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In a perfect world, personal injury lawyers could just get the best possible recovery for their clients, either by settlement or trial, and that would be the end of it. Often, it is just the beginning of a case because of medical liens. In terms of hierarchy of difficulty, Medicare liens are among the most difficult. This post offers a few thoughts on dealing with Medicare liens.

Medicare was established in 1965 as a part of the Social Security Act. In theory and usually in practice, Medicare offers what should be a part of any civilized society: health insurance and medical care for the aged and disabled. When a personal injury plaintiff receives Medicare benefits, Medicare has a subrogation interest to any award given in a workers' compensation, medical malpractice or auto accident claim (both first and third party recoveries). While Medicare has been provided a direct right of action, they usually choose to piggyback off personal injury lawyers seeking compensation for their clients.

A Medicare lien has real teeth, taking priority over all other liens or interests on any settlement or judgment proceeds. If you ignore the lien, they can later seek a recovery not only from the injury victim, but also the lawyer. Unlike many liens, notice is not required, so lawyers need to find out if there is a Medicare lien, as opposed to sitting back passively waiting for a lien notice. Under the statute, if the lien exceeds the amount of the recovery, Medicare recovers the entire lien, excluding only the lawyer fees and expenses.

 So is there any hope beyond recovery of the attorneys’ fees? There is. Medicare has authority to reduce or waive its Medicare lien if it is in the “best interests of the program,” if the “probability of recovery, or the amount [of the recovery] not warrant pursuit” of the lien, or if enforcing the lien would lead to significant “financial hardship.” This means you have to find the right person to talk to at Medicare and you need to make a real case; you can’t just have a paralegal call and ask for a reduction. You also need patience, because getting a response takes time and multiple phone calls and letters.

Not surprisingly, the more of a reduction you seek, the more hoops you have to jump through. If the request exceeds $ 100,000.00, the Department of Justice decides whether a reduction is in order.  Obviously, this adds more time, more phone calls and more letters to the process.

There is nothing more frustrating than killing yourself to settle an auto accident or medical malpractice case, only to realize you work has just begun. But in many cases, it is the most essential work a lawyer can do on the case in terms of achieving some measure of justice for your injured client.

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When settling a case (mainly workers comp) with a MSAT' (Medicare Set Aside Trust), a number of allocators are calculating costs of prescription for a period of five years only, rather than lifetime. CMS will not approve the allocation if the prescriptions are going to be for a longer period of time.  Here's an example:

• Plaintiff lifecare plan shows about $200,000 in prescription medication
• Defense lifecare plan shows about $120,00 in prescription medication
• the MSA shows $22,000 in prescriptions (based on the first five years only)

CMS will not approve the prescription medications and the client will get caught in the middle. So carefully review the period of time that prescriptions are calculated for in MSA's and request a revision.

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In May 2006, significant changes were made to the Medicare regulations concerning Providers’ ability to “bill” the liability insurance proceeds. Medicare Participating Providers may now wait and bill the beneficiary (liability settlement) for the actual charges.  Previously, Participating Providers were required to bill Medicare, as “billing” against the settlement proceeds was, in effect, the same as billing the beneficiary, which was a violation of the Participating Provider “assignment agreement”.

Effective May 8, 2006, CMS Medicare issued a policy change to the billing procedure for providers, physicians and suppliers with regards to payment for services where liability insurance is available. 

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As Medicare's role in workers' compensation and liability settlements evolves, a lack of clear guidance has left many lawyers perplexed. Know how to protect the interests of both your client and Medicare.

Matthew L. Garretson

Political and popular pressure to preserve the Medicare Trust Fund is mounting. The population of beneficiaries that Medicare is intended to cover--older people and the severely disabled--is on the rise. Statistics about the growing number of retiring baby boomers are now cliché. At least 54 million Americans are disabled and more than 41 million receive Medicare.

 

To reduce Medicare costs, Congress enacted a collection of statutory provisions in the 1980s called the Medicare Secondary Payer, or MSP, statute, largely in recognition that workers' compensation carriers should be the primary source of medical insurance coverage for people injured on the job. The statute says the government serves as a secondary insurance provider when another source of primary coverage exists.

