USE OF MEDICARE AND MEDICAID ON AUTO ACCIDENT CLAIMS

Auto accident clients who have never dealt with the government programs involving Medicare and Medicaid have the mistaken impression that the liens asserted by these two entities can be easily resolved. If you have ever dealt with these two government entities, you know that resolution of Medicare and Medicaid liens can be very time consuming.

Medicare is our country’s health insurance program for people 65 years of age or older. It also covers younger people who have disabilities. There are four (4) parts to Medicare:

  • Part A – hospital insurance that helps pay for in-patient care;
  • Part B – pays for doctor services as well as other services and supplies;
  • Part C – Medicare Advantage, which works like a HMO or PPO, the individual chooses to get Parts A and B from one provider organization;
  • Part D – is the prescription drug coverage plan.

Medicaid is a state run program that provides hospital and medical coverage for people with low income and minimal financial resources. Each state has its own rules about who is eligible and what is covered by Medicaid.

As far as the heirarchy of insurance liens is concerned, Medicare and Medicaid liens are the most difficult to resolve.

MEDICARE

Medicare was established in 1965 and is part of the Social Security Act. When a personal injury claimant receives accident-related Medicare benefits, Medicare has a subrogation interest on any first-party or third-party insurance recoveries. Medicare has the right of direct action under Federal Statutes. They can sue the adverse party directly. However, they usually choose to piggy-back their recovery from personal injury lawyers seeking compensation for their clients.

42 USC 1395y(b)(2)(B)(iii) creates a Medicare right of subrogation on personal injury or wrongful death settlements.

Medicare liens take priority over other liens and attach to any settlement or judgment proceeds. If you ignore these liens, Medicare can later seek a recovery, not only from the injured victim, but also from the lawyer. Unlike many liens, notice is not required on Medicare liens. The lawyer has the burden to determine if a Medicare lien exists. A Medicare lien notice may never arrive prior to the distribution of settlement proceeds without the attorney contacting Medicare.

Under Medicare statutes, if the Medicare lien exceeds the amount of recovery, Medicare recovers the entire lien, excluding the lawyer’s fees and expenses.

Medicare subrogation is often handled by CMS (Centers for Medicare and Medicaid Services) and MSPRC.

Medicare does have some authority to reduce or waive Medicare liens if it is in the best interests of the program, or if the probability of recovery, or the amount of the recovery does not warrant pursuit of the lien, or if enforcing a lien would lead to a significant financial hardship. Attorneys must find the right person to talk to at Medicare about a lien reduction or waiver.

In dealing with any Medicare lien, everyone involved needs to have patience, because getting a response from Medicare takes time and will involve multiple phone calls and letters. Virtually every time you call Medicare, someone will tell you that they need another 45-90 days to respond to your request. You will probably speak to a different person each time you call. It is frustrating to a personal injury attorney after settling an injury claim to realize that Medicare paid some of your client’s bills.

After much hard work on the part of your attorney, a resolution of a Medicare lien can be finally accomplished. Clients must consider that Medicare has a statutory lien against settlement proceeds and there is no person that can be contacted to quickly verify the amount of the lien.

All personal injury claimants want to know the final amount of their net recovery as soon as possible. Clients generally do not appreciate the amount of time and effort it takes to resolve a Medicare lien.

In the event that the Medicare payments exceed the settlement amount, the lien formula can result in a Medicare recipient receiving nothing, and may result in claimant’s lawyer and Medicare only being paid. Personal injury claimants become irate when they are subjected to this end result. Medicare does waive liens. However, the waiver application can tie up disbursement of settlement proceeds for a year or more.

Unfortunately, Medicare recipients, their lawyers and even the liability insurers who are paying the settlement, are all individually liable for reimbursing Medicare pursuant to 42 CFR 411.24(h) and (I). These federal regulations can send a chill down the spines of insurance companies paying out money on claims where Medicare liens are involved. Some insurance companies will insist on issuing a single settlement check payable to plaintiff, plaintiff’s lawyer and the United States of America. Most clients, especially in our present economic environment, need settlement funds immediately. Sometimes the attorney is forced to disburse a portion of the net settlement proceeds to the client, and hold in their Trust Account the amount of the estimated Medicare lien. A year later, the attorney can receive a final confirmation of the final Medicare.
In today’s personal injury litigation climate, fewer liability insurers are inclined to ignore unliquidated Medicare liens in return for an Indemnity Agreement offered by the plaintiff and plaintiff’s lawyer.

