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MEDICARE SECONDARY PAYER LAW COMPLIANCE FOR LITIGATORS AFTER THE MEDICARE, MEDICAID AND S-CHIP EXTENSION ACT OF 2007

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Teddy (Theda) Snyder, Esq., CSSC, is an attorney and Certified Structured Settlement Consultant in the Beverly Hills, California office of Ringler Associates. Ringler Associates is the oldest and largest structured settlement brokerage, helping parties conclude claims with free evaluation and negotiation services. Teddy joined Ringler in 2001 after more than 20 years of litigation and litigation management experience, including more than 100 trials. She has presented lectures to numerous legal organizations, state bar associations and annual meetings of the American Bar Association. Her articles have been published in a variety of legal and insurance journals and newspapers, and she has written four books about running a law practice, all published by the American Bar Association. Ms. Snyder holds a J.D. degree from Loyola University School of Law in Chicago and a B.A. cum laude from the State University of New York at Buffalo. She also holds the Certified Structured Settlement Consultant designation conferred by the University of Notre Dame, and is certified to broker structured sales. She can be reached at [email protected] or (310) 889-8165 DISCLAIMER: The following materials and accompanying Access MCLE, LLC audio program are for instructional purposes only. Nothing herein constitutes, is intended to constitute, or should be relied on as, legal advice. The author expressly disclaims any responsibility for any direct or consequential damages related in any way to anything contained in the materials or program, which are provided on an “as-is” basis and should be independently verified by experienced counsel before being applied to actual matter. By proceeding further you expressly accept and agree to Author’s absolute and unqualified disclaimer of liability.

mailto:[email protected]


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TABLE OF CONTENTS

I. Background- Medicare Secondary Law before MMSEA ........................................................... 3 II. Workers Compensation Medicare Set-Asides 2001................................................................... 3 III. Medicare, Medicaid and S-CHIP Extension Act of 2007 (“MMSEA”)................................... 4

How To Determine If A Claimant Is A Medicare Beneficiary................................................... 5 1) Use the status request form................................................................................................. 5 2) Query software ................................................................................................................... 5

Report Data Elements ................................................................................................................. 6 How To Handle Settlements, Judgments, Awards, Payments After MMSEA........................... 6

Determine claimant‘s Medicare status.................................................................................... 6 REPORT!................................................................................................................................ 6 Medicare Set-Asides For Claim-Related Medicare-Eligible Expenses— New Deal Point In Negotiations ............................................................................................................................ 6

Four distinct Medicare Set-Aside concepts ................................................................................ 6 MSA ALLOCATION ............................................................................................................. 6 MSA REPORT ....................................................................................................................... 8 MSA APPROVAL.................................................................................................................. 8 MSA ACCOUNT.................................................................................................................... 8

Take-Away Points....................................................................................................................... 9 For claims brought by a Medicare beneficiary, create a good-faith allocation .............. 9 Your structured settlement broker can compute the present value of a future stream of expenses (no fee)..................................................................................................................... 9

What happens if the case is tried or arbitrated? .......................................................................... 9 Scenarios:................................................................................................................................ 9

BEWARE THE “DANGER ZONE” ........................................................................................ 11 What if Medicare was not notified of the settlement prior to the report submission?.............. 11

Look for continuing information from CMS ................................................................................ 11 42 USC 1395y RELEVANT SECTIONS..................................................................................... 12

42 CODE OF FEDERAL REGULATIONS- RELEVANT SECTIONS ……………………14

July 23, 2001 CMS memo………………………………........………………………………….21

Status Request Form………………………………………………………………………..……42

Additional Citations……………………………………………………………………..……… 44


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I. Background- Medicare Secondary Law before MMSEA In effect since 1980, Medicare Secondary Payer (“MSP”) rule provides that Medicare is the secondary payer. 42 USC 1395y. Medicare won‘t pay if there is a primary payer. CMS, the Centers for Medicare and Medicaid services, administers the MSP. MEDICARE is part of the Department of Health & Human Services (“HHS”). References to “Secretary” mean the Secretary of the Department of Health & Human Services. CMS has consolidated all of the functions and workloads related to MSP post-payment recoveries into one MSP recovery contract. The Medicare Secondary Payer Recovery Contractor (“MSPRC”) is the recovery contractor. Each of these entities has its own website for further information. “Primary Payers” include

• Liability, Workers Compensation, and no-fault insurers • Self-insureds • Health insurers

Under MSP, Medicare may make a “conditional payment” to a medical provider, but it has a “right of recovery” (aka “lien”) to get it back. 26 Code of Federal Regulations § 411.24 provides:

• CMS has a direct right of action to recover from any primary payer. • CMS has a right of action to recover its payments from any entity, including a beneficiary,

provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.

