New Medicare Reporting Requirements Are Added to Longstanding Medicare Reimbursement Requirements
By: John K. Nelson
Namwolf Newsletter. December 2010
When a settlement or judgment is paid to a Medicare recipient, the parties must be mindful of both the Medicare reporting requirements and the need to satisfy Medicare’s reimbursement claims. These requirements apply to any payment of a judgment in, or settlement of, a lawsuit or claim brought by a plaintiff who seeks to recover from a third-party medical bills that were paid by Medicare. A plaintiff is eligible for Medicare payments if he or she:
- is 65 years of age or older;
- has been entitled to receive Social Security Disability benefits for at least 24 months;
- has amyotrophic lateral sclerosis (“ALS”); or
- has had end-stage renal disease within the last 36 months.
Defendant’s Medicare Reporting Requirements
The date for compliance with new Medicare reporting requirements for one-time payments of settlements and judgments in tort cases (except for workers’ compensation or no-fault payments) has recently been moved from October 1, 2010 to October 1, 2011. Beginning on that date, self-insured defendants or their liability insurers who pay settlements or judgments to Medicare-eligible plaintiffs must report those payments to the Centers for Medicare and Medicaid Services (“CMS”). These payments must be reported quarterly, beginning in the First Quarter of 2012. The reporting will be made electronically to CMS’s Coordination of Benefits Coordinator (“COBC”). All defendants and their insurers should now be registered with the COBC to permit such reporting and should be in file testing status.
To comply with these reporting requirements, defendants will need to obtain, at a minimum, the following information regarding the plaintiff:
- his or her full name, as it appears on the Social Security card;
- date of birth;
- Social Security number; and
- Health Insurance Claim Number (“HICN”) from the Medicare card, if available.
Some courts handling pattern litigation like asbestos claims have issued standing orders which require that plaintiffs provide this information (and more) to defendants on designated data forms. Information provided on these forms can be used by defendants and their insurers for specified purposes only.
All one-time payments of settlements or judgments in excess of $5,000 (for claims resolved before 2013) must be reported to Medicare. This threshold amount drops in subsequent years as follows:
- $5,000 for payments of settlements or judgments prior to 1/1/13;
- $2,000 for payments of settlements or judgments from 1/1/13 through 12/31/13;
- $600 for payments of settlements or judgments from 1/1/14 through 12/31/14; and
- No threshold for payments of settlements or judgments after 1/1/15.
Payments of settlements or judgments in cases based on incidents occurring before December 5, 1980 are not reportable. For claims involving alleged injury by “exposure” to a product or substance (such as an asbestos claim), reporting is not necessary if there was no exposure to the particular defendant’s products on or after December 5, 1980 alleged, established, or included within a release. According to recent statements by the CMS, settlements in such cases must be reported to the CMS even where plaintiff alleges only injury or exposure before December 5, 1980 if the plaintiff signs a full release of all claims against the defendant (which, according to the CMS, would release claims for exposures after December 5, 1980).
Where a settlement or a judgment involving a Medicare recipient involves multiple defendants or multiple insurers, each defendant or insurer involved must report the total settlement or judgment to Medicare, not just the share it paid. If a settlement or judgment is paid by insurance which involves a deductible, whether the defendant or its insurer needs to comply with the Medicare reporting requirements depends on whether the settlement or judgment amount paid is within the deductible.
Failure to report a payment of a settlement or judgment to a Medicare beneficiary could result in a fine to the defendant or its insurer of $1,000 per day, per claim.
Additional information about the Medicare reporting requirements is available online at www.cms.gov/MandatoryInsRep.
Potential Liability for Not Satisfying Medicare’s Reimbursement Claim
When a tort claim is resolved by payment of a settlement or judgment, the primary responsibility to resolve Medicare’s reimbursement claim has historically rested with the plaintiff, and it still does. But if a plaintiff fails to reimburse Medicare for Medicare’s conditional payments, Medicare may sue directly the plaintiff, the plaintiff’s counsel, the defendant, and/or the defendant’s insurer to recover back the Medicare conditional payments and it can recover up to double the amount of the conditional payments (if a lawsuit is necessary) even if the defendant or its insurer has already paid the settlement or judgment.
Because of this potential liability, defendants should take steps to ensure that the plaintiff discharges all Medicare reimbursement claims from the proceeds of the settlement or judgment. This can be accomplished by, for example:
- Drafting a release which specifies a process for resolving the Medicare claim. Options include requiring the plaintiff’s attorney to deposit into his or her client trust account a sufficient part of the settlement proceeds to resolve Medicare’s claim before the remaining funds are disbursed to the plaintiff;
- Requiring the plaintiff to provide defendants with written proof of satisfaction of Medicare’s reimbursement claim; and/or
- Including provisions in the release by which plaintiff agrees to indemnify defendants and their insurers against any claim or suit brought by Medicare to recover its conditional payments made to plaintiff.
To expedite the conclusion of a case upon a settlement, it is important for plaintiff’s counsel to self-identify – i.e. to contact Medicare early in the case to determine whether, and to what extent, Medicare has made conditional payments to the plaintiff. This will allow Medicare to open a potential recovery file early in the case, so it is better prepared to resolve its reimbursement claim when the case is eventually settled.