Thursday, May 27, 2010

Settling Medicare's Lien Amount

In a situation where an injured party on Medicare has ongoing medical treatment associated with a personal injury claim or suit that may not settle for many months or a year or more, does requesting Medicare payment information prior to settling a claim or lawsuit start the clock running on interest owed on Medicare's lien amount for medical payments made by by Medicare? What benefit is there if any to requesting this information at the outset of a cae or before a case settles as opposed to waiting until after settlement occurs and thereby avoiding interst accruing on Medicare's lien amount?

The MSPRC (Medicare Secondary Payer Recovery Contractor) begins identifying claims for recovery when it receives notice of a pending no-fault, liability, or WC matter. However, it does not issue a formal recovery demand letter until there is a settlement, judgment or award. It is against the date of that formal Final Demand Letter that interest accrues. Resolving Medicare's interest in a settlement takes time so starting early will allow you to have an ongoing accounting of Medicare's interest in your case so starting early is crucial.

Sylvius von Saucken

Thursday, May 20, 2010

When Can Attorney's Process Their Fee?

Regarding a plaintiff attorney's contractual obligation, can we tell our clients that, when a settlement payment comes in, we plan to process our attorney fees and hold the rest until the lien has been satisfied, or must the entire settlement amount, including our fees be held?

According to the Medicare contractors at MSPRC, they presume attorneys will take their fees and expenses from the gross settlement, prior to Medicare reimbursement. Having said that, if there is any concern that there may not be sufficient funds to cover that reimbursement obligation, we recommend you escrow the entire settlement, provided there are no needs-based government benefits(such as SSI and/or Medicaid) to protect.

Sylvius von Saucken

Wednesday, May 19, 2010

Submission Process For WCMSAs

What is the new submission process for WCMSAs?

Recently, the Centers for Medicare & Medicaid Services (“CMS”) announced a new submission process in development for Workers’ Compensation Medicare Set-aside Arrangements (“WCMSAs”). As CMS has previously suggested, it will be moving forward with the development of a web portal. Once introduced, this web portal will enable WCMSA submitters to submit WCMSA proposals electronically via the internet. The web portal should allow for WCMSA proposals to be viewed by CMS on a more expedited basis. Scheduled to be introduced in first quarter 2011, the web portal would provide submitters with a real-time receipt acknowledgement from CMS. CMS will announce further developments regarding the web portal at a later date.

GFRG will continue to monitor CMS communications and provide this new information to the settlement community as it becomes available. To view the CMS announcement in its entirety, click here

Tuesday, May 18, 2010

CMS’ Updated Procedures For Calculating Life Expectancies For MSAs

What is the procedure for calculating life expectancies for MSAs?

The Centers for Medicare & Medicaid Services (“CMS”) recently announced a new procedure regarding how life expectancies for Medicare Set-aside Arrangement (“MSA”) purposes should be calculated. As of April 12, 2010, CMS will begin referencing the 2005 United States Life Tables recently published by the Centers for Disease Control (“CDC”) for Workers’ Compensation (“WC”) MSA calculations.

Practically speaking, the settlement community should begin referring to the CDC’s Table 1: Life Table for the total population, United States, when calculating a claimant’s life expectancy for MSA purposes. CMS will be applying this table for WCMSA proposals received on or after April 12, 2010 as well as any WCMSA case reopened on or after April 12, 2010.

GFRG will continue to monitor CMS communications and provide new information to the settlement community as it becomes available. To view the CMS announcement in its entirety, click here

Friday, May 14, 2010

Medicare Secondary Payer Enhancement Act of 2010

What is the Medicare Secondary Payer Enhancement Act of 2010?

Recently, Congressmen Patrick Murphy (D-PA) and Tim Murphy (R-PA) introduced HR 4796, a bill titled the “Medicare Secondary Payer Enhancement Act of 2010.” This piece of legislation purports to provide a seemingly less complicated approach to reimbursing Medicare for conditional payments made for injury-related care under the Medicare Secondary Payer (“MSP”) Act (42 U.S.C. §1395y(b)). Additionally, this bill purports to allow for less onerous requirements for entities obligated to report to Medicare under the recently enacted Medicare, Medicaid and SCHIP Extension Act of 2007 (“MMSEA”).

If passed by Congress and signed into law, the Medicare Secondary Payer Enhancement Act of 2010 would provide for the following:

•Voluntary Calculation and Payment of Conditional Payments. Claimants and plans would be able to submit a payment to Medicare, calculated in good faith, as full satisfaction of any reimbursement obligation to Medicare for conditional payments made by Medicare if submitted within ninety (90) days of the anticipated settlement, judgment, award or other payment.

•Secretary’s Ability to Contest Amount of Payment. Medicare would have the ability to contest the payment made according to the above procedure within seventy-five (75) days of receipt of such payment from the claimant or plan if Medicare determines that the payment made was not the total amount owed by submitting a final demand to the claimant or plan for the remaining balance owed.

