Though regulation was enacted 30 years ago to recover funds erroneously paid by Medicare, confusion remains as to how to handle liability claims involving Medicare eligible claimants.
The government is now attempting to clear up some of the confusion that has festered for decades.
The MSP, the Medicare Secondary Payer Act, was enacted in 1980 to protect Medicare so its net care trust did not go bankrupt. But it was not until 2000 that the Centers for Medicare and Medicaid Services (CMS) sent out any notifications or guidelines on how these MSAs should be handled, according to Vinnie Polinsky, director of operations for Ringler Medicare Solutions, a private company created in 2010 to handle to growing need for expertise in dealing with MSAs associated with claims that involve structured settlements.
And while Medicare has established guidelines for workers’ compensation claims, it has not done this for liability claims.
“There are strict guidelines for taking Medicare’s interest into account for workers’ comp claims,” Polinsky said.” Workers comp is much more clear-cut because there’s three, four parties involved, we know who they are. There are attorneys involved, it’s much easier.”
“Liability is a totally gray area for CMS and when they enacted the MSP, liability was part of the equation. Auto liability, general liability, it’s all part of the equation. But to date they still haven’t set any strict guidelines, or guidelines that an MSA vendor like myself can follow,” Polinsky said.
Christine Buechner, vice president of the structured settlement consulting firm of James E. Logan & Associates, agrees.
“When you’re dealing with liability claims, you have a whole bunch of different issues, policy limits, liability, contributory negligence, comparative negligence. You’ve got liens,” said Buechner. “It’s much more complicated, and it’s difficult in the liability claims to know how to address Medicare’s interest because there really haven’t been any specific guidelines set out by the Centers for Medicare & Medicaid Services yet. They’re starting to do that now, but not to the extent that they’ve done so with workers’ compensation claims.”
Adjusters may encounter resistance from the plaintiff bar.
“A liability claim, it can be anywhere from a dollar to $5 million, but as far as CMS reviewing them we have no thresholds for that…Many plaintiff attorneys are resistant to doing liability MSAs because it holds up the settlement of the case,” Polinsky said.
Though clear cut guidelines don’t yet exist, Medicare began requiring liability insurers to report claims involving Medicare eligible claimants a few years ago. Along with the reporting requirement came the threat of monetary penalties for non-compliance.
“Where I’ve seen the increase, is actually on the liability side. Even in the last few years, let’s just say mid 2000’s, where it would trickle in, and you get maybe one or two every couple months. Now we see a steady flow of them, of the amount of cases, again, we handle on a monthly basis. Seventy-five to 80 percent of them are workers’ comp, but that other 20, 25 is liability. That makes up several cases a month. I’ve seen the increase on the liability side where workers’ comp has been steady.” Polinsky said.
“There’s nothing written that says an MSA is required under any circumstances. But the MSA, the reason it was enacted was to take Medicare’s interests into account, protect them, and make sure that they were the secondary payer, the payer on cases where a carrier should be the primary payer,” Polinsky said. “They’re [the carriers] hearing a lot of different mixed messages, and until CMS comes in and says this is how they’re going to be handled, it leaves us kind of open-ended as far as how they should be taken care of.”
The confusion among liability carriers in handling Medicare eligible claimants may soon end. Earlier this year Medicare sent out a request for commentary on establishing guidelines in liability claims. The agency took comments up until June.
“CMS… gave us seven options to choose from, and some are good, some are not so good. But at least it was an initiative by CMS that they recognized something, guidelines need to be set for liability MSAs,” Polinsky said.
Major industry organizations submitted commentary.
Polinsky is cautiously optimistic.
“This is the first step in getting a clearer process for how liability MSAs should be handled,” Polinsky said. “The thing I look back on is the Medicare Secondary Payer Act was enacted in 1980 but CMS went 20 years without putting any notifications or notices or anything out. I don’t think they’re going to wait 20 years between when they ask for comments and when they make formal guidelines for us. At the same time, I don’t make any predictions where they’re concerned because they’re not the easiest organization to be patient with.”
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