MEDICARE, MEDICAID & SCHIP EXTENSION ACT OF 2007

PRESENTED BY:Tim DohertySRS Specialty Risk ServicesPO Box 5340Manchester, New Hampshire 03108(603) 222-9318

Elizabeth Hurley, Esq.GETMAN,SCHULTHESS & STEERE, P.A.Three Executive Park Drive Suite 9Bedford, New Hampshire 03101(603) 634-43001

MEDICARE,MEDICAID & SCHIP EXTENSION ACT OF 2007 (MMSEA)

Legislative Intent:Mandatory reporting requirements to aid in enforcement of Medicare Secondary Payer Act2HISTORY OF MSPEnacted 1965Clarified Secondary vs. Primary Payer StatusWorkers Compensation Cases W/C Primary Payer3HISTORY OF MSPAmended in 1980 to Include Liability PoliciesMedicare Secondary to Liability Insurance Road Map for MMSEA Section 111Identification: Did the Plaintiff receive Medicare benefits?Road Map for MMSEA Section 111Notification: Medicare we have a claim

Road Map for MMSEA Section 111Reimbursement: How much does Medicare get paid back?

Road Map for MMSEA Section 111Reporting: We have settlement or judgment now what?

MMSEA Applies to Primary PayersPrimary Payers any entity that is or was required or responsible to make payment with respect to an item or service (or any portion thereof) under a primary plan.MMSEA Applies to Primary PayersPrimary Payers Responsibility:JudgmentPayment Pursuant to a CompromiseSettlementAwardContractual ObligationWho Must Contact Medicare?Primary Payer = Responsible ReportingEntity (RRE)Liability Insurance PlanNo Fault InsurerWorkers Compensation PlanSelf-InsurersThird-Party AdministratorsGroup Health Plans

IDENTIFICATION

CMS QUERY SYSTEMMethod by which RREs can determine claimants Medicare entitlement statusRRE submits claimants name, SSN, date of birth & genderConfirms entitlement status only not dates or basis of entitlementWritten verification of entitlement status providedSubmission of query alone does not satisfy reporting requirements

12http://www.cms.gov/MandatoryInsRep/Downloads/NGHPregistrationAlert.pdf

Direct Data Entry option for occasional reporters, The registration and outline fully explain this reporting option, IDENTIFICATIONHOW TO ACQUIRE THE NECESSARY INFORMATION

AUTHORIZATION FOR RELEASE OF RECORDSDISCOVERY REQUESTS

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Notification15Send release as soon as claim is made IdentificationMail Consent to Release to MSPRC at:MSPRC Auto/Liability[check address as it changes]P.O. Box 33828Detroit, MI 48232-0998Fax: (734) 957-0998NotificationIdentificationSAMPLE INTERROGATORIES

1.Please provide the following information about yourself:(a)Date of birth;(b)Social Security Number or your health insurance claim number (HICN); (c)Gender.

2. Are you currently a Medicare beneficiary? If so, Please identify any and all amounts that have been paid by Medicare in satisfaction of medical expenses from any healthcare provider involved in the treatment of your injuries you are claiming in this lawsuit. Please outline any communications that you have had with Medicare and specifically any Medicare secondary payer contractor regarding their lien.

3.If you are not currently a Medicare beneficiary, do you anticipate becoming one during the pendency of this litigation either due to your age or applying for Social Security Benefits? If so, please be sure to supplement your discovery responses accordingly.

The information outlined in the above interrogatories is necessary so that the defendant or any insurer ofthe defendant can comply with the Medicare regulations. See 42 U.S.C. 1395(y)(b)(8) otherwise knownas Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA), Section 111.

18IdentificationSAMPLE INTERROGATORIES

WRONGFUL DEATH CASES:1. Please provide the following information about the decedent: (a)Date of birth; (b)Social Security Number or their health insurance claim number (HICN); (c) Gender.

2.Was your decedent a Medicare beneficiary? If so, please identify any and all amounts paid by Medicare in satisfaction of medical expenses for any healthcare provider involved in the treatment of your decedent for which are being claimed in conjunction with this lawsuit.

The information outlined in the above interrogatories is necessary so thatthe defendant or any insurer of the defendant can comply with the Medicareregulations. See 42 U.S.C. 1395(y)(b)(8) otherwise known as Medicare, Medicaidand SCHIP Extension Act of 2007 (MMSEA), Section 111.