• The primary payer must reimburse Medicare even though it has already reimbursed the beneficiary or other party.

• If it is necessary for CMS to take legal action to recover from the primary payer, CMS may recover twice the amount of the amount of the Medicare primary payment.

Penalties for failure to reimburse Medicare for a conditional payment include: For claimant: loss of Medicare benefits For primary payer: 100% penalty for shortfall up to total amount of settlement Duty to repay a conditional payment is known as “Medicare reimbursement liability.” Enforcement was not pervasive. Plaintiff attorneys should notify Medicare early in the case so a Conditional Payment Letter will issue

II. Workers Compensation Medicare Set-Asides 2001


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On 7/23/2001, by publication of an internal memo, CMS mandated Medicare Set-Asides in workers compensation claims to protect Medicare’s interest. Parties are required to set aside that portion of a workers compensation settlement which represents payment for future claim-related Medicare-eligible expenses. The set-aside account can be administered by a third party administrator or self-administered. CMS established two categories of claims where a Set-Aside would be required to protect Medicare’s interest:

“Class 1”: The claimant is already receiving Medicare benefits due to disability or age regardless of the amount of the settlement.

OR “Class 2”: The settlement will pay out $250,000 or more and the claimant is

likely to be eligible for Medicare within 30 months CMS refined its position through a series of memoranda. These are synthesized into a single document at: http://www.cms.gov/WorkersCompAgencyServices/04_wcsetaside.asp CMS offices will review and issue an approval letter for Class 1 workers compensation claims exceeding $25,000 and Class 2 workers compensation claims. Approval is not required, though most insurance carriers have insisted on it.

III. Medicare, Medicaid and S-CHIP Extension Act of 2007 (“MMSEA”) On December 29, 2007, President Bush signed into law the Medicare, Medicaid and S-CHIP Extension Act of 2007 (“MMSEA”). By its terms, the law was to go into effect on 7/1/2009, but technological difficulties have delayed implementation. MMSEA is an amendment to the MSP. This is a big, sprawling, omnibus law; only §111(g) applies to claims seen in litigation which might close out a claim for medical benefits. MMSEA creates reporting requirements to facilitate enforcement of the Medicare Secondary Payer law. Primary payers are required to file quarterly reports detailing information about the parties and the claim. This new potential for Medicare reporting liability allows better enforcement of Medicare reimbursement liability. The goal is to stop double-dipping and thereby strengthen Medicare so it will be around for the rest of us. The reporting law applies to:

Settlements Judgments

http://www.cms.gov/WorkersCompAgencyServices/04_wcsetaside.asp


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Awards Payments

where the claimant is a Medicare beneficiary and a claim for medical liability is being closed out. This includes employment cases where there is a claim for medical liability. CMS teleconference 06-09-09, transcript page 6 Payments to be reported fall into two categories:

“TPOC”, pronounced “tea-pock”, stands for Total Payment Obligation to Claimant. This is a lump sum payment, such as typically concludes a liability case or a total closure of a workers compensation claim.

“ORM”, Ongoing Responsibility for Medical applies to workers compensation claims and no-fault claims. A report is required upon the assumption and closing of ORM.

The penalty for failure to report is $1,000 per day per claimant. Primary Payers must electronically report through their Responsible Reporting Entity (“RRE”) 132 information fields in the basic report, more if there is more than 1 Claimant and 1 Defendant. A Primary Payer’s “Responsible Reporting Entity” must register to electronically report. Reports will be quarterly. Primary Payers must start transmitting real data in 1st Quarter 2011. Each RRE is assigned a one-week window in which to report. “Trigger dates” for reporting:

TPOC after 10/01/2010 ORM for claims open as of 01/01/2010

Small claim TPOC exemptions: 2010 and 2011 : $5,000 2012: $2,000 2013: $ 600 How To Determine If A Claimant Is A Medicare Beneficiary 1) Use the status request form. 2) Query software The RRE can obtain free query software from CMS. A query system is available to determine Medicare status, but submitter must have claimant’s Health Insurance Claim Number or Social Security Number. Queries may be submitted once a month for an unlimited number of claimants.

