Centers for Medicare and Medicaid Services Released New Conditional Final Payment Letters on June 27, 2011.

Dollar SignThe United States District Court for the District of Arizona, on May 9, 2011, issued an opinion in Haro vs Sebelius, wherein the court held that the Secretary’s for DHHR application for a 60-day reimbursement requirement did not give immediate collection actions of Medicare beneficiaries. The MSP provisions did not authorize the Secretary to bring direct action against the medicare recipient to collect disputed reimbursement claims.

What this means is if you are in a car accident in West Virginia and you have medicare or medicaid which pays for medical services DHHR cannot bring a suit to seek repayment if you dispute the amount of reimbursement they are seeking. The reason is simply what if they are seeking to be paid back for bills which are unrelated to the accident?

The Haro vs. Sebelius case was brought on behalf of Medicare beneficiaries and their attorneys against the Secretary of the Department of Health and Human Resources regarding the confusing Medicare Secondary Payee provisions wherein Medicare seeks to be reimbursed for monies that were paid to either someone who was injured in a liability case, a Workers’ Compensation case or a no-fault case. The suit was declaratory judgement action wherein the attorneys and the beneficiaries of Medicare were seeking to get a ruling on whether or not the Secretary’s practices were permissible, or whether it violated a due process clause in the United States Constitution. The plaintiffs sought a declaratory judgement and an injunction to prevent the Medicare Secondary Payee program from seeking collection from the beneficiaries who had received benefits through Medicare.

What was happen is Medicare was sending out a 60-day reimbursement requirement to the plaintiffs and their attorneys saying that if they did not get reimbursed in 60 days, interest would accrue on the amount they were seeking to be reimbursed, as well as other types of collection. They also made threats of referring it to law enforcement agencies. The court in New Mexico found that these tactics were not the type that was anticipated by Congress in passing the act, and subsequently, granted the motion for a declaratory judgement and entered an injunction in this case.

The court found that the MSP reimbursement claims collection actions where there is a dispute regarding the amount of the claim exceeded the authority of the Medicare statute. The defendant in this case was enjoined from demanding payment with any threats of commencing a collection action until there was a review or an appeal process if the amount to be reimbursed was in dispute.

The reason this is important is Medicare can say “we want this amount of funds to be reimbursed back when you settle your claim,” whether it be a liability court claim or a Workers’ Compensation case. Medicare bases the amount to be reimbursed to them on what they believe is related to the liability case or Workers’ Compensation case wherein medical benefits were paid. However, problems arise when there are bills that were included in Medicare’s amount that they are seeking to be reimbursed that are not related to the claim.

For example, you are in a car wreck and you’re on Medicare. As a result of the accident, you incur $15,000 in medical expenses. When a settlement is reached in your case, you request Medicare provide you with a final lien amount so you can reimburse them. However, Medicare could say they want to be paid back $25,000.00 in medical benefits, which is $10,000.00 more than what the insurance company deemed to be caused and related to the accident. Therefore, you, your attorney and the insurance company believe that additional $10,000 is not related and should not be paid to Medicare. At this point you have a due process right to challenge the amount sought by Medicare.

The court also in this ruling ordered that the Medicare cannot demand that the attorneys withhold the liability proceeds of a client’s pending payment amounts if that amount was in dispute. What this means is that the lawyer can go ahead and disburse some payment to their clients upon the settlement of the case as long as they withhold enough to adequately meet the claim from the Medicare Secondary Payee.

Now in response to this case, Medicare on June 27, 2011, issued new and revised conditional payment demand letters. The conditional payment demand letters are letters that they send out. They have one that goes to the primary payee, and one that go to the claimant under each area of Medicare reimbursement.

Under a Workers’ Compensation case, they have a standard form letter that they send out to the primary payee, which lets them know they are the responsible primary payees for an accident which Medicare paid conditional medical bills on that behalf. They also send a letter directed to the claimant, which would be the person that was injured, as well as their attorney if they have, advising them that they are still responsible for repaying Medicare for the monies that were received. This letter also explains how Medicare calculates the amount they are seeking to be reimbursed, explains the process for you to undergo if you have a dispute with the amount Medicare is seeking to be reimbursed and how you can appeal that amount, in addition to what

happens if you do not repay Medicare. These letters were a direct response to the case in Arizona and our significant change from the previous letters.

The previous letters issued by Centers from Medicare and Medicaid did not talk about the due process rights with the right to appeal or the right to challenge the amounts requested. Therefore, Medicare has changed their standard form letters that they send out when they see that there have been conditional payments made to someone who has been injured and these letters are more fair, and do have a procedure for challenging what Medicare wants to be reimbursed back.

However, Medicare is extremely slow, and CMS is extremely difficult to get any type of prompt response. The problem is the delay for an attorney to receive settlement information because they were always waiting for the Centers from Medicare and Medicaid to get back with the subrogation amounts. It was even a more difficult situation when the subrogation amount they finally received from Medicare was wrong as there was no real concrete procedure for appealing that as there was no due process way to appeal it in place.

Also, Medicare was insisting that no funds be disbursed, and so insurance companies or liability at-fault parties who were responsible for paying the settlement would refuse to issue the settlement check until there was a final lien amount that was agreed upon by the parties. This could take anywhere from 12 to 18 months after negotiating a settlement before you could even receive a check from the insurance company because of the misapplication of the Medicare law by both Medicare themselves and the insurance companies.

It is yet to be seen if this new case and new conditional payment demand letters will make a difference in the process. The entire process has been entirely too slow and that has caused problems for the people who are waiting to get information on what their subrogation amounts are so they can settle their case.

If you were involved in an accident wherein you were injured, and you have Medicare or Medicaid, given the new reimbursement laws, you need to consult with an attorney who is familiar with subrogation rights and Medicare Secondary Payee Recovery rights. If you do not get proper legal advice and if you do not properly consider Medicare or Medicaid’s subrogation rights, you could lose your benefits and you could lose your future benefits. Also, any settlement that you may get from an insurance company may not be released to you. The insurance company itself might just determine what should be repaid back to Medicare or Medicaid, and not give you any input into that process. Therefore, it is important that you talk with a lawyer who is familiar with the Medicare/Medicaid repayment system, which can be confusing and time delaying.