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Whenever a Medicare recipient receives money in resolution of a personal injury
claim, Federal law creates an obligation to reimburse Medicare for the care it
paid for related to the claim. Although there has been uncertainty about this
obligation for decades, recent legislative and regulatory changes no longer leave
room for dispute. Failure to reimburse Medicare is likely to result in an action for
double recovery plus interest. The parties to such an action will likely include the
claimant, the claimant’s lawyer and the defendant’s insurer. Recent litigation
instituted by the government has shown its willingness to pursue its rights in this
regard. Newer legislation requires liability insurers to report every settlement to
Medicare. The purpose of this legislation is to enable Medicare’s identification of
the parties to its potential suit for double recovery plus interest if reimbursement
is not voluntarily and promptly paid. As a result, the parties to a claim involving a
Medicare beneficiary must understand the legal requirements and prepare for the
inevitable day of reckoning with Medicare.
The primary goal of this paper is to provide an overview of the Medicare
reimbursement process and practice tips for managing the challenges presented
by these regulations. Section 1 of this paper provides a brief review of the legal
and regulatory history. Section 2 details the reimbursement process, highlights
the attendant challenges, and provides practice tips. Section 3 addresses the
most contentious and misunderstood aspect of the legal and regulatory changes
– providing for future medical expenses. Of course, like the regulations
themselves, the strategies for managing the process remain a work in progress.
Successful and appropriate strategies will be determined through cooperation
and collaboration as we gain collective experience and Medicare continues to
reveal its interpretation of the applicable regulations, practice preferences and
Frank Luccia, Luccia & Evans L.L.P.
SECTION 1: A Brief History of the Applicable Law
The relevant legislation and regulations fall into two broad categories: the MSP
statutes and the MMSEA. The MSP statutes are a collection of laws that
establish Medicare’s right to reimbursement from defendants and their insurers
for the past medical bills paid by Medicare. The MMSEA is a 2007 statute that,
amongst other things, requires all insurers and self insured entities to report
settlements, thereby enabling Medicare to identify the claims that require
The MSP Statutes: When Medicare came into existence in 1965 it was
the primary payer for medical services provided to Medicare beneficiaries, except
when workers’ compensation coverage was available. By 1980 there was a
realization that increased life expectancy, increasing health care costs and the
impending shift in demographics brought on by the aging of the baby boom
generation threatened the sustainability of the Medicare program. To address
this concern, an effort was made to shift responsibility for payment of medical
expenses to private insurance plans whenever possible. To further this goal,
Congress passed the Omnibus Reconciliation Act (1980), the first of a series of
provisions referred to collectively as the Medicare Secondary Payer (or MSP)
statutes. This act established that Medicare’s obligation to pay medical expenses
would be secondary to any other available insurance. Necessarily, then, any
other available insurer became the primary payer.
As a secondary payer,
Medicare is only required to make “conditional” payments for medical treatment
and services. Conditional payments are those made with the expectation of
reimbursement once the primary insurance plan (defendant’s insurer) paid on the
Medicare beneficiary’s personal injury claim. The law relied on voluntary
reimbursement of conditional payments. To encourage compliance, the law
provided that if suit was required to recover its conditional payments, Medicare
could seek double recovery plus interest. Additionally, Medicare could recover its
conditional payments by offsetting the amount owed against the beneficiaries
social security benefits, railroad retirement pension, future Medicare benefits and
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tax refunds owed by the Treasury Department to the beneficiary. However, the
law provided no mechanism that would allow Medicare to know that a liability
claim and potential primary payer existed. Furthermore, the language of the law
was less than clear as to the responsibility, if any, of liability insurers and self
insured entities to reimburse Medicare in disputed claims. Litigation instituted by
the government to clarify its right to reimbursement from liability insurers and self
insured entities resulted in a conflict amongst the federal circuits. Because the
extent of the obligation to reimburse was uncertain and the likelihood of getting
caught was negligible, the parties to liability claims largely ignored the issue.
In 2003, Congress passed the Medicare Modernization Act. While primarily
recognized for creating the Medicare prescription drug program, the act made
additional changes designed to further strengthen Medicare’s secondary payer
status. It did this by clarifying that:
Medicare is always considered a secondary payer whenever a primary
insurance plan (including self-insurance) has made or should have made a
primary payment for medical services provided to a Medicare beneficiary;
“Primary insurance plans” are defined very broadly to include group health
insurers, workers’ compensation insurers, liability insurers and those who selfinsure for liability; and
Medicare has the right to sue primary payers and any person that receives
payment from a primary payer for recovery and double damages if Medicare is
not reimbursed for its conditional payments.
Despite this new law and the clarifications provided by the accompanying
regulations, little was changed in the practice surrounding the resolution of claims
involving Medicare beneficiaries. This can be partly attributed to ignorance and
inertia. Additionally, lingering questions remained about whether a liability
insurer’s obligation to reimburse Medicare was only triggered by an admission or
judicial finding of liability. That question was resolved in February 2008 when the
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federal regulations implementing the MSP statutes were amended to clarify that
a primary payer’s responsibility for payment is not limited to just those situations
where the primary payer accepts liability or is adjudicated as liable for the injuries
which required medical treatment. While a primary payer’s responsibility to pay
may be demonstrated by a judgment, it may also be demonstrated by a payment
conditioned on giving a waiver or release to the primary payer or its insured
(whether or not there is a determination or admission of liability), and can be
demonstrated by “other means” including but not limited to a settlement, award,
or contractual obligation.
The Medicare and Medicaid SCHIP Extension Act (MMSEA): Despite all the
legislative efforts, they did little to substantially increase Medicare’s recovery of
conditional payments made on behalf of beneficiaries who were claimants in a
personal injury matter and who subsequently received compensation from a third
party for the medical expenses. It was realized that the honor system, even with
the attendant penalties if caught, was inadequate. Medicare needed a bigger
stick to motivate the parties to settlement to reimburse Medicare for its
conditional payments. Medicare got what it needed on December 29, 2007, when
President Bush signed the Medicare and Medicaid SCHIP Extension Act of 2007,
more commonly referred to as the MMSEA. Section 111 of the MMSEA requires
that all liability insurers (including self-insurers), no-fault insurers, workers’
compensation insurers, and group health insurers report detailed information
directly to Medicare each time a settlement, judgment, award or other payment is
made to a claimant who is entitled to receive Medicare benefits. Failure to
comply with the reporting requirements carries a civil penalty of $1,000 per claim,
per day. The exact requirements and process for reporting evolved in fits and
starts until the fall of 2011, when they were finalized.
