by: Michael E. Civittolo, Esq.
This article discusses some of the significant issues facing the practitioner handling a case in which Medicare’s interests are involved. For the reasons which follow, you will see that failure to spot compliance issues and then deal with them appropriately can have serious adverse consequences, not only for your client, but also for you personally.
II: MANDATORY INSURANCE REPORTING
The Medicare and Medicaid SCHIP Extension Act (“MMSEA”) was passed in 2007. Section 111 was included in the Act to create mandatory reporting of payments by so called Responsible Reporting Entities to medicare beneficiaries in personal injury and workers compensation cases. Responsible Reporting Entities face fines of $1,000 a day per claim for failure to report. The magnitude of the potential exposure from failure to report should ensure compliance and the amount of data should provide the Centers for Medicare and Medicaid Services (“ CMS”) the information necessary to carry out its duties much more effectively. Although section 111 reporting in liability cases has been delayed, under existing regulations if a primary payer knows that medicare has paid for treatment for which the primary payer has paid or should have paid, it must notify CMS of its primary payment responsibility and provide “information about the underlying MSP situation.”
III: THE MEDICARE SECONDARY PAYER STATUTE (“MSP”)
Medicare is prohibited from providing coverage to a beneficiary in situations where another applicable plan has paid or is reasonably expected to make payment promptly. Medicare is, however, allowed to make conditional payments subject to reimbursement if there is a recovery by the beneficiary. Although Medicare’s right to reimbursement is many times referred to as a lien, it is actually a right of recovery which arises by operation of law at the time the beneficiary receives payment. All parties sharing in the proceeds used to resolve the claim are personally liable for the entire amount of reimbursement due to the Federal Government. Quite simply, not only the medicare beneficiary but also the beneficiary’s attorney, medical providersand the primary payer are jointly and severally liable for the entire amount.
The collection tools available to medicare are formidable:
1.) It may offset the amount it is due against money the beneficiary is entitled to receive from the Federal Government.
2.) It may bring an action for double damages against any responsible party.
3.) It may bring an action under the Federal False Claims Act for treble damages plus a civil penalty of $5,000 to $10,000.
4.) It may join or intervene in the relevant action
5.) It may pursue its own separate right of subrogation.
The MSP statute also establishes a private cause of action for double damages in the case of a primary plan which fails to make payment or appropriate reimbursement.
Besides facing an action from the United States Government, the Federal False Claims Act also provides for Qui Tam actions by private parties to enforce the government’s rights. These actions could be quite profitable for those who pursue them.
The claimant’s attorney is also exposed to a malpractice action for the client’s losses and a disciplinary complaint for failure to protect the interests of Medicare. See Ethics Advisory Panel Opinion No. 2007-02.
It may offset the amount it is due against money the beneficiary is entitled to receive from the Federal Government. It may bring an action for double damages against any responsible party. It may bring an action under the Federal False Claims Act for treble damages plus a civil penalty of $5,000 to $10,000. It may join or intervene in the relevant action. It may pursue its own separate right of subrogation.
IV: ADMINISTRATIVE REMEDIES
Beneficiaries may petition for a full or partial waiver of medicare’s right of reimbursement. In addition, your client may seek to compromise medicare’s claim. A request for compromise may be made before or after settlement of the underlying claim.
The rules and procedures governing these remedies are beyond the scope of this article. Obviously obtaining a waiver or reduction of the amount owed could be instrumental in resolving certain cases.
When medicare compliance issues are implicated in your case, standard form or boiler plate releases are probably insufficient. Settlement documents should precisely identify the injuries released since the scope of the obligation to CMS is determined by the injuries for which compensation is received. Other specific provisions may also be necessary.
VI: MEDICARE SET-ASIDE ARRANGEMENTS
Your client may require future treatment for the injuries sustained as a result of the claim. If so and the medical expense relating thereto would be covered by Medicare, you may have to set aside an appropriate amount of money to pay for the treatment. Failure to do so could result in Medicare’s refusal to pay for such treatment later or if payment is made, CMS may treat it as a conditional payment subject to reimbursement. CMS will review for approval proposed set-asides in Workers Compensation cases that meet certain thresholds established by CMS. Proposed liability set-asides are reviewed within the discretion of the regional office. Even if CMS declines to review a proposed set-aside, the duty to provide for future medical expenses is not relieved.
The law and best practices in this area continue to evolve as CMS issues additional memos and alerts and appellate decisions are issued. For the reasons stated above, you must ensure that your office makes compliance an ongoing priority.
Michael E. Civittolo, Esq. has received the Medicare Set-Aside Consultant Certified designation and is a member of the National Alliance of Medicare Set-Aside Professionals. He may be reached at (401) 739-6700 x6 with any questions.
The Rhode Island Supreme Court licenses all lawyers in the general practice of law. The court does not license or certify any lawyer as an expert or specialist in any particular field of practice.
Michael E. Civittolo
Attorney at Law
Airport Professional Park
2374 Post Road, Suite 106
Warwick, Rhode Island 02886
Telephone: (401) 739-6700 ext.6
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