Medivest - Solutions for Workers' Compensation and Liability Settlements

18/Jan/2022

The Centers for Medicare & Medicaid Services (CMS) released a revised Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide (“Reference Guide”) Version 3.5 on January 10, 2022. This Reference Guide replaces Version 3.4 which was released on October 4, 2021. When comparing the two Reference Guides, a new section 4.3 and new language has been added. Below indicates the new section and language added in the (WCMSA) Reference Guide Version 3.5.

To download the new WCMSA Reference Guide v3.5  Click Here.

CMS’s Version 3.5 Reference Guide, Section 1.1 includes the following changes:

Clarification has been provided regarding the use of non-CMS-approved products to address future medical care (Section 4.3).

Section 4.3 The Use of Non-CMS-Approved Products to Address Future Medical Care

A number of industry products exist with the intent of indemnifying insurance carriers and CMS beneficiaries against future recovery for conditional payments made by CMS for settled injuries. Although not inclusive of all products covered under this section, these products are most commonly termed “evidence-based” or “non-submit.” 42 C.F.R. 411.46 specifically allows CMS to deny payment for treatment of work-related conditions if a settlement does not adequately protect the Medicare program’s interest. Unless a proposed amount is submitted, reviewed, and approved using the process described in this reference guide prior to settlement, CMS cannot be certain that the Medicare program’s interests are adequately protected. As such, CMS treats the use of non-CMS-approved products as a potential attempt to shift financial burden by improperly giving reasonable recognition to both medical expenses and income replacement.

As a matter of policy and practice, CMS will deny payment for medical services related to the WC injuries or illness requiring attestation of appropriate exhaustion equal to the total settlement less procurement costs before CMS will resume primary payment obligation for settled injuries or illnesses. This will result in the claimant needing to demonstrate complete exhaustion of the net settlement amount, rather than a CMS-approved WCMSA amount.

Keep in mind the WCMSA Reference Guide states:

There are no statutory or regulatory provisions requiring that you submit a WCMSA amount proposal to CMS for review. If you choose to use CMS’ WCMSA review process, the Agency requests that you comply with CMS’ established policies and procedures.

Take Aways

While CMS added Section 4.3, this language is not entirely new or at least not entirely unexpected. Similar currently existing Reference Guide language has for years included warnings about what could happen if parties failed to adequately consider Medicare’s future interests in WC settlements. For example, language from previous Reference Guide versions indicated in Section 8.0 that even for examples where a settlement did not meet CMS workload review thresholds “The settling parties must consider CMS’ future interests even though the case would not be eligible for review. Failure to do so could leave settling parties subject to future recoveries for payments related to the injury up to the total value of the settlement” (Example 1) and “Not establishing some plan for future care places the settling parties at risk for recovery from care related to the WC injury up to the full value of the settlement” (Example 2).

Also in prior versions of the Reference Guide in Section 4.1.4, CMS has warned of its ability and intention to deny injury-related medical services when it said that “If Medicare’s interests were not reasonably considered, Medicare will refuse to pay for services related to the WC injury (and otherwise reimbursable by Medicare) until such expenses have exhausted the entire dollar amount of the entire WC settlement. Medicare may also assert a recovery claim, if appropriate.”

On a positive note, CMS has now clarified in the new language in Section 4.3 that it will allow for a procurement cost reduction when there is a denial of service when there was no approved WCMSA submission. The new language clearly explains that the denial of service amount will not exceed the gross settlement minus procurement costs. This is more reasonable than denying services up to the entire amount of the settlement as it had previously listed or perhaps denying services up to double the amount of services. The double damages concept has been sometimes misstated in industry circles. (In court cases, even double damages claims have first determined the recovery damages by determining the conditional payment amount after applying a procurement cost reduction and then doubling that amount). The new language actually helps with this issue.

However, perhaps even more troubling is whether funds earmarked to help protect Medicare’s future interests as WCMSA funds are actually used for the intended purpose. According to the National Council on Compensation Insurance, Inc. (NCCI) 2018 research brief updating its 2014 survey on WCMSAs, approximately ninety-eight percent (98%) of the Workers’ Compensation cases settled with the injured worker choosing to self-administer their MSA funds. This 2018 NCCI update published research brief included a sample of over 11,500 WC settlements between 2010 and 2015.

Perhaps to address this gap between what is said will be done (i.e. WCMSA allocation reports) and what actually is done (the administration of settlement dollars to pay for injury-related medical items, services, and expenses including prescription drug expenses, CMS already has the following language recommending professional administration in its Reference Guide in Section 17:

“CMS highly recommends professional administration where a claimant is taking controlled substances that CMS determines are “frequently abused drugs” according to CMS’ Part D Drug Utilization Review (DUR) policy. That policy and supporting information are available on the web at https://cms.gov/Medicare/Prescription-Drug- Coverage/PrescriptionDrugCovContra/RxUtilization.html.

