Medicare v. Medicaid • Medicare: not tested by income or resources • Medicaid: is tested by income or resources • Medicare: entirely a federal program and benefits are paid entirely from federal resources • Medicaid: a shared state-federal program , paid part by both entities and administered by state agencies with federal oversight • Both programs are overseen by the Centers for Medicare and Medicaid Services (CMS), formerly known as the Health Care Financing Administration (HCFA), a component of United States Department of Health and Human Services (HHS). The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 22
Medicaid • Medicaid is a welfare program which pays medical bills for the aged, blind and disabled. It is a medical payment program, not a medical insurance program. • Medicaid was established in 1965 as an amendment to the Social Security Act. It can be found in Title XIX of the Social Security Act and is found at 42 U.S.C. Section 1396 and 42 C.F.R. Parts, 430, 431 and 435 . • The federal government provides matching payments to the state. It is a federal program administered in cooperation with the states. Although some provisions are delegated to state determination, state programs must meet requirements imposed by the federal government. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 23
Missouri Medicaid MO HealthNet • Missouri is known as a Section 209(b) state—209b . States are allowed to enforce more restrictive eligibility standards in some areas of the program so long as the requirements are no more restrictive than those in efgect in the state as of January 1, 1972. • On August 28, 2007, with the passage of the Missouri Health Improvement Act of 2007, SB 577 , the Medicaid program in Missouri became known as “MO HealthNet” • The state’s authorizing laws are codified at §§ 208.010 et seq. of the Revised Missouri Statutes. • MO HealthNet is administered by the Missouri Department of Social Services, primarily through the Family Support Division (FSD). • The state’s regulations that address long-term care are set forth at Mo. Code Regs. Ann. tit. 13, Division 40 . • Policies and procedures for determining MO HealthNet eligibility are published in the FSD’s Income Maintenance Manual (IMM). The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 24
Financial Eligibility • A single person may not own “available resources” in excess of $999.99 . • If married and living together in an institution, a couple may not own available resources in excess of $1,999.99 in order for one or both of them to be eligible for Medicaid. • Spousal impoverishment rules apply to allow a well spouse living in the community to retain available resources in excess of $1,999.99 for both vendor (nursing home benefits) and home and community based waiver services. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 25
Income • There is no income cap for Missouri Medicaid vendor benefits. • As a practical matter, if the income exceeds the cost of care, no Medicaid benefits will be paid. Income belongs to the person to whom it is paid. • The Minimum Monthly Maintenance Needs Allowance (MMMNA) for the community spouse is $1991.25 in 2016. If insufgicient, income received by the Medicaid applicant can be assigned to provide for the healthy spouse to meet the MMMNA. • The Maximum Monthly Maintenance Needs Allowance is $2980.50 . • From the income, a personal needs allowance of $45 may be deducted. • Like the SSI rules, income is not included as an available resource in the month in which it is received. It converts to a resource in the next month . Important for settlement issues. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 26
Exempt Resources Family home • The home is generally considered an exempt resource . The home is exempt when it is providing shelter to the applicant, the applicant’s spouse or dependent children. The applicant is only entitled to one home, defined as the applicant’s principle place of residence. • The “Maximum Home Equity” amount is $ 552 ,000 for 2016. This is the exempt equity value in the home for those individuals seeking vendor (nursing home) benefits or home and community-based waiver services. • An exception is made when the home is providing shelter to the participant’s spouse, a child under the age of twenty-one (21) or a child over age twenty-one (21) who is blind or disabled. • The definition of “home” generally includes adjoining land on which the home is located. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 27
Exempt Resources • For rural land, any adjoining acreage will be included in the exemption regardless of whether roads separate difgerent tracts, so long as the property is treated, such as by farming it as one contiguous parcel. • If there are other homes located on the property, they are not an exempt resource and the value of the additional homes is a countable resource, although the value of the underlying property may remain exempt. • If a participant has not occupied the home for over twenty-four (24) months , it is no longer considered the principal place of residence and the homestead exemption no longer applies . There is an exception to the twenty-four (24) month rule: if the participant has been absent from the home for more than twenty-four (24) months, the “home” remains exempt if, within the first twenty-four (24) months of absence, the participant became a resident of a nursing home , residential care facility, state hospital or medical institution. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 28
Exempt Resources Pre-Need Funeral Plans and Life Insurance • Families may not have sufgicient resources at the time of death to pay for the cost of burial. • The Medicaid program exempts one irrevocable pre-need funeral plan for each applicant and one for his or her spouse. • The cash surrender value of any life insurance is considered an available resource. If there is no irrevocable funeral plan, $1500 of the cash surrender value of any life insurance owned is exempt. • It is possible to transfer ownership or irrevocably assign a paid-up life insurance policy to funeral home to fund a pre- need plan. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 29
