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Medicare Compliance in Workers’ Compensation and Liability Cases: Conditional Payment Claims, Mandatory Reporting and Medicare Set-asides. Joe Isbell Carr Allison 100 Vestavia Parkway Birmingham, AL 35216 www.carrallison.com. Medicare Secondary Payer Act. MSPA was enacted in 1980
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Medicare Compliance in Workers’ Compensation and Liability Cases:Conditional Payment Claims, Mandatory Reporting and Medicare Set-asides Joe Isbell Carr Allison 100 Vestavia Parkway Birmingham, AL 35216 www.carrallison.com
Medicare Secondary Payer Act • MSPA was enacted in 1980 • Medicare is “secondary” payer when any other entity could possibly be considered a primary payer
Conditional Payment Claims (CPCs) • Expenses paid by Medicare prior to thedateof settlement or judgment • Research CPCs prior to settlement • Report all injuries being settled, including disputed ones • Must resolve CPCs when case with Medicare beneficiary settles
Possible Options for Repayment • Direct payment to Medicare by defendant • Put Medicare on the settlement check (not required by law) • Claimant responsible for repayment
Amount CMS May Recover • CPCs reduced for procurement costs • Medicare may recover FULL amount of CPC up to total settlement amount even if injury or responsibility for injury is disputed
Waiver/Reduction • May request on behalf of beneficiaries if financial need • Pre-settlement compromise may also be an option
Interest and Penalties Under the MSPA • Accrue if Medicare is not repaid within 60 days of formal demand • Double damages if Medicare sues to recover
Risk Mitigation Strategies - CPCs • Maintain accurate, current information about injuries • Carefully report injuries • If using an agent for Section 111 reporting, review their plan to ensure accuracy of reported codes
Section 111 Reporting Requirements • Will assist Medicare with recovery of CPCs and to keep Medicare from paying when primary payer exists. • Duty to “notify” Medicare has existed since 1980. Section 111 imposes a penalty of $1,000 per day per claim for failing to do so.
Section 111 Reporting Requirements (Cont.) • Electronic transmission of data related to certain settlements, judgments, awards and other payments to Medicare
Claims That Must be Reported:TPOC Claims • TPOC (Total Payment Obligation to Claimant) • Claims that are “resolved (or partially resolved) through a settlement, judgment, award or other payment” • regardless of whether there is admission or determination of responsibility • that involve a Medicare beneficiary and • are settled on or afterOctober 1, 2011 • Must be reported beginning the first quarter of 2012.
TPOC Exceptions To Reporting • The following do not have to be reported: • TPOC amounts of $5,000.00 or less through January 1, 2013 • TPOC amounts of $2,000.00 or less from January 1, 2013 - December 31, 2013 • TPOC amounts of $600.00 or less from January 1, 2014 - December 31, 2014 • After December 31, 2014, all TPOC claims must be reported • TPOC claims with an ORM aspect must still be reported – no exceptions
Claims That Must be Reported:ORM Claims • Claims for which the RRE still had/has responsibility for ongoing medical payments as of January 1, 2010 • such as open medicals in wc claims (regardless of date of accident) • Must be reported beginning first quarter of 2011
ORM Exceptions to Reporting • ORM files that meet ALL of the following criteria do not have to be reported through December 31, 2012: • medicals only • lost time of no more than 7 days • all payments made directly to the provider • total payment does not exceed $750.00
ORM Exceptions to Reporting (Cont.) • If a claim is actively closed or removed from current claims inventory prior to January 1, 2010, the RRE is not required to report that claim unless the claim is later reopened • Does not include claims which remain open even if no medicals have been paid for a substantial period of time.
Claims That Do NOT Have To Be Reported • Claims in which: • a judgment or defense verdict is rendered concluding that no money is owed • no claim was made for medical expenses, i.e., liability case with property damage only with no release of medicals • Be careful with general releases! • there is no settlement, judgment, award or other payment (including assumption of ORM) • The only payment was a one time payment for a defense evaluation from a provider or physician
Medicare Set-asides (MSAs) • Money for future medical expenses Medicare would otherwise pay
Are MSAs Required? • No • However, the burden of paying future medical expenses may not be shifted from a primary payer to Medicare
Are MSAs Required? (Cont.) • CMS recommends MSAs in certain cases
CMS Review Thresholds in WC Cases • CLASS I • Medicare beneficiary AND • total settlement exceeds $25,000 • CLASS II • Total settlement exceeds $250,000 AND • claimant has a “reasonable expectation” of becoming a Medicare beneficiary within 30 months
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
Determining Total Settlement Amount • Money paid at time of settlement for: • Future medical, indemnity and/or vocational benefits • Claimant’s attorney’s fees • Court costs and filing fees • Medicare conditional payment claim, if any • Money paid in prior partial settlement, if any, including third party liability settlements • If using structured settlement, must include uncommuted expected lifetime payout
CMS Submission Process • Start early! • Allocation reports should be less than six months old
Risk Mitigation Strategies for MSAs • Physician involvement • Claimant’s attorney involvement
Impact Of Disputes And Defenses • Dispute among treating physicians • Legal defenses/judicial determinations
Lapse In Claimant’s Treatment • If last treatment was long ago, CMS may require records from other physician(s) who have treated the claimant more recently, including family practitioner
Prescription Medications • CMS uses average wholesale prices (AWP) • CMS includes medications recommended in records and actual prescriptions the claimant is receiving
Zero MSAs • May be available if: • Completely denied claim • NO money was paid for medical treatment or indemnity
No Appeal of CMS Determinations • No formal appeal process if CMS rejects proposed MSA amount • RO will correct obvious mistakes, such as math errors
WC and Third Party Cases • MSAs are appropriate in WC/third party cases if the WC carrier or employer is being relieved of obligation to pay future medical expenses • Same process for approval as WC cases
MSAs • Are MSAs required in liability case? • NO • MSAs are not required by law in any case
WC vs. Liability Cases • Difference between WC and liability cases
Guidance From CMS • One RO has indicated that MSAs are also “preferred” in liability cases • No formal process for review of liability MSAs like there is for WC, but the “underlying statutory obligation is the same” (Town Hall Transcript) • Law that requires protection for Medicare when case with Medicare beneficiary settles is the exact same for WC and liability
Guidance From CMS (Cont.) • When “future medicals are a consideration in arriving at the settlement . . . appropriate arrangements should be made for . . . exhaustion of the settlement before Medicare is billed for related services.” (Town Hall Transcript)
When to Use LMSAs • Claimant is a Medicare beneficiary; • Future medical treatment likely needed; • Settlement because of physical injuries/medical claims; and • Settlement amount more than nominal
Determining Amount to Set-aside • Allocation report may be used OR • The parties may jointly designate reasonable amount for future medical expenses OR • Include statement in Release that money being paid is intended to cover future medical expenses
Liability Allocation Reports • May be reduced to take defenses into account!
When should allocation reports be obtained in liability cases?
CMS Review and Approval of MSAs • Some ROs will review and approve LMSAs, although not required • Will estop Medicare from later claiming that its interests were not protected
Funding Medicare Set-aside Accounts • Lump sum • Annuity
Administration • Self-administration • Custodian Administration
Joseph P. Isbell Carr Allison 100 Vestavia Parkway Birmingham, Alabama 35216 Phone: (205) 949-2931 Fax: (205) 822-2057 jisbell@carrallison.com