Presentation on theme: "Liability Medicare Set Asides Battling Fear & Chaos What an Elder Law Attorney Needs to Know."— Presentation transcript:
Liability Medicare Set Asides Battling Fear & Chaos What an Elder Law Attorney Needs to Know
Two Take Aways 1. Medicare beni/reasonable expectation within 30 months 2. No statute/case requires MSA ….BUT MMSEA - MIR Introduction
Medicare & MSP Basics
Or …. AWP:Ain’t What’s Paid CMS: Can’t Make Sense MSA: More Sad Answers MSPRC: Maniacal Superior Professionals Reporting Confusion! RRE: Ridiculously Restricted Existence! NGHP: Not Going to Help Pay! GHP: Going to Help Pay! MMSEA: More Money Spent Elsewhere Act MSA:Medicare Set Aside WCMSA:Workers Compensation Medicare Set Aside LMSA:Liability Medicare Set Aside CMS: Center for Medicare and Medicaid Services AWP: Average Wholesale Price COBC: Coordination of Benefits Contractor COBSW: Coordination of Benefits Secure Website MSP(A): Medicare Secondary Payor Act MSPRC: Medicare Secondary Payor Recovery Contractor NGHP: Non Group Health Plan GHP: Group Health Plan RRE: Responsible Reporting Entity EDI: Electronic Data Interchange SSDI: Social Security Disability Insurance MMSEA: Medicare, Medicaid and SCHIP Extension ACT MIR:Mandatory Insurer Reporting ORM: Ongoing Responsibility for Medicals TPOC:Total Payment Obligation to the Claimant Acronym MANIA
U.S. Department of Health & Human Services Parent Agency Centers for Medicare and Medicaid Services (CMS) Oversees Medicare & Medicaid Central Office in Baltimore with 10 Regional Offices Medicare Secondary Payer Recovery Contractor (MSPRC) Tracks Medicare payments Collection of reimbursements for Medicare Reviews accountings for Medicare Set Asides Coordination of Benefits Contractor (COBC) Identifies 3 rd party payers who may be liable to Medicare Central clearinghouse for 3 rd party liability information Medicare Govt Agency Hierarchy
Not income or asset sensitive (entitlement) Funded by FICA Enough Quarters & Disability Medicare Entitlement 30 months after Disability SSDI/Medicare
Part A Hospital Insurance (typically premium free) - Covers inpatient care in hospitals and skilled nursing facilities (but not custodial or long- term care). Part B Medical Insurance (premiums) - Helps cover physician and other supplier items/services as well as hospital outpatient care. It also covers some other medical services that Part A doesn't cover, such as some of the services of physical and occupational therapists, and some home health care. Part C Medicare Advantage Plan Coverage (HMO/PPO) - Run by private companies approved by Medicare. Alternative to the fee-for-service Part A and Part B coverage and often provide extra coverage for services such as vision or dental care. Prescription Drug Coverage (Part D) - Private companies provide the coverage. Beneficiaries choose the drug plan they wish to enroll in, and most will pay a monthly premium. Medicare Coverage
Medicare Secondary Payor Act (“MSP”) 42 U.S.C. §1862(b)(2)(A) of the Social Security Act & Regulations found at 42 C.F.R. § 411 Precludes Medicare payments for services to the extent that payment has been made or can reasonably be expected to be made promptly due to any of the following: - Workers’ compensation - Liability insurance - No-fault insurance
Obligations Under the MSP Act Conditional Payments Medicare Set-Aside
CMS LMSA Memos
MSA Case Law Finke, 596 F. Supp. 2d 1254 (2009): No LMSA necessary where plaintiff was covered by GHP plan Benoit, 2011 U.S. Dist. LEXIS 1392 (2011): LMSA necessary in Jones Act Case Hinsinger, 18 A.3d 229 (2011): Reduce MSA by procurement costs Schexnayder, 2011 U.S. Dist. LEXIS (2011): Cites Stalcup memo Marine Terminals, 2011 U.S. Dist. LEXIS (2011): Federal Ct approves MSA when CMS fails to review
An MSA allocator performs an in-depth review of the injured party’s medical records to determine the future anticipated amount of Medicare covered medical treatment. Medicare regulations establish the treatment Medicare would normally cover. The total allocation is based upon remaining NLE which is determined by the injury victim’s current chronological age, pre-existing medical conditions, accident/injury related medical conditions, and recommended medical treatment. Rated ages are used by CMS as evidence of impaired NLE. A projection is then made of the likely expenses for the injury related Medicare covers services based upon the applicable medical reimbursement fee schedule and injury victim’s life expectancy. This allocation is the amount that should be placed in the Medicare set-aside. The “Allocation”
Future Injury-Related Medical Expenses of the Type Normally Covered by Medicare + Future Injury-Related Rx Expenses of the Type Normally Covered by Medicare Over Remaining Life Expectancy = Allocation MSA Allocation Calculation
The Importance of Rated Ages for MSAs A “rated age” is a life expectancy adjusted age used to calculate the cost of a structured settlement The life insurance company has decided that the claimant’s life expectancy is less than normal shortened life expectancy = lower total MSA Why?