Exempt Resources Personal Property • Includes household goods, jewelry, farm surpluses, livestock, farm or business machinery or equipment, automobiles and trucks and similar items. Whether personal property is exempt depends on how the participant uses the personal property. • The applicant is allowed to have one vehicle for transportation purposes. An additional vehicle will be deemed exempt if necessary to meet the family’s extraordinary transportation needs. • Livestock, farm surplus, or other equipment “used in the course of business or employment ” is exempt. • Boats, campers, trailers, or recreational vehicles are considered available resources and the fair market value must be established. • Motorcycles are not exempt unless they are the participant’s only means of transportation. • Furniture is an available resource unless it is being directly used by the applicant or the applicant’s spouse or dependent children. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 30
Transfers and Penalties • The current “look-back” period is 60 months or five years . • The length of the penalty is directly related to the value of the asset transferred. To determine the penalty, the value of the asset transferred is divided by the average monthly private pay rate for nursing homes on the date of the application. • The average monthly private pay rate is called the penalty divisor and is established by each state. • The penalty divisor is $4,889 per month and $160.73 per day for 2016. • If all of the assets transferred that would otherwise result in a penalty be imposed are returned, the penalty will no longer be imposed. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 31
Exempt Transfers Transfer of a family home is exempt if: • the participant’s child is under age 21 or blind or permanently and totally disabled; • the participant’s sibling , if that sibling has an equity interest in the home and was residing for at least one year immediately prior to the participant’s date of institutionalization; or, • the participant’s child who resided in the home for at least two years immediately prior to the participant’s date of institutionalization if it is established that care provided by the child allowed the participant to remain in the home and not be placed in a nursing home. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 32
Exempt Transfers Other assets may be transferred without penalty to: • the participant’s spouse ; • the participant’s child who is blind or totally and permanently disabled; • or to a trust , including a Special Needs “(d)(4)(a) Trust established for the benefit of an individual under age 65 and who is disabled as defined in 42 U.S.C. 1382c(a)(3)(A). • Note that the requirement is that an individual be disabled, not necessarily a child. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 33
Other Medicaid Programs • Non-Vendor Medicaid has both income and resource limits and excess income is “ spent-down .” The participant must be: m totally disabled as determined by the Missouri Family Support Division; m be blind; m be at least 65 years of age; or m receive SSI or SSDI. • Single - $833.70 ; Married - $1128.37 • MO HealthNet for Disabled Children: Income of both parent and child is used. The child must “spend-down” any excess. Resources and both parent and child are counted. The child must be m under the age of 18; m disabled; or m receiving SSI. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 34
Other Medicaid Programs • Missouri Children with Developmental Disabilities (the Sara Lopez Waiver) : The parents income and resources are not deemed to the child. Transfer penalties may cause ineligibility for 60 months. Provides personal assistance services, case management, respite care, medical equipment, behavior therapy and transportation. The child must be: m under the age of 18; and m disabled (developmental disability) and receive SSI. • Missouri Autism Waiver : This waiver provides personal assistance, home and out of home respite, transportation and medical equipment. The child must be: m between the ages of 3-18; m meet the Medicaid financial eligibility requirements; m have a diagnosis of Autism Spectrum Disorder; m must meet a level of care; and m have no greater need for services of $22,000. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 35
Right to Recover Benefits Paid Medicaid has a right to recover benefits paid when a Medicaid recipient receives compensation from a third-party for health services incurred due to personal injury, disability or disease. This right exists to prevent a double recovery by a Medicaid recipient who receives payment from both Medicaid and a third- party. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 36
Application Form Contains Assignment Language In Missouri, the application form for Medicaid (MO HealthNet) benefits contains the following statement: “I/We UNDERSTAND that application for and acceptance of MO HealthNet constitutes an assignment of rights to the Department of Social Services, MO HealthNet Division for payment for medical care from a third-party.” Authority: § 208.215.4 & .15 RSMo. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 37
Assignment A MO HealthNet beneficiary is compelled by statute to make an “assignment” to the state of whatever is recovered, up to what is owed, when he or she applies for benefits. This form states that if the assistance is due to an accident, the claimant must repay the agency for any benefits received. In practice, this “assignment” functions as notice to the plaintifg that MO HealthNet has a lien against the recovery. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 38
