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Birmingham Bar Association Bulletin - Fall 2014

Medicare Law Jennifer W. Pickett; Smith, Spires & Peddy P.C. Updates To Medicare Reporting & Reimbursement Requirements • Th e current mandatory reporting threshold for liability insurance (including self-insurance) Total Payment Obligation to the Claimant (TPOC) is $2,000 and over for TPOCs dated on or after October 1, 2013. • Th e mandatory reporting threshold for liability (including self-insurance) TPOCs dated October 1, 2014 and after is changing from $300 to $1,000. If A. Cases to Magistrate Judges Northern District’s System of Referring the most recent TPOC Date is on or after October 1, 2014, and the cumulative TPOC Amount is greater than $1,000, TPOC(s) must be reported no later than the end of the Responsible Reporting Entity (RRE’s) submission timeframe in the quarter beginning January 1, 2015. Future medicals Since 1980, Medicare has required that it be reimbursed for conditional payments made in liability cases. Th e recent Medicare law, Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (“the Act”), now imposes reporting and reimbursement requirements to ensure that Medicare recovers monies paid for medical damages to plaintiff s who are Medicare benefi ciaries. Th ere is a four-step process under this new law: (1) Determine Medicare status of the claimant; (2) Report settlements involving Medicare benefi ciaries; (3) Reimburse Medicare for conditional payments made; (4) Give consideration to Medicare’s interest in future payments. Th e practical application of the Act has caused confusion and considerable delay since all parties and entities in a liability claim are potentially responsible for failing to abide by the above requirements. Unfortunately, the Centers for Medicare and Medicaid Services (CMS) acknowledge that signifi cant questions remain unanswered, such as how to handle future medical care. On the other hand, CMS and Congress have recently taking steps to minimize the burdens, delays and confusion brought about by the Act. Th e thresholds for reporting certain settlements, judgments, etc. have been updated as follows: A. Regarding future medical payments in non-workers’ compensation cases, there is no set requirement that a Medicare Set-Aside (MSA) be established. In fact, Medicare is not set up at this time to review MSAs in liability cases. Medicare, however, has the right under this new law to challenge settlement agreements that do not adequately consider whether Medicare will be required to pay future medicals arising out of the claim. Consider that in workers’ compensation cases, an MSA is required when the claimant is a Medicare benefi ciary and the settlement is greater than $25,000. An MSA is also required when the claimant is expected to be a Medicare benefi - ciary and the total settlement is greater than $250,000. Obviously, the more extensive the future medicals, such as with a life care plan, the greater the need for some form of MSA. In addition to the formal MSA, the parties to a settlement may agree to an informal Claims Settlement Allocation that is not specifi cally approved by Medicare but sets aside specifi c monies to be used for future medical expenses. An MSA, whether formal or informal, is not necessary when (1) the facts demonstrate that the claimant is only being compensated for past medicals; (2) there is no evidence that the parties are trying to skirt around Medicare’s interests; and (3) there is some evidence in the medical records and/or doctors’ testimony that the claimant is not expected to incur future medical expenses. CMS originally intended to issue a Notice of Proposed Rulemaking (NPRM) in September 2013 to address concerns with the Medicare Secondary Payor (MSP) requirements and future medicals. Not surprisingly, CMS did not take any 22 Birmingham Bar Association


Birmingham Bar Association Bulletin - Fall 2014
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