SCHIP EXTENSION ACT OF 2007
Beginning in the early part of this decade, the Social Security Administration decided to enforce the "secondary payor" provisions of the Social Security Act through rules promulgated by the Centers for Medicare/Medicaid Services (CMS) related to workers' compensation settlements. At the end of 2007, Congress passed an important statute expanding CMS powers into liability and/or PIP/no-fault settlements. Similar to the protections involved with a workers' compensation settlement, the Medicare, Medicaid and SCHIP (State Children's Health Insurance Program) Extension Act is designed to protect Medicare's interest including reimbursement for any "conditional payments" made by Medicare as well as establishing reserves for the payment of future treatment for claimants who settle liability claims.
This Act is extremely convoluted and ambiguous. For our client's purposes Section (8)(a) provides in pertinent part that beginning July 1, 2009 an "applicable plan" shall 1) determine if a claimant is entitled to Medicare benefits; and 2) if the claimant is entitled, submit information described in a form and manner specified by CMS.
Regrettably, this section of the Act, does not describe when the claimant shall be deemed to be eligible for Medicare benefits. Moreover, the Act fails to set forth a protocol or guidelines for CMS compliance. Undoubtedly, CMS will promulgate rules and procedures for liability settlements within the months to come. It is our considered opinion that CMS will likely follow their current rules for workers' compensation claims settlements with some critical variations.
Under this new law (sometimes referred to as The Mandatory Insured Reporting Law [MIR]) workers' compensation, group health, liability and no fault insurers and self-insurers will be required to provide information to CMS beginning in July 2009, on each claim involving a potential Medicare, Medicaid or SCHIP beneficiary. CMS is currently in the process of developing a web site which will allow users to determine electronically whether an individual is Medicare/Medicaid eligible or currently receiving benefits simply by putting in the name and social security number of claimant. Once that reporting is done, CMS will be able to determine the following:
- Whether Medicare made any payments for treatment of the same injury.
- Whether the parties to the settlement made arrangements to reimburse CMS for any payments it made for treatment, and
- If reimbursement was not made, who CMS can go after for the penalties ($1,000 per day) for delayed reporting and double damages for failing to reimburse conditional payments.
One interesting distinction between workers' compensation cases and liability settlement is the concept of "coordination of benefits." This term is most often found in health and auto no fault policies and it simply means that Medicare is secondary to any and all other healthcare plans of every type as defined in the Medicare Secondary Payor Statute.
The Medicare Secondary Payor Statute gives Medicare a statutory claim entitling them to collect 100% of the conditional payments made on behalf of a Medicare beneficiary. Even though the guidelines have not yet been established, this aspect of the CMS interest in liability cases requires immediate attention because failure to "consider and protect" the interests of Medicare may result in double damages being assessed against all parties to any liability settlement.
As a conclusion, it is important to note that the Secretary of Health and Human Services, through CMS has not yet promulgated the rules for the implementation of the SCHIP Extension Act. However, it is very clear that employers, insurance companies, third party administrators and attorneys make a specific determination for each claimant under a workers' compensation, liability or PIP (Personal Injury Protection/no fault program) as to whether the party is a Medicare beneficiary. Failure to adequately consider and protect the interests of Medicare may result in a penalty of $1,000 per claim per day for non-compliance. Our clients are specifically cautioned that there is no protection through indemnity and hold harmless agreements contained in settlement documentation. Medicare has a statutory right to assert claims against any party involved in any settlement concerning a Medicare beneficiary who has or will receive Medicare benefits.
Contacting Our Attorneys
To make arrangements for initial consultation regarding a Medicare Set-Aside issue, call our Grand Rapids, Michigan offices toll free at 866-677-9243 or contact us online.
