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

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

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific TUESDAY, MAY 17, 2016

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

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Jeremy Burton Lipe Lyons Murphy Nahrstadt & Pontikis Ltd. 230 West Monroe Street, Suite 2260 Chicago, IL 606006 (312) 448-6231 jtb@lipelyons.com

Trial and Settlement Considerations

 Introduction  Considerations for Plaintiff’s counsel  Considerations for Defense counsel  Settlement language  Negotiating Settlement with the CMS  Introduction  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. 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. 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) Paying appropriately.

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) 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.” 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. 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

*Reporting Thresholds

Not repayment thresholds

January 1, 2012 >$100,000

*Reporting Thresholds

Not repayment thresholds

January 1, 2012 >$100,000 July 1, 2012 >$50,000 October 1, 2012 >$25,000 January 1, 2013 >$5,000 January 1, 2014 >$2,000 January 1, 2015 >$1,000

12

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.

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.

13

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 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

14

Considerations for Plaintiff’s Counsel

Pleading Considerations Any operative amended complaint must occur prior to the date of settlement, judgment, award or other payment and must not have the effect of improperly shifting the burden to Medicare by amending the prior complaint to remove any claim for medical damages.

Section 111 NGHP User Guide, Chapter III, 1-1. Version 4.5.

Pleading Considerations Any operative amended complaint must occur prior to the date of settlement, judgment, award or other payment and must not have the effect of improperly shifting the burden to Medicare by amending the prior complaint to remove any claim for medical damages.

Section 111 NGHP User Guide, Chapter III, 1-1. Version 4.5. 15

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. 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.

16

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. 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.

17

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.” 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.”

18

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. 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.

19

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

• wed,

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. Penalty Provisions U.S. v. Harris, 2009 WL 891931 (N.D.W.Va) The CMS calculated the amount it was

• wed,

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.

20

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

21

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. 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.

22

Considerations for Defense Counsel

A completed A-1 form allows an insurer to query the Benefits Coordination & Recovery Center (BCRC) to determine whether an injured party is a Medicare beneficiary. A completed A-1 form allows an insurer to query the Benefits Coordination & Recovery Center (BCRC) to determine whether an injured party is a Medicare beneficiary.

23

Considerations for Defense Counsel

Reporting Make certain your client – insurer or self-insured entity is registered to report. http://www.Section111.cms.hhs.gov If a complaint or discovery lists the date of a plaintiff’s injury

• r exposure after December 5, 1980, Medicare will require a

report. Reporting Make certain your client – insurer or self-insured entity is registered to report. http://www.Section111.cms.hhs.gov If a complaint or discovery lists the date of a plaintiff’s injury

• r exposure after December 5, 1980, Medicare will require a

report.

24

Considerations for Defense Counsel

Reporting When a case involves continued exposure, Medicare focuses on the date of last exposure to determine whether the exposure continued after 12/5/80. The application of the 12/5/80 date is specific to a particular defendants. Medicare will assert a recovery claim against exposure after 12/5/80 if liability is claimed, released or effectively released. Reporting When a case involves continued exposure, Medicare focuses on the date of last exposure to determine whether the exposure continued after 12/5/80. The application of the 12/5/80 date is specific to a particular defendants. Medicare will assert a recovery claim against exposure after 12/5/80 if liability is claimed, released or effectively released.

25

Considerations for Defense Counsel

Reporting When the following requirements are met, Medicare will not assert a recovery claim and reporting is not required. All exposure ended before 12/5/80 Exposure has not been claimed in the most recently amended complaint and/or specifically released. There is no release for exposure after 12/5/80 or whether there is a release it is a broad general release which effectively releases exposure. Reporting When the following requirements are met, Medicare will not assert a recovery claim and reporting is not required.

• All exposure ended before 12/5/80
• Exposure has not been claimed in the most recently

amended complaint and/or specifically released.

• There is no release for exposure after 12/5/80 or whether

there is a release it is a broad general release which effectively releases exposure.

26

Considerations for Defense Counsel

Reporting The RRE does not make a determination of what portion of any settlement is for medicals and what portion is not. If medicals are claimed and/or released the settlement, judgment, award or other payment bust be reported regardless of any allocation made by the parties or a determination by the court. Reporting The RRE does not make a determination of what portion of any settlement is for medicals and what portion is not. If medicals are claimed and/or released the settlement, judgment, award or other payment bust be reported regardless of any allocation made by the parties or a determination by the court.

27

Considerations for Defense Counsel

Reporting The CMS is not bound by any allocation made by the parties even where a court has approved such an allocations. The CMS does normally defer to an allocation made through a jury verdict or after a hearing on the merits. This issue is relevant to whether the CMS has a recovery claim and does not affect the RRE’s obligation to report.

