Teleconference Q&A – 2nd installment

Medicare Set-Aside Blog on April 10, 2009 | Posted by


I again apologize for the delay in answering your remaining
teleconference questions but implementing the latest memo from CMS regarding Rx
pricing this week has been a challenge. This is nearly all the questions posted
during the call and I should have the last few posted questions and the emailed
questions for you by the beginning of next week. So keep checking back and
please feel free to send any other questions that may arise as you read over
the answers. Have a pleasant Easter holiday.


Please send me printed materials for the last part of the seminar.


The materials the last part of the seminar was derived from are
available here.

Where can I find out what a TPA has to do in order to become our


If by “our” you are indicating that you are the RRE, you cannot
name an agent until you nearly complete the registration process. First the
authorized representative must initiate the registration on the COBSW (just
posted on 4/2/09 here)
with the basic company info (TIN, NAIC, contact info).  The AM must be a
person able to legally bind the RRE and must name an account manager – the AM
and AR cannot be the same person. COB will mail a PIN to the AR who must then
provide it to the AM who will complete the registration. The AM will maintain
the RRE’s profile, can initiate and monitor the reporting, and can name account
designees which is when you would name the TPA as an agent.

How can I get in touch with you after this seminar for association on
negotiations with SS?

MEDVAL provides conditional payment negotiation services. Just
call 888-SET-ASIDE and your call will be directed to a member of the staff who
can provide you will all the information you need to get started.


In a liability insurance case, is
defense counsel only obligated to notify Medicare of settlement?

Liability claims are only reported in the quarter settled unless
there is an ongoing responsibility for medicals which needs to be reported on
inception and upon settlement. And actually defense counsel can only do the
reporting if named by the RRE’s account manager as an account designee or


The anti-lien statute that applies
to Medicaid and that was central to the decision in the Ahlborn case by the US Sup Ct, does
that anti lien provision and Ahlborn analysis apply to MSPA?

The Ahlborn rational applies only to 42 USC 1396a(a)(25), not 42
USC 1395y(b)(2). Not only are Medicare and Medicaid totally different programs,
but their respective authorities are separately codified with very different
recovery mechanisms. Medicare recovery rights are codified at 42 USC
1395y(b)(2)(B)(ii)-(iv) which provides Medicare a primary right of recovery
from insurance payment proceeds, a much more powerful recovery right than
Medicaid’s subrogation right.


How does a Medicare Advantage plan
figure into this situation?

Medicare Advantage, or Medicare Part C, is still Medicare for all
intents and purposes of this discussion. Although provided by private insurance
carriers, it is done so on behalf of the Medicare program which entitles the
private carrier to secondary payer status and all recovery rights provided
Medicare under the MSP.


Does SS consider the amounts of money paid for loss consortium to
the spouse in determining whether the there was a substantial discount in the
settlement due to an absence of insurance coverage?


A loss of consortium claim belongs to the spouse and should not be
included in the total settlement amount for purposes of evaluating MSP issues
in the settlement.


In a liability insurance settlement, how does defense counsel
protect insured and carrier?


By taking whatever precautions available to prevent Medicare from
treating the injury subject to the insurance claim post-settlement. Compliance
with the MSP can be accomplished by making a reasonable allocation from the
total settlement amount sufficient to accomplish just that without any
involvement of expensive vendors or even CMS. However those additional opinions
are advantageous in preparing your defenses to future CMS scrutiny as you then
have the ability to state that you reasonably relied upon an expert 3rd
party vendor specializing in MSP compliance or that the government agreed with
your assessment. [Note: there is still not formal review process for liability
claims, however one can request the review of a liability MSA that CMS may
opine on at its sole discretion. It does not happen much, but we have
occasionally received approval letters on liability claims.] 


Just remember that the only thing required by law is that Medicare
may not make payment were a primary payer is responsible – all the rest of what
everyone thinks is required is totally superfluous.


