[PPT] - Ethical Considerations for Handling Liens and Dealing with the PowerPoint Presentation

SLIDE 1

Ethical Considerations for Handling Liens and Dealing with the Shifting Sands of Medicare Set-Aside Accounts

Sylvius von Saucken John V. Cattie, Jr. Garretson Firm Resolution Group South Carolina Injured Workers’ Advocates November 6, 2009 Asheville, NC

SLIDE 2

Medicare in 2003

MMA

Medicare in 2006

Changes in MSPRC Medicare Part D

Medicaid in 2006

Ahlborn Decision

ERISA – 2006/07

Sereboff ; Wal-Mart Case

Medicare in 2009

MMSEA, HR 2641

SSDI Offsets Tricare; VA; DOD, HMOs

One More Thing To Worry About…

SLIDE 3

Statistics – How many

cases does this issue impact?

44 million Americans (14%) are on Medicare 40 million Americans (13%) are on Medicaid 175 million Americans (57%) are on Private Plans, including ERISA Plans

Statistics – How Many are Impacted?

Medicare, 14% Medicaid, 13% Private Health Insurance, 57% Other, 16%

SLIDE 4

Historically, the affirmative obligations have been focused on plaintiff’s counsel….. That is changing.

Compliance – What is required of counsel?

SLIDE 5

Compliance (federal and state statutes as well as ABA Model Rules of Professional Responsibility) – What is required of plaintiffs’ counsel?

Medicare & Medicaid Other federally funded healthcare plans

– Veterans Administration (“VA”) – TRICARE – Department of Defense

Private / ERISA health insurance plans

Compliance – What is required of counsel?

Medicare

According to 42 U.S.C.

§1395y(b)), when a Medicare

beneficiary retains an attorney to represent him/her in a liability case, it is the attorney's responsibility to notify the Medicare Coordination of Benefits Contractor

(COBC).

SLIDE 6

Compliance (federal and state statutes as well as ABA Model Rules of Professional Responsibility) – What is required of plaintiffs’ counsel?

Medicare & Medicaid Other federally funded healthcare plans

– Veterans Administration (“VA”) – TRICARE – Department of Defense

Private / ERISA health insurance plans

Compliance – What is required of counsel?

Medicare

According to 42 U.S.C.

§1395y(b)), when a Medicare

beneficiary retains an attorney to represent him/her in a liability case, it is the attorney's responsibility to notify the Medicare Coordination of Benefits Contractor

(COBC).

Medicaid

example is OH §5101.58 (c) – (e) prior to initiation
f action when medical expenses have been

received; disclose to county and to state dept.; settlement/judgment not final until notice given;

"(C) A recipient or participant, and the recipient's or

participant's attorney, if any, shall cooperate with the

departments. In furtherance of this requirement, the

recipient or participant, or the recipient's or

participant's attorney, if any, shall, not later than thirty days after initiating informal recovery activity or filing a legal recovery action against a third party,

provide written notice of the activity or action to the appropriate department or departments as follows:

(1) To only the department of job and family

services when medical assistance under medicaid has been paid;

(2) To the department of job and family services

and the appropriate county department of job and family services when medical assistance under the disability medical assistance program has been paid.

SLIDE 7

Compliance (federal and state statutes as well as ABA Model Rules of Professional Responsibility) – What is required of plaintiffs’ counsel?

Medicare & Medicaid Other federally funded healthcare plans

– Veterans Administration (“VA”) – TRICARE – Department of Defense

Private / ERISA health insurance plans

Compliance – What is required of counsel?

Medicare

According to 42 U.S.C.

§1395y(b)), when a Medicare

beneficiary retains an attorney to represent him/her in a liability case, it is the attorney's responsibility to notify the Medicare Coordination of Benefits Contractor

(COBC).

Medicaid

example is OH §5101.58 (c) – (e) prior to initiation
f action when medical expenses have been

received; disclose to county and to state dept.; settlement/judgment not final until notice given;

"(C) A recipient or participant, and the recipient's or

participant's attorney, if any, shall cooperate with the

departments. In furtherance of this requirement, the

recipient or participant, or the recipient's or

participant's attorney, if any, shall, not later than thirty days after initiating informal recovery activity or filing a legal recovery action against a third party,

provide written notice of the activity or action to the appropriate department or departments as follows:

(1) To only the department of job and family

services when medical assistance under medicaid has been paid;

(2) To the department of job and family services

and the appropriate county department of job and family services when medical assistance under the disability medical assistance program has been paid.

