The Medicare Secondary Payer Act:

Transcription

1 The Medicare Secondary Payer Act: What It Is and Why It Is Important to Your Professional Liability Claim Kevin Fisher Assistant Vice President, Employment PracGces & Governmental Claims Allied World NaGonal Assurance Company P. David Brannon Shareholder Carr Allison Medicare Secondary Payer Act v Medicare Secondary Payer Act (MSPA) modernized in 1980 v Medicare was given the right to recover condi?onal payments made to Medicare beneficiaries ( condi?onal payment claims or CPC ) based on its status as a secondary payer the payment source of last resort when any other en?ty could possibly be considered a primary payer v Statute applies to workers compensa?on, automobile or liability insurance, no- fault insurance and self- insurer v A torjeasor s carrier or group health plan becomes the primary payer - responsible to pay before Medicare v Two Significant Amendments 2003 and 2007 Ø The 2007 Amendments contained significant changes and place new obliga?ons on insurers and self- insurers 2 1

2 Two Separate Issues v Repor?ng Ø Requirements under Sec?on 111 ü Responsible Repor?ng En??es ( RREs ) ü Determine whether a claimant is en?tled to Medicare benefits ü Electronically submit claim data through the Coordina?on of Benefits Secure Website ü Repor?ng is done quarterly v Payment to Medicare Ø Under exis?ng MSP provisions, Medicare can recover expenses made on behalf of a beneficiary from anyone who receives the sewlement (plain?ff or plain?ffs counsel) or pays the sewlement (sewling defendants and/ or their insurers) 3 Medicare s Right to Recover v Federal law takes precedence over any state law or private contract v Medicare s right to recover is not limited by a state law or a sewlement agreement between the par?es v Medicare s right to recover is always paramount to any other en?ty s or individual s rights 4 2

3 Failure to Comply v If and RRE fails to report a claim, it can be subject to a fine up to $1, per day, per claim v If Medicare is not reimbursed for its Condi?onal Payment Claim ( CPC ), it may assert a direct cause of ac?on for double damages, plus interest, against: Ø Primary payer Ø Beneficiary Ø Provider Ø Supplier Ø Physician Ø AWorney Ø State Agency Ø Private insurer that has received a primary payment ü Medicare's prac?ce manual suggests it will first pursue reimbursement from the beneficiary, but how and when Medicare will switch to pursue recovery from the primary payer is not clear 5 What Must Be Reported? v Repor?ng Data Elements Ø Informa?on on Claimant ü The Big 5 - Name, Gender, Birth Date, Health Insurance Claim Number (HICN) and Social Security Number (if known) Ø Informa?on about the injury ü Date of Incident and Venue ü ICD- 9- CM (medical diagnos?c codes) and E Codes (external causes of injury) Ø Informa?on about insurer and aworneys Ø Total amount of payment to claimant (even if you are splifng the payment with another insurer or en?ty) 6 3

4 CMS Model Form and Alert v Alert: Some NGHP repor?ng en??es have advised the Centers for Medicare & Medicaid Services (CMS) that they are having difficul?es in obtaining either the HICN or SSN from some claimants. The CMS is providing the awached model language (with a picture of a Medicare card), to assist repor?ng en??es in obtaining this informa?on and being compliant with Sec?on 111. Ø hwp:// ALERTComplianceHICNSSNsNGHP pdf v Model Form: Ø hwp:// NGHHICNSSNNGHPForm.pdf 7 8 4

5 9 Safe Harbor? v Per the August 24, 2009 CMS Alert: Ø If the claimant completes sec?on III of the model form acknowledging his refusal to provide Social Security/ Medicare Iden?fica?on numbers, CMS will consider the repor?ng en?ty to be in compliance with its Sec?on 111 requirements ü Note: This safe harbor does not ex?nguish poten?al liability for non- payment of Medicare liens down the road; it relates only to repor?ng, not repayment v BUT Ø Alert also provides that the process does not provide a safe harbor to any repor?ng en?ty awemp?ng to use it to avoid repor?ng MSP data about an individual known to the repor?ng en?ty to be a Medicare beneficiary ü Hard for our clients to argue that they had no knowledge that a claimant was a Medicare beneficiary 10 5

