We all mean well. Everyone handling claims tries to do the right thing. But sometimes, things just don’t go as planned and end up taking significantly longer than expected and costing way more than agreed.
Take for example this nursing home negligence claim in which the plaintiff alleged decubitus ulcers resulting from lack of care at an Oklahoma nursing home back in 9/1/2014.
Everyone knew the plaintiff was a Medicare beneficiary. Everyone knew the medical care and treatment provided resulting from the decubitus ulcers was paid by Medicare. So everyone agreed to do the right thing- reimburse Medicare for such conditional payments.
Immediately after filing a claim, plaintiff’s attorney communicated with Medicare and informed them of the date of incident and resulting injuries. As a result, on 10-1-14, Medicare provided a Conditional Payment letter (CPL) to plaintiff’s counsel indicating Medicare had paid over $20,000 in medical expenses related to the claim.
The claims adjuster did not ask plaintiff’s attorney for a copy of the CPL and plaintiffs counsel never provided a copy of the CPL to the claims adjuster.
After lengthy negotiations, the parties agreed to settle the claim for $125,000 on 2/1/2016. Plaintiff agreed that out of this amount, he would reimburse Medicare conditional payments related to this matter. As a result, on 2/16/2016, plaintiff’s counsel informed Medicare of the settlement reached.
Upon learning of the settlement, Medicare sent a Final Demand (FD) to plaintiff’s counsel on 3/1/2016 in the amount of $22,418.89. The claims adjuster never asked plaintiff’s attorney for the FDL. Plaintiff’s counsel never shared a copy of this final demand with the insurance adjuster handling the file on behalf of the nursing home.
Unbeknownst to the claims adjuster, plaintiff’s counsel did not reimburse the $22,418.89 owed to Medicare within 60 days of the Final Demand. As a matter of fact, a year later, on 3-20-2017, Flagship Services Group (FSG) was hired by the claims adjuster to inform on the status of conditional payments. FSG was able to confirm that the conditional payments remained unpaid and had accrued interest with a new balance of 24,786.85.
After informing the claims adjuster of these facts, she attempted to communicate with plaintiff’s counsel. Unfortunately, after several months of searching, the claims adjuster was unable to find him. As a result, the adjuster asked FSG for the updated amount due. On 8-4-2017, FSG provided the claims adjuster with the updated $25,515.45 due and instructions on how to pay same.
As a result of leaving the responsibility of reimbursement of the Medicare conditional payments to the plaintiff, and plaintiff counsel’s failure to reimburse these on a timely manner, the claim which settled for $125,000, ended up costing the insurer $150,515.45.
Had the adjuster referred the case to Flagship prior to or immediately upon settlement in early 2016, we would have gathered final demand information and assisted plaintiff’s counsel with reimbursement to Medicare.
Early intervention, attention to detail and having professionals who understand, know, and live conditional payment resolution day in and day out is key to your success in managing and mitigating your company’s Medicare and Medicaid compliance risk.
About Medicare Conditional Payments
42 CFR Section 411.21 indicates that Medicare conditional payments are payments made by Medicare for medical treatment where a primary payer (insurer or self-insurer) has or may have an obligation to make such payment. Primary payers must reimburse Medicare for conditional payments it has made. 42 USC Section 1395y indicates that primary payers include group health providers, workers’ compensation, liability and no-fault insurers and self-insured entities, as well as physicians, attorneys, hospitals, or clinics that receive payment from a primary payer must make reimbursement.
42 USC Section 1395y also indicates responsibility as a primary payer arises even if liability for the medical expense is contested. Such a responsibility can be demonstrated by entry of a judgment or by payment conditioned on a release or waiver of payment, even if liability is denied. 42 CFR Section 411.24 indicates Medicare has a direct right of action against all primary payers responsible for making payment. And, Medicare has a direct right of action against any person or entity that received a primary payment, including the Medicare beneficiary, medical provider, physician, attorney, state agency or private insurer.
About Medicaid Liens
42 USC Section 1396a mandates that all reasonable measures to ascertain legal liability for Medicaid payments and reimbursement of same be taken. The state or agency administering a Medicaid plan must take all reasonable measures to ascertain the legal liability of third parties to pay for care and services paid by Medicaid. Federal law also provides that in any case where such a legal liability is found to exist after medical assistance has been made available on behalf of the individual, the state or local agency must seek reimbursement for such assistance to the extent of such legal liability. 42 U.S.C. Section 1396a(a)(25).
The 2013 Strengthening Medicaid Third Party Liability Act, effective October 1, 2017, allows state Medicaid agencies or the insurers/managed care organizations contracted with to provide such benefits to seek reimbursement from any responsible third party of all payments made from the entirety of settlement, judgment, award funds, not just a portion thereof.
About Flagship Services Group
Flagship Services Group is the premier Medicare compliance services provider to the property & casualty insurance industry. Our focus and expertise has been the Medicare and Medicaid compliance needs of P&C self-insureds, insurance companies, and third party administrators. We specialize in P&C mandatory reporting, conditional payment resolution, and set aside allocations. Whether auto, liability, no-fault, or work comp claims, we have assembled the expertise, experience and resources to deliver unparalleled MSP compliance and cost savings results to the P&C industry. To find out more about Flagship, our folks, and our customized solutions, please visit us at www.flagshipservicesgroup.com. To speak with us about any of our P&C MSP compliance products and services, you may also contact us at 888.444.4125 or firstname.lastname@example.org.
About Rafael Gonzalez
Rafael Gonzalez, Esq. is President of Flagship Services Group. He speaks and writes on mandatory insurer reporting, conditional payment resolution, set aside allocations, CMS approval, and MSA and SNT professional administration, as well as the interplay and effect of these processes and systems and the Affordable Care Act throughout the country. Rafael blogs on these topics at Medicare Compliance for P&C Insurers at www.flagshipservicesgroup.com/blog. He is very active on LinkedIn, Twitter, Instagram, and Facebook. He can be reached at email@example.com or 813.967.7598.