Section 111 NGHP User Guide, Chapter III, 6-22, Version 4.5.

Reporting The CMS is not bound by any allocation made by the parties even where a court has approved such an allocations. The CMS does normally defer to an allocation made through a jury verdict or after a hearing on the merits. This issue is relevant to whether the CMS has a recovery claim and does not affect the RRE’s obligation to report.

Section 111 NGHP User Guide, Chapter III, 6-22, Version 4.5. 28

Considerations for Defense Counsel

NGHP RRE BCRC Primary Payer/Debtor

29

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) 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)

30

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. 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.

31

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) 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)

32

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) 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)

33

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)

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)

34

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 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

35

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.

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. 36

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

• f

settlement forward.

Medicare Set Asides

1.

Medical damages from the date of injury through the date of settlement.

2.

Future medical damages from the date

• f

settlement forward.

37

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 used 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. 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 used 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.

38

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). 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).

39

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. 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.

40

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. 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.

41

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 overpaying for unrelated medical conditions. Is there a need for a trust? Can a Third Party administer the trust? 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 overpaying for unrelated medical conditions. Is there a need for a trust? Can a Third Party administer the trust?

42

Medicare Set Asides

“We have continued to say with respect to set-asides or liability situations that set-asides are not required in terms

• f

CMS being involved in any type

• f

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.” “We have continued to say with respect to set-asides or liability situations that set-asides are not required in terms

• f

CMS being involved in any type

• f

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.”

43

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.

“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.

44

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.

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. 45

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. 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.

46

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

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

47

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  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

48

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.

 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.

49

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. 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.

50

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. 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.

51

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

• therwise obtain discharge or release of any Medicare claim or

lien including "set asides," if any. 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

• therwise obtain discharge or release of any Medicare claim or

lien including "set asides," if any.

52

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 or 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 … (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 or 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 …

53

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). 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).

54

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. 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.

55

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. 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.

56

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

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

57

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. 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.

58

Negotiating Settlement with the CMS

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”. 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”.

59

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. 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.

60

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. 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.

61

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. 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.

62

Negotiating Settlement with the CM

 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:

 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:

63

Negotiating Settlement with the CMS

1. This overpayment (for purposes of requesting waiver of recovery, the amount you owe is considered an overpayment) 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. 1. This overpayment (for purposes of requesting waiver of recovery, the amount you owe is considered an overpayment) 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.

64

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. 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.

65

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: 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:

66

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 of the settlement. 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 of the settlement.

67

Negotiating Settlement with the CMS

But see Hadden v. United States, In Hadden the plaintiff’s medical bills totaled over $82,000. The defendant settled the case for $125,000. After deducting attorneys’ fees, Medicare demanded

• ver $62,000.

Hadden paid under protest noting that the settling defendant was only 10% at fault, and therefore arguing was only responsible for about $8,000 of his medical expenses. But see Hadden v. United States, In Hadden the plaintiff’s medical bills totaled over $82,000. The defendant settled the case for $125,000. After deducting attorneys’ fees, Medicare demanded

• ver $62,000.

Hadden paid under protest noting that the settling defendant was only 10% at fault, and therefore arguing was only responsible for about $8,000 of his medical expenses.

68

Negotiating Settlement with the CMS

The court applied the Chevron standard in analyzing the Medicare related statutes. Chevron U.S.A., Inc. v. National Resources Defense Counsel, Inc., 467 U.S. 837, 842-43 (1984). IF Congress “has directly spoken to the precise question at issue” in the text of the statute, the court gives effect to Congress’s answer without regard to any divergent answers offered by the agency or anyone else. The court applied the Chevron standard in analyzing the Medicare related statutes. Chevron U.S.A., Inc. v. National Resources Defense Counsel, Inc., 467 U.S. 837, 842-43 (1984). IF Congress “has directly spoken to the precise question at issue” in the text of the statute, the court gives effect to Congress’s answer without regard to any divergent answers offered by the agency or anyone else.

69

Negotiating Settlement with the CMS

But, IF “the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” But, IF “the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.”

70

Negotiating Settlement with the CMS

The CMS has interpreted the statute finding that Medicare is “entitled to a full reimbursement of conditional Medicare payments when a beneficiary receives a discounted settlement from a third party. Zinman v. Shalala, 67 F.3d 841, 845 (9th Cir. 1995). The CMS has interpreted the statute finding that Medicare is “entitled to a full reimbursement of conditional Medicare payments when a beneficiary receives a discounted settlement from a third party. Zinman v. Shalala, 67 F.3d 841, 845 (9th Cir. 1995).