Claimants may also administer their own WCMSAs, if State law allows. Claimants should submit annual self-attestations, just as a professional administrator would. This arrangement is subject to the same rules and reporting requirements as any other WCMSA. See Section 17.5 for more on this annual attestation. Although beneficiaries may act as their own administrators, it is highly recommended that settlement recipients consider the use of a professional administrator for their funds.”

Perhaps CMS felt that its existing high recommendation language for professional administration was sufficient to encourage settling parties to avoid pitfalls of incompetent administration of WCMSAs. But has CMS or any other entity ever done research to see what percentage of self-administered MSA funds were properly and fully exhausted before any injury-related medical bills were submitted to Medicare? If a non-submit WCMSA comes in at 80% of the CMS methodology submitted and approved WCMSA (80% because it follows an evidence-based drug tapering program guideline often seen in a state-based Workers’ Compensation medical protocol like the MTUS in California for example) but the WCMSA funds are professionally administered, wouldn’t that seem to protect Medicare’s real-world interests rather than a CMS submitted and approved WCMSA allocation report but self-administered by an injured claimant?

Stay Up To Date

Count on Medivest to help you navigate your risk tolerance in light of the new CMS WCMSA Reference Guide language and see if we can’t find the right balance to reasonably protect Medicare’s interests in your settlement. Medivest will continue to monitor changes occurring at CMS and will keep its readers up to date when such changes are announced. For questions regarding these updates, please reach out to a Medivest representative in your area by clicking here or call us direct at 877.725.2467.

Medivest

16/Dec/2021

On December 15, 2021, CMS issued an alert regarding the Computation of Annual Recovery Thresholds for Certain Liability Insurance, No-Fault Insurance, and Workers’ Compensation Settlements, Judgments, Awards or Other Payments for 2022. CMS also issued the methodology for Computation of Annual Recovery Thresholds for Certain Liability Insurance, No-Fault Insurance, and Workers’ Compensation Settlements, Judgements Awards or Other Payments.

The CMS alert states, “Beginning January 1, 2022, the threshold for physical trauma-based liability insurance settlements will remain at $750. CMS will maintain the $750 threshold for no-fault insurance and workers’ compensation settlements, where the no-fault insurer or workers’ compensation entity does not otherwise have ongoing responsibility for medicals.

This means that entities are not required to report, and CMS will not seek recovery on settlements, as outlined above. Please note that the liability insurance (including self-insurance) threshold does not apply to settlements for alleged ingestion, implantation, or exposure cases.”

To view CMS’ Alert for 2022 Recovery Thresholds for Certain Liability Insurance, No-Fault Insurance, and Workers’ Compensation Settlements, Judgements, Awards or Other payments Click This Link.

For the full announcement regarding CMS’ Methodology for Computation of Annual Recovery Thresholds for Certain Liability Insurance, No-Fault Insurance, and Workers’ Compensation Settlements, Judgements, Awards or Other Payment for 2022 Click This Link.

Count on Medivest to help guide you through some of the complexities associated with MSP compliance.

Medivest

01/Dec/2021

On Friday, July 2nd, 2021 the U.S. Supreme Court announced it would take up a legal battle that could have a dramatic effect on settlements in the state of Florida, and potentially the entire country. At question in Gallardo v. Marstiller will be whether Florida’s Medicaid program is only entitled to be reimbursed for the money it spent for a Medicaid beneficiary/Member’s past medicals up to the date of a settlement, judgment, award or other arrangement (“settlement”) or whether it is entitled to recover a portion of the settlement that represents future medical expenses too. Gallardo By & Through Vassallo v. Marstiller, 141 S. Ct. 2884 (2021).

A Brief Summary of Events

In 2008, a Lee County school bus struck and seriously injured 13-year-old Gianinna Gallardo. Florida’s Medicaid agency provided $862,688 in medical payments on Gianinna’s behalf. Her parents sued the responsible parties and ultimately agreed to an $800,000 settlement, of which $35,367 was allocated as past medical expenses.

Florida’s Medicaid agency, using the state’s then-current statutory formula to calculate reimbursement, claimed it was entitled to $323,508 of Gianinna’s settlement. However, the state’s statutory formula did not distinguish between past and future medicals and included money in the settlement that was allocated for future medical expenses.

The Gallardo family sued the state Medicaid agency in federal court, arguing that Florida’s reimbursement formula violates federal law because the state should only be able to recover from that portion of her settlement allocated to past medical expenses. The Medicaid agency countered that it was entitled to satisfy its lien from the portion of the settlement representing compensation for both past and future medical expenses.

