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Medicare Compliance: Back to the Basics

Medicare Secondary Payer issues can seem daunting and can complicate settlements with beneficiaries injured in accidents or on the job. While the issues can be complex, it is important that we have a basic understanding of the Medicare Secondary Payer Act (MSPA). We should be able to identify cases where Medicare issues exist and be familiar with the three components of Medicare Compliance that will need to be addressed in settlement.

MSP issues are present in cases with a claimant who is or will soon be a Medicare beneficiary and physical injuries with past and/or likely future medical treatment are being claimed. The first step in evaluating whether a file has potential Medicare exposure is determining the claimant’s Medicare and Social Security Disability (SSD) status. It is important to obtain information about the claimant’s SSD status because a claimant will become a Medicare beneficiary after receiving SSD benefits for two years.

If it is determined that a claimant is receiving SSD or Medicare or will be soon, Medicare’s interests will need to be considered and protected in settlement of the claim. There are three issues that need to be addressed:

(1) Section 111 Reporting,

(2) conditional payments made by Medicare, a Medicare Advantage, and/or a Medicare Prescription Drug plan, and

(3) a Medicare Set-aside.

1. Section 111 Reporting

Section 111 Reporting is the electronic reporting of certain information regarding claims involving Medicare beneficiaries to CMS. This information assists CMS with recovery of payments they may have made related to an injury and prevents them from making further payments that should be covered by a Primary Payer. Primary Payers are workers’ compensation, no-fault, and liability insurers, including self-insurers, and are the entities responsible for reporting to Medicare. Penalties of $1,000 per day per claim can be asserted for failure to comply with Section 111 Reporting requirements.

2. Medicare Conditional Payments, Advantage Plans, Prescription Drug plans

When Medicare makes a payment that a primary payer is responsible for, the payment is conditional and must be repaid to Medicare when a settlement, judgment, award or other payment is made by a Primary Plan. These are past payments made by Medicare, from the date of injury to the date of settlement.

In addition to traditional Medicare (Medicare Parts A and B), beneficiaries can enroll in Medicare Advantage and Prescription Drug plans (Parts C and D). These plans have the same direct right of recovery as traditional Medicare and should be reimbursed for conditional payments as part of a settlement. If Medicare, Medicare Advantage, and Medicare Prescription Drug plans are not reimbursed as part of settlement, they can file suit to recover for their conditional payments and receive double damages.

3. Medicare Set-asides

A Medicare Set-aside (MSA) is a portion of the settlement funds that is designated to cover future medical treatment, from the date of settlement through the remainder of the claimant’s life. An MSA is designed to prevent Medicare from paying those expenses. It demonstrates that the burden of paying for future treatment has not been shifted to Medicare in settlement.

Addressing these issues in settlement will ensure that Medicare remains a secondary payer and demonstrate the parties’ compliance with the Medicare Secondary Payer Act. Carr Allison is here to guide you through each aspect of the Medicare Compliance process and are happy to answer any questions you may have along the way. Please reach out to us any time!


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