On October 17, 2011, U.S. Senators Ron Wyden (D-OR), Rob Portman (R-OH), Ben Nelson (D-NE), and Richard Burr (R-NC), introduced S. 1718, The Strengthening Medicare and Repaying Taxpayers Act (SMART Act), in the Senate. The goal of the proposed legislation is to make the Medicare Secondary Payer (MSP) system more efficient and effective. The SMART Act was also introduced in the House of Representatives last March. Click here to see discussion of the SMART Act.
Tag Archive for 'MSP'
The MSPRC recently announced that CMS will implement a new payment option for beneficiaries who receive certain types of liability insurance settlements of $5,000 or less to resolve Medicare’s recovery claim. A beneficiary who elects this option will be able to resolve Medicare’s lien by paying Medicare 25% of his/her total liability insurance settlement instead of using the traditional recovery process. In order to quality for this option, 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 timeframe 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.
The new option will be available on November 7, 2011. A full explanation, including instructions on how and when to elect the option, will be available on MSPRC’s website on November 7, 2011.
Beneficiaries may not be willing to pay a quarter of a small settlement to Medicare, especially where the beneficiary is represented by an attorney and will have to pay attorney’s fees from those settlement proceeds. It does not appear that this option provides a reduction for procurement costs.
In a recent order by the United States District Court for the Eastern District of Arkansas, the court approved the parties’ Liability Medicare Set Aside (“LMSA”) amount to cover the plaintiff’s future medical treatment for accident-related injuries that would otherwise be covered by Medicare. The plaintiff had sued seeking damages associated with a permanent and disabling injury to his right hand while working as a truck driver aboard a floating barge. The parties reached a settlement agreement where plaintiff agreed to compromise and discharge all claims against defendant in the liability suit and all claims under the Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. § 901 et seq., against the employer and workers’ compensation carrier in exchange for a total payment of $1,000,000.00.
The plaintiff was a current recipient of Social Security Disability benefits, and therefore, he was Medicare eligible. To protect Medicare’s interest in the settlement, the parties agreed to establish an LMSA and retained the Garretson Resolution Group to determine an LMSA amount to cover the future cost of plaintiff’s accident-related medical treatment. The proposed LMSA was submitted to CMS for approval, but CMS refused to review it due to “workload issues.” Instead, the parties filed a motion with the court to review and approve the proposed LMSA. The court approved the proposed LMSA finding that the parties had reasonably considered and protected Medicare’s interest in the settlement and that the LMSA amount fairly and reasonably took Medicare’s interest into account.
It seems likely that CMS will refuse to review the majority of LMSA’s submitted for third-party liability settlements. By having a court review and approve a proposed LMSA, parties can obtain some assurance that the amount set aside is sufficient and meet their good faith obligations.
Date of Decision: August 9, 2011
Smith v. Marine Terminals of Arkansas et al., No. 3:09-CV-00027 (E.D. Ark. Aug. 9, 2011).
In Portman v. Goodson et al., after the defendant was sued by the plaintiff for personal injuries, the defendant filed a third-party complaint against the Secretary of the U.S. Department of Health and Human Services (“Secretary”) seeking a declaratory judgment with respect to the amount of any reimbursement the Secretary might seek pursuant to the Medicare Secondary Payer (MSP) Act. The defendant contended that Medicare made conditional payments on behalf of the plaintiff and argued that he had “exposure to liability” for reimbursement and that any potential liability for repayment should be established.
The U.S. District Court for the Western District of Kentucky granted the Secretary’s motion to dismiss. The court held that the third-party complaint was premature because it failed to allege a “case or controversy” cognizable under the Declaratory Judgment Act, 28 U.S.C. § 2201(a), and therefore, the court lacked subject matter jurisdiction. The court explained that the MSP Act makes clear that Medicare conditional payments do not become subject to reimbursement until a beneficiary receives an award, settlement or other payment in satisfaction of his claims. Further, the court stated that administrative remedies must be exhausted before a federal district court has jurisdiction over Medicare conditional payment issues. The court found that the case was not ripe for disposition because there had not yet been a settlement, judgment or other payment to trigger an initial determination by the Secretary and the administrative process had not yet been exhausted.
This case highlights the problems an insurance carrier faces because it does not know the amount of a Medicare reimbursement before settlement. Once the Medicare Secondary Payer Recovery Contractor (MSPRC) has been notified of a claim by a beneficiary, it will issue a “Rights and Responsibilities” (RAR) letter informing the beneficiary of his or her responsibilities to Medicare. Within 65 days from the date of the RAR letter, the MSPRC is supposed to automatically issue a “Conditional Payment Letter” (CPL), which contains the amount Medicare paid for medical claims related to the case. However, it is not until after the MSPRC receives notice that a settlement, judgment or other payment was reached that it calculates the final reimbursement amount and issues a “Demand Letter.”
The system as currently administered precludes insurers from determining the exact amount of the Medicare reimbursement before settlement. Under proposed legislation, H.R. 1063, The Strengthening Medicare and Repaying Taxpayers Act (SMART Act), the Secretary would be required to provide the reimbursement amount upon request.
Date of Decision: February 28, 2011
Portman v. Goodson et al., No. 3:10CV-313-S, 2011 U.S. Dist. LEXIS 19491 (W.D. Ky. Feb. 28, 2011).