Reporting by liability
insurers began in January of 2012. As a result, it must be anticipated that any
claim involving a Medicare recipient that exists as of today is, or soon will be on
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Medicare’s radar screen. Medicare will know about every payment made to a
Medicare recipient in settlement or judgment.
Though debate continues, it appears that Medicare will have a long time to seek
recovery of conditional payments.
Medicare has a three year statute of
limitations for its tort claims and a six year statute on its contract claims. Until we
get further guidance on the applicable limitations period, document retention
policies need to insure that settlement agreements and documentation of the
steps taken to protect Medicare’s interests remain available for at least 6 years
after the settlement or judgment is paid.
SECTION 2: The Players, the Process and You
Medicare has created a process for claim notification, calculation of their
conditional payments, negotiation of their conditional payment amount, reporting
of the settlement, and ultimate compromise. The process is neither quick nor
easy. Cooperation amongst all counsel is in everyone’s best interest and should
be pursued early and often. Negotiation of the settlement, drafting of the
settlement documents and payment of the settlement funds will present new
challenges. These issues and the author’s recommendations are outlined below
with a caveat. As our collective experience with the process grows, our
understanding of the challenges and strategies for management will necessarily
The Players:
CMS (Centers for Medicare and Medicaid Services): CMS is the federal agency
within Heath and Human Services that oversees the administration of Medicare.
CMS has a limited number of employees staffing ten regional offices. Sally
Stalcup is the MSP Regional Coordinator for CMS Region 6 which covers all of
Texas. CMS has contracted some of its duties to third parties who play an
integral role in the claims resolution process.
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COBC (Coordination of Benefits Contractor): The COBC is charged with the
responsibility of determining if there is another insurer who should be considered
the primary payer and that should reimburse Medicare for conditional payments
Medicare has made. Additionally, The COBC creates the CWF (Common
Working File) that will be used by CMS and the MSPRC (see below) in the
resolution of the claim.
MSPRC (Medicare Secondary Payer Recovery Contractor): The MSPRC is the
entity responsible for calculating how much Medicare is owed and collecting
reimbursement at the time of settlement. Currently, the contractor is Chickasaw
Nation Industries, Inc based in Oklahoma.
The Process: Medicare has created the flow chart below depicting the
reimbursement process.
Frank Luccia, Luccia & Evans L.L.P.
Frank Luccia, Luccia & Evans L.L.P.
The flow sheet above does not contemplate the participation of the defendant, its
insurer or counsel until the time of settlement. This thinking reflects past
practices. However, it is in everyone’s best interest for all counsel to be involved
early and to coordinate their efforts. To that end, the following strategies are
Challenges and Practice Strategies:
Step 1 - Determine if the Claimant is a Medicare Beneficiary: Medicare is not
required to provide any formal notice of its recovery rights. Unlike traditional liens
and subrogation claims, Medicare’s right to recover conditional payments is not
predicated on formal written notice of any kind. In fact, the only “notice” provision
in the MSP regulations requires that primary payers notify Medicare—not the
other way around. For this reason, it is recommended that counsel take
affirmative steps to identify all claimants who are entitled to receive Medicare
benefits. Very early in the process it should be determined if the claimant is
entitled to receive Medicare benefits. It does not matter whether the claimant has
actually received benefits. If the claimant is entitled to benefits, the settlement will
have to be reported by the insurer. To avoid questions from Medicare after the
fact, the parties must begin the process of information collection and negotiation
that will ultimately facilitate settlement. However, it is critical to note that the issue
is whether the claimant is entitled to receive benefits on the date of settlement.
So, while the discovery of this information must begin early, an initial
determination that the claimant is not entitled to benefits should be confirmed at
the time of settlement.
There are three primary tools available to determine if a claimant is Medicare
eligible: demographics, discovery and query.
Demographics: Medicare takes the position that whenever a liability
insurer/self-insured issues payment to a claimant who is age 65 or older, they
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“have reason to know of Medicare’s probable interest” and must “act to ascertain
Medicare’s involvement.” If a claimant is 65 or older, he or she is likely eligible for
benefits. However, approximately 15% of current beneficiaries are under 65.
These recipients fall into one of three categories:
- a recipient of SSDI for 24 consecutive months;
- a recipient of SSDI for 1 month due to Lou Gehrig’s disease;
- a recipient of treatment for end-stage renal disease or kidney failure.
Discovery: Initial discovery in all new claims should include an inquiry into
whether the claimant is Medicare eligible. Sample discovery is attached as
Appendix 1. This discovery will necessarily include a request for the claimant’s
social security number and health information claim number (HICN).
claimants will be reluctant to provide their SSN or HICN. In that event, provide
them a copy of the CMS Alert dated April 6, 2010 and attached as Appendix 2.
The letter from CMS is designed to explain to beneficiaries why the information is
being requested and to assure them that it is appropriate to comply with requests
for the information. If the claimant is still reluctant to provide their SSN, CMS has
posted a form on its website that the claimant can execute and submit to verify
their Medicare status. The form is attached as Appendix 3 .
Query: Regardless of the information revealed in response to your
discovery, it is recommended that you take advantage of Medicare’s query
process. Most insurers and self insured entities are now registered Responsible
Reporting Entities (RREs). RREs have a secure, dedicated, electronic
connection to Medicare. One of the benefits of being an RRE is that you may
submit certain limited information (HICN or SSN; first and last name; date of
birth; and gender) about a potential Medicare beneficiary once per calendar
month. Within 14 days, Medicare should advise if there is a match. If there is a
match, the report will give you the claimant’s HICN. That number should be used
in all future contact with Medicare. It is recommended that the query be
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performed upon response to the discovery described above. If the result is
negative, the query should be run again prior to serious settlement negotiations
to insure that the claimant’s status hasn’t changed.
If your investigation reveals that the claimant is a Medicare beneficiary, it is
recommended that you follow up with additional discovery. Appendix 4 is a
request for production of various documents that will assist in determining the
extent of Medicare’s reimbursement claim.
If your investigation reveals the claimant is not eligible for benefits, retain written
documentation of the steps you have taken to confirm the claimant’s Medicare
Step 2 - Notice to the Coordinator of Benefits Contractor (COBC): Once it
has been determined that the claimant is Medicare eligible, the parties need to
know what amount, if any, has been paid by Medicare to the providers who
treated the injury at issue. The official answer to that question is determined and
communicated by the MSPRC. The form of the communication is the final
Demand for Payment Letter. Unfortunately, the MSPRC will not calculate and
communicate the final demand until it has been notified of a settlement.