Between 2017 and 2020 several courts weighed in on similar cases but decisions at odds with each other. In 2017, U.S. District Judge Mark Walker ruled in favor of the Gallardo family. In a 2020 appeal, the 11th Circuit rejected Walker’s decision and ruled that the Florida Agency for Health Care (“AHCA” or “Florida Medicaid”) was entitled to $200,000 of the settlement (Gallardo v. Dudek, 11th Cir., No. 17-13693, June 26, 2020). However, in a separate 2018 case, Giraldo v. Agency for Health Care Admin., 248 So. 3d 53 (Fla. 2018), the Florida Supreme Court said the federal Medicaid Act preempted a state law that authorized Florida Medicaid to seek reimbursement from “portions of (a settlement) that represents future medical funds.” Therefore, that case seemed to indicate that Florida Medicaid was only entitled to recover the portion of money from a settlement that represented past medical expenses

Potential Far-Reaching Effects of a U.S. Supreme Court Medicaid Lien Recovery Decision

All Medicaid agencies have a duty under Federal law to recover past medical payments and most attorneys know to do a lien search when their clients are enrolled in Medicaid. However, up to now, attorneys never had a legal duty to set aside a portion of settlement proceeds to protect Medicaid’s future interests. The current state of federal law on this topic has been discussed in our prior blog referencing the U.S. Supreme Court’s decisions in Ahlborn and Wos, and their reinstatement via the Budget reconciliation Act of 2018. Now the U.S. Supreme Court will weigh in this issue – i.e., whether a Medicaid agency like Florida’s is entitled to seek a portion of funds designated for future medical care from a settlement, judgment, award, or other arrangement (each individually now referred to as “settlement”) when it takes up Gallardo v. Marstiller.

How would that be enforced if it is decided that Medicaid’s future interests must be considered at the time of a settlement, judgment, award, or other arrangement? Could this set legal precedent for a nationwide practice of Medicaid beneficiaries setting aside some portion of their settlements to represent Medicaid futures like is done for certain cases involving Medicare beneficiaries or those who have a reasonable expectation of becoming Medicare beneficiaries within 30 months of settlements? Is it possible that a U.S. Supreme Court ruling in favor of Florida Medicaid’s future interests may lead to a federal statute setting forth the protection of Medicaid’s future interests in settlements similar to the way the Medicare Secondary Payer Statute sets the framework for the protection of Medicare’s past and future interests?

The effects could be felt beyond the state of Florida. Perhaps this is the reason that briefs have been filed in this case by or on behalf of the National Conference of State Legislatures, the National League of Cities, the U.S. Conference of Mayors, and the Government Finance Office, the American Justice Association, the Florida Justice Association, the American Academy of Physician Life Care Planners

Additionally, the outcome could increase the awareness of Medicaid lien resolution specifically and lien resolution generally. Furthermore, if it is determined that Medicaid is entitled to at least some portion of the expected accident-related Medicaid futures, this could affect how Medicare Set-Aside (MSA) allocation reports would be prepared when beneficiaries are dual enrolled, and could increase the need for Professional Administration, due to the complexity of administering funds set aside for protection of both Medicare and Medicaid’s interests.

The Supreme Court’s decision will likely come during the Court’s 2021-2022 term. At that time Medivest will review the decision and provide analysis on what effects it could have on settlement services.

Medivest

14/Jul/2021

On May 12, 2021, the Court of Appeals of Iowa published its opinion number 20-1250 in Forbes v. Benton County Agricultural Society and reminded everyone that in order to avoid surprises that lead to bad settlement results, plaintiffs in liability cases or employers in Workers’ Compensation cases, should always perform a lien investigation into the existence of any lien holders, entities, or plans that could assert a claim for reimbursement of paid claim charges (for this article, all simply referred to as liens). The next steps upon identifying any such liens would be to follow up with lien resolution audit, analysis, and negotiation. While the negotiation of the lien is often finalized after settlement, it is a form of malpractice for an attorney to move to settlement without first inquiring as to whether liens exist.

In August of 2017, Larry Forbes sustained an injury while on the premises of the Benton County Iowa fairgrounds, and hired an attorney to file a negligence action. After initial discovery, counsel for the Benton County Agricultural Society (Ag. Society), made an offer to Forbes’s counsel to settle for $10,000.

The letter referenced TRICARE but not Medicare and stated: “Based on information you have provided to date, Mr. Forbes had an excellent recovery, and his actual medical bills totaled $2,732, for which TRICARE apparently had a subrogation interest.” Burris added: “There is no indication that Mr. Forbes had to pay anything out-of-pocket, or that the medical providers are actually charging anything beyond the $2,732 paid.”

After negotiating, Forbes agreed to settle his suit with the Ag. Society for $12,500. In return, Forbes would dismiss the suit with prejudice. Counsel for the Ag. Society then informed Forbes’ counsel that if Forbes was Medicare eligible, her client would require “final CMS letter, showing the amount owed, if any, in reimbursement to Medicare.” However, after reaching the agreement, Forbes’ attorney learned that Medicare was pursuing a Medicare lien in the amount of $25,482 for reimbursement of conditional payments it made toward Forbes injury related medical expenses. Forbes’ attorney attempted to renegotiate the settlement once the existing Medicare conditional payments came to light. However, the Ag. Society pushed back, insisting Forbes accepted the agreed upon terms of the settlement and was aware of his obligations to Medicare. The Ag. Society moved to enforce the settlement by filing a motion for summary judgment.

