Questions and Answers about Liability MSAs and the Medicare Secondary Payer Act
Q: Under what circumstances does Medicare have a statutory right to seek double damages?
A: If Medicare has to file suit to recover reimbursement for conditional payments, it is entitled to double damages. It is after 60 days from demand for payment that interest starts to accrue.
Q: How does the MSP affect Medicaid beneficiaries?
A: If the beneficiary is dually eligible for both Medicare and Medicaid, you will need to be cognizant of the fact that any MSA that is established in settlement would be subject to asset exclusions and you should explore special needs trust options.
Q: I am a plaintiff’s personal injury attorney. My clients are almost never currently receiving Medicare benefits. What obligation do I owe Medicare or my clients when settling an average liability claim?
A: Technically, you have an obligation to look and see if Medicare will ever have foreseeable exposure in future treatment related to your client’s injury. Although not currently entitled to Medicare benefits, it is very likely that your client will at some point, by virtue of age alone, become entitled and, at that time, is there foreseeable required medical treatment related to the injury/illness at issue? For instance, it is accepted medical knowledge that an artificial knee joint needs to be replaced approximately every 15 years given average wear and tear. If, for example, your 50 year old client suffered a crush injury, had a knee replacement, has completely recovered and is not treating at all, you may not believe you need to consider Medicare’s interests in your settlement. However, it should be fully expected at the time of settlement that a revision will become necessary at or beyond age 65 and Medicare would be exposed to that expense absent a proper set-aside allocation. On your average liability claim, you likely do not have much to consider. However, you should certainly make note in your settlement documents that you did consider the MSP statute and determined that Medicare had no foreseeable exposure at the time of settlement related to the claim for whatever reasons. If nothing else, it should become one of those generic paragraphs like governing law or effectiveness.
Q: In a motor vehicle liability claim where Medicare has not paid for past medical care, do I need to communicate with Medicare and/or have an MSA prepared? What if no future Medicare payments are anticipated for accident-related injuries?
A: If you represent a Medicare beneficiary, you should still ideally report the claim to the Coordination of Benefits Contractor(COBC – 800-999-1118) at the initiation of the claim to avoid putting Medicare in a position of making conditional payments. If your client is not a Medicare beneficiary and required medical treatment for which payment was disputed, then you likely have a Medicaid lien which has nothing to do with Medicare or the federal government.
If you have foreseeable related lifetime medical treatment and a client who is or will become entitled to Medicare at the time the treatment will occur, then you absolutely need an MSA. If no future medical treatment is reasaonably anticipated, then you don’t need to have a Medicare Set-Aside allocation prepared; however, we highly recommend at least noting the reason and the attention paid to the Medicare Secondary Payer Act in the settlement documents.
Q: What are the current requirements imposed on an insurance company settling a liability insurance personal injury claim? How do those requirements change in 2009?
A: Since 1980 and pursuant to the MSP, any type of insurance company has a duty to ensure that Medicare has not and will not make any payments related to the treatment of the injury subject to the claim. This remains exactly the same in 2009. Starting July 1, 2009, insurers will have a duty to determine the Medicare status of the injured party and, should he prove to be entitled to Medicare benefits (entitled, not enrolled), settlement documents must be reported to the Secretary of Health and Human Services. We believe this will most likely be facilitated through the MSPRC.
However, you must consider this policy change: Prior to this new filing requirement, the terms of a liability settlement were generally confidential and there was essentially no way for Medicare to ever know the settlement occurred if the claim was not reported, absent following court dockets. Now, CMS will have instant access to a host of information on potential primary payyers for payments already made. Additionally, CMS will be able to determine if its interests were adequately considered for future Medicare-covered medical treatment or if the burden was intentionally shifted onto it via the settlement.
Q: Is the July 1, 2009, effective date applicable to the date of the injury? Or the date of payment?
A: The 2009 effective date applies only to settlements and the new requirements of determining Medicare status of the injured party at the time of settlement. If entitled to Medicare, you will be required to file final settlement documents with CMS. The time frame in which you will have to make that filing has not been determined yet, but it has no bearing on the date of injury, payment, etc. The filing requirement will only be going forward from that date. Currently, you can voluntarily submit the information to the MSPRC but are not required to do so. However, CMS will likely continue to look back at older claims on its own regardless of the new law. There is a provision in the MSP statute that states the government has the right to look back three years for repayment, but it is silent into what triggers the three years – is it the date of service? Or CMS becoming aware of the payments? Relevant case law suggests it is three years from notice/demand.
With regard to preparing for July 1, 2009, MEDVAL is working with several carriers to help establish protocols in preparation of the implementation of the new law. For years we’ve been looking at the tail end of claims and telling carriers that a lot of the “problem” settlements could have been avoided with proactive efforts. Now that the government has attached a $1,000 per day per claim penalty into the equation, people have become increasingly interested in suggestions on how to avoid such problems. MEDVAL is creating some releases and protocols that would work in any organization, so if yours is interested, let us know.
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