The MSP has been in effect since 1980, and there has been little effort to enforce its provisions in third-party liability cases. Moreover, there has been no indication from CMS that they would seek to exercise their MSP rights retroactively. Indeed, the workers’ compensation example has shown that CMS is not interested in ‘looking back’ to impose MSP responsibility.
We think that the MSP Act applies to third-party liability cases.
Although Medicare has not traditionally enforced its rights under the MSP with respect to third-party liability cases, it is clear that the Act applies to those cases. Lack of enforcement will likely soon change. All insurers, third-party health plans, self-insured plans, and self-administered plans must identify situations where the Plan is or has been primary to the Medicare program. The requirements of the MMSEA including the carrier/self-insured’s duties to identify claimants and provide “such other information as the Secretary may specify” certainly signal the beginning of an enforcement effort by CMS in third-party liability cases.
It is true that there is not yet a “formal” CMS process in place for reviewing settlements in the liability arena as there is in the workers’ compensation world. However, CMS offices in Dallas and Atlanta have begun reviewing third-party liability settlements and granting approvals of set-aside agreements. At a CMS “town hall” meeting - a dial-in telephone conference call - which took place on March 16, 2010, CMS stated that “the obligation of liability settlements to protect CMS for past-due and future medical bills is exactly the same as the workers’ compensation side.” CMS said “[w]here future medicals are a consideration in arriving at a settlement, then appropriate arrangements should be made for appropriate exhaustion of the settlement before Medicare is billed for related services.”

On December 29, 2007 President Bush signed into law the “Medicare, Medicaid and SCHIP Extension Action of 2007” (‘MMSEA’). The MMSEA made changes to the nation’s three major health programs: Medicare, Medicaid, and the State Children’s Health Insurance Program (SCHIP). Section 111 of the MMSEA imposes complicated reporting obligations on self-insured and insurance carriers who settle claims with plaintiffs who have received, or who are qualified to receive, Medicare benefits for the injuries that are the subject of their claims. Specifically, RREs must identify claimants who are Medicare beneficiaries and report data regarding their identities and claim to Medicare.
Liability insurers, self-insured defendants, and defense attorneys must take all steps necessary to ensure their compliance with the reporting requirements imposed by MMSEA Section 111. The MMSEA imposes substantial fines on ‘Responsible Reporting Entities’ (“RRE”) who fail to report qualifying claims. CMS may seek reimbursement from plaintiffs, defendants, carriers, and both the claimants’ attorneys and defense attorneys.
Mandatory reporting was initially scheduled to begin July 1, 2009. This was pushed back to April 1, 2010 and now is set for January 1, 2011. RREs must register with CMS, and should have already done so.
Triggers for reporting requirements include settling a claim with a payee who received Medicare payments. In addition, CMS has set a ‘declining’ table of reviewable claims values: $5,000 in 2010, $2,000 in 2011, and $600 in 2013. In other words, if a RRE is going to settle a claim for $601 in 2013, and the claimant is Medicare-entitled, the settlement must be reported to CMS. Even if the settlement falls below these “threshold” levels, Medicare’s reimbursement rights exist.


Noncompliance can result in fines of up to $1,000 per day per claimant.

During settlement negotiations, RREs and their representatives must take care to determine whether a claimant is a Medicare beneficiary and find out if there is a Medicare lien. The lien must be paid from settlement proceeds before money is distributed to the claimant and must be paid within 60 days of payment to the claimant.

My guide for Complying with MMSEA

Each carrier and self-insured must establish protocols to comply with the Medicare reporting requirements imposed by the “Medicare, Medicaid and SCHIP Extension Action of 2007” (‘MMSEA’). Each carrier and self-insured is left to its own devices to come up with these protocols. We have seen many of our clients turn to vendors to review claims and communicate with Medicare.
My Checklist:
Carriers must determine which claimants are Medicare beneficiaries and those non-Medicare beneficiaries who have a reasonable expectation of entitlement within 30 months of the settlement date.
A claims representative should determine entitlement to Social Security and Medicare as early as possible in the file’s life. Warning flags include: (a) Has the claimant been out of work more than six months (SSD); (b) Has the claimant been off work for 30 months or longer (Medicare); (c) Was it a catastrophic injury?; (d) Is the settlement value over $250,000 (including the cost of medicals paid)?; (e) Does the claimant admit to applying for SSD and getting denied or is the SSD denial on appeal?; (f) Is the claimant aged 62 and six months old or older?; and (g) Does the claimant have end-stage renal disease?
Our rule of thumb is that where the parties negotiate a settlement that terminates the obligation of the self-insured or carrier to pay for future medicals, even if the claimant denies being on Social Security Disability, independent verification should be obtained. A vendor can be used to identify Social Security recipients.
If the claimant is on Medicare but the settlement is less than $25,000 (and forecloses the possibility of the carrier/self-insured being responsible for future medicals) CMS will not review the settlement and either ‘approve’ a proposed set-aside or ‘waive’ Medicare’s set-aside requirement. In such an instance, the carrier/self-insured can prepare their own set aside agreement with the claimant. At settlement, appropriate consent and/or testimony should be obtained from the payee, making sure they understand that the payee must ‘spend down’ the allocable amount with medical bills prior to submitting bills to the compensated injury to Medicare.
One way of verifying that a payee is not on Medicare is to ask for copies of recent pay stubs. If the pay stubs are less than six months old, they cannot be a Medicare beneficiary.

The impact of the Medicare Secondary Payer Act on civil and workers’ compensation litigation is growing. In the next few years we expect that CMS’s enforcement activities will increase. On May 24, 2010, the New Jersey Appellate Court decided a case (Jackson v. Hudson Court) that we believe is the first case in New Jersey focusing on the MSP and a civil claim. In Jackson, the plaintiff sought to have the trial court issue an order allocating the proceeds of her settlement to discharge a Medicare lien. The Court refused to do so - forcing the payee to consider Medicare’s interest in her settlement.

This article (caution - very long!) is a comprehensive guide to handling claims (workers' comepnsation claims and liability matters) in which medicare may have an interest. Read on for my review of this important topic, with flow-charts illustarting the decisions facing the employer/defendant in personal injury/workers' compensation claims. Read More...

This entry discusses a recent Appellate decision where the court found that subsequent employment DID aggravate a prior comp injury. Contrast this decision with Zrno, another recently decided case on 'subsequent' injury.
The petitioner in Singeltary v. WaWa, A-5723-07T3, App. Div. decided April 23, 2009 (published version not available as I blog this) worked in a convenience store for 20 years. In 1992 and 2001 she was injured in work-related slip-and-falls involving her cervical spine. At the time of the incidents, AIG was the carrier. In 2002, WaWa became self-insured for workers' compensation purposes in New Jersey. In 2006 the claimant was told she needed a cervical fusion surgery.

The question was: Who was to pay? AIG or WaWa?
Read More...