Medicare Liens

Useful link to Medicare and MSPRC billing and diagnostic codes for auditing conditional payment letters

I found this link with MSPRC's website and thought it might be helpful to some of you.  This link takes you to the PDF lists of all the Medicare diagnosis codes dating back to 2002.

You can download the pdf files and open them in Acrobat and then CTRL F search for the codes that show up on your conditional payment letters from Medicare.  This will help you sort out medical visits that have been "coded" for payment for non-related medical procedures and visits.
This makes it easier to find and eliminate appointments for pre-existing conditions.  You can also scan in a long conditional payment spread sheet, do a conversion to searchable text (OCR) and then use the search feature on that to find the billing codes.
Hope this is helpful to some of you.
Chris Nichols 1.800.906.5984

A brief "how to" for dealing with Medicare

I was sent this brief "idiot's guide" to dealing with Medicare and thought it was an excellent summary of the process.  I've posted it in full, along with the contact information for a company that will help with the lien resolution process.  I am not endorsing their product as I have never used their services.

-Chris Nichols

The Idiot’s Guide to Medicare Lien Resolution

Typically, Medicare liens are placed on the personal injury case of a person whose treatment is paid by Medicare.  Medicare’s agents, the COBC, MSPRC, and CMS have a right to recover funds which would not have been paid without the negligent act which harmed the plaintiff-beneficiary.

If you are the Medicare beneficiary and plaintiff in a lawsuit, your attorney should handle the Medicare liens for you.  If you are the attorney, but you don’t know how to handle the lien, or just need some help, follow these simple steps:

  1. Report the case to the COBC
    1. Call (800) 999-1118
    2. Be prepared to give the following Plaintiff/Beneficiary information:
      1. Name
      2. Social Security Number
      3. Medicare Number (a/k/a HIC Number)
      4. Date of Birth
      5. Address
      6. Date of Incident
      7. Injury (the COBC prefers physical body parts )
      8. Defense insurance (if known)
  2. This should be the only time you deal with the COBC
  3. Wait 10-15 days.  During this time period the COBC will transfer the file to the MSPRC, another Medicare agency.  At the end of this time period you should receive two (2) pieces of Medicare lien information from the MSPRC:
    1. First, you will receive a Beneficiary Information Questionnaire (you will recognize this document based on the red grid lines on the back pages).  This document can be ignored if, and only if, the plaintiff-beneficiary’s information has not changed.
    2. Concurrently, you will receive a Rights and Responsibilities Letter.  This will give some information on the Conditional Payment Letter process.  No action on your part is required.
      1. This Rights and Responsibilities Letter starts a countdown until you should receive a Conditional Payment Letter (a/k/a the initial lien).  That countdown will last 65 days – however, you need something else to receive the letter.
      2. Within the 65 day period, you need to send consent  and proof of representation to the MSPRC.  If you do not send the consent, you will not receive information on the Medicare lien, nor will you be able to speak to MSPRC representatives regarding your case.
        1. Unfortunately, the MSPRC is notoriously slow.  Without constant checks on the status and timeline, your Conditional Payment Letter probably won’t arrive within the 65 day period.
          1. Be sure to call the MSPRC to check the status of your consent (its validity).
          2. Be sure to call the MSPRC multiple times after to check the status of your Conditional Payment Letter.
          3. Please be ready to wait when you call theMSPRC.  Hold times range anywhere from 10 to 55 minutes (and increasing).  In fact, due to theMSPRC’s inability to handle current volumes of mail, its call center is now closed on Fridays.
  4. After all that time and effort you should receive the Conditional Payment Letter.
    1. But if you did not bother to call the MSPRC – you probably don’t have it!
    2. You’ve received the Conditional Payment Letter, now what?
      1. Review the payments.  Check every ICD-9 code and injury to make certain they relate to the plaintiff’s sued-for injuries.
        1. Hint: ICD-9 Code 250.00 (Diabetes Mellitus) usually does not relate to malpractice or a personal injury.
  5. On nearly every Conditional Payment Letter there will be unrelated codes – this means the lien is too high and Medicare is claiming funds to which it is not entitled.
  6. If you have time before settlement you should Dispute theConditional Payment Letter.
    1. The MSPRC requires these in writing.
    2. Dispute the codes that are unrelated and explain why the MSPRCwas wrong to include them.
    3. Be detailed.
    4. The MSPRC will take 60-90 days to review your dispute.  When it replies to your dispute it will not give reasons, it simply sends a new Conditional Payment Letter.
    5. The case is settled, how do I pay Medicare?
      1. First you have to request a Final Lien Demand by notifying theMSPRC of settlement.
        1. Be sure to include the settlement, attorneys fee, any costs incurred (plus an itemization), and the date of settlement.
        2. In 30-45 days you will receive a Final Lien Demand.  This is the amount you must pay to Medicare from the settlement proceeds.
          1. You have 60 days to repay the lien before interest accrues.
          2. If you fail to pay within 60 days the interest will accrue for all 60 days plus any additional time.
  7. Final Lien Demand is not really final:
    1. You can appeal the Final Lien Demand on the basis that unrelated payments are included in the lien.
      1. You must do so within 120 days.
      2. Be very careful and detailed when appealing.  Keep in mind the MSPRC is the judge, jury, and executioner at this point of the Medicare lien appeal.
    2. Other methods exist to lower the lien, including:
      1. Compromises with CMS.
      2. Waivers through the Social Security Administration.
      3. Now that I appealed, how does my client get aMedicare Lien Reimbursement?
        1. Medicare lien reimbursements (for “overpayment”) take 10-14 weeks to be processed and sent to your client.
        2. You don’t have to do anything once the appeal has been agreed to by the MSPRC.
          1. But the check will go straight to the last-known address for the beneficiary.
          2. If you want the check to go to your office you must contact the MSPRC and request it be sent to you.
            1. Usually this check arrives as a two-party check.
            2. This will protect the interests of all heirs who have an entitlement to the lawsuit funds.
            3. Now you can put the check into your escrow account and disburse the funds as is legal, ethical, and agreed to by the plaintiff, heirs, and secondary lienholders.
  8. Timelines:
    1. Reporting to COBC – Day 1
    2. COBC transfer to MSPRC – Day 3-5
    3. MSPRC sends Rights and Responsibilities letter, starting 65 day countdown to a Conditional Payment Summary, or Initial Medicare Lien – Day 15-20
    4. Conditional Payment Letter arrives – Day 80-85
    5. Disputes add 60-90 days
    6. Compromises add 60-90 days
    7. Appeals add 60-90 days
    8. Notice of settlement to receive Final Lien Demand
      1. Was 10-21 days
      2. Now is 30-45 days
      3. If you do everything right in Medicare Lien Resolution, you could resolve a lien within 110 days; but, if you let letters sit and do not take the time to carefully review and resolve your liens, they could take years.
        1. Report early;
        2. Call often; or,
        3. GET HELP!  Lien Resolution Servicesspecializes in this process.  When we see a Medicare letter, we know what to do with it – reducing lag time and speeding up the lien resolution process.  LRS makeslien resolution 100% of our focus; we take this administrative work off your hands providing you with time to practice law and litigate cases.
        4. Best of all – The cost of lien resolution isbillable to the client, just like an expert fee.  The attorney pays nothing; and, while the client pays a small fee, he or she ultimately benefits by a reduced lien, faster disbursement, and results.
        5. Contact us for all of the above.
Ryan J. Weiner
Co-Founder Lien Resolution Services
[email protected] 1.800.906.5984