71

Negotiating Settlement with the CMS

The scope of a payer’s responsibility for a beneficiary’s medical expenses – is defined by the scope of the claim against the payer, regardless of whether a compromise has been reached or if the payer never admits liability. “And thus a beneficiary cannot tell a third party that it is responsible for all of his medical expenses, on the one hand, and later tell Medicare that the same party was responsible for only 10% of them, on the other.” The scope of a payer’s responsibility for a beneficiary’s medical expenses – is defined by the scope of the claim against the payer, regardless of whether a compromise has been reached or if the payer never admits liability. “And thus a beneficiary cannot tell a third party that it is responsible for all of his medical expenses, on the one hand, and later tell Medicare that the same party was responsible for only 10% of them, on the other.”

72

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. 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.

73

Negotiating Settlement with the CMS

Iowa Supreme Court Attorney Disciplinary Board v. Silich, 972 N.W.2d 181 (Dec. 2015). In one recent case, an attorney’s delay in resolving a Medicare subrogation lien on a tort settlement violated rules of professional conduct relating to due diligence, client communication, and expediting litigation. The attorney was suspended for 30 days. Iowa Supreme Court Attorney Disciplinary Board v. Silich, 972 N.W.2d 181 (Dec. 2015). In one recent case, an attorney’s delay in resolving a Medicare subrogation lien on a tort settlement violated rules of professional conduct relating to due diligence, client communication, and expediting litigation. The attorney was suspended for 30 days.

74

Medicare Part C Issues

Several state courts are grappling with whether Medicare Advantage Organizations (Part C organizations), or private companies acting as Medicare insurers have the same rights as Medicare in recovering under the Medicare “superlien” rather than under state lien

• procedures. Several courts have held that MAOs have

the same rights under the Medicare statutes to enforce a superlien. Several state courts are grappling with whether Medicare Advantage Organizations (Part C organizations), or private companies acting as Medicare insurers have the same rights as Medicare in recovering under the Medicare “superlien” rather than under state lien

• procedures. Several courts have held that MAOs have

the same rights under the Medicare statutes to enforce a superlien.

75

Medicare Part C Issues

Notwithstanding any other provision of law [an MAO] may (in the case of the provision of items and services to an individual under [an MA] plan under the circumstances in which payment under this subchapter is made secondary pursuant to section 1395y(b)(2)

• f this title) charge or authorize the provider of such services to

charge, in accordance with the changes allowed under a law, plan,

• r policy described in such section-

(A) The insurance carrier, employer, or other entity which under

such law, plan, or policy is to pay for the provision of such services, or

(B) Such individual to the extent that the individual has been paid

under such law, plan, or policy for such services. 42 USC Section 1395w-22(a)(4) Notwithstanding any other provision of law [an MAO] may (in the case of the provision of items and services to an individual under [an MA] plan under the circumstances in which payment under this subchapter is made secondary pursuant to section 1395y(b)(2)

• f this title) charge or authorize the provider of such services to

charge, in accordance with the changes allowed under a law, plan,

• r policy described in such section-

(A) The insurance carrier, employer, or other entity which under

such law, plan, or policy is to pay for the provision of such services, or

(B) Such individual to the extent that the individual has been paid

under such law, plan, or policy for such services. 42 USC Section 1395w-22(a)(4)

76

Medicare Part C Issues

MSP rules and State laws. Consistent with Section 422.402 concerning the Federal preemption of State law, the rules established under this section supersede any State laws, regulations, contract requirements, or other standards that would otherwise apply to MA plans. A State cannot take away an MA organization’s right under Federal law and the MSP regulations to bill, or to authorize providers and suppliers to bill, for services for which Medicare is not the primary payer. The MA organization will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations in subparts B through D

• f part 411 of this chapter.

42 CFR Section 422.108(f) MSP rules and State laws. Consistent with Section 422.402 concerning the Federal preemption of State law, the rules established under this section supersede any State laws, regulations, contract requirements, or other standards that would otherwise apply to MA plans. A State cannot take away an MA organization’s right under Federal law and the MSP regulations to bill, or to authorize providers and suppliers to bill, for services for which Medicare is not the primary payer. The MA organization will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations in subparts B through D

• f part 411 of this chapter.

42 CFR Section 422.108(f)

77

Jeremy Burton Lipe Lyons Murphy Nahrstadt & Pontikis Ltd. 230 West Monroe Street, Suite 2260 Chicago, IL 606006 (312) 448-6231 jtb@lipelyons.com