How to Handle Medicare Liens on Personal Injury Cases
While we were all worrying about falling off the fiscal cliff, Congress and the President did something SMART… literally. The SMART Act was signed by President Obama on January 10, 2013. It makes numerous complicated administrative changes to Medicare that effect personal injury cases where the employee or plaintiff is on Medicare and has had treatment paid by Medicare. While most of this may be over the average person’s head, if you stop reading now, just know that something “good” happened to reduce bureaucracy and to speed up settlements that need the federal government’s approval.
For example, when a senior citizen covered by Medicare is treated after an accident or an injury, it’s generally paid for by Medicare. Those medical expenses must then be reimbursed through insurance or a legal settlement. But, the process by which that was to happen has not been running smoothly. The Strengthening Medicare and Repaying Taxpayers, or SMART, Act aims to remedy that.
Many claims involving Medicare beneficiaries could not settle because the parties could not determine their respective obligations to reimburse the federal government in the Medicare Trust Fund. The result was a lose-lose-lose for the beneficiary, the defendant, and the Medicare Trust Fund – all because under the former law, Medicare had no pathway to provide the amount due the Trust Fund for “conditional payments” – those payments previously made by Medicare for the injury that will be covered by the settlement.
The SMART Act fixes this problem by creating a process for Medicare to advise parties in the process of settling, before settlement, of how much is owed, so that the parties can appropriately allocate and resolve their Medicare obligations during settlement. By requiring Medicare to provide the amount due within 65 days of a request, the settling parties will know how much money has to be set aside for Medicare, and factor that amount into their final settlement.
There were numerous other changes. I have summarized some of them for you below. These amendments will require changes to settlement procedure, lien resolution and reporting, and release language. If you are on Medicare and have a personal injury case, make sure you have a lawyer that knows and understands the SMART ACT.
SUMMARY OF SOME OF THE CHANGES
Access to Information About How Much Medicare Paid
Old Law: Did not require Medicare to give immediate access to the conditional payments that were made on behalf of a claimant.
New Law: Up-to-date Conditional Payment Information Available Online
Claimants and responsible reporting entities (RREs, as defined by 42 U.S.C. § 1395y(b)(8)) will now have access to up-to-date information on the claims for which conditional payments have been made by CMS. Again, conditional payments are those payments previously made by Medicare for the injury that will be covered by the settlement. The SMART Act requires CMS to make claims information—including payment amounts and information regarding claims related to a potential settlement, judgment, or other payment—available to claimants or their authorized representatives and RREs (that have obtained the claimant’s consent) through a secure website. This information must be updated no later than fifteen (15) days after the date that payment is made.
Additionally, claimants or RREs now may provide notice to CMS that a settlement, judgment, award, or other payment is reasonably expected and the date of the expected payment up to 120 days before the reasonably expected date of the payment.
CMS already has a web-based portal for claims information, the Medicare Secondary payer Recovery Portal [https://www.cob.cms.hhs.gov/MSPRP/], which appears to satisfy the requirements of the SMART Act. Final regulations must be promulgated by October 10, 2013, nine (9) months after date of enactment, the effective date of this provision.
Pre-Settlement Lien Demands
Old Law: Medicare could not provide a final lien demand until after settlement. The inability to finalize Medicare’s reimbursement interest prior to settlement complicated settlement and lien resolution.
New Law: Establishing Conditional Payment Exposure Prior to Settlement
The SMART Act provides a mechanism by which a claimant or RRE (responsible reporting entities as defined by 42 U.S.C. § 1395y(b)(8)) determines liability for conditional payments prior to a settlement, judgment, award, or other payment for conditional payments. To do so:
- the claimant or RRE (with the claimant’s consent) must obtain a statement of reimbursement amount from the website during the “protected period”—defined as the time, if any, after the expiration of the federal government’s response period following notice of a settlement, judgment, award, or other payment
- the federal government’s response period is 65 days following notice
- it may be extended by an additional 30 days if additional time is required to address claims for which payment has been made
- it does not include any days where there was a failure in the claims payment and posting system due to exceptional circumstances as defined by regulation
- the related settlement, judgment, award, or other payment must be made during that period, and
- the last statement of reimbursement downloaded during that period and within three (3) business days of the date of the settlement, judgment, award, or other payment shall constitute the final conditional amount subject to recovery by the federal government related to that settlement, judgment, award, or other payment.
Final regulations must be promulgated by October 10, 2013, nine (9) months after date of enactment, the effective date of this provision.
Minimum Values Established
Old Law: The Medicare Lien reimbursement process currently applies even to settlements of minimal value.
New Law: The SMART Act establishes a threshold below which the lien reimbursement and Section 111 reporting obligations do not apply. The threshold will be established each year beginning in 2014. The minimum threshold exception does not apply to settlements concerning alleged ingestion, implantation or exposure (including asbestos).
