North Carolina Trial Law Blog

Medicare will no longer cover hospital mapractice costs and could eliminate liens

I read an interesting newspaper article over the weekend by Robert Pear for the New York Times News Service.  Read the article here.  Another good version of the article can be read here.

The article says that the Bush administration "will no longer pay the extra costs of treating preventable errors, injuries and infections that occur in hospitals."  The new rules go into effect in October, 2008

Charges can not be passed down to patients. The administrative rule stems from a 2006 law but the implementation was delayed for fear that hospitals would pass along the charges to patients.

Under the rules, the charges CAN NOT be passed along to the patient.

Common Errors and Infections.  There is no indication exactly how the program will determine which fees are the results of preventable errors.  However, it does look like certain issues will be considered "per se" error, such as bed sores, bladder infections resulting from catheters, and preventable infections such as those stemming from staphylococcal infections.

The rule identifies eight conditions — including three serious types of preventable incidents sometimes called "never events" — that Medicare no longer will pay for. Those conditions are:

• Objects left in a patient during surgery

• Blood incompatibility

• Air embolism

• Falls

• Mediastinitis, which is an infection after heart surgery

• Urinary tract infections from using catheters

• Pressure ulcers, or bed sores

• Vascular infections from using catheters

• The Centers for Medicare and Medicaid Services said it also would work to add three more conditions to the list next year.

$20 Million Dollars Worth of Malpractice.  The Bush administration expects this will save $20 million per year, which to me means there is $20 million per year worth of treatments designed to "fix" malpractice.  You can count this as one of the first times this Administration has recognized the prevalence of medical negligence.

Implications for Attorneys.  The implementation of this policy only seems to have positive implications for victims of malpractice.  The most obvious would be that if Medicare does not pay for these services, then there can not be a lien from recovery.  I would suppose that if one gets a verdict or settlement on a malpractice claim that if Medicare has paid, the attorney for the patient could argue that Medicare should receive a refund from the medical provider rather than a lien against the Plaintiff's recovery.  Right now I don't know the effective date of the policy change.

I will be doing further research to see how the regulations will be implemented.  I'm assuming that Medicare's refusal to pay for "malpractice" will not be admissible to prove negligence in malpractice cases.

A further question is what happens when the victim of malpractice needs medical treatment for the remainder of their lives?  Will the hospital be paying for all the bills?  I'm thinking this will be a difficult issue in some cases.

Check back for updates on this post.

Chris Nichols

www.NicholsTrialLaw.com

Liens and Workers' Compensation

I had the pleasure of speaking this  morning at the North Carolina Academy of Trial Lawyer's Workers' Compensation Roundtable Seminar.  I was pinch hitting for a number of State and federal Employees who were supposed to talk about:  Medicaid, Medicare, State Employee Health Plan, and TriCare.

Instead, they got me.

I am posting a link to my PowerPoint presentation for  those in attendance who wantde the "paper" copy of my talk.  Here is the link:  Ahlborn PowerPoint Slide show

Thanks for all the great questions!

Chris Nichols

www.NicholsTrialLaw.com

Medicare Lien Contact Information

When an attorney is requesting a lien from Medicare, it is important to request the lien amount as soon as possible.  I suggest that when you first "take in" a case you set up the Medicare lien request so that you don't have to wait too long on the "back end".  Don't worry if the client is still treating, by the time Medicare processes the lien request, your client will probably be fully recovered.

To start a Medicare claim, you must "set up" the file with the New York Office:

Medicare-COB
MSP Claims Investigation Unit
P. O. Box 5041
New York, NY  10274-0125

Phone: (800) 999-1118, 8 am - 8 pm, EST.

Once you get the claim/lien request set up with Medicare, you will deal with a different office:

MSPRC Liability  

PO   Box 33828
Detroit, MI  48232-3828

The Detroit office is new, so I'm still waiting to see how they are doing in terms of responding to requests.  I can't imagine t could be slower than it has been in the past (1-2 years) but we'll just have to see.  If you have had a good or bad experience, post it as a comment below.

-Chris Nichols
Nichols Law Firm

Medicare Liens and Set Asides (MSA) in Liability Cases: Myth or Reality?

