Medicare Secondary Payer and Negligence Lawsuits an Overview Patricia J. Foltz Anderson, Rasor & Partners, LLP January 24, 2014

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 an administrative route to appeal or request waiver. You must exhaust administrative remedies to pursue anything later in court. See, Braucher v. Swagat Group, LLC, 2011 WL 832512 (C.D. Ill.); Spencer v. Manes, 2013 WL 4007816 (S.D. Ohio).

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 then plaintiff must address the issue of 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 – show that you have considered this issue See proposed regulations issued June 15, 2012. 77 Fed. Regis No. 116, page 35917

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 ICD9 codes and injury codes Basis of relatedness analysis Consider addressing in settlement negotiations But be careful what plaintiff has asked for in the course of the case. What is unclear? What if plaintiff will become a Medicare recipient after settlement 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

Attempts to Avoid Medicare’s “Lien” In Illinois wrongful death and survival action claims are typically filed together. Medical expenses are recoverable under the survival action claim. CMS looks at what you filed so late dismissal of a survival action will not avoid a “lien”. See, Medicare Secondary Payer Manual (CMS Pub. 100-05) Chapter 7, section 50.4.4 In relatedness review be careful what you have claimed for damages. See, Bensen v. Sebelius, 771 F. Supp.2d 68 (D.C, 2011) CMS may be bound by Probate allocation. See, Bradley v. Sebelius, 621 F.3d 1330 (11th Cir., 2010) but special equity considerations in that decision.

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.