Medicare in Personal Injury Claim Settlements: Complying with - - PowerPoint PPT Presentation

Medicare in Personal Injury Claim Settlements: Complying with Reporting Requirements and Satisfying Liens

Today’s faculty features:

1pm East ern | 12pm Cent ral | 11am Mount ain | 10am Pacific The audio port ion of t he conference may be accessed via t he t elephone or by using your comput er's speakers. Please refer t o t he inst ruct ions emailed t o regist rant s for addit ional informat ion. If you have any quest ions, please cont act Customer Service at 1-800-926-7926 ext. 10. TUES DAY, MAY 13, 2014

Presenting a 90-Minute Encore Presentation of the Teleconference with Live, Interactive Q&A

Jeremy T . Burton, Partner, Lipe Lyons Murphy Nahrstadt & Pontikis, Chicago

Tips for Optimal Quality

S

• und Qualit y

If you are listening via your computer speakers, please note that the quality

• f your sound will vary depending on the speed and quality of your internet

connection. If the sound quality is not satisfactory, you may listen via the phone: dial 1-866-570-7602 and enter your PIN when prompted. Otherwise, please send us a chat or e-mail sound@ straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Qualit y To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again.

FOR LIVE EVENT ONLY

Continuing Education Credits

For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps:

• In the chat box, type (1) your company name and (2) the number of

attendees at your location

• Click the S

END button beside the box If you have purchased S trafford CLE processing services, you must confirm your participation by completing and submitting an Official Record of Attendance (CLE Form). Y

• u may obtain your CLE form by going to the program page and selecting the

appropriate form in the PROGRAM MATERIALS box at the top right corner. If you'd like to purchase CLE credit processing, it is available for a fee. For additional information about CLE credit processing, go to our website or call us at 1-800-926-7926 ext. 35.

FOR LIVE EVENT ONLY

Program Materials

If you have not printed the conference materials for this program, please complete the following steps:

• Click on the ^ symbol next to “ Conference Materials” in the middle of the left -

hand column on your screen.

• Click on the tab labeled “ Handouts” that appears, and there you will see a

PDF of the slides for today's program.

• Double click on the PDF and a separate page will open.
• Print the slides by clicking on the printer icon.

FOR LIVE EVENT ONLY

Jeremy Burton Lipe Lyons Murphy Nahrstadt & Pontikis Ltd. jtb@lipelyons.com

Trial and Settlement Considerations

 Introduction  Getting your cases settled  Considerations for Plaintiff’s counsel  Considerations for Defense counsel  Settlement language  Negotiating Settlement with the CMS

6

Introduction

Medicare is a government program providing health care. Under Medicare, the government reimburses health care providers for covered care provided. Until 1980, Medicare was the primary payer of all medical costs except in workers’ compensation cases. After 1980, Medicare is always a secondary payer to liability insurance, self-insurance, no-fault insurance, and workers’ compensation insurance. Medicare is also a secondary payer to group health plan coverage in certain situations.

7

Introduction

Insurers are not allowed to write policies secondary to

• Medicare. Such policies

would supersede federal law.

8

Introduction

Since 1980, Medicare beneficiaries, attorneys, insurers, self-insured entities, third party administrators and their agents have been responsible for (1) understanding when there is coverage primary to Medicare, (2) notifying Medicare when applicable, (3) and for paying appropriately.

9

Introduction

The new law, Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA Section) “Adds mandatory reporting requirements with respect to Medicare beneficiaries who have coverage under group health plan arrangements as well as for Medicare beneficiaries who receive settlements, judgments, awards or other payment from liability insurance, no- fault insurance, or workers’ compensation.”

10

Introduction

Implementation dates for the new law were originally January 1, 2009 for group health plans to register and July 1, 2009 for liability insurers to register. Insurers must report claims with settlement dates on or after October 1, 2011. In certain cases where an insurer has ongoing responsibility for medical claims, claims arising after January 1, 2010 must be reported.

11

Introduction

The new law is designed to enforce the statutes passed in 1980.

 It does not substantively change the pre-existing

Medicare law and statutes.

 It adds new reporting rules.  It includes penalties for noncompliance.

