personal injury claims settlement: new cms...

Presenting a live 90‐minute webinar with interactive Q&A

Personal Injury Claims Settlement:Personal Injury Claims Settlement:New CMS GuidanceNavigating Clarifications to Medicare Set‐Asides, QSFs and Section 111 Reporting Requirements

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

TUESDAY, DECEMBER 6, 2011

Today s faculty features:

John Cattie, Head, Future Cost of Care Practice, Garretson Group, Charlotte, N.C.

Jeremy T. Burton, Partner, Williams, Montgomery & John, Chicago

The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

Conference Materials

If you have not printed the conference materials for this program, please complete the following steps:

• Click on the + sign next to “Conference Materials” in the middle of the left-hand column on your screen hand column on your screen.

• Click on the tab labeled “Handouts” that appears, and there you will see a PDF of the slides for today's program.

• Double click on the PDF and a separate page will open. Double click on the PDF and a separate page will open.

• Print the slides by clicking on the printer icon.

Continuing Education Credits FOR LIVE EVENT ONLY

For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps:

• Close the notification box

• In the chat box, type (1) your company name and (2) the number of attendees at your location

• Click the SEND button beside the box

Tips for Optimal Quality

S d Q litSound QualityIf you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection.

If the sound quality is not satisfactory and you are listening via your computer speakers, you may listen via the phone: dial 1-866-869-6667 and enter your PIN -when prompted Otherwise please send us a chat or e mail when prompted. Otherwise, please send us a chat or e-mail [email protected] immediately so we can address the problem.

If you dialed in and have any difficulties during the call, press *0 for assistance.

Viewing QualityTo maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key againpress the F11 key again.

Personal Injury Claims Settlements and Personal Injury Claims Settlements and New CMS updates

John V. Cattie, Jr.

Strafford PublicationsDecember 6, 2011

Agenda

M di S t A id (MSA )1. Medicare Set-Asides (MSAs)2. Qualified Settlement Funds (QSFs)3 December 5 19803. December 5, 19804. MMSEA Section 1115. Other CMS Updatesp

7

MSP: The Medicare Secondary Payer Act

History…y• MSP – December 5, 1980• Medicare in 2003

• MMA 301 (expanded liability)• MMA 301 (expanded liability)• Medicare in 2006-07

• Changes in MSPRC• Medicare Part D

• Medicare in 2008-09• MMSEA (eff. 7-1-09:1/1/11)( )• MSP Reform Act (intro 5/09)• New CP procedures (eff. 10/1/09)

8

MSP: The Medicare Secondary Payer Act

History…y• MSP – December 5, 1980• Medicare in 2003

• MMA 301 (expanded liability)

What it means…• After 30 years of • MMA 301 (expanded liability)

• Medicare in 2006-07• Changes in MSPRC

evolution focused largely on plaintiff obligation….

• MMSEA “closes the loop” by involving the • Medicare Part D

• Medicare in 2008-09• MMSEA (eff. 7-1-09:1/1/11)

loop , by involving the defense / payer in the process( )

• MSP Reform Act (intro 5/09)• New CP procedures (eff. 10/1/09)

9

2011 MSP Compliance = 2 Obligations

“What do you mean by closing the loop?”REPORTING OBLIGATION [NEW]REPORTING OBLIGATION [NEW]Accountable Party is the Defendant

RESOLUTION OBLIGATION [OLD]RESOLUTION OBLIGATION [OLD]Accountable Party is the Plaintiff & Plaintiff Counsel

To sum it up…• Each settling party now has a role. • Our objective today is to illustrate

what each role is (and what it’s not).

10

2011 MSP Resolution = 2 Obligations

“Consider and Protect” Medicare’s interests Past Interest (Date of Injury to Date of Settlement) Past Interest (Date of Injury to Date of Settlement)

Verify and resolve conditional payments Future Interest (Date of Settlement Onward)Future Interest (Date of Settlement Onward)

Determine IF an MSA is appropriate under the case/claim specific facts AND document the filep

Today’s Objective:T d t t h t dd To demonstrate how to address these obligations in a compliant manner.