However, it is possible to get the MSPRC working on the calculation before
settlement. In order to accomplish that, the COBC must first be notified that a
potential primary payer exists. In this regard, the COBC is the gatekeeper. Once
notified, the COBC will update the CWF (common working file). This will
automatically trigger the MSPRC to begin investigating the payments Medicare
has made and eventually result in the availability of a Conditional Payments
Letter (discussed in Step 3).
Appendix 5 is the form for notifying the COBC of the potential that other
insurance (or a self insurer) may be available to reimburse Medicare. The
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COBC’s phone number is 800-999-1118 and the call center hours of operation
are Monday-Friday 8am to 8pm (Eastern Time). Insurers and self-insured entities
do not need the claimant’s permission to communicate with the COBC. However,
it is important that efforts in this regard be coordinated amongst the parties.
There have been reports that when several different parties each independently
report the same claim, the COBC has opened multiple files for the same incident
and created confusion. Additionally, as explained below, the notice to the COBC
tells the MSPRC what the injury is and, therefore, affects the MSPRC’s
determination of the payments that are related to the claim. Poor notice to the
COBC increases the likelihood of a conditional payment calculation that includes
medical services unrelated to the claim. This is a frequent problem and it can be
difficult to correct the discrepancy after the fact.
The notice to the COBC requires two significant pieces of information: the date of
accident; and the injury description. The date of accident seems straight forward
but be careful. When the COBC communicates to the MSPRC that other
insurance may be available, the MSPRC will start their calculation by looking at
all bills paid after the date of accident. In the event of a hospitalization, significant
medical expenses may have been realized in the care of an underlying condition
before the date of the alleged negligence. In that situation, instead of using the
date of admission, try to determine as accurately as possible the exact date of
the alleged negligence.
The injury description presents more of a challenge. Historically, it has been
claimant’s counsel that gives notice to the COBC in order to initiate the process
of getting the conditional payment letter. At the risk of being accused of gross
generalization, the plaintiff’s bar likes to think of their damage model expansively
and usually describes the injury in an expansively phrased narrative. The COBC
doesn’t work with narratives. It works with ICD-9 codes. When it receives a
narrative, the COBC assigns ICD-9 codes to enumerate the injuries alleged to be
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caused by the defendant. The COBC will then communicate the date of incident
and ICD-9 codes to the MSPRC who will determine what charges were paid after
the date of incident for treatment of the enumerated ICD-9 diagnoses. It is the
objective of the COBC to maximize Medicare’s recovery. Therefore, when the
COBC gets a narrative it will interpret it as broadly as possible when assigning
the ICD-9 codes. For this the reason, the conditional payment letters frequently
indicate a payment amount by Medicare in excess of calculations derived from a
critical review of the billing records. Generally, defense counsel will be more
focused on the parsing of injuries resulting from the alleged negligence as
opposed to pre-existing conditions. A problem then arises at the time of
settlement when the defendant establishes that the amount of past medical
supported by the evidence is less than Medicare’s conditional payment claim.
There is a second reason to be careful with the description of the injury. Upon
receipt of notice from anyone, the COBC may suspend payment of benefits for
120 days to health care providers who submit bills for treatment of the ICD-9
codes assigned. This can cause great distress to the claimant/beneficiary being
harassed for payment by his care providers. It is best for the claimant then that
the ICD-9 codes associated with the claim be as narrow as good faith will allow.
Unless a case is dismissed or summarily disposed of it will probably be settled. If
the claimant is a Medicare beneficiary, the amount of Medicare’s claim will need
to be determined before settlement can be achieved. The only way to get an idea
of Medicare’s claim is through the conditional payment letter. In order to get that
letter the COBC must be notified. If notification to the COBC is coordinated,
carefully communicates the date of incident, and narrowly communicates the
related diagnoses with ICD-9 codes, the parties enhance the likelihood of getting
an accurate Conditional Payment letter. An accurate letter facilitates settlement
and helps avoid overpayment for the medical specials.
Frank Luccia, Luccia & Evans L.L.P.
Determining when to notify the COBC will be on a case by case basis. The
COBC has set a goal of 30 days from receipt of notice to update the CWF and
communicate that to the MSPRC. The MSPRC has a goal of issuing the
Conditional Payment Letter within 65 days. At a minimum, then, one must
anticipate that it will take three months or more from the date of notice till receipt
of the Conditional Payment Letter. On the other hand, notice should not be
provided so early that the related diagnoses are still unclear or significant
medical bills for the treatment of the related diagnoses are still accruing.
Step 3 - The Conditional Payment Letter: Once the COBC updates the file
to reflect that a potential third party payer exists and the diagnoses for which this
other entity potentially should have paid medical claims, the MSPRC will begin
the process of determining what was paid after the date of incident for treatment
of the related diagnoses codes. It will also send a Rights and Responsibilities
letter to the claimant. The goal is to complete the calculation and send the
Conditional Payment Letter 65 days following the Rights and Responsibilities
Letter. The preparation of the Conditional Payment letter is automatic following
notice to the COBC and there is no need to make a specific request for a
Conditional Payment Letter. If you determine when the claimant got the Rights
and Responsibilities letter you will have a good idea of when the Conditional
Payment Letter will be available.
If the parties are cooperating, the defendant should request and the plaintiff
should provide an authorization allowing the MSPRC to release the Conditional
Payment Letter to the defendant. The form of the release is Appendix 6. Also
included with Appendix 6 is the MSPRC cover sheet. The MSPRC requests that
this sheet be used with all correspondence.
Frank Luccia, Luccia & Evans L.L.P.
If the claimant refuses to provide an authorization, the defendant will have to get
the Conditional Payment Letter from the claimant. Attached to the letter will be
the Payment Summary Form. See the sample below.
The form details all of the charges paid and which the MSPRC believes to be
related to the alleged negligence. If a substantial period of time has passed
between the last conditional payment letter and negotiations, get an updated
Conditional Payment Letter. A written request for an updated Conditional
Payment Letter can be sent anytime after the first letter is received. A written
request will take time. The fastest and easiest way to get updated information is
to view it online. The Medicare beneficiary and his or her lawyer can view current
Conditional Payment information by accessing, a site
which the MSPRC intends to update weekly. A release (Appendix 6) will not
authorize the defendant to access the website. Any updated information from the
website will have to be obtained from the claimant.
Frank Luccia, Luccia & Evans L.L.P.
The Conditional Payment Letter will prominently advise you not to pay the
conditional amount. Heed this advice. Medicare’s claim does not ripen until after
settlement. Once advised of settlement, the MSPRC will issue a payment
demand. It may be more or less than the conditional payment amount.
