Past Payments Made By Medicare

Question: I understand that no MSA is required on a medical malpractice case but that doesn't answer the question whether Medicare can post settlement refuse to pay claims in light of 1395Y(b)(2)(A)(i). Do you think we should be telling our clients that it might be a possibility?

Also, in mediation, do you suggest we avoid submitting written itemizations of damages that include large components of future medical expense that would ordinarily be covered by Medicare?

Thanks in advance for your thoughts.

Ohio Attorney

Answer: You raise a very good point, given the fact that the statutory language of sub(b)(2)(A)(i) from 42 U.S.C. §1395y refers to "payments made or to be made". However that subsections goes on to exempt from immediate recovery those payments made on a conditional basis.

When read in conjunction with subpara. (b)(2)(B) (conditional payments Medicare can make, subject to recovery), and when considering the MSP Statute in light of recent CMS clarifications concerning the Medicare reporting rules for Responsible Reporting Entities (insurance companies), effective July 1, 2009, for settlement occurring on or after Jan. 1, 2010, the statutory construct clearly refers to past payments made by Medicare, or to payments Medicare should not make based on its secondary payer status.

In the case then of a WC settlement, clients should be told that there is a possibility that Medicare can refuse to pay a medical claim unless its interests were properly considered as part of the settlement process. In the case of a medical malpractice (liability) case, however, the same analysis whether there exists a future cost of care and a permanent burden shift, combined with a future medical allocation and properly documented file will be the best way to then determine what, if anything, you need to tell the clients.

Until further statutory evidence, interpretations or case law is presented that proves the MSP Statute is intended to apply to future costs of care and not just conditional payments; as even the rules for double damage for attorneys and the broad liability to attorneys and settling parties alike for non-compliance only apply to conditional payments (rather than future ones), we would not recommend advising your clients that Medicare would challenge their future medical claims absent the proper analysis of the case.

To the extent that the mediation does not result in a specific, carved out amount of future medical expenses to be paid, whether you also discuss or review future medicals to build your damage analysis is not dispositive of the question whether or not a MSA should be considered.

Simply put, if it is in your client's best interests to submit life care plans and other evidence of damages, you should continue to do so. That type of evidence, while probative of arguments for damages leading to settlement do not, unless the parties agree, result in a line item for future medicals that would, in our opinion, trigger the need to consider whether there also exists a permanent shift of the burden of paying for those future medical expenses (over to Medicare). It is those two critical elements, and not the existence of a life care plan or similar documents, that can lead to the need to properly consider Medicare's interests through the use of a MSA.

To be clear, there are very limited instances when we see liability MSAs. Those include jury verdict sheets, the settlement of cases which are greater than maximum caps on damages under state law would permit, or the existence of an injury that the parties all understand will require future costs of care such as the loss of a limb for someone who is entitled to Medicare - Medicare would pay the costs of prosthetics and no amount of arguing would prevent the parties from recognizing the existence of future costs of care. However, even in that case, if there is another source of coverage, there may not be a permanent burden shift. As discussed, you need both conditions to be met before you can move forward with determining whether a MSA will be needed to properly consider Medicare's interests.

Please let us know if you have any follow up questions.