11

The Big Shift

All this change is causing…• …shift away from reliance on “indemnification” clauses alone…• …to affirmative obligation to address liens before disbursing as

condition of settlementcondition of settlement

What it means…R i t ti h li• Requires starting much earlier

• Requires formal verification of entitlement

12

MSP Reimbursement Obligations

KEY CONSIDERATIONSHow a How a formalized formalized

1. Medicare’s past and future interests are considered/protected appropriately.

2 The parties are MSP compliant (based on statute

formalized formalized approach to approach to MSP issues MSP issues yields MSP yields MSP 2. The parties are MSP compliant (based on statute,

regulations, guidance and case law).3. The claimant’s Medicare benefits are protected

going forward

yycompliant compliant

resultsresults

going forward.

13

MSP Reimbursement for Future Medicals

What About Future Payments?(D I d f th t id ?)(Do I need one of those set asides?)

MEDICARE REIMBURSEMENT CLAIM

2000 ---------------------------------------- 2010

MEDICARE SET ASIDE?

2011 2012 2017 2022 2027 2032 2037 2042 2047 2052

Q: What’s my MSP obligation re: future medicals? A: Determine IF a Medicare Set Aside (MSA) is appropriate under your

2011 2012 2017 2022 2027 2032 2037 2042 2047 2052

14

A: Determine IF a Medicare Set Aside (MSA) is appropriate under your case/claim specific facts and DOCUMENT THE FILE accordingly.

CMS Handout CMS Handout –– Future MedicalsFuture Medicals

CMS issued first informal guidance re: LMSAs in May 2011CMS issued first informal guidance re: LMSAs in May 2011 “The law requires that the Medicare Trust Funds be protected

from payment for future services whether it is a workers’ compensation or liability case There is no distinction in the law ”compensation or liability case. There is no distinction in the law.

“There is no formal CMS review process in the liability arena as there is for workers’ compensation.”

“Each attorney is going to have to decide, based on the specific facts of each of their cases, whether or not there is funding for future medicals…” If answer for P counsel is YES, they should ensure those funds are used for

future IRC otherwise covered by Medicare If answer for D is YES, they should make sure their records contain

documentation of their notification to P counsel and Medicare beneficiary that

15

documentation of their notification to P counsel and Medicare beneficiary that settlement does fund future medicals.

CMS Alert CMS Alert -- LMSAsLMSAs

First policy memo from CMS regarding LMSAsFirst policy memo from CMS regarding LMSAsCertification letter from treating physician stating treatment is

completed as of date of settlement and no future IRC neededMedicare’s future interest protected with regard to that settlementMedicare’s future interest protected with regard to that settlementNo written confirmation from CMS – simply document your file and

move onWhat does this mean?Closer to formal “requirement” for LMSAs (here to stay)Aligns with GRG MSA MethodologyAligns with GRG MSA Methodology

16

42 C.F.R. §411.46(d)

Lump-sum compromise settlement: Effect on payment for services furnished after the date of settlement—

ALL settlements must “adequately consider” Medicare’s interest, no shifting of Medicare to be primary payer for past & future medical care.Medicare will not pay for any medical expenses related to an injury after settlement until the time the portion of the settlement allocated to future medical expenses covered by Medicare is allocated to future medical expenses covered by Medicare is fully exhausted.

17

42 C.F.R. §411.46(d)

Lump-sum compromise settlement: Effect on payment for services furnished after the date of settlement—

ALL settlements must “adequately consider” Medicare’s interest, no shifting of Medicare to be primary payer for past & future medical care.Medicare will not pay for any medical expenses related to an injury after settlement until the time the portion of the settlement allocated to future medical expenses covered by Medicare is allocated to future medical expenses covered by Medicare is fully exhausted.

REMEMBER – the basic rule is that Medicare will pay p yfor future injury-related care EXCEPT WHEN proceeds allocated to future medical expenses.

18

42 C.F.R. §411.47(a)(1)

Determining amount of compromise settlement considered as a payment for medical expenses. p y p

If a compromise settlement allocates a portion of the payment for medical expenses and also gives reasonable recognition to the medical expenses and also gives reasonable recognition to the

income replacement element, that apportionment may be acceptedas a basis for determining Medicare payments.