UPDATED July 31, 2013:
To further explain the minimum values… the SMART Act requires HHS to set a “single monetary compliance threshold” for certain claims, starting on November 15, 2014. The purpose underlying that amendment is to avoid expending resources in seeking to recover conditional payments the value of which is less than the expense necessary to recover them. This is sort of a common sense provision as you will. The “monetary compliance threshold” that the Act contemplates would be a dollar figure that defines the minimum value of a conditional payment for which Medicare could pursue reimbursement without wasting more resources in seeking to recover the payment than the claim itself is worth. The SMART Act requires the Secretary of HHS to set and adjust that minimum threshold figure no later than November 15 each year, starting in 2014. Attorneys should calander this date to learn the threshold for that year.
The monetary compliance threshold does not apply to all conditional payments. More specifically, the monetary compliance threshold applies only to (1) liability TPOC reporting (total payment obligation to the claimant); and (2) conditional payments pertaining to “alleged physical trauma-based incidents,” but not incidents based on alleged ingestion, implantation, or exposure.
§111 Penalty Modification
Old Law: Companies that reported settlements involving Medicare beneficiaries to CMS either late or erroneously were subject to automatic fines of $1,000 per-day, per-claim.
New Law: Such penalties are now discretionary, not automatic. HHS is directed to create “safe harbors” for companies that report in good faith, despite being late or in error. §203, SMART Act.
No SSN or HICN
Old Law: Claims professionals and settlement parties use claimants’ Social Security numbers (SSNs) or Health Insurance Claim Numbers (“Medicare numbers”) to access claimant health records. This situation has obvious and troubling privacy implications.
New Law: Within 18 months, the Secretary of HHS is to change §111 of Mandatory Insurance Reporting to make use of SSNs and Medicare numbers optional rather than required. Medicare beneficiaries are understandably reluctant to provide this information – given the high incidence of identity theft. The SMART Act protects beneficiaries’ sensitive personal information while also reducing professionals’ liability exposure in the event of subsequent beneficiary identity theft. §204, SMART Act.
UPDATE: July 31, 2013
I received a call from a lawyer today asking if SSN’s are still required as his client does not want to give out his SSN. As of this date, SSN’s are still required. The Act provides that CMS must implement this requirement within 18 months of the SMART Act’s enactment, or by the middle of 2014. That deadline is not a firm one, however. The Act permits the Secretary of the Department of Health and Human Services (HHS) (the agency in which CMS operates) to request an extension of that 18-month deadline by “one or more periods up to one year each” if the Secretary believes that eliminating the use of social security numbers and health insurance claim numbers by the operative deadline “threatens patient privacy or the integrity of the secondary payer program[.]” I will keep monitoring for changes but I suggest if you are an attorney and uncertain that you contact the HHS Department.
Three-Year Statute of Limitations
Old Law: The MSP statute permits the government to pursue settling defendants for unsatisfied Medicare Liens in certain circumstances, even after the defendant has paid settlement funds to the plaintiff. Unclear law and inconsistent court rulings left settlement parties without a clear answer on the scope of the statute of limitations for the government to bring an action seeking conditional payment.
New Law: The SMART Act codifies a 2010 U.S. District Court decision – U.S. v. Stricker – which held that the government must file a complaint within three years of receiving notice that a judgment or settlement has been reached. §205, SMART Act.
Full Text of H.R. 1845: http://www.gpo.gov/fdsys/pkg/BILLS-112hr1845rds/pdf/BILLS-112hr1845rds.pdf
A Lawyer’s Timeline Under SMART for Finding Out How Much to Pay Back Medicare
For those lawyer fans of this blog, starting in October 2013, you should follow these rules to obtain a Final Conditional Amount.
- T-120 days to settlement – Send an Expected Settlement Notice to the MSPRC;
- T-115 days to settlement – Check to see if the MSPRC received the Expected Settlement Notice. Everyone knows the MSPRC response, “we don’t have that in the file” or “I don’t see that here.” If you don’t check you might waste the entire process.
- T-55 days to settlement – You should receive notice that the Final Conditional Amount is available for download on the MSPRC website, or more likely, the Medicare Secondary Payer Recovery Portal (MSPRP). If you have not, contact the MSPRC to check the status. Keep in mind the rule states they have 65 days from receipt of your notice – so we will have to keep track of how they define the word receipt. If your case qualifies for “exceptional circumstances” the MSPRC will tell you it needs another 30 days to process the Final Conditional Amount.
- T-25 days to settlement – You should receive notice that your exceptional circumstances request is completed and the Final Conditional Amount is available for download.
- T-3 days to settlement – You must download the Final Conditional Amount from the designated website. If you do so at 4 days to settlement it is apparently invalid and does not constitute a Final amount. If you do so more than 3 days after settlement (we believe after is still okay – the rule uses the word “within”) it is also invalid.
-Published January 31, 2013. Authored by Michelle M. Funkenbusch, St. Louis Trial lawyer
If you know someone in need of a personal injury lawyer, please contact St. Louis Personal Injury Lawyer Michelle Funkenbusch at 314-338-3500 .
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