Medicare Medicaid and SCHIP Extension Act of 2007 Brings Important Ramifications for Insurers

The "Medicare, Medicaid, and SCHIP Extension Act of 2007" was signed into law by President George W. Bush on December 29, 2007. The enactment of this law has ramifications for Liability Insurance, Self Insurance, No Fault Insurance, and Workers' Compensation Insurance programs nationwide.  The aspect that should alarm most is that if the carrier does not comply with the disclosure method (that has yet to be disclosed) the carrier may be subject to a fine of $1000 per day until it complies.  Fines could thus inadvertently mount at an exponential rate.  While it does not go into effect until July 1, 2009, the implication is huge.To view a complete attachment of the bill click here for the link.

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Of major importance to liability, self, no fault, and workers' compensation insurers is Section 111 ("Medicare Secondary Payor"), paragraph 8 ("Required Submission of Information by or on behalf of Liability Insurance (including Self-Insurance), No Fault Insurance, and Workers' Compensation Laws and Plans"), items (A)-(H). 

(A) REQUIREMENT - On or after the first day of the first calendar quarter beginning after the date that is 18 months after the date of the enactment of this paragraph (the law was passed on 12/29/07, making the following requirements begin July 1st, 2009), an applicable plan shall-

(i) determine whether a claimant (including an individual whose claim is unresolved) is entitled to benefits under the program under this title on any basis; and

(ii) if the claimant is determined to be so entitled, submit information described in subparagraph (B) with respect to the claimant to the Secretary in a form and manner (including frequency) specified by the Secretary.

(B) REQUIRED INFORMATION- The information described in this subparagraph is -

(i) the identity of the claimant for which the determination under subparagraph (A) was made: and

(ii) such other information as the Secretary shall specify in order to enable the Secretary to make appropriate determination concerning coordination of benefits, including any applicable recovery of claim.benefits from Worker's Compensation or a liability carrier or self-insured entity, if Medicare's interests are not considered, stiff penalties can follow to the attorney and client.

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The Centers for Medicare and Medicaid Services (CMS), the federal agency that administers Medicare, has the responsibility to recover monies from past overpayments and to ensure that future medical benefits are paid by the primary payer (liability insurers, Worker's Comp, self-insureds, judgments, settlements, compromises, etc,) and not shifted to Medicare.

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If Medicare erroneously pays a claim that should have been paid by the primary payer in a liability or Worker's Compensation case and finds that Medicare's interest was not properly considered, the penalty can be double the damages incurred by Medicare, and the injured party could lose their future Medicare benefits (42 C.F.R. 411.24(c)(2)).  CMS is also authorized to recover not only from the claimant, but from you, the claimant's attorney, the fees you were paid.  They can also collect payments made to medical providers, private insurers, or any other party receiving a payment from the case, including experts you may have paid (42 C.F.R. 411.24(g)).

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Therefore, if the primary payer is settling a claim involving future medical benefits for a "qualified" injured party, an allocation to a Medicare Set Aside (MSA) account is worth serious consideration by all involved parties. An injured party is considered "qualified" if he/she is currently on Medicare (through Social Security Disability or retirement), or if there is reasonable expectation that the injured party is going to be on Medicare within 30 months of settlement and the amount of settlement is $250,000 or more.

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The components and requirements for creating and funding an MSA are, unsurprisingly, very detailed, and require expertise and medical proficiencies that attorneys rarely possess, and generally don't have the time to develop. 

Protect yourself from liability in this area and protect your injured client from potentially losing their Medicare services in the future.