1. 1 Medicare Compliance in Workers’ Compensation and Liability Cases: Conditional Payment Claims, Mandatory Reporting and Medicare Set-asides Joe Isbell Carr Allison 100 Vestavia Parkway Birmingham, AL 35216 www.carrallison.com

2. 2 Medicare Secondary Payer Act MSPA was enacted in 1980 Medicare is “secondary” payer when any other entity could possibly be considered a primary payer

3. 3 Complete Medicare Compliance Conditional Payment Claim/Lien Resolution Section 111 Reporting Future Medical Expenses (Medicare Set-asides)

4. 4 Conditional Payment Claims (CPCs) Expenses paid by Medicare prior to the date of settlement or judgment Research CPCs prior to settlement –Report all injuries being settled, including disputed ones Must resolve CPCs when case with Medicare beneficiary settles

5. 5 Possible Options for Repayment Direct payment to Medicare by defendant Put Medicare on the settlement check (not required by law) Claimant responsible for repayment

6. 6 Amount CMS May Recover CPCs reduced for procurement costs Medicare may recover FULL amount of CPC up to total settlement amount even if injury or responsibility for injury is disputed

7. 7 Waiver/Reduction May request on behalf of beneficiaries if financial need Pre-settlement compromise may also be an option

8. 8 Interest and Penalties Under the MSPA Accrue if Medicare is not repaid within 60 days of formal demand Double damages if Medicare sues to recover

9. 9 Risk Mitigation Strategies - CPCs Maintain accurate, current information about injuries Carefully report injuries –If using an agent for Section 111 reporting, review their plan to ensure accuracy of reported codes

10. 10 Complete Medicare Compliance Conditional Payment Claim/Lien Resolution Section 111 Reporting Future Medical Expenses (Medicare Set-asides)

11. 11 Section 111 Reporting Requirements Will assist Medicare with recovery of CPCs and to keep Medicare from paying when primary payer exists. –Duty to “notify” Medicare has existed since 1980. Section 111 imposes a penalty of $1,000 per day per claim for failing to do so.

12. 12 Electronic transmission of data related to certain settlements, judgments, awards and other payments to Medicare Section 111 Reporting Requirements (Cont.)

13. 13 Claims That Must be Reported: TPOC Claims TPOC (Total Payment Obligation to Claimant) –Claims that are “resolved (or partially resolved) through a settlement, judgment, award or other payment” regardless of whether there is admission or determination of responsibility –that involve a Medicare beneficiary and –are settled on or after October 1, 2011 Must be reported beginning the first quarter of 2012.

14. 14 TPOC Exceptions To Reporting The following do not have to be reported: –TPOC amounts of $5,000.00 or less through January 1, 2013 –TPOC amounts of $2,000.00 or less from January 1, 2013 - December 31, 2013 –TPOC amounts of $600.00 or less from January 1, 2014 - December 31, 2014 After December 31, 2014, all TPOC claims must be reported TPOC claims with an ORM aspect must still be reported – no exceptions

15. 15 Claims That Must be Reported: ORM Claims Claims for which the RRE still had/has responsibility for ongoing medical payments as of January 1, 2010 –such as open medicals in wc claims (regardless of date of accident) Must be reported beginning first quarter of 2011

16. 16 ORM Exceptions to Reporting ORM files that meet ALL of the following criteria do not have to be reported through December 31, 2012: –medicals only –lost time of no more than 7 days –all payments made directly to the provider –total payment does not exceed $750.00

17. 17 ORM Exceptions to Reporting (Cont.) If a claim is actively closed or removed from current claims inventory prior to January 1, 2010, the RRE is not required to report that claim unless the claim is later reopened –Does not include claims which remain open even if no medicals have been paid for a substantial period of time.

