CMS Announces New Fixed Percentage Option For Medicare’s Recovery Claim

October 26, 2011

Certain beneficiaries will be able to resolve Medicare’s recovery claim by paying Medicare 25% of his/her total liability insurance settlement instead of using the traditional recovery process. This means that a beneficiary will know what he/she owes and will be able to immediately pay Medicare.

The Centers for Medicare & Medicaid Services announced that this new and simple fixed percentage option will be available to certain beneficiaries beginning November 7, 2011. This option is available to beneficiaries who receive certain types of liability insurance (including self-insurance) settlements of $5000 or less.

In order to elect this option to resolve Medicare’s recovery claim, the following criteria must be met:

1.The liability insurance (including self-insurance) settlement is for a physical trauma based injury. (This means that it does not relate to ingestion, exposure, or medical implant), and
2.The total liability settlement, judgment, award, or other payment is $5000 or less, and
3.The beneficiary elects the option within the required time frame and Medicare has not issued a demand letter or other request for reimbursement related to the incident, and
4.The beneficiary has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident.

A full explanation, including instructions on how and when to elect this option, will be available on this website on November 7, 2011 in the Fixed Percentage Option section of both the Attorney and Beneficiary Toolkits.

Please Note:When a beneficiary elects this option, he/she must understand that as part of choosing the option he/she will be giving up the right to appeal the fixed payment amount or request a waiver of recovery for the fixed payment amount.

Related:

CMS presentation on fixed percentage option

Liability Settlement Solutions

Wyden, Portmam Lead Effort to Make Medicare Secondary Payer Program More Efficient, Save Taxpayer Dollars

October 19, 2011

Wyden, Portman Lead Effort to Make Medicare Secondary Payer Program More Efficient, Save Taxpayer Dollars

Bill Makes Common Sense Reforms to Medicare’s Reimbursement Rules to make it easier for the program to collect from Third Party Payers

FOR IMMEDIATE RELEASE: Monday, October 17, 2011
Jeff Sadosky (Portman) | 202-224-5190
Jennifer Hoelzer (Wyden) | 202-224-3789
Jake Thompson (Nelson) | 202-224-8795
David Ward (Burr) | 202-228-1616

WASHINGTON, D.C. – U.S. Senators Ron Wyden (D-Ore.) and Rob Portman (R-Ohio) are leading a bipartisan effort that includes U.S. Senators Ben Nelson (D- Neb.) and Richard Burr (R-N.C.) to make the Medicare Secondary Payer (MSP) Program more efficient and cost effective to taxpayers. The Strengthening Medicare and Repaying Taxpayers (SMART) Act will speed up the rate by which Medicare and its beneficiaries are reimbursed for costs that should be borne by another party.

“Streamlining third party payment fixes some of the bureaucratic requirements that often stand in the way of Medicare being reimbursed for services that they are not supposed to pay for,” Wyden said. “By making the process more efficient, Medicare will be repaid more quickly and more accurately than before and the repayment process will work the way it was designed to work. An easier repayment process is not just good for Medicare and taxpayers, but also for the beneficiary who should be able to settle their claim more quickly.”

“I am pleased to introduce the SMART Act because it will help strengthen and protect Medicare by ensuring greater reliability and efficiency of Medicare reimbursements,” said Portman. “With Washington’s sky high debt and deficit, we need to do everything we can to ensure that entitlement programs such as Medicare are cost effective and working for the very people they were designed to help.”

“The current Medicare Secondary Payment Program is a bureaucratic mess that often leaves everyone involved in the settlement process – from Medicare beneficiaries to small businesses – unsatisfied,” Sen. Nelson said. “The SMART Act will help the program run more efficiently and reduce unneeded uncertainty for all the parties involved.”

“The lack of transparency and inefficiencies with the current Medicare Secondary Payer process illustrates how Washington’s red-tape and regulatory uncertainty can adversely impact seniors and businesses,” Burr said. “In order to get our economy back on track, we simply cannot afford to continue to waste taxpayer dollars by perpetuating the inefficiencies of the current Medicare Secondary Payer system. We can and must do a better job for the seniors and stakeholders depending upon this program to be as transparent and efficient as possible.”

Under the MSP program, if a Medicare beneficiary is injured by a third party and a settlement is pursued as a result of that injury, the third party is responsible for paying for the individual’s medical expenses. If Medicare, now the “secondary payer,” pays any of the costs associated with the injury, it is entitled to reimbursement.

Several problems exist with the reimbursement process under this scenario. Under current law, Medicare does not have a way to disclose the MSP amount before settlement, creating unnecessary uncertainty that makes it hard to settle cases. Second, there are times when Medicare spends more money pursuing an MSP payment than they actually end up receiving in payment. MSP reporting requirements also require beneficiaries to submit sensitive personal information to the settlement company, causing privacy concerns. Finally, there is no clear statute of limitations on all MSP claims.