Medicaid (continued)

(D) The written notice that must be given under

division (C) of this section shall disclose the identity and address of any third party against whom the recipient or participant has or may have a right of recovery.

(E) No settlement, compromise, judgment, or

award or any recovery in any action or claim by a recipient or participant where the departments have a right of recovery shall be made final without first giving the appropriate departments written notice as described in division (C) of this section and a reasonable opportunity to perfect their rights of recovery. If the departments

are not given the appropriate written notice, the recipient or participant and, if there is

ne, the recipient's or participant's attorney,

are liable to reimburse the departments

for the recovery received to the extent of medical payments made by the departments."

SLIDE 8

Compliance (federal and state statutes as well as ABA Model Rules of Professional Responsibility) – What is required of plaintiffs’ counsel?

Medicare & Medicaid Other federally funded healthcare plans

– Veterans Administration (“VA”) – TRICARE – Department of Defense

Private / ERISA health insurance plans

Compliance – What is required of counsel?

Medicare

According to 42 U.S.C.

§1395y(b)), when a Medicare

beneficiary retains an attorney to represent him/her in a liability case, it is the attorney's responsibility to notify the Medicare Coordination of Benefits Contractor

(COBC).

Medicaid

example is OH §5101.58 (c) – (e) prior to initiation
f action when medical expenses have been

received; disclose to county and to state dept.; settlement/judgment not final until notice given;

"(C) A recipient or participant, and the recipient's or

participant's attorney, if any, shall cooperate with the

departments. In furtherance of this requirement, the

recipient or participant, or the recipient's or

participant's attorney, if any, shall, not later than thirty days after initiating informal recovery activity or filing a legal recovery action against a third party,

provide written notice of the activity or action to the appropriate department or departments as follows:

(1) To only the department of job and family

services when medical assistance under medicaid has been paid;

(2) To the department of job and family services

and the appropriate county department of job and family services when medical assistance under the disability medical assistance program has been paid.

Medicaid (continued)

(D) The written notice that must be given under

division (C) of this section shall disclose the identity and address of any third party against whom the recipient or participant has or may have a right of recovery.

(E) No settlement, compromise, judgment, or

award or any recovery in any action or claim by a recipient or participant where the departments have a right of recovery shall be made final without first giving the appropriate departments written notice as described in division (C) of this section and a reasonable opportunity to perfect their rights of recovery. If the departments

are not given the appropriate written notice, the recipient or participant and, if there is

ne, the recipient's or participant's attorney,

are liable to reimburse the departments

for the recovery received to the extent of medical payments made by the departments."

Veterans Administration

38 CFR §17.1007 Independent right of recovery.

(a) VA has the right to recover its payment under this

section when, and to the extent that, a third party makes payment for all or part of the same emergency treatment for which VA reimbursed or made payment under this section.

(1) Under 38 U.S.C. 1725(d)(4), the veteran (or

the veteran’s personal representative, successor, dependents, or survivors) or claimant shall ensure that the Secretary is promptly

notified of any payment received from any third party for emergency treatment furnished to the veteran. The veteran (or the

veteran’s personal representative, successor, dependents, or survivors) or claimant shall immediately forward all documents relating to such payment, cooperate with the Secretary in the investigation of such payment and assist the Secretary in enforcing the United States’ right to recover any payment made and accepted under this section. The required notification and submission of documentation must be provided by the veteran or claimant to the VA medical facility of jurisdiction within three working days of receipt of notice of the duplicate payment.

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Compliance (federal and state statutes as well as ABA Model Rules of Professional Responsibility) – What is required of plaintiffs’ counsel?

Medicare & Medicaid Other federally funded healthcare plans

– Veterans Administration (“VA”) – TRICARE – Department of Defense

Private / ERISA health insurance plans

Compliance – What is required of counsel?