•Request for Final Demand for Reimbursement. The claimant or plan would be able to request a final demand amount from Medicare within 120 days prior to the expected date of settlement, judgment, award or other payment. Within sixty (60) days of receiving such final demand request, Medicare would provide that final demand. The claimant and plan would then have sixty (60) days from the receipt of that final demand from Medicare to provide payment as satisfaction of that final demand amount.

•Failure of the Secretary to Provide Final Demand for Conditional Payment. If Medicare failed to provide final demand as set forth above, the claimant or plan would not be liable for submitting payment to Medicare to satisfy any outstanding reimbursement claims asserted by Medicare.

•Right of Appeal. Medicare would establish a right of appeal and appeals process for the payment procedures set forth above, including review through an Administrative Law Judge and access to the U.S. District Court.

•De Minimus Threshold. There would be no reimbursement obligation when the settlement, judgment, award or other payment did not exceed $5,000.

•Reporting Requirement Safe Harbors. The MMSEA would be amended to allow Medicare the discretion not to apply the statutory $1,000 penalty for each day of noncompliance with respect to a responsible reporting entity’s reporting obligation. This section would also allow for the creation of safe harbors from penalties asserted under the MMSEA.

•Use of Social Security Numbers and Other Identifying Information in Reporting. The MMSEA would be amended so that responsible reporting entities would not be required to access or report social security numbers or health identification claim numbers (i.e., Medicare numbers) of claimants.

•Statute of Limitations. A three (3) year statute of limitation, measured from the date of reporting, would be established within which time the federal government must bring any action associated with compliance under the MSP.

•User Fee. Each person or plan that submits a payment to fulfill a MSP reimbursement obligation or each person or plan that submits a request for a final demand letter as set forth above would be subject to a $30 fee, payable to Medicare.

We will continue to follow the progress of this legislation, in addition of other pieces of legislation that may affect the settlement community. Please check often for updates as well as new client advisories and practice tips. A copy of HR 4796 may be found by clicking here

Thursday, May 13, 2010

ERISA Plans & Reimbursement Agreements

My client, 19 years old, was injured in a motor vehicle accident and the ER/hospital bill will approach $300,000. Her parents each have insurance through work. The mom's plan has less onerous reimbursement language, but mom's birthday comes after dad's, so dad's plan will pay the bill first (which is one of the funkier rules I've seen).

Dad's plan is ERISA with some component of insurance, although we don't yet know how the insurance comes into play. The plan administrator wants our client and her dad to fill out some paperwork in order to begin processing the claims. The problem with the paperwork is that it sets forth a series of acknowledgements and agreements, including the agreement to assign rights to the plan and the understanding that the plan is asserting an equitable lien against any recovery.

As I recall from a recent CLE, if insurance is involved in the plan, then state law governing reimbursement may govern the reimbursement. In our state, the law requires that the insurer reduce for its share of attorney fees and costs.

I am concerned that the form my client is being asked to sign could permit the plan to claim an equitable lien for all payments, even those that might otherwise be subject to state law. I also wonder if by asking the client to agree to something beyond the language of the policy and the law, the plan has opened a window for our client to request her mother's plan to cover the claims (recall mother's plan has friendlier reimbursement language).

Finally, what requirement is there that client and father sign the agreement at all? The insured should not have to make additional agreements (beyond what is in the plan documents) in order for the plan to process the claims and make payments.


Thank you for the question. I have answered your question in two separate parts. If you should have any questions with regard to this response please feel free to reach out so we can discuss further.

1. ERISA Plans: Self-Funded & Fully Insured

Both insured Plans and self-funded Plans are both ERISA-covered. ERISA defines an employee welfare benefit plan as a plan, fund, or program; established or maintained; by an employer, an employee organization, or both through the purchase of insurance or otherwise, for the purpose of providing medical, surgical, or hospital care or benefits in the event of sickness, accident or disability, for its participants or their beneficiaries. The only exceptions are individual plans, government plans, and religious group plans. ERISA expressly preempts state laws insofar as they relate to employee benefit plans (29 U.S.C. 1144(a)). HOWEVER, under ERISA this preemption does not apply to those laws which regulate insurance, banking, or securities (29 USC 1144(b)(2)(A). This is known as the savings clause and if an ERISA plan is in fact insured you can use state law insurance defenses. This would include the common fund doctrine mentioned in your question.

Funding status can be determined by analyzing the plan language and the Form 5500 (annual filing with Depart of Labor). Special attention should be paid to the Schedule A(s). If these documents are ambiguous another good option is requesting a signed affidavit from the plan administrator.

2. Reimbursement Agreements

The first consideration should be whether or not the plan language provides for or requires the signing of a separate agreement. The second consideration should be whether or not the language of the reimbursement differs or changes the right laid out in the original plan documentation. If the plan says that no benefits may/will be provided unless an agreement is signed then beneficiary may stuck between a rock and a hard place. If, in the alternative, there is no mention of the agreement in the plan language and/or the terms of the agreement differ substantially from that of the plan then you may a serious challenge. The strongest argument is that such a reimbursement agreement would be void for lack of consideration since the plan is already obligated to pay for the benefits.

