A MORE EFFICIENT APPROACH TO SETTLE A MEDICARE CLAIM
by Scott G. Weber
As United States Senator, Ben Nelson (D-Neb), put it last October, "The current Medicare secondary payment program is a bureaucratic mess that often leaves everyone involved in the settlement process - from Medicare beneficiaries to small businesses - unsatisfied."1 Anyone who has dealt with the Medicare Secondary Payer Program (MSP) undoubtedly shares Senator Nelson’s sentiment. Therefore, Senator Nelson along with other U.S. Congressmen led a bipartisan effort to make the MSP more efficient and cost effective to taxpayers. The new act entitled Strengthening Medicare and Repaying Taxpayers (SMART Act) will speed up the rate by which Medicare and its beneficiaries are reimbursed for costs that should be borne by another party.
Under the MSP program, if a Medicare beneficiary is injured by a third party and litigation is pursued as a result of that injury, the third party may be found responsible for paying the individual’s medical expenses, often through the form of a settlement or judgment. If Medicare, now the "secondary payer," paid any of the costs associated with the injury, it is entitled to reimbursement. In fact, it maintains an automatic lien which the courts will enforce against any settlement or judgment in the case.
There are numerous complications with the current system. For example, Medicare does not have the means to disclose the secondary payer amount before settlement, creating unnecessary uncertainty that makes it difficult when attempting to settle a case. In addition, there are times when Medicare spends more money pursuing an MSP payment than they actually receive in payment, which costs the government and ultimately taxpayers. Privacy concerns may arise with the requirement of beneficiaries to submit sensitive personal information. Finally and most frustratingly may be the inordinate amount of time it takes to coordinate a settlement with MSP with regard to their lien claim (which can take six months or more depending on whether you agree with their "final demand").
Among the reforms to redress these complications, the Medicare and Medicaid Services have implemented a new and simple fixed percentage option that is available to certain beneficiaries, effective November 7, 2011. This option will speed up the process by which settlements involving Medicare are resolved. It is available to beneficiaries who receive certain types of liability insurance (including self insurance) in settlements of $5,000 or less. A beneficiary who elects this option will be able to resolve Medicare’s recovery claim by paying Medicare 25% of his or her total liability insurance settlement instead of using the traditional recovery process. This means that a beneficiary will know what he or she owes and will be able to immediately pay Medicare.
To pursue this option, the following conditions must be met:
- The liability insurance settlement is for a physical trauma based injury. In other words, it does not relate to ingestion, exposure, or medical implant; and
- The total liability settlement, judgment, award, or other payment is $5,000 or less; and
- The beneficiary elects the option within the required time frame and Medicare is not issued a demand letter or other request for reimbursement related to the incident; and
- The beneficiary has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident.
It is important to note that when a beneficiary elects this option, he will be giving up the right to appeal the fixed payment amount or request a waiver of recovery for the fixed payment amount. It is also worth considering whether the settlement or judgment amount minus the anticipated MSP lien is greater than 75% of the settlement or judgment. The advice of counsel when negotiating a settlement with MSP can be extremely beneficial. Should you have any questions on this matter, feel free to contact me at 309-674-1133.
1http://wyden.senate.gov/newsroom/press/release/; accessed 11/25/11.