Navigating the Medicare Minefield: Practical Tips and Strategies for the Practitioner
Reflecting on the sacrifices of countless brave Americans, I am loathe to characterize what we do as trial attorneys as “battle.” I cringe a little when I hear colleagues recount stories from “the trenches” and describe our profession as a “minefield” with ethical and financial consequences for every misstep. Nothing we do as trial attorneys can rival the sacrifices of our men and women in uniform.
That said, the battle metaphor is not entirely unwarranted. As trial attorneys, we face opposition every day from well-funded corporate and insurance defendants, tort reformers, a skeptical public, and lien holders determined to siphon off as much of our clients’ recoveries as possible–not the least of which is an entirely unaccountable federal government. Medicare and its collection agency, the Medicare Secondary Payer Recovery Contractor (MSPRC), operate with impunity. Unlike us, they are not constrained by deadlines, motivated by customer satisfaction, or sworn to accurate and honest reporting. Medicare cannot waive its rights through bungling, oversight or lack of prosecution. It cannot be called to task when it misstates the facts. Accordingly, transactions with Medicare are fraught with peril. This article recounts some real-life Medicare transactions from my own practice, and seeks to provide some tips and strategies to avoid pitfalls that subject practitioners to dissatisfied clients, bar complaints and potential liability.
Stories that Illustrate Perils of Dealing with Medicare
The following are true stories from my own nursing home negligence practice, both from the past 60 days, and are illustrative of the perils of dealing with Medicare:
Case 1: The case had settled for a substantial amount and the client was thrilled with the outcome. He was apprised both verbally and in writing of the attorneys’ fees and expenses to be deducted from his case. He was also in possession of MSPRC’s Conditional Payment Letter dated May 21, 2012 stating “Medicare has not paid any claims that currently appear related to the beneficiary’s pending settlement, judgment or award for the above-referenced incident.” The client confidently relied upon MSPRC’s representation inasmuch the client’s father, the Medicare beneficiary, had been dead for over two years, and the client was sure no new bills had come in since May, 2012.
On March 3, 2013, I notified MSPRC that our case had settled, and asked the agency to please confirm in writing that Medicare was not seeking reimbursement of any medical expenses paid in relation to our claim. By April 12, 2013, I had received no response to my inquiry, so I called MSPRC. MSPRC indicated it had issued a Final Demand Letter on March 20, 2013. Upon further inquiry, I learned that this letter was not directed to me, the duly authorized attorney of the estate who requested it, but to the last known address of the beneficiary. I informed the MSPRC representative that her agency had, in fact, directed the Final Demand Letter to the last known address of a dead person. She was unfazed by this revelation, offered no apology, and advised me “that’s our policy.” As she was viewing the Final Demand Letter on her computer screen, I asked if she could please fax or email a copy to me. She stated that faxing and emailing were not options, and instructed me to allow 21 days for the letter to arrive. Naturally, I had to assume she intended to walk the letter to my office from hers in Oklahoma City. She was kind enough to tell me over the phone, however, that Medicare had reversed its earlier determination, and had concluded that it actually paid $18,041.62 in medical expenses related to our case. Factoring in my client’s litigation costs, Medicare was willing to accept $10,762.73 in settlement of its lien. Needless to say, my client was not pleased.
Case 2: The Defendant had made what I believed to be a reasonable offer given the tenuous liability and limited damages in our case. The client, however, was reluctant to consider the offer because MSPRC had issued a Conditional Payment Letter in which it identified $20,741.79 in medical expenditures it believed were necessitated by the personal injuries that were the subject of our litigation. The client feared there would be little left over for the estate after the deduction of attorneys’ fees, expenses and liens. I finally prevailed upon the client, and the case was settled in spite of Medicare’s lien. I promptly notified MSPRC of the settlement, and asked the agency to send me a Final Demand Letter. True to form, MSPRC sent the Final Demand Letter not to me, but to the last known address of the now deceased beneficiary. Fortunately in this case, the client intercepted that letter and provided it to me. The Final Demand Letter was accompanied by a Payment Summary Form that itemized the charges for which Medicare sought reimbursement. I personally conducted a line-by-line audit of the Payment Summary Form, and determined that not one penny of Medicare’s lien was associated with injuries that were the subject of our case. I immediately notified MSPRC of my findings, and asked the agency to waive Medicare’s lien in its entirety. For good measure, I included at the end of my letter Kentucky’s standard Insurance Fraud Warning Notice. MSPRC sent the client a letter two weeks later stating it had reconsidered its position and was owed nothing.