12

Considerations for Plaintiff’s Counsel

Intake Considerations Is the client 65 or older? Receiving Social Security Disability? Suffering from end-stage renal disease? Obtain your client’s Medicare identification card Advise Defense counsel

13

Considerations for Plaintiff’s Counsel

Lien Concerns Explain to your client that a substantial portion of their settlement will be payable to Medicare. Inform your client that Medicare costs may have a significant impact on your chances to favorably resolve the case.

14

Consideration for Plaintiff’s Counsel

Future Medicals Advise your client that Medicare has a right to recover any amount they expend on future medical care. You may want to consider the availability of a special needs trust or other ways to escrow money for future medical costs.

15

Considerations for Plaintiff’s Counsel

Future Medicals “You should also be aware that if you do not repay Medicare in full, it may decide to recover any amounts you owe (including accrued interest) from any Social Security or Railroad Retirement benefits to which you might otherwise be entitled, or from future Medicare payments.”

16

Considerations for Plaintiff’s Counsel

Penalty Provisions 42 C.F.R. Sect. 411.24(g) Recovery from parties that receive primary payments. 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.

17

Considerations for Plaintiff’s Counsel

Penalty Provisions U.S. v. Harris, 2009 WL 891931 (N.D.W.Va) The CMS calculated the amount it was owed, after subtracting amounts for attorney’s fees and costs. The CMS made its demand by letter, and after the statutory time elapsed without appeal the government filed suit. The court granted summary judgment to the government and ordered the Plaintiff’s counsel to pay the judgment plus interest.

18

Considerations for Defense Counsel

Discovery Is the plaintiff a beneficiary? Has the plaintiff received benefits? What has the plaintiff done with respect to the lien?

19

Considerations for Defense Counsel

Discovery Form A-1 Allows an insurer to determine whether the plaintiff is a Medicare beneficiary. Obtain with interrogatories. Full name, Medicare claim number (HICN), date of birth, social security number and sex.

20

Considerations for Defense Counsel

Reporting Make certain your client – insurer or self-insured entity is registered to report. If a complaint or discovery lists the date of a plaintiff’s injury or exposure after December 5, 1980, Medicare will require a report.

21

Considerations for Defense Counsel

Reporting Plaintiffs cannot claim a settlement, judgment or award does not contemplate medical liability in an effort to circumvent Medicare, even if a court accedes to such a compromise.

22

Considerations for Defense Counsel

Third Party Administrators The new Medicare reporting requirements are complicated enough that the CMS has anticipated that RREs will hire Third-Party Administrators (TPAs) to handle reporting and payment obligations. 42 U.S.C. 1396y(b)(7)&(8)

23

Considerations for Defense Counsel

Medicare Penalties Medicare beneficiaries are required to reimburse Medicare within 60 days of receipt of settlement. If Medicare is not reimbursed by the beneficiary, payment becomes the responsibility of the primary payer.

24

Why Report

The 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. 42 CFR Sec. 411.24(g)

25

Why Report

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. 42 CFR Sec. 411.24(i)

26

Why Report

The United States can collect double damages and attorneys fees against any entity not paying under the new statute. Furthermore, An applicable plan that fails to comply with the Medicare reporting requirements is subject to a civil money penalty of $1,000 for each day of noncompliance with respect to each claimant. 42 USC Sec. 1395y(b)(8)(E)(i)

27

Considerations for Defense Counsel

New Process 1) Determine the Medicare status of all claimants 2) RRE must report settlements 3) RRE must resolve liens 4) RRE must give consideration to Medicare’s interest in future payments

28

Considerations for Defense Counsel

ORM/TPOC and Date of Settlement

It may be but not always is the check date or payment date, it is the date the obligation is signed, if there’s a written agreement, unless court approval is required. If court approval is required it is the later of the date the

• bligation is signed or the date of court approval. If

there is no written agreement it is the date the payment,

• r the first payment if there will be multiple payments is

issued.

See http://www.cms.gov/MandatoryInsRep/Downloads/March11NGHPTranscript.pdf, pg. 15.