Duty to Report The MO HealthNet application form also contains the following statement: “I/We UNDERSTAND that I/we must report any changes in circumstances within ten days of when they happen.” The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 39
Duty to Report The MO HealthNet application form also contains the following statement: “I/We UNDERSTAND that I/we must provide complete information regarding any health or accident insurance benefit available to any household member and I/we must report within 30 days any accident for which medical care is received.” Authority: § 208.215.3 & .16 RSMo. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 40
208.215 RSMo. Section 208.215 RSMo. sets out certain lien rights that arise when one of the welfare recipients of the Missouri Department of Social Services recovers for personal injuries, disability or disease of the recipient. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 41
208.215 RSMo. Medicaid liens, by statute, do require notice and now may be reduced by a court under the Medicaid statute. See § 208.215.9 RSMo. Jones by Williams v. Missouri Dept. of Social Services, 966 S.W.2d 324 (Mo.App.1998) (lien reduced, even though it accrued before statute allowing reduction was efgective); Gravier v. Missouri Dept. of Social Services, 968 S.W.2d 149 (Mo.App.1998) (insufgicient evidence to justify reduction); American Family v. Fehling, 970 S.W.2d 844 (Mo.App.1998) (reduction pursuant to proper consideration of statutory factors). The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 42
Anti-Lien Provisions A Florida Court of Appeals rules that Medicaid’s anti-lien provision does not apply to a Medicaid lien imposed on a Medicaid recipient’s property afuer the recipient dies. Estate of Hernandez v. Agency for Health Care Admin. (Fla. Ct. App., 3rd Dist., No. 3D14-2115, Feb. 17, 2016) . Betsy Hernandez died of a rare condition. Her estate filed a wrongful death lawsuit against the hospital that treated her. The hospital agreed to settle the lawsuit for $700,000, and Medicaid placed a lien on the settlement to recoup medical expenses paid on Ms. Hernandez’s behalf. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 43
Anti-Lien Provisions The Medicaid agency claimed it was entitled to $262,500 before any wrongful death apportionment. The estate argued that the agency sought money allocated to survivors and that under Arkansas Department of Health and Human Services, et al. v. Ahlborn (547 U.S. 268 (2006)) , states cannot assert a lien on portions of a settlement not allocated to medical expenses . The trial court denied the estate’s motion for a hearing, and the estate appealed. The Florida Court of Appeals, 3rd District, afgirms, holding that “the Medicaid Act’s anti-lien provision does not apply to a Medicaid lien imposed against the property of a Medicaid recipient afuer her death.” The court holds that Ahlborn and Wos v. E.M.A (U.S., No. 12-98, March 20, 2013) do not apply because Medicaid’s anti-lien provision applies only to living Medicaid recipients . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 44
MO HealthNet Right of Reimbursement and Notice The MO HealthNet Division requires any participant, even if a minor, an incapacitated person (acting through a guardian or conservator), someone filing a wrongful death case or the attorney, to promptly notify the MO HealthNet Division of any recovery from a third-party and shall immediately reimburse the Department of Social Services, MO HealthNet Division, or its contractor, from the proceeds of any settlement, judgment or other recovery in any action or claim initiated against any such third- party. A case cannot be settled where the division has an interest without first giving the division notice and a reasonable opportunity to file and satisfy the claim or proceed with any action as otherwise permitted by law - § 208.215.6 RSMo The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 45
MO HealthNet Lien The Department of Social Services or MO HealthNet Division shall have a lien upon any moneys paid by anyone (insurance company, other person or business) to satisfy a judgment or settlement in any claim for medical expenses for which the Department or MO HealthNet Division made payment . This lien shall also be applicable to any moneys which may come into the possession of any attorney who is handling the claim for injuries . In each case, a lien notice shall be served by certified mail or registered mail upon the party or parties against whom the applicant or participant has a claim, demand or cause of action. The lien shall claim the charge and describe the interest the Department or MO HealthNet Division has in the claim, demand or cause of action. The lien shall attach to any verdict or judgment entered and to any money or property which may be recovered on account of such claim, demand, cause of action or suit from and afuer the time of the service of the notice - § 208.215.8 RSMo . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 46
Determination of Right to Recovery • The Department may file a petition by giving notice to all injured persons to adjudicate its rights of the parties and enforce the charge. • The court may approve the settlement of any claim, demand or cause of action either before or afuer a verdict. • The court may determine what portion of the recovery shall be paid to the Department against the recovery. In making this determination the court shall conduct an evidentiary hearing - § 208.215.9 RSMo . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 47
