• Resolving the Medicare lien is the claimant’s problem.

Resolving Medicare’s right to reimbursement of payments for medical treatment related to an injury upon which a negligence, workers’ comp, malpractice, no fault or other civil law claim has been made is the obligation of every party to the injury claim.

The Medicare Secondary Payer (MSP) statute -42 USC 1395y(b)(2)-, regulations under that statute -42 CFR 411.21 et seq.- and the Medicare, Medicaid and SCHIP Extension Act of 2007 -42 USC 1395y(8)- create obligations on the part of the Medicare beneficiary, the beneficiary’s attorney, the party against whom a civil claim is made by a Medicare beneficiary and the insurers of both the beneficiary and the claim respondent. Those obligations include reporting the claim to the Centers for Medicare and Medicaid Services (CMS), reimbursing past payments made by Medicare related to the claim and protecting Medicare’s interests related to future payments related to the claim.

• The personal injury claim respondent and its insurer need not worry about the Medicare lien if there is no finding or admission of liability for the injury that was treated by Medicare.

The MSP statute makes clear that the party / insurer claimed to be responsible to cover treatment that in fact has been provided by Medicare becomes primary to Medicare and thus owes reimbursement by making any payment in settlement of the claim, even if liability for the injury/treatment is never established and in fact is denied.42 USC 1395y(b)(2)(B)(ii).

• No one needs to worry about a Medicare lien unless Medicare takes some affirmation action to notify parties of the lien and requests reimbursement.

Medicare is not required to notify anyone of its right to reimbursement and is not required to make a request for reimbursement in order to enforce its right to recovery.  Federal law obligates the parties to the injury claim to notify Medicare of the claim and to take specific action to determine the amount of the reimbursement amount and to make reimbursement within a specified period of time.

• Medicare is only entitled to recover reimbursement from that portion of the settlement allocated to medical expenses.

Medicare’s right to reimbursement is not dependent on whether or to what extent there is any allocation of the settlement to various types of loss. However, Medicare does recognize allocations of settlements to nonmedical losses when payment is based on a court order on the merits of the case and will not seek recovery from portions of court awards designated as payment for nonmedical losses.Medicare Secondary Payer Manual, section 50.4.4.

• Initiating contact with Medicare regarding resolution of its right to reimbursement should not be done until the claim is settled.

Resolving a Medicare lien is a multi-step process that can take months to complete and should be started well before settlement is reached.  Those steps include reporting the claim to Medicare’s Coordination of Benefits Contractor, communicating with the Medicare Secondary Payer Recovery Contractor to determine what Medicare payments were and were not related to the underlying claim and, when required, asking that the Medicare lien amount be compromised or waived in order to allow the claim to settle. In many cases it makes more sense to handle lien waiver and compromise negotiations before settlement is reached.

• There is no process for review or appeal from a determination on a Medicare lien determination.

There is an established, multi-level review and appeal process from the determination of the amount Medicare is entitled to recover.

• The new mandatory insurer reporting law requires the use of Medicare set-asides in settlement of non-workers’ compensation cases.

The Medicare, Medicaid and SCHIP Extension Act of 2007 imposes new requirements for reporting of negligence, no fault, malpractice, uninsured motorist and other non-workers’ compensation claims of Medicare beneficiaries.  The law does not expand the requirement for the creation of Medicare set-aside accounts beyond the current requirement for use of set-asides in settlement of certain workers’ compensation cases.

Implementation of the new reporting requirements has led to greater awareness of the already existing obligation of the parties to personal injury claims of all kinds to protect Medicare’s interests in settlement of those claims. Even in non-workers’ compensation settlements, Medicare set-asides may be used to demonstrate that the parties took Medicare’s interests into consideration in the settlement. However, there are other ways to protect Medicare’s interests in non-workers’ compensation settlement short of creating a set-aside account.

• Where the Medicare lien exceeds the amount of the settlement (or exceeds the amount of the policy limits) the entire settlement amount will be taken by Medicare.

Medicare’s final reimbursement demand will reflect reductions in consideration of attorney fees and costs incurred in prosecuting the personal injury claim under42 CFR 411.37and Medicare has a process for waiving its reimbursement or compromising the amount of its recovery depending on the individual facts and circumstances of the case.42 CFR 411.28; 42 CFR 401.613

• Attorneys representing parties to personal injury claims don’t have to worry about penalties or sanctions directed at them if their clients don’t comply with Medicare reimbursement and reporting requirements.

CFR 411.24(g)makes an attorney who receives funds from a primary payer liable to reimburse Medicare conditional payments.  The federal courts have recognized the attorney’s obligations and liability for payment to Medicare when reimbursement requirements are not met.U.S.v. Paul J. Harris, 2009 WL 891931 (N.D.W.Va.)

In most states rules are in effect governing attorney conduct modeled on ABA Model Rule 1.15(d), requiring attorneys to notify third parties (such as Medicare) when client funds in which the third party may have an interest come into the attorney’s hands and to deliver client funds to the third party once the third party’s interests are established.

Attorneys have an established obligation to Medicare and May 2009 amendments to the federal False Claims Act create the opportunity for expanded sanctions against attorneys for failing to comply with an obligation owed to an agency of the federal government.

• Medicare reimbursement requests only include payments made by Medicare that were for treatment related to the injury involved in the underlying personal injury claim.

Although Medicare is only entitled to reimbursement of payment made for treatment of the injury involved in the personal injury claim the reality is that many Medicare requests for reimbursement include payments made by Medicare to treat medical conditions that pre-existed the claim injury or were otherwise unrelated to the claim injury.  It is important to audit the reimbursement requests to identify and then challenge the request for reimbursement of payments for unrelated treatment.