Michael D. Russell

Wednesday, May 5, 2010

Reporting Threshold of $5,000 In Mass Tort Cases With Multiple Settlments

Regarding dollar reporting threshold of $5,000, in mass tort cases or where there are multiple settlements paid out over time, is the reporting requirement for $5,000 in aggregate or only for a single $5,000 payment or above?

The answer is that the reporting threshold is considered in the aggregate, but where exceeded, each payment is to be reported separately. For liability settlements, the threshold for settlements, judgments, awards or other payments on or after January 1, 2010 through December 31, 2011 is any amount up to and including $5,000. In response to your question about how the threshold amount is applied, Section 11.4 of Version 2.0 of the User Guide states that “Where there are multiple TPOCs associated with the same claim record, the combined, cumulative TPOC amounts must be considered in determining whether or not the reporting threshold is met. However, multiple TPOCs must be reported in separate TPOC fields as described later in this guide.” This section goes on to state that “The threshold dollar and date ranges apply to the date when the threshold is met (the most recent TPOC Date). The COBC will use the most recent TPOC Date supplied on the claim report when checking the threshold ranges. Timeliness of reports will be determined based upon the applicable date for the TPOC which caused the threshold to be met (the last, latest, most recent TPOC Date reported on the claim record).

Section 11.10.2 of the User Guide reinforces the above and states that “…the sum of all TPOC amounts must be used when determining whether the claim meets the applicable reporting threshold. Use the most recent, latest TPOC Date associated with the claim when determining whether the claim meets the interim reporting thresholds defined in Section 11.4.”

Section 11.5 of the User Guide provides a detailed description of how multiple TPOCs need to be reported. The definition as used in the User Guide references above for TPOC is the Total Payment Obligation to the Claimant. The TPOC refers to the dollar amount of a settlement, judgment, award or other payment in addition to/apart from ongoing medicals. A TPOC generally reflects a one time or lump sum payment. A complete definition of TPOC is in Section 2 of the User Guide.

Sylvius von Saucken

Monday, May 3, 2010

Can A Defendant Require A MSA?

We have been trying to reach a settlement of a medical negligence claim with substantial past medical expenses but relatively little in anticipated future Medicare-eligible expenses. The client has significant deficits but future needs primarily are for attendant care rather than the kind of medical care Medicare will pay for.

The defendant's insurer is insisting that we either set up a Medicare set aside trust or get a release from Medicare. Do you have any suggestions on how best to deal with this?

Missouri Attorney

Certainly, your fact pattern is one commonly encountered these days due to the vast amount of misinformation promulgated towards the insurance community regarding Medicare compliance under the Medicare Secondary Payer ("MSP") Act. Because of their new reporting obligations under Section 111 of the MMSEA (Medicare, Medicaid and SCHIP Extension Act of 2007, found at 42 USC Sec. 1395y(b)(8)), insurance companies want to ensure that Medicare will not chase them for reimbursement of any interest, either past (represented by conditional payments made by Medicare from date of injury to date of settlement) or future (represented by payments made by Medicare for injury-related care post settlement). In their zeal for satisfying Medicare's interests, they often miss the forest for the trees.

Nowhere in currently enacted law or guidance from CMS are we told that a Medicare Set-Aside ("MSA") must be established as a part of our third party liability settlement. The obligation under the MSP Act is to "consider and protect" Medicare's interests, both past and future. Many insurance companies fail to understand that considering and protecting Medicare's interests does not always mean that you pay Medicare money. In fact, in the third party liability context for MSAs, it rarely means that. What it does mean is that the settling parties should be documenting their files to show what steps have been taken to consider and protect Medicare's future interests, including MSA evaluations, letters from treating physicians indicating exactly what care the injured individual will require, and other items.

Another concept most insurance companies do not realize yet is that the obligation to consider and protect Medicare's future interests falls on the claimant as opposed to the defense. In short, the obligation to satisfy Medicare’s future interests via a MSA or any other vehicle is the responsibility of the claimant and claimant’s attorney, not the defendant. As support for that position, we can look to the federal regulations at 42 CFR 411.46, which contains no language placing liability on the defense (unlike 42 CFR 411.24). Furthermore, evidence exists on the CMS website under the Intro to WC tab of the WCMSA site. If we look at the Future Medical Services portion in the final paragraph, we see that Medicare asserts that the liability to consider and protect Medicare’s future interests extends to those entities that RECEIVE a primary payment (as opposed to liability for conditional payments made date of injury to date of settlement as promulgated under 42 CFR 411.24 whereby Medicare may recover its conditional payment interest from any entity that MAKES/RECEIVES a primary payment).

To sum up, the insurance community appears to be receiving misinformation about Medicare compliance, and requires a re-education as to the appropriate scope of their obligations. For starters, I would forward to them our MSA White Paper and Act Two articles (attached) supporting the proposition that MSAs are rarely appropriate in the liability context, and when they are appropriate, they are plaintiff oriented obligations to handle. Further, share with them the language of the CMS website about Future Medical Services. These tools should make the insurer more comfortable with the notion that it does not face exposure to Medicare on these future interest issues. Finally, I make myself available to you for a conference call to discuss these issues.

My best,
John Cattie