18. 18 Claims in which: –a judgment or defense verdict is rendered concluding that no money is owed –no claim was made for medical expenses, i.e., liability case with property damage only with no release of medicals Be careful with general releases! –there is no settlement, judgment, award or other payment (including assumption of ORM) –The only payment was a one time payment for a defense evaluation from a provider or physician Claims That Do NOT Have To Be Reported

19. 19 Complete Medicare Compliance Conditional Payment Claim/Lien Resolution Section 111 Reporting Future Medical Expenses (Medicare Set-asides)

20. 20 Medicare Set-asides (MSAs) Money for future medical expenses Medicare would otherwise pay

21. 21 Are MSAs Required? No However, the burden of paying future medical expenses may not be shifted from a primary payer to Medicare

22. 22 Are MSAs Required? (Cont.) CMS recommends MSAs in certain cases

23. 23 CMS Review Thresholds in WC Cases CLASS I –Medicare beneficiary AND –total settlement exceeds $25,000 CLASS II –Total settlement exceeds $250,000 AND –claimant has a “reasonable expectation” of becoming a Medicare beneficiary within 30 months

24. 24 Reasonable Expectation of Entitlement If the claimant: –Is currently receiving Social Security Disability (SSD) benefits –Has applied for SSD benefits –Was denied SSD benefits, but is appealing denial –Is 62.5 years old or older –Has End Stage Renal disease

25. 25 Determining Total Settlement Amount Money paid at time of settlement for: –Future medical, i ndemnity and/or vocational benefits –Claimant’s attorney’s fees –Court costs and filing fees –Medicare conditional payment claim, if any Money paid in prior partial settlement, if any, including third party liability settlements If using structured settlement, must include uncommuted expected lifetime payout

26. 26 Cases Below CMS Review Thresholds Medicare Beneficiaries

27. 27 Cases Below CMS Review Thresholds Non-Medicare Beneficiaries

28. 28 CMS Submission Process Start early! Allocation reports should be less than six months old

29. 29 Risk Mitigation Strategies for MSAs Physician involvement Claimant’s attorney involvement

30. 30 Impact Of Disputes And Defenses Dispute among treating physicians Legal defenses/judicial determinations

31. 31 Lapse In Claimant’s Treatment If last treatment was long ago, CMS may require records from other physician(s) who have treated the claimant more recently, including family practitioner

32. 32 Prescription Medications CMS uses average wholesale prices (AWP) CMS includes medications recommended in records and actual prescriptions the claimant is receiving

33. 33 Zero MSAs May be available if: –Completely denied claim –NO money was paid for medical treatment or indemnity

34. 34 No Appeal of CMS Determinations No formal appeal process if CMS rejects proposed MSA amount RO will correct obvious mistakes, such as math errors

35. 35 WC and Third Party Cases MSAs are appropriate in WC/third party cases if the WC carrier or employer is being relieved of obligation to pay future medical expenses Same process for approval as WC cases

36. 36 MSAs Are MSAs required in liability case? –NO MSAs are not required by law in any case

37. 37 WC vs. Liability Cases Difference between WC and liability cases

38. 38 BUT...

39. 39 Guidance From CMS One RO has indicated that MSAs are also “preferred” in liability cases No formal process for review of liability MSAs like there is for WC, but the “underlying statutory obligation is the same” (Town Hall Transcript) –Law that requires protection for Medicare when case with Medicare beneficiary settles is the exact same for WC and liability

40. 40 Guidance From CMS (Cont.) When “future medicals are a consideration in arriving at the settlement... appropriate arrangements should be made for... exhaustion of the settlement before Medicare is billed for related services.” (Town Hall Transcript)

41. 41 When to Use LMSAs Claimant is a Medicare beneficiary; Future medical treatment likely needed; Settlement because of physical injuries/medical claims; and Settlement amount more than nominal

42. 42 Determining Amount to Set-aside Allocation report may be used OR The parties may jointly designate reasonable amount for future medical expenses OR Include statement in Release that money being paid is intended to cover future medical expenses

43. 43 Liability Allocation Reports May be reduced to take defenses into account!

44. 44 When should allocation reports be obtained in liability cases?

45. 45 When should allocation reports not be obtained?

46. 46 CMS Review and Approval of MSAs Some ROs will review and approve LMSAs, although not required Will estop Medicare from later claiming that its interests were not protected

47. 47 Funding Medicare Set-aside Accounts Lump sum Annuity

48. 48 Administration Self-administration Custodian Administration

49. 49 Questions?

50. 50 Joseph P. Isbell Carr Allison 100 Vestavia Parkway Birmingham, Alabama 35216 Phone: (205) 949-2931 Fax: (205) 822-2057 jisbell@carrallison.com