Medicare (CMS) offering new fixed percentage subrogation option for settlements of less than $5,000

New Fixed Percentage Option For Medicare's Recovery Claim


The Centers for Medicare & Medicaid Services will be implementing a new and simple fixed percentage option that will be available to certain beneficiaries beginning November 7, 2011. This option is available to beneficiaries who receive certain types of liability insurance (including self-insurance) settlements of $5000 or less.

A beneficiary who elects this option will be able to resolve Medicare's recovery claim by paying Medicare 25% of his/her total liability insurance settlement instead of using the traditional recovery process. This means that a beneficiary will know what he/she owes and will be able to immediately pay Medicare.

In order to elect this option, the following criteria must be met:

  1. The liability insurance (including self-insurance) settlement is for a physical trauma based injury. (This means that it does not relate to ingestion, exposure, or medical implant), and
  2. The total liability settlement, judgment, award, or other payment is $5000 or less, and
  3. The beneficiary elects the option within the required timeframe and Medicare has not issued a demand letter or other request for reimbursement related to the incident, and
  4. The beneficiary has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident.

A full explanation, including instructions on how and when to elect this option, will be available on this website on November 7, 2011 in the Fixed Percentage Option section of both the Attorney and Beneficiary Toolkits.

Please Note:When a beneficiary elects this option, he/she must understand that as part of choosing the option he/she will be giving up the right to appeal the fixed payment amount or request a waiver of recovery for the fixed payment amount. 1.800.906.5984

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 1.800.906.5984

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 1.800.906.5984

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:

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 1.800.906.5984

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 1.800.906.5984

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.Lien_seminar

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 1.800.906.5984

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 1.800.906.5984

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:


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 1.800.906.5984