medicare: conditional payment claims, mandatory reporting and msas
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8/6/2019 Medicare: Conditional Payment Claims, Mandatory Reporting and MSAs
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Medicare:Conditional Payment Claims,
Mandatory Reporting and
MSAs
Bennett Pugh and Melisa Zwilling
Carr Allison
100 Vestavia ParkwayBirmingham, Alabama 35216
(205) 822-2006
bpugh@carrallison.commzwilling@carrallison.com
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Medicare Secondary Payer Act� Medicare Secondary Payer Act (MSPA)
enacted in 1980
� Relegated Medicare to ³secondary´ payer status when any other entity could possibly
be considered a primary payer
� Statute applies to workers¶ compensation,automobile or liability insurance, no-faultinsurance and self-insurers
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Three Issues to Consider
� Conditional Payment Claims� Section 111 Mandatory Insurer Reporting
Requirements
� Medicare Set-asides (in appropriatecases)
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Conditional Payment Claims
� Conditional payment claims (CPC) are
NOT the same as Medicare Set-asides.� CPC is asserted by Medicare for expenses
it paid prior to date of settlement or
judgment� Medicare Set-asides are designed to paymedical expenses after date of settlement
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Medicare¶s Right to Recover
� Federal law takes precedence over any
state law or private contract.� That means Medicare¶s right to recover
may not be limited by a state law or asettlement agreement between parties.
� Medicare¶s right to recover is alwaysparamount to any other entity or individual¶s rights.
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Medicare¶s Recovery of CPCs
� When any case with a Medicare beneficiary settles,
if Medicare has made a CPC, Medicare must bereimbursed.
� Obtaining CPC information can take a few months.
� CPC demand letter will not be issued until Medicarereceives copy of approved settlement documents.
± Payment only due at that time.
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Amount CMS May Recover
� CPC may be reduced for procurementcosts
� Medicare may recover FULL amount of CPC up to total settlement amount even if
claimant only recovered a portion of what would otherwise be due if theclaim had not settled!
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Interest and Penalties Under the MSPA
� If Medicare is not reimbursed within 60
days from the date of formal demandletter, interest will begin to accrue
� If Medicare has to file a lawsuit to
recover its money, it will collect doubledamages from whomever it sues
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Private Cause of Action
� MSPA provides for private cause of action
± May be asserted by Medicarebeneficiary
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Statute of Limitations for Medicare to Assert Claim
� 6 years� Begins to run once ³facts material to the
right of action are known or reasonablycould be known´ by the U.S.
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Challenging Medicare¶s Claim
� In order to challenge a CPC or any other
claim, must exhaust administrativeremedies!
� Medicare may NEVER be sued by anyparty for any reason in connection withthe Medicare Act without first goingthrough administrative remedy process.
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Medicare Set-asides� Medicare Set-aside (MSA) is money for future medical
expenses related to a specific accident or injury
� Neither MSPA nor any other legislation makes MSAsan absolute requirement in any case.
� MSAs are the best and perhaps only way to show thatMedicare¶s interests were adequatelyconsidered/protected at time of settlement
� CMS recommends MSAs in workers¶ compensationcases with Medicare beneficiaries when future medicalbenefits are closed
� Liability cases are handled differently
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� If Medicare¶s interests are not adequatelyconsidered, Medicare may requireexhaustion of entire settlement amount on
medical expenses before it begins payingfor any treatment for the claimant relatedto the injury at issue
� Medicare may also pay medical expensesand request reimbursement
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MSAs in Workers¶ Compensation Cases� CLASS I
± If the claimant is a Medicare beneficiary AND
± the total settlement amount exceeds
$25
,000,
� CMS approval of a MSA should beobtained.
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� CLASS II
± If the total settlement amount is greater than$250,000 AND
± the claimant has ³a reasonable expectation´of becoming a Medicare beneficiary within 30months of the settlement
� CMS approval of a MSA should beobtained.
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Reasonable Expectation of Entitlement
� If the claimant: ± Is currently receiving Social Security Disability
(SSD) benefits
± Has applied for SSD benefits
± Was denied SSD benefits, but is appealing denial
± Is 62.5 years old or older
± Has End Stage Renal disease
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Cases That do not MeetCMS Review Thresholds
� Medicare beneficiaries ± Medicare beneficiaries must always
consider and protect Medicare¶s interestswhen settling claims regardless of
settlement amount� No safe harbor
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� For M edicare beneficiaries, CMS stated:
± ³In other words if the total settlementamount is $25,000.00 or less, the parties to
the settlement are still required to consider Medicare¶s interests. The recommended method to protect M edicare¶s interest isto enter into a M edicare Set Aside
arrangement to protect Medicare¶s interesteven though CMS will not review theproposal.´
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Cases Not Meeting CMS Review Threshold
N on- M edicare Beneficiaries� CMS stated:
± "when a non-Medicare eligible claimant's [workers'compensation] settlement does not meet the 30-
month and $250,000 thresholds, typically thatindividual will completely exhaust his/her settlementby the time Medicare eligibility is reached. Also,according to various members of the [workers'compensation] community, most settlements for these
individuals are in the range of $10,000 to $50,000.Therefore, the amount of money in the settlement thatis actually being provided for an individual's medicalcare normally will be appropriately exhausted beforethe individual becomes a Medicare beneficiary."