Six Factors 1. Consideration for the total attorney fees and other costs in securing the recovery and whether the Department should bear a proportionate share 2. The amount of the attorney’s fees and other costs incurred by the participant incident to the recovery and paid by the participant up to the time of recovery and the amount of such fees and costs remaining unpaid at the time of recovery 3. The total medical expenses incurred for treatment of the injury to the date of recovery and the amounts paid by the participant, insurance or the Department; the amount of such previously incurred expenses which remain unpaid and who is entitled to payment The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 48
Six Factors 4. Whether the recovery represents less than substantially full recompense for the injury and the hospital, doctor and other medical expenses incurred to the date of recovery for the care and treatment of the injury, so that reduction of the charge sought to be enforced against the recovery would not likely result in a double recovery or unjust enrichment to the participant 5. The participant’s age, his/her dependents, the nature and permanency of the participant’s injuries as they afgect not only the future employability and education of the participant but also the reasonably necessary and foreseeable future material, maintenance, medical rehabilitative and training needs of the participant, the cost of such reasonably necessary and foreseeable future needs, and the resources available to meet such needs and pay such costs 6. The realistic ability of the participant to repay in whole or in part the charge sought to be enforced against the recovery when judged in light of the factors enumerated above The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 49
Not Required to Address All Six Factors The Medicaid recipient requesting reduction of the lien under § 208.215.9 is not required to prove each statutory factor, nor does the trial court have to enter findings on each statutory factor. Gravier v. Missouri Dept. of Social Services, Div. of Medical Services, 986 S.W. 2d 149 (Mo.App. 1998) . The recipient must only provide sufgicient evidence to support exercise of the trial court’s discretion. Id. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 50
Burden of Proof The burden of producing evidence sufgicient to support the exercise by the court of its discretion to reduce the amount of a proven charge sought to be enforced against the recovery shall rest with the party seeking such reduction . The computerized records of the MO HealthNet Division, certified by the director or his or her designee, shall be prima facie evidence of proof of moneys expended and the amount of the debt due the state - § 208.215.10 RSMo . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 51
Reduction of Lien by Court • The court may reduce and apportion the Department’s or MO HealthNet Division’s lien proportionate to the recovery of the claimant. • The court may consider the nature and extent of the injury, economic and noneconomic loss, settlement ofgers, comparative negligence as it applies to the case at hand, hospital costs, physician costs, and all other appropriate costs. • The Department or MO HealthNet Division shall pay its pro rata share of the attorney’s fees based on the Department’s or MO HealthNet Division’s lien as it compares to the total settlement agreed upon - § 208.215.11 RSMo . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 52
Attorney’s Fees and Compromise • MO HealthNet’s right to recover is secondary to the attorney’s claim for fees regardless of whether an action based on participant’s claim has been filed in court. • The state may enter into a compromise agreement with any participant afuer consideration of the factors in Subsections 9 to 13 of the statute. § 208.215.12 RSMo . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 53
Attorney’s Fees Claim Expenses § 208.215.14 RSMo. The debt due the state provided by this section is subordinate to the lien provided by Section 484.130 or Section 484.140 , relating to an attorney’s lien and to the participant’s expenses of the claim against the third-party. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 54
Service Brian Kinkade, Director Department of Social Services Broadway State Ofgice Building P.O. Box 1527 221 W. High Street Jefgerson City, MO 65102-1527 Telephone: (573) 751-4815 The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 55
Service Dr. Joseph John Parks III, Director MO HealthNet Division P.O. Box 6500 615 Howerton Court Jefgerson City, MO 65102-6500 Telephone: (573) 751-3425 The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 56
Recovery Limited to Medical The United States Supreme Court has repeatedly held that a Medicaid agency cannot be reimbursed from a plaintifg’s settlement in excess of the portion of the settlement that is compensation for past medical care paid by the state. Arkansas Dept. of Health & Human Services v. Ahlborn, 547 U.S. 268 (2006); Wos v. E.M.A., 133 S. Ct. 1391 (2013) . This allowed many plaintifgs to obtain significant lien reductions by arguing only a small portion of his or her recovery was actually compensation for past medical care . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 57
Validity of § 208.215 RSMo.? Wilhoite case (unreported) held that § 208.215 could not stand in light of Ahlborn because the statute failed to limit MO HealthNet’s recovery to the amount of damages recovered for medical. Lien reduction portion of § 208.215 protects due process rights of plaintifg. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 58
Bipartisan Budget Act of 2013 • Note: Section 202 of the Bipartisan Budget Act’s obscure amendments to the Social Security Act allow a Medicaid agency to demand full reimbursement from any settlement even if medical expenses were not actually pled or recovered for and, regardless of any contributory negligence or other issues with recovery, preventing the client from being made whole. • Would overturn Ahlborn & Wos cases . • Was to be efgective October 2014, but later amended to delay efgective date to 2017 . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 59
Practice Tip In light of the uncertainty of the final impact the Bipartisan Budget Act of 2013 will have on Medicaid liens, consider the following: • In addition to a client’s current Medicaid status, also inquire about the date of eligibility . It is unclear whether the new law will apply to settlements where the Medicaid beneficiary was Medicaid-eligible prior to settlement. This is an especially important future consideration when the client is a minor. • Inform clients that Medicaid may be entitled to 100% reimbursement . • Obtain the amount of any lien prior to releasing the tortfeasor. • If a Medicaid lien (or any lien for that matter) is over-flowing into other elements of damages, negotiate an agreement prior to releasing the tortfeasor (unless your client is willing to reimburse Medicaid in full). The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 60
Success? In many cases, losing MO HealthNet also has the efgect of cutting ofg the client’s participation in programs in which first priority must be given to persons who are eligible for MO HealthNet benefits. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 61
Success? Frequently, the award will be exhausted quickly to pay for medical expenses and other services that otherwise would have been paid by Medicaid or other programs. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 62
Medicare Secondary Payer Act (MSP) • Medicare was created in 1965 • Medicare Secondary Payer Act was created in 1980 The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 63
The Law • 42 U.S.C. §1395y • 42 C.F.R. §§ 411.20 et.seq. • Medicare is a secondary payer The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 64
Three Compliance Parts - Present, Past & Future In every liability settlement involving a Medicare beneficiary, the parties, including any group health plan or liability insurer, now has three distinct obligations: 1) report the settlement to CMS (the present); 2) resolve any conditional payments (the past)and 3) provide for payment of future medical expenses as a term of the settlement, taking into consideration Medicare’s interests (the future). Each obligation carries its own penalty for failure to fulfill it. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 65
Medicare, Medicaid and SCHIP Extension Act of 2007 • Enforces Medicare’s basic right of recovery and to ensure that Medicare serves as a secondary payer , whenever possible. • Section 111: reporting requirements • Only Non-Group Health Plan (NGHP) Plan insurers “are obligated to notify Medicare about ‘settlements, judgments, awards or other payment from liability insurers (including self insurers), no fault insurers and workers’ compensation’ received by or on behalf of Medicare beneficiaries,” MMSEA Section 111 Mandatory Insurer Reporting, Quick Reference Guide, Version 1, January 19, 2012. • The insurers are identified as “ responsible reporting entities ” (RREs), as are self insureds . • The RRE’s are to report information when the insurer assumes an ongoing responsibility for medicals (ORM) or afuer paying the total payment obligation to the claimant (TPOC) in the form of a settlement, judgment, award or other payment. • Simply stated, the trigger for reporting is the issuance of payment to the claimant or satisfaction of medical expense. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 66
Conditional Payments • Medicare has the right to recover any conditional payment made against the settlement proceeds of a workers’ compensation or third-party liability case • Sometimes referred to as a “super lien” because of the broad power of CMS • From the date of incident to the date of settlement The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 67
Procurement Costs • Medicare reduces its recovery automatically to take into account the cost of procuring the judgment or settlement. • The costs include attorney’s fees, expert witness fees and court costs. In order to properly calculate this reduction, the claimant’s attorney must provide a copy of the fee agreement along with documentation of costs incurred during litigation. 42 C.F.R. 411.37 . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 68
Medicare and Wrongful Death Cases • See: Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010) : A child’s loss of parental companionship claim is a property right belonging to the child, not Medicare. • See: Benson v. Sebelius, 2011 WL 1087254 (D.D.C. 2011) : Plaintifg factored his mother’s medical claims into the settlement calculation. The conditional payments were recoverable by CMS. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 69
Medicare Advantage Plans (Part C) and the MSPA Parra v. PacifiCare of Arizona, No. 11-16069 , holding that a private insurer operating as a Medicare Advantage Organization Plan is not permitted to bring an action in federal court seeking reimbursement for $136,630.90 from a tort settlement secured by survivors of the deceased in a wrongful death action. The Court holds that the federal statute, 42 U.S.C. § 1395y(b) (3)(A) , “was intended to allow private parties to vindicate wrongs occasioned by the failure of primary plans to make payments.” This statute does not authorize a suit for reimbursement against its insured (or survivors) for reimbursement. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 70
Medicare Advantage Plans • Medicare Part A is hospital insurance • Medicare Part B is medical insurance • Medicare Part C covers Medicare Advantage Plans • Medicare Part D covers prescription drug coverage • Medicare Advantage Plans are also known as Medicare Advantage Organizations, MAP’s, MAO’s or Part C The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 71