3 of 4 fields must match the submitted #: • First initial of first name • First 6 characters of last name • Gender


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• DOB 01=Yes 51=No match

Report Data Elements Identifying information about:

The Primary Plan (Insurance Carrier or Self-Insured plan) Injured Medicare beneficiary or claimant, if different Policy-Holder Claimant’s Attorney (or other representative) Incident and Resolution Information: Nature of Claim- Unique fields for Product Liability claims Venue International Classification of Diseases Code(s) Date of Occurrence Description of injury field-- in place through 2010 TPOC

How To Handle Settlements, Judgments, Awards, Payments After MMSEA Determine claimant‘s Medicare status Guidelines:

65 years old Disabled Receiving SSDI (Social Security Disability Income) End-Stage Renal Disease

REPORT! There is no “safe harbor” Medicare Set-Asides For Claim-Related Medicare-Eligible Expenses—

New Deal Point In Negotiations All parties will benefit from a lower Medicare Set-Aside

Four distinct Medicare Set-Aside concepts MSA ALLOCATION The amount of future claim-related Medicare-eligible expenses necessary to protect Medicare’s interest When is an allocation unnecessary? 1) The facts demonstrate that claimant is only being compensated for PAST medical expenses


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2) No evidence of attempt to maximize other aspects of the settlement, e.g., lost wages, to Medicare’s detriment 3) Treating physicians conclude in writing that to a reasonable degree of medical certainty that individual will no longer require any Medicare-covered treatments related to the claim CMS memo 4/22/2003 MSAs can be set up as a lump sum with no discount for present value -OR- as a structured settlement with a discount for present value and taking into account the claimant’s individual life expectancy Allocation must be in good faith Sample language:

The parties have taken Medicare’s interests into account and set aside $2,000 for claim-related Medicare-eligible expenses”

“The parties have taken Medicare’s interests into account and set aside $26,447.06 as an initial deposit and annual lifetime payments of $3,676.47 commencing within one year of settlement for claim-related Medicare-eligible expenses”

Lump sum MSA No discount for present value, e.g., an MSA allocation of $118,358.81 to be paid upon settlement will cost $118,358.81. Structured MSA Almost always costs less due to the discount for present value

Cost Payout MSA Initial Deposit $26,447.06 $26,447.06

Annual MSA payment $3,676.47 per year for life starting on 7/10/2011 (Expected Lifetime 25.4 yrs)*

$54,783.00 $91,911.75

$81,230.06 $118,358.81

In liability cases, resolution is a compromise of many elements not present in health insurance or workers compensation, e.g., comparative negligence, policy limits, nuisance value settlements CMS’ position is that they are entitled to the entire TPOC amount necessary to satisfy their right of recovery: “. . .The agency’s perspective is that we have priority right of recovery as well as a subrogation right. We do not do a pro rata reduction based on comparative negligence. Nor do we do a reduction based on allocation of fault or any allocation of the parties. . . . If you settle for a nuisance value of $10,000 then we have recovery rights up to that amount. … [But] beneficiaries have certain rights including the right to request a waiver of recovery


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in certain situations which takes into account both determinations of what’s called without fault as well as whether it’s against equity and good conscience would defeat the purpose of the Medicare program in order to recover. And they have full administrative appeal rights and potentially judicial review rights on that issue.. . .” CMS teleconference 12-15-2009, transcript pp.50-52 Will this work? “The parties have taken Medicare’s interests into account and set aside $0 for claim-related Medicare-eligible expenses. Notwithstanding the release by Plaintiff of all claims for future medical care, the parties do not have reason to believe such claim-related care will be incurred.” “The parties have taken Medicare’s interests into account and set aside $20,000 as an initial deposit and annual lifetime payments of $4,325 commencing within one year of settlement for 50% of future anticipated claim-related Medicare-eligible expenses. Due to 50% comparative negligence, the settlement does not compensate the balance.”

MSA REPORT If parties cannot agree, or need assistance, an MSA allocation company, such as Ringler Medicare Solutions, can prepare a report of projections of future claim-related Medicare-eligible expenses Report is an analysis of medical reports and paid medical benefits resulting in a recommendation for an MSA allocation; typically provides both lump sum and annuitized funding options

MSA APPROVAL

MSA approval is optional and may not be available for your case Whether approval is available depends on the CMS Regional Office’s workload. Approval is not currently available for California liability claims. Regional offices are in Atlanta, Boston, Chicago, Dallas, Philadelphia, San Francisco, Seattle. “Liability set-asides; both of them, worker’s comp and liability, neither one of them has ever been required to participate in a CMS review process” CMS teleconference transcript 3/24/09. page 61

MSA ACCOUNT

An interest-bearing bank account administered by the claimant or a professional custodian for payment of claim-related Medicare-eligible expenses


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An MSA Account is not a trust, though it may be wrapped in a Special Needs Trust where appropriate. Medicare Set-Aside Account Administration