 

Interpreting the statute's requirements, however, can be difficult, and critics say the system is inefficient and the law has not succeeded in substantially lowering Medicare costs. As early as 1990, one U.S. senator commented, "Failure to follow the MSP law is costing the taxpayer billions of dollars," and as recently as 2003, a court was still citing the senator’s statement as relevant.

 

 

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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.

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Medicaid Reimbursement in Personal Injury Cases after Arkansas Dept. of Health and Human Services v. Ahlborn

Matthew L. Garretson

You have a catastrophically injured client who receives Medicaid benefits. You have settled the case. Due to liability issues or policy limit issues, you believe you’ve gotten your client about 20 cents on the dollar for his true damages. Medicaid wants the entire settlement because it has paid $100,000 more for the client’s medical expenses than you recovered. What now? Ahlborn is a decision capable of creating more confusion and pitfalls than any case in recent history.

It appears that Monday, May 1, 2006, was a landmark day for plaintiffs’ rights in personal injury settlements. On that day the U.S. Supreme Court unanimously affirmed the Eighth Circuit’s decision in Arkansas Dept. of Health and Human Services v. Ahlborn. With this holding, a state’s Medicaid department will be limited to reimbursement from only that portion of a judgment or settlement that represents payment for medical expenses—states are now prohibited from seeking reimbursement for Medicaid costs from settlement proceeds that were intended to cover items other than medical expenses, such as pain and suffering and wage loss. The U.S. Supreme Court held that the federal anti-lien statute prevents states from attaching or encumbering the non-medical portion of the settlement or judgment.

In the slip opinion released May 1, 2006, the Court reasoned:

[t]here is no question that the State can require an assignment of the right, or chose in action, to receive payments for medical care. So much is expressly provided for by §§1396a(a)(25) and 1396k(a). And we assume, as do the parties, that the State can also demand as a condition of Medicaid eligibility that the recipient "assign" in advance any payments that may constitute reimbursement for medical costs. To the extent that the forced assignment is expressly authorized by the terms of §§1396a(a)(25) and 1396k(a), it is an exception to the anti-lien provision. See Washington State Dept. of Social and Health Servs. v. Guardianship Estate of Keffeler, 537 U.S. 371, 383–385, and n. 7 (2003). But that does not mean that the State can force an assignment of, or place a lien on, any other portion of Ahlborn’s property. As explained above, the exception carved out by §§1396a(a)(25) and 1396k(a) is limited to payments for medical care. Beyond that, the anti-lien provision applies."

(Emphasis added).

 

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In May 2006, significant changes were made to the Medicare regulations concerning Providers’ ability to “bill” the liability insurance proceeds. Medicare Participating Providers may now wait and bill the beneficiary (liability settlement) for the actual charges.  Previously, Participating Providers were required to bill Medicare, as “billing” against the settlement proceeds was, in effect, the same as billing the beneficiary, which was a violation of the Participating Provider “assignment agreement”.

 

Effective May 8, 2006, CMS Medicare issued a policy change to the billing procedure for providers, physicians and suppliers with regards to payment for services where liability insurance is available.

 

Previously, Medicare participating providers, physicians and suppliers (hereafter “Providers”) were required to bill Medicare conditionally for injury-related claims and accept the Medicare approved amount as payment in full if they could not expect payment from the liability insurer within 120 days.  Providers could only charge the beneficiary for the coinsurance and deductible amounts.   With the policy change, Providers may now pursue payment from the plan covering the liable third party and they may charge the beneficiary (client) actual charges up to the amount of the liability proceeds, less procurement cost.  Providers cannot attempt to collect payment until the client has received the settlement funds.  

 

In the event that the Providers choose to pursue the liability insurer and issue a lien they may not charge the beneficiary/client any interest, administrative fees or any costs associated with the filing of the lien.

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Tags: Post-Settlement Issues

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