The Court’s job is not to do the heavy lifting of Medicare Secondary Payer Compliance for the insurance carrier settling a claim with a Medicare beneficiary. The Act requires: 1) Medicare be paid back for any items and services it has paid for related to the claim; 2) Medicare’s interests be protected with regard to “Future Medicals” ; and 3) Report to Medicare certain settlements exceeding thresholds established by the Centers for Medicare & Medicaid Services (CMS). If a defendant does not address these issues of compliance, well before a settlement conference or mediation, then do not expect the Court, even a Federal Court, to fill in the blanks after a settlement is consummated.
In Bruton v. Carnival Corporation, 2012 U.S. Dist. LEXIS 64416 (USDC So. Dist. Fla., May 12, 2012), plaintiff sued as a result of a slip and fall she sustained while a passenger on a cruise ship. As it was a maritime matter, venue was proper in Federal Court. During the pendency of the claim, Carnival was made aware that plaintiff was a Medicare beneficiary. When the matter was mediated, the amount owed to Medicare was not known and the parties did not discuss the approach to considering Medicare’s Interest with regard to Future Medicals, as set forth in the CMS Memo issued on 9/29/2011 on this topic. As the settlement amount is not known, we cannot tell if there is a reporting requirement under 42 U.S.C. Section 1395y(b)(8).
During the mediation, plaintiff agreed to pay the Medicare lien and the case was resolved with a Mediation Settlement Agreement that provided that Plaintiff would execute a general release with “Medicare provisions”. When the proposed Release was supplied by Carnival, Medicare provisions included repayment of the Medicare lien and establishment of a Medicare Set Aside (“MSA”). Plaintiff rejected the MSA language and a dispute arose when Carnival pushed for its continued inclusion. To resolve the impasse, Plaintiff moved to enforce settlement and asked the Court to decide.
Carnival lost. The Court did not decide that a MSA did not exist. Rather, because the parties did not agree during the mediation to its creation, Carnival had no basis to force it on the Plaintiff. Making matters worse, Carnival was provided no control over the repayment to Medicare for conditional payments and therefore Carnival remains exposed to 42 C.F.R. Section 411.24(i). The lesson learned here is that approaching a mediation or settlement conference without a game plan on Medicare Secondary Payer Compliance can lead to serious consequences.
The exposures faced by insurance carriers, including self insurance, when paying a Medicare beneficiary in a liability settlement are significant. Having a plan in place saves money and time. First, deal with what is owed to Medicare. Although the industry continues to express complaints about the challenges to determine from Medicare what it is owed, the best practices we have in place for our clients have made this us an easy lift for the client. Attending a mediation without a number from Medicare does not happen for our clients. Second, determine if the liability case is, in fact, one that has to deal with “Future Medicals”. The right step is to “consider Medicare’s interests”. If the case does not deal with future treatment, or if there is clear evidence that Medicare is protected, a MSA is not necessary. Future Medicals do have to be managed under the CMS Memo, so practitioners must work toward a manageable solution before settlement negotiations. Nearly every case leads to the same result in this matter involving Carnival because the MSA is undertaken by ambush. As of today, there are no clear rules in place, but CMS is working toward clarity, see our blog on the CMS proposed rule submission to the Office of Management & Budget. The most significant failure of this case is the lack of attention to the reporting issues. Medicare requires reporting, and there was no mention by the parties of the required data fields that should be agreed upon so the Medicare beneficiary and the primary plan are protected. The third focus of any settling claim involving a Medicare beneficiary is to plan for reporting.
Protecting Medicare is a responsibility we all share. It is more than an MSA. It covers reimbursement, reporting and Future Medical. We must rethink our approach to settlements with a Medicare beneficiary if we want to achieve compliance and to avoid surprises.
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