19IdentificationSample Request for Admissions:

REQUEST FOR ADMISSION NO. 1: Admit that on ____________[here insert the date of the accident in question] you were not a Medicare beneficiary and not entitled to Medicare.ADMIT OR DENY:

REQUEST FOR ADMISSION NO. 2: Admit that since___________ [here insert the date of the accident in question] you have not becomea Medicare beneficiary and are not presently entitled to receive benefitsfrom Medicare.ADMIT OR DENY:

IdentificationSAMPLE REQUEST FOR PRODUCTION

Please produce copies of any and all medical expenses or bills that youare claiming in this case with an outline of the specific amounts that havebeen paid by Medicare. Please also produce any conditional paymentsummary that you have been provided through Medicare or the Medicaresecondary payer contractor. If you do not have this document, pleasecomplete and return the attached CMS/MSPRC Consent to ReleaseAuthorization.

21CMS QUERY SYSTEM

RREs can Query 1 x MonthEach Query can have Multiple ClaimantsIdentification

IdentificationCMS QUERY SYSTEM Pros & Cons

Insurer (RRE) no longer has to rely on opposing counsel to determine claimant/plaintiffs Medicare status Insurer (RRE) is now directly responsible for determining Medicare eligibility status by submitting inquiry to CMS

23NotificationMedicares Coordination of Benefits Contractor (COBC) 1-800-999-1118Date of BirthHealth Insurance Claim Number (HICN)Type of Insurance (liability, no-fault, workers comp)Date of IncidentPlaintiffs Full Name, Address and Telephone No.Opposing Counsels Name, Address and Telephone No.RREs address, Telephone No., Agent and Policy No.List of all Claims using ICD-9 categoriesNotificationCOBC opens a potential recovery case and refers matter to second contractor the MSP Recovery Contractor (MSPRC)

MSPRC issues a MSP Rights and Responsibilities Letter

New Rules: MSPRC might not work directly with RREs or their counsel

ReimbursementHow Much Does Medicare Get Paid Back?

Medicare sends conditional payment letter from CMS/MSPRCThis is Initial DemandReimbursementNEGOTOATING THE LIEN:Write letter to plaintiffs counsel to send to CMS re: why treatment is not related.Provide IME Reports.Outline pre-existing conditions with copies of selected key records.ReimbursementNEGOTIATING THE LIEN:Procurement Cost42 C.F.R 411.37 provides for the reduction based on procurement costs or plaintiffs attorney fees and costs.costs are incurred because the claim is disputed; andcosts are borne by the party against which CMS seeks to recover.

ReimbursementAn Example Calculation of a Recovery Situation with Represented Medicare Claimant in a Liability Case

Facts: Settlement of $20,000.00. Attorneys contingency arrangement of 30% with actual cost of $500. Medicare is asserting a lien of $5,000.00Attorneys fees are $6,000.00 ($20,000 x 30%) plus $500.00 provides for total Cost of Procurement of $6,500.00Reimbursement$6,500.00 divided by $20,000.00 = .325, which is the proportional share of the fees and costs.

.325 x $5,000.00 Medicare Lien = $1,625.00, which is Medicares proportional amount of procurement costs.

Subtract $1,625.00 from Medicares original lien amount of $5,000.00; which equals $3,375.00.

Medicares recovery is $3,375.00 from the settlement proceeds of $20,000.00ReimbursementNEGOTIATING THE LIEN:Hardship Exceptions waiver of lien 1870(c)The plaintiff has the opportunity to apply fora hardship waiver. Medicare can issue a full or partial waiver, or deny the waiver completelyReimbursementHardship Waiver50.6.5.1 Examples of Financial Hardship (Rev. 1, 10-01-03)

The demonstrated beneficiary income and resources are at a poverty level standard, such as being in an SSI pay status.

Unforeseen severe financial circumstance existing at the time Medicares claim comes into existence so long as and no other financial resources to meet this legal obligation. Reimbursement50.6.5.2 Recovery Would Be Against Equity and Good Conscience (Rev. 1, 10-01-03)

The degree to which the beneficiary contributed to causing the overpayment;

ReimbursementThe degree to which Medicare and/or its contractors contributed to causing the overpayment;

ReimbursementThe degree to which recovery or adjustment would cause undue hardship for the beneficiary;

ReimbursementWhether the beneficiary would be unjustly enriched by a waiver or adjustment of recovery; and

ReimbursementWhether the beneficiary changed their position to their material detriment as a result of receiving the overpayment or as a result of relying on erroneous information supplied to the beneficiary by Medicare.

Hadden v. U.S.Slip Copy, 2009 WL 2423114W.D.Ky.,2009

Plaintiff filed suit to have lien amount reduced. Suit Dismissed.ReimbursementFinal Demand Letter

This is the actual amount of the lien

We have determined that you are required to repay the Medicare Program $XXX.xx.