Medicare Advantage Plans • Medicare beneficiaries can enroll in a Medicare Advantage Plan and get all Part A and B Medicare services (except hospice) plus additional coverage (i.e., vision, dental and sometimes prescription drug coverage) through private companies. • Beneficiaries pay more for a Medicare Advantage Plan than for regular Medicare. • Medicare pays companies a fixed amount for each beneficiary in the plan. • The Medicare Advantage Plan Companies must follow Medicare’s rules regarding payments for services, but can set charges for out-of-pocket costs and rules for how and where to receive services. • Rules can change each year. Currently, 31% of the Medicare population is enrolled in Medicare Advantage Plans . • This number has more than tripled since 2004. • There are various plans out there, including plans issued by BlueShield, Humana and Oxford. The plans typically have a third-party administrator, such as Rawlings or Trover. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 72
Medicare Advantage Plans • There is no way to get information about Medicare Advantage Plan, except from the plaintifg . • Inquiries to Medicare/CMS/RCBC will not reveal a Medicare Advantage Plan lien. • You can receive a letter from CMS/RCBS indicating no Medicare lien and/or not a Medicare beneficiary and still have an existing Medicare Advantage Plan lien . • In re: Avandia, 685 F.3d 353 (3d Cir. 2012) , cert. denied, is the seminal case which recognized that a MAP is granted the right to a private cause of action under the Medicare Secondary Payer Act (MSPA) for reimbursement of the conditional payments it has made. (Under the MSPA, Medicare refers its cases to the Dept. of Treasury). The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 73
Medicare Advantage Plans In the last couple of years, four federal cases have discussed the right of a Medical Advantage Plan to obtain double damages when it has not been reimbursed for conditional payments: • Amie Collins v. Wellcare Plans, Inc., 73 F.Supp.3d 653 (E.D.La. December 2014) . Plaintifg in a motor vehicle accident settled with the tortfeasor and held in trust monies claimed by the MAP. She files a DJ action and the MAP counterclaimed. The Court held that the MAP had the right to a private cause of action to recover the conditional payment amount. The judge found that double damages were not warranted, as the money claimed by the MAP was held in escrow. The Court also found that the plaintifg’s failure to respond to correspondence from the MAP tolled the 3 year statute of limitations, since MAP’s only information comes from the plaintifg beneficiary. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 74
Medicare Advantage Plans • Humana Medical Plan v. Western Heritage Insurance Company (2015 WL 1191208 (S.D.Fl. 2015) . Case involved a slip and fall accident. Plaintifg settled the case for $115,000. Plaintifg represented there was no Medicare lien, but the insurance company learned that plaintifg had a MAP. It wrote the settlement check to plaintifg, plaintifg’s attorney and Humana. • Plaintifg objected, resulting in a hearing and a ruling by the state court for the carrier to turn the proceeds over to plaintifg’s attorney, who was to keep some of it in escrow. Humana filed suit to recover payment. • The Court followed in re: Avandia and granted the Medicare Advantage Plan the right to proceed with private cause of action for double damages under the MSPA. Currently on Appeal to 11th. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 75
Medicare Advantage Plans • MSP Claims 1, LLC v. Liberty Mutual Ins., 2015 US Dist. LEXIS 99188, (S.D.Fl. 2015) . Plaintifg, a Medicare beneficiary through a MAP, was involved in a car accident. Liberty Mutual denied PIP coverage and plaintifg’s bills were paid by the MAP, which sought recovery of the conditional payment amount and double damages. The Court held that since the Florida PIP statute recognizes that the PIP carrier can assert that the claim was unrelated, not medically necessary or unreasonable, Liberty Mutual should not face double damages for contesting the payment of claims. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 76
Medicare Advantage Plans • Cariten Health Plan, Inc. v. Mid-Century Insurance Company, 2015 WL 5449221 (E.D.Tenn. 2015) . Cariten, a Medicare Advantage Plan (MAP), was granted the right to proceed with private cause of action for double damages against a no-fault carrier which refused to repay conditional payments made by Cariten. The Court found that under the Medicare Secondary Payer Act, a MAP is a secondary payer, and is entitled to a private right of action for failure to reimburse conditional payments made by the MAP. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 77
SMART Act History • Known as the Strengthening Medicare And Repaying Taxpayers (SMART) Act • One of the co-sponsors, Rep. Tim Murphy (R-Pa.) indicated the bill stemmed from a constituent who was in a car accident and had to wait years for a settlement on medical bills covered by Medicare • The bill’s lead Democratic sponsor was Rep. Ron Kind (D-Wis.) • The SMART Act was signed by President Obama on January 10, 2013 The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 78
SMART Act Purpose • The SMART Act was passed as part of H.R. 1845 and attached onto a Medicare IVIG Access Bill ; • It reforms several aspects of the conditional payment and MMSEA Section 111 processes • The Amends Section 1862(b)(2)(B) of the Social Security Act (42 U.S.C. 1395y(b)(2)(B)) The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 79
Efgective Date • This process was supposed to go into efgect nine (9) months afuer H.R. 1845 goes into efgect – or on October 10, 2013 (efgective date of H.R. 1845 is January 10, 2013). • This section also provides that the Secretary create an appeals process for conditional payments. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 80