Step 4 - Relatedness Request (Appeal of the Conditional Payment Letter):
The parties have an opportunity to dispute that some or all of the payments made
by Medicare were caused by the alleged negligence before settlement
negotiations even begin. A small survey of experienced plaintiffs’ lawyers was
unable to find only a few who had tried to do so at this juncture. Most cite lack of
expertise in interpreting the Payment Summary Form and a lack of resources to
go through each line item and identify the specific care behind the charges. In
cases where it is anticipated that the conditional payment claim can be
significantly reduced, the defendant should consider taking the laboring oar in
this regard. Defendants already do much of this work in their effort to limit the
damage model.
To prepare a relatedness request, each unrelated line item on the Payment
Summary Form should be lined out across the entire record. For each item that is
lined out, an explanation needs to be provided. The redacted summary form
should be attached to a letter to the MSPRC requesting the adjustments.
Appendix 7 is a form of the letter. The MSPRC should respond in 30 to 45 days.
The MSPRC may accept, reject, or modify your request. It may request additional
information or documentation.
The defendant can not send a relatedness request even if it has obtained a
release from the claimant. The release authorizes the MSPRC to send
information to the defendant. It does not authorize the defendant to send
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information to the MSPRC. Submission of the relatedness request should be
coordinated with claimant’s counsel but must be filed by claimant’s counsel.
The MSPRC has recently rolled out a new tool kit for self-calculation of the final
conditional payment amount prior to settlement. The inclusion criteria are a
physical trauma based injury (not related to ingestion, exposure or medical
implant); a total liability settlement of $25,000 or less; and a date of incident at
least six months ago. If the inclusion criteria are met, the claimant must still go
through the relatedness request process described above. The marked up
Payment Summary Form must then be attached to an application, the form of
which is attached hereto as appendix 8. Additionally, the claimant must complete
the Proposal Cover Sheet attached here as appendix 9. The MSPRC will
respond to the application and proposal within 60 days. If they agree, the
proposed amount is considered final provided that a settlement is reached within
60 days. If the MSPRC disagrees, it will reply with an amended proposal that will
be considered final if the case is settled within 60 days and for $25,000 or less.
Remember, the amount of the settlement will be reported to CMS by the
insurer/self insured.
Step 5 – Negotiations and Release: Once the relatedness issues are
resolved, the case can be settled with a high degree of confidence that there will
be no significant surprise when the MSPRC is advised of settlement and issues
the final demand letter. However, there are a number of contingencies that need
to be considered and accounted for at the time of negotiation and release.
Settlement Offers, Mediation Agreements and Rule 11 Agreements
It is a basic tenant of contract law that, in order for an agreement to be
enforceable, it must specifically address all material terms. Prior to the
preparation of the formal release, one of three writings usually sets out the terms
of an agreement to settle: the last written offer, a mediation agreement, or a rule
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11 agreement. It has been held that the inclusion of Medicare as a payee on the
settlement draft is a material term that, if not in the settlement agreement, is
unenforceable. The options for reimbursing Medicare are discussed below in the
sub-section titled Payment Provision. The defendant needs to determine the best
strategy for reimbursing Medicare and include the chosen strategy as a term in
whatever writing is generated to confirm settlement pending preparation of the
formal agreement and release.
Offer and Conditional Acceptance
It is not uncommon that settlement is thwarted because the amount the
defendant is willing to pay is close to the conditional payment amount. In that
situation, the parties may want to consider a written offer of settlement and
conditional acceptance. The way this works is that the defendant formally offers
to pay a certain amount of money for a defined period of time. Claimant agrees to
accept the offer conditioned on the ability of claimant’s counsel to convince the
MSPRC to accept some specifically defined amount or less in full satisfaction of
Medicare’s claim. The agreement must include a provision that requires the
claimant to confirm all negotiations with the MSPRC in writing and share that
communication with defense counsel. Without this ability to verify the status of
negotiations, the defense runs the risk that claimant suffers seller’s remorse and
simply decides to back out of the deal claiming non-cooperation on the part of the
MSPRC. Appendix 10 contains sample language for such an agreement. The
suggested language is by no means tested and it is urged that individual legal
judgment be used. However, do not sign a “Settlement Agreement”. Many
mediators have a form with those words at the top. Even though the text in the
body of the document may recite that the agreement is nothing more than an
offer and conditional acceptance, it is not prudent to rely on an MSPRC
employee to understand the distinction. Liability insurers and self insured entities
are required to report settlements. To avoid a claim that the case was settled and
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not timely reported, do not call the agreement contemplated here a settlement
Drafting the Release
Preparation of the release will require consideration of new challenges. Though
this is new territory, several of the challenges and strategies for their
management can be identified.
Release and Indemnity for Medicare Obligation: Medicare is not bound by
the terms of a release between the parties including any statement that seeks to
disclaim any obligation by defendant to satisfy Medicare or shift responsibility
solely to the claimant. Even if the settlement proceeds have been paid to the
claimant, Medicare still has a right to seek reimbursement from any of the parties
and entities responsible under federal law for protecting Medicare’s right to
reimbursement. Including an indemnification provision in any settlement
agreement with a Medicare beneficiary is still a good idea. If the beneficiary has
the ability to pay, the provision protects the defendant from double payment.
Recognize, however, that Medicare is not bound by the indemnification
agreement and, if Medicare’s final demand is not fully repaid by the beneficiary,
Medicare will seek recovery directly from the insurer without regard to the parties’
indemnification agreement.
Allocation and Post Settlement Pleading Amendments: Medicare will not
recognize the parties’ efforts to allocate settlement proceeds to damages other
than medical expenses (such as pain and suffering). You may have heard of
strategies to apportion settlements that have been employed in regard to
Medicaid claims. Those strategies will not work with Medicare. Medicare is only
bound by an allocation based on an order issued following a determination on the
merits of the case. Also, it is important to understand that one cannot avoid
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Medicare’s right to reimbursement merely by re-pleading after settlement to
eliminate a claim for medical expenses from the petition.
Payment Provision: The settlement agreement should explicitly describe
the manner in which Medicare is to be paid. There are a number of options and
variations on the options. Counsel will need to exercise judgment on a case by
case basis. The two most frequently employed options are:
- Making Medicare a joint payee on the check; or
- Withholding some portion of the settlement funds until the final demand
amount is known; at which point the withheld funds can be allocated
Option One: Making Medicare a Payee: Many argue that making Medicare
a joint payee on the check is the best option. Medicare requires that all other
payees sign first. Then the check goes to Medicare. Medicare will deposit the
check in its account, withhold its share and distribute the balance. Proponents of
this strategy argue that it is the easiest for defendants and, since the plaintiff is
unable to get his money without reimbursing Medicare, it is certain that Medicare
will be paid. Plaintiffs generally dislike this option. All of the money is unavailable
to the claimant and claimant’s counsel for weeks or more. The check can
become stale and need to be re-issued thus further delaying the process. If this
option is selected, the settlement agreement should explicitly state that Medicare
will be made a payee on the check. If the case is settled at mediation, include
this language in the agreement signed that day.