What is a Medicare Set Aside (MSA)?
In 2001 Medicare (CMS) announced that it would begin to exercise the Medicare Secondary Payer (MSP) statute.  The concept of the law is that Medicare is a "secondary payer" when any other form of insurance exists to pay claims.  Before 2001, that meant traditional health insurance, but starting in 2001 CMS began to interpret that to mean that even third party insurance, specifically Worker's compensation settlements that "cut off" future medical benefits (clinchers), would be subject to the MSP regulations.

This meant that any Workers Compensation clincher that resaonably cut off future workers compensation benefits would have to be reviewed by CMS to determine if there should be an MSA "allocation."  Accordingly, Medicare would look at the case and decide what the future medical costs for the injury would be.  The future costs would be placed in a MSA trust for the payment of medical services related to that claim. Click here to read what Medicare says about MSA's.

Qualified claimants are  often referred to as Class I and Class II claimants or beneficiaries and  are determined as follows:                   

• CLASS I - Any claimant who is currently Medicare eligible and the total settlement value is greater than $25,000.
• CLASS II - Any claimant who has a reasonable expectation of Medicare enrollment in 30       months or less and the total settlement value is greater than $250,000.

Does the MSP apply to Liability Settlements?
The answer is yes, and no.  Yes, because the MSP statute clearly says that liability settlements are covered by the MSA guidelines:

USC Title 42, Chapter 7, Subchapter XVIII, Section 1395y comprises the Medicare Secondary Payer Statute.According to the Code of Federal Regulations(CFR) Title 42, Part 411, Subpart B, Section 411.20 (2), “Section1862(b)(2)(A)(ii) of this Act precludes Medicare payments for services to the extent that payment has been made or can reasonably be expected to be made promptly under any of the following:”

(i) Workers’ compensation (ii) Liability insurance (iii) No-fault insurance

The "no" part of the answer is because CMS has not yet started enforcing Medicare Set Asides in standard laibility cases, but that is coming, I think.

Dark Clouds on the Horizon
Here are the signs that things may be changing in the future:

United States of America v. Baxter International, 345 F.3d 866 (11th Circuit 2003) This was a class-action products liability case centered on leaking silicone breast implants.The defendants settled the class-action lawsuit in 1995 for $4.2 billion with no admission of liability. The Office of General Counsel filed suit in 2001 on behalf of Medicare asserting a right of recovery consisting of payments Medicare made to treat the toxic condition of many of the claimants. The government’s case was dismissed  at the district court level for failure to state a claim.  However, the Eleventh Circuit U.S. Court of Appeals reversed and remanded the case, determining that Medicare did in fact have a right of recovery. The case is significant because it expands the reach of the MSP to civil litigation and upholds Medicare’s secondary payer rights.

According to Gould & Lamb, LLC, an MSA company,

• In late 2003, CMS appointed a Director of Liability in the Baltimore Home Office to begin addressing liability settlements. They have indicated that CMS is diligently developing the MSP Liability enforcement policy covering liability and no-fault settlements. While the thresholds and case criteria remain unclear, it is clear that liability settlements’  involving consideration of future medical costs will be the target of this CMS program.

• Medicare Prescription Drug Improvement and Modernization Act of 2003 included changes to the MSP Statute that increase Medicare rights as a secondary payer. The legislation is written as if the changes noted in the Act were included in the original MSP, dating back to 1980. The Act closed loopholes and eliminated previous legal arguments used to defend against the MSP, including “prompt payment” and “self-insured plan” exclusions. The Act also added that an admission of liability is not necessary to have exposure to the MSP; it applies if any payments are made to settle the claim.

• During a recent CMS Conference in Atlanta (June 2004), representatives of the Office of General Counsel  of the United States confirmed the intention of Medicare to begin enforcing the MSP against liability and no-fault cases in the very near future. They remain guarded about the specifics of the program and Gould & Lamb continues to monitor this situation closely. However, it is our considered opinion that an official MSP enforcement policy will be forthcoming within 12-24 months.

It's Coming, Get Ready
Given that Medicare is continually put on the chopping block by the federal government, and our current administration is not exactly "lawyer friendly", we should expect that we will have to deal with tMedicare Set Aside issues in liability cases in the near future.  Fortunately, in the recent case of Arkansas v. Ahlborn the US Supreme Court has at least given us the ability to argue that if CMS gets a piece of the settlement for future meds, then at least their lein for the past medical expenses must be allocated in proportion to the ratio of the medical costs to the overall value of the case.