Since WC matters have 3 “buckets” of recovery (indemnity/wage loss, past medicals & future medicals), if you know the wage loss component and the WC lien/CP amount, then the balance is the p ,allocated amount to future medicals.

MSA amounts should be capped at the amount allocated to future medicals, IF your case passes this test.

19

, y p

How to Consider/Protect Medicare’s Future Interest

ScreenScreen AssessAssess ValueValue EducateEducate

20

MSP Reimbursement – Future Interest

Relative to future medicals, settling parties should take four steps to ensure MSP compliance & “SAVE” a claimant’s Medicare card:

The Need to The Need to SAVESAVE

Medicare card:1. Screen to validate candidacy for MSA.2. Assess damages to determine future medical g

allocation.3. Value future medicals for candidate case.4 Ed t & Ad i i t MSA ( h i t )4. Educate & Administer MSA (when appropriate)

21

Screen to Validate Candidacy for LMSA

• Determine Medicare enrollment status

Does gross award contain specific allocation for ScreenScreen

• Does gross award contain specific allocation for future medicals?

• Determine whether claimant needs future injury-Determine whether claimant needs future injuryrelated care

• Based on this assessment, parties should then

Permanent Future Cost

DOCUMENT the file accordingly

Burden Shift

Future Cost of Care MSA

22

Assess Damages to Determine Future Medical Allocation

Does Gross Award Have $ for Futures?

Perform allocation determination for future medicals based on alleged damages analysis

AssessAssessbased on alleged damages analysis

GRG employs allocation determination methodology based on judicial guidance.

Where damages include future medicals, determine how much Medicare would pay If no damages are so included, no LMSA If damages identified, value the medicals

23

Assess Damages to Determine Future Medical Allocation

Does Gross Award Have $ for Futures?

Perform allocation determination for future medicals based on alleged damages analysis

AssessAssessbased on alleged damages analysis

GRG employs allocation determination methodology based on judicial guidance.

Where damages include future medicals, determine how much Medicare would pay If no damages are so included, no LMSA

If this assessment yields a “no” response, parties h ld DOCUMENT THE If damages identified, value the medicalsshould DOCUMENT THE

FILE in order to be MSP compliant re: futures.

24

Value Future Medicals for Candidate Case

Develop a “Medicare covered” life care plan Based on expected life expectancy (using CDC

tables)ValueValue

tables). BUT…parties must take into account the $$$

available to fund any future medical obligation.

25

Value Future Medicals for Candidate Case

Develop a “Medicare covered” life care plan Based on expected life expectancy (using CDC

tables)ValueValue

tables). BUT…parties must take into account the $$$

available to fund any future medical obligation.

LMSA total capped at future cost of at future cost of care figure.

26

Educate & Administer LMSA Results

Funding Decision Lump Sum versus Annuity etc Lump Sum versus Annuity, etc.

Administrative Decision Self Admin versus Professional Custodian

EducateEducate

CMS Submission Decision Voluntary not mandatory Informal CMS review procedure versus more formalized p

WC approach Time considerations

27

MSA Case Law – MSA Appropriate

Big R Towing(2011 WL 43219)(2011 WL 43219)

Jones Act settlement where Court found LMSA for $52,500 out of $150 000 gross settlement was reasonable Why?$150,000 gross settlement was reasonable. Why?

• Parties presented medical testimony identifying futures

• Parties previously agreed to let court determine MSA allocation based on evidence presented

• Court ratified what parties had already determined, but put a number to it. Therefore, MSA was created by the parties themselves, not the court.

28

themselves, not the court.

MSA Case Law – CMS Review/Approval

Schexnayder(2011 LEXIS 83687)(2011 LEXIS 83687)

Court found LMSA for $239,253.84 was reasonable. Why?

• Parties agreed to set funds aside for MSA; created allocation; submitted to CMS for review/approval as condition of settlement.

• No response from CMS – Why?

• Joint motion for declaratory judgment to approve settlement.

• Court ratified what parties had already determined. Therefore, MSA was created by the parties themselves, not the court.

29

MSA Case Law – CMS Review/Approval

Smith(2011 LEXIS 90428)(2011 LEXIS 90428)

Court found WCMSA for $14,647 was reasonable. Why?

P ti d t t f d id f MSA • Parties agreed to set funds aside for MSA;

• MSA vendor created allocation totaling $313,095.54; Garretson id 2nd i i MSA $14 647 b itt d t CMS f provides 2nd opinion; MSA = $14,647; submitted to CMS for

review/approval as condition of settlement.

• CMS declines opportunity to review Why?• CMS declines opportunity to review – Why?

• Joint motion for declaratory judgment to approve settlement.

30

• Court ratified what parties had already determined. Therefore, CMS future interests protected without requiring CMS approval.

MSA Case Law – MSA Not Appropriate

Finke(2009 WL 6326944)(2009 WL 6326944)

Liability settlement where Court found no LMSA needed to properly consider and protect Medicare’s future interest Why?properly consider and protect Medicare s future interest. Why?

• Plaintiff identified/satisfied Medicare conditional payment obligation.obligation.

• Plaintiff covered by private insurance going forward (spouse’s policy).p y)

• Therefore, no LMSA needed to reasonably consider and protect Medicare’s future interest.

31

Does Defense Have Any Liability for Future Medicals?

Current law only provides double damages to an insurer where conditional payment reimbursement obligations exist but were not satisfied. See 42 U.S.C. 1395y(b)(2)(B).

1395y(b)(2)(B) means that insurers have no liability for failing to make future payment arrangements. That responsibility is, and always has been on the Medicare beneficiary’s shoulders. The MSP statute, even its reporting obligations to insurer ( 111(8) of MMSEA), is statutorily looking to past payments made, not future payments to be made. Even an insurer’s reporting obligations stops where the person is not a

f fMedicare beneficiary at the time of settlement.

32

Does Defense Have Any Liability for Future Medicals?

Important Points…CMS b it M di ’ i b t f Current law only provides double damages to an insurer where conditional

payment reimbursement obligations exist but were not satisfied. See 42 U.S.C. 1395y(b)(2)(B).

• CMS website says Medicare’s reimbursement focus is on “entities that received” payment, not entities that made payment (http://www.cms.gov/WorkersCompAgencyServices/

1395y(b)(2)(B) means that insurers have no liability for failing to make future payment arrangements. That responsibility is, and always has been on the Medicare beneficiary’s shoulders.

02_workerscompensationoverview.asp#TopOfPage).• But, statutory language arguably includes payments

made or “to be made”, which has some commentators concerned about future payment

The MSP statute, even its reporting obligations to insurer ( 111(8) of MMSEA), is statutorily looking to past payments made, not future payments to be made. Even an insurer’s reporting obligations stops where the person is not a

f f

p yliability.

Medicare beneficiary at the time of settlement.

33

MSA Trends to Watch

Additional guidance from CMSRules of the LMSA game are coming

Increased Litigation• More confusion about how to apply rules of the LMSA game

• Judiciary will fill in the blanks

MSA (and MSP) Compliance addressed in formalized manner

No longer handled piecemeal or only when parties want to address

34

Qualified Settlement Funds

CMS guidance re: Qualified Settlement Funds (QSFs)

Who this affects?

Why is this important?

35

QSFs: Bringing Order to Chaos

Collection, Allocation & Distribution

Temporary holding without “Receipt”

Breathing space!

Defense removed from process Defense removed from process

Empowers Administrator to allocate damages (potentially limit liens)liens)

Not safe harbor….but a stopping point between defendant t d l i t i t

36

payment and claimant receipt

QSFs: Benefits to Plaintiffs

Funds earn interest immediately.

In almost all cases settlement not subject to D’s creditors

Review / negotiate liens

E l ti S i l N d T t d d t b fitEvaluating Special Needs Trusts and need to preserve benefits

Considering Structured Settlement without requiring the i / i i i f h d fsignature/participation of the defense

Avoids defendant’s involvement

37May avoid fighting over release language

QSFs: Benefits to Defendants

Allowed to disengage from litigation and qualify for economic performance.

Payments are in exchange for a release from the present and possible future Payments are in exchange for a release from the present and possible future claimants.

Once a payment is made into a QSF the litigation process will cease.

Allowed to deduct their payments to a QSF as if the defendants had paid claimants directly or paid into an irrevocable and unconditional fund… form of accelerated deduction

Permitted to take a current income tax deduction if available upon payment

Doctrine of Novation allows for complete release from all claims

38

Questions?Questions?

39

Thank You

John V. Cattie, Jr.(866) 694-4446(866) 694-4446(704) 559-4300

j tti @ [email protected]

40

CMS UPDATESE X P O S U R E , I N G E S T I O N A N D I M P L A N T A T I O N C L A I M S

CMS UPDATES

JEREMY BURTONWILLIAMS MONTGOMERY & JOHN LTDWILLIAMS MONTGOMERY & JOHN LTD

EXPOSURE, INGESTION AND IMPLANTATION CLAIMS

DOI – The Date of IncidentDOI The Date of Incident.(The Date of Incident for anautomobile accident is thedate of the accident.)

For exposure claims, the DOI isthe date of first exposure.

For ingestion claims, the DOI isthe date of first ingestion.

For claims involving implants,the DOI is the date of theimplantimplant.

42


When the injured party is aWhen the injured party is aMedicare beneficiary andthe date of incident is onor after

December 5 1980 December 5, 1980,

Liability insurance isLiability insurance isprimary to Medicare.

43


Application of the DecemberApplication of the December5, 1980 date is specific to aparticular claim/defendant.

If exposure for Defendant “X”ended prior to December 5,1980 but exposure for other1980 but exposure for otherdefendants did not, asettlement, judgment, awardor other payment withp yrespect to Defendant “X”would not be reported.NGHP User Guide, Ver. 3.2,, p. 115

44


Initially, certain representatives of MedicareInitially, certain representatives of Medicareindicated they did not intend to follow this rule andthat it may be necessary to report client specificclaims that fall outside of this rule but otherwise haveclaims that fall outside of this rule but otherwise haveexposure after December 5, 1980.

45


The CMS on October 11 2011 announced theThe CMS on October 11, 2011 announced thefollowing:

The Centers for Medicare & Medicaid Services hasconsistently applied the Medicare Secondary Payer(MSP) provision for liability insurance (including self(MSP) provision for liability insurance (including self-insurance) effective 12/5/1980. As a matter of policy,Medicare does not assert a MSP liability insurancebased recovery claim against settlements,judgments, awards or other payments, where thedate of incident (DOI) occurred before 12/5/1980.date of incident (DOI) occurred before 12/5/1980.

46


Medicare in their OctoberMedicare in their October11, 2011 announcementindicated that wherecontinued exposure oringestion exists – Medicarefocuses on the date of lastfocuses on the date of lastexposure or ingestion forpurposes of determiningwhether the exposure orwhether the exposure oringestion occurred on orafter 12/5/1980.

47


For implant cases, the date of last exposure is usedfor ruptured implants and for non-ruptured implants,p p p pthe date the implant was removed is the date of lastexposure.

Medicare notes that the term exposure refers to aclaimant’s physical exposure to the harm rather thanp y pa defendant's legal exposure to liability.

48


Medicare will assert a recovery claim when:Medicare will assert a recovery claim when:

ONEONE

Exposure, ingestion or the alleged effects of animplant on or after 12/5/1980 is claimed, released, oreffectively released.

49



TWO

A specified length of exposure or ingestion is requiredin order for the claimant to obtain the settlementin order for the claimant to obtain the settlement,judgment, award, or other payment, and theclaimant’s date of first exposure plus the specifiedlength of time in the settlement judgment award orlength of time in the settlement, judgment, award orother payment equals a date on or after 12/5/1980.This also applies to implanted medical devices.

50



THREE

A requirement of the settlement, judgment, award, orother payment is that the claimant was exposed toother payment is that the claimant was exposed to,or ingested, a substance on or after 12/5/1980. Thisrule also applies if the settlement, judgment, award,or other payment depends on an implant that wasor other payment depends on an implant that wasnever removed or was removed on or after12/5/1980.

51


Medicare will not assert a recovery claim when:Medicare will not assert a recovery claim when:

All exposure or ingestion ended, or the implant wasremoved before 12/5/1980; andremoved before 12/5/1980; and

Exposure, ingestion, or an implant on or after 12/5/1980has not been claimed and/or specifically released; andp y

There is either no release for the exposure, ingestion, or animplant on or after 12/5/1980; or where there is such a

l it i b d l l ( th threlease, it is a broad general release (rather than aspecific release), which effectively releases exposure oringestion on or after 12/5/1980. The rule also applies if thebroad general release involves an implant.broad general release involves an implant.

52


“Effective Releases”

Medicare seems to contradictitself on the issue of whether they

iwill assert or not assert recoverywhen exposure is “effectivelyreleased.” Most commenters onthis view it as an issue of knownor alleged exposure.

53


Where exposure or ingestion is claimed in theWhere exposure or ingestion is claimed in thecomplaint or through discovery, Medicare is likely topursue recovery where a settlement does notcontemplate that exposure but release “effectivelyreleases” the exposure.

The kind of release Medicare is okaying is one whereexposure after December 5, 1980 is not raised in thecase, is unknown, but is “effectively released.”

54


For this reason it is imperative for settling counselFor this reason, it is imperative for settling counsel,especially defendants to review the complaint,answers to interrogatories and deposition testimonyfor any suggestion of exposure after December 5,1980. That information should also be provided to theclient.client.

If there is evidence of exposure after that date, report to Medicare. If there is no evidence, then reporting is most likely not necessary.

55


Medicare has indicated where the only evidence of post December 5, 1980 exposure is the release, they will not pursue recovery.

We look at what’s claimed or released and we have We look at what s claimed or released … and we have carved out this one exception where the only basis … for us looking to … primary payment responsibility was a broad general release We have said in that situation we broad general release. We have said in that situation we won’t pursue a recovery plan.

S htt // /M d t I /D l d /10192011NGHP dfSee http://www.cms.gov/MandatoryInsrep/Downloads/10192011NGHP.pdf

56


Another issue to consider is whether a policy whichAnother issue to consider is whether a policy whichexpired prior to December 5, 1980 can be liable toMedicare in a case where exposure does notterminate on that date and the settlement by virtueterminate on that date and the settlement by virtueof the policy does not cover subsequent exposure.

57


In such a case The CMS has indicated that it has a recovery In such a case. The CMS has indicated that it has a recovery claim against that settlement.

…let’s say a policy ended in 1979, but nonetheless that party d d t f th b fi i ’ l i t I was sued and part of the beneficiary’s complaint was I

continued to be exposed at this location through such and such.

If that insurer settles with them, we have a recovery claim against that settlement. It’s not based on when their legal liability ended for the particular exposure that’s claimed our recovery claim is looking to what was claimed or released… .recovery claim is looking to what was claimed or released… .

See http://www.cms.gov/MandatoryInsrep/Downloads/10192011NGHP.pdf

58


The claimant was exposed to The claimant was exposed to a toxic substance in his house. He moved on 12/4/1980. The claimant did not return to the house Exposure ended house. Exposure ended before 12/5/1980.

The claimant was exposed to The claimant was exposed to a toxic substance in his house. He moved on 12/4/1980. The claimant makes monthly visits t th h b hi to the house because his mother continues to live in the house. Exposure did not end before 12/5/1980. before 12/5/1980.

59


The claimant was exposed to a The claimant was exposed to a toxic substance while he worked in Building A. He was transferred to Building B on 12/4/1980, and did

t t t B ildi A E not return to Building A. Exposure ended before 12/5/1980.

Th l i t d t The claimant was exposed to a toxic substance while he worked in Building A. He was transferred to Building B on 12/4/1980, but g / / ,routinely goes to Building A for meetings. Exposure did not end before 12/5/1980.

60


The claimant had a defective implant removed on The claimant had a defective implant removed on 12/4/1980. The implant had not ruptured. Exposure ended before 12/5/1980.

The claimant had a defective implant that was never removed Exposure did not end before 12/5/1980removed. Exposure did not end before 12/5/1980.

61

CMS UPDATESS E C T I O N 1 1 1 R E P O R T I N G

CMS UPDATES62S E C T I O N 1 1 1 R E P O R T I N G 62

SECTION 111 REPORTINGSECTION 111 REPORTING

Section 111 of the Medicare Medicaid and SCHIPSection 111 of the Medicare, Medicaid and SCHIPExtension Act of 2007 (MMSEA Section)

Adds mandatory reporting requirements with respectto Medicare beneficiaries who have coverage undergroup health plan arrangements as well as forgroup health plan arrangements as well as forMedicare beneficiaries who receive settlements,judgments, awards or other payment from liabilityinsurance, no-fault insurance, or workers’compensation.

63


The administrator of any liability insurance plan mustThe administrator of any liability insurance plan mustreport money paid pursuant to any settlement,judgment, award or other payment. 42 USC1395y(b)(8)(F).

Liability insurance is defined as coverage thatLiability insurance is defined as coverage thatindemnifies or pays on behalf of the policyholder orself-insured entity against clams of negligence,inappropriate action, or inaction which results in injuryor illness to an individual or damage to property.

64


A primary plan and an entity that receives paymentA primary plan, and an entity that receives paymentfrom a primary plan, shall reimburse [Medicare] forany payments made … if it is demonstrated that suchprimary plan has or had a responsibility to makepayment …. A primary plan’s responsibility for suchpayment may be demonstrated by a judgment, apayment may be demonstrated by a judgment, apayment conditioned upon the recipient'scompromise, waiver or release …

42 USC Sec. 1395 y(b)(2)(A)(ii)

65


The CMS has a right of action to recover its paymentsThe CMS has a right of action to recover its paymentsfrom any entity, including a beneficiary, provider,supplier, physician, attorney, State agency or privateinsurer that has received a primary paymentinsurer that has received a primary payment.

42 CFR Sec 411 24(g)42 CFR Sec. 411.24(g)

66


If Medicare is not reimbursed as required byIf Medicare is not reimbursed as required byparagraph (h) of this section, the primary payer mustreimburse Medicare even though it has alreadyreimbursed the beneficiary or other partyreimbursed the beneficiary or other party.

42 CFR Sec 411 24(i)42 CFR Sec. 411.24(i)

67


The United States can collect double damages andThe United States can collect double damages andattorneys fees against any entity not paying under thenew statute.

Furthermore,

An applicable plan that fails to comply with theMedicare reporting requirements is subject to a civilmoney penalty of $1 000 for each day ofmoney penalty of $1,000 for each day ofnoncompliance with respect to each claimant. 42USC Sec. 1395y(b)(8)(E)(i)

68


Implementation dates for the new law were originallyImplementation dates for the new law were originallyJanuary 1, 2009 for group health plans to register andJuly 1, 2009 for liability insurers to register.

Insurers originally were required to report all claimswith settlement dates on or after October 1 2011with settlement dates on or after October 1, 2011.

In certain cases where an insurer has ongoingIn certain cases where an insurer has ongoingresponsibility for medical claims, claims arising afterJanuary 1, 2010 must be reported.

69


The date of a Settlement is the date of the paymentThe date of a Settlement is the date of the paymentobligation was established.

It may be but not always is the check date or paymentdate, it is the date the obligation is signed, if there’s awritten agreement, unless court approval is required. Ifg pp qcourt approval is required it is the later of the date theobligation is signed or the date of court approval. If thereis no written agreement it is the date the payment, or theg p y ,first payment if there will be multiple payments is issued.

•See http://www.cms.gov/MandatoryInsRep/Downloads/March11NGHPTranscript.pdf, pg. 15.See http://www.cms.gov/MandatoryInsRep/Downloads/March11NGHPTranscript.pdf, pg. 15.

70


On September 30 2011 On September 30, 2011, One day before the new reporting requirements were set to go into effect, the CMS issued a

Revised Implementation pTimeline

71


The reporting date for Settlement Payments isThe reporting date for Settlement Payments isdetermined by the amount of the settlement.

Starting on October 1, 2011, all settlements over$100,000 must be reported.

Starting on April 1, 2012, all settlements over $50,000must be reported.

Starting on July 1, 2012, all settlements over $25,000must be reported.

72


Starting on October 1, 2012, all settlements over the “minimum Starting on October 1, 2012, all settlements over the minimum threshold” must be reported.

The minimum thresholds are as follows:

Until December 31, 2012, settlements of under $5,000 are exemptfrom reporting.

Between January 1, 2013 and December 31, 2013, settlements ofunder $2,000 are exempt from reporting.

