By Guest Author Rasa Fumagalli, J.D., MSCC, CMSP-F – Director of MSP Compliance Services
Personal injury settlements involving Medicare beneficiaries will often have conditional payment claims by Medicare and/or Part C plan liens. Since accurate and complete information regarding Medicare’s payments may be unavailable during settlement negotiations, practitioners may find themselves engaged in guesswork. The confusion between Medicare’s interim and final conditional payment figures have also resulted in post settlement disputes between parties. Lack of information on Part C plan liens also can lead to exposure for double the lien amount. This article will examine the Medicare Secondary Payer (MSP) Act conditional payment obligations/Part C plan liens and provide a roadmap for navigating the recovery process.
The Medicare Secondary Payer (MSP) Act, 42 U.S.C.§1395y(b)(2)(A)(ii) prohibits Medicare from making payment for medical services when “payment has been made or can reasonably be expected to be made under a workers’ compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance.” A primary plan’s responsibility for such payment may be “demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan, or the primary plan’s insured or by other means.” 42 U.S.C.§1395y(b)(2)(B)(ii).
When a primary plan has not made or cannot reasonably be expected to make prompt payment for the service, Medicare may make a payment conditioned upon reimbursement of the payment to the appropriate Medicare Trust Fund. A failure to reimburse the Medicare Trust Fund may result in Medicare filing suit directly for double damages against any or all entities that were responsible for reimbursement of the conditional payments. 42 U.S.C.§1395y(b)(2)(B)(iii); 42 U.S.C.§1395y(b)3. Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) Mandatory Insurer Reporting obligations require the primary plan’s Responsible Reporting Entity to report any liability physical trauma settlement involving a Medicare beneficiary that exceeds $750.00. This “defense” reporting requirement puts Medicare on notice of nearly any settlement involving a Medicare beneficiary.
In a December 5, 2011 Memo, the Centers for Medicare & Medicaid Services (CMS) advised that Medicare Advantage Organizations (MAOs) and Prescription Drug Plans (PDPs) have the same rights of recovery as Medicare under the MSP Act. A detailed discussion of resolution of Part C (Medicare Advantage) liens is beyond the scope of this article but it is very important to make sure that these liens are resolved properly as well since MAOs have become very aggressive with their litigation recovery tactics.
Medicare Coverage Types
Medical payments may be made on behalf of a Medicare beneficiary under a traditional Medicare Part A or B Fee-For-Service plan or under a Medicare Advantage Organization Part C or Part D drug plan. The traditional Part A coverage is the most basic coverage and is limited to a hospitalization benefit. Although it is premium free, there are deductibles and co-payments. Part B coverage provides for expanded services such as outpatient physician visits, diagnostic studies, certain outpatient surgeries and physician administered drugs. This coverage has a monthly premium associated with it along with co-payments and deductibles. Medicare’s Benefits Coordination and Recovery Center (BCRC) provides information regarding payments made under these plans upon request or through the Medicare Secondary Payer Recovery Portal (MSPRP).
Medicare Part C, or Medicare Advantage plans, are offered by private insurers and provide the same benefits that are offered under Parts A and B as well as additional services such as dental and vision care. These plans have monthly premiums as well as co-payments and deductibles. The plans are paid a fixed amount by Medicare for each Medicare beneficiary enrollee. Medicare Part D plans provide pharmacy prescription drug coverage and are provided by private insurers that are paid by Medicare.
Conditional Payment Recovery Process for traditional Medicare Part A and B
A Medicare beneficiary is responsible for giving Medicare’s Benefits Coordination and Recovery Center (BCRC) notice if he/she is involved in an automobile accident, has a workers’ compensation injury, or takes legal action for a medical claim. This notice is separate and distinct from the Section 111 Mandatory Insurer Reporting Obligation by the defense. The beneficiary may report their claim by calling the BCRC or through the Medicare Secondary Payer Recovery Portal (MSPRP). If a beneficiary has a representative working on his behalf, the BCRC and MSPRP will require the submission of appropriate Proof of Representation and Consent to Release Note documentation. Once the BCRC receives the initial report of the claim, the BCRC will send the beneficiary a Rights and Responsibilities letter that explains the conditional payment recovery process.