29

Considerations for Defense Counsel

ORM/TPOC and Date of Settlement

Application of the December 5, 1980 date is specific to a particular claim/defendant. If exposure for Defendant “BW” ended prior to December 5, 1980 but exposure for other defendants did not, a settlement, judgment, award or other payment with respect to Defendant “BW” would not be reported. Certain representatives of Medicare have indicated they do not intend to follow this rule and so it may be necessary to report client specific claims that fall outside of this rule but

• therwise have exposure after December 5, 1980.

30

Considerations for Defense Counsel

Medicare Set Asides

1. Medical damages from the date of injury through the date of settlement. 2. Future medical damages from the date of settlement forward.

31

Medicare Set Asides

In non-workers’ compensation cases, you are not required to set aside money for future damages to pay for plaintiff’s future medical expenses. There is some disagreement on this topic. Many defense firms are advising clients to set aside funds for future medical expenses. The CMS has confirmed that set asides are not required in liability cases, though they have also noted that they “reserve their right” to both challenge agreements which do not adequately cover Medicare costs and the future right to require set asides in liability cases. You should consider something like a Medicare Set Aside (MSA) for future medical damages. This set aside is required in workers’ compensation cases to “reasonably protect Medicare’s future interests.” If the CMS approves the proposed set-aside all parties will receive “safe harbor” protection from future government collection action.

32

Medicare Set Asides

Unfortunately, CMS is not in a position to review set asides at this time. As an alternative you can make a Claims Settlement Allocation (CSA).

33

Medicare Set Asides

The following standards apply to MSAs in workers’ compensation cases and should be taken into account in

• ther liability cases.

A MSA is available where the claimant is currently a Medicare beneficiary and the TPOC is greater than $25,000. Or where the plaintiff will soon be a Medicare beneficiary and the TPOC amount for future medical expenses, disability and lost wages is expected to be greater than $250,000.

34

Medicare Set Asides

A MSA is not necessary where: 1. The facts of the case demonstrate that the injured individual is only being compensated for past medical expenses; and 2. There is no evidence that the individual is attempting to maximize the other aspects of settlement to Medicare’s detriment; and 3. The individual’s treating physicians conclude in writing that, to a reasonable degree of medical certainty, the individual will no longer require any Medicare-covered treatments related to the workers’ compensation injury.

35

Medicare Set Asides

A MSA/CSA must show a good-faith consideration of future medical expenses. Remember that expenses must be related to the injury and in the appropriate case, you may want to consider a second review of medical records to eliminate

• verpaying for unrelated medical conditions.

Is there a need for a trust? Can a Third Party administer the trust?

36

Medicare Set Asides

“We have continued to say with respect to set-asides or liability situations that set-asides are not required in terms of CMS being involved in any type of determination of how much the set-asides should be. We have also said that our regional offices have the ability to evaluate proposed set-aside amounts for liability if their workload permits them to do so.”

37

Medicare Set Asides

“This is not the same thing as a blanket statement that liability set asides are simply not required or not appropriate. Regardless of the mechanism, Medicare’s interests need to be protected. The statute says that we don’t make payment where payment has already been made. Whether or not this is protected through setting up a formal set-aside, setting up a formal trust, simply keeping the money and insuring that it’s being [paid] in a priority manner to Medicare until the appropriate funds are exhausted; those are all choices, but we need to make it clear that’s not the same thing as saying – and that we are not in fact saying that liability set-asides aren’t appropriate.”

http://www.cms.gov/MandatoryInsRep/Downloads/Jan2810NGHPTranscript.pdf, pg. 17.

38

Medicare Set Asides

The CMS has noted their “standard expectation is that they will be pursuing recoveries against settlements received by individual beneficiaries.” However the CMS further notes that “there are limited instances where CMS has gone back to an insurer or to an attorney particularly if, for instance, an attorney for a beneficiary who ignores CMS’s demand, technically, there are some risks under the regulation. Is it any type of standard practice for us to routinely go back to an insurer or attorney or other entity when we’ve issued the demand to the beneficiary? No.”

See http://www.cms.gov/MandatoryInsRep/Downloads/Feb2510NGHPTranscript.pdf, pg. 37.

39

Creating Medicare Set Asides

If both sides have obtained medical records in written discovery, you likely have a blue print to create a successful MSA. If both sides have testimony from medical experts regarding permanency and anticipated future medical damages you are in an even better position. If one or both sides have hired an economist to analyze future medical needs, your work is almost complete.