In litigation, Medicare can be named in a complaint as an interested party. The U.S. Attorney entering an appearance in the action on behalf of Medicare, may be better equipped to expedite settlement on a Medicare subrogation lien. Of course, this strategy has its complications because Medicare subrogation creates a federal question that may cause the case to be removed to the Federal Court.

Why does it take so long to resolve a Medicare lien?

It is not unusual for the entire Medicare lien resolution process to take as long as six (6) months to one (1) year. The first task is to establish a case with Medicare’s Tort Recovery Department and to obtain a listing of all expenditures. This list will assist the attorney in determining which charges are related to a particular injury and accident. Medicare’s Tort Recovery Department will probably first provide you with a list of all expenditures from the date of the accident.

The contractor that handles the lien recovery for Medicare, must first determine which medical expenses have been paid under Part A and Part B providers. (In certain situations, medical providers have up to 25 months to bill Medicare after providing medical services to your client.) The attorney must first review all expenses for which Medicare is claiming a right of reimbursement to make sure they occurred sometime between the date of injury and the date of the settlement. Then the attorney must determine if all expenses listed are related to the injury which is the subject of the settlement.

A claimant can gain access to your Medicare Explanation of Benefit (EOB) through mymedicare.gov.

As you can see, the resolution of a medicare lien is a time consuming process.

Can a Medicare lien be challenged?

Claimants who are Medicare beneficiaries have the right to appeal Medicare’s lien amount. Any appeal request must be made in writing on special forms. Appeal decisions on generally based on financial hardship that the re-payment would cause the claimants. In order to make final determination, a Waiver Form is sent to the beneficiary, requesting information on monthly income and expenses.

Does Medicare pay attorney’s fees and costs associated with obtaining your settlement?

Medicare will off-set its lien by a proportionate share of necessary “procurement costs” incurred in obtaining the settlement. This procurement off-set is only applicable if you recover from a liable third-party. If you receive payment from your own automobile, medical, or no-fault insured, this off-set will not apply.

What happens if you ignore the Medicare lien?

Once the final lien is agreed upon, it must be paid within 60 days. If the demand is ignored, then the matter will be referred to the U.S. Treasury Department for collection. The Treasury Department can request that your government Social Security checks will be off-set to pay back the lien. Interest will also accumulate on the Medicare lien if payment is delayed.

MEDICAID

Subrogation rights associated with Nevada Medicaid are controlled by NRS 422.293, et. seq. These rules are similar to those that apply to Medicare subrogation. Nevada Medicaid has subrogation rights against recipients to the extent of all medical costs paid involving third-party liability claims. They may intervene in any action by the recipient or his/her successors in interest to enforce such legal liability.

Upon receiving a Notice required pursuant to NRS 422.293001, the Department, shall within thirty (30) days provide written notice to the recipient or his attorney and to the third-party. This written notice must include, without limitation, the amount of the Department’s lien. NRS 422.293003 states that “no lien, created pursuant to NRS 422.293 is enforceable unless written notice is first given to the person against whom the lien is asserted or his attorney.”

Generally speaking, a Medicaid final lien amount can be obtained much more quickly then a Medicare lien. Also, one must consider that if a person is eligible for Medicare, they may also be eligible under Medicaid. Medicare will pay bills first, and then bills will be submitted to Medicaid for payment. Whenever the Medicare Medicaid combination exists, Medicaid will pay a very small portion of each bill.

CONCLUSION

The Federal law governs Medicare and the State law governs Medicaid. When a plaintiff receives a personal injury settlement, he must use a part of that settlement to pay back medical expenses paid by Medicare and Medicaid. Many plaintiffs are not aware of their obligations under Medicare and Medicaid. These laws often place the burden on the claimant’s attorney to verify whether or not Medicare or Medicaid has a lien. Personal injury attorneys spend considerable time resolving these liens so that they can avoid personal liability on the part of themselves and their clients.

Therefore, personal injury clients should be sympathetic with their attorneys’ efforts in dealing with the slow and frustrating process of resolving Medicare and Medicaid liens.

This entry was posted on Monday, September 1st, 2008 at 8:00 am and is filed under auto accidents, bodily injury, insurance, Medicaid, Medicare. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

4 Responses to “USE OF MEDICARE AND MEDICAID ON AUTO ACCIDENT CLAIMS”

  1. Sherry Says:

    I am pro se suing an insurance company in federal court to recover for the Medicare and medical provider liens. This article was very helpful. Thank you very much!

  2. Lynell Siregar Says:

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  3. Hoteluri Romania Says:

    I do not like insurance companies. You give them lots of money when you start an insurance (car, house, life etc) and when you are in trouble they find lots of ways to not help you with your own money that you payed to them. How can it be possible something like that?

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