1. MEDICARE SET ASIDES: M EDICARE AND P ERSONAL I NJURY S ETTLEMENT T IPS T WIN C ITIES C LAIMS A SSOCIATION N OVEMBER 9, 2010 B. Jon Lilleberg Johnson & Condon, P.A. Minneapolis, MN Telephone: 952.806.0451 BJL@Johnson-Condon.com BJL@Johnson-Condon.com Allison Haley Johnson & Condon, P.A. Minneapolis, MN Telephone: 952.806.0448 ARHaley@Johnson-Condon.com@Johnson-Condon.com

2. THE GOOD, THE BAD, AND THE UGLY

4. 2008 STATISTICS 45.2 million covered by Medicare; 37.8 million aged 65 and older; 7.4 million disabled; Total benefits paid in 2008 = $462 billion 2009 Annual Report of The Board of Trustees

5. THE GOOD

6. MEDICARE Medicare settlement compliance can involve two obligations: 1. Discharge of Medicares claim from the date of injury through date of settlement. 2. Evaluation and discharge of Medicares interest from the date of settlement forward.

7. CONSIDER FOR SETTLEMENTS Your Goal: To substantially comply, in good faith, with the obligation to reasonably consider Medicares future interest* * even though you know Medicare does not currently offer much in the way of guidance!

8. MEDICARE: CONSIDER FOR SETTLEMENTS Is Medicare or SSDI involved? Nature and type of injury; Previous/subsequent injuries/incidents; Past reports of treating doctors; Chart notes of treating doctors; Obtain report from treating doctor? Demand letter; IME; Past depositions and statements; Other doctors; SSDI documents; Fault; YOUR GOAL: To comply in good faith with the obligation to reasonably consider Medicares future interests.

9. MEDICARE: SETTLEMENT AGREEMENT Fault; Causation; Other accidents; Supportive Medicals; Lack of Medicals; Photographs; Treating and IME doctor notes; Supplemental Reports; P will not submit…; Indemnity, hold harmless ; P has asserted…; Ps doctors would testify; In order to consider Medicare we have…; Exact Terms of Set Aside; Cannot use canned releases for these cases. If you thought about it and it explains your position you should include it in Settlement Agreement.

10. MEDICARE: SETTLEMENT AGREEMENT No federal law or regulations mandate a MSA and the parties agree that Medicares interest my be properly considered without one. Nevertheless, the plaintiff agrees to take actions necessary to ensure Medicares interests are properly considered.

11. MEDICARE: SETTLEMENT AGREEMENT The plaintiff and her attorneys agree to satisfy all Medicare interests, claims and liens. Using proceeds from this settlement, past Medicare claims have been satisfied.

12. MEDICARE: SETTLEMENT AGREEMENT Plaintiff and her attorneys agree to reserve the funds necessary to cover any interest asserted by Medicare related to this settlement. The plaintiff understands that it is her responsibility to properly consider Medicares interests. List of consequences if plaintiff fails to properly consider Medicare (refusal to pay, recovery claim, etc.).

13. MEDICARE: SETTLEMENT AGREEMENT The plaintiff holds harmless defendant and insurer from any liability associated with Medicare/CMS asserting any right… CMS has not issued guidance for the proper way to consider Medicares interests in a liability settlement at this time.

14. MEDICARE: SETTLEMENT AGREEMENT Nevertheless, the parties have acted in good faith to substantially comply… It is not the purpose of this settlement agreement to shift to Medicare the responsibility for accident-related expenses.

15. MEDICARE: SETTLEMENT AGREEMENT Plaintiff agrees to ensure that future medical expenses involving Medicare are reasonably addressed. Plaintiff understands that this settlement agreement may not be binding on the Federal Government… Liability for work-related injuries should not be shifted to Medicare but: THIS IS NOT A WORK-RELATED INJURY

16. THE BAD

17. MEDICARE The United States of America v. Harris 2009 W.L. 891931 (N.D.W.V.)

18. AND THE UGLY

19. MEDICARE SECONDARY PAYER STATUTE 42 U.S.C. § 1395y(b)(2)(A)(ii): (A) In general Payment under this subchapter may not be made [if]: (ii) payment has been made, or can reasonably be expected to be made [under] an automobile or liability insurance policy or plan (including a self- insured plan) or under no fault insurance.