When the case went to court, Forbes argued the agreement was unenforceable and claimed there was a “mutual mistake” because the parties failed to reach a “meeting of the minds.” The Iowa District Court for Benton County disagreed with Forbes and ruled in favor of the Ag. Society granting it summary judgment, based on its position that the settlement contract was enforceable. The Court of Appeals of Iowa affirmed the District Court’s ruling, reaching its affirmation under the theory that settlement agreements are essentially contracts and because the District Court properly applied contract law. Furthermore, the Court of Appeals confirmed that the lower court record showed a “meeting of the minds,” and that Forbes therefore, bore the risk of the mistake.

The Court of Appeals provided a detailed analysis on how a party may be considered to bear the risk of a mistake such as when:

“(a) the risk is allocated to him by agreement of the parties, or

(b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or

(c) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.”

The court decided that Forbes bears the risk of mistake in two of these exceptions:

“The first of those two exceptions is called “conscious ignorance.” See id. cmt. c. Under that exception, even if Forbes did not agree to bear the risk of mistake, he was aware when he agreed to the settlement that he had limited knowledge about potential Medicare payments. And despite that uncertainty, he “undertook to perform” the bargain. See id. In doing so, he assumed the risk of the mistake. See id. We agree with the district court that Forbes had exclusive access to his medical records and the ability to investigate whether Medicare would seek a recovery claim.

On the second exception, even if Forbes were not consciously ignorant about the possibility of a Medicare recovery claim, the district court was still reasonable in assigning the risk of mistake to him. See Pathology Consultants v. Gratton, 343 N.W.2d 428, 438 (Iowa 1984); see Restatement (Second) of Contracts § 154 cmt. a. As the court noted, Forbes’s fall occurred nearly two years before he sued. In that time, he had the opportunity and the burden to inquire thoroughly into the payment of his medical bills. It made sense for the court to allocate the risk of any mistake to Forbes.”

The full opinion and summary of the case can be read here: https://www.iowacourts.gov/courtcases/12533/embed/CourtAppealsOpinion.

Takeaways

Lien Investigation should be addressed during the pendency of any liability claims to determine who is paying for the injured party to recover from their injury and whether they will be asserting any subrogation/reimbursement right lien. This is especially important for those who are eligible/enrolled in any type of government issued medical insurance plan such as Medicare, Medicaid, VA/TRICARE/CHAMPVA, or who works/worked for a government entity (Such as FELA or FEHBA), or whose health plan is governed by federal law (such as an ERISA plan).

Patience is a virtue, especially in Lien Resolution and Lien Investigation. CMS’ guidelines allow for up to a 45-day response per inquiry. VA/TRICARE/CHAMPVA often take longer. Parties should take this into consideration and be proactive and inquire as to liens early in the case, so that if a settlement opportunity arises, they are able to have an accurate picture of all outstanding liens at the right time. Otherwise, they may be settling prematurely and as Mr. Forbes learned, at their peril.

Neglecting to address liens at the start of settlement is taking an unnecessary risk. Working with an experienced lien resolution group will often produce faster response times and outstanding resolution results. This is due in part to familiarity with the various lien processes, having lien holder contacts on file, use of electronic portals and secure email systems of recovery agents, use of proprietary diagnosis review software. Knowing which remedies may be available when, and how to best use the facts of cases in favor of the injured party when applicable.

Medivest can help you navigate through the complexities of lien resolution while you work toward a desired settlement outcome. Call us to today to speak to one of our highly trained settlement consultants for a free lien case consultation. For more information about Medivest or to refer a case, please call 877.725.2467 | Monday – Friday 8 am to 5 pm EST.

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Medivest

01/Jul/2021

On June 28th, Centers for Medicare & Medicaid Services (CMS) made two announcements. The first is notice of the updated MMSEA Section 111 Group Health Plan (GHP) User Guide, while the second concerns a new technical alert regarding the inclusion of Part D information in Section 111.

Updated MMSEA Section 111 Group Health Plan (GHP) User Guide and GHP 270/271 Health Care Eligibility Benefit Inquiry and Response Companion Guides

A summary of the updates that have been made in Version 6.2 of the MMSEA Section 111 GHP User Guide are listed here:

The CMS electronic file transfer (EFT) file-naming conventions for inbound and outbound files have been updated (Section 8.1.1).

To provide more accurate direction to submitters, instead of receiving the RX 07 error code (Beneficiary does not have Part D enrollment), Disposition Code 51 will be returned for those records where the submitted individual is not entitled to Medicare Part D (Appendix D).

A new Modifier Type Code (PVR) and Name (From a provider) have been added for unsolicited MSP response files, and the DTM code (Name of employer submitting the Data Match Questionnaire Response) has been removed (Section 7.2.10.6).

The following will become effective December 11, 2021:

Under the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT Act) for Patients and Communities, Section 111 Responsible Reporting Entities (RREs) who provide primary prescription drug coverage must submit this information through the Section 111 process. To support their efforts, the Query-Only Response File layout will be updated to provide the most recent Part D enrollment information for beneficiaries. Additionally, process steps for installing and configuring the HIPAA Eligibility Wrapper (HEW) software will also be provided (HEW Query-Only Response File Record – Version 4.0.0, Appendix I).

