RESOLVING CONDITIONAL PAYMENT CLAIMS/PAST LIENS
When injured individuals settle a lawsuit, or potential lawsuit, research must be conducted to ensure that no Medicare conditional payment claim exists.  In cases wherein the injured individual is entitled to Medicare at the time of a settlement, a possibility exists that Medicare may have paid for some of the injured individual’s medical expenses, particularly when liability has been disputed.  This type of case gives rise to a Medicare claim for reimbursement of the expenses it paid on behalf of the injured individual.  It is important to note that, even though the insurer or self-insured may dispute liability, the existence of a dispute alone does not extinguish Medicare’s claim for medical expenses it has paid.  Medicare’s right to reimbursement is superior to almost all other claims - including that of the injured individual.^[6] 

The MSP statute provides as follows with regard to conditional payments:
(A) Conditional payment.
(i)  Authority to Make Conditional Payment.  The Secretary may make payment under this title with respect to an item or service if a primary plan described in subparagraph (A)(ii) has not made or cannot reasonably be expected to make payment with respect to such item or service promptly (as determined in accordance with regulations). Any such payment by the Secretary shall be conditioned on reimbursement to the appropriate Trust Fund in accordance with the succeeding provisions of this subsection.^[7]
 
Should Medicare make a conditional payment, the statute provides as follows with regard to repayment of the same to Medicare:

(ii) Repayment required.  A primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary under this title with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service. A primary plan’s responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means.  If reimbursement is not made to the appropriate Trust Fund before the expiration of the 60-day period that begins on the date notice of, or information related to, a primary plan’s responsibility for such payment or other information is received, the Secretary may charge interest (beginning with the date on which the notice or other information is received) on the amount of the reimbursement until reimbursement is made (at a rate determined by the Secretary in accordance with regulations of the Secretary of the Treasury applicable to charges for late payments).^[8]
 
If Medicare does not receive reimbursement of its conditional payment within the 60 day time frame, a lawsuit seeking double damages may be filed against any of several entities and individuals.  The Act provides:

(iii) Action by United States.  In order to recover payment made under this title for an item or service, the United States may bring an action against any or all entities that are or were required or responsible (directly, as an insurer or self-insurer, as a third-party administrator, as an employer that sponsors or contributes to a group health plan, or large group health plan, or otherwise) to make payment with respect to the same item or service (or any portion thereof) under a primary plan. The United States may, in accordance with paragraph (3)(A) collect double damages against any such entity.  In addition, the United States may recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity. . . .^[9]

Under the MSP statute, which was amended by the Medicare Prescription Drug, Improvement and Modernization Act of 2003, Medicare may make a claim for reimbursement any time within three years of the date the medical service was provided to the injured individual without regard to any conflicting state statute of limitations or claims filing period.^[10]  The Federal Claims Collection Act (“FCCA”), however, allows for a six year statute of limitations for Medicare to seek reimbursement for overpayments.^[11]

The Duty to Inquire with Medicare Regarding Potential Claims for Medical Expenses Paid
The Code of Federal Regulations (“C.F.R.”) makes it clear that the third party payer has an affirmative duty to notify Medicare if the third party payer learns that Medicare has made a payment for an injured individual’s medical expenses which would be covered under the MSP statute.  Specifically, the C.F.R. provides as follows:

Third party payer’s notice of mistaken Medicare primary payment.

(a) If a third party payer learns that [CMS] has made a Medicare primary payment for services for which the third party payer has made or should have made primary payment, it must give notice to that effect to the Medicare intermediary or carrier that paid the claim. . . .
 
(b) If a plan is self-insured and self-administered, the employer must give the notice to [CMS].  Otherwise, the insurer, underwriter, or third party administrator must give the notice.^[12]

A third party payer should not rely on someone else to ascertain the existence of a Medicare claim.  If the primary payer fails to reimburse Medicare for such claim, the C.F.R. provides that “the third party payer must reimburse Medicare even though it has already reimbursed the beneficiary or other party.”^[13]

Compromise and Waiver of Medicare’s Claim for Medical Expenses Paid
Fortunately, a Medicare claim for past medical expenses paid on behalf of an injured worker may be either compromised or waived under 1) the FCCA, 2) the MSP statute or 3) 42 U.S.C. §1395gg(c).  Under the FCCA, the basis for compromising a claim are as follows:  1) the worker does not have sufficient money to repay Medicare’s claim within a reasonable period of time; 2) CMS believes it would be difficult for it to prevail on its claim in court; or 3) the costs which CMS would incur in collecting the claim exceed the value of such.  Under the MSP statute, claims may be waived if such waiver is deemed to be in the best interest of the MSP program.  Pursuant to 42 U.S.C. §1395gg, a claim may be compromised for economic hardship, for equitable reasons, and for reasons that are beyond the fault/control of the injured individual, such that the individual was not responsible for Medicare’s overpayment.

TIMING
As in workers’ compensation cases, the MSA process should be started as early as possible.  It takes a few weeks to obtain a proper allocation report regarding the amount necessary for the MSA.  This amount should be obtained before settlement negotiations begin so adequate authority may be obtained for a settlement.  In addition, researching whether any conditional payment claims exist can take several months.  Further, obtaining CMS approval can take months.  As such, it is in all parties’ best interest to begin the MSA process as soon as settlement becomes a possibility in appropriate cases.

CONCLUSION
Clearly, with more focus being placed on the Medicare program by the federal government, MSAs will continue to be an important consideration in all cases, workers’ compensation or otherwise.  Knowing when MSAs should be utilized and following all steps necessary to ensure protection from future claims is more important than ever before.  Having knowledgeable, experienced counsel assist with the process now will save you time, hassle and money in the future.