Medicare laws require you to repay Medicare for medical bills paid on your behalf for treatment of injuries resulting from another party’s negligence or other wrongful conduct. Medicare issues conditional payments to the medical providers but wants its money back if you obtain a recovery. Medicare will allow a reduction for the proportionate share of attorney’s fees and costs you incur in obtaining the third party recovery. Medicare does not reduce its claim if first-party medical payments are available.
Medicare laws also require you to take Medicare’s future interests into account in the event you require future treatment for your injuries after your case has settled. The process is long, complicated and often delays payment of a settlement for months at a time. We want you to understand the process so that you are not surprised when you agree to a settlement amount only to have to wait for Medicare to complete its process.
These obligations arise whether you have traditional Medicare Part A and Part B or Medicare Part C which is known as a Medicare Advantage Plan administered by a private insurer such as Anthem Blue Cross or United Healthcare.
Medicare Repayment Obligation
Under federal law, Medicare has a right to recover the money it pays for your medical bills that are the fault of a third party. You have an obligation to notify the Centers for Medicare and Medicaid Services that you have a claim pending for injuries caused by someone else, whether it is against another party, its insurance company, or even your own insurance company in the event of an Uninsured Motorist claim. We typically notify CMS for you to start the process.
Once CMS has been notified that you have a claim, the Medicare Secondary Payer Recovery Contractor sends you and our office a “Rights and Responsibilities Letter.” The letter informs you of the right of Medicare to recover its conditional payments, along with your responsibility to pay the funds to Medicare in a timely manner once your case has concluded. The MSPRC will later issue a “Conditional Payment Letter” detailing what conditional payments have been made to the medical providers. You will want to scrutinize that conditional payment letter to make sure that MSPRC has not included medical bills that are not related to treatment for your injuries. If there are unrelated items, we will highlight the disputed items and tell MSPRC why the charges are not related. We then request a updated Conditional Payment Letter. When your case is settling, we again request an updated Conditional Payment Letter to make sure there are no subsequent additions to the total. These updated letters can take a month or more, provided MSPRC has not made one of their frequent mistakes that set back the process even further.
Once we are confident that the numbers on the Conditional Payment Letter are final, we request a Final Demand Letter from MSPRC. With that letter we have to show the settlement amount, provide MSPRC with a copy of the settlement agreement signed by the client, a copy of the retainer agreement, and an itemization of costs incurred on your case. MSPRC then calculates what the final reimbursement amount will be and sends the Final Demand Letter. We have thirty days from issuance of that letter to pay the demand amount, otherwise interest starts accumulating on the amount.
Because third parties and their insurers have legal obligations (backed by stiff penalties) to make sure that Medicare is repaid, they will typically make Medicare a payee on you settlement check. We prefer to have the insurance companies issue one check to Medicare for its reimbursement claim and the other payable to the client and our office.
Although Medicare reduces the reimbursement for a proportionate share of attorney’s fees and costs, it rarely considers the hardship to you in repaying the conditional payments and will assert its right to recovery even if you receive little or no net recovery after repaying Medicare.
Medicare’s Future Interests
Medicare laws oblige beneficiaries, and those who will be eligible for Medicare benefits within thirty months of settlement, to pay from the settlement all reasonably foreseeable medical that will occur after the settlement date. However, Medicare laws and regulations do not tell us how that is to be done. We have taken direction from various court case precedents, guidelines from CMS, and from other professionals to determine how the obligation is to be met, expecting that at some time in the future the government will issue regulations in third party liability cases.
We believe there is a threshold settlement amount of $25,000, below which no future considerations are expected to be taken into account. If the gross settlement is more than $25,000, there may be a need to establish a Liability Medicare Set-Aside Account. You will be earmarking money from the settlement to pay for future care. Your physician can give an opinion on what you will require in the future, and a private company will compute the cost of the future case. If your case goes to trial or binding arbitration, any allocation for future medical care in the award will provide the amount that must be set aside.
Once the set-aside proposal has been generated, it is submitted to Medicare, which at this time does not respond to the proposals with an approval or denial. The proposal does serve to prove your due diligence if questions arise later. A Set-Aside account is then funded based on the estimate. The account can be self-administered or administered by a third party. As future treatment is obtained, receipts and proof of payment must be maintained. If you exhaust all of the funds on injury-related medical care and still require treatment, Medicare is then expected to resume paying the bills if your estimate of future medical care was made in good faith but the needs ended up being more than anticipated.
There may be situations where your actual damages exceed the amount of the settlement where a Medicare Set-Aside Account may not be required. This is a complicated and evolving area of law that will be addressed if the issue arises in your case.
If you believe you will not require treatment in the future for your injuries, you will need to obtain certification of that fact from your treating physician in order to avoid having to consider a set-aside.
We maintain close contact with the MSPRC, but such contact does not guarantee that MSPRC will act in a timely manner to provide conditional payment amounts. We want Medicare beneficiaries to know in advance that there may be substantial delays in getting their money after they have agreed to a settlement. These delays are not within our control. The best advice we can give is to not have your settlement money spent or committed before you receive your final check.
If your case is one which may require additional treatment after the case has settled, we will work closely with you to make sure that you understand your future obligations and avoid surprises that can arise months or even years after the case has settled.
As Medicare laws and rules are formulated and amended, we will keep you updated regarding your rights and obligations.