6 CMS Query v The repor?ng system allows the RRE to send an electronic query to CMS in order to determine whether a claimant is a Medicare beneficiary v The query process s?ll requires the RRE to input the HICN or SSN, name, date of birth and gender of the claimant 11 Stay Ac?ve During Course of the Claim v Determine en?tlement to Medicare early in the claim Ø COBC electronic query process v Know that en?tlement to Medicare can change and monitor during the course of li?ga?on up to claim resolu?on v Obtain the Big 5 and for ini?al query and necessary demographic informa?on in the event repor?ng is required v Ensure Plain?ff s counsel is apprised of the poten?al for repor?ng and cooperates with informa?on sharing 12 6

7 Which Claims Get Reported? v In general, RREs must report a sewlement, judgment, award or other payment with or to Medicare beneficiaries that are finalized aoer October 1, 2011, and liability is released for medical expenses. Ø Repor?ng du?es arise when the sewlement agreement is signed or approved by a court (if necessary). v The ongoing responsibility to pay Medicare is retroac?ve to July 1, 2009 v Are medicals being claimed? Are medicals being released? v Liability is irrelevant look to the terms of the resolu?on. v There are stair- stepped thresholds for repor?ng obliga?ons. 13 Medicare s Recovery of CPCs v When any case with a Medicare beneficiary sewles, Medicare must be reimbursed for any condi?onal payment it has made v Therefore, prior to se,lement CPC research should be conducted for ALL injuries included in sewlement. v Obtaining CPC informa?on can take some?me and is not part of the repor?ng process. v May dispute CPC in some cases if treatment is undisputedly, totally unrelated. However, as a prac?cal mawer, if codes used by the HCP appear to relate to the injury in ques?on, there may be less chance of a successful challenge. v CPC demand lewer will not be issued un?l Medicare receives copy of approved sewlement documents v Payment is due only at this?me 14 7

8 Thresholds for Total Payment of Claims (TPOC) v Thresholds applicable based on dates resolved Ø TPOC over $100,000 occurring on or aoer October 1, 2011 must be reported during the quarter beginning January 1, 2012 Ø TPOC between $50,000- $100,000 occurring on or aoer April 1, 2012 must be reported during the quarter beginning July 1, 2012 Ø TPOC between $25,000- $50,000 occurring on or aoer July 1, 2012 must be reported during the quarter beginning October 1, 2012 Ø All TPOCs between $5,000- $25,000 occurring on or aoer October 1, 2012 must be reported during the quarter beginning January 1, 2013 v Examples: Ø If you sewle a TPOC for $115,000 before October 1, 2011, you are not required to report that claim. You may voluntarily report, but mandatory repor?ng (and the penal?es associated therewith) would not apply un?l you sewled that $115,000 claim on or aoer October 1, Ø If you sewle a TPOC for $115,000 on or aoer October 1, 2011, mandatory repor?ng occurs no later than the submission window assigned during the first quarter of Penal?es can be assessed if the RRE sewles a TPOC of $100,000 or more, on or aoer October 1, 2011, and the RRE does not report under Sec?on 111 during the repor?ng period in the first quarter of Professional Liability Scenarios v An employee brings a claim alleging sexual harassment and wrongful termina?on. Prior to filing suit, the employee seeks treatment from a mental health professional for problems that allegedly resulted from the harassment and termina?on. Is the claim reportable? Ø Impact on reportability if the employee had been receiving treatment prior to the alleged harassment? 16 8