SAMPLE ADMINISTRATION YEAR ONE Initial Dep. $30k | Medicare-Eligible Expenses $5k | Bal. $25k | Medicare pays $0 YEAR TWO Ann. Pymt. $5k | Medicare-Eligible Expenses $5k | Bal. $25k | Medicare pays $0 YEAR THREE Ann. Pymt. $5k | Medicare-Eligible Expenses $35k | Bal. $0 | Medicare pays $5k YEAR FOUR Ann. Pymt. $5k | Medicare-Eligible Expenses $4k | Bal. $1k | Medicare pays $0 YEAR FIVE Ann. Pymt. $5k | Medicare-Eligible Expenses $2k | Bal. $4k | Medicare pays $0 YEAR SIX Ann. Pymt. $5k | Medicare-Eligible Expenses: $2k | Bal. $7k | Medicare pays $0 YEAR SEVEN (Plaintiff dies after receiving his annual payment) Ann. Pymt. $5k | Medicare-Eligible Expenses $1k | Bal. $11k | Medicare pays $0 Medicare has a right of recovery for $5,000. $6,000 goes to Plaintiff’s heirs. Take-Away Points

For claims brought by a Medicare beneficiary, create a good-faith allocation Your structured settlement broker can compute the present value of a future stream of

expenses (no fee) What happens if the case is tried or arbitrated? Plaintiff should create and administer own set-aside account– no input from the primary payer Amount should reflect a good-faith allocation based on the verdict and admitted evidence Scenarios: Medicare patient obtains treatment post-settlement Medicare makes “conditional payment" to provider Medicare checks Health Insurance Claim Number against reported tort payments, sends Explanation of Benefits letter to patient to determine what sums from settlement were attributable to future claim-related Medicare-eligible expenses

1) No set-aside in agreement 100% of settlement deemed available to pay for care 2) Set-aside in agreement


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Inquiry as to how money was spent and how much is left; if anything left, must be used to reimburse Medicare, if nothing left, how was it spent? If spent on expenses other than claim-related Medicare-eligible expenses, patient must reimburse Medicare. Set-aside is not binding on Medicare

Both scenarios: Medicare can seek $$ from primary payer


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BEWARE THE “DANGER ZONE”

Example:

Case closes on 30th day of quarter Primary Payer reports on 46th day of quarter, this case not included Primary Payer reports on 46th day of next quarter Plaintiff presents for claim-related medical care on 60th day of first quarter and continues

treatment through 40th day of next quarter; Medicare pays because it has no notice of the primary payment

Medicare can seek reimbursement of its payment from the beneficiary, the health care provider, or the Primary Payer

What if Medicare was not notified of the claim prior to the report submission? At its April 14 2010 electronic town hall meeting, MSPRC unveiled its new document, the Conditional Payment Notice (CPN). Upon receipt of an electronic MMSEA report where there was no prior notice to Medicare, MSPRC will issue a CPN in lieu of the Conditional Payment Letter (CPL) it normally issues upon notice of a claim on a primary payer. The CPN can be disputed. The MSPRC will issue a Demand for payment. The CPN amount can increase if there are additional claim-related Medicare-eligible payments. The CPN procedure should not be common, as the Primary Payer will not report claims where there is no notice or query response that the claimant is on Medicare. If the Primary Payer does have notice that the claimant is on Medicare, it will likely take steps to make sure the Right of Recovery is resolved. Look for continuing information from CMS https://www.cms.hhs.gov/MandatoryInsRep/


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42 USC 1395y RELEVANT SECTIONS

§ 1395y. Exclusions from coverage and Medicare as secondary payer *** (b) Medicare as secondary payer *** (2) Medicare secondary payer (A) In general Payment under this subchapter may not be made, except as provided in subparagraph (B), with respect to any item or service to the extent that— (i) payment has been made, or can reasonably be expected to be made, with respect to the item or service as required under paragraph (1), or (ii) payment has been made, or can reasonably be expected to be made under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance. In this subsection, the term “primary plan” means a group health plan or large group health plan, to the extent that clause (i) applies, and a workmen’s compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance, to the extent that clause (ii) applies. An entity that engages in a business, trade, or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part. (B) Conditional payment (i) Authority to make conditional payment The Secretary may make payment under this subchapter with respect to an item or service if a primary plan described in subparagraph (A)(ii) has not made or cannot reasonably be expected to make payment with respect to such item or service promptly (as determined in accordance with regulations). Any such payment by the Secretary shall be conditioned on reimbursement to the appropriate Trust Fund in accordance with the succeeding provisions of this subsection. (ii) Repayment required A primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary under this subchapter with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service. A primary plan’s responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means. If reimbursement is not made to the appropriate Trust Fund before the expiration of the 60-day period that begins on the date notice of, or information related to, a primary plan’s responsibility for such payment or other information is received, the Secretary may charge interest (beginning with the date on which the notice or other information is received) on the amount of the reimbursement until reimbursement is made (at a rate determined by the Secretary in accordance with regulations of the Secretary of the Treasury applicable to charges for late payments). (iii) Action by United States In order to recover payment made under this subchapter for an item or service, the United States may bring an action against any or all entities that are or were required or responsible (directly, as an insurer or self-insurer, as a third-party administrator, as an employer