Medicare Secondary Payer Statute Medicare Set-Aside Arrangements • See: Section 1862(b)(2)(A)(ii) of the Social Security, Act [42 USC 1395 y(b) (2)] - precludes Medicare payment for services to the extent that payment has been made or can reasonably be expected to be made promptly under liability insurance . • Medicare has the right to scrutinize any settlement of workers’ compensation case or third-party liability case to determine if its right must be protected against a shifu to Medicare of any third-party’s liability as it relates to future medical care . • Unless funds are set aside that will meet the participant’s future medical bills, Medicare will not assume liability for future medical treatment when a third- party is responsible. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 81
Medicare Set-Aside • The law does not require them ; it’s merely a device to use to comply with the law. • No definition of “MSA” is in the MSP, its regulations or other law. • MSA is an allocation of settlement proceeds among the various damage components of a settled claim. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 82
Reference Guide for WCMSA • Issued January, 2015 • CMS will review a proposed WCMSA amount when the following workload review thresholds are met: m The claimant is a Medicare beneficiary and the total settlement amount is greater than $25,000.00 ; or m The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00 . m This is not a safe harbor. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 83
CMS Reference Guide for WCMSA • A claimant has a reasonable expectation of Medicare enrollment within 30 months if any of the following apply: m The claimant has applied for Social Security Disability Benefits m The claimant has been denied Social Security Disability Benefits but anticipates appealing that decision m The claimant is in the process of appealing and/or re-filing for Social Security Disability benefits m The claimant is 62 years and 6 months old m The claimant has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD. • If the threshold is met, a WCMSA can be submitted to CMS for approval. • These thresholds are created based on CMS’ workload and are not intended to indicate that claimants may settle below the threshold with impunity. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 84
Sally Stalcup Memo - 5/25/11 • Stalcup is the MSP Regional Coordinator-Dallas, Texas (pertains to AR, OK, TX, NM, LA). • “The Law requires that the Medicare Trust Funds be protected from payment for future services whether it’s a Worker’s Compensation or liability case. There is no distinction in the law.” • There is no formal process for review of liability cases. Attorneys must decide based upon the facts of their case whether the Trust Fund must be protected. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 85
Sally Stalcup Memo - 5/25/11 • “The fact that a settlement/judgment/award does not specify payment for future medical services does not mean that they are not funded.” • “The fact that the agreement designates the entire amount for pain and sufgering does not mean that future medicals are not funded .” • “Set-aside is our method of choice and the agency feels it provides the best protection for the program and Medicare beneficiary.” The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 86
Charlotte Benson Guidance Memo – 9/30/11 • Benson is the Acting Director of the Financial Services Group of the Ofgice of Financial Management in Baltimore, Maryland • Where the beneficiary’s treating physician certifies in writing that treatment for the alleged injury related to the liability “settlement” has been completed as of the date of the “settlement,” and future medical services for injury will not be required , Medicare considers its interest, with respect to future medicals for that particular “settlement” satisfied . • When there is such a certification, there is no need for the beneficiary to submit the certification or a proposed LMSA for review. CMS will not provide the settling parties with confirmation that Medicare’s interest with respect to future medicals for that “settlement” has been satisfied. • The beneficiary and/or their representative are encouraged to maintain the physician’s certification. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 87
Medicare Secondary Payer and ‘Future Medicals’ Proposed Rule Making • On May 3 of 2012, CMS submitted to the Ofgice of Management and Budget advanced notice of proposed rulemaking (ANPRM) entitled “Medicare Secondary Payer and ‘Future Medicals’ ( CMS-6047-ANPRM ). • Solicits comment on options to “ clarify how beneficiaries can meet their obligations to protect Medicare’s interest with respect to Medicare Secondary Payer (MSP) claims involving automobile and liability insurance (including self-insurance), no-fault insurance and workers’ compensation when future medical care is claimed or the settlement, judgment, award or other payment releases (or has the efgect of releasing) claims for future medical care.” The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 88
Proposed Rule Making The CMS proposed general rule states if an “individual or Medicare beneficiary” anticipates receiving Medicare covered services afuer the date of the settlement, then such person is required to satisfy Medicare’s interest with respect to “future medicals” using any one of several options. • Option 1 : The Medicare beneficiary pays for all future injury related expenses out of the settlement proceeds until exhausted . • Option 2 : No MSA is required if individual is not expected to become a Medicare beneficiary within 30 months of the settlement and the injury is not “ chronic ” as defined and the settlement amount is below a certain amount. Comments were solicited on what the threshold amount should be. This would be similar to the procedure employed in workers compensation cases. • Option 3 : No MSA is required if the treating physician certifies there are no future injury-related expenses to be incurred. • Option 4 : A proposed MSA is submitted to CMS for approval. • Option 5 : The Medicare beneficiary participates in one of the CMS recovery options . This option to cover the smaller settlements. • Option 6 : The Medicare beneficiary makes an upfront payment . • Option 7 : The individual receives a compromise or waiver from CMS at the time of the settlement. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 89