Medical Costs Based Upon: – “Usual & Customary” (Liability) or – WC Fee Schedules (WC) – Isn’t based on Medicare approved amounts; and Medicare deductibles or co-pays aren’t factored in Rx Costs Based Upon: – “Average Wholesale Price” (AWP) – Deductibles, co-pays and the “doughnut hole” aren’t factored in – Priced for generics only when generics are available What costs are used?
Determine Set Aside Allocation Amount Allocation is Based on Historical Data + projected future medical care Need Medical & RX Payment History + Medical records Past Medical & RX Expenses + Futures
2 years worth of RX payouts with National Drug Codes (“NDC”) 3-5 years worth of medical records and payouts HIPAA Release What docs are necessary for allocation?
A la Ahlborn Not CMS “approved” Total Case Value: $3,000, Actual Settlement: $1,325, Fees, Costs & Liens: $609, Net to Client: $715, Set Aside Amount: $284, Percentage of Recovery:23.86% Reduced MSA Amount:$67, Reduction Methodology
“There is no formal CMS review process in the liability arena as there is for Workers’ Compensation, however Regional Offices do review a number of submitted set-aside proposals.” “voluntary process” Stalcup Memo: Review for LMSA
LMSA SUBMISSION PROCESS Submission package (including allocation) is forwarded to appropriate CMS Regional Office Can be done electronically and includes: 05 - Submitter Letter or Other Summary Documentation 10 - Consent Form 15 - Rated Age Information or Life Expectancy 20 - Life Care Plan 25 - Settlement Agreement or Proposed or Court Order 30 - Set-Aside Administrator or Copy of Agreement 35 - Medical Records 40 - Payment History 45 - Future Treatment Plan 50 - Supplemental or Additional Information
MSA SUBMISSION PROCESS CONTD. CMS Regional Office may request further documentation. CMS agrees to Set Aside Amount or increases/decreases There is no appeal from CMS’s MSA approval process
Funding & Administration
Lump Sum vs. Annuity Funding A MSA may be funded with a lump sum or an annuity which pays is in annually over NLE. Lump Sum – MSA allocation gives the amount that must be placed in the MSA if funded in lump sum fashion. Structure – MSA allocation gives annuity funding parameters which includes “seed” and annual payments. Seed = 2 years of tx and medications plus large ticket items/surgeries Annual – remainder of MSA less seed divided by NLE minus 1
A structured settlement should be used to fund most Medicare Set-Asides Why? Smaller amount has to be set aside Lower Cost Rated Age – life expectancy = smaller MSA “Temporary Exhaustion” vs. “Total Exhaustion” Taxability (greater net rate of return) Greater creditor/judgment protection Reduced cost for funding Professional Administration Annuity Funding of MSA
Annuity Options GuaranteedExpectedCost Total Cost with Seed ($46,165.22) Option 1- Temp Life $0$128,406$74,627.91$120, Option 2 - Life with Certain $111,657$161,903$90,756.99$136, Option 3 - Premium Guarantee $89,326$161,903$89,113.01$135, MSA Funding Summary Annuity Options from Metropolitan Life Insurance Company Rated A+ by A.M. Best
LMSA Administration A Medicare Set Aside allocation should be placed in a dedicated interest bearing account. Self-administered (if allowed by state law) Professionally administered (MSAT) The funds are to be spent only on Medicare covered medical expenses and Medicare covered prescription drugs cost that are specifically related to the underlying injury. Upon exhaustion of the funds and proper notification to CMS, Medicare will begin paying for covered services and prescription drugs relating to the injury.
Private vs. Prof. Admin of MSA When to use Prof. Admin. and why Dollar Value of the MSA Sophistication of the claimant Potential benefits to the Medicare beneficiary: The availability of an expert to negotiate the cost of future medical services Ensuring that future Medicare benefits are uninterrupted or delayed for any reason
Private vs. Prof. Admin of MSA Attorneys Representing the Parties - Prof Admin. Reduces potential legal exposure to all parties to settlement by ensuring that Medicare’s future interest is adequately protected Highest degree of protection for an injured parties’ future Medicare coverage. Reduces errors and omissions as well as any potential malpractice exposure.
Jason D. Lazarus, J.D., LL.M., MSCC, CSSC Chief Executive Officer Toll-Free: Direct: