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Medicare Compliance in Workers’ Compensation and Liability Cases: Conditional Payment Claims, Mandatory Reporting and Me

Medicare Compliance in Workers’ Compensation and Liability Cases: Conditional Payment Claims, Mandatory Reporting and Medicare Set-asides. Joe Isbell Carr Allison 100 Vestavia Parkway Birmingham, AL 35216 www.carrallison.com. Medicare Secondary Payer Act. MSPA was enacted in 1980

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Medicare Compliance in Workers’ Compensation and Liability Cases: Conditional Payment Claims, Mandatory Reporting and Me

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  1. Medicare Compliance in Workers’ Compensation and Liability Cases:Conditional Payment Claims, Mandatory Reporting and Medicare Set-asides Joe Isbell Carr Allison 100 Vestavia Parkway Birmingham, AL 35216 www.carrallison.com

  2. Medicare Secondary Payer Act • MSPA was enacted in 1980 • Medicare is “secondary” payer when any other entity could possibly be considered a primary payer

  3. Conditional Payment Claims (CPCs) • Expenses paid by Medicare prior to thedateof settlement or judgment • Research CPCs prior to settlement • Report all injuries being settled, including disputed ones • Must resolve CPCs when case with Medicare beneficiary settles

  4. Possible Options for Repayment • Direct payment to Medicare by defendant • Put Medicare on the settlement check (not required by law) • Claimant responsible for repayment

  5. Amount CMS May Recover • CPCs reduced for procurement costs • Medicare may recover FULL amount of CPC up to total settlement amount even if injury or responsibility for injury is disputed

  6. Waiver/Reduction • May request on behalf of beneficiaries if financial need • Pre-settlement compromise may also be an option

  7. Interest and Penalties Under the MSPA • Accrue if Medicare is not repaid within 60 days of formal demand • Double damages if Medicare sues to recover

  8. Risk Mitigation Strategies - CPCs • Maintain accurate, current information about injuries • Carefully report injuries • If using an agent for Section 111 reporting, review their plan to ensure accuracy of reported codes

  9. Section 111 Reporting Requirements • Will assist Medicare with recovery of CPCs and to keep Medicare from paying when primary payer exists. • Duty to “notify” Medicare has existed since 1980. Section 111 imposes a penalty of $1,000 per day per claim for failing to do so.

  10. Section 111 Reporting Requirements (Cont.) • Electronic transmission of data related to certain settlements, judgments, awards and other payments to Medicare

  11. Claims That Must be Reported:TPOC Claims • TPOC (Total Payment Obligation to Claimant) • Claims that are “resolved (or partially resolved) through a settlement, judgment, award or other payment” • regardless of whether there is admission or determination of responsibility • that involve a Medicare beneficiary and • are settled on or afterOctober 1, 2011 • Must be reported beginning the first quarter of 2012.

  12. TPOC Exceptions To Reporting • The following do not have to be reported: • TPOC amounts of $5,000.00 or less through January 1, 2013 • TPOC amounts of $2,000.00 or less from January 1, 2013 - December 31, 2013 • TPOC amounts of $600.00 or less from January 1, 2014 - December 31, 2014 • After December 31, 2014, all TPOC claims must be reported • TPOC claims with an ORM aspect must still be reported – no exceptions

  13. Claims That Must be Reported:ORM Claims • Claims for which the RRE still had/has responsibility for ongoing medical payments as of January 1, 2010 • such as open medicals in wc claims (regardless of date of accident) • Must be reported beginning first quarter of 2011

  14. ORM Exceptions to Reporting • ORM files that meet ALL of the following criteria do not have to be reported through December 31, 2012: • medicals only • lost time of no more than 7 days • all payments made directly to the provider • total payment does not exceed $750.00

  15. ORM Exceptions to Reporting (Cont.) • If a claim is actively closed or removed from current claims inventory prior to January 1, 2010, the RRE is not required to report that claim unless the claim is later reopened • Does not include claims which remain open even if no medicals have been paid for a substantial period of time.

  16. Claims That Do NOT Have To Be Reported • Claims in which: • a judgment or defense verdict is rendered concluding that no money is owed • no claim was made for medical expenses, i.e., liability case with property damage only with no release of medicals • Be careful with general releases! • there is no settlement, judgment, award or other payment (including assumption of ORM) • The only payment was a one time payment for a defense evaluation from a provider or physician

  17. Medicare Set-asides (MSAs) • Money for future medical expenses Medicare would otherwise pay

  18. Are MSAs Required? • No • However, the burden of paying future medical expenses may not be shifted from a primary payer to Medicare

  19. Are MSAs Required? (Cont.) • CMS recommends MSAs in certain cases

  20. CMS Review Thresholds in WC Cases • CLASS I • Medicare beneficiary AND • total settlement exceeds $25,000 • CLASS II • Total settlement exceeds $250,000 AND • claimant has a “reasonable expectation” of becoming a Medicare beneficiary within 30 months

  21. Reasonable Expectation of Entitlement • If the claimant: • Is currently receiving Social Security Disability (SSD) benefits • Has applied for SSD benefits • Was denied SSD benefits, but is appealing denial • Is 62.5 years old or older • Has End Stage Renal disease

  22. Determining Total Settlement Amount • Money paid at time of settlement for: • Future medical, indemnity and/or vocational benefits • Claimant’s attorney’s fees • Court costs and filing fees • Medicare conditional payment claim, if any • Money paid in prior partial settlement, if any, including third party liability settlements • If using structured settlement, must include uncommuted expected lifetime payout

  23. Cases Below CMS Review Thresholds Medicare Beneficiaries

  24. Cases Below CMS Review ThresholdsNon-Medicare Beneficiaries

  25. CMS Submission Process • Start early! • Allocation reports should be less than six months old

  26. Risk Mitigation Strategies for MSAs • Physician involvement • Claimant’s attorney involvement

  27. Impact Of Disputes And Defenses • Dispute among treating physicians • Legal defenses/judicial determinations

  28. Lapse In Claimant’s Treatment • If last treatment was long ago, CMS may require records from other physician(s) who have treated the claimant more recently, including family practitioner

  29. Prescription Medications • CMS uses average wholesale prices (AWP) • CMS includes medications recommended in records and actual prescriptions the claimant is receiving

  30. Zero MSAs • May be available if: • Completely denied claim • NO money was paid for medical treatment or indemnity

  31. No Appeal of CMS Determinations • No formal appeal process if CMS rejects proposed MSA amount • RO will correct obvious mistakes, such as math errors

  32. WC and Third Party Cases • MSAs are appropriate in WC/third party cases if the WC carrier or employer is being relieved of obligation to pay future medical expenses • Same process for approval as WC cases

  33. MSAs • Are MSAs required in liability case? • NO • MSAs are not required by law in any case

  34. WC vs. Liability Cases • Difference between WC and liability cases

  35. BUT . . .

  36. Guidance From CMS • One RO has indicated that MSAs are also “preferred” in liability cases • No formal process for review of liability MSAs like there is for WC, but the “underlying statutory obligation is the same” (Town Hall Transcript) • Law that requires protection for Medicare when case with Medicare beneficiary settles is the exact same for WC and liability

  37. Guidance From CMS (Cont.) • When “future medicals are a consideration in arriving at the settlement . . . appropriate arrangements should be made for . . . exhaustion of the settlement before Medicare is billed for related services.” (Town Hall Transcript)

  38. When to Use LMSAs • Claimant is a Medicare beneficiary; • Future medical treatment likely needed; • Settlement because of physical injuries/medical claims; and • Settlement amount more than nominal

  39. Determining Amount to Set-aside • Allocation report may be used OR • The parties may jointly designate reasonable amount for future medical expenses OR • Include statement in Release that money being paid is intended to cover future medical expenses

  40. Liability Allocation Reports • May be reduced to take defenses into account!

  41. When should allocation reports be obtained in liability cases?

  42. When should allocation reports not be obtained?

  43. CMS Review and Approval of MSAs • Some ROs will review and approve LMSAs, although not required • Will estop Medicare from later claiming that its interests were not protected

  44. Funding Medicare Set-aside Accounts • Lump sum • Annuity

  45. Administration • Self-administration • Custodian Administration

  46. Questions?

  47. Joseph P. Isbell Carr Allison 100 Vestavia Parkway Birmingham, Alabama 35216 Phone: (205) 949-2931 Fax: (205) 822-2057 jisbell@carrallison.com

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