Is $250k per claimant’s total recovery or per defendant’s


If this refers to the CMS threshold for determining if a claim is
reviewable, then the answer is per claimant’s total recovery. CMS adds all
related settlements: 3rd party liability + WC, WC with 2 different
insurers, previous indemnity settlement + current medical. Also note that CMS
also uses the total of all expected payments when a structured settlement is
involved, not the cost of the annuity purchased.


Have regulations now been put in
place with regard to how carriers will be required to report Medicare
recipients who have filed PI suits?

PI will only have to be reported when settled, unless it is a
no-fault situation which will need to be reported as an ongoing medical claim
in the quarter opened then reported again when the benefits run out or the
claim is settled. The details can be found in the operations manual available here.


If you inquire of a claimant in a
liability case as to whether he/she is a Medicare recipient and he/she does not
disclose but is, is there potential liability on a carrier?

By not verifying with SSA that there was no Medicare entitlement
when that opportunity was available, a carrier could be opening themselves up
to potential future liability. It is best to make provisions under the MSP
regardless as nearly everyone will become Medicare entitled at some point in
their lives and if lifetime medical is anticipated, Medicare has an interest in
that settlement. However when an insurer wants to rely on the word of the
claimant like this, we frequently suggest language such as “As a term of this
settlement, the parties have fully considered Medicare’s interests pursuant to
the MSP and in doing so, Claimant has declared that he is not Medicare eligible
and therefore Medicare has no interest to protect at this time. Claimant has
been made aware and fully understands that should he become Medicare entitled
in the future and require treatment of this injury that he will not be entitled
to treatment by Medicare and will be required to use proceeds from this
settlement for treatment of the same.”


Now please note that this will change effective July1, 2009 when
the reporting requirements go into effect. The insurer has the duty to verify
Medicare eligibility and has been provided with a monthly query function as
part of the reporting process. Due to the $1,000/day fine, the word of the
claimant will carry very little weight with insurance carriers in the near


Are there certain situations that
you are aware of in which the government may be more willing to waive or reduce
the lien? Is this just a matter of who the claims representative is?

The regulations state CMS may waive or reduce in cases that do not
warrant pursuit. Take that with the standard line when you call of cases being
evaluated on a case by case basis, you still don’t get an answer to your
question. In our experience, cases that really do demonstrate hardship, where a
claimant will receive nothing in a settlement due to the amount of the
conditional payments compared to the size of the settlement or especially in
policy limits situations, CMS is reasonable.


Can the government come after a
Plaintiff’s attorney for reimbursement, if that attorney received a contingency
fee from the settlement proceeds?

Absolutely. 42 CFR 411.24(g) states:  “Recovery from parties
that receive third party payments. CMS has a right of action to recover its
payments from any entity, including a beneficiary, provider, supplier,
physician, attorney, State agency or private insurer that has received a third
party payment.”


Is there an on-going resp of the
govt to update its response?

I don’t fully understand the context of this question, however
regardless of whether it is referring to the reporting requirement inquiry
responses or WCMSA approvals, we have never experienced CMS “updating” any
information we have ever been able to drag out of them. The burden on all
aspects of MSP compliance has always fallen upon the parties to the settlement
itself. Find it unlikely that that will change in the future.


What is an MSA (that people say they don’t need)


Frequently people state that they do
not require an MSA in cases unless it is workers’ compensation, unless it is
over $250,000. Regardless of the type of insurance or the dollar amount of the
settlement, if the injury requires lifetime medical treatment and the injured
party is or will become entitled to Medicare at a time when the treatment will
occur, an MSA is needed.

Are there Medicare lien rights on undetermined future medical


Not unless and until Medicare makes payment for treatment of the
insured injury post-settlement and seeks repayment from the insurance payment
from the primary payer. Just as in a liability insurance situation where
Medicare has no right of recovery for Medicare payments made unless and until a
settlement is reached and they become considered conditional, Medicare will
also have no right to assert a lien on undetermined future medical expenses
until they make a payment which requires repayment.





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