40

Creating Medicare Set Asides

As a general rule in creating a set aside, your Medicare Allocation Report should include the following.

 The beneficiary’s name  The beneficiary’s address  The beneficiary’s social security number  The beneficiary’s current age  The beneficiary’s life expectancy  The date of the injury  The state of jurisdiction

41

Creating Medicare Set Asides

 The related diagnoses and ICD-9 Diagnosis Codes  An introduction and description of the injury  A medical history including relevant doctors’ visits,

examinations, and surgeries

 Summaries of the relevant doctors’ visits, examinations,

and surgeries

 Physician diagnoses, prognoses, recommended course of

treatment and if available opinions on possible future surgeries and all future costs.

 A list of pre-existing and unrelated conditions

42

Creating Medicare Set Asides

 A summary of the plaintiff’s current functional states and

ability to perform activities of daily living.

 A summary of the future treatment plan including doctors’

visits, future surgery, and anticipated prescription costs.

 A bottom line MSA number.

Your report should also contain the methodology utilized to explain how you calculated the final number, e.g. adjusted life expectancy and discount rate. The more you rely on verifiable medical information, the more protected you and your client will be.

43

Settlement Language

Madison County, Illinois has entered an order in Asbestos cases with helpful suggested settlement language. As part of settlement, Plaintiff’s counsel must complete Medicare Form B in order to finalize any settlement agreement. Medicare Form B requires all of the same information contained in the A- 1 form as well as information that Medicare requires such as the diagnosis code for the plaintiff’s illness, the name of the settling defendant, the date

• f the settlement, the amount of settlement and information on the

funding of settlement.

44

Settlement Language

Releases should be tailored to discuss Medicare obligations. If there are no future medical damages, that should be stated in the release. If possible, obtain indemnification, defense and hold harmless language from the plaintiff’s firm ensuring that a paying RRE will be protected from double paying and double damages. At the very least, all settlement agreements should state who is responsible for investigating Medicare liens, and who is responsible for satisfying any Medicare liens.

45

Settlement Language

The language of the Madison County order notes that 1) Defendant will not include Medicare on the settlement check. 2) PLAINTIFF'S FIRM agrees to hold in its trust account sufficient funds to pay all Medicare claims or liens relating to such settlement … or has in fact satisfied all Medicare claims or liens in full. PLAINTIFF'S FIRM will notify ... CMS, of any settlement which this Agreement governs and will work to satisfy or otherwise obtain discharge or release of any Medicare claim or lien including "set asides," if any.

46

Settlement Language

3) If defendant receives a claim for any unsatisfied Medicare claim … defendant will notify PLAINTIFF'S FIRM … and request from them any evidence that the claim or lien has been satisfied in full … If such evidence is not forthcoming or fails to resolve the claim in full without payment by defendant, defendant may by regular mail notify PLAINTIFF'S FIRM to undertake the principal response to the matter

• r to arrange payment or other resolution. If the U.S. government or

its designee including CMS brings suit, PLAINTIFF'S FIRM will undertake the principal defense of such matter … PLAINTIFF'S FIRM will be liable to defendant for the amount owed or paid by such defendant to the United States Government … for the allegedly unsatisfied Medicare claim or lien plus all attorney fees and out of pocket expenses reasonably necessary …

47

Settlement Language

But consider Many plaintiff’s firms will refuse an indemnification provision. Some states have ruled finding that a plaintiff’s attorney cannot agree to indemnify an opposing party for unpaid liens. Illinois Adv. Op. 06-10 (2006).

48

Other settlement options

Medicare has acknowledged that it can be a joint payee on settlement

• checks. The main issue with such a solution is that it puts the burden on

the plaintiff to contest non-suit related charges and it will inevitably delay payment to the plaintiff, especially in cases where significant future medical costs are anticipated. Moreover, drafting a check in such a manner does not absolve a RRE from further following up to ensure that Medicare is reimbursed.