Option Two: Doing the Two Steps: The second option is to fund the
settlement in two steps. Proponents of this strategy are of the mindset that if you
want something done right you have to do it yourself. They worry that with option
one, their check is delivered to the plaintiff but, for whatever reason, is never
forwarded to Medicare. The defendant or its insurer will report the settlement to
Medicare. If Medicare does not receive payment in 60 days, the defendant’s first
notice that Medicare wasn’t reimbursed may be suit for collection of double the
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amount owed plus interest. If this option is selected, the following language
should be included in the settlement agreement:
In consideration for the settlement of this matter, claimant agrees
that a check in the amount of ___________ (fill in the total settlement
amount, less 110% of the conditional payment amount) will be
issued to the trust account of counsel for claimant. The amount of
______________ (110% of the conditional payment amount), will be
withheld by (self insured defendant / defendant’s insurer). Once
Medicare’s final demand is known, (self insured defendant/
defendant’s insurer) will issue a check directly to Medicare. If the
final demand amount is less than the amount withheld, an
additional check for the difference will be issued to the trust account
of the claimant’s attorney. If the final demand amount is greater
than the amount withheld, counsel for claimant shall deliver a check
payable to Medicare from his/her trust account to (self insured
defendant / defendant’s insurer) in the amount of the shortage.
(Self insured defendant / defendant’s insurer) shall then remit the
funds withheld and the check from claimant’s counsel to Medicare.
Under no circumstances will the total amount paid by the defendant
(and/or the insurer) exceed the total settlement amount of
______________ (fill in the total settlement amount).
There is no magic to 110%. It is a good idea to have a cushion. The extent of the
cushion needed will depend on the comfort level with the accuracy of the
conditional payment amount and the trustworthiness of plaintiff’s counsel to pay a
shortage should there be one. Medicare has been discounting the final payment
to account for the plaintiff’s procurement costs. In all likelihood then, the final
payment amount will be less than the conditional payment amount. Additionally,
as noted above, the conditional payment amount can be checked online. It is
Frank Luccia, Luccia & Evans L.L.P.
recommended that the conditional payment amount be checked online on the
day the agreement is drafted to maximize everyone’s comfort level with the
amount withheld.
Waiver of Private Cause of Action: The Medicare eligible claimant has a
private cause of action against the defendant’s insurer. 42 U.S.C. 1395y(b)(3)(A)
gives the beneficiary a cause of action against the defendant’s insurer “in the
case of a primary plan which fails to provide for primary payment (or appropriate
reimbursement)” under the MSP Act. This potential claim should be waived as
part of settlement. Here is the suggested language for the release:
In consideration of the payments set forth in the Settlement
Agreement, claimant waives his/her 42 U.S.C. 1395y(b)(3)(A)
causes of action, and releases and forever discharges defendant
and defendant’s insurer from any obligations for any claim, known
or unknown, arising out of the failure of defendant and/or
defendant’s insurer to provide for a primary payment or appropriate
reimbursement pursuant to 42 U.S.C. 1395y(b)(3)(A).
Disclosure and Acceptance of TPOC Reporting: As mentioned near the
beginning and as described in more detail in Step 6, once a settlement
agreement is reached, the self insured defendant or the defendant’s insurer is
required to report the settlement to Medicare. Though the report may affect the
claimant’s future Medicare eligibility, the claimant has no role in this reporting.
Three of the data fields included in the report of settlement are most salient: the
amount; the date of settlement; and the ICD-9 codes that identify the injury. It is
good practice to spell out in the release what will be reported to help avoid any
later claim of negligent or bad faith reporting. The amount is self explanatory.
The date of settlement is not the date of funding. The date of settlement is the
date of the agreement, unless court approval of the settlement is required, in
Frank Luccia, Luccia & Evans L.L.P.
which case the date of settlement is the date of approval. If the settlement
agreement will be signed by multiple parties on different days, include language
that makes it clear that the date of settlement is the date of the last signature.
Medicare may refuse to make future payments for services provided in treatment
of the ICD-9 codes reported. The plaintiff’s bar needs to be aware of their risk of
complaint by their clients who, after settlement, find that their medical bills are no
longer being paid. If the lawyers have worked cooperatively on the notice to
COBC and relatedness request process, agreement should already have been
reached about the appropriate ICD-9 codes to report at settlement. Regardless of
whether or not this has been accomplished, the following release language is
Claimant understands that this settlement will be reported to
Medicare by (defendant / defendant’s insurer).
A TPOC (total
payment obligation to claimant) in the amount of $_______________
will be reported.
Claimant and claimant’s counsel agree with the released party and
his/her insurer that the following ICD-9 codes describe the injuries
alleged to have been sustained by you as a result of the Incident
(Incident should be defined elsewhere in the agreement). Claimant
acknowledges and understands that this settlement may impact,
limit or preclude claimant’s right or ability to receive future Medicare
benefits for these diagnoses codes or arising out of the injuries
alleged in this lawsuit. Claimant has had the advice and guidance
of his/her counsel in this regard and nevertheless wishes to
proceed with the settlement.
Frank Luccia, Luccia & Evans L.L.P.
Whereas multiple signatures are required to effectuate this
agreement, it is understood and agreed that the date of settlement
shall be the date of the last required signature.
Or, if appropriate:
This agreement is subject to approval by the court. The parties
understand and agree that the date of this agreement for the
purpose of reporting to Medicare is the date of court approval.
Step 6 - Reporting the Settlement
Medicare’s success in recovering conditional payments is dependent on knowing
when other insurers or self insured entities have reached settlements with
Medicare beneficiaries.
Section 111 of the MMSEA requires that all liability
insurers, including self-insured entities, no-fault insurers, workers’ compensation
insurers, and group health insurers (RREs) report detailed information directly to
Medicare each time a settlement, judgment, award or other payment is made to a
claimant who is entitled to receive Medicare benefits. Failure to comply with the
reporting requirements carries a civil penalty of $1,000 per claim, per day. There
are two types of settlement reporting recognized by Medicare, the Total Payment
Obligation to Claimant (TPOC) and the Ongoing Responsibility for Medical
(ORM). ORM is a frequent situation in worker’s compensation claims. However,
for most self insured entities and liability insurers, all settlements and reporting
will be of the TPOC variety. Comprehensive detail of what RREs must do to
comply with the §111 reporting requirements is contained in the 311 pages of
guidelines issued in August of last year. As described in Step 5, the parties
should have an agreement as to the date of the settlement, amount of the TPOC
and the related ICD-9 codes to be reported. Ensure that this information is
correctly and completely communicated to facilitate accurate reporting.
