Personal injury attorneys who have cases where the claimant is a Medicare beneficiary need to have a basic understanding of Medicare reimbursement and the reporting process. This article does not address Medicare with regard to workers' compensation.
Congress created Medicare in 1965 to provide health coverage to low income families. It has expanded to cover pregnant women, children, seniors and individuals on Supplemental Security Income who qualify due to low income or other criteria. When a qualified patient receives medical treatment, Medicare/Medicaid provides direct payment to the provider. Medicare was considered the primary payer.
In an effort to shift the rising cost of medical care and depleting the trust account that funded Medicare, Congress enacted the Medicare Secondary Payer Act in 1980. The act stated that Medicare would be the secondary payer to (1) group health plans, (2) auto and other liability insurance, (3) no fault liability insurance, and (4) workers' compensation. The act was codified at 42 U.S.C. Section 1395y(b) and established a method by which the government would be reimbursed for payments made to health care providers when a third party or entity should be the primary payer. Although there was a statutory framework for requesting reimbursement, the act was largely not enforced until 2007. It was not enforced because Medicare had no way of knowing what bills were paid in personal injury cases and should have been reimbursable.
In 2007, Congress passed new legislation imposing reporting requirements on insurance companies and other payers to disclose pending litigation to the Centers for Medicare and Medicaid Services (Medicare, Medicaid and SCHIP Extension Act of 2007, modified by the Strengthening Medicare and Repaying Taxpayers Act). The legislation created a sliding scale as to what settlements had to be reported to the services. After Jan. 1, 2015, all settlements over $1,000 must be reported.
If the treatment is related to a liability case, the beneficiary must report it to the Benefits Coordination and Recovery Center. The best method is through the online Medicare Secondary Payer Recovery Portal. Notice should be given at the beginning of litigation; do not wait until the eve of trial or a mediation date because the Centers for Medicare and Medicaid Services are not going to jump through hoops at the last minute to get your numbers.
The beneficiary's attorney needs to provide a proof of representation document indicating that the beneficiary has consented to the release of the information to the attorney. The benefits center may also request a copy of the attorney's retainer agreement but other proof of representation will also work. The documentation must include the beneficiary's name, gender, health insurance claim number, and the date of the incident.
An individual or entity who does not represent the beneficiary but who is requesting information regarding the conditional payment information will need a consent to release form signed by the beneficiary. The consent to release must identify who you are, the length of time that the consent is effective, and have the beneficiary's Medicare Health Insurance Claim Number.
When the Benefits Coordination and Recovery Center learns about a claim, they will determine what items and services they believe are related to the incident. This process takes approximately eight weeks, but could take longer.
The center will provide a rights and responsibilities letter. The letter gives an overview of the process, outlines the information needed, gives an approximate timeline, and advises how to repay.
After approximately 65 days, the center will automatically provide a conditional payment letter and a payment summary form which list the items that Medicare believes are related to the incident. The letter goes to all authorized parties. Upon receipt of the letter, the attorney should go through the items to make sure that they are in fact related. The attorney can dispute unrelated itemizations and the dispute must be resolved before settlement. Failure to timely dispute a charge will lead to a waiver.
Before starting settlement negotiations, the attorney should download the final conditional payment amount. With information about the lien, the beneficiary's attorney can have a better idea of how to negotiate a settlement. The biggest danger is settling the case and then finding out that the Medicare lien exceeds the settlement amount, or unexpectedly eats most of it up.
When there is a pending settlement or award, the attorney should notify the Benefits Coordination and Recovery Center identifying the amount of the settlement, the date of settlement, and the amount of attorney fees and costs borne by the beneficiary. Use the final settlement detail form.
The center will determine if there are new costs and then issue a formal recovery demand letter advising of the amount owed. Payment is due within 60 days of the date of the demand letter. Interest starts to accrue from the date of the demand letter and the debt should be paid by the date identified in the letter.
While it is known that Medicare was entitled to be reimbursed for past medical payments, there has been a question as to how it could be reimbursed for future medical payments. The Centers for Medicare and Medicaid Services has been looking to see how to enforce the set-asides in liability cases.
In Aranki v. Burwell, 151 F. Supp.3rd 1038 (D. Ariz. 2015), the district court ruled that a set-aside was not required because there was no federal law or regulation requiring the creating of a Medicare set-aside in personal injury settlements to cover potential expenses. However, other federal courts have determined that a set-aside was appropriate. Courts noted that the uncertainty of set asides would discourage personal injury settlement.
With these cases in mind, the Centers for Medicare and Medicaid Services started the process to establish such a policy for set-asides. Effective October 2017, the agency required contractors to install a new system that would allow the agency to monitor liability Medicare set-asides.
Medicare Advantage Plan
The obligations (and dangers) go beyond Medicare. The 11th U.S. Circuit Court of Appeals found that because Humana Medical Plan Inc. was a Medicare Advantage Plan, it had a private right of action to collect from the insurance company even after it had settled with the plaintiff.
In Humana Medical Plan, Inc. v. Western Heritage Insurance Company (11th Cir. 2016), Humana had paid $19,155 in medical bills to a beneficiary who was injured in a slip and fall. The beneficiary settled her case with the property owner and Humana provided a determination amount to the plaintiff. The settlement agreement stated that there was no Medicare lien or right to subrogation. The parties in the litigation agreed that the plaintiff attorney would hold the disputed amount in trust. Humana sued the defendant's insurer demanding double damages under the Medicare Secondary Payer Act private cause of action. The court affirmed summary judgment in Humana's favor. The court found that putting the $19,115 in the attorneys' trust account was insufficient to extinguish the reimbursement obligation to Humana because they were not paid within 60 days. The total award was $38,310.
Find out as early as possible whether the claimant is a Medicare recipient or has a Medicare Advantage Plan.
All settlement agreements should have a statement that Medicare's interests have been taken into consideration.
To avoid a Medicare set-aside, the beneficiary's health care provider should certify that the treatment has been completed as of the date of the settlement and that future treatment will not be required. The certification can be placed in the file. If the beneficiary will need future care, the health care provider should certify the amount of compensation for future medical expenses and the attorney should place that amount in the set-aside account. The beneficiary and attorney should ensure that Medicare is not billed until that amount is exhausted.