Medicare

According to 42 U.S.C.

§1395y(b)), when a Medicare

beneficiary retains an attorney to represent him/her in a liability case, it is the attorney's responsibility to notify the Medicare Coordination of Benefits Contractor

(COBC).

Medicaid (continued)

(D) The written notice that must be given under

division (C) of this section shall disclose the identity and address of any third party against whom the recipient or participant has or may have a right of recovery.

(E) No settlement, compromise, judgment, or

award or any recovery in any action or claim by a recipient or participant where the departments have a right of recovery shall be made final without first giving the appropriate departments written notice as described in division (C) of this section and a reasonable opportunity to perfect their rights of recovery. If the departments

are not given the appropriate written notice, the recipient or participant and, if there is

ne, the recipient's or participant's attorney,

are liable to reimburse the departments

for the recovery received to the extent of medical payments made by the departments."

TRICARE

§ 43.2 Obligations of persons receiving care and treatment.

(a) In the discretion of the Department or Agency concerned,

any person furnished care and treatment under circumstances in which the regulations in this part may be applicable, his guardian, personal representative, estate, dependents or survivors may be required:

(1) To assign in writing to the United States his claim or

cause of action against the third person to the extent of the reasonable value of the care and treatment furnished or to be furnished, or any portion thereof;

(2) To furnish such information as may be requested

concerning the circumstances giving rise to the injury or disease for which care and treatment is being given and concerning any action instituted or to be instituted by or against a third person;

(3) To notify the Department or Agency concerned
f a settlement with, or an offer of settlement from,

a third person; and

(4) To cooperate in the prosecution of all claims and actions

by the United States against such third person.

SLIDE 10

Compliance (federal and state statutes as well as ABA Model Rules of Professional Responsibility) – What is required of plaintiffs’ counsel?

Medicare & Medicaid Other federally funded healthcare plans

– Veterans Administration (“VA”) – TRICARE – Department of Defense

Private / ERISA health insurance plans

Compliance – What is required of counsel?

Medicare

According to 42 U.S.C.

§1395y(b)), when a Medicare

beneficiary retains an attorney to represent him/her in a liability case, it is the attorney's responsibility to notify the Medicare Coordination of Benefits Contractor

(COBC).

Medicaid

example is OH §5101.58 (c) – (e) prior to initiation
f action when medical expenses have been

received; disclose to county and to state dept.; settlement/judgment not final until notice given;

"(C) A recipient or participant, and the recipient's or

participant's attorney, if any, shall cooperate with the

departments. In furtherance of this requirement, the

recipient or participant, or the recipient's or

participant's attorney, if any, shall, not later than thirty days after initiating informal recovery activity or filing a legal recovery action against a third party,

provide written notice of the activity or action to the appropriate department or departments as follows:

(1) To only the department of job and family

services when medical assistance under medicaid has been paid;

(2) To the department of job and family services

and the appropriate county department of job and family services when medical assistance under the disability medical assistance program has been paid.

Medicaid (continued)

(D) The written notice that must be given under

division (C) of this section shall disclose the identity and address of any third party against whom the recipient or participant has or may have a right of recovery.

(E) No settlement, compromise, judgment, or

award or any recovery in any action or claim by a recipient or participant where the departments have a right of recovery shall be made final without first giving the appropriate departments written notice as described in division (C) of this section and a reasonable opportunity to perfect their rights of recovery. If the departments

are not given the appropriate written notice, the recipient or participant and, if there is

ne, the recipient's or participant's attorney,

are liable to reimburse the departments

for the recovery received to the extent of medical payments made by the departments."

TRICARE

§ 43.2 Obligations of persons receiving care and treatment.

(a) In the discretion of the Department or Agency concerned,

any person furnished care and treatment under circumstances in which the regulations in this part may be applicable, his guardian, personal representative, estate, dependents or survivors may be required:

(1) To assign in writing to the United States his claim or

cause of action against the third person to the extent of the reasonable value of the care and treatment furnished or to be furnished, or any portion thereof;

(2) To furnish such information as may be requested

concerning the circumstances giving rise to the injury or disease for which care and treatment is being given and concerning any action instituted or to be instituted by or against a third person;

(3) To notify the Department or Agency concerned
f a settlement with, or an offer of settlement from,

a third person; and

(4) To cooperate in the prosecution of all claims and actions

by the United States against such third person.