The SMART Act will address these issues by creating a process that allows CMS to disclose the MSP amount before settlement so it can be factored into the settlement; requiring Medicare to no longer pursue MSP claims that do not cover their own expenses; directing Medicare to establish an alternative method of identifying individuals so that they don’t have to provide sensitive personal information; and setting a three-year statute of limitations for most claims.

Related:

Three Medicare Secondary Payer (MSP) Predictions for 2021

CMS Memoranda

October 17, 2011

October 4, 2011

The Centers for Disease Control (CDC) has recently published its 2007 United States Life Tables. Effective October 31, 2011, the Centers for Medicare & Medicaid Services (CMS) will begin referencing the CDC’s Table 1: Life table for the total population: United States, 2007, for WCMSA life expectancy calculations. This means that for any newly submitted WCMSA proposal received by CMS’ Coordination of Benefits Contractor (COBC), or where any WCMSA case is reopened on or after October 31, 2011, CMS will apply the CDC’s 2007 Table 1 for life expectancy calculations. You may access the CDC’s United States Life Tables in the related links outside of CMS section of this page.

CMS will begin referencing the CDC’s Table 1: Life table

The Centers for Disease Control (CDC) has recently published its 2007 United States Life Table.

Effective October 31, 2011, the Centers for Medicare & Medicaid Services (CMS) will begin referencing the CDC’s Table 1: Life table for the total population: United States, 2007, for WCMSA life expectancy calculations. This means that for any newly submitted WCMSA proposal received by CMS’ Coordination of Benefits Contractor (COBC), or where any WCMSA case is reopened on or after October 31, 2011, CMS will apply the CDC’s 2007 Table 1 for life expectancy calculations.

Access the CDC’s U.S. Life Tables 2007.

 

 

Can a court modify a workers’ compensation settlement agreement?

October 16, 2011

ArvinMeritor, Inc. v. Clifton Johnson, 331 S.W.3d 267 (Ala. Civ. App. Feb 25, 2011)

Can a court unilaterally modify or supplement the essential terms of a workers’ compensation settlement agreement that has been incorporated into a judgment? 

In ArvinMeritor, the claimant filed a claim for workers’ compensation benefits against the employer in 1999.  In 2003, the trial court found the claimant to be 100% permanently disabled as a result of an occupational disease and required employer to pay workers’ compensation disability benefits and all future medical benefits related to claimant’s occupational disease.  Additionally, the claimant filed a third-party claim against tortfeasors for the same occupational disease.

In November, 2008, the claimant reached a settlement with the third-party tortfeasors for an amount in excess of past workers’ compensation payments made by the employer.  In an effort to avoid double compensation pursuant to Ala. Code 1975, § 25-5-11(which gives the employer the right to credit third-party proceeds against its liability for workers’ compensation benefits, and a right to subrogation with respect to employee’s recovery of medical expenses from the third party), the employer and the claimant reached a settlement agreement.

In January, 2009, the employer and the claimant petitioned the trial court for approval of their settlement.  The proposed settlement stated that a Medicare set aside trust would be established and would cost $83,936.17.  However, at this point in time, CMS had not approved the Medicare set aside trust.  The proposed settlement further stated that the employer will contribute up to $65,000.00 to fund the Medicare set aside trust and the remaining balance shall be paid by claimant.  The trial court approved the settlement prior to CMS’s approval of the Medicare set aside trust.

In July, 2009, the claimant filed a petition with the trial court stating that the Medicare set aside trust described in the settlement had not been established and the employer had stopped paying claimant’s medical expenses.  Claimant indicated that he was ready and willing to pay his portion of the Medicare set aside trust ($18,936.17), as set out in the settlement.  At that time, the employer’s counsel stated that CMS required an amount significantly higher than the proposed Medicare set aside trust of $83,936.17.  The employer argued that they were ready and willing to pay the $65,000.00 they had agreed to pay in the approved settlement and the claimant was responsible for the difference.

The trial court essentially concluded that the employer “induced” the claimant to agree to the settlement by making him believe he would only be responsible for the remainder balance of the Medicare set aside of $18,936.17, as the Medicare set aside allocation was not presented to the claimant as a mere estimate.  Based on the above reasoning, the trial court ruled that the employer is responsible for the remainder exceeding $18,936.17 and is required to pay the claimant’s medical expenses until the Medicare set aside trust was funded in its entirety.

On appeal, the Alabama Court of Civil Appeals reversed the part of the trial court’s holding concluding that the court cannot “unilaterally modify or supplement the essential terms of a workers’ compensation settlement agreement that has been incorporated into a judgment.”  The terms of the settlement were ambiguous and the parties had failed to provide in their settlement agreement that the cost of the Medicare set aside agreement may exceed $83,936.17, and it is not the role of the court to advise the parties on settlements.

In addition to holding the trial court in error for “imposing a legally incorrect remedy”, the appellate court also ruled that the employer was responsible for paying medical costs for the claimant’s occupational disease.