Frank Luccia, Luccia & Evans L.L.P.
Step 7- Final Demand Letter and Appeal
Only after being notified of the settlement will the MSPRC prepare the final
demand/recovery letter. The only exception is the Self-Calculated Conditional
Final Payment Option discussed on page 16. It is important to note that there is a
disconnect between the way the system is designed to generate the final claim
amount and how it is actually happening.
Briefly, the regulations provide that, upon notice of the settlement, the
MSPRC, without input from the parties, calculates the total of the related
charges. The regulations authorize the MSPRC to demand the entire amount.
The parties then have 60 days to pay the amount demanded or request
administrative review to reduce the demand. The only recognized reasons for
requesting reduction is lack of relatedness of the charges, procurement costs, or
hardship. In regard to procurement costs, the MSPRC has generated the Final
Settlement Detail Document attached as appendix 11. Medicare has made it
clear that it is under no obligation to “negotiate” its claim and reduce the demand
due to things like low probability of trial success, contributory negligence,
damage caps, etc. This is not what is happening. Thus far, the MSPRC has
been willing to talk to plaintiff’s counsel before, during and after settlement and
negotiate Medicare’s claim much like any lien holder. When the regulations first
came out, many looked at the system as designed and warned that the inability
to negotiate Medicare’s claim would either have a chilling effect on suits by
Medicare beneficiaries or substantially increase the cost to settle suits with
Medicare beneficiaries. This hasn’t happened to any significant degree. Most
agree that the MSPRC’s current practice of negotiating the final payment amount
is responsible for avoiding the doomsday prophesies.
Undoubtedly, there will be cases where the parties will be surprised and
disappointed by the final demand letter. As mentioned above, the regulations do
provide for administrative review on limited grounds. Defense counsel will not be
Frank Luccia, Luccia & Evans L.L.P.
able to communicate directly with the MSPRC in this process. Even if an
authorization is obtained, that authorization only allows the MSPRC to give
information to the defendant. It does not allow the defendant to communicate
with it. Therefore, claimant’s counsel must handle the administrative review.
On November 7, 2011 the MSPRC introduced a new option for calculating the
recovery amount due to Medicare called the Fixed Percentage Option. This
option allows the parties to almost completely bypass the normal reimbursement
process by paying Medicare 25% of the gross settlement. Unfortunately, the
inclusion criteria are narrow. The settlement must be for physical trauma (not
related to ingestion, exposure or medical implant); the settlement amount must
be $5,000 or less; and the claimant must certify that he/she has gotten no other
money and expects no other money in resolution of the claim. The form for
electing the fixed percentage option is attached as appendix 12. The MSPRC
has set a goal of responding to all applications within 30 days. The MSPRC may
accept or reject the application. If rejected, the parties must go through the
regular process for determining the final payment amount.
Step 8- Making Payment to Medicare
Once an injury claim is settled, the law and supporting regulations require that
Medicare’s conditional payments be reimbursed within 60 days of settlement.
However, it is often difficult to comply with the 60-day repayment requirement
because it has taken Medicare’s recovery contractor several months (or longer)
after being advised of a settlement to identify the amount it is owed and issue a
Final Demand Letter setting forth the amount Medicare must be paid. Medicare
has recognized this problem and has been telling beneficiaries to repay Medicare
within 60 days after receiving the final demand letter from the MSPRC. If
Medicare is not paid within 60 days from the demand letter, Medicare begins to
charge interest for each 30 day period the debt remains unresolved.
Frank Luccia, Luccia & Evans L.L.P.
Checks should be made payable to “Medicare”. If there are multiple payees on
the check, Medicare will not accept the draft until it is endorsed by all other
payees. Medicare requests that the check include the beneficiary’s name, HCCN,
type of case (i.e. NGHP), and date of injury.
Upon receipt of payment, the
MSPRC will provide a letter advising that the debt is zero and that the file is
closed. If the parties elected at the time of settlement to make Medicare a payee
on the check, it is recommended that you not close your file until a copy of this
letter is obtained.
SECTION 3 - Resolving Future Medical Claims (MSA’s):
In regard to workers compensation claims, CMS has published guidelines and
established practices to insure that settlements that contemplate future medical
expenses protect Medicare from payment for the future medical services. In
essence, the parties prepare a life care plan. The plan is priced and an annuity is
purchased to fund the plan. A trustee is retained to manage the funds and pay for
future services. The entire proposal is sent to CMS and approved. Should the
approved plan run out of money, Medicare resumes making payments. The
process works because it gives the defendant finality and protects the beneficiary
from losing Medicare eligibility. The downside is that the process can be
expensive. An entire industry has developed including folks who determine future
needs, price the plans, determine current value, establish trusts and administer
the trusts.
There are no parallel regulations applicable to liability insurers and self insured
entities. Despite this, CMS has made it clear that it expects the parties to a
settlement to account for future medical care. Thus far, we have been left to
figure out how to satisfy CMS’ desire on our own. Not surprisingly, then, there is
considerable debate about what liability insurers and self insured entities must
do, if anything, or should do to account for medical expenses expected to be
incurred after settlement for injuries related to the claim. The arguments for and
Frank Luccia, Luccia & Evans L.L.P.
against the obligation of liability insurers to provide for payment of future care
involves the parsing of legislative and regulatory jargon. That is beyond the
scope of this paper. Instead, a limited review of the law behind the arguments is
provided to help the practitioner understand the issue and practical implications.
It was Congress’ intention to design laws that would help preserve the financial
stability of Medicare. The marching orders to CMS are unambiguous: get
reimbursed for bills we paid (conditional payments) that should have been paid
by a tortfeasor; and don’t pay bills for medical services if the beneficiary has
already been compensated for those bills by a tortfeasor. There is no dispute
that Medicare can stop paying a claimant’s bills (future medical) if the claimant
has already been compensated. The questions are: is the defendant required by
Medicare to do anything at settlement to ensure that the settlement funds pay the
future medical bills; and can Medicare do anything to the defendant/insurer who
fails to do so. The answers to these questions appears to be no, at least for now.
Medicare’s rights against the defendant/insurer are limited to the recovery of
conditional payments. Payments to health care providers for treatment rendered
after settlement aren’t conditional payments. The claimants, and perhaps their
counsel, are solely at risk for future medical bills.
