Will postponement of Medicare reporting speed up PI settlements?

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By Sylvia Hsieh

Dolan Media Newswires

BOSTON, MA — Once again, controversial reporting rules that require liability insurers to inform Medicare of personal injury settlements have been postponed — and plaintiffs’ lawyers are hoping the delay will encourage settlements.

The reporting requirements, which implicate Medicare’s right as the secondary payer for an injured recipient’s medical bills, were set to take effect in January, but have been delayed a number of times in the midst of confusion, controversy and gridlock in settling personal injury cases.

Under the new timeline, liability and self-insurers will be required to report settlements occurring on or after Oct. 1, 2011, instead of those occurring on or after Oct. 1, 2010. The date for initial claims reporting, in turn, will change from the first quarter of 2011 to the first quarter of 2012 for all liability insurers.

According to Sarah Rooney, regulatory counsel at the trial lawyers’ group American Association for Justice, which has been in direct talks with the Centers for Medicare and Medicaid Services over the issue, the new implementation dates are intended to help lawyers settle cases.

“By rolling back the reporting requirements for another year, it’s our hope that it will ease people’s concerns and allow them to more freely enter into settlements,” Rooney said.

Settlements are often getting held up for the sole reason that the attorneys can’t agree on how to handle Medicare secondary payer issues, Rooney said.

“It’s become almost impossible for two parties to come to agreement over these aspects of a case,” she said, noting that the delay also temporarily lifts the $1,000 per day penalties for failure to report.

Moratorium or delay?

Anticipation has been building for years as the new rules have been scheduled to go into effect, because the reporting of settlements would for the first time allow Medicare to electronically track liability payments for medical bills.

Neither side of the bar likes this idea.

For plaintiffs’ attorneys representing injured, elderly plaintiffs, the reporting means that their clients must be warned that Medicare can seek reimbursement of medical bills it paid, or it can deny benefits for future medical services that are part of a settlement.

For defense attorneys representing liability insurers, it means their clients face “open-ended liability,” said David Rosenbaum, a defense attorney at McDowall Cotter in San Mateo, Calif.

The anticipated reporting has clogged up cases.

“Right now, defense counsel are saying we need to gather information about your client to submit to Medicare and requiring every single plaintiff involved in any incident to fill out a form to report to Medicare,” said Elise R. Sanguinetti, an attorney at Hinton Alfert & Sumner in Walnut Creek, Calif., who will moderate a teleseminar for plaintiffs’ attorneys on this topic.

Cases have also been slowed down because plaintiffs’ and defense counsel are taking extra steps to protect themselves, since the secondary payer rules allow Medicare to go after the attorneys as well as their clients.

AAJ is calling the one-year period a “moratorium.”

“I look at it as a moratorium, because they are saying you don’t have to report for a year’s period of time,” said Sanguinetti.

Rooney added that the Medicare officials have said they will not go back later and seek information from the one-year moratorium period.

“[CMS] stated unequivocally that after reporting starts again, they are not going to require people to submit documents for the last year [during the delay]. We discussed that explicitly with them,” Rooney said.

Some lawyers, however, see the new timeline as merely postponing the inevitable.

“They haven’t abolished reporting; they are merely delaying it,” said Rosenbaum. “It doesn’t change the fact that Medicare has a lien on the claim. The fact that they want to electronically track these settlements in my mind makes it easier for Medicare to look for money it hasn’t been paid.”

Meanwhile, everyone agrees that Medicare’s secondary payer rights aren’t disappearing.

“Oh, goodness, no, no, no. They are not going away,” said Karen Shelton of Project Works in Charleston, S.C., a certified nurse who helps attorneys address Medicare post-settlement issues.

The most lawyers can hope for is that during the delay, CMS produces clear guidelines on how to deal with future medical payments and mass tort situations.

“This will give CMS more time to issue more guidelines, but it’s like hitting a moving target,” said Shelton.

Lawyers forge on despite confusion

Many lawyers plan to continue to muddle through with practices designed to deal with Medicare secondary payer rules regardless of the delay in reporting.

“It’s not going to affect what we’re doing. Our firm has been planning and preparing for quite a while for settlements as if the law would be taking effect,” said Mark Joye of the Joye Law Firm, a personal inujury firm in North Charleston, S.C.

He added that it’s always a good practice for lawyers to advise their clients not to spend all of their settlement money, especially when they have injuries requiring future care.

In some cases, lawyers should not rule out setting up a post-settlement health savings account, said Shelton.

“This is where attorneys are going to fall short if they’re thinking this is a moratorium. You still need to be mindful of Medicare’s future interest and advise your client carefully to put money away for treatment,” Shelton said.

In rare cases, such as when the future medical bills are likely to be high, a Medicare set-aside similar to those set up in workers’ comp cases is appropriate, even though CMS has never required them in the personal injury context, she added.

On the defense side, Rosenbaum said he will continue his practice of not cutting a settlement check until he has a final statement of conditional benefits from Medicare.

“We will write a check to Medicare and a check to the plaintiff’s attorney — two checks,” he said.