The full guide can be downloaded here at CMS.gov.

Medicare Secondary Payer (MSP) Mandatory Reporting Provisions Section 111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 2007

The purpose of the latest alert is to notify Group Health Plan (GHP) RREs of changes being made to the Query Only Response File. Effective December 13, 2021, RREs will need to provide current Part D enrollment information for a beneficiary if the profile indicates that it provides network primary prescription drug coverage via Section 111 reporting. Additionally, three new fields will be added to the Query Only Response File layout.

The full alert can be downloaded here at CMS.gov.

For questions regarding these updates and how they may affect you and/or your clients workers’ compensation or liability settlements, please contact Medivest here or call us at 877.725.2467.

Medivest

08/Jun/2021

On June 23rd, 2021 at 1pm EST, Centers for Medicare & Medicaid Services (CMS) will host a webinar regarding the implementation of the Provide Accurate Information Directly (PAID) Act. The full notice can be read below:

CMS will be hosting a webinar to discuss upcoming impacts to Section 111 Non-Group Health Plan (NGHP) Responsible Reporting Entities (RREs) related to the PAID Act, which was signed into law on December 11, 2020. The intention of the PAID Act is to help NGHP Responsible Reporting Entities better coordinate benefits by providing additional beneficiary Part C and Part D enrollment information. This webinar will cover what the PAID Act is, details of the NGHP Section 111 Query Response File changes, information on the scheduled testing period and implementation timeframes. The webinar will also be followed by a live questions and answer session with staff from CMS and the Benefits Coordination & Recovery Center.

Questions for this town hall can be submitted in advance to PL110-173SEC111-comments@cms.hhs.gov. Please have your questions submitted no later than June 16, 2021.

Date: Wednesday, June 23, 2021
Time: 1:00 PM ET

Webinar URL: https://www.mymeetings.com/nc/join.php?i=PWXW2072056&p=9205987&t=c

and

Conference Dial In: 888-469-1074
Conference Passcode: 9205987

Please note that for this webinar you will need to use both the webinar link and conference call information above to access both the visual and audio portion of the presentation. Please plan to join at least 15 minutes prior to the start of the presentation.

Additional information on the PAID Act can be found here. If you have questions on how topics discussed in this webinar this may affect your clients, please contact Medivest here or call us at 877.725.2467.

Medivest

02/Jun/2021

How Attorneys in Washington and Other States Should Prepare Their Clients and Themselves for Lump-Sum Settlements

Last month, Washington state governor Jay Inslee signed a bill into law that will allow injured workers to receive Workers’ Compensation (WC) settlements as lump-sum settlements for the first time. Included in the bill, S.B. 5046 was an emergency clause that made it take effect immediately once it was signed. Previously, injured workers in Washington state were required to receive WC settlements via structured settlement (annuitized) payments over time. The COVID-19 Pandemic may have influenced this change and only time will tell if the decision will be good for the State of Washington. Funding of WC settlements by structured settlements have always provided a sort of safety net so that if a WC claimant failed to preserve settlement funds in any one year, there would be another round of funding to help cover the medical needs of the claimant going forward.

Are There Risks with Lump-sum Settlements?

Lump-sum settlements offer the advantage of receiving money immediately, which can be helpful when large bills are looming overhead. However, injured workers who receive lump-sum settlements are naturally prone to misuse the medical portion of their settlement funds for several reasons. Disregarding any malicious intent, its not uncommon for misuse to occur due to:

Lack of Expertise – Inability to seek or negotiate for the best price on products and services due to a lack of knowledge about fee schedules, rates, coordination of benefits, medical billing department practices and policies, and negotiation.
Dependence on Willpower – Decisions are at the mercy of the beneficiary’s self-control.
Outside Influences – Life circumstances, including needs and wants, or even manipulation by family members or friends creates pressure to spend imprudently.

Workers’ Compensation claimants may face sanctions from the Centers for Medicare & Medicaid Services (CMS), the agency charged with administering the Medicare program, which include denial of future medical care under Medicare for the WC related injury that was compensated, and obligation of repayment to Medicare for conditional payments made by Medicare, which can potentially be up to double the amount owed or otherwise carry high interest on unpaid Medicare Secondary Payer statute (MSP) debt. However, consequences of misuse of funds are not limited to just the claimants. Their attorneys may also share responsibility.

What Does This Mean for Attorneys in Washington State?

Attorneys in Washington, and any other state that allows lump-sum payments for Workers’ Compensation settlements, must make every effort to ensure that their clients are considering Medicare’s future interest in their settlement and have a plan for future care that will protect Medicare from being prematurely billed for any injury related and Medicare allowable future medical component of the WC settlement. CMS identifies the legal support providing why an attorney could be in its cross-hairs as a target of a MSP recovery penalty for a claimant’s misuse of funds in its April 22, 2003 memorandum.