‘The Wailing of Plaintiff’s Attorneys Nationwide’
Exasperated by my dealings with Medicare, I called attorney Dave Place, Vice President and Director of Lien Resolution Services for Synergy Settlement Services. Synergy offers healthcare lien resolution, Medicare secondary payer compliance services, pooled trust services, settlement asset management and structured settlements. “What you are describing is the wailing of plaintiff’s attorneys nationwide” Place said. “Medicare can be as incompetent as they want to be, and there’s nothing you can do about it.” Place agreed that Conditional Payment Letters, so heavily relied upon by plaintiffs, plaintiffs’ attorneys, defense counsel and liability insurance carriers, are not worth the paper on which they are written.
As if that were not enough, Place believes the terrain for Plaintiffs’ attorneys is becoming even more hazardous. Most attorneys are familiar with the mandatory reporting requirements of Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMESA), 42 U.S.C. §1395y(b)(8). The law requires group health plans, liability insurance carriers, self-insureds, no-fault carriers and workers’ compensation carriers to notify Medicare of any payments made to Medicare beneficiaries. What most attorneys may not know, however, is that Medicare is now using the information gathered from mandatory reporting to limit their exposure for future accident-related care and even to increase, rather than decrease, final demand amounts.
Place explained that in the past, a plaintiff’s attorney would write Medicare to determine the amount of medical bills the agency had paid on his client’s behalf. This request would elicit a “Conditional Payment Letter” in which Medicare identified medical expenses it paid on the client’s behalf, and which it believed were necessitated by the injuries that were the subject of the plaintiff’s civil claim. Once that claim was settled or a favorable judgment obtained, the plaintiff’s attorney would notify Medicare and request from the agency a final amount it would accept in satisfaction of its lien. A “Final Demand” was only issued by Medicare upon request of the plaintiff’s attorney. In accordance with 42 CFR 311.37, if Medicare’s payments were less than the settlement amount, the Final Demand would reflect Medicare’s total payments reduced by the ratio of the plaintiff’s procurement costs (attorney’s fees and case expenses) to the total amount of his settlement.
Place stated nowadays Medicare is taking the information obtained from mandatory reporting and is issuing a “Conditional Payment Notice.” This notice will inform the Medicare beneficiary that she has thirty (30) days from the date of the notice to respond or a “Final Demand” will be issued for the entire amount of the conditional payments identified. The Final Demand will not provide any reduction for the beneficiary’s procurement costs, and payment will be due within sixty (60) days of the Final Demand.
“What adds insult to injury” Place said, is that unlike the traditional Final Demand, under its new system, MSPRC will continue to add paid claims to this total after the issuance of the Conditional Payment Notice. Place observed “this may mean that not only is your client not getting a reduction for the cost associated with obtaining a settlement, judgment or award, they may also see the amount due MSPRC increase months after their personal injury case has resolved.”
Help Is On the Way
According to Place, some help is on the way. On January 10, 2013, President Obama signed into law the Strengthening Medicare and Repaying Taxpayers Act (SMART Act). Among the key provisions:
- Effective July 10, 2013 (six months after its enactment), a three-year statute of limitations will apply to MSPRC recovery actions, which is triggered upon receipt of the Section 111 report;
- The Secretary of the U.S. Department of Health and Human Services (“Secretary”) has nine months, or until September 10, 2013, to issue final regulations that establish a process by which parties notify Medicare of a reasonably expected settlement and request and receive a demand letter from Medicare setting forth the total reimbursement amount due to Medicare; and
- The Secretary is also required to maintain a website which allows Beneficiaries to access information about claims and services paid by Medicare. Parties are required to provide CMS with 120 days’ notice before a reasonably expected settlement. The Secretary will have 65 days from the receipt of this notice to provide the Medicare reimbursement amount, a period which can be extended by 30 days by the Secretary. After this time has expired, the parties can rely on the reimbursement amount obtained from the website and rely on it as long as the settlement occurs within 120 days of the notice and 3 business days from the last download of the reimbursement amount from the website.