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that sponsors or contributes to a group health plan, or large group health plan, or otherwise) to make payment with respect to the same item or service (or any portion thereof) under a primary plan. The United States may, in accordance with paragraph (3)(A) collect double damages against any such entity. In addition, the United States may recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity. The United States may not recover from a third-party administrator under this clause in cases where the third-party administrator would not be able to recover the amount at issue from the employer or group health plan and is not employed by or under contract with the employer or group health plan at the time the action for recovery is initiated by the United States or for whom it provides administrative services due to the insolvency or bankruptcy of the employer or plan. (iv) Subrogation rights The United States shall be subrogated (to the extent of payment made under this subchapter for such an item or service) to any right under this subsection of an individual or any other entity to payment with respect to such item or service under a primary plan. (v) Waiver of rights The Secretary may waive (in whole or in part) the provisions of this subparagraph in the case of an individual claim if the Secretary determines that the waiver is in the best interests of the program established under this subchapter. (vi) Claims-filing period Notwithstanding any other time limits that may exist for filing a claim under an employer group health plan, the United States may seek to recover conditional payments in accordance with this subparagraph where the request for payment is submitted to the entity required or responsible under this subsection to pay with respect to the item or service (or any portion thereof) under a primary plan within the 3-year period beginning on the date on which the item or service was furnished. (C) Treatment of questionnaires The Secretary may not fail to make payment under subparagraph (A) solely on the ground that an individual failed to complete a questionnaire concerning the existence of a primary plan. *** (3) Enforcement (A) Private cause of action There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A). *** (8) Required submission of information by or on behalf of liability insurance (including self-insurance), no fault insurance, and workers’ compensation laws and plans (A) Requirement On and after the first day of the first calendar quarter beginning after the date that is 18 months after December 29, 2007, an applicable plan shall— (i) determine whether a claimant (including an individual whose claim is unresolved) is entitled to benefits under the program under this subchapter on any basis; and (ii) if the claimant is determined to be so entitled, submit the information described in subparagraph (B) with respect to the claimant to the Secretary in a form and manner (including frequency) specified by the Secretary. (B) Required information The information described in this subparagraph is— (i) the identity of the claimant for which the determination under subparagraph (A) was made; and


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(ii) such other information as the Secretary shall specify in order to enable the Secretary to make an appropriate determination concerning coordination of benefits, including any applicable recovery claim. (C) Timing Information shall be submitted under subparagraph (A) (ii) within a time specified by the Secretary after the claim is resolved through a settlement, judgment, award, or other payment (regardless of whether or not there is a determination or admission of liability). (D) Claimant For purposes of subparagraph (A), the term “claimant” includes— (i) an individual filing a claim directly against the applicable plan; and (ii) an individual filing a claim against an individual or entity insured or covered by the applicable plan. (E) Enforcement (i) In general An applicable plan that fails to comply with the requirements under subparagraph (A) with respect to any claimant shall be subject to a civil money penalty of $1,000 for each day of noncompliance with respect to each claimant. The provisions of subsections (e) and (k) of section 1320a–7a of this title shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1320a–7a (a) of this title. A civil money penalty under this clause shall be in addition to any other penalties prescribed by law and in addition to any Medicare secondary payer claim under this subchapter with respect to an individual. (ii) Deposit of amounts collected Any amounts collected pursuant to clause (i) shall be deposited in the Federal Hospital Insurance Trust Fund. (F) Applicable plan In this paragraph, the term “applicable plan” means the following laws, plans, or other arrangements, including the fiduciary or administrator for such law, plan, or arrangement: (i) Liability insurance (including self-insurance). (ii) No fault insurance. (iii) Workers’ compensation laws or plans. (G) Sharing of information The Secretary may share information collected under this paragraph as necessary for purposes of the proper coordination of benefits. (H) Implementation Notwithstanding any other provision of law, the Secretary may implement this paragraph by program instruction or otherwise. ***

http://www.law.cornell.edu/uscode/html/uscode42/usc_sec_42_00001320---a007a.html

http://www.law.cornell.edu/uscode/html/uscode42/usc_sec_42_00001320---a007a.html

http://www.law.cornell.edu/uscode/html/uscode42/usc_sec_42_00001320---a007a.html#a


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42 CODE OF FEDERAL REGULATIONS- RELEVANT SECTIONS

§ 411.21 Definitions.

