2014 Livingston Law Firm Retreat

John C. Hentschel
February 1, 2014
One of the most completely impenetrable
texts within human experience.
Cooper University Hospital v. Sebelius, 636 F.3d
44, 45 (3d. Cir. 2010)
Medicare Basics
Reporting Obligations
Reimbursements for Paid Medical
Expenses
Set Asides for Future Expenses
Best Practices

Guaranteed health insurance
Works like regular private
market insurance
Premiums
Copays
Deductibles
Out of pocket costs
65 and over who worked and
paid into system
Younger disabled (SSD more
than 24 months)
End stage renal failure
ALS

Inpatient hospital stays
2 night rule
90 day maximum
SNF in some cirmcumstances
Hospice stays
Generally no monthly premium if
10 years of FICA payments

Monthly premium (deducted from
SS)
Out patient services after deductible
($147 in 2013)
Physician services
Diagnostic imaging
Tests
Durable medical equipment
Optional if still working and covered
under private insurance

Private health insurance funded through
beneficiary premiums plus private monthly
premium
Additional coverages
Reduced copays and deductibles
Anyone with Part A or Part B eligibility
Designed and administered through
private insurers and regulated through
CMS

In addition to traditional Part A/B
coverages
Separate premiums
If a personal injury plaintiff is Medicare
eligible, obligations and duties are
triggered for all involved in the action
Plaintiff
Defendants
Insurers
Health care providers

42 USC 1395y(b)(2) - Beneficiaries of GHP
who get payments from NGHP, i.e.
primary plans
Liability insurance
No-fault insurance (med pay)
Workers compensation
Self insurance
IF Medicare pays for an item or service
that should have been paid by a primary
plan, reimbursement required per 42
CFR 411.22.
See Overview of the Recovery Process
flowchart



Right of action for CMS against responsible
parties
Insurer or self-insurer
TPA
Employer
Facility or provider
Attorneys (US v. Harris 2009 U.S. Dist. LEXIS 23956
(N.D. W.Va. 2009))
Double damages plus interest
Private right of action
Does not apply to Medicare Advantage (Part C) Plans,
(Parra v. Pacificare of Arizona, Inc., 715 F.3d 1146 (9
th

Cir. 2012))

Who pays first if I have a claim for no-fault or liability insurance?

No-fault insurance or liability insurance pays first and Medicare pays
second, if appropriate.

If doctors or other providers are told you have a no-fault or liability
insurance claim, they must try to get paid from the insurance company
before billing Medicare. However, this may take a long time.

If the insurance company doesnt pay the claim promptly (usually within
120 days), your doctor or other provider may bill Medicare. Medicare
may make a conditional payment to pay the bill, and then later get back
any payments the primary payer should have made.

Medicare and Other Health Benefits: Your Guide to Who Pays First,
CMS, p. 13
Unlike most liens, no notice requirement
Super lien, i.e., superior to al other claims

Benficiary should notify COBC of the
availability of other coverages
COBC notifies recovery contractor
Contractor will Conditional Payment
Summary (CPS)
When settlement reached, demand letter
sent
Payment to CMS within 60 days
Plaintiffs counsel, since 1980, has had
the responsibility to report to CMS the
existence of other potential sources of
payment for medical services and items
Section 111 of MMSEA added new
reporting requirements
To have CMS pay appropriately for Medicare-covered items
and services furnished to Medicare beneficiaries.
Allows CMS to determine who should be the primary payer of
services.

Responsible Reporting Entities
Insurers
Liability insurance
Workers compensation
No fault
Self insured entities
Attorneys are NOT RREs
Identity of claimant
Individual filing claim directly against
applicable plan
Individual filing a claim against an individual
or entity insured or covered by the applicable
plan
Any other information required by CMS
(42 USC 1395y(b)(B)(ii))
DOB, ICD-9 Diagnosis, Payment amounts
See Quick Reference Guide

E-file
Secure web portal
Quarterly
Triggered by settlement with
beneficiary
Assuming ORM or paying TPOC
$1k/day for non-compliance

SMART Act of 2012 42 USC 1395y(b)(9)
In 2014, HHS will establish a minimum amount
below which reporting and reimbursement is not
required

Medicares interests must be settled before
any settlement funds distributed (42 USC
1392y(b)(8)(iii))
Process of identifying all payments can
take time and should be done prior to final
settlement discussions
RRE needs up to date CPS prior to
resolving case

If settlement will not satisfy all of plaintiffs
obligations
Holds offer open for a specified period of
time to allow plaintiff to attempt to
compromise amount owed CMS
See 42 CFR 411.37 re: reduction of amount due
to CMS for procurement costs
Specify how CMS paid
Medicare named a payee on settlement draft
Funds escrowed
Hold harmless and indemnity
Apportionment?
Waiver of private right of action
Reporting particulars
Set-Aside Arrangement An administrative
mechanism used to allocate a portion of a
settlement, judgment or award for future
medical and/or future prescription drug
expenses. A set-aside arrangement may be in
the form of a Workers Compensation
Medicare Set-Aside Arrangement (WCMSA),
No-Fault Liability Medicare Set-Aside
Arrangement (NFSA) or Liability Medicare Set-
Aside Arrangement (LMSA).

42 CFR 411.46 provides that if lump-sum
settlement is intended to provide for all
future medical expenses due to a work-
related injury, Medicare payments for such
services are excluded until the expenses
equal the amount of the payment


A fund of money set aside at the time of
the settlement that must be exhausted to
pay for injury related treatment before
Medicare can be used
Protects Medicares future interests
Formally reviewed by CMS
Provides safe harbor for beneficiary and WC
insurer
$25,000/$250,000 thresholds
See Reference Guide


No legal authority requiring their use
Hybrid cases?
Texas?
See May 25, 2011 Handout from Region VI
Practical problems
Liability considerations in settlement
No apportionment of future medical benefits
Potential uses
Life care plan
Special needs trust

Cannot on own decide to require a set
aside
Must rely on cooperation with beneficiary
In interest to do so to avoid
Double damages and interest
Easy target
Caveat beware of those trying to sell
services!
Identify early as practicable if a claimant is
a Medicare beneficiary
Even if no benefits paid, notice still must be given
Medical records
RRE queries
Communication with claims rep and client
on obligations and strategy for compliance
Special Interrogatories
Have YOU applied for or are YOU eligible for Medicare benefits ?
Please state the date on which YOU first became entitled to
receive such benefits.
Please state YOUR Health Insurance Claim Number.
Please state YOUR Social Security Number,
Are any of the medical expenses related to YOUR injuries been
submitted to, or paid by, Medicare?
Have you been diagnosed with Lou Gehrigs disease?
Are YOU receiving treatment for end-stage renal disease or
kidney failure?
Have YOU applied for SSDI (Social Security Disability) benefits?
If YOU have applied for SSDI, state the date of application and
the current status of your application.

Document Requests
All documents which refer, reflect or pertain to
communication with Medicare, CMS or any of its
contractors specifically including, but not limited
to, notice to COBC, Rights and Responsibility
letters, conditional payment letters (with payment
summary forms), and correspondence regarding
relatedness.
A photocopy of the front and back of YOUR
current Medicare card.