Between January 1, 2014 and December 31, 2014, settlements ofunder $600 are exempt from reporting.

After Jan ar 1 2015 all settlements m st be reportedAfter January 1, 2015, all settlements must be reported.

73


Medicare beneficiaries who receive a liabilityMedicare beneficiaries who receive a liabilitysettlement, judgment, award or other payment havean obligation to refund associated conditionalpayments within 60 days of receipt of such settlement,judgment, award, or other payment.

If Medicare is not reimbursed by the beneficiary,payment becomes the responsibility of the primarypayer.

74

CMS UPDATESA D D I T I O N A L C M S A N N O U N C E M E N T S

CMS UPDATES75A D D I T I O N A L C M S A N N O U N C E M E N T S 75

ADDITIONAL CMS ANNOUNCEMENTSADDITIONAL CMS ANNOUNCEMENTS

The $300 Threshold

Under pressure from severalsources, Medicare has

irelented and announced itis not financially viable forthe government to seekgrecovery of settlements of$300 and under.

76


If the following criteria are met, MSPRC will not recover against aIf the following criteria are met, MSPRC will not recover against asettlement, judgment, award or other payment.

(1) The recovery is related to a trauma-based incident (not ai l i i ti i l t ti )case involving ingestion, implantation or exposure)

(2) The recovery is $300 or less.

(3) The beneficiary has not received and does not expect toreceive any other settlements, judgments, awards, orother payments related to the incident.

(4) Medicare has not previously issued a recovery demandletter.

77


The $300 threshold does not apply where an insurer is The $300 threshold does not apply where an insurer is paying or has paid medical bills directly or on an ongoing basis.

Keep in mind that the $300 threshold is a recovery threshold rather than a reporting threshold threshold rather than a reporting threshold.

See: http://www.msprc.info/forms/300%20Threshold%20on%20Liability%20Settlements.pdf

78


The Fixed Percentage OptionThe Fixed Percentage Option

Starting on November 7, 2011 theStarting on November 7, 2011 theCMS has announced a FixedPercentage Option which givesbeneficiaries who have a settled abeneficiaries who have a settled acases for $5,000 or less the ability toresolve Medicare’s claim by payingMedicare 25% of the settlementinstead of using the recoveryprocess.process.

79


For the Fixed Percentage Option to apply the For the Fixed Percentage Option to apply, the following criteria must be met.

(1) The liability insurance (including self-insurance settlement is for a physical trauma based injury. This means that it does not relate to ingestion, exposure, or medical implant.

(2) The total liability insurance settlement (2) The total liability insurance settlement, judgment, award or other payment is $5000 or less.

80


For the Fixed Percentage Option to apply the For the Fixed Percentage Option to apply, the following criteria must be met.

(3) The beneficiary elects the option within the required timeframe and Medicare has not issued a demand letter or other request for reimbursement related to the incident.

(4) The beneficiary has not received and does not (4) The beneficiary has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident to the incident.

81


For the Fixed Percentage Option to apply the For the Fixed Percentage Option to apply, the request must be submitted before or at the same time Notice of Settlement documentation is submitted.

If the request is made in response to a Conditional If the request is made in response to a Conditional Payment Notice, it must be received by the response due date referenced in the CPN.

82


If the Fixed Percentage Option is elected and If the Fixed Percentage Option is elected and approved, the beneficiary may not seek an appeal or waiver of recovery.

See http://www.msprc.info/forms/Fixed%20Percentage%20Option%20Infor

ti dfmation.pdf

83


MSPRC Self ServiceMSPRC Self Service

On September 30, 2011 On September 30, 2011 the CMS announced a Self-Service Information feature which gives feature which gives callers the ability to get the most up-to-date Demand and Conditional Payment amounts.

84


In order to access the Self Service Functions use:In order to access the Self-Service Functions use:

• The Case Identification numberThe Case Identification number• The beneficiary’s date of birth• The first five letters of the beneficiary’s last name.• The last four digits of the beneficiary’s Social

Security Number.

85

CMS UPDATES

JEREMY BURTONJEREMY BURTONWILL IAMS MONTGOMERY & JOHN LTD

[email protected](312) 443-3286

86

personal injury claims settlement: new cms...

Documents