CMS may sue for repayment from all parties involved in the settlement, including the claimant’s attorneys. Double damages may also be sought against the “primary payer” under the authority of 42 CFR 411.24(c)(2), and if the government is unable to recover against the “primary payer,” against the “beneficiary.” 42 CFR 411.24(l)(1).
CMS outlines the “ethical and legal obligations” of attorneys representing Workers’ Compensation claimants when their clients chose to “ignore Medicare’s interests in a Workers’ Compensation case,” citing to the CFR section that gives CMS a claim against the attorneys.

How to Protect Future Medicals and Your Own Future

For the protection of all parties involved, CMS highly recommends Professional Administration for a Medicare Set-Aside account. It effectively eliminates or significantly reduces the likelihood of misuse of MSA funds, assuring the settling parties remain in compliance with the letter and spirit of the MSP thereby protecting both the claimant and attorney. Additionally, Medivest’s Professional Administration services can often stretch the medical portion of the settlement funds, helping to ensure that medical funds are available for a longer period of time than if self-administered.

Medivest can help you navigate through Medicare Secondary Payer compliance complexities while you work toward a desired settlement outcome. Call us to today to speak to one of our highly trained settlement consultants for a free lien and MSP futures case consultation. For more information about Medivest or to refer a case, please call 877.725.2467 | Monday – Friday 8 am to 5 pm EST.

Medivest

01/Sep/2020

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On Friday August 21, 2020, the U.S. Attorney’s Office for the Middle District of Pennsylvania announced a $53,295 settlement of Medicare Secondary Payer Act, 42 U.S.C. §1395y(b)(2) (“MSP”) debt. The settlement described in the press release demonstrates the U.S. Government’s continued interest and intent in enforcing the recovery provisions of the MSP.

Headlines on MSP recovery often focus on plaintiff attorneys who fail to adequately address Medicare conditional payment reimbursement claims, often called Medicare liens by attorneys and Medicare beneficiaries. However, at fault parties and their insurance carriers need to pay close attention to these MSP recovery actions. That is because the MSP provides for joint and several liability of primary plans such as liability carriers and self-insureds, including the potential for double damages, even after settlement proceeds have been paid and a release has been signed.

While the plaintiff attorney is the focus of the headline “Harrisburg Law Firm Pays $53,295 To Reimburse Medicare Program” the press release indicates that one of the defendants in the underlying improper drug dispensing case, paid $33,750 of the $53,295 to the U.S. for settlement of the MSP debt. Insurance carriers or self-insureds sometimes insist on forwarding the lien payment to Medicare because they don’t want to pay a settlement to the plaintiff, only to later be asked to pay the Medicare portion (or more) again, if the plaintiff’s attorney has not timely paid the lien.

There is no information about why the plaintiff’s firm did not pay the amount demanded, but ultimately paid $19,545.15 toward the debt in this settlement with the U.S. Government. The conditional payments were described in the press release as being $84,353 with the ultimate settlement amount being $53,295. This seems to indicate that a 36.82% procurement cost reduction was allowed. The settlement did not include a double damages request or even include any additional interest.

It is not clear from the press release whether there were any appeals over the amount of Medicare’s demand “determination” that led to the delayed payment of the lien and whether the release agreement contemplated the defendant/primary plan agreeing to pay the Medicare debt from withheld settlement funds. Did the parties do their due diligence in investigating the debt? Did they coordinate with each other over whether any Conditional Payment Letters contained amounts not related to the claimed/released injuries? Did they coordinate their respective settlement notification/reporting to make sure that the ICD codes reported from the plaintiff and defense were aligned, and to help prevent an overreach in the future by Medicare in potentially flagging more than just injury related claims.

Could it have been similar to the recent Osterbye case in which the parties seemed to rely on Conditional Payment Letters as opposed to the official Medicare demand at the time of settlement? See JOSEPH C. OSTERBYE, as Administrator of the ESTATE OF…, Slip Copy (2020) 2020 WL 3546869, June 30, 2020. In Osterbye, the Administrator of an estate of a deceased Medicare beneficiary sued the U.S. Government and the primary plan defendant alleging that there was a mistake of fact as to the amount owed to Medicare when the plaintiff failed to recognize that two files had been opened for the same case. The plaintiff alleged that the defendant had “initiated” a separate conditional payment claim with Medicare without disclosing to plaintiff the amount of the separate conditional payment amount and arguing that plaintiff would not have settled the case if he had known that Medicare had a lien for over $100,000.00. At the time of settlement, the Conditional Payment Letter that the plaintiff was in possession of only indicated about $13,000.00 in conditional payments. In Osterbye, the NJ U.S. District Court denied the defendant’s motion to dismiss on the basis that the settlement may have been entered into based on mistake of fact indicating that the facts of the settlement will have to be investigated. A similar issue was also addressed in the Langone state court case referenced in a prior blog article where parties mistakenly relied on Conditional Payment Letters instead of a demand letter.