ReimbursementFunds Distribution Strategies

Await final conditional payment statement, then issue a separate check directly to Medicare, with the balance to the plaintiff. Hold the funds in trust until the Medicare issue can be resolved40ReimbursementAlmost Final Letter will State:

We have received check number XXXX in the amount of $XXX.xx

ReimbursementFinal Letter will State:

The amount has been applied to outstanding debt due Medicare. The principal amount of the debt and interest (if applicable) has been reduced to zero and our file is being closed.

ReimbursementMEDICARE SET-ASIDE (MSA) ALLOCATION

May be needed when settling future medical benefits for individuals who are or will become entitled to Medicare Applies when there is foreseeable, ongoing medical treatment related to settled claimFuture Medicare entitlement cannot be waived by claimantNot needed if medicals are left open, i.e. workers comp.

44ReimbursementCALCULATING AMOUNT OF MSAAmount based on reasonable projection of future medical costs related to injury that would otherwise be covered by MedicareBased on amount that Medicare would ordinarily pay (considering deductibles & co-pays)Based on life expectancy & rated age of beneficiary

45ReimbursementMSA OPTIONS

Self-Administered AccountsFor small amountsPlaintiff administers following same accounting rules as a professional administratorCustodial AccountsLarger AmountsAdministered by a professional custodian for a fee Medicare Set Aside TrustPlaintiff receiving means-tested public benefits (SSDI, Food Stamps, Veterans Benefits or Section 8 Housing. A formal trust with a trusteePooled TrustPlaintiff receives means-tested public benefitsOperated by a non-profitPools with other funds for investment purposes. Structured Settlements

46ReimbursementMedicare Set-Asides & Future MedicalsPayment of future medicals and approval of Medicare Set-Asides (MSA) are required for workers comp claims: Total Payment Obligation to Claimant (TPOC)

Section 111 does not specifically require non-WC liability carriers to provide for ORMs or establish MSAs

Medicare expects attorneys to disclose future medicals to CMS and may require MSAs in future and can seek claw backsProposed Release / Settlement Agreement Languageacknowledges and stipulates that claimant has consulted with physician and avows that there are no expected future medical expenses associated with this accident.

48Reimbursementparties have made reasonable efforts to recognize and protect the interests of Medicare pertaining to its conditional payments and possible future payments of medical expenses

Reimbursementagrees to indemnify, defend and hold defendant, carrier and their attorneys harmless from any future medical, Social Security, Medicaid, Medicare or contract government health insurance fund claims

Reimbursementagree that the amount of the final Medicare lien as stated in the Final Demand Letter, which shall be provided to the defense, will be paid in full out of the proceeds of this settlement and the remainder of the settlement funds paid in accordance with the instructions of counsel.

ReimbursementThe defense shall then be provided with a copy of Medicares Final Discharge Letter

ReimbursementProposed Release LanguageSIMPLE MSASame language as above PLUS:

- avows that claimant has consulted with her health care providers relative to the need for future care and treatment for injuries related to the incident and the expected costs for same

53Reimbursement- avows that he will establish a self-administered Medicare Set-Aside account funded by proceeds from this settlement in the amount of $x,xxx, which is a reasonable amount for payment of certain future medical expenses related to the incident.

Reimbursement- avows that this amount will be used exclusively for payments that Medicare might otherwise be called upon to pay in the absence of a Medicare Set-Aside.

Reimbursement- avows that the defendant and its carrier have relied in good faith on the representations of claimant and his counsel as to his agreement to honor the obligations herein and adhere to the provisions of The Medicare Secondary Payer Act, 42 U.S.C. sec. 1395y.

SUBSTANTIAL MSASame language as above PLUS:

Claimant will establish a dedicated account in which settlement funds in that amount shall be deposited;Claimant has attempted, through a Certified Medicare Set-Aside Consultant or otherwise, to seek review and approval of that amount and account, and to apprise the defense of any decision, or none, of Medicare regarding the Medicare Set-Aside plan set forth or referenced herein; Medicare Set-Aside Account will be funded by the defense

Reimbursement57The Medicare Set Aside Account must have restrictions in place such that withdrawals can only be made for purposes of medical care that would have otherwise been paid for by Medicare.

AND/OR

A strict accounting requirement must be in place in case of future action by Medicare.

ReimbursementReportingReporting When to Report

Section 111 Requires reporting ofSettlements, Judgments, Awards, or otherPayments by RREs

ReportingTriggering Event

Payment = Obligation to repay lien arises when payment to claimant has been made.

