With the recent passage of SB 2499 (“Medicare, Medicaid, and SCHIP Extension Act of 2009”), all businesses with exposure to tort claims – including personal injury claims – need to be keenly aware of Medicare’s reimbursement rights. Medicare’s reimbursement rules are changing, and businesses should consider modifying their liability and settlement strategies. Importantly, there likely will be stiff penalties for businesses that do not follow the new requirements.
Here are a few tips that businesses should consider when navigating the murky waters created by the new law:
Reimburse Medicare for conditional payments. Medicare’s primary concern is to get reimbursed; it is less concerned about who is at fault. If a liability claim is settled, the settlement is evidence of responsibility, and Medicare can pursue its reimbursement right against the primary payer. (According to Medicare, a “primary payer” is any person or entity who has the primary responsibility to pay a claimant’s medical expenses before Medicare will step in to cover the remainder. This could be the claimant, his or her health insurance provider, or a person or entity responsible for the claimant’s injury.) Therefore, a forward-looking evaluation of liability claims is required to ensure Medicare’s interests are considered. Businesses must be wary of claimants who attempt to over-estimate their Medicare obligations in order to pad their settlements. This possibility is what makes the following bullet point so important.
Notify Medicare of claims that implicate Medicare’s interests. It is vitally important that businesses be diligent in discovering whether a claimant is a Medicare beneficiary. This is a much easier task when formal litigation is involved because interrogatories and depositions can be used to require the claimant to answer pointed questions under oath about his or her Medicare status. However, it is not as simple in the pre-litigation stage, since the claimant has no obligation to truthfully report his or her Medicare status. One way to discover a claimant’s Medicare status is to require him or her to sign a Social Security form SSA-3288 (also known as the “Consent to Release Information” form). This form can be sent to a local Social Security office with a request for complete benefit eligibility information. Most importantly, the primary payer must not fund a settlement with a claimant until the claimant’s Medicare status has been verified. Once a claim is resolved, Medicare must be notified so that it can seek reimbursement for conditional payments. Failure to notify Medicare in a timely manner can result in a fine of $1,000 per day, per claim.
Make sure that HIPAA compliance remains on your radar. With sensitive information comes great responsibility. Once a primary payer has obtained Medicare eligibility information – which will likely include sensitive information such as Social Security numbers and/or Medicare HIC numbers – the primary payer must develop procedures for collecting, storing and transmitting such information while complying with HIPAA privacy rules. In addition, when claims are resolved, it is likely (but not certain at this point) that Medicare will require medical records when the primary payer notifies Medicare of the claim resolution. Obviously, such information may be subject to HIPAA privacy rules and must be managed accordingly.
Evaluate Medicare’s “future interests.” Some of the language within the new law is not very clear, and many industry participants believe that Medicare will require set-asides to compensate it for future conditional payments. This is already the case in the Workers’ Compensation arena. Because it is no longer the sole obligation of the Medicare beneficiary and his or her attorney to make sure that Medicare is reimbursed out of settlement proceeds, businesses may wish to structure settlement agreements so that a sum of money is set aside to take care of any future conditional payments made by Medicare.
Companies should keep these tips in mind and follow specific procedures to ensure that they are adequately complying with Medicare’s new reimbursement requirements.
Adams and Reese LLP has prepared a detailed litigation and discovery package aimed at helping companies obtain necessary information from claimants in order to satisfy Medicare’s new reporting requirements. For claims that never reach formal litigation, we have developed a list of protocols that should be followed in order to obtain the same information. If you would like to review this information, please contact David Toney at (713) 308-0166 or .