Medicare has recommend that, in addition to reimbursing Medicare’s past
beneficiaries also “set aside” a portion of their settlement to cover the costs of
future medical expenses so that the responsibility for future accident-related
medical expenses is not unfairly shifted to Medicare. CMS and specifically, Ms.
Stalcup, has communicated that MSAs are the preferred method for preventing
the unfair shifting of accident-related medical expenses to Medicare following a
settlement. Appendix 13 is Ms. Stalcup’s memo on the issue. Ms. Stalcup’s
desire for everyone to use MSAs makes perfect sense. Claimants can not be
reasonably relied upon to hold onto a portion of the settlement proceeds and
Frank Luccia, Luccia & Evans L.L.P.
make payments to providers for future care of the injuries related to the settled
claim. An MSA gives Medicare maximum assurance that future care will be paid
from the settlement proceeds and not shifted to Medicare. Some have predicted
that, with the advent of §111 reporting, Medicare is likely to take steps to
formalize a procedure for establishing MSAs in no-fault and liability settlements,
and there are indications Medicare is doing precisely that. For instance, effective
July 6, 2009, Medicare added a definition of “Set-Aside Arrangement” to its
Medicare Secondary Payer Manual which, for the first time, defined MSAs in a
way which did not limit them to the workers’ compensation context:
“Set-aside Arrangement - An administrative mechanism used to
allocate a portion of a settlement, judgment or award for future
medical and/or future prescription drug expenses. A set-aside
arrangement may be in the form of a Workers’ Compensation
Medicare Set-Aside Arrangement (WCMSA), No-Fault Liability
Medicare Set-Aside Arrangement (NFSA) or Liability Medicare SetAside Arrangement (LMSA).”
An informed claimant and their careful counsel are likely to request an MSA
when significant future medical expenses are anticipated. Medicare’s sole
remedy after settlement is to suspend the claimant’s Medicare benefits. If future
medical care is anticipated, a smart claimant wants assurance that if Medicare
refuses payment, the funds are available to pay providers and the headache of
processing payments will be shouldered by someone else. Additionally, the
preparation of an MSA plan and filing with CMS gives CMS notice of the
apportionment of the settlement payment to future damages. Keep in mind, the
RRE is going to report the total settlement to CMS. The claimant does not want
CMS to suspend benefits until the beneficiary has paid an amount equal to the
total settlement. Again, CMS is not bound by the apportionment made by the
parties. However, it is hoped and believed that with notice of the amount
apportioned to future medical, Medicare will resume primary payer status once
the MSA is exhausted unless the set aside proves to be grossly inadequate. In
Frank Luccia, Luccia & Evans L.L.P.
the workers comp setting, Medicare will actually approve the set aside and give
the parties finality. That process is not yet available for liability claims. However,
CMS will acknowledge that the MSA plan has been received and note such in the
common working file.
The more likely it is that Medicare will be asked to pay significant amounts for
future accident-related medical care the more important it is to seriously consider
use of an MSA. In the workers’ compensation context, Medicare has specified
the circumstances under which an MSA arrangement need not be established,
and those factors may provide a framework for analysis of liability settlements as
It is unnecessary for the individual to establish a set-aside
arrangement for Medicare if all of the following are true:
a) The facts of the case demonstrate that the injured individual is
only being compensated for past medical expenses (i.e., for
services furnished prior to the settlement);
b) There is no evidence that the individual is attempting to
maximize the other aspects of the settlement (e.g., the lost wages
and disability portions of the settlement) to Medicare’s detriment;
c) The individual’s treating physicians conclude (in writing) that to a
reasonable degree of medical certainty the individual will no longer
require any Medicare-covered treatments related to the WC injury.
If you determine an MSA is not appropriate under the circumstances, that
decision should be carefully documented. For example, it may be wise to recite in
the settlement agreement or release that the medical evidence supports the
conclusion that no future accident-related medical care will be necessary. If an
MSA is not being established because the claimant has rejected the concept,
Frank Luccia, Luccia & Evans L.L.P.
language should be included in the release whereby the claimant acknowledges
that the settlement may affect Medicare benefits for any future accident-related
care, and they nevertheless knowingly choose to proceed with the settlement.
Remember that the purpose behind documenting the decision to not establish an
MSA is to be able to demonstrate to Medicare, if asked, that you adequately
considered Medicare’s future interests and took reasonable steps to protect
Everyone involved ion the resolution of claims involving Medicare beneficiaries
should remain vigilant for developments in this rapidly evolving area. CMS and
the MSPRC maintain good websites that should be visited regularly to stay
abreast of changes.
Frank Luccia, Luccia & Evans L.L.P.
Sample Interrogatories to Determine Eligibility
Instruction: The information requested in interrogatories nos. ____ - ____ is necessary
so that the defendant can comply with Mandatory Reporting requirements, specifically
42 USC 1395y(b)(8), otherwise known as Medicare, Medicaid and SCHIP Extension Act
of 2007 (“MMSEA”), Section 111 and 42 USC 1395y(b)(2) otherwise known as the
Medicare Secondary Payer Act.
INTERROGATORY NO. ___: State whether you have applied for or are eligible for
Medicare benefits and if so, state your Health Insurance Claim Number and Social
Security Number, the date on which you first became entitled to receive such benefits
and whether any of the medical expenses related to the injuries complained of in your
petition have been submitted to, or paid by, Medicare. [if you are not currently Medicare
eligible but become eligible for Medicare during the pendency of this lawsuit, you must
supplement your response at that time.]
INTERROGATORY NO. ___: Have you been diagnosed with Lou Gehrig’s disease or
are you receiving treatment for end-stage renal disease or kidney failure.
INTERROGATORY NO. ___: Have you applied for SSDI - Social Security disability
benefits? If yes, state the date of application and the current status of your application.
Page 1 of 2
The Centers for Medicare & Medicaid Services (CMS) is the federal agency that oversees the Medicare
program. Many Medicare beneficiaries have other insurance in addition to their Medicare benefits. Sometimes,
Medicare is supposed to pay after the other insurance. However, if certain other insurance delays payment,
Medicare may make a “conditional payment” so as not to inconvenience the beneficiary, and recover after the
other insurance pays.
Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA), a new federal law
that became effective January 1, 2009, requires that liability insurers (including self-insurers), no-fault insurers,
and workers’ compensation plans report specific information about Medicare beneficiaries who have other
insurance coverage. This reporting is to assist CMS and other insurance plans to properly coordinate payment
of benefits among plans so that your claims are paid promptly and correctly.
