Your client’s Medicare lien is sometimes called a “super lien” because it takes priority over other interests in a personal injury settlement. Fortunately, Medicare will reduce its final demand by a pro-rata share of attorney’s fees and costs.
However, situations may arise where Medicare has made errors, or circumstances warrant Medicare reducing or waiving its reimbursement interest. The good news that after the case is settled and Medicare issues its Final Demand Letter, there are still opportunities to reduce or eliminate the Medicare lien.
This guide offers an overview of four potential avenues to reduce or eliminate the Medicare lien after Medicare issues its Final Demand. You may pursue some of these strategies in tandem.
To explore these options further, we recommend that you review Chapter 7 of the Medicare Secondary Payer Manual regarding MSP Recovery.
Important: Always Reimburse a Medicare Lien by the Deadline
Submit the request for a reduction of the Medicare Final demand immediately upon receiving the Final Demand Letter, if there is a basis for it.
Reimburse Medicare by the deadline if the request is not resolved by then, and continue with the process.
Paying interest will be necessary if you fail to reimburse Medicare by the deadline.
Medicare will issue a refund if they grant the reduction after you have made the payment.
1. Appeal – Correcting Medicare’s Fundamental Errors
An appeal should be pursued if there was a fundamental error in Medicare’s claim handling.
An appeal is appropriate if Medicare made an apparent mistake in applying the statute and regulations. For example, suppose that Medicare failed to properly apply the statutory procurement cost offset. In that case, an appeal is the proper avenue to take.
Step-by-Step Guide for Filing a Medicare Lien Appeal
The first step in the appeals process is filing a request for a redetermination. This request must be made in writing within 120 days of the Final Demand. Here’s a simple guide to help you through it:
1. Complete the Redetermination Request Form
Obtain the Medicare Redetermination Request form CMS-20027.
Fill out the form accurately, providing all necessary details.
2. Compile Supporting Documents
Collect all relevant documents, such as medical bills, payment receipts, and other evidence supporting your claim. Ensure these documents clearly show why the Medicare amount should be reconsidered.
3. Write a Detailed Explanation
Include a letter explaining why you believe the lien amount is incorrect, along with the form.
Be specific and reference the supporting documents you’ve gathered. Make sure to include the following information:
- Beneficiary name
- Medicare number
- Specific service(s) and/or item(s) for which a redetermination is being requested
- Specific date(s) of service
- Name of the party or the representative of the party
- An explanation of why the appellant disagrees with the contractor’s determination
4. Submit the Appeal to the Medicare Contractor Within the 120-Day Deadline
You must submit the redetermination request within 120 days from receipt of the Medicare Demand Letter. Some contractors may allow you to submit the appeal electronically.
5. Wait for a Decision
Medicare will review your request and make a decision. This process can take up to 60 days. If you disagree with the redetermination decision, you can take further steps in the appeals process. The next stage is a reconsideration request, a review by a Qualified Independent Contractor (QIC).
2. Medicare Lien Financial Hardship Waiver
If the Medicare lien exceeds the settlement proceeds or other factors indicate a hardship to the beneficiary, you may pursue a Medicare lien financial hardship waiver.
With the “Financial Hardship Waiver,” Medicare may grant a hardship waiver if Medicare’s recovery would negatively impact the beneficiary’s standard of living compared to how it was before the injury. SSA §1870(c), 42 U.S.C. 1395gg.
Criteria for Medicare Lien Financial Hardship Waiver Eligibility
The Financial Hardship Waiver is outlined in the Social Security Act. SSA §1870(c), 42 U.S.C. 1395gg. The beneficiary may qualify for a full or partial waiver if the following conditions are met:
1. The beneficiary is “without fault.”
To be “without fault” does not mean