In this subpart B and in subparts C through H of this part, unless the context indicates otherwise—

Conditional payment means a Medicare payment for services for which another payer is responsible, made either on the bases set forth in subparts C through H of this part, or because the intermediary or carrier did not know that the other coverage existed.

Coverage or covered services, when used in connection with primary payments, means services for which a primary payer would pay if a proper claim were filed.

Monthly capitation payment means a comprehensive monthly payment that covers all physician services associated with the continuing medical management of a maintenance dialysis patient who dialyses at home or as an outpatient in an approved ESRD facility.

Plan means any arrangement, oral or written, by one or more entities, to provide health benefits or medical care or assume legal liability for injury or illness.

Primary payer means, when used in the context in which Medicare is the secondary payer, any entity that is or was required or responsible to make payment with respect to an item or service (or any portion thereof) under a primary plan. These entities include, but are not limited to, insurers or self-insurers, third party administrators, and all employers that sponsor or contribute to group health plans or large group health plans.

Primary payment means, when used in the context in which Medicare is the secondary payer, payment by a primary payer for services that are also covered under Medicare.

Primary plan means, when used in the context in which Medicare is the secondary payer, a group health plan or large group health plan, a workers' compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan), or no-fault insurance.


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Prompt or promptly, when used in connection with primary payments, except as provided in §411.50, for payments by liability insurers, means payment within 120 days after receipt of the claim.

Proper claim means a claim that is filed timely and meets all other claim filing requirements specified by the plan, program, or insurer.

Secondary, when used to characterize Medicare benefits, means that those benefits are payable only to the extent that payment has not been made and cannot reasonably be expected to be made under other coverage that is primary to Medicare.

Secondary payments means payments made for Medicare covered services or portions of services that are not payable under other coverage that is primary to Medicare.

§ 411.22 Reimbursement obligations of primary payers and entities that received payment

from primary payers.

(a) A primary payer, and an entity that receives payment from a primary payer, must reimburse CMS for any payment if it is demonstrated that the primary payer has or had a responsibility to make payment.

(b) A primary payer's responsibility for payment may be demonstrated by—

(1) A judgment;

(2) A payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary payer or the primary payer's insured; or

(3) By other means, including but not limited to a settlement, award, or contractual obligation.


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§ 411.23 Beneficiary's cooperation.

(a) If CMS takes action to recover conditional payments, the beneficiary must cooperate in the action.

(b) If CMS's recovery action is unsuccessful because the beneficiary does not cooperate, CMS may recover from the beneficiary.

§ 411.24 Recovery of conditional payments.

If a Medicare conditional payment is made, the following rules apply:

(a) Release of information. The filing of a Medicare claim by on or behalf of the beneficiary constitutes an express authorization for any entity, including State Medicaid and workers' compensation agencies, and data depositories, that possesses information pertinent to the Medicare claim to release that information to CMS. This information will be used only for Medicare claims processing and for coordination of benefits purposes.

(b) Right to initiate recovery. CMS may initiate recovery as soon as it learns that payment has been made or could be made under workers' compensation, any liability or no-fault insurance, or an employer group health plan.

(c) Amount of recovery. (1) If it is not necessary for CMS to take legal action to recover, CMS recovers the lesser of the following:

(i) The amount of the Medicare primary payment.

(ii) The full primary payment amount that the primary payer is obligated to pay under this part without regard to any payment, other than a full primary payment that the primary payer has paid or will make, or, in the case of a primary payment recipient, the amount of the primary payment.

(2) If it is necessary for CMS to take legal action to recover from the primary payer, CMS may recover twice the amount specified in paragraph (c)(1)(i) of this section.


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(d) Methods of recovery. CMS may recover by direct collection or by offset against any monies CMS owes the entity responsible for refunding the conditional payment.

(e) Recovery from primary payers. CMS has a direct right of action to recover from any primary payer.

(f) Claims filing requirements.

(1) CMS may recover without regard to any claims filing requirements that the insurance program or plan imposes on the beneficiary or other claimant such as a time limit for filing a claim or a time limit for notifying the plan or program about the need for or receipt of services.