Take Aways:

While some insist MSP recovery obligations are solely a plaintiff’s concern, defendants should pay close attention to make sure the debt is satisfied or otherwise resolved – Medicare will issue a case closed letter once the debt is satisfied even when a compromise is reached for an amount lower than the demand

Not all courts will be as accommodating to the plaintiff’s attorney as in the Osterbye Court. Instead of a second bite at the settlement apple, the plaintiff’s attorney in Osterbye could have just as easily been accused of legal malpractice by the injured party, if there was a lack of disclosure or lack of competence by the attorney in verifying the proper amount of Medicare’s demand

Plaintiff and defense should cooperate with each other over what steps are being taken to confirm conditional payment resolution, including whether either party has hired a third party to investigate, audit, and/or negotiate the demand balance

Both parties should know that it is imperative to obtain a demand letter as opposed to a Conditional Payment Letter prior to settling a case unless the correct procedures have been taken via the Medicare Secondary Payer Recovery Portal to provide the 120 day anticipation of settlement notification and to request the Final Conditional Payment Calculation within 3 days of a settlement the details of which need to be timely reported

Plaintiff attorneys should be proactive in addressing Medicare’s past interests in a settlement by auditing payment summary forms to dispute non-injury related items, should timely notify Medicare of the settlement details to obtain procurement cost reductions, and should also consider whether lien resolution via waiver or compromise of the procurement cost reduced demand may be a suitable option to help the injured party retain more of the settlement proceeds.

Medivest

08/Jul/2020

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Once again, the Centers for Medicare & Medicaid Services has provided an indication that while regulations and/or guidance is on its way regarding the protection of Medicare’s future interests for liability and No Fault settlements, the proposed rule regarding these have been moved to August 1, 2020 or perhaps further into the future (again). Technically, the information indicates that the Notice of Proposed Rule Making would “clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items services related to liability insurance (including self-insurance), no fault insurance, and worker’s compensation settlements, judgments, awards, or other payments. Specifically, this rule would clarify that an individual or Medicare beneficiary must satisfy Medicare’s interest with respect to future medical items and services related to such settlements, judgments, awards, or other payments. This proposed rule would also remove obsolete regulations.” The information is also indicating that regulations CMS determines to be obsolete will be removed. See the disclosure published in the Spring 2020 Federal Register Unified Agenda here.

Many in the MSP compliance industry believe that while the regulations and guidance could be focused on clarifying both the need to protect Medicare’s future interests and the way to protect those interests for each of the Non Group Health Plan (NGHP) primary plan types (Liability, Self-Insurance, No Fault, and Workers’ Compensation), it seems more likely that this particular group of regulations and/or guidance will focus primarily on liability and No Fault settlements. This is because both regulations and guidance have already been published specific to protecting Medicare’s future interests in Workers’ Compensation settlements in both the Code of Federal Regulations and via the Workers’ Compensation Medicare Set-Aside Arrangement – WCMSA Reference Guide Version 3.1.

Medicare Set-Aside Report

Take Aways

Considering and protecting Medicare’s past interests has become the industry standard and quite honestly a “no brainer” for all NGHP settlement types – liability, self-insurance, No Fault, and Workers’ Compensation.
Whether the announced guidance comes this August or not, doesn’t it make sense to help ensure that Medicare’s future interests are protected in accordance with existing federal law, i.e. the MSP?
Helping to ensure that Medicare is not prematurely billed for injury related futures for any settlement type is the right thing to do and helps protect the Medicare Trust Funds.

Count on Medivest to help guide you through some of the complexities associated with MSP compliance.

Medivest

02/Jun/2020

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In March 2020, the U.S. Attorney’s Office, as an enforcement arm of the U.S. Department of Justice, filed a lawsuit on behalf of the Department of HHS and its sub agency, CMS, against an attorney in Texas alleging failure of the attorney representing a party injured in a motor vehicle collision to properly reimburse Medicare for conditional payments. The case is U.S. v. Carrigan & Anderson, Case 4:20-cv-00991, Filed 03/18/2020 in U.S. District Court for the Southern District of Texas, Houston Division.

That would not really seem like big news as we have written about several conditional payment enforcement actions by the U.S. Attorney’s Office/Department of Justice over the past few years against plaintiff attorneys for a failure to properly inquire with CMS’s Beneficiary Coordination & Recovery Center (BCRC) contractor and address amounts to be reimbursed to CMS.[1]

However, unlike some of the other cases, the plaintiff attorney in this case took proactive steps attempting to address Medicare’s past interests in the liability settlement. Unfortunately, the steps taken were misguided. Had the attorney requested a compromise or waiver and/or appealed the demand amount by CMS, he would have likely fared better.

Prior to settlement, the attorney properly provided notification of the claim to the BCRC triggering the search by the BCRC for claim related conditional payments. The case settled for $70,000.00 and the plaintiff attorney provided notification of the settlement to the BCRC. Presumably, the plaintiff and attorney had received a copy of an earlier Conditional Payment Letter. Within a few weeks after the settlement notification was provided, the BCRC delivered a demand letter in the amount of $46,244.74, demanding payment within the standard 60 day time period from the date of the demand and informing of the right to appeal its demand amount.