Department of Defense

32 CFR 757.18 (e)(2) says:

“The JAG designee will also notify the injured person
r his legal representative of the Government’s

interest in the value of the medical care provided by the

United States. This notice will advise that:

The United States may be entitled to recover the reasonable

value of medical care furnished or paid for by the Federal Government;

The injured person is required to cooperate in the efforts of

the United States to recover the reasonable value of medical care furnished or paid for by the Federal Government;

The injured person is required to furnish a statement

regarding the circumstances surrounding the care and treatment;

The injured person may seek legal guidance concerning any

possible claim for personal injury;

The injured person is required to furnish information

concerning legal action brought against any individual involved in the incident and provide the name of counsel representing the parties to such an action; and

The injured person should not execute a release or settle a

claim arising from the incident causing the injury without first notifying the JAG designee.

SLIDE 11

Compliance (federal and state statutes as well as ABA Model Rules of Professional Responsibility) – What is required of plaintiffs’ counsel?

Medicare & Medicaid Other federally funded healthcare plans

– Veterans Administration (“VA”) – TRICARE – Department of Defense

Private / ERISA health insurance plans

Compliance – What is required of counsel?

Medicare

According to 42 U.S.C.

§1395y(b)), when a Medicare

beneficiary retains an attorney to represent him/her in a liability case, it is the attorney's responsibility to notify the Medicare Coordination of Benefits Contractor

(COBC).

Private/ERISA Health Insurance Plans

ABA Model Rule 1.15
Some states’ affirmative notice
bligations:
Client’s contractual obligations
FL, GA, MN, MT
“A claimant shall send the provider of any

collateral sources…notification of claimant’s intent to claim damages from the tortfeasor.” FL Code 768.76(6)

“When recovery for personal injury is

sought…the person asserting the claim shall provide notice of the claim to any benefit provider [that] has paid benefits relating to the injury…” GA Code 33-24- 56.1(g)

Also consider KY “Duty to notify those

believed…to hold subrogation rights to any award received by plaintiff..” [What does believed mean?]

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A survey of SC state Notice rules shows:

SC Code of Laws §43‐7‐430 (A) “The department

automatically is subrogated, only to the extent of the amount of medical assistance paid by Medicaid, to the rights an applicant or recipient has to recover an amount paid by Medicaid from a third party or private insurer. The applicant or recipient shall cooperate fully with the department and shall do nothing after medical assistance is provided to prejudice the subrogation rights of the department.”

Duties to Notify in SC

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Ethical Considerations:

Model Rule 1.15(d): Upon receiving funds…in which

a client or third person has an interest, a lawyer shall promptly notify the client or third person [and] a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive...

Requires: Actual notice of a just claim

ABA Model Rule 1.15

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A survey of nearby state ethical rules shows:

SC Rules of Prof. Conduct – Rule 1.15(d)

same as ABA

NC Rules of Prof. Conduct ‐ Rule 1.15‐2 (l), (m)

same as ABA

GA Rules of Prof. Conduct – Rule 1.15(I) (b)

same as ABA

TN Rules of Prof. Conduct – Rule 1.15(b)

same as ABA

http://www.abanet.org/cpr/links.html

Contiguous State Treatment of MR 1.15

SLIDE 15

Medicare, Medicaid and SCHIP Extension Act of 2007

New Reporting Standards
CMS Guidance
How Reporting Will Occur
Key Practice Tips

SLIDE 16

Medicare, Medicaid and SCHIP Extension Act

f 2007 (“MMSEA”)

SLIDE 17

MMSEA – Medicare, Medicaid and SCHIP Extension Act of 2007 CMS – the Centers for Medicare and Medicaid Services RRE – Responsible Reporting Entity MIR – Mandatory Insurer Reporting HICN – Medicare Health Insurance Claim Number COBC – Coordination of Benefits Coordinator MSA – Medicare Set‐aside Arrangement

Abbreviations

SLIDE 18

On or after July 1, 2009, insurers must engage in a two‐step process:

Step 1: Determine whether a claimant (including an individual whose claim is unresolved) is currently entitled to Medicare benefits Step 2: If the claimant is determined to be currently entitled, report certain information to the Secretary of Health and Human Services at the time of settlement/judgment/payment/other award

MMSEA

SLIDE 19

How will Medicare use this information?