49

Other settlement options

Tomlinson v. Landers, 2009 WL 1117399 (M.D.Fla.) In Tomlinson the defendant included Medicare on the settlement check. The plaintiff returned the check and requested that Medicare not be included on the check, promising instead that it would hold the defendant carrier harmless for any Medicare liens. The court found that including Medicare on the settlement check was not required under the rules, and further held that due to the disagreement between the parties that the settlement was invalid as the parties never had a meeting of the

• minds. Tomlinson does not stand for the proposition that Medicare

cannot be included on the check when both parties are in agreement.

50

Settlement Considerations

In the case of a joint and several settlement, where each defendant technically is responsible for the whole settlement, each entity must report the entire settlement, judgment, award or other payment. If each defendant enters into a separate settlement, they are each responsible for reporting the separate settlement, judgment, award or other payment.

See http://www.cms.gov/MandatoryInsRep/Downloads/Jan2810NGHPTranscript.pdf, pg. 20

51

Settlement Considerations

What about cases wherein a discounted settlement does not allow for reimbursement of Medicare due to questionable liability? “Waiver of Rights. The Secretary may waive (in whole or in part) the provisions of this subparagraph in the case

• f an individual claim if the Secretary determines that

the waiver is in the best interests of the program established under this title.” 42 USC Secs. 1395 et seq.

52

Conditional Payment Estimate We are writing to advise you that Medicare has identified a claim or number of claims for which you have primary payment responsibility and Medicare has made primary payment. The Medicare Secondary Payer provisions of the statute, 42 CFR 1395y(b)(2), precludes Medicare from paying for a beneficiary’s medical expenses when payment “has been made or can reasonably be expected to be made … under no-fault insurance”.

53

Negotiating Settlement with the CMS

However, Medicare may pay for a beneficiary’s covered medical expenses conditioned on reimbursement to Medicare from proceeds received pursuant to a third party liability settlement, award, judgment, recovery or from any entity responsible for making primary

• payment. Medicare must recover these payments from

the entity responsible for payment or when payment has been made from the entity/individual who has received payment for these claims.

54

Negotiating Settlement with the CMS

Enclosed is an itemization of conditional payments made by Medicare on behalf of the Medicare beneficiary referenced above. Currently, Medicare has paid _______ in conditional payments related to your claim.

55

Negotiating Settlement with the CMS

Final Demand Letter We are writing to you because we recently learned that you have made a liability claim relating to an illness, injury, or incident occurring on or about _____ and

• btained a recovery. We have determined that you are

required to repay the Medicare program _______ for the cost of medical care it paid relating to your liability

• recovery. (The term “recovery” includes a settlement,

judgment, award or any other type of recovery.

56

Negotiating Settlement with the CMS

 Right to Request a Waiver - you have the right to

request that the Medicare program waive recovery of the amount you owe in full or in part. Your right to request a waiver is separate from your right to appeal

• ur determination, and you may request both a waiver

and an appeal at the same time. The Medicare program may waive recovery of the amount you owe if you can show that you meet both of the following conditions:

57

Negotiating Settlement with the CMS

1. This overpayment (for purposes of requesting waiver

• f recovery, the amount you owe is considered an
• verpayment) was not your fault, because the

information you gave us with your claims for Medicare benefits was correct and complete as far as you knew; and when the Medicare payment was made, you thought that it was the right payment; AND 2. Paying back this money would cause financial hardship or would be unfair for some other reason.

58

Negotiating Settlement with the CMS

Right to Appeal - You also have the right to appeal our determination if you disagree that you owe Medicare as explained in Part I of this letter, of if you disagree with the amount that you owe Medicare ______ as explained in Part II of this letter. To file an appeal, you should send us a letter explaining why you think the amount you owe Medicare is incorrect and/or any reason(s) why you disagree with our determination. 120 days from receipt of letter.

59

Negotiating Settlement with the CMS

Counsel should be familiar with whether their request is for a complete waiver, a compromise allocation or a full commutation before contacting any Medicare

• representative. In the case of a compromise request,

counsel should be familiar with 42 CFR § 411.47 which governs compromise settlements in workers’ compensation cases and is currently the best tool available for an argument reducing a Medicare payment in a liability case. That section states:

60

Negotiating Settlement with the CMS

Negotiating Settlement with the CMS

42 CFR § 411.47 proposes a ratio analysis. If a settlement does not apportion the sum granted, the portion to be considered as payment for medical expenses is computed as follows: Determine the ratio of the amount awarded to the total amount that would have been payable … if the claim had not been compromised. Multiply that ratio by the total medical expenses incurred as a result of the injury or disease up to the date

• f the settlement.

