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					UNCLE SAM IS WATCHING!
THE MEDICARE SECONDARY
PAYER STATUTE


   PENNSYLVANIA ASSOCIATION OF
INDEPENDENT INSURANCE ADJUSTERS
          November 6, 2009
       Jay Barry Harris, Esquire
      Fineman Krekstein & Harris
       www.finemanlawfirm.com
 MEDICARE
 Federally funded public
  health plan
 Administered by Center for
  Medicare & Medicaid
  Services (“CMS”)
 For people over 65 years old,
  or with end-stage renal
  disease or certain disabilities
 Provided coverage to 42.5
  million people in 2005
               MEDICARE


 Spends $330 billion in
  benefits
 Without further
  reforms, expenditures
  will increase over
  next 75 years from
  3.2% to 11% of GNP
     MEDICARE SECONDARY
     PAYER STATUTE (MSP)

 Addressed Medicare’s rising costs
 Medicare payments now conditional
 Primary plan responsible to reimburse
  Medicare
 Eliminated prompt payment requirement,
  strengthening reimbursement rights from
  “primary plan”
MEDICARE SECONDARY
PAYER STATUTE (MSP)
        Primary plan includes
         liability and workers’
         compensation insurers
         and self-insured entities
        Required reimbursement
         within 60 days from
         beneficiary’s receipt of
         proceeds from primary
         plan
       MEDICARE SECONDARY
         PAYER STATUTE
 Enabled Medicare to
 seek reimbursement
 from:
     The Medicare
      beneficiary
     The primary plan or
     Anyone who receives
      payment from the
      primary plan
          NEW RULES –
   MEDICARE, MEDICAID & SCHIP
  EXTENSION ACT OF 2007 (MMSEA)

 Mandatory reporting requirements
 Insurers, self-insureds and third-party
  administrators must report all payments
  made to Medicare Beneficiaries after
  July 1, 2009
                NEW RULES

 Medicare must receive notice of
  settlements and judgments
 Primary plan must protect Medicare’s
  interest
     Even if claimant has been paid
 Penalties for non-compliance
   $1,000 per day per claimant for late
    reporting
   Private cause of action with double
    damages, attorney’s fees and interest
    RESPONSIBLE REPORTING
        ENTITIES (RRE)
 Parties that fund in whole or part a
  settlement, judgment, award or other
  payment to a Medicare beneficiary
 Liability, no fault and workers’
  compensation insurers, self-insured
  entities and third-party administrators
  (TPAs) are RREs
 Employing an agent to report does not
  relieve RRE of its responsibility
   REPORTING REQUIREMENTS

 Begins January 1, 2010
 Includes deductibles if paid to beneficiary
 Any ongoing payment responsibilities
  (medical bills, med pay, or gift cards)
 Exempt from reporting requirement:
     Payment of $5,000 or less through 12/31/10
     Payment of $2,000 or less through 12/31/11
     Payment of $600 or less through 12/31/12
 No duty to report claim where there is no
  payment anticipated
          RRE REPORTING

 RRE must register with Center for
  Medicare & Medicaid Services (CMS) by
  September 30, 2009
 Register at:
  www.cms.hhs.gov/mandatoryinsrep
      REPORTING TRIGGERED IF
       RECIPIENT IS MEDICARE
            BENEFICARY

 People 65 years or older
 Receiving social security disability
  payments for 24 months
 Diagnosed with end-stage renal disease
 Ongoing duty to ascertain status
     OBTAINING INFORMATION
      ABOUT THE CLAIMANT
 Claimant’s name
 Social security
  number
 Date of birth
 Medicare or HSIN
  number
 Medicare paid any
  medical bills
  related to the claim
    OBTAINING INFORMATION

 Claimant not required to respond or give
  permission to access the claimant’s
  Medicare information
 RRE cannot rely on claimant’s response –
  no safe harbor provision
 Privacy issues
 Unfair Claims Practices Act
            HYPOTHETICAL

 Claimant 64.5 years old on date of loss
 Trips and falls breaking his leg
 Reports the claim one month before
  birthday
 Receiving cancer treatments
 Injuries from fall have not completely
  healed
 Unrepresented
 Desires to settle his claim
          SETTLEMENT ISSUES

 Medicare interest must be fully satisfied
     Regardless of fault, whether medical bills
      are related to the accident or settlement
      amount
     Medicare is owed its monies 60 days after
      disbursement
     Failure to meet deadline is the
      responsibility of all parties involved in the
      settlement, triggering penalties
     Cannot “contract” away your responsibility
          SETTLEMENT ISSUES

 CMS makes demand only after settlement
 CMS under no obligation to timely
  respond
 Initial determination can take 6 months
 Settlement delay
     Drafts may become non-negotiable
     Claimants may reject settlement
     Retain counsel and initiate litigation
 Increased cost of nuisance claims
        SETTLEMENT ISSUES

FUTURE LIABILITIES
 Not addressed by Act
 Traditionally insurers not obligated to pay
  medical expenses
 Ignore them at your own peril
 If anticipated, must be addressed in the
  settlement agreement
 If not anticipated, CMS can terminate
  future benefits to beneficiaries
            ADDRESSING
         SETTLEMENT ISSUES
 Involve Medicare early
 Obtain consent form from claimant to get
  conditional payment estimate
 Request conditional payment estimate
 Reduce Medicare’s interest
     Analyze conditional payment estimate for
      unrelated payments
     Procurement costs
     Hardship petition
 Request payment instruction
            ADDRESSING
         SETTLEMENT ISSUES
 Satisfy Medicare’s 60 day rule
     Make disbursement conditioned upon
      satisfying Medicare’s interest
 Forward final settlement agreement to
  Medicare
 Obtain final statement from Medicare
 Forward payment to Medicare
 Court approval of settlement
 Consent judgment
   ADDRESSING
SETTLEMENT ISSUES
     Payment
       Name Medicare on settlement
        check and send check to
        Medicare
       Provide two settlement checks
              Plaintiff lawyer and claimant
              Plaintiff lawyer and Medicare
         Hold the funds until Medicare’s
          approval
     Interpleader
     Court approval of settlement
            ADDRESSING
         SETTLEMENT ISSUES
 Release
   Name Medicare in the release

     Submit the release to Medicare for
      approval
     Including indemnity language will not
      negate your responsibility
     Labeling settlement proceeds to avoid
      Medicare’s interest will be disallowed
     Payments to beneficiaries does avoid
      Medicare’s interest
         FUTURE PAYMENTS

 No clear provisions in the regulations
 Ignore at your peril
 Medicare set asides
    Analyze plaintiff’s medical condition
    Utilize the defense IME
    Utilize fault concepts
    Life expectancy
    Rated ages from life insurance tables
    Court approval of the settlement
 Make a good faith effort
        FUTURE PAYMENTS

 Follow the worker’s compensation model
 Not necessary for any settlement less
  than $25,000
 Not necessary for any settlement less
  than $250,000 for someone who is
  reasonably expected to be a beneficiary
 Release issues:
   Have claimant release any claims should
    Medicare deny future benefits
   Clause does not shield you from Medicare
                      TRIAL

 Special verdicts
   Distinguish between
    economic, medical and
    non-economic
    damages
   Distinguish between
    past and future injuries
 Join Medicare as a
  party

				
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