Chris Nichols
Nichols Law Firm

Medicaid, ERISA, Medicare & Ahlborn Seminar: What to Do With Ahlborn

I will be teaching a seminar at the North Carolina Academy of Trial Lawyers this Friday on the implications of Ahlborn on Medicaid Third Party reimbursement.  I will also talk about the implications of the recent Ezell case in NC.  The Seminar is being "webcast" so if you can't come to Raleigh, you will be able to attend from the comfort of your own office.

The Seminar is titled, "What You Don't Know Will Hurt You" and it features two other incredible lecturers.  Art Donaldson, on ERISA claims, Jason Wolf, on Medicare.  I'm honored to be with these folks.

You can view the seminar description here. Looks like the registration is now closed, but I wonder why they can't add more people to the Webcast?  Call NCATL if you really want to be on this webcast.

-Chris Nichols
www.NicholsTrialLaw.com

Medicare Office Address to Change

My friend, attorney Julie Bell at Lewis & Daggett, in Winston-Salem, tipped me off that Medicare is going to change their lien processing system, again.  For a long time, we would deal with a local office.  Then we transitioned to a national office in New York and they would get us in touch with a local office.  I noticed very little improvement in the system.

Looks like Medicare is now going with a new national lead contractor and all requests will go to the same place.  The new lead contractor will also cover every step of the process, including final payment letters.  Note:  You will STILL "open" your files with the New York office.

 

"Dark Days" ahead
Julie told me that "in preparation [for] the transition, Medicare has scheduled "dark days" from September 18-30, 2006, during which they will not be receiving or sending information.  Therefore, you will not be able to call them nor should you try to send any information to them.  Thereafter, once the new lead contractor's office is operational (anticipated to be October 2, 2006), you may contact the new contractor to determine the updated conditional payment amount and provide settlement information.  They intend to put a first priority to address previously submitted notices of settlement and to make a formal Medicare demand."

Detroit, Rock City

Maybe in the same way that Lee Iacocca rescued Chrysler from decades of inefficiency, Medicare hopes that the city of rock, autos, and murder will improve the efficiency of Medicare third party recovery programs.  Right now Medicare sometimes takes 1-2 years to allow a lawyer to pay a lien, so it won't be too hard to improve that record.

The new Medicare address, as of October 2, 2006, will be:

 

MSPRC Liability

PO Box 33828

Detroit, MI  48232-3828

Phone 866-677-7220

I have to admit that I'm not holding my breath that this change will improve the program one bit. But you never know.  Maybe they will put that assembly line technology to work.

Chris Nichols
www.NicholsTrialLaw.com

 

Medicare Lien Formula Explained

Medicare is the Federal health benefit available to seniors and those determined to be disabled by Social Secuirty Disability.  Every pay check you get has taxes taken out to pay Medicare.  If you have a personal injury case and receive a settlement, Medicare has a right to be paid back for any medical costs they have paid as a result of some third party's negligence.  Think of it as Medicare "loaning" you the money until you get your settlement.

Medicare Formula:  They don't get all the money

Medicare "allows" for attorney fees when they get their money back.  Here is how that works:

HOW to Reduce Medicare's Lien:

1.      Total Amount of Liability Settlement:  $________     

        Amount of Medical Pay Settlement: +  $      _____

                     TOTAL Received(ITEM A)      $________       

            

2.      Amount of Attorney's fees                  $________     

         Other Procurement expenses/cost +  $      _____

                     TOTAL Fees/Costs (ITEM B)  $ ________    

3.      (ITEM B) $_________  ÷  (ITEM A) $_______ = RATIO  ._____    

4.      LIEN x RATIO = $ ________Reduction Amount     

5.      LIEN – Reduction Amount = FINAL LIEN $__________ 

Here is an actual example of how the lien works out using a "real life" scenario:

EXAMPLE

Medicare Claims $40k

  $100,000   Settlement

+$   5,000   Med Pay

  $105,000  ITEM A

  $33,333.33   Attorney Fees

+$ 5,642.00   Costs

  $38,975.33  ITEM B

Item B $38,975.33 ÷ Item A $105,000 = .3711

$40,000 (total lien claimed) x .3711  =  $14,844.00 Reduction Amount

$40,000 - $14,844 =  $25,156 FINAL LIEN

Because Medicare is a Federal Program, this formula should hold true for any state in the nation.  Of course, each area will have a different Medicare contact number.

Chris Nichols

www.NicholsTrialLaw.com