(2) However, CMS will not recover its payment for particular services in the face of a claims filing requirement unless it has filed a claim for recovery by the end of the year following the year in which the Medicare intermediary or carrier that paid the claim has notice that the third party is a primary plan to Medicare for those particular services. (A notice received during the last three months of a year is considered received during the following year.)

(g) Recovery from parties that receive primary payments. CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.

(h) Reimbursement to Medicare. If the beneficiary or other party receives a primary payment, the beneficiary or other party must reimburse Medicare within 60 days.

(i) Special rules. (1) In the case of liability insurance settlements and disputed claims under employer group health plans, workers' compensation insurance or plan, and no-fault insurance, the following rule applies: If Medicare is not reimbursed as required by paragraph (h) of this section, the primary payer must reimburse Medicare even though it has already reimbursed the beneficiary or other party.

(2) The provisions of paragraph (i)(1) of this section also apply if a primary payer makes its payment to an entity other than Medicare when it is, or should be, aware that Medicare has made a conditional primary payment.


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(3) In situations that involve procurement costs, the rule of §411.37(b) applies.

(j) Recovery against Medicaid agency. If a primary payment is made to a State Medicaid agency and that agency does not reimburse Medicare, CMS may reduce any Federal funds due the Medicaid agency (under title XIX of the Act) by an amount equal to the Medicare payment or the primary payment, whichever is less.

(k) Recovery against Medicare contractor. If a Medicare contractor, including an intermediary or carrier, also insures, underwrites, or administers as a third party administrator, a program or plan that is primary to Medicare, and does not reimburse Medicare, CMS may offset the amount owed against any funds due the intermediary or carrier under title XVIII of the Act or due the contractor under the contract.

(l) Recovery when there is failure to file a proper claim—(1) Basic rule. If Medicare makes a conditional payment with respect to services for which the beneficiary or provider or supplier has not filed a proper claim with a primary payer, and Medicare is unable to recover from the primary payer, Medicare may recover from the beneficiary or provider or supplier that was responsible for the failure to file a proper claim.

(2) Exceptions: (i) This rule does not apply in the case of liability insurance nor when failure to file a proper claim is due to mental or physical incapacity of the beneficiary.

(ii) CMS will not recover from providers or suppliers that are in compliance with the requirements of §489.20 of this chapter and can show that the reason they failed to file a proper claim is that the beneficiary, or someone acting on his or her behalf, failed to give, or gave erroneous, information regarding coverage that is primary to Medicare.

(m) Interest charges. (1) With respect to recovery of payments for items and services furnished before October 31, 1994, CMS charges interest, exercising common law authority in accordance with 45 CFR 30.13, consistent with the Federal Claims Collection Act (31 U.S.C. 3711).

(2) In addition to its common law authority with respect to recovery of payments for items and services furnished on or after October 31, 1994, CMS charges interest in accordance with section 1862(b)(2)(B)(i) of the Act. Under that provision—


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(i) CMS may charge interest if reimbursement is not made to the appropriate trust fund before the expiration of the 60-day period that begins on the date on which notice or other information is received by CMS that payment has been or could be made under a primary plan;

(ii) Interest may accrue from the date when that notice or other information is received by CMS, is charged until reimbursement is made, and is applied for full 30-day periods; and

(iii) The rate of interest is that provided at §405.378(d) of this chapter.

[54 FR 41734, Oct. 11, 1989, as amended at 55 FR 1820, Jan. 19, 1990; 60 FR 45361, 45362, Aug. 31, 1995; 69 FR 45607, July 30, 2004; 71 FR 9470, Feb. 24, 2006]

§ 411.25 Primary payer's notice of mistaken Medicare primary payment.

(a) If a primary payer learns that CMS has made a Medicare primary payment for services for which the primary payer has made or should have made primary payment, it must give notice to that effect to the Medicare intermediary or carrier that paid the claim.

(b) The notice must describe the specific situation and the circumstances (including the particular type of insurance coverage as specified in §411.20(a)) and, if appropriate, the time period during which the insurer is primary to Medicare.

(c) If a plan is self-insured and self-administered, the employer must give the notice to CMS. Otherwise, the insurer, underwriter, or third party administrator must give the notice.

[54 FR 41734, Oct. 11, 1989; as amended at 55 FR 1820, Jan. 19, 1990]

§ 411.26 Subrogation and right to intervene.

(a) Subrogation. With respect to services for which Medicare paid, CMS is subrogated to any individual, provider, supplier, physician, private insurer, State agency, attorney, or any other entity entitled to payment by a primary payer.

(b) Right to intervene. CMS may join or intervene in any action related to the events that gave rise to the need for services for which Medicare paid.


