By Jason D. Lazarus, J.D., LL.M., MSCC, CSSC
Medicare Secondary Payer Compliance for law firms when it comes to “futures” is all about risk mitigation. How do you properly and compliantly close a file when you represent a Medicare beneficiary? The biggest risk a trial lawyer faces when dealing with settlements for a Medicare beneficiary is the denial of future care as a result of Mandatory Insurer Reporting (MIR). If a client does not understand that risk and has a problem with Medicare paying for future injury related care, then the law firm is exposed to malpractice risks. So how do you protect your law firm and make sure your client can make an informed decision about Medicare compliance issues? The answer is to educate yourself and the client by turning to an expert Medicare compliance partner.
Medicare Futures: The Problem & Risk
Today, there is a very real threat of Medicare denying future injury related care after the personal injury case is resolved. This can be very easily triggered by the MIR and reporting of injury related ICD codes which happens automatically now with any settlement of one thousand dollars or greater. Once a denial of care is triggered, a Medicare beneficiary has to go through the four levels of internal Medicare appeals plus a federal district court before ever getting the denial of care addressed by a federal appeals court. This is why it must be of primary concern for the personal injury practitioner to address these issues, particularly in catastrophic injury cases where denial of care could be devastating to the injury victim’s medical quality of life.
Consider this scenario: You represent a current Medicare beneficiary in a third-party liability case. As part of the work up of the case, you determine the client will need future medical care related to the injuries suffered. This could be determined by either deposing the treating physician or by the creation of a life care plan for litigation purposes. Ultimately, you settle the case. Since the client is a Medicare beneficiary, the defendant will report the settlement under the Mandatory Insurer Reporting law as it is greater than $750.00 in gross settlement proceeds. The defendant puts some language into the release about a Medicare Set-Aside being the injury victim’s responsibility and that they can’t shift the burden. Everyone signs the release and settlement dollars are paid. The file is closed, then forgotten. What happens though if that course of action triggers a denial of future care by Medicare?
Unfortunately, there is no cookie cutter answer for what to do about Medicare compliance. It is a case-by-case analysis. In some instances, there may be an argument that future medicals aren’t funded at all by the settlement. In other cases, there might be an argument that a reduced amount of future medicals should be set aside to satisfy obligations under the MSP because the case settled for less than full value. There are just too many possibilities to give a simple one size fits all answer. However, what is clear is that doing nothing has its risks. For example, the client who received the denial of care likely will face a lengthy appeal process within Medicare that must be exhausted before having the issue addressed by a federal district court. In that scenario, the client is going to have to decide between paying out of their own pocket for future care or waiting for the care until exhausting all appeals in anticipation of prevailing over Medicare.
While the problem created for the client is a serious one if they are denied care, an equally scary proposition for the trial lawyer is their exposure for malpractice claims in this scenario. Let’s assume that the injury victim who got this denial letter was not properly advised of the risks of failing to set aside money. Would the trial lawyer potentially face a suit for legal malpractice? The answer is most likely they would. There could be all sorts of arguments made about whether they fell below the standard of care, but in the end, this is a known issue and one that is of the law. Worse yet, a trial lawyer and his/her firm could have Medicare breathing down their necks. While we haven’t see any instances of Medicare pursuing a law firm over failing to set up a Medicare Set-Aside, as discussed earlier, there are recent examples of law firms being pursued by the Department Of Justice (DOJ) related to other aspects of the MSP and failing to have a process internally to ensure compliance with the MSP.
How to be Compliant
If you represent a Medicare beneficiary, you must determine if future medicals have been funded and, if so, advise the client regarding the legal implications of the MSP related to futures. The easiest way to remember the process once you have identified someone as a Medicare beneficiary or someone with the reasonable expectation is by the acronym “CAD”. The “C” stands for consult with competent experts who can help deal with these complicated issues. The “A” stands for advise/educate the client about the MSP implications related to future medical. The “D” stands for document what you did in relation to the MSP. If the client decides that they don’t want an MSA or to set aside anything, a choice they may make, then document the education they received about the issue with them signing an acknowledgement. If they elect to do an MSA analysis, hire a company to do the analysis so that they can help you document your file properly and close it compliantly.
