Medicare Secondary Payer and Negligence Lawsuits an Overview

Medicare Secondary Payer and Negligence Lawsuits an Overview Patricia J. Foltz Anderson, Rasor & Partners, LLP June 21, 2013

Medicare’s Right of Recovery �Statutory reimbursement right �Medicare is secondary to all types of liability insurance, including self-insurance. �Medicare may make “conditional payments” while a claim is pending and/or before a claim is filed. If a claim is pursued and resolved that resolution must include reimbursement of Medicare for expenses related to the claim. �This has been known as a “Medicare Lien”.

The Process for Plaintiff �The accident/incident happens �The Medicare Beneficiary gets treatment from hospitals/doctors �The hospital/doctor submits claims to Medicare and is reimbursed �The Beneficiary makes a negligence claim Formal Lawsuit Pre suit claim to insurer

The Process for Plaintiff �Plaintiff or their representative/lawyer notifies the Coordination of Benefits Contractor (COBC) of the injury/incident and the claim. �MSPRC (Medicare Secondary Payer Recovery Contractor) issues a Rights and Responsibilities letter. Attorney must file proof of representation. �MSPRC creates a Tort Recovery Record

The Process for Plaintiff �MSPRC identifies Medicare paid medical claims related to the case and issues a “Conditional Payment Letter” (CPL) This is often simply all payments after date of incident. �The plaintiff/beneficiary may challenge claims that are not related to the case. Sometimes called a relatedness review. �You can update the CPL every 90 days

The Process for Plaintiff �Case settles/verdict for plaintiff �Plaintiff/beneficiary, attorney for plaintiff and/or authorized representative must notify MSPRC the settlement information Settlement amount Date Attorney’s fees Costs

The Process for Plaintiff �MSPRC identifies final payment amount, calculates amount owed (crediting procurement costs) and issues Demand Letter. �Payment due within 60 days of Demand Letter or interest accrues �If not paid within 60 days MSPRC issues an Intent to Refer Letter �If not paid within 60 days of Intent letter referred to Treasury for collection.

The Process for Plaintiff �After the Demand Letter there is a route to appeal or request waiver.

Sanctions �If plaintiff/plaintiff’s representative/plaintiff’s lawyer does not address the “lien” Medicare can sue any one of them to recoup the “lien” amount. �Failure to pay “lien” may result in double damage.

The Process for Defendant’s Insurer �RRE = Responsible Reporting Entity (aka insurer) �RRE becomes aware of lawsuit or claim �RRE obtains baseline information to query MMSEA (Medicare, Medicaid and SCHIP Extension Act of 2007) system. �RRE queries Medicare through MMSEA system to see if the plaintiff is a beneficiary �RRE should re query if case is close to trial or settlement

The Process for Defendant’s Insurer �If plaintiff is a Medicare recipient the insurer and defendant’s lawyer should deal with the Medicare Lien during settlement discussions. �Plaintiff/Plaintiff’s lawyer must deal with Medicare. �If the injury is continuing hen plaintiff must deal with reimbursement of Medicare in the future.

Future Payments by Medicare �Medicare Set Asides clearly apply to Worker’s Compensation cases A formal process applies �CMS clearly believes that non Worker’s Comp cases also must address future payment �Dealing with future medicals for a Medicare beneficiary is in flux May resolve outside the formal set aside process

The Process for Defendant’s Insurer �Insurer must report claim through MMSEA if: Plaintiff is a Medicare Recipient at time claim is resolved and money has been paid �Claim report includes 130 data fields. Key fields are ICD 9 codes and injury codes Basis of relatedness analysis Consider addressing in settlement negotiations �What is unclear? What if plaintiff will become a Medicare recipient and require care for continuing injury

Responsibility for Medicare “lien” �Insurer is primarily responsible to Medicare for reimbursement �If Insurer pays beneficiary/beneficiary’s attorney they become responsible to pay Medicare �This does not relieve insurer of liability for payment. Medicare can still pursue the insurer.

Sanctions �Double damages for unpaid lien �$1000 per day for failure to report claims �Not dealing with Medicare lien where your client has provided care for the alleged injuries can lead to False Claims Act issues which include criminal sanctions.

Alternatives �Pay 25 % of settlement of $5000 or less �Pay nothing if settlement $300 or less �Self-calculate lien on settlement of $25, 000 of less �All of these have caveats

What About Medicare Part C and D? �Part C is Medicare Advantage, the Medicare HMO �Part D is prescription drug coverage �Both C and D involve a capitated payment by Medicare to a part C or D provider who assumes the risk of costs above that capitated payment �Both C and D work more as true “liens” not statutory rights of recovery. See, 42 CFR 422. 108 and 42 CFR 423. 462. The Part C providers bill the third parties themselves. Part D providers advise the COBC.