Medicare, Medicaid, and SCHIP Extension Act: What All Lawyers and Their Clients Must Know About the Act Before Settling a Personal Injury Claim

Transcription

1 Medicare, Medicaid, and SCHIP Extension Act: What All Lawyers and Their Clients Must Know About the Act Before Settling a Personal Injury Claim SPEAKERS: W. Randall Bassett Stephanie Ann Webster Tara Kay Kelly Tuesday, November 17, :00 1:00 p.m. Eastern Time

2 Costs and Benefits of MMSEA 400 hours: estimated minimum cost of designing, building, and operating a system to comply with MMSEA does not include ongoing costs $200 million: estimated amount Medicare expects to shift back to primary plans as expanded to include self-insured entities $89 trillion: estimated amount of Medicare s unfunded liabilities 5X greater than Social Security s unfunded liability 2

3 Centers for Medicare and Medicaid Services ( CMS ) Agency within the U.S. Department of Health and Human Services Formerly known as the Health Care Financing Administration Currently administers Medicare, Medicaid, and the Children s Health Insurance Program (CHIP) 3

4 Scope of Medicare Eligibility 65 years or older Disabled End-stage renal disease Coverage (in 2008) 45.2 million beneficiaries $462 billion in benefits and $468 billion in total expenditures 4

5 Medicare Identifiers HICN number used by Medicare to identify Medicare beneficiaries and track payments SSN plus identifier SSN and HICN used for a variety of data matches for Medicare payment purposes 5

6 Medicare Payment Medicare generally pays healthcare providers, not Medicare beneficiaries If a provider chooses to bill Medicare when another payer could have responsibility for payment, the provider loses the right to pursue additional funds from the other payer 6

7 Medicare Legislation 7

8 Medicare Secondary Payer (MSP) Medicare secondary payer (MSP) provisions enacted in 1980s Medicare generally will not pay for treatment if any another entity has an obligation to pay The responsible entity is known as the primary plan Medicare authorized to recover payments from a primary plan even if the primary plan has already paid to settle the claim 8

9 The Medicare Prescription Drug Improvement, and Modernization Act of 2003 ( MMA( MMA ) Expanded the definition of primary plan to include selfinsured entities that bear their own risk This definition includes tort defendants who pay judgments and settlements out of their own pockets 9

10 The Medicaid, Medicare, and SCHIP Extension Act of 2007 (MMSEA) CMS no longer has a mere right to seek reimbursement Imposes an affirmative duty on entities including tort defendants to report the resolution of any claim or action brought by a beneficiary Provides stiff penalties for failure to report up to $1,000 a day per claimant 10

11 Implementation of MMSEA Section 111 CMS is responsible for implementing the very complicated provisions of the Medicare statute-- how? -Guidance issuances -Regulations adopted through notice and comment rulemaking 11

12 Implementation of MMSEA Section 111 Rules can change until adopted in regulations CMS is notorious for adopting retroactive clarifications of prior policy 12

13 Medicare Right to Reimbursement A tort defendant s responsibility is established through judgment, settlement, or other payment No admission of liability is required CMS may recover from beneficiaries and third parties who receive funds from primary plans If CMS is unable to recover from the recipients it may seek payment directly from the primary plan even if it has already paid to settle the claim 13

14 Complying With Reporting Requirements of MMSEA 14

15 1. Register with CMS Responsible Reporting Entity ( RRE ): any entity that is or may become liable to CMS as a primary plan September 30, 2009: RREs that expect to have something to report were required to begin registering Informal Guidance: CMS has stated informally that it will not penalize RREs for failing to register by September 30; if not already registered, then do so immediately 15

16 2. Determine Plaintiff s s Status What: RREs must determine the status of all plaintiffs with whom claims are settled on or after January 1, 2010 Who: RREs bear the sole responsibility for accurately determining a plaintiff s status How: RREs must implement a procedure to determine plaintiff s status When: RREs have ongoing duty to determine a plaintiff s status 16

17 3. Reporting Electronic: all reporting must be done electronically July 1, 2010: deadline for RREs to submit first reports for claims settled after January 1, 2010 Required Information: Plaintiff s name, DOB, SSN or HICN CMS may require up to 100 categories of information about the claim RREs must keep existing reports updated and correct 17

18 RRE Registration Registering RREs within a corporate structure A parent company may register as a RRE for a direct subsidiary whether or not the parent qualifies as an RRE A subsidiary company may not register as an RRE for its parent An entity may not register as an RRE for its sibling company 18

19 What Claims Are Reportable? 19

20 Exempt Reporting Amounts January 1, 2010 through December 31, 2011: $0 - $5,000 January 1, 2012 through December 31, 2012: $0 - $2,000 January 1, 2013 through December 31, 2013: $0 - $600 20