In addition, release language is critical when it comes to the question of documentation of considering Medicare’s future interests. Release language I have seen prepared by defendant/insurers is typically overbearing. Frequently the language cites regulations that are related to workers’ compensation settlements and typically will specifically identify a figure to be set aside. The latter can potentially cause a loss of itemized deductions for the client. Not only is release language an important consideration, so is the method of calculation of the set aside, potential reduction methodologies and funding alternatives (lump sum vs. annuity funding). These issues do impact how the release is crafted as well as considerations of whether to submit to CMS for review and approval (which is rarely a good idea). Submission of a liability set aside isn’t required and a settlement should never be made contingent upon CMS review and approval. Some regional offices will not review a liability set aside whiles others will. Since review/approval is voluntary, I typically don’t recommend submission given the lack of appeal process should CMS come back with an unfavorable decision. Furthermore, making a settlement contingent upon CMS review/approval could create an impossible contingency if the settlement is in a jurisdiction where the regional office will not review.
The key to compliance is to start early and not let the defendant-insurer control the Medicare compliance process. At the outset of your case you have to confirm disability eligibility with Social Security and get copies of all insurance as well as government assistance cards. Make sure you understand who is potentially Medicare eligible such as those who are on SSDI, those turning 65, someone with end stage renal disease (ESRD), Lou Gehrig’s disease (ALS) or a child disabled before age 22 with a parent drawing Social Security benefits. Collaborate with the other side regarding what is being reported under MIR. Be active in mandating the proper ICD codes to be included in the release.
Medicare beneficiaries must understand the risk of losing their Medicare coverage should they decide to set aside nothing from their personal injury settlement for future Medicare covered expenses related to the injury. It is about educating the client to make sure they can make an informed decision relative to these issues. Beyond education of the client, the most critical issue becomes how to properly document your file about what was done and why. This part is where the experts come into play. For most practitioners, it is nearly impossible to know all the nuances and issues that arise with the Medicare Secondary Payer Act. From identifying liens, resolving conditional payments, deciding to set money aside, the creation of the allocation to the release language and the funding/administration of a set aside, there are issues that can be daunting for even the most well-informed personal injury practitioner. Without proper consultation and guidance, mistakes can lead to unhappy clients or, worse yet, a legal malpractice claim.
The lesson to take away regarding Medicare compliance is to strategically deal with these issues pre-settlement. If a client is a Medicare beneficiary, then make sure you know which ICD codes will be reported under the Mandatory Insurer Reporting law and evaluate with the client the possibility of a set aside. Discuss with competent experts the proper steps for MSP compliance. Potentially use the set aside as an element of damages to help improve settlement value. Properly word the release if a set aside is being used to make sure the client doesn’t get saddled with inappropriate language or lose itemized deductions.
Synergy’s Medicare Expert Case Evaluation Service: Mitigating the MSP Risk
If you represent a client who is Medicare eligible and is treating for their injuries, I recommend a Medicare Expert Case Evaluation (MECE) when you resolve the case. As part of the MECE, a Synergy Medicare Compliance expert will consult with your client regarding Medicare future interest protection mechanisms and the risk of doing nothing. After being advised, your client can make an informed decision about what they would like to do, and you can document your file accordingly.
For $1,000.00, the MECE service includes:
- Unlimited client consultation
- Template communications to your client
- Customized acknowledgement form to document your file
- Settlement documentation consultation for MSP compliance
If an MSA allocation report is desired after consultation with the client, the cost of the MECE is applied towards the $2,500 charge for a Medicare Set Aside allocation report.
The whole system is flawed when it comes to Medicare. You take all the risks, you do all the work, you bear all the costs and, after you win, you must address the Medicare Secondary Payer Act. Synergy flips that paradigm on its head and fixes the broken system. Our team will create a comprehensive plan to allow you to close your file compliantly by addressing Medicare’s “future interest,” freeing you up to take on the next battle. You can focus on what you do best and everyone wins.
If you have a client who is Medicare eligible that is going to require future accident related care, a Medicare Set-Aside should be considered and a MECE completed. There are numerous ways to deal with Medicare Secondary Payer compliance (without a set-aside) to ensure both your firm as well as your clients are protected. It just requires expert analysis with Synergy’s help.
Jason D. Lazarus is the managing partner and founder of the Special Needs Law Firm; a Florida law firm that provides legal services related to public benefit preservation, liens and Medicare Secondary Payer compliance. He is also a founding Principal and Chief Executive Officer of Synergy Settlement Services, which offers healthcare lien resolution, Medicare secondary payer compliance services, pooled trust services, settlement asset management services and structured settlements.