Insurers in the Cross-Hairs: New Medicare Secondary Payer case
Monday, January 25, 2010 Filed in: Medicare|
Workers
Compensation| Regulations|
Subrogation|
Settlement
Medicare filed a new lawsuit on December 1, 2009
signaling a possible change in the recovery focus -
from claimants (Medicare beneficiaries) to insurance
carriers who contribute to settlements.
In the past, workers, their attorneys, employers, and even insurance companies have ignored or attempted to evade the fact that workers’ compensation is primary to Medicare. There were undoubtedly some instances in which a worker would go into a hospital for treatment of a work-related problem and show a Medicare card, and the hospital would bill Medicare. At times, no one on behalf of the employer or its insurer went out of the way to tell the hospital that the bill should have been sent to workers’ compensation or to reimburse Medicare after it had paid the bill.
In July 2001 CMS issued a memo to its regional offices. It suggests that under certain circumstances parties to workers' compensation claims should not settle those cases until after CMS has had an opportunity to review the settlement and approve the allocation to future medical expenses. In addition, Medicare asserted a right to repayment for medical expenses for treatments ‘related’ to the workers’ compensation claim but which had been paid by Medicare (“conditional payments”).
Since then, the settlement of workers’ compensation claims in which an employee’s future right to medical treatment is foreclosed and the claimant is Medicare-entitled or eligible have required a Medicare Set-Aside approval (or waiver). As any claims person can tell you, this has dramatically slowed down the closure rate of higher-value ‘lump-sum’ type claims (Section 20s in NJ, Section 32s in NY). At the same time, Medicare has been issuing ‘Conditional Payment Statements’ showing payments made for medical care which Medicare asserts may be related to the workers’ compensation claim - and therefore not payable by Medicare under the Secondary Payer Act.
In the past, workers, their attorneys, employers, and even insurance companies have ignored or attempted to evade the fact that workers’ compensation is primary to Medicare. There were undoubtedly some instances in which a worker would go into a hospital for treatment of a work-related problem and show a Medicare card, and the hospital would bill Medicare. At times, no one on behalf of the employer or its insurer went out of the way to tell the hospital that the bill should have been sent to workers’ compensation or to reimburse Medicare after it had paid the bill.
In July 2001 CMS issued a memo to its regional offices. It suggests that under certain circumstances parties to workers' compensation claims should not settle those cases until after CMS has had an opportunity to review the settlement and approve the allocation to future medical expenses. In addition, Medicare asserted a right to repayment for medical expenses for treatments ‘related’ to the workers’ compensation claim but which had been paid by Medicare (“conditional payments”).
Since then, the settlement of workers’ compensation claims in which an employee’s future right to medical treatment is foreclosed and the claimant is Medicare-entitled or eligible have required a Medicare Set-Aside approval (or waiver). As any claims person can tell you, this has dramatically slowed down the closure rate of higher-value ‘lump-sum’ type claims (Section 20s in NJ, Section 32s in NY). At the same time, Medicare has been issuing ‘Conditional Payment Statements’ showing payments made for medical care which Medicare asserts may be related to the workers’ compensation claim - and therefore not payable by Medicare under the Secondary Payer Act.
Since 2001 Tompkins McGuire has been advising clients
on how to comply with the Medicare Secondary Payer
Statute; identifying cases where conditional payment
statements; Set-Aside Agreement; or waiver must be
obtained. The focus has been on making sure that
Medicare was apprised of the imminent settlement,
reviewed the terms of the settlement (the body parts
or systems and the claimant;s (potential) need for
future medical treatment, and weighed in on whether a
Set-Aside Trust needed to be established. In
addition, when Medicare issues a conditional payment
statement, demanding repayment of certain medical
expenses, we have provided guidance on which of the
conditional payments (if any) need to be satisfied.
Previously there was no case in which Medicare sought reimbursement of “conditional payments” directly from insurance carriers contributing to a settlement.
That is no longer the case.
In the recently-filed U.S. Court action (Untied States v. James J., Stricker) Medicare is seeking recovery of conditional payments based upon the Medicare Secondary Payer Statute (MSP). This Complaint seeks recovery from both the liability carriers and the plaintiffs' counsel.
In Stricker a class action claim was settled without reimbursing Medicare for conditional payments.
In addition to seeking the conditional payments, interests and penalty, the government is requesting "[the insurers] must give CMS notice of all future payments to Medicare beneficiaries and [the carriers] must ensure before any future settlement payment is made to any claimant that appropriate payment is made to the United States."
We think this language signals Medicare’s ultimate goal: to proceed directly against liability carriers for pre and post-settlement Medicare expenses. Our interpretation of the Act has also been that this was possible.
Previously there was no case in which Medicare sought reimbursement of “conditional payments” directly from insurance carriers contributing to a settlement.
That is no longer the case.
In the recently-filed U.S. Court action (Untied States v. James J., Stricker) Medicare is seeking recovery of conditional payments based upon the Medicare Secondary Payer Statute (MSP). This Complaint seeks recovery from both the liability carriers and the plaintiffs' counsel.
In Stricker a class action claim was settled without reimbursing Medicare for conditional payments.
In addition to seeking the conditional payments, interests and penalty, the government is requesting "[the insurers] must give CMS notice of all future payments to Medicare beneficiaries and [the carriers] must ensure before any future settlement payment is made to any claimant that appropriate payment is made to the United States."
We think this language signals Medicare’s ultimate goal: to proceed directly against liability carriers for pre and post-settlement Medicare expenses. Our interpretation of the Act has also been that this was possible.