9 Professional Liability Scenarios v A lawyer misses the statute of limita?ons on a personal injury lawsuit. The client files a legal malprac?ce claim against the lawyer and seeks the full measure of damages she would have received but for the missed deadline. Plain?ff was not on Medicare at the?me of the injury but the injury involved an uncontroverted trauma?c brain injury and went on Medicare following the incident. Is the claim reportable? Ø Impact if Plain?ff was clearly brain- injured and unable to work but was not accepted for Medicare un?l one month following the sewlement 17 Professional Liability Scenarios v A real estate broker serving as a property manager fails to repair a known latent defect and a tenant is injured. The tenant is already a Medicare recipient. The tenant sues for personal injuries alleging professional negligence. Medicare pays all of the medical bills, and during the same?me period, pays for mul?ple other medical procedures arguably unrelated to the alleged injuries. The tenant also sues for economic damages because he had to move into a hotel while the defec?ve condi?on was repaired. Plain?ff sues and the professional liability carrier defends under a reserva?on of rights alleging that personal injuries and medical bills are not damages under the policy. The carrier sewles the case for a significantly compromised sum, and less than the total amount Plain?ff claimed in medical expenses. Ø Is the claim reportable? Ø What is reportable and what can be recovered by Medicare? 18 9

10 Poten?al for Specialty Lines Excep?on v During the April 24, 2012 Town Hall Mee?ng Discussion there was no men?on of a Specialty Lines Excep?on for specialty lines claims, such as EPL, D&O, et al. v Such claims typically contain broad releases covering poten?al personal injury/emo?onal injury even in the absence of allega?ons in the ini?al claim or evidence of same during suit. v It was an?cipated CMS may make it clear that releases for such claims that contain broad language, in the absence of actual claims or evidence of such damage, can be exempted from repor?ng. 19 SeWling the Case v Again, compliance with Sec?on 111 does not eliminate poten?al liability to Medicare for repayment of benefits v How do we protect our clients and ourselves? v SeWlement agreements Ø If the claimant will likely need future treatment related to the alleged injuries, the par?es might consider designa?ng an adequate sum in the Release to cover future medical expenses Ø Seek indemnifica?on agreement from claimant 20 10

11 SeWling the Case and Payment Methods: Protec?ng Medicare and Protec?ng Ourselves Various SeWlement Payment Op?ons: v Op?on A - Ø Obtain signed release and hold the money pending receipt of final demand Ø Pay the final demand and release the balance to Plain?ff v Op?on B Ø Agree with Plain?ff that funds will be held in trust pending receipt and payment of final payment demand Ø Obtain copies of claim sa?sfac?on documents (note these may be inconsistent and not?mely) Ø Allow early distribu?on of procurement costs only (aworney fees and costs) v Op?on C Ø Cut check for CPC to Medicare Ø Hold back release check for balance to plain?ff v Op?on D Ø Send en?re sewlement check to plain?ff and u?lize acceptable release language 21 Medicare Set- Asides v Medicare Set- aside (MSA) is money for future medical expenses related to a specific accident or injury v Neither MSPA nor any other legisla?on makes MSAs an absolute requirement in any case. v MSAs are the best and perhaps only way to show that Medicare s interests were adequately considered/protected at?me of sewlement v CMS recommends MSAs in workers compensa?on cases with Medicare beneficiaries when future medical benefits are closed v Liability cases are handled differently v There is no formal CMS review process in the liability arena as there is for worker s compensa?on v When the liability is large enough or other unusual facts exist within the case, the CMS Regional Office may review the sewlement and help make a determina?on on the amount to be available for future services. Regional offices have informal, ooen changing thresholds 11

12 Issues Regarding SeWling Future Medicals in Liability Claims v Vague statute leads to open ques?ons v CMS handout places an obliga?on on defense counsel and the insurer to determine whether a sewlement funds future medicals Ø If the sewlement funds future medicals ü No?fy opposing counsel ü Document the file showing no?fica?on v BoWom line is that you must protect Medicare s interest v Populate the release with language regarding no?ce and belief regarding future medicals 23 12