TPOC = Total Payment Obligations to ClaimantReportingDate Reporting Requirement Commenced

0ctober 1, 2010

ReportingTHRESHOLDS:

There are thresholds for Reporting General Liability Claims under Section 111 that impact when a settlement is required to be reported.

No need to Report if:

Less than $5,000.00 between January 1, 2011 and December 31, 2011Less than $2,000 between January 1, 2012 and December 31, 2012;Less than $600.00 between January 1, 2013 and December 31, 2013;

ReportingAfter January 1, 2014, EVERY payment made to a Medicare beneficiary concerning a general liability claim must be reported whether the payment is made as a result of settlement, judgment, or for any other reason whether a release is obtained or not.ReportingSection 111 of the Medicare, Medicaid & SCHIP Extension Act

These thresholds do not apply or otherwise relieve a RRE from any obligations under the Medicare Secondary Payer Act to protect Medicares interest.In other words..

Still Must Pay the Lien and Protect Medicare from paying for future related treatment.ReportingFinal Reporting

RRE must report using CMS website using Claim Input FileThis can only be done by the RREPenaltiesREIMBURSEMENT TO MEDICARE

Medicare must be reimbursed within 60 days of receipt of payment by Medicare beneficiaryIf a liability insurance settlement is made and Medicare is not reimbursed, the third party payer must reimburse Medicare even if it has already paid the beneficiary!Applies regardless of how amounts are designated in settlement (i.e. pain & suffering)

67PenaltiesCMS STATUTORY RIGHTS TO RECOVERY UNDER MSPInterest if not paid within 60 days of notification 42 U.S.C. 1395y(b)(2)(B)(ii)Double damages if US must bring action to recover against primary payers 42 U.S.C. 1395y(b)(2)(B)(iii)Subrogation rights 42 U.S.C. 1395y(b)(2)(B)(iv)68PenaltiesFines and Penalties Associated with Section III

Any entity which fails to comply with the reporting requirements mandated by 42 U.S.C. 1395y(b)(8), which is the codification of Section 111, is subject to a $1,000.00 a day fine, per claim, for noncompliance.PenaltiesPENALTIES FOR NONCOMPLIANCE Penalties for noncompliance with reporting requirements are $1,000 per day!!!

70PenaltiesU.S. v. HarrisThe U.S. Government sued claimants attorney in personal injury case seeking to assert its recovery rights under the MSP.

CMS had paid approximately $22,549.67 in Medicare claims submitted on the beneficiarys behalf.

Underlying case settled for $25,000.00 and Medicare agreed to reduce its conditional payments to $10,253.59.

Counsel never filed any such appeal and also failed to pay CMS within the statutorily required 60-day time period. PenaltiesU.S. v. Harris

Holding: The government was entitled to recover funds received by a Medicare beneficiary from a settlement in a personal injury action from a ladder retailer. Because the defendant took responsibility for the payment of beneficiary's medical services, the government statutorily reserved the right for reimbursement for the medical services paid for by Medicare.PenaltiesU. S. v Stricker (E.D. N.D. Ala. 2009) (No. CV-09-PT-2423-E)

The U.S. government sued to recover conditional payments and double damages plus interest under the Medicare Secondary Payer Act.

The parties named in the suit include claimants counsel, insurers and corporate defendants.PenaltiesPlaintiff May Have Cause of Action

Medicare beneficiaries also have a potential private cause of action against a primary plan which fails to provide for primary paymentPlaintiff can seek double damages against RRE

Examples:Beneficiary can sue if a beneficiarys Medicare benefits are suspended because an agreement did not properly protect his/her interest; ORIf insurers/self-insureds post-settlement reporting or reimbursement violations interrupted the plaintiffs Medicare payments

WHAT IS THE IMPACT ON RESOLVING CLAIMS?Indemnification clauses shifting responsibility to plaintiff are no longer sufficient to protect the insurer

Insurers have an affirmative obligation to report

Efforts to address Medicare liens must begin at an early stage in litigation

Claimants Medicare status must be determined by liability insurer or workers compensation carrier 75WebsitesCenters for Medicare-Medicaid Services:www.cms.hhs.govCMS Users Guide:www.cms.hhs.gov/MandatoryInsRep/Downloads/NGHPUserGuide022210.pdfCMS Downloads:www.cms.hhs.gov/MandatoryInsRep/Town Hall Transcripts:www.cms.hhs.gov/MandatoryInsRep/07 NGHP Transcripts.asp/#TopOfPage

Medicare Advocacy Recovery Coalition:www.marccoalition.comMSPRC:http://www.msprc.info/www.mymedicare.gov

QUESTIONS?THANK YOU FOR YOUR PARTICIPATION!

GETMAN, SCHULTHESS & STEERE, P.A.

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