Medicare’s secondary payer process remains messy
Published: August 27, 2012
Attorneys engaged in settling personal injury suits say the process for squaring away Medicare’s secondary payer rights is still a mess, and some suspect that new required reporting, from which Medicare collects data on personal injury settlements, is only making it worse.
Last year, as the reporting deadline approached, plaintiffs’ attorneys, defense attorneys and insurance companies complained about the gridlock that held up settlements of personal injury cases.
The new requirements went into effect in January, and third-party liability insurers, including self-insurers, began reporting information related to personal injury settlements to the Centers for Medicare and Medicaid Services (CMS).
Medicare has a right to reimbursement for medical bills it paid for injuries to a plaintiff that a tortfeasor later covers in a liability award or settlement.
Since the reporting requirements went into effect, attorneys have continued to face long wait times on the phone and slow responses from CMS in their attempts to finalize how much the agency is owed.
Kathleen O’Donnell, an attorney in Lowell, Mass., represented an injured plaintiff in a slip-and-fall case in which the tortfeasor made a good offer, but settlement was held up for nine months while the parties waited for an itemization of amounts owed to Medicare, also known as a “conditional payment” letter.
The delay turned out to be because CMS did not recognize O’Donnell as the attorney on the case because the notice of representation she filed was dated at the top rather than the bottom of the page.
According to CMS spokeswoman Ellen Griffith, “some errors are correctable simply by contacting the Medicare contractor.”
But plaintiffs’ lawyers say there’s nothing simple about contacting the Medicare contractor, and that calls mean hours on hold and repeating the same information on each call.
Griffith said that the current wait time on the phone for the Medicare Secondary Payer contractor is 10 minutes and that a conditional payment letter is issued within 65 days after a beneficiary or his or her lawyer receives a “rights and responsibilities” letter.
But plaintiffs’ lawyers dispute those estimates.
“No way. My assistant just waited on the phone 28 minutes today,” said O’Donnell, who added that she often waits months – even years – for a conditional payment letter.
“The amount of lawyer time going into this is crazy. It’s very, very frustrating.”
In addition to delays with settlement, there is a new concern that the reporting process is causing CMS to “flag” the entire file of a Medicare beneficiary and in some cases incorrectly deny Medicare benefits for treatment unrelated to the injury involved in the settlement.
Chris Zwygart, vice president of legal and corporate compliance at West Bend Insurance in West Bend, Wis., said in one case his company settled with a plaintiff injured in an auto accident and closed the file. Medicare later denied the plaintiff’s kidney dialysis treatment, even though it was unrelated to the auto accident.
Zwygart ultimately got the plaintiff’s congressional representative involved to resolve the error.
In another case, an elderly couple in South Dakota contacted West Bend, asking why the insurer was holding up their Medicare benefits, because CMS told them that West Bend had an open claim with the couple and was the primary payer of their medical bills.
“The problem was we didn’t have an open claim, we are not the primary payer, and Medicare had a policy number [for the couple] that was not our policy. The couple was not our insured. We don’t even write individual policies in South Dakota,” said Zwygart.
“Those folks are stuck and there was not a lot we can do to help them. It’s causing folks’ lives to be disrupted,” he said.
According to Griffith, the agency is hearing complaints about denied claims but the number of complaints it has received has reduced significantly over the last several months.
As to whether CMS flags certain files, she said: “We flag a beneficiary’s record when the beneficiary has Group Health Plan coverage that is primary to Medicare or when we learn the beneficiary is involved in a liability insurance, no-fault insurance, or workers’ compensation situation.”
Griffith said that CMS investigates complaints involving claims denials to determine if the denial was proper or in error. In many cases, the claims are properly denied, she said.
An example is when a Medicare claim is denied because the beneficiary has Group Health Plan coverage, and the plan is the primary payer, owing the money for the patient’s care instead of Medicare.
While that may be true, the reason for such a denial is often not well-communicated, said Casey Schwarz, an attorney for the Medicare Rights Center in New York, N.Y., a non-profit that operates a national helpline for consumers.
In one case, an injured beneficiary was denied Medicare coverage and was told the denial was due to an open workers’ comp claim. A Medicare Rights Center investigation revealed that not only were the individual’s injuries unrelated to the workers’ comp claim, making denial improper, but the actual reason for the denial – group health coverage – was also a mistake, because the health plan was from a job the person had retired from years earlier.
Another common problem, said Schwarz, is that conditional payment letters include injuries unrelated to an accident.
A woman in one case was in a car accident and her case settled. She then received a letter from Medicare stating that it had reimbursement rights as the secondary payer for hip surgery that was not related to the accident. The case is on appeal.
In other instances, Schwarz said individuals are receiving demand letters from Medicare requesting payments that exceed their settlement amounts.
Griffith said in some cases the misunderstanding over unrelated injuries is because the ICD-9 (International Classification of Disease) codes used are not specific enough to distinguish the exact injury.
For example, the codes provided to CMS do not always distinguish between injuries on the right and left side of the body. (That is something the upcoming ICD-10, is supposed to do.)
Some predict that the problems will multiply in the next three to four months as reporting really gears up.
“There are a lot of unfortunate stories out there, because the process is still embryonic,” said Roy Franco, chief legal officer at Franco Signor, a Medicare Secondary Payer consultant in Kenmore, N.Y.
David Farber, a defense attorney at Patton Boggs in Washington, said the ramping up of reporting could worsen the situation.
“As more reporting happens, Medicare is going to flag more files, and more beneficiaries are going to get hurt,” said Farber, who also heads a coalition seeking to change the process through legislation.
Two new features
CMS is aware of complaints about its Medicare Secondary Payer system, and says it has rolled out two new features that should improve the process.
One is an automated voice system that allows a beneficiary or lawyer to punch in certain identifying information to hear up-to-the-minute information on conditional payment amounts.
But Doug Bowles, a paralegal who works with O’Donnell and handles calls to the Medicare Secondary Payer contractor, said the problem with the phone line is that a case ID number is necessary in order to get any information.
“If you don’t have a case ID yet, even if you have all the other information, then the automated option isn’t any good and it kicks you back to the beginning [of the automated loop],” said Bowles.
The second CMS feature is a web portal at www.msprc.info that allows users to get information online.
But according to Bowles, who has been trying to log in through the online portal, the servers are down and the connection times out before he is able to do so.
“I haven’t been able to register. I think a lot of people are trying to get on,” he said.
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