Two separate and distinct time frames..

“Coordination of benefits” – Pre‐Payment and Post‐Payment Activities

Pre‐Payment Activities are generally designed to stop mistaken conditional payments from occurring when Medicare should be secondary Post‐Payment Activities are designed to recover mistaken or conditional payments made by Medicare from date of injury to date of settlement where there is a contested case which has resulted in a settlement, judgment, award or other payment

“Applicable recovery claim” – who should have been paying in the past?

MMSEA

SLIDE 20

How will MMSEA change what RREs demand in future Settlement Programs?

If settlement is reportable, RRE will report over 50 data points to CMS in the following areas: Injured Party data Claimant data Primary Plan data Policy Holder data Injured Party/Claimant Attorney data Incident data Resolution data

MMSEA

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Changing Habits ‐ RREs

Compliance with Mandatory Insurer Reporting (“MIR”) requirements under MMSEA

RRE must self report or have reporting agent work on its behalf

Consent to release information?

MMSEA does not provide “implied consent” allowing RRE to

request Medicare entitlement info; and

MMSEA does not require a claimant to authorize RRE to obtain

SS info from the Social Security Administration; BUT

Collection of SSNs and similarly protected health id information for

the purposes of coordinating benefits with CMS is a required, legitimate use of the SSN under federal (i.e. HIPAA) law

MMSEA will lead to change in process by which claims are paid by defendants/insurers

MMSEA

SLIDE 22

Changing Habits – Plaintiffs

MMSEA poses no new obligations; however, plaintiffs must understand RRE’s reporting

bligations to minimize disruptions to settlement

process

Need internal protocols for verification/resolution of CPs

Start early Enhance client intake Educate claimants Have resolution strategy

Collaborate with defendants/insurers

Advise defense up front of your procedure to integrate with RRE-COBC reporting process

MMSEA

SLIDE 23

Compliance Timeline

Sept. 30, 2009

RRE registration deadline July 1, 2009 Test/Production query input files accepted January 1, 2010 Claim input file testing begins January 1, 2010 Production claim input files accepted, after approval

Apr. 1–June 30, 2010

Production claim input files due

MMSEA

SLIDE 24

Query System

CMS’ QUERY ACCESS System

RRE tool to determine Medicare entitlement status RRE supplies limited Claimant data to CMS CMS provides “yes/no” response, not dates/basis of entitlement Using Query System ≠ MMSEA Compliance

MMSEA

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How does RRE Verify Entitlement Using Query System?

a) Obtain limited data related to Claimant

1) HICN/SSN 2) 1st letter of first name 3) 1st six letters of last name 4) Date of birth 5) Gender

b) Supply data to CMS via electronic data transfer c) CMS will respond within 14 calendar days with yes/no answer

Confirms entitlement status, but nothing else (no dates, no basis, no SSDI info, etc.)

MMSEA

SLIDE 26

Pending Issues

CMS provides guidance via teleconferences (2x/month) and updated User Guides CMS still discussing how to handle :

Mass Tort cases Bankruptcy/Insolvency Write offs in the healthcare sector

CMS exploring low dollar reporting floor

Currently using interim thresholds

CMS still determining cut off date for reporting cases considered by insurers to be closed or inactive

MMSEA

SLIDE 27

MMSEA ≠ MSAs

MMSEA is not a Trojan Horse for MSAs

MMSEA addresses Medicare’s past interests, not its future interests

MMSEA = statutory = reporting requirement (defense) MSA = non-statutory = permanent burden shift for future cost of care analysis (plaintiff)

CMS stresses on every town hall teleconference that MMSEA reporting rules are not intended to replace or change CMS’ current recovery practices, including MSA guidance.