61

Negotiating Settlement with the CMS

Similar language governs the plaintiff’s counsel’s recovery under 42 C.F.R. Sec. 411.37(c) Determine the ratio of the procurement costs to the total judgment or settlement payment. Apply the ratio to the Medicare payment. The product is the Medicare share of procurement costs.

62

SMART Act

Jeremy Burton Lipe Lyons Murphy Nahrstadt & Pontikis Ltd. jtb@lipelyons.com

SMART Act

The Strengthening Medicare and Repaying Taxpayers (SMART) Act of 2011 was signed by the President on January 10, 2013. The SMART Act is contained in HR 1845. The SMART Act reforms several aspects of the conditional payment process and MMSEA 111 process.

64

SMART ACT – CMS Website

The SMART Act requires the CMS to create and maintain a WEBSITE providing conditional payment information to authorized searchers. The CMS has 9 months to establish the website and following procedures.

65

SMART Act – CMS Website

 At any time beginning 120 days before the reasonably

expected date of a settlement, judgment, award or other payment, the claimant or an applicable plan may notify the Secretary that a payment is reasonably expected and the expected date of such payment.

 The Secretary must maintain a password protected website

and allow claimants (and authorized family members or plans) to access information on the claims, including payment amounts. 42 USC 1395y(b)(2)(B)

66

SMART Act- CMS Website

 The Secretary is required to update claim and payment

information on the website in a timely manner, no later than 15 days after the date payment is made.

 The information is required to include:

 Provider/supplier name  Diagnosis codes  Dates of service  Conditional payment amounts

 The information provided on the website must break out

claims and payments related to a potential settlement, judgment, award or other payment.

67

SMART Act – CMS Website

 The website must provide a

method of secure communication with the individual, representative or plan.

 The website must provide

information in a manner which includes a time and date stamp.

 The website must permit the

download of a statement of reimbursement amounts.

68

SMART Act – CMS Response

 The Secretary has 65 days to respond to a notice from

the beneficiary, representative or authorized plan. The Secretary is also entitled to a 30 day extension “if the Secretary determines additional time is required to address claims for which payment has been made.”

 Further extensions may be possible where failures are

justified due to exceptional circumstances.

 This period is known as the “Protected Period.”

69

SMART Act- CMS Reimbursement

 If the statement of reimbursement is obtained from

the website between the time notice is given (120 days before the reasonably expected date of settlement, judgment or award) and the time a Secretarial response is due – generally 65 days thereafter (subject to a 30 day extension) and the related settlement, judgment, award or other payment is made during this period, the last statement of reimbursement downloaded during this period and within 3 days before the date of resolution shall constitute the final conditional amount subject to recovery.

70

SMART ACT – CMS Discrepancies

 If the beneficiary (or representative) believes there is a

discrepancy with the statement of reimbursement amount, the Secretary must provide a timely process to resolve the discrepancy.

 The beneficiary (or representative) must provide

documentation explaining the discrepancy and a proposal to resolve the discrepancy.

71

SMART ACT – CMS Discrepancies

 The Secretary has 11 business days after the receipt of

discrepancy documentation to determine whether there is a reasonable basis to include or remove claims on the statement of reimbursement.

 If the Secretary does not make a determination within 11

days, the proposal to resolve the discrepancy shall be accepted.

 If the Secretary determines within 11 days that there is not a

reasonable basis to include or remove claims, the proposal shall be rejected.

72

SMART Act – CMS Discrepancies

 If the Secretary determines within 11 days that there is

a reasonable basis to find a discrepancy, the Secretary must respond in a timely manner by (1) agreeing to the proposal to resolve the discrepancy OR by (2) providing documentation showing with good cause why the Secretary is not agreeing and establishing an alternate discrepancy resolution.

 There is no administrative or judicial review of the

Secretary’s determinations.