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§ 411.28 Waiver of recovery and compromise of claims.

(a) CMS may waive recovery, in whole or in part, if the probability of recovery, or the amount involved, does not warrant pursuit of the claim.

(b) General rules applicable to compromise of claims are set forth in subpart F of part 401 and §405.376 of this chapter.

(c) Other rules pertinent to recovery are contained in subpart C of part 405 of this chapter.

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MEDICARE SECONDARY PAYER LAW COMPLIANCE FOR LITIGATORS AFTER THE MEDICARE, MEDICAID AND S-CHIP EXTENSION ACT OF 2007 July 23, 2001 CMS memo creating MSA requirement for worker's compensation claims CAUTION: Portions of this memo have been superseded by later memoranda. Consult http://www.cms.gov/WorkersCompAgencyServices/04_wcsetaside.asp

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The Centers for Medicare & Medicaid Services (CMS) is the federal agency that oversees the Medicare program. Many Medicare beneficiaries have other insurance in addition to their Medicare benefits. Sometimes, Medicare is supposed to pay after the other insurance. However, if certain other insurance delays payment, Medicare may make a “conditional payment” so as not to inconvenience the beneficiary, and recover after the other insurance pays.

Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA), a new federal law that became effective January 1, 2009, requires that liability insurers (including self-insurers), no-fault insurers, and workers’ compensation plans report specific information about Medicare beneficiaries who have other insurance coverage. This reporting is to assist CMS and other insurance plans to properly coordinate payment of benefits among plans so that your claims are paid promptly and correctly.

We are asking you to the answer the questions below so that we may comply with this law.

Please review this picture of the Medicare card to determine if you have, or have ever had, a similar

Medicare card.

Section I Are you presently, or have you ever been, enrolled in Medicare Part A or Part B? □Yes □No If yes, please complete the following. If no, proceed to Section II. Full Name: (Please print the name exactly as it appears on your SSN or Medicare card if available.)

Medicare Claim Number:

Date of Birth (Mo/Day/Year)

- -

Social Security Number: (If Medicare Claim Number is Unavailable)

- - Sex □Female □Male

Section II I understand that the information requested is to assist the requesting insurance arrangement to accurately coordinate benefits with Medicare and to meet its mandatory reporting obligations under Medicare law. __________________________________________ __________________________________ Claimant Name (Please Print) Claim Number __________________________________________________________________________________ Name of Person Completing This Form If Claimant is Unable (Please Print) __________________________________________ _________________________________ Signature of Person Completing This Form Date If you have completed Sections I and II above, stop here. If you are refusing to provide the information requested in Sections I and II, proceed to Section III.

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MEDICARE SECONDARY PAYER LAW COMPLIANCE FOR LITIGATORS AFTER THE MEDICARE, MEDICAID AND S-CHIP EXTENSION ACT OF 2007 MEDICARE STATUS REQUEST FORM

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Section III __________________________________________ _________________________________ Claimant Name (Please Print) Claim Number For the reason(s) listed below, I have not provided the information requested. I understand that if I am a Medicare beneficiary and I do not provide the requested information, I may be violating obligations as a beneficiary to assist Medicare in coordinating benefits to pay my claims correctly and promptly. Reason(s) for Refusal to Provide Requested Information: _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ __________________________________________ _________________________________ Signature of Person Completing This Form Date

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ADDITIONAL CITATIONS Cox v. Shalala, 112 F. 3d 151 (4th Cir. 1997) MSP trumps state law Gory v. U.S. Food Service, Inc. WCAB ADJ1180690 (OAK 0281569) 10/23/2009 Employer didn’t pay Medicare as anticipated in Compromise & Release; injured worker’s Social Security Disability Income benefits garnished to reimburse Medicare In re Dow Corning http://www.tortcomm.org/downloads/Settlement_Agreement_with_U.pdf Settlement of U.S. government’s claim in bankruptcy court for failure of Debtor to create Medicare Set-Aside fund in settling the breast implant class action: U.S. v. Harris, Civ. Action 5:08CV102 (N.D. W.Va. 2008) Plaintiff Attorney liable for Medicare Secondary Payer reimbursement U.S. v. Rhode Island Insurers’ Insolvency Fund, 80 F. 3d 616 (1st Cir. 1996) A state insolvency fund can be a primary payer U.S. v. Stricker, Civ. Action CV-09-KOB-2423-E Government suit to collect Medicare Secondary Payer reimbursement from defendants and their insurers in underlying class action arising from settlement where claims for past and future medical expenses were released.

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http://www.tortcomm.org/downloads/Settlement_Agreement_with_U.pdf

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