21 Excluded Claims Date of exposure before December 5, 1980 No exposure on or after December 5, 1980 alleged, established and/or released Specific to a claim/defendant Burden of documenting on RRE 21

22 When Are Claims Reported? 22

23 Timeframe to Report Claims TPOC Date: date agreement obligating RRE to pay a claim is signed unless court approval is required April-June, 2010: period for submitting initial reports of claims after testing Quarterly Reporting: within the 7 day file submission timeframe assigned to RRE 45 day Grace Period: if TPOC date occurs 45 days before file submission period then claim reported during the next quarter 23

24 Risks of Non-Compliance 24

25 Failure to Register and Report MMSEA authorizes fines for failure to register and report Up to $1,000 per day reporting is late for each plaintiff beneficiary Electronic registration and reporting procedures and requirements are complex Self Study Code

26 Recovery against RRE RRE may be forced to reimburse CMS even though it has already paid the plaintiff CMS may recover double damages if legal action is required to secure payment from the RRE The result is potential triple liability for the RRE 26

27 Best Practices for Complying with MMSEA 27

28 Initial Inquiry: Best Practices Consider a task group and point person(s) to coordinate MMSEA issues and answer questions Identify persons who will gather information, query CMS database, and report Determine and communicate assigned 7-day reporting period Conduct training and partner with client to understand their process and concerns Gather information on cases where MMSEA reporting is required Coordinate with co-defendants and industry trade groups 28

29 Best Practices During Litigation: Obtain discovery on Medicare status and pre-1980 exposure if applicable Query CMS database and document results and dates of queries Use CMS safe harbor documentation where claimant will not provide necessary information Monitor changes in MMSEA and update procedures regularly Engage CMS and offer written comments on proposed changes in the guidance Conduct periodic audits of recordkeeping, querying, and reporting functions to improve process and document your practices 29

30 Best Practices Settlement: Assess completeness of information needed for reporting when settlement discussions appear imminent Query CMS database upon notice of mediation or other event triggering potential settlement Structure settlement to require information needed for reporting Incorporate indemnity language and other provisions addressing MMSEA concerns into the settlement agreement Consider whether MSA ( Medical Set-Aside ) is needed where future medicals are likely Retain discovery and other documents that support decision NOT to report (e.g., discovery showing no pre-1980 exposure) 30

31 Best Practices Settlement (If Medicare Recipient): Obtain statement of conditional payments from plaintiff or Medicare at beginning of case and least 60 days before potential settlement Eliminate or minimize exposure to CMS for reimbursement for conditional payments write two settlement checks: one to CMS and one to plaintiff s counsel establish escrow account holding amount equal to conditional payment obtain letter of satisfaction and indemnity from plaintiff 31

32 Implications and Outstanding Questions 32

33 Effects on Settlement Strategy Adds another hurdle to settlement negotiations Increases transactional costs and could eliminate nuisance settlements with Medicare recipients Confidentiality is uncertain Complicates aggregate settlements and other settlement mechanisms where allocation is unknown to the defendant 33

34 CMS Mass Torts Working Group Purpose: Discuss issues unique to reporting settlement of mass tort and class action claims Discussions are preliminary and should not be used as guidance Issues: Timing of reporting recognition that information for reporting often is unknown at time of settlement considering alert to CMS that settlement is imminent report required only when name of claimant is known, allocation of settlement to claimant is known, and funding has occurred Scope of reporting less detailed reporting is being discussed 34

35 CMS Mass Torts Working Group Structuring settlements cannot throw money over the wall defendants can no longer enter into settlements where they do not know individual allocations to Medicare recipients Considering allowance for settlements in the pipeline Non-reporting of pre-1980 exposure claims considering language that would allow broad release where uncontroverted facts show no pre-1980 exposure burden will be on RRE to establish uncontroverted facts Updated User s Guide due shortly as well as updated language on RREs 35

36 Speaker Biography W. Randall Bassett (404) Randy Bassett is a partner with King & Spalding s Product Liability Practice where he has over 15 years experience representing foreign and domestic manufacturers in high exposure product liability cases. He has represented product manufacturers such as Brown-Forman Corporation, General Motors, Purdue Pharma, Reynolds American Inc., and Sofamor Danek in the federal and state courts throughout the Southeast and Southwest. He has argued cases in the federal circuit court of appeals for the Fourth, Sixth, and Eleventh Circuits, and has appeared in the appellate courts of Alabama, Florida, Georgia, North Carolina, and Tennessee. Mr. Bassett has been recognized by Chambers USA and Legal 500 for his work in the area of products liability. He is a graduate of The Citadel and the University of Georgia School of Law and is a member of the state bars of Georgia and Florida. 36