Let Medivest Handle Your Lien Resolution Matters

The attorney creatively filed a motion with a state court in Texas challenging the amount demanded by Medicare and provided notice of same to the BCRC. He called the motion, Motion To Determine Portion of Plaintiff’s Settlement That Constitute Reimbursement of Medical Payments Made in and Regarding Settlement. The court reviewed submitted evidence including an affidavit signed by plaintiff counsel suggesting the claim settled at 1/10^th its full case value, and issued an order reducing the amount to be paid to Medicare by 90% to a figure of $4,700.00. Plaintiff counsel submitted a copy of the order to the BCRC. The full demand amount went unpaid and began accruing interest at nearly 10% APR on the 61^st day post-demand (for current demands, the annual interest percentage rate is now over 10%).

As of March 18th, 2020, when the U.S. filed its recovery action in U.S. District Court, the alleged reimbursement amount had increased to $53,445.93 including interest. The U.S. requested recovery of its fees and costs but interestingly did not request double damages.

The U.S. Attorney’s position is that state courts lack authority to make determinations of federal law including amounts owned to Medicare under the Medicare Secondary Payer Act, 42 U.S.C. Section 1395y(b)(2) (MSP). Furthermore the complaint asserts that because there is an administrative procedure in place under the current MSP regulations, if the plaintiff and attorney disagreed with the demand amount, the administrative appeals process should have been followed, i.e. that there was a failure to exhaust administrative remedies, an express condition precedent to seek redress in U.S. District Court for appeal of Medicare Initial Determinations such as the amount of a demand or a denial of a waiver.

Take Aways

Dispute and Appeal

Review each conditional payment letter to verify each reimbursement claimed is injury related
Dispute all non-injury related claims in a timely manner before the matter settles or before CMS issues its final demand
If unhappy with a CMS reimbursement of conditional payment demand, consider appealing through CMS’s administrative appeals process
You have 120 days to request a first level appeal in writing

In the meantime, consider one of the other post demand dispute processes allowed that may offer your client relief from what you consider to be an unreasonable demand. Depending on the outcome, the appeal may not be necessary.

Compromise Requests

Requesting a compromise to the BCRC offering a sum certain to resolve the claim laying out arguments based in equity similar to the ones made to the state court judge in the case above and/or according to regulations governing compromises by the U.S. Government existing in the CFR
Compromise requests are forwarded by the BCRC to the applicable CMS Regional Office (RO) and a response is provided within 45 days of the BCRC’s receipt of the request
Responses will either be accepted, countered, or rejected

Waivers

If not happy with the response to the compromise request and if the financial condition of the plaintiff is such that they have a hard time meeting their day to day living expenses, a waiver request could be an alternative option
Waiver requests entail filling out a detailed Social Security Administration financial form called the SSA 632-BK
To make its decision, CMS will evaluate resources of the plaintiff, income, the amount of the settlement, outgoing expenses, and hardship factors and may take up to 120 days from start to finish so you need to be mindful of the appeal deadline for the original demand.

[1] January 2020 DOJ US Attorney https://www.medivest.com/philadelphia-based-personal-injury-law-firm-agrees-to-resolve-allegations-of-unpaid-medicare-debts/ Philadelphia plaintiff firm settles for $6,604.59,

Nov 2019 US Attorney General – Baltimore plaintiff firm settles with Medicare for $91,406.98

March 2019 DOJ US Attorney – Maryland plaintiff firm settles with Medicare for $250k

June 2018 DOJ US Attorney – Philadelphia plaintiff firm settles with Medicare for $28k

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The Medivest Blog

WCMSA Reference Guide Version 3.5 Updates of Significance

CMS’s Version 3.5 Reference Guide, Section 1.1 includes the following changes:

Section 4.3 The Use of Non-CMS-Approved Products to Address Future Medical Care

Keep in mind the WCMSA Reference Guide states:

Take Aways

Stay Up To Date

NGHP Recovery Thresholds Alert – A CMS Update

Will the U.S. Supreme Court Mandate Protection of Medicaid Futures?

A Brief Summary of Events

Potential Far-Reaching Effects of a U.S. Supreme Court Medicaid Lien Recovery Decision

The Perils of Failing to Investigate for Medicare and Other Liens

Takeaways

CMS Announcements: GHP Alert and User Guide Update

Updated MMSEA Section 111 Group Health Plan (GHP) User Guide and GHP 270/271 Health Care Eligibility Benefit Inquiry and Response Companion Guides

Medicare Secondary Payer (MSP) Mandatory Reporting Provisions Section 111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 2007

CMS Announces PAID Act Webinar

Washington State Passes Lump-Sum Workers’ Comp Bill

How Attorneys in Washington and Other States Should Prepare Their Clients and Themselves for Lump-Sum Settlements

Are There Risks with Lump-sum Settlements?

What Does This Mean for Attorneys in Washington State?

How to Protect Future Medicals and Your Own Future

Is Paying a Third Party Liability Medicare Lien Only the Concern of the Plaintiff?

Take Aways:

CMS Provides Notice Regarding LMSA Regulations/Guidance

Take Aways

Update on Medicare Conditional Payment Enforcement Actions

Take Aways

Dispute and Appeal

Compromise Requests

Waivers

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