Steps Attorneys Can Take to Minimize Delay
Attorneys dealing with Medicare reimbursement can take steps to minimize the delay in obtaining vital information, reduce the chances of being surprised by a large Medicare lien and minimize potential liability for failing to protect Medicare’s interests or squandering settlement proceeds by overpaying Medicare:
- Never ever ignore a Medicare lien. The Medicare Modernization Act of 2003 gave Medicare a “super-lien” status in connection with personal injury and workers’ compensation claims. Since that time, the parties to litigation, their attorneys and insurers have affirmative duties to (a) notify Medicare when the agency may have an interest in a lawsuit; (b) satisfy the lien; and (c) make Medicare the first payee out of any recovery. Giving teeth to the legislation, Congress also empowered the government to assess double damages against any entity involved in the settlement, judgment or award that does not protect Medicare’s interest. 42 USC § 1395y(b)(2)(B)(iii) (2003).
- Make sure you initiate contact with Medicare sooner rather than later. It is better to have some idea of your client’s Medicare obligations early in the case than to be surprised by a huge Medicare lien after the case has resolved.
- At the time of that initial contact, furnish Medicare with Proof of Representation and a Consent to Release signed by the beneficiary or his duly appointed representative. This will avoid unnecessary delays in the transmittal of vital information.
- Be as explicit as possible in instructing MSPRC where to direct information concerning Medicare’s lien. Medicare may ignore your instructions, and insist on following “policy” by directing lien information to the last known address of a deceased person, but at least you have made the effort to obtain that vital information in a timely fashion.
- Instruct your client to regularly check mail at the beneficiary’s last known address. If the beneficiary is deceased, have your client notify the current resident at that address to be on the lookout for mail from Medicare.
- Given MSPRC’s new approach following receipt of a Section 111 mandatory report, request a Final Demand as soon as a case is resolved.
- Make liberal use of the relatively new Medicare Secondary Payer Recovery Portal (MSPRP). This web-based tool allows users the to electronically perform the following activities:
- Submit Proof of Representation or Consent to Release documentation. Instead of mailing in an authorization, users will be able to upload authorizations through the portal.
- Request conditional payment information. Requesting an updated conditional payment amount or a copy of a current conditional payment letter is as simple as clicking a few buttons.
- Dispute claims included in a conditional payment letter. Users are able to view the claims listed on the conditional payment letter and dispute unrelated claims online.
- Submit case settlement information. Users can input settlement information online and upload a copy of the settlement documentation through the portal.
- Conduct an audit of MSPRC’s Payment Summary Form immediately upon receipt of a Final Demand. There are a number of websites that allow the practitioner to identify treatments paid for by Medicare by their corresponding ICD-9-CM treatment codes. I have personally found www.findacode.com to be an invaluable resource in this regard. In the alternative, contract that work out to an experienced lien resolution service like Synergy Settlement Services. “We track our reductions,” Place said, and “we’re averaging about 71% on reduction because so much of what Medicare claims is unrelated.”
Lawyers Can’t Afford to Ignore Audits
Given Medicare’s penchant for dramatically overstating the value of its liens, plaintiffs’ attorneys cannot afford to ignore audits and blindly cut checks to Medicare for Final Demand amounts. “Your client is relying on you,” Place observed, “and likely will never know you didn’t save money you could have. It doesn’t hurt you, but it ultimately hurts your client. No one really has an incentive financially to audit, but there are substantial savings out there. The client is really paying the price for that lack of zealousness.”
Jane Long, an attorney with Lawyers Mutual Insurance Company of Kentucky agreed with Place, and added that failing to perform audits of Medicare liens, among other missteps, could subject plaintiffs’ attorneys to liability. “I do believe it’s an issue for plaintiffs’ lawyers,” Long said. “Medicare reimbursement is fertile ground for claims of legal malpractice.” Additionally, Long cautioned that claims by Medicare against attorneys are generally not covered by lawyers’ professional liability insurance. “I never like to say whether we would have coverage or not until I see the specifics” Long said, but explained that malpractice insurance typically affords attorneys protection against claims by clients, but not from claims by third parties like Medicare.
The minefield of Medicare reimbursement can present serious hazards for plaintiffs’ attorneys and anyone else connected with civil litigation. The wary practitioner, however, can take steps to protect himself and his clients.
Mat A. Slechter is a founding partner of Slechter Law Firm, PLLC in Louisville. He has been practicing law since 1993. His practice encompasses all facets of plaintiffs’ personal injury law, with a particular emphasis on nursing home neglect and abuse.