Proposed Rule Making • The public comment period ended on August 14, 2012 • CMS initiated the MSA rulemaking on their own; no funding by Congress • This issue has taken a back-seat to the SMART Act implementation requirements. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 90
Allocations Medicare is not bound by the parties’ allocation of settlement funds. The court can determine whether future medical expenses are likely and the amount of the allocation necessary for a MSA. See, Big R Towing v. Benoit, No. 6:2010cv00538 (W.D. La 2010) ; 2011 WL 43219; Finke v. Hunter’s View, 2009 WL 6326944 (D.Minn.) ; Schexnayder v. Scottsdale, No. 6:2009cv01390, (W.D. La) ; 2011 WL 3273547 The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 91
Court Concludes Medicare Allocation Not Necessary • Sipler v. Trans Am Trucking, Inc., US District Court – New Jersey • Plaintifg involved in PI case and receives Medicare • Court concludes that no Medicare allocation is necessary. • The settlement in this case did not arise in the workers’ compensation context and it does not indicate a particular amount to compensate Mr. Sipler for future medical expenses arising out of the accident. • Tort cases involve non-economic damages and not determined by a specific formula. • To require personal injury settlements to specifically apportion future medical expenses would prove burdensome to the settlement process and, in turn, discourage personal injury settlements . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 92
Court Involvement Into Medicare Future Interest Court orders that despite Medicare not participating in allocation of future medical, conditional payments are ordered to be paid, future expenses will be set in interest-bearing account and based on third-party estimate of future expenses; once interest-bearing account is depleted by Medicaid charges then Medicare must pay even if related to suit. See: Frank v. Gateway Insurance Company, 2012 WL 868872, U.S. Dist. Ct., W.D. LA, Mar. 13, 2012. The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 93
Aranki v. Burwell - Does it do away with the consideration of Medicare’s interests in liability cases? • Rachel Aranki filed a medical malpractice case in 2009. She was a Medicare recipient. • Plaintifg, wanting to comply with Federal Law sought the input from CMS regarding the necessity of an MSA. • The state court judge enforced the agreement to settle and ordered Ms. Aranki to file a declaratory judgment action in federal court on the LMSA issue. • The United States District Court for the District of Arizona issued its order dismissing the matter for lack of subject-matter jurisdiction. • In the opinion, the Court stated that “ no federal law or CMS regulation requires the creation of a MSA in personal injury settlements to cover potential future medical expenses .” The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 94
Aranki v. Burwell - Does it do away with the consideration of Medicare’s interests in liability cases? • The Court finds that there is no justiciable case or controversy ripe for review. As such, the Court does not have subject matter jurisdiction to hear this case. This case is not ripe for review because no federal law mandates CMS to decide whether Plaintifg is required to create a MSA. That CMS has not responded to Plaintifg’s petitions on the issue, is not reason enough for this Court to step in and determine the propriety of its actions. There may be a day when CMS requires the creation of MSA’s in personal injury cases, but that day has not arrived. • Case decided in October, 2015—took 6 years for this decision. • In short—case does NOT do away with the consideration of Medicare’s interest in liability cases . The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 95
MSAs and Settlement Agreements The settling parties asked the Court to determine whether a liability Medicare Set-aside Arrangement (“LMSA”) was required as part of settling the claim. The Court concluded, afuer reviewing the evidence, that the parties, in fact, did not have a settlement agreement as they did not agree to every essential term . See: Early v. Carnival Corporation, No. 12-20478-CIV- Goodman, (S.D. Fla. February 7, 2013) The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 96
Types of Arrangements • Self-Administered • Custodial Accounts • Special Needs Trust • Pooled Trust The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 97
Self-Administration • Must complete annual attestation, interest reported, payment records, eligible/covered items, related to MSA • Minor cases (Rx or orthotics only) • Understanding Medicare allowable items The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 98
Professional Administration • Allows for a licensed, insured and bonded insurance professional to administer the funds similar to a workers’ compensation or group health plan • Administrator is a custodian of an account, that is established on behalf of the claimant • Completion of the annual attestation filed with CMS The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 99
Funding • Lump Sum • Structured Settlements The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC | 100
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