Amendments to Medicare Lien Legislation

By John J. Hare, Esq. of Marshall Dennehey Warner Coleman & Goggin, P.C.

Anyone who has settled liability or workers' compensation claims in the past couple of years knows how difficult it can be to understand and comply with the Medicare secondary payer rules regarding the reimbursement of liens, as set forth in Title XVIII of the Social Security Act. On January 10, 2013, President Obama signed legislation, known as the "Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012," which primarily seeks to simplify the process for reporting and paying Medicare liens and grants Medicare discretion to reduce or eliminate penalties for good faith violations. Most of these amendments do not become effective immediately, but they are summarized below so that you are aware of them as you settle cases and report to Medicare. Please call me or Jim Pocius with any questions.

Section 201. Determination of Reimbursement Amount Through CMS Website To Improve Program Efficiency.

This section, which becomes effective nine months from January 10, 2013 (or on October 10, 2013), outlines a process (to be further detailed by Medicare regulations promulgated over the next nine months) by which parties may request a demand letter from Medicare that is good for a period of time before disposition of a liability or workers' compensation case. It requires that the Center for Medicare and Medicaid Services (CMS) be provided notice within 120 days before the reasonably expected date of a settlement, judgment, award or other payment that a payment is reasonably expected and the expected date of such payment.

In order the ease the transfer of information, Section 201 also requires that CMS create and maintain a password- controlled website that provides a statement of reimbursement amounts and information on claims and payment amounts for such claims, including those claims that relate to a potential settlement, judgment, award or other payment. The information on the website must be updated in as timely a manner as possible but not later than 15 days after the date a payment is made. After receiving notice of an expected payment, CMS has 65 days (extendable by 30 days) to produce a demand letter. After the appropriate time period has lapsed, the parties can retrieve the demand information from the website and rely on it, so long as the settlement occurs within 120 days of notice and within 3 days from the last download of the website.

Finally, Section 201 provides for a right of appeal. This is a new right granted to insurance carriers that can be exercised without consent of the Medicare beneficiary (although the beneficiary is entitled to notice of the appeal). CMS is required to promulgate regulations governing such appeals (presumably within the nine-month effective date). It is not clear, but doubtful, that the legislation creates jurisdiction in federal courts for insurance carriers that does not exist today.

Section 202. Thresholds.

This section, which becomes effective on January 1, 2014, provides that, in liability cases only (excluding ingestion, implantation and exposure cases), there is no obligation to repay Medicare if a claim falls below certain undefined annual thresholds. Such annual threshold must be calculated and published by the Secretary of Health and Human Services by November 15th of the year prior to the year in which they will apply.

Section 203. Reporting Requirement.

Section 203, which is the only amendment to become effective immediately, changes the civil penalty for reporting violations from a mandatory $1,000 for each day of non-compliance. Under the amendment, CMS is granted discretion to impose penalties of "up to" $1,000 per day.This section also requires CMS, within 60 days after enactment, to solicit proposals for safe harbor situations and, after an undetermined period of consideration, propose final safe harbor regulations for good faith efforts when a Medicare beneficiary cannot be identified.

Section 204. Use of Social Security Numbers and Other Identifying Information in Reporting.

This section, which applies to all claims subject to mandatory insurance reporting, takes effect 18 months after January 10, 2013 (or on July 10, 2014), although CMS can ask Congress for an additional one-year extension. It allows insurance companies responsible for electronic reporting to report without using a Medicare beneficiary’s social security number or Health Care Identification Claim Number. Instead of using such protected information, insurance carriers can use the last four digits of a claimant’s Medicare beneficiary number. This amendment seeks to reduce the likelihood that carriers will face state law claims for violation of a claimant's privacy.

Section 205. Statute of Limitations.

This section, which becomes effective six months after January 10, 2013 (or on July 10, 2013), applies to workers’ compensation, liability and no-fault claims. It addresses the current confusion about the applicable statute of limitations on claims brought by the United States to recover payments owed by clarifying that the statute of limitations in all such cases is three years after the date of the receipt of notice of a settlement, judgment, award or other payment. As in other litigation, the question of precisely when the statute of limitations is triggered likely will be subject to judicial interpretations.

For additional information or questions, contact John at jjhare@mdwcg.com - (215) 575-2609 or Jim at jepocius@mdwcg.com - (570) 496-4601

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Amendments to Medicare Lien Legislation

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