73

SMART Act - Appeals

 The Secretary must set

regulations allowing primary payers to APPEAL determinations regarding payments for items or services that the Secretary is seeking to recover.

74

SMART Act - Appeals

 The applicable plan, an attorney, agent or third party

administrator may make an appeal.

 The beneficiary shall be notified of the plan’s intent to

appeal such a determination.

75

SMART Act – Annual Threshold

The SMART Act also requires the CMS to establish an annual THRESHOLD review limit. Settlements, judgment, awards or other payments below this amount do not need to be reported or repaid. The CMS must set a threshold beginning in 2014.

76

SMART Act – Annual Threshold

 Settlements, judgments, awards or other payments

from liability insurers resulting in a TPOC below the threshold amount do not need to be reported or repaid.

 The threshold amount applies to physical trauma-

based incidents and excludes ingestion, implantation

• r exposure claims.

77

SMART Act – Annual Threshold

 The annual threshold amount must be set on

November 15 every year.

 The threshold amount shall be set so that the average

amount credited to Medicare trust funds for collections equals the estimated cost of collection.

78

SMART Act – Annual Threshold

 The Secretary must publish

 The estimated cost of collection for conditional

payments arising from liability insurance

 A summary of the methodology and date used by the

Secretary used to compute the threshold amount.

 For ORM the amount used for calculation of the

threshold must include the cumulative value of medical payments.

79

SMART Act – Annual Threshold

 The CMS is to submit an annual report to Congress on

the annual threshold. Each report must set forth:

 Calculations for the threshold amount  A summary of the methodology and data used to

calculate the threshold amount and the amount of savings achieved by setting the threshold.

80

SMART Act - Penalties

The noncompliance penalties for failing to report have been changed from a compulsory PENALTY to a discretionary penalty.

81

SMART Act – Penalties

 The MMSEA contained language that an entity failing

to report a judgment, settlement, award or other payment “shall be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant.”

 The Act was rewritten to state that an entity failing to

report a judgment, settlement, award or other payment “may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant.” 42 USC 1395y(b)(8).

82

SMART Act – Penalties

 Within 60 days of the enactment of the penalty

change, the Secretary is to solicit proposals, to be accepted within a 60 day period for specification of practices for which sanctions will and will not be imposed.

 The bill suggests not imposing sanctions for “good

faith efforts to identify a beneficiary.”

83

SMART Act - Penalties

 After reviewing suggestions, the Secretary will publish

proposed specified practices for which such sanctions will and will not be imposed.

 After publication, a 60 day period for comment will

proceed.

 After considering public comments during the time for

comment, the Secretary will issue final rules.

84

SMART Act - Privacy

The SMART Act also provides new privacy protections for beneficiaries, by attempting to remove the requirement that a beneficiary provide his

• r her SOCIAL SECURITY or

HICN number. The CMS has 18 months in which to modify the reporting requirements.

85

SMART Act - Privacy

 An applicable plan will be permitted but not required

to access or report the Social Security number or HICN number of the beneficiary to the Secretary.

86

SMART Act - Privacy

 The reporting change will be implemented with 18 months

• f the enactment, though the deadline for modification

can be extended by one or more periods of one year.

 If extension is sought, the Secretary must notify congress

that the existing deadline, without such extension threatens patient privacy or the integrity of the secondary payer program.

 If extension is sought, the Secretary must also provide

information on the progress being made in implementing the modification and the anticipated implementation date.

87

SMART Act – Statute of Limitations

The SMART Act for the first time also sets a STATUTE OF LIMITATIONS for recovery against a Primary Payer. The new statute of limitations applies beginning in 6 months.

88

SMART Act – Statute of Limitations

“An action may not be brought by the United States under this clause with respect to payment owed unless the complaint is filed not later than 3 years after the date

• f the receipt of notice of a settlement, judgment, award,
• r other payment made pursuant to paragraph (8)

relating to such payment owed.” 42 USC 1395y(b)(2)(B)(iii)

89

SMART Act – Statute of Limitations

 The new SoL applies to actions brought and penalties

sought starting 6 months from the date of enactment

• f the SMART Act.

90

SMART Act

Jeremy Burton Lipe Lyons Murphy Nahrstadt & Pontikis Ltd. jtb@lipelyons.com