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� For settlements, still consider a MSA if future medical treatment is needed, or atleast indicate with individuals with areasonable expectation which do not quitemeet the $250,000 threshold, in settlementdocuments that a portion of the money is
being paid for future medical expenses.� CMS will not review and approve though.
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� Medicare will NOT issue opinionletters concerning the need or not for
a MSA.� Therefore, if case does not meet the
review thresholds, should not submit
it to CMS.
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Determining Amount for MSA
� MSA accounts consist only of money to cover
expenses that Medicare would otherwise pay� Allocation reports helpful to determine amount
CMS will likely require for MSA.� Allocation amount based on workers¶
compensation fee schedule or actual/usual andcustomary charges, whichever is appropriate inthe state
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Settlement of Cases Prior toObtaining CMS Approval
� No amount included in settlement
documents is binding on CMS unless CMSapproves that amount
� Parties must provide CMS withdocumentation that the account has beenfunded as C M S approved , in order tofinalize the CMS process and ensure nofuture problems
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Obtaining CMS Approval of Set-aside Amount
� Files submitted to Workers¶ CompensationReview Center (WCRC) for recommendation to CMS Regional Office(RO) as to adequacy of amount submitted
� RO actually issues ³determination letter´
� Usually takes a few months to obtainapproval
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� No appeals process if CMS rejectsthe amount of the initial proposal
� Obvious mistakes, such asmathematical errors, may becorrected by contacting the Regional
Office
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State Court, Board or Commission Approved Settlements
� Medicare will generally honor decisions but onlyif issued after a hearing on the merits of a caseby a court of competent jurisdiction.
� Medicare will not simply accept documentsapproved by any such body if they merelyincorporate the parties¶ settlement agreement
� Medicare will not accept a settlementagreement, even if approved in the state, if itdoes not adequately address Medicare¶sinterests
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Workers¶ Comp and Third Party Cases
� MSA is required in cases involving a workers¶comp claim and a third party claim if the workers¶comp carrier is being relieved of the obligation topay future medical expenses.
� Must go through same process for approval as
cases involving only workers¶ compensationclaims
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Liability Only Cases� Key difference between workers¶ comp
and liability cases
± In workers¶ comp cases, state law usuallymandates lifetime payment of all futuremedical expenses related to a work injury
± In liability cases, responsibility to pay futuremedical expenses is a product of a settlementagreement itself, not a requirement of statelaw
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� CMS does not require MSAs or prior approval of settlements in liability cases
� Using a MSA for Medicare beneficiariesand obtaining CMS review and approval, if available, is a good way to guarantee nofuture problems with Medicare
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� Regional Offices are vested withsubstantial discretion regarding reviewof liability cases involving Medicare
beneficiaries ±Some will review and some will not.
No standard guidelines to determine if
RO will review.� No formal CMS review process for
liability cases
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� If settling a liability case with a claimant who is aM edicare beneficiary likely to need futuremedical care and the settlement agreement
includes payment of money for such futuretreatment,
± Parties may designate in the Release a portion of thesettlement money to cover such expenses OR
± A MSA may be used.
� If parties are not able to determine reasonableamount, allocation report may be helpful.
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Case # 1Issues� Preliminary Lien Letter of $0 but Conditional
Payment Letter of $8,365.90??
� MSA Submission?
� Reporting Required??
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Case #1Conditional Payments
� Providers have between 15-27 months tosubmit billing to Medicare, depending on date
of service� Preliminary lien letter amount can change!!
� CPL sent after Medicare receives executedsettlement documents
� Best protection is a MSA trust agreement todeal with post settlement contingencies
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Case #1MSA Submission
� Class 1 claimant and WCRC will review only if total settlement is over $25,000!
� TSA includes past or present indemnitysettlement, medical settlement, repayment of liens, plaintiff attorney fees and cost
� Does NOT include incremental indemnity and
medical payments� Denied claim with no payments allows for $0
allocation
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Case #1Reporting
� TPOC claim since no payments made to or onbehalf of claimant
� Settled 1.12.10
� Section 111 User Guide exempted TPOC claimsif settled before 10.1.10
� Now exemption for TPOC liability claims if settled before 10.1.11
� 42 CFR 411.25(a) requires notice to Medicare
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Case #2Issues
� No conditional payment if claimant is not aMedicare beneficiary at the time of settlement
� MSA Needed??
� No reporting required if claimant is not aMedicare beneficiary at the time of settlement
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Case #2MSA
� Class II claimant since he applied for SSD
� CMS will review it if total settlement amount isover $250,000
� The partied still must consider and protectMedicare¶s interests in the settlement
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Case # 2MSA� The parties can designate a reasonable amount
for future medical care
� Consider age and future treatment needs of theclaimant
� Reflect it in settlement agreement
� Allocation NOT
required, but could be helpful if parties can not agree, complicated medicalpicture or high dollar settlement
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Bennett Pugh and Melisa C. Zwilling
Carr Allison
100 Vestavia ParkwayBirmingham, Alabama 35216
Phone: (205) 822-2006
Fax: (205) 822-2057bpugh@carrallison.commzwilling@carrallison.com
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