settlement monies?


I have a client insured with Tricare. My client suffered medical negligence at an army hospital and sought treatment at a private hospital for follow-up reparative surgery. Her medical specials are all from the private hospital and surgeons, only a portion of which was paid by Tricare.

When settling a case with a Tricare insured plaintiff, is Tricare treated as Medicare and Medicaid would be? Namely, before disbursing funds, MUST I notify Tricare before disbursing settlement monies to my client (as compared to the private health insurance company, who, if they do not send a notice of lien, the lawyer has no obligation to notify a private health insurer of suit and settlement monies?

Thanks in advance for your comments
South Carolina Attorney

With respect to Tricare's scope of recovery, the U.S. military's rights arise under the Medical Care Recovery Act (42 U.S.C. Sections 2651-53). The MCRA states that when the Federal Government provides treatment or pays for treatment of an individual who is injured or suffers a disease, the Government is authorized to recover the reasonable value of that treatment from any third party legally liable for the injury or disease. The statute provides an independent right of recovery, but only for those payments actually made. (The statute does not contemplate any recovery for future payments to be made. (32 C.F.R. Section 757.14(a) and (d))).

Below is some additional information regarding US Navy reimbursement claims (from a recent opinion letter we prepared):

"...It is significant to note that the Navy's recovery right is NOT initially in the form of a notice of lien, or a claim. Instead, the Navy typically sends a letter to plaintiff's counsel requesting that counsel recognize the Navy's interest, and to take action consistent with protecting that interest by maintaining contact with the Navy's Legal Service Ofice (NLSO), thereby requesting approval before compromising the Navy's interests.

In exchange for plaintiffs' cooperation, the Navy would provide free of charge access to Navy doctors and access to Naval medical records and would not complicate the litigation process by becoming directly involved.

Please note that the Judge Advocate General's ("JAG") designee has limited rights to compromise a claim of more than $40,000 (42 CFR Section 757.19), and that any waiver or compromise involving a claim worth more than $40,000 will require investigation by the JAG office and additional documentation (42 CFR 757.18).

The Navy has no legal right to hire private attorneys to prosecute the Government's claim, but would refer any matter to the Dept. of Justice. 5 USCA Section 3106. Instead, the Navy would rather be a part of the settlement process by using plaintiff's private attorney to ensure that the government's interests are represented in the settlement process. The Navy does not want to be an additional party plaintiff, but wants its rights protected. Please note that the Government will take action to secure its interests (in a separate lawsuit) should "cooperation" from plaintiff and/or his counsel be withheld.

So, the bottom line is that the Navy would likely want (claimant) to do its work, and wants his "cooperation" to protect the Navy's interests in the lawsuit (assuming there are third party tortfeasors).

The one issue that keeps arising is to what extent does the Navy recognize procurement costs. So far, the only time that such costs are noted are when the reimbursement would cause a hardship. There are factors that the Navy's Legal Service Office can review, but those do not necessarily mean that the Navy is willing to compromise the reimbursement amount..."

I hope this helps.

My best,
Matt Garretson