Frequently Ask Questions About MSP Law
CLICK TO READ ABOUT Penalties and Fines that can be assessed for failure to comply with the Medicare Secondary Payer Act inside Legal Update (pp. 8-10). It is important to know how and when penalties can be assessed as they can add up quickly.
When do the MSP reporting requirements take effect?
ANSWER: Medicare had originally planned to require all settlements be reported effective April 1, 2010. However, on February 17, 2010 CMS delayed the commencement of the mandatory MSP reporting requirements to January 1, 2011 in order to give Carriers more time to test an implement their reporting systems.
Which types of settlements does the MSP require to be reported?
ANSWER: Medicare requires that all no-fault, third party liability and workers' compensation settlements or judgments that involve past or future medical benefits payable to a Plaintiff that is entitled to Medicare be reported. Judgments or settlements that are not associated with past or future medical benefits do not need to be reported (i.e.. breech of contract, sexual harassment, etc.). Also, any judgment or defense verdict ruling in favor of the defense and holding that no money is owed for past or future medical benefits does not need to be reported.
What is the minimum settlement or judgment that must be reported?
ANSWER: There is no minimum reporting amount for Workers' Compensation and no fault settlements or judgments. For third party liability cases, the minimum reporting amount was originally schedule to be $5,000 with this amount to be reduced to $2,000 effective January 1, 2011. However, with the recent delay in the implementation of MSP reporting requirements it is not clear at this time what the minimum reporting amount will be. .
What is the time limit for reporting settlements to Medicare?
ANSWER: Medicare requires that the settlement or judgment be reported in a "reasonable" time. However, Medicare has not yet issued any guidance on what is or is not "reasonable". The penalty for failing to report a settlement or judgment can be up to $1,000 per day, per claim. Because the penalty can be so severe, the prompt reporting of a settlement or judgment is critical.
Can a hold harmless agreement insulate a defendant from liability exposure against a plaintiff and CMS?
ANSWER: While a hold-harmless agreement may insulate a defendant from liability exposure against a plaintiff , such an agreement is ineffective against an action brought by CMS. CMS has a "super lien" and may bring an action against all the parties to a settlement, as well as thier attorneys, if CMS believes that Medicare's interests were not properly considered as a part of the settlement. As a part of such a claim CMS may seek double damages against the parties and thier attorneys and may also suspend a beneficiaries right to further Medicare benefits. All settlements that involve a Medicare beneficiary must consider Medicare's best interests and cannot seek to shift the burden of future medical treatment onto Medicare.
When does a Medicare Set Aside agreement (MSA) need to be prepared and does it need to be approved by CMS?
ANSWER: For Workers' Compensation settlements, CMS has issued guidance which indicates that a any settlement over $25,000 with a current Medicare beneficiary, or $250,000 with a person that is reasonably expected to become Medicare eligible within 30 months, will require a MSA to be submitted to CMA for approval. However, Medicare requires that thier interest always be considered and has indicated that these amounts are not safe harbors and so each settlement must be looked at individually in order to ensure compliance. It is also important to note that CMS has not yet issued any guidance regarding the approval of liability or no fault settlement. Until such guidance is issued, all liability and no fault settlements with an individual who is an Medicare beneficiary or may become eligible within 30 months should considered for the submission of an MSA to CMS for approval.
What about the 68 year old Medicare beneficiary who settles for $20K?
ANSWER: The settlement will need to be reported because it is over $5,000. An MSA will need to be considered but it likely that CMS approval of the MSA will not be required so long as Medicare's interests have been considered as a part of the MSA.
What is the Statute of Limitations for the U.S. Government in pursuit of Medicare claim?
ANSWER: The Statute of limitations for the U.S. government in pursue a Medicare claim is 6 years from “facts material to the right of action are known or reasonably could be known” to the government. As such, the Statute of Limitations not will begin to run until the government has knowledge of a potential claim.
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