MMSEA

SLIDE 28

Understand that MMSEA really means that the insurers, as RREs, must REGISTER + REPORT while plaintiffs must continue to VERIFY + RESOLVE. Key Practice Tips

SLIDE 29

A Final Review

Start Early

Enhance the Client Intake – 50 Data Points Education Modules Resolution Strategy/Assistance

Demonstrate that the process is already started

Better to get Final Demand in 30 days than to wait 8 plus weeks if Medicare’s name is put on the check!

Collaborate!

Be prepared at settlement to stipulate to the 50 data points (especially IRC info) to be reported

If Defense is demanding MSA in liability case

First, try to educate with “white paper” Second, try opinion letter Third, if necessary get a plaintiff‐focused MSA report Finally, always disclose to client in writing about the MSA “debate”

Key Practice Tips

SLIDE 30

MSA Nuts and Bolts

What is a MSA?
When is a MSA Necessary?
How do I Create a MSA?
How can a MSA Evaluation Help?
MSA Allocation for Future Cost of Care
Medicare Approval of MSA Proposal

SLIDE 31

2007 2012 2017 2022 2027 2032 2037 2042 2047 2052 1995

2006

What About Future Payments?

(Do I need one of those set asides?)

MEDICARE REIMBURSEMENT CLAIM MEDICARE SET ASIDE?

Setting aside an amount to be spent down after the settlement on injury-related care before using Medicare

SLIDE 32

Why are MSAs important?

To be Medicare compliant, both past and

future interests must be “considered”

MSAs are a piece to the Medicare compliance

puzzle

– Protect Medicare’s interest – Protect my client’s Medicare benefits

SLIDE 33

Medicare Secondary Payer Act

Enacted December 5, 1980
Intended to slow the rising costs of Medicare
42 U.S.C. §1395y(b)(2)

– Codified at 42 C.F.R. §411

Extends Medicare’s secondary payer status to

liability settlements

Prevents shifting of responsibility for medical

treatment from primary payer to secondary payer (Medicare)

SLIDE 34

MSP Regulations (42 CFR §411.46)

ALL settlements must “adequately consider” Medicare’s interest, no shifting of Medicare to be primary payer for past & future medical care.

Medicare will not pay for any medical expenses related to an injury after settlement until the time the portion of the settlement allocated to future medical expenses covered by Medicare is fully exhausted.

NEED TO IDENTIFY PAYMENT SOURCES AS PART OF THIS

PROCESS!

Medicare is intended to be secondary – even in future
payments. No BURDEN SHIFTS!

SLIDE 35

What is a MSA?

Account holding settlement proceeds post-

settlement to satisfy the MSP statute requirements

Covers future costs of injury-related care for which

Medicare would ordinarily pay

Addresses who pays for treatment post-settlement
Acts like a deductible that client pays before billing

Medicare for injury-related care

MSA Allocation is the preferred method

SLIDE 36

MSA Evaluation

When part of a settlement is allocated to

future medical expenses, if settling the case creates a shift of that payment obligation to Medicare, you may need a MSA.

Focus on the permanent burden shift

– Who pays for treatment after the settlement (Comp Carrier or someone else)?

SLIDE 37

Completing a MSA Evaluation Requires…

Completed Intake sheet Medicare date of entitlement SSDI date of entitlement (or application status) Signed releases (SSA, CMS, HIPAA) Last 2-3 years of payments (Medicals/Indemnity) Pharmacy summary (Part D Consideration) Life Care Plan (if prepared) Settlement documents

SLIDE 38

MSA Allocation determined by:

– Comprehensive review of medical records – Review of payout history – Physician recommendations – Standards of care

MSA Allocation

SLIDE 39

Common Medicare covered/allowed services:

– Physician visits – Diagnostic studies – Lab work – Hospitalizations – Surgery/Procedure – Therapies (OT, PT, speech, psychological) – Prescription medications

Medicare Coverage

SLIDE 40

Common services not covered by Medicare:

– Over-the-counter medications – Custodial care – Some durable medical equipment – Some medical supplies – Home & vehicle modifications – Mileage & travel expenses – Glasses/dentures/hearing aids