The BCRC will then begin to identify payments that were made in connection with the reported injury. These conditional payments are “interim” payments and are subject to change. The first Conditional Payment Letter (CPL) will include a Payment Summary Form and should be sent to the beneficiary within 65 days of the issuance of the Rights and Responsibilities letter.
A final conditional payment figure may be provided to the beneficiary prior to settlement if the final conditional payment process is initiated through the MSPRP within 120 days of the settlement. This process only allows one conditional payment dispute that must be resolved within that 120-day period. A final time and date stamped conditional payment figure will then be provided and may be relied upon as long as the final settlement agreement is reached within three business days of requesting the final conditional payment amount. The settlement documents must be submitted to the BCRC within 30 calendar days of requesting the final conditional payment amount. If these steps are not complied with, the conditional payment figure is not final.
If the beneficiary only reports a settlement, the BCRC will issue a Conditional Payment Notice (CPN). The CPN will also be issued when the BCRC is notified of the settlement through the Section 111 Mandatory Insurer Reporting. The CPN requires a response within 30 calendar days in order for the beneficiary’s attorney’s procurement cost reduction to be allowed. The underlying charges may also be disputed. After 30 calendar days, the CPN will become a demand letter. Once the “final” demand is issued, interest will begin to accrue for each 30-day period the debt remains unpaid. In order to avoid the accrual and assessment of interest, Medicare suggests that the full demand be paid. If an appeal/ waiver request is granted, Medicare will refund the payment.
Medicare Advantage Plan Recovery claims
Although Medicare Advantage Plans are private insurance plans that provide benefits to Medicare beneficiaries, Medicare views these plans as secondary payers under the MSP Act. To date, the BCRC and MSPRP do not provide information regarding payments made by these plans. Information regarding their payments must be secured from the plans themselves. Unfortunately, the plan information is not always readily available to the practitioners since a beneficiary may not be the best source of information when it comes to the identification of plans. This may be especially true when there is a significant delay between the injury date and the settlement. The BCRC’s inability to provide this plan enrollment may hamper a beneficiary’s ability to address the reimbursement interest of a Medicare Advantage plan.
The Provide Accurate Information Directly Act (PAID) legislation was proposed to remedy this issue. It was added into H.R. 900 “Further Continuing Appropriations Act, 2021 and Other Extensions Act” and signed into law on December 11, 2020. The language requires CMS to provide information upon request regarding a beneficiary’s enrollment in a Medicare Advantage Plan or Medicare Part D plan during the preceding three-year period. The ability to access this information will help practitioners identify reimbursement claims that are associated with their settlements. In the meantime, payments under a Medicare Advantage Plan may be reflected in billing statements. The beneficiary may also find information regarding their Medicare claims by registering on MyMedicare.gov.
Attorneys should be aware that Medicare Advantage plans can bring a private cause of action as an enforcement action for double the amount of the lien if it isn’t satisfied at settlement. This right is provided for in the Medicare Secondary Payer Act. See 42 C.F.R. §422.108(f). The action can be brought against the personal injury attorney or the defendant insurer. The seminal case on this issue is, for now, Humana v. Western Heritage Ins. Co., from late 2016. Humana sued Western Heritage when the plaintiff didn’t reimburse the plan after resolution of the case. The 11th Circuit ruled that Humana was entitled to maintain a private cause of action for double damages pursuant to 42 U.S.C. § 1395y(b)(3)(A) and was therefore entitled to double the claimed lien amount as a matter of law.
When it comes to Advantage plan liens, there is a good chance you may be unaware that a lien exists without your own research. A good practice is to obtain copies of all government assistance program cards and any health insurance cards to see just what the injury victim is receiving in terms of benefits/insurance coverage. Make sure a thorough investigation is done if the client is a Medicare beneficiary for the existence of Part C/Advantage plan liens. The investigation and inquiry should start upon intake and continue throughout representation with the final check occurring before disbursement of settlement proceeds. Failing to do so may expose you and your firm to personal liability for double damages to a Part C Plan or Medicare itself.
Any personal injury settlement that involves a Medicare beneficiary should address the conditional payments, if any, in the settlement. It is important to understand the difference between interim conditional payment amounts and final conditional payment amounts in order to prevent any unexpected consequences post settlement. Until the changes in the PAID Act are implemented, a practitioner should also be mindful that Medicare Advantage Plan payment information will not be provided by the BCRC. By mastering the framework of conditional payments, the conundrum of Medicare reimbursement can be unraveled.
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.