20. MEDICARE SECONDARY PAYER STATUTE 42 U.S.C. § 1395y(b)(2)(A)(ii): (b) Medicare as secondary payer (cont.) In this subsection, the term primary plan means … an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance, …. An entity that engages in a business, trade, or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part.

21. CODE OF FEDERAL REGULATIONS 42 CFR § 411.50: (b) Definitions. Liability insurance means insurance (including a self- insured plan) that provides payment based on legal liability for injury or illness or damage to property. It includes, but is not limited to, automobile liability insurance, uninsured motorist insurance, underinsured motorist insurance, homeowners' liability insurance, malpractice insurance, product liability insurance, and general casualty insurance.

22. CODE OF FEDERAL REGULATIONS 42 CFR § 411.50: (b) Definitions. Self-insured plan means a plan under which an individual, or a private or governmental entity, carries its own risk instead of taking out insurance with a carrier.

23. MEDICARE SECONDARY PAYER STATUTE 42 U.S.C. § 1395y(b)(2)(A)(ii): (ii) Primary Plans. A primary plan, and an entity that receives payment from a primary plan, shall reimburse [Medicare] for any payment made … if it is demonstrated that such primary plan has or had a responsibility to make payment …. A primary plan's responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release … (whether or not there is a determination or admission of liability)

24. CODE OF FEDERAL REGULATIONS 42 CFR § 411.24: (g) Recovery from parties that receive primary payment. CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.

25. CODE OF FEDERAL REGULATIONS 42 CFR § 411.24: (i) Special rules. (1) If Medicare is not reimbursed as required by paragraph (h) of this section, the primary payer must reimburse Medicare even though it has already reimbursed the beneficiary or other party.

26. MEDICARE SECONDARY PAYER STATUTE (iii) Action by United States (cont.) The United States may, in accordance with paragraph (3)(A) collect double damages against any such entity. In addition, the United States may recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan's payment to any entity.

27. MEDICARE The United States of America v. Stricker, et al. CV-09-KOB-2423-E (N.D. Ala.)

28. THE STANDOFF

29. THREE AMIGOS

30. MEDICARE SECONDARY PAYER STATUTE

31. Once a claimant is identified as a Medicare beneficiary: Create a claim file with Medicare through the Coordination of Benefits Contractor (COBC) by telephone (1-800-999-1118) and letter sent via fax (734-957-9598) and to: MEDICARE - COBC MSP Claims Investigation Project P.O. Box 33847 Detroit, MI 48232

32. MEDICARE SECONDARY PAYER STATUTE Once the COBC creates a claim file: The Medicare Secondary Payer Recovery Contractor (MSPRC) sends a Conditional Payment Letter (CPL) - itemization of benefits paid by Medicare - within 65 days MSPRC – NGHP P.O. Box 138832 Oklahoma City, OK 73113 1-866-677-7220

33. MEDICARE SECONDARY PAYER STATUTE Negotiate Conditional Payments with the MSPRC One-way street v. two-way street Notice of Representation Consent to Release Eliminate Medicare payments not related to the claimed injury Updated Conditional Payment Letter – 90 days Final Demand Letter Pay within 60 days

35. MEDICARE SECONDARY PAYER STATUTE Mandatory Insurer Reporting – Section 111 Responsible Reporting Entities (RRE) must report claims involving Medicare beneficiaries at the time of settlement, judgment, award or other payment Electronic reporting https://www.section111.cms.hhs.gov $1,000 per day penalty for failure to report First calendar quarter of 2011 (January – March 2011)

36. THE GOOD, THE BAD, AND THE UGLY

37. MEDICARE SET ASIDES: M EDICARE AND P ERSONAL I NJURY S ETTLEMENT T IPS T WIN C ITIES C LAIMS A SSOCIATION N OVEMBER 9, 2010 B. Jon Lilleberg Johnson & Condon, P.A. Minneapolis, MN Telephone: 952.806.0451 BJL@Johnson-Condon.com BJL@Johnson-Condon.com Allison Haley Johnson & Condon, P.A. Minneapolis, MN Telephone: 952.806.0448 ARHaley@Johnson-Condon.com@Johnson-Condon.com