37 Stephanie Ann Webster (202) Speaker Biography Stephanie Webster is a partner in the Healthcare Practice Group at King & Spalding and practices in the areas of Medicare and Medicaid reimbursement. She has been elected to the firm s partnership effective January 1, She counsels hospitals regarding payment and compliance, and represents them in administrative and federal court litigation. Ms. Webster has significant experience with Medicare and Medicaid disproportionate share hospital (DSH) and graduate medical education (GME) payment matters. She formerly served as an attorney for the Office of General Counsel for the U.S. Department of Health and Human Services and has been recognized as an Outstanding Healthcare Litigator. Ms. Webster s other professional experience includes work at the Texas Legislative Counsel in areas including Medicaid, hospital districts, and insurance. Ms. Webster also worked as an attorney for Legal Aid of Central Texas. 37

38 Speaker Biography Tara Kelly (713) Tara Kelly is of counsel in the Houston office of King & Spalding and a member of its Litigation Practice Group. Ms. Kelly currently represents Chevron in environmental toxic tort litigation pending in Louisiana. She has also worked on a number of products liability cases, defending pharmaceutical, medical device, and tobacco companies. Ms. Kelly graduated, summa cum laude, and with program distinction from Stockton State College in New Jersey with a B.A. in philosophy in She graduated in 1996 from American University in Washington, D.C., with an M.A. in literature. She received her J.D., cum laude, from New York University School of Law in She is a member of the New Jersey State Bar Association and the State Bar of Texas. 38

39 Appendix A Glossary of Selected MMSEA Terms 39

40 Glossary Account Designee: assigned at discretion of RRE may be an agent can upload and download files cannot serve as Authorized Representative or Account Manager for another RRE Account Manager: required for each RRE may be an agent can be associated with another RRE ID may designate Account Designees Authorized Representative: required for each RRE must be in the RRE organization with legal authority to bind the company ultimate accountability for RRE compliance but no personal liability 40

41 Glossary HICN Medicare Health Insurance Claim Number ORM Ongoing Responsibility for Medicals refers to the RRE s responsibility to pay, on an ongoing basis, for the injured party s (the Medicare beneficiary s) medicals associated with a claim. This typically only applies to no-fault and workers compensation claims. RRE Registered Reporting Entity TPOC Total Payment Obligation to Claimant refers to the dollar amount of a settlement, judgment, award, or other payment in addition to/apart from ORM. A TPOC generally reflects a one-time or lump sum payment of a settlement, judgment, award, or other payment intended to resolve/partially resolve a claim. TPOC date: Date payment obligation was established. This is the date the obligation is signed if there is a written agreement unless court approval is required. If court approval is required it is the later of the date the obligation is signed or the date of court approval. If there is no written agreement it is the date the payment (or first payment if there will be multiple payments) is issued. See p. 136, Field 100, User s Guide Version

42 Appendix B Checklist for Creating MMSEA Guidelines 42

43 A Checklist for Creating Internal Guidelines Initial Inquiry: Does the client have a set of procedures for MMSEA compliance? What training should be provided? Who should handle the initial identification of cases implicated by the MMSEA? What initial information should be gathered about the cases and claimants? What discovery requests should be served to identify and verify Medicare status and when? What procedures and forms should be used to collect and transmit information to query the CMS database? What steps are being taken to maintain confidentiality over claimants data? 43

44 A Checklist for Creating Internal Guidelines During Litigation: Who will be the contact person for MMSEA issues? When should the CMS database initially be queried? How often should the CMS database be queried? How much discretion should counsel have in querying the CMS database? Should reporting information be obtained on claimants who are not Medicare recipients? How often should outside counsel seek supplemental discovery on Medicare status? How should updates/changes to the law be communicated? 44

45 A Checklist for Creating Internal Guidelines Settlement: What information should be reported internally and when? How many days before a settlement should the CMS database be queried again? Who should do the reporting to CMS and how should this information be entered and reviewed to achieve maximum accuracy? What form should be used in preparing settlement documents for a claim involving a Medicare recipient? What preferred method should be used for structuring the settlement to ensure CMS is reimbursed? Should a set-aside be created for future medicals? What documents should be retained in the event of an audit? 45

46 Appendix C CMS Resources 46

47 CMS Resources General link to CMS website regarding MMSEA: Statutory Language: orylanguage.pdf Link to MMSEA User s Guide 2.0 for Liability Insurance: PUserGuide2ndRev pdf CMS Town Hall Transcripts on MMSEA: ripts.asp#topofpage 47

48 CMS Resources CMS comment mailbox on MMSEA issues: Model language for discovery purposes: ads/nghhicnssnnghpform.pdf 48