Medicare Coverage

SLIDE 41

CMS now independently prices future prescription drug costs in

MSA proposals as of June 1, 2009

Pricing is calculated using Average Wholesale Price (“AWP”)
CMS does not use/recognize any other pricing methods
If MSA proposal does not contain prescription drug amount and

claimant needs future prescription drugs, CMS will calculate using AWP of BRAND NAME drugs

If MSA proposal contains prescription drug amount characterized

as being “Generic” and no “Generic” is available, then CMS will calculate using AWP of BRAND NAME drugs

Prescription Medications

SLIDE 42

Workers’ Compensation Fee Schedule Usual, customary & reasonable expenses CDC Life Expectancy (table 1) Rated age(s) on company letterhead Use median of Rated Ages

Cost & Calculation

SLIDE 43

Specifics of compensable injury/disease; Brief description of past medical treatment; Present medical treatment; Projected future treatment; Patient’s medical recovery prognosis; and Pre-existing or unrelated medical condition(s).

MSA Proposal

SLIDE 44

Adopted by CMS in 1995 as preferred method to

deal with WC cases

No enforcement of MSP until CMS distributed

July 2001 memo to WC primary payers

To date, CMS distributed twelve memos
utlining MSA process when settling WC case

How Did MSA Concept Originate?

SLIDE 45

CMS Memoranda

Memos only apply if settlement permanently closes future medical benefits

July 23, 2001
April 21, 2003
May 23, 2003
May 7, 2004
October 15, 2004
July 11, 2005
December 30, 2005
April 25, 2006
July 24, 2006
May 20, 2008
August 25, 2008
April 3, 2009

http://www.cms.hhs.gov/WorkersCompAgencyServices/01_overview.asp

SLIDE 46

When is a MSA Required?

A MSA is required if the case meets all three (3) of

the following criteria:

– Client is Medicare entitled at time of settlement or possesses “reasonable expectation” of Medicare entitlement within thirty (30) months of settlement; – Settlement closes future meds, creating permanent burden shift (“PBS”) of obligation to pay future injury‐ related care to Medicare; and – Client will require future injury‐related care (“FCC”) that would otherwise be covered by Medicare.

SLIDE 47

“Reasonable Expectation” of

Medicare Entitlement

Situations where an individual has a “reasonable

expectation” of Medicare entitlement include but are not limited to the following:

– The individual has applied for SSDI; – The individual has been denied SSDI but anticipates appealing that decision; – The individual has been denied SSDI and is in the process

f appealing and/or re‐filing for SSDI;

– The individual is 62 years, 6 months or older; or – The individual has an End Stage Renal Disease condition but does not yet qualify for Medicare.

SLIDE 48

When Are MSAs Not Needed?

Client is not Medicare entitled at settlement and

does not possess “reasonable expectation” of Medicare entitlement within thirty (30) months of settlement; or

Settlement leaves meds open

– Therefore, no PBS to Medicare; or

Client will not need future injury‐related care
therwise covered by Medicare.

– Client should get letter from treating physician stating that, to a reasonable degree of medical certainty, future injury‐related care will not be needed.

SLIDE 49

Are There Safe Harbors for MSAs?

Common misperception that certain WC settlements

are exempt from MSA obligations due to gross settlement total

In Memos dated July 11, 2005 and April 25, 2006,

the following thresholds are provided:

– Medicare entitled – over $25,000 – “Reasonable Expectation” ‐ $250,000 or more;

Those same memos stress these are WORKLOAD

REVIEW thresholds, not safe harbor amounts

– Therefore, while CMS only reviews MSAs in certain cases, MSAs should be established whenever appropriate

SLIDE 50

MSA Submission

Class I – receiving Medicare & total

settlement > $25,000; OR

Class II – reasonable expectation of Medicare

within next thirty (30) months & total settlement amount ≥ $250,000

$25,000/$250,000 = medical, indemnity, and

attorney fees + conditional payments

SLIDE 51

MSAs – Submit or Not Submit?

