Trial Lawyer Resource Center

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By Matt Garretson & Jason Wolf

Prior to New Year’s Eve (December 31, 2005), Medicare’s interest was focused only on the reimbursement of injury-related care in the form of primary physician care and treatment in a hospital. Effective January 1, 2006, Medicare has expanded its reimbursement interests to include prescription drugs (under its Medical Part D Program). We all have been exposed to the massive media coverage over the past few months regarding the new Part D coverage. The punch line to the media message – Part D instantly will make Medicare one of the largest consumers/payee’s of prescription drugs. Undeniably, Medicare’s role continues to evolve and its complex reimbursement interests must be addressed in all liability settlements.

Medicare expanded coverage directly translates into expanded reimbursement obligations for you and your Medicare-entitled clients (creating a "bigger bite" of the proverbial apple for Medicare and thereby further eroding your clients’ net proceeds). Not only is the "substance" or scope of the Medicare’s recovery rights evolving, but the "form" of the recovery process will become more complicated as well. Medicare (via the Medicare Secondary Payer Division of CMS) recovers its past "conditional" payments for injury-related physician care and hospital treatment by outsourcing the recovery effort to the Coordination of Benefits office (COB). COB, in turn, appoints one of the approximately two dozen lead contractors (fiscal intermediaries) to your file. Most personal injury practitioners are familiar with this process.

The traditional process (COB, lead contractor) was created for the recovery of expenses related to physician care and hospital treatment. Medicare Part D, however, is covered by a new entity - Prescription Drug Plans (PDP). PDP is similar to Medicare managed plans (supplemental and replacement plans) and have a similar yet separate right of recovery than Medicare. Based upon our firm’s discussion with officials with in CMS, it appears that the reimbursement for the Part D coverage (prescription drugs) will be addressed through an additional, separate recovery effort. In other words, the PDP will share the same recovery right as Medicare managed plans and will need to seek recovery on it’s own as opposed to working in concert or inclusive with the traditional Medicare recovery effort.

From this point forward, when you settle a personal injury case for a Medicare beneficiary, two reimbursement obligations will be triggered based upon: 1) diagnosis codes related to the primary injury, and, 2) prescription drugs associated with the management of the injury (e.g. those drugs associated with disease treatment and / or pain management).

The bad news related to Part D doesn’t end here. In addition to Medicare’s recovery of injury-related prescription drug treatment from date of injury to date of settlement, CMS also is adding the future costs of injury-related prescription drug coverage to allocations crafted for Medicare Set Asides. As discussed in prior correspondence, a Medicare Set Aside is not only necessary in any Workers’ Compensation (WC) settlement involving a Medicare beneficiary but also is advisable in any personal injury case in which a Medicare beneficiary settles with a definitive allocation for future medical treatment. CMS, to clarify the meaning of this change, published a memorandum on December 30, 2005, outlining that all WC settlements that occur on or after January 1, 2006, must consider and protect: (1) Medicare’s interests when future treatment includes prescription drugs; and (2) future medical services that would otherwise be reimbursable by Medicare.

Not only is Medicare’s recovery interest in your clients’ net proceeds growing, but the percentage of your cases involving Medicare is going to increase. The population of beneficiaries that Medicare is intended to cover – older persons and the severely disabled – is on the rise. The statistics regarding retiring baby boomers are by now cliché. At least 50 million Americans are disabled and over 41 million receive Medicare.

Get to know your clients’ government benefit status as early as possible. Begin asking the following questions at case intake, "Are you currently receiving Medicare? If so, do you have Part D coverage?" and, "As a result of the incident, what prescription drugs (if any) are you currently taking?"

Indeed, it is imperative for plaintiffs’ counsel to have a formalized approach to verify whether clients are entitled to any government-provided medical benefits and identify the respective agency’s right of recovery (e.g. Medicare, Medicaid, VA, Indian Health, Champus (a/k/a Tri Care)).

In our capacity as settlement administrator and / or settlement planner, The Garretson Law Firm and The Settlement Services Group has resolved thousand’s of reimbursement claims for the attorneys with which we work. Accordingly, we can attest to the benefits of starting the verification and resolution process early. Such benefits include:

1. identifying the potential entities that may have a right of recovery in your clients’ settlement
2. defining the respective past and future reimbursement obligations
3. determining the agencies (COB, PDP, lead contractor, Medicare Regional Office, Managed Care Plan, etc.) with which you must interact to address such reimbursement interests
4. crafting a strategy if a compromise or waiver is necessary;
5. disputing pre-existing or unrelated charges; and,
6. facilitating a seamless settlement and disbursement.

By keeping track of the changing landscape of Medicare:

1. You – will be able to accept the settlement terms knowing their Medicare benefits are secure.
2. Your clients
– will be able to define and direct the settlement to both address the governments’ recovery rights and maximize client recovery.

If we can be of assistance, please contact our firm’s Resolution Department which handles Medicare and Medicaid reimbursement claims for other attorneys and their clients. Our team of experienced case workers can be reached at 704-344-4446.