What Constitutes as a Medicare Hardship

Question: I’m looking for insight as to what MSPRC-CMS thinks qualifies as “hardship” to reduce or waive a lien.

Maryland Attorney

Answer: While waiver decisions are made on the merits of an individual case, in our practice we see the following criteria as indicators:

• Medicare’s claim exceeds the settlement amount;
• Beneficiary sustained permanent injuries;
• There are non-covered, out-of-pocket accident-related expenses;
• or Beneficiary’s living expenses are equal to or higher than income.

In our experience, waivers are often denied if:

• Beneficiary receives large settlement (say north of $500K);
• Beneficiary’s income exceeds ordinary living expenses;
• After repaying Medicare and allowing out-of-pocket medical costs, the beneficiary will be left with a substantial amount of the proceeds; or
• Beneficiary has substantial assets.

Medicare may grant a full or partial waiver of its recovery amount with respect to the beneficiary. The criteria for a §1870 (c) waiver are 1) it requires the beneficiary be without fault and the recovery, 2) would effect financial hardship or be against equity and good conscience, Section 1870 (c) of the Social Security Act.

“Without fault” refers to the information the patient gave to the provider/supplier/physician or Medicare regarding the details of the accident. The information was correct and complete as far as he/she knew, and, when the Medicare payment was made, the beneficiary believed it to be the right payment for his/her claim.

With respect to the meaning of “financial hardship” in this context, Medicare will consider the impact of unforeseen severe financial circumstances existing at the time of Medicare’s claim as well as the impact of out­-of-­pocket medical expenses (even such items as home modifications and adaptive equipment) versus the beneficiary’s resources to meet these obligations. Medicare may grant a full or partial waiver if recovery would have an adverse effect on the beneficiary’s standard of living as it existed prior to the accident/injury/illness.

“Equity and good conscience” refers to the total impact upon the beneficiary of granting or not granting a full or partial waiver. In applying the standards of “equity and good conscience” possible factors which might be included could be: 1) the degree of financial hardship caused by the recovery, 2) the extent to which the beneficiary’s state in life would be altered, 3) Medicare’s recovery amount exceeds the settlement amount and, 4) the extent to which the beneficiary can meet non-­covered, out-­of-­pocket, accident­-related expenses, including the absence of Medigap insurance coverage.

I hope this information helps…