Overall, decision will be driven by

client/attorney comfort level

– More conservative approach is to submit anything you are able to submit in order to get CMS’ blessing (see workload review thresholds); – More practical approach is to submit those MSAs where Future Meds are extremely high, so as to limit the MSA amount before Medicare pays again

Per CMS, submission of MSAs to CMS for

review/approval is a voluntary exercise

SLIDE 52

CMS c/o Coordination of Benefits Contractor P.O. Box 33849 Detroit, MI 28232 Attention: WCMSA Proposal

MSA Submission

SLIDE 53

CMS Review Timeline

Per CMS Memos, it should take between

45 and 60 days for CMS to respond

In reality, it’s more like…

SLIDE 54

MSA proposal either incomplete or insufficient
COBC/MLC sends letter acknowledging receipt &

request for additional information

Respond to COBC within 45 days
If more than 45 days, CMS will close file
Process starts all over again

CMS Response ‐ Rejection

SLIDE 55

Top 10 WCMSA Submitter Errors

1) No medical records for the last two years of treatment; 2) No rated age statement from submitter confirming all rated ages obtained on the claimant have been included; 3) No proof of stated rated ages; 4) No claims payment history; 5) Calculation method not stated; 6) No total settlement amount; 7) No proposed MSA amount; 8) No proposed prescription drug amount; 9) No consent form; and 10) No response to development requests.

SLIDE 56

CMS sends written approval with or without

revisions of MSA proposal

NO FORMAL APPEALS PROCESS
Approved MSA sent to WC state agency for

review/approval

Approval of MSA not effective until signed

settlement sent to COBC - must include approved MSA amount

CMS Response ‐ Approval

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MSAs – Is there any Legislative Relief?

H.R. 2549 (2007) Shelved/Reintroduced as H.R. 2641(2009) Would amend 42 U.S.C. §1395y(b) to create a statutory rule for MSAs (none exists today) Would create exemptions & safe harbors from MSA statutory requirement

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Final Tips - What More Can I Do Now?

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Improve Your Case Intake

– Screening and questionnaires – Simply “yes” / “no” is no longer sufficient – Need entitlement dates – Detail regarding plan elections (A, B, C, D) – Sample questionnaire available in “Learning & Resource Center”: www.garretsonfirm.com

Article: “Does Your Retainer

Agreement Still Cut It?”

What Else Can I Do Now?

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Provide educational materials to clients

See “Medicare, Medicaid & Private (ERISA) Health Insurance Plans – Important Information about Healthcare Liens in Personal Injury Settlements” See video series The point is to better educate clients to manage their expectations and… Let them know what they can do to help speed up the process

Consider partnering and outsource

What Else Can I Do Now?

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Protect confidential information
Ensure that the service providers are competent and

suitably trained

Conduct reference checks and background info for

service providers

Perhaps interview the primary professionals on a

project team

Obtain the client’s informed consent
Referring attorney must “oversee”
The client gets a net benefit out of the arrangement

(if passing fee to client)

The fees are reasonable (if passing the fee to the

client)

What the ABA Says….

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New York Professional Ethics Committee Opinion (July 2008) ABA Opinion on “outsourcing” (Ethics Opinion 08‐451, August 5, 2008)

Guidance for Outsource Program

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Akin to ancillary areas to PI cases: probate, bankruptcy, taxation and disability planning Isn’t an “administrative” function With rising health costs juxtaposed to caps on recovery, policy limits, etc, lien resolution may be as important to client’s ultimate “net” as any other aspect of proving / litigating case You may want to revise your fee agreement(s) to include new language that further defines the scope of the representation Pursue independent ethics opinion

Passing the cost to the client? What the experts are saying…

Fee Application

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We understand that current laws with regards to (Healthcare Providers) may require all parties involved in this matter to compromise, settle, or execute a release of Healthcare Providers’ separate claim for reimbursement / lien for past and future payments prior to distributing any verdict or settlement proceeds. We agree that the law firm may ..hire separate experts / case workers who assist with resolving any Healthcare Providers’ reimbursement claims or liens for past and/or future injury‐related medical care. The expense of any such service shall be treated as a case expense and deducted from our net recovery and shall not be paid out of the law firm’s contingent fee in this matter.

Sample Language

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If you know you are going to have to deal with it in the end, why not start addressing it in the beginning?

Conclusion

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