We are asking you to the answer the questions below so that we may comply with this law.
Please review this picture of the
Medicare card to determine if you
have, or have ever had, a similar
Medicare card.
Section I
Are you presently, or have you ever been, enrolled in Medicare Part A or Part B?
If yes, please complete the following. If no, proceed to Section II.
Full Name: (Please print the name exactly as it appears on your SSN or Medicare card if available.)
Medicare Claim Number:
Social Security Number:
(If Medicare Claim Number is Unavailable)
Date of Birth
Section II
I understand that the information requested is to assist the requesting insurance arrangement to accurately
coordinate benefits with Medicare and to meet its mandatory reporting obligations under Medicare law.
Claimant Name (Please Print)
Claim Number
Name of Person Completing This Form If Claimant is Unable (Please Print)
Signature of Person Completing This Form
If you have completed Sections I and II above, stop here. If you are refusing to provide the information
requested in Sections I and II, proceed to Section III.
Page 2 of 2
Section III
Claimant Name (Please Print)
Claim Number
For the reason(s) listed below, I have not provided the information requested. I understand that if I am a
Medicare beneficiary and I do not provide the requested information, I may be violating obligations as a
beneficiary to assist Medicare in coordinating benefits to pay my claims correctly and promptly.
Reason(s) for Refusal to Provide Requested Information:
Signature of Person Completing This Form
Sample Follow-up Requests for Production
REQUEST FOR PRODUCTION NO.____: All documents reflecting communication with
Medicare, CMS or any of its contractors specifically including, but not limited to, notice
to COBC, Rights and Responsibility letters, conditional payment letters (with payment
summary forms), and correspondence regarding relatedness. If you have accessed
more current information regarding conditional payments from the MSPRC website,
attach a copy of the information reviewed.
REQUEST FOR PRODUCTION NO. ____: A photocopy of the front and back of your
current Medicare card.
REQUEST FOR PRODUCTION NO. ____: An executed Consent to Release form, a
copy of which is attached.
COBC First Notification Letter
Medicare – Coordination of Benefits
P. O. Box 33847
Detroit, MI 48232
Beneficiary Name:
Policy/Claim No.:
Date of Injury:
Dear Coordination of Benefits Contractor:
Your Beneficiary named above has asserted a (medical malpractice/premises liability/etc.)
claim. [insert name of company] [is the liability insurer for the defendant/or is self-insured for
the incident]. As such, [insert company name] is the potential liability plan for this incident.
The contact information for the liability plan is:
[name of insurance carrier/self-insured]
Policy/Claim No.:
The Medicare Beneficiary is represented for this incident.
[insert attorney name]
[insert attorney firm name]
Mailing address line 1:
The injuries allegedly related to this accident are identified by the following ICD9 codes:
[insert ICD9 codes}
Please refer this matter to the Medicare secondary payer recovery contractor for calculation of
the conditional payments related to this incident. [If applicable – The MSPRC consent to
release form signed by the Beneficiary is enclosed. [Company name] would appreciate
transmittal of this document along with your referral to the MSPRC for preparation of the
conditional payment summary.]
The liability claim is still under investigation and the liability plan is not able to pay promptly at
this time. It is requested that Medicare continue to pay conditionally until the underlying
liability claim is resolved to avoid any interruption to the delivery of medical items and services
to the beneficiary. Notification of when there is a settlement, award, judgment, or other
payment to the Medicare Beneficiary will be provided to the MSPRC upon its occurrence.
[insert signatory name]
[insert signatory title]
MSPRC Relatedness Letter
[insert date]
Medicare Secondary Payer Recovery Contractor
P. O. Box 138832
Oklahoma City, Oklahoma 73113
Beneficiary: [insert beneficiary name]
HICN: [insert HICN]
Date of Incident: [insert date of incident]
Dear Medicare Secondary Payer Recovery Contractor:
We are in receipt of your conditional payment letter dated [insert date] with the attached
payment summary forms showing that the Medicare Beneficiary received medical services
related to this claim in the amount of [insert dollar amount]. In review of the payment summary
form, we have identified certain items and services which are unrelated to the incident and
request they be removed.
[Insert a short description explaining the basis for your relatedness request. For example: The
Beneficiary presented to Mercy Hospital for the treatment of a deep vein thrombosis (DVT).
There is no allegation or suggestion that the defendants to this claim caused the DVT. The DVT
was caused by an underlying hypercoagulable condition. Instead, your Beneficiary complains
that the defendants failed to timely diagnose the thrombosis thereby allowing a pulmonary
embolism to develop that required jet thrombolysis. The treatment for the pulmonary embolism,
and specifically the jet thrombolysis, is the only injury alleged to be caused by the defendants’
negligence. As such, only those charges for the treatment of the pulmonary embolism are related
to this claim. Your payment summary form includes charges for the treatment of the patient’s
preexisting DVT. Additionally, you have included payments after resolution of the pulmonary
embolus for the diagnosis and long-term treatment of the patient’s underlying hypercoagulable
state that caused the DVT.] Supporting documentation is attached hereto for your consideration.
In view of the above medical documentation, it is hereby requested that all references to the
following ICD-9 codes be removed: [list the ICD-9 codes to be removed]. We have included a
copy of the payment summary form and have lined out the unrelated items and services for your
easy reference.
We look forward to your response.
[signatory name]
[signatory title]
Rule 11 Agreement
Defendant (or Defendant’s insurer on behalf of Defendant) has offered to settle all claims
brought or that could have been brought by Plaintiff in the above-referenced litigation for the
amount of $_____________. Defendant’s offer shall remain open for ___ days, at which time
the offer is automatically withdrawn. No notice is required to effectuate withdrawal of
Defendant’s offer at that time.
Plaintiff agrees to accept the offer conditioned on Medicare’s agreement to accept $______ or
less in full satisfaction of its claim for reimbursement of conditional payments. Counsel for
Plaintiff agrees that all communication between him/her and Medicare will be confirmed in
writing to Medicare by Plaintiff’s counsel. Counsel for Defendant must be copied on all such
Should Medicare refuse to accept $__________ or less in full satisfaction of its claim for
reimbursement of conditional payments, there is no agreement by or between the parties.
Should Medicare accept $___________ or less, the parties agree to settle this matter for the
amount offered. Defendant (or Defendant’s insurer on behalf of Defendant) shall issue a
separate check made solely payable to Medicare for the final demand amount. The balance shall
be paid to Plaintiff and his/her counsel.
Signed this _____ day of _____________, 2011.
Defendant (or Defendant’s insurer)
Plaintiff’s Counsel
Defendant’s Counsel