Thereb s nothing that strikes fear and intimidation more than red ink. Think about it, no other color elicits quite the same response. Perhaps this reaction stems from seeing correction marks in red ink. Over the years you become conditioned to those marks, and red becomes a color that indicates something is wrong or needs your attention. It canb t be ignored. In the case of the Medicare personal liability settlement Red Letter that your client may receive, this couldnb t be truer. If or when your client receives this letter, it wonb t justB needB attentionb &it willB demandB it. In fact, it demands it now and hereb s why.
Imagine youb ve settled a liability case for a client who isnb t Medicare eligible at the time of settlement. Meaning thereb s no reason for the defendants or their insurers to report this case to Medicare. Section 111 Medicare Secondary Payer, which was signed into law in 2007, requires B settlements to be reported to Medicare. In fact, it states that the responsible reporting entity, defendant or the self-insured, which does not report a Medicare-eligible beneficiaryb s liability settlement to Medicare is subject to $1000 per day, per claimant penalty. We’ll cover more about this law, and its effects, inB this article.B
Had your client been Medicare eligible, reporting to Medicare would have meant disclosing ICD-9 or ICD-10 disease codes. These are codes that describe the injuries or conditions that are settled as part of the case and, when reported to Medicare, are filed away to match up against future bills submitted to Medicare. A match means payment is denied.
Some casualty adjusters have disclosed that their firm reports B all settlements to the government, Medicare eligible or not. While no answers have come from Medicare as to what happens with non-eligible reports, living in an age where all of our tweets, emails and phone calls are tracked certainly suggests that this info could also be stored for later. Yet, it appears that you and your client are in the clear as, in our example, your client isnb t Medicare eligible at the time of settlement, right?
That is true, until your client becomes Medicare eligible, post-settlement. At this point, Medicare will send them a Medicare SECONDARY CLAIM DEVELOPMENT (SCA) Red Letter that includes a questionnaire. This questionnaire has three sections. The second section, b More Information About You,b being the most alarming of them all.
[H2: The In’s & Out’s Of TheB Medicare Personal Liability Settlement Red Letter]
It starts out harmless enough with a request for some general information in Section I. Shown below is the second part of this letter, which asks if your client is receiving Black Lung Benefits, workersb compensation benefitsB or treatment for an injury or illness which another party could be held liable forB or is covered under automobile no-fault insurance. A simple yes or no is all thatb s required.
Then to the left of each of these questions they ask for dates, which are immediately followed by sections asking for detailed information about their insurance carrier. Most clients answering b Yesb to #3 will probably enter their auto insurance carrier here. Not too bad, but then thereb s more.
As this section continues to the second page, youb ll notice that things go alarmingly in depth. Detailed information about their employer (being disabled and on Medicare, they probably donb t have an employer), their attorney, (thatb s YOU), and then a brief description of their illness or injury are required.
Why does this matter? It matters because Medicare now knows of your clientb s settlement, and will soon have all of the information they need to match bills and deny payments later. There is no way to get out of this.B
Now you realize, eligible or not at time of settlement, Medicare will find out about your clientb s settlement. When they do, they will not pay for future expenses. In fact, they will cut off your clientb s Medicare benefits for those conditions and injuries that are the subject of the settlement of your clientb s claim. What does this mean for your client? Less funds for other needs, unless proper settlement planning has occurred from the beginning. B Or it could mean that your client has already spent their settlement and they have no money left with which to pay the denied Medicare bills. B What does this mean for you? B Probably at the least an angry phone call. B If your client is being crushed under a pile of denied Medicare bills, possibly a bar complaint or worse, a malpractice claim.
But there is a solution. It involves looking at an MSA as a useful tool instead of a dangerous weapon.B AB strategically allocatedB and administered custom MSA account, minimized to the lowest reasonable (and therefore, defensible) dollar amount possible, may be your protection-seeking clientb s best defense against not having the money to pay denied bills from Medicare. B The additional benefit is that your client may have effectively b cappedb their exposure to Medicare at the amount that is ultimately funded into their MSA. B You see, if your client does nothing in the way of considering Medicareb s b interest,b or protecting the Medicare Trust Fund from becoming a first-payer on their settlement related medical bills, Medicare may take the position (as they do in Workerb s Comp cases) that your client must prove that they have spent their entire settlement (including the amounts they paid you for fees and legal costs) on Medicare-allowable expenses before Medicare will jump back in and pay one dime.
However, if your client has voluntarily created and funded a custom MSA account, and that account has reached eitherB temporaryB orB permanentB b exhaustionb (out of money) then by law Medicare has to cover your clientb s settlement related, Medicare-allowable expensesB for up to the rest of their life.
Effectively, this is what it boils down to: in order for your client to get into Medicareb s pocket, they must prove they spent theirB entireB settlement (BIG NUMBER) or that they have exhausted a minimized MSA (smaller number). Which do you think your client will prefer?
Take control of your clientb s Medicare issues with the help of The Plaintiffb s MSA and Lien Solution. Our tools will help you and your client determine whether they have a potential Medicare issue in their future, and whether they can first use one of our b 2 Ways To Avoid an MSA.b If it canb t be avoided and it looks like Medicare could be a problem for your client, they may want to voluntarily fund an MSA account to solve it. B Then our team will create a strategically minimized Medicare Set-Aside allocation to the lowest possible, reasonable and defensible number, leaving them with more settlement funds and you feeling like youb ve done everything you can to protect them from this situation.
What you don’t know about Medicare reporting and skillful use of MSAs to avoid major client Medicare issues can B affect your time, money and reputation. Let us help you through it. Sign up for our free video training series:B How to Avoid Stress, Reduce Risk and Save Money in Cases Involving Liability MSAs, Structured Settlements and Lien Resolutions.
By now everyone knows that MSAb s are not legally required in liability settlements. But a strategically minimized MSA from The PLAINTIFFb S MSA & LIEN SOLUTION may still be a strategy worth considering as a means to provide the money to pay clientb s future Medicare b allowable, settlementb related medical bills.
MORE MONEY FOR CLAIMANTS. LESS STRESS FOR TRIAL ATTORNEYS.