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NAELA News Journal - NAELA News Online

Ensuring Medicare Secondary Payer Compliance in Elder Law Cases

By Shery Ramezanian, CEO and founder of LitPro, and Charles Medlin, COO
Published January 2021

Shery Ramezanian

Charles Medlin
This article is provided by LitPro, sponsor of the webinar: 
Navigating Health Care Reimbursements Obligations for Medicare Parts A & B
View the webinar recording.

Most elder law attorneys are already aware that Medicare parts A and B, commonly known as Traditional Medicare, is a federal program that provides health insurance coverage to people 65 and over, as well as people diagnosed with end-stage renal disease or Lou Gehrig’s disease. Attorneys entering into third party liability settlements on behalf of their clients, may not be aware that such settlements are subject to the statutory mandate that Medicare be reimbursed, or of the penalties imposed for non-compliance. Where does Medicare’s right of recovery come from and, more importantly, what are the penalties for non-compliance?

A Brief History of Medicare Recovery Rights
On December 5, 1980, Congress passed the Medicare Secondary Payer ACT (MSP Act) to increase the financial viability of the Medicare program by allowing the burden of payment to be shifted to other sources of payment where applicable. The MSP Act made it clear that Medicare has the right to recover for past medical expenses that were paid on behalf of an injured individual prior to the date of a settlement, and for foreseeable benefits that will be paid by the Medicare program in the future. 

In personal injury practice there were many questions around whether tort defendants and their insurers would be deemed to be primary payers under the MSP Act, requiring them to reimburse Medicare for payments which had already been made on behalf of an injured beneficiary. It is now widely accepted that these defendants and insurers do qualify as “primary payers” under the MSP Act and, in fact, were codified as such in the Medicare Prescription Drug Improvement and Modernization Act (MMA Act) passed by Congress in 2003.

Nearly 27 years after passage of the MSP Act, Medicare was still not satisfied that the majority of personal injury awards were being adequately reported to Medicare. This led to Congress passing the Medicare, Medicaid and SCHIP Act (MMSEA Act) in 2007, which required Defendants and their insurers to determine plaintiff Medicare eligibility and to report corresponding settlements, awards, and judgements, effectively creating a safety net for Medicare reimbursement in instances where the plaintiff was not otherwise reporting.

Consequences for Non-Compliance
With the ever-shifting landscape of law practice during a pandemic, the last thing an attorney needs is the Department of Justice (DOJ) investigating their firm for non-compliance with the Medicare Secondary Payer Act. Elder law attorneys, likely more than any other practice of law, encounter Medicare health care reimbursement obligations on a daily basis. Medicare liens are often referred to as “super liens” which can carry steep penalties for MSP Act noncompliance: 
• Double Damages
Medicare can bring an action against any or all parties, including the plaintiff, the plaintiff’s attorney, the defendant and the defendant’s attorney, for damages equal to two times the amount of the conditional payments made by Medicare on behalf of the injured party without regard to the settlement amount. For example, in a nursing home negligence case where Medicare paid $50,000 for an injured plaintiff’s care related to the case, a plaintiff’s failure to report could create $100,000 of damages which could be levied against any of the parties involved, including the plaintiff’s attorney. Furthermore, even if the settlement in question was only $25,000, Medicare could still recover up to their full $100,000. 

• Benefit Offsets and Coverage Termination
Medicare has the authority to offset or completely terminate benefits. No attorney wants to be in the position of having to explain to their elderly client that due to their failure to comply with the MSP Act, in a settlement that they helped them to achieve, Medicare is now partially or permanently suspending all of their future health benefits, a consequence which could mean life or death. 

• $1,000 Per Day Reporting Penalty
There is a severe penalty for defendants who fail to report settlements to Medicare on a quarterly basis. When those deadlines are missed, Medicare can assess up to $1,000 per day for every day following the date a reporting was required. This penalty has greatly increased compliance with the MSP Act, including strict adherence to the release language parties now use to ensure the protection of Medicare’s rights under the Act.
Department of Justice Actions
Department of Justice cases in the past two years highlight Medicare’s ability to seek reimbursement under these circumstances. For example, a Pennsylvania firm had to pay a $28,000 fine for failing to reimburse the government for payments that Medicare made to providers on behalf of several of the firm’s clients. Similarly, a Maryland firm recently had to pay a $250,000 fine for failing to reimburse the government for Medicare payments to medical providers on behalf of a single client. 

Many attorneys may mistakenly believe that the penalties for non-compliance do not apply to them in instances where a co-counsel relationship exists. However, the DOJ has made it clear that a co-counsel relationship does not exempt a firm from Medicare reimbursement obligations. In a 2019 Maryland action, US Attorney Robert Hur stated, “Plaintiffs’ attorneys cannot refer a case to and enter into a joint representation agreement with co-counsel and simply wash their hands clean of their obligations to reimburse Medicare for its conditional payments. We intend to hold attorneys accountable for failing to make good on their obligations to repay Medicare for its conditional payments, regardless of whether they were the ones primarily handling the litigation for the plaintiff.”
Tips on Resolving Medicare Liens 
Reporting cases to Medicare as early as possible creates efficiencies in identifying the lien obligation, and allows for disputing unrelated charges prior to settlement negotiations. Traditionally, reporting a case to Medicare required either a written letter or telephone call. Today, attorneys can take advantage of Medicare’s online portal to report. The information required to report a case should, if possible, be gathered at the initial intake stage, which also helps to simplify this part of the process.

When a case is reported, an MSP record is immediately created. The record is given a unique case identification number which will be used in all correspondence throughout the life of the resolution process. Medicare will then begin to compile a claims listing associated with the reported injury, which is generally received within 60 days of establishing the record. It is important to remember that a Medicare beneficiary always receives a copy of correspondence sent from Medicare, which means attorneys should always be in close contact with their client during this process in order to address their questions. 

Reporting detailed injuries utilizing the narrow ICD-10 codes can be very helpful in elder law litigation, especially nursing home negligence cases. One of the most frequent injuries sustained in  nursing home negligence cases are pressure sores, which can be staged from levels I to IV. Historically, Medicare would pull the full spectrum of treatment for a pressure sore injury, often resulting in weeks of stage I charges before becoming stage IV. Depending on what is claimed, pled, or released in the case documents, a specific ICD-10 code allows attorneys to narrow the related pressure sores to stage IV only, which is important because stage IV is typically the only stage in which a sore is actionable in a lawsuit.

It is not uncommon for Medicare to establish duplicate records (same date of loss, injuries, etc.) arising from the requirement that both plaintiffs and defendants make a report. As one might expect, this dual reporting creates the opportunity for discrepancies to arise between the information reported from both sides, resulting in the establishment of duplicate records. Duplicate records can be closed by notifying Medicare that the duplicate records are from the same settlement. Medicare is aware that duplicate records are common and are generally receptive to closing them. Unfortunately, not all parties will be copied on every record that is established, making it crucial for attorneys to instruct clients to provide them with any correspondence received from Medicare. This helps to avoid the situation of Medicare escalating a duplicative debt and saves attorneys and their clients from the time-consuming pursuit of closing a duplicate record in its later stages. 

Once a case settles and an attorney reports the settlement to Medicare, a final demand is issued. The final demand is the most important document received in the lien resolution process. The demand letter provides information on the procedure for resolving the debt by repayment, as well as on administrative appeal rights.  A demand is time sensitive, not only for repayment purposes, but also for administrative appeal right deadlines. 

The final demand will contain a listing of all claims Medicare contends are related to the compensable injury. It is vital that a comprehensive audit of the claims be performed in order to confirm that Medicare has not included unrelated charges. While Medicare is generous with the length of time allowed to file a first level appeal (120 days), they are equally strict with adhering to those timeframes. Late filings will be dismissed unless Medicare is provided with sufficient cause for an extension.

When reviewing a final demand, another consideration to be aware of is the time span of asserted claims. Medicare is only entitled to recover from the date of loss, injury or illness, through the date of settlement. A reported settlement date should toll any claims being pulled into the demand after the settlement date, and thus, a quick review of dates of service is prudent.

Lastly, even in cases where an attorney agrees that all the amounts Medicare is claiming is related to their client’s case, there are still other avenues for getting Medicare to reduce their final amount. Compromise and waiver requests are often the best option at making sure that a client receives the maximum amount of their recovery. Although, Medicare will not always grant these types of requests, in cases where a claimant will suffer a substantial financial hardship or the amount Medicare is requesting is inequitable based on the breakdown of settlement proceeds, either or both of these remedies should be pursued for a reduction. Firms with robust procedures for identifying cases where Medicare potentially has an interest, that follow the proper channels for reporting, and that exhaust all remedies for reduction, are typically those that are able to negotiate the best possible outcomes for their clients.
About the Author
Shery Ramezanian is CEO and founder of LitPro. LitPro brings more than 50 years of combined experience in navigating this crucial area of the settlement timeline. “Our approach is to maximize settlement dollars by leveraging our relationships and our tested and proven internal processes to alleviate the challenges currently facing our clients.” Learn more. Shery is a legal, compliance, and MBA-qualified executive with a background in healthcare reimbursement obligations, legal process outsourcing, and management consulting internationally. Shery brings focused skills in business operations, commercial negotiation, legal process outsourcing, and project management. Following a successful legal career in the USA, Shery worked globally in the management consulting space both with Huron Consulting Group and later with  global law firm Eversheds. At Huron, Shery was a key player in launching the Middle East office based in Dubai, UAE. At Eversheds, she was hired as the international lead to globally develop business of a management consultancy practice within a global law firm. She provided innovative solutions to a Fortune 500 client base, with a focus on the USA, Middle East and Asia Pacific regions. Shery recently worked for a leading legal process outsourcing company specializing in mass tort and class action litigations. In this role, she worked as a business development leader to generate organizational growth by planning and managing commercial activities, supporting and measuring performance against plan, coordinating marketing and market research efforts, and creating methodical processes to achieve new business goals in core and target expansion markets. Shery holds a BA from the University of North Carolina at Chapel Hill, a JD from the Michigan State University College of Law, an MBA from the University of North Carolina at Charlotte, a Governance, Risk, and Compliance diploma from the University of Manchester Business School, and a law license for the state of North Carolina. She also teaches undergraduate and MBA courses in Global Marketing at the University of North Carolina at Charlotte. 

Charles is an experienced attorney and legal operations executive with a background in complex settlement administration, healthcare reimbursement obligations, legal process outsourcing, business consulting and sales transformation. Most recently, Charles served as a Director of Legal and Compliance outsourcing at Conduent, where he consulted with healthcare sector clients on digital and workforce-enabled strategies for legal and compliance operations. Charles was responsible for retaining and consulting with in-house legal departments from pharmaceutical clients and large hospital systems. Prior to joining Conduent, Charles spent 7 years as a subject matter expert in lien resolution and complex settlement administration at a leading legal process outsourcing company. In that role, Charles served in a number of senior level positions overseeing operational, product development and business development. He was instrumental in obtaining, operationalizing and implementing a number of high profile projects for complex mass tort and environmental litigations. Charles holds a BA from Appalachian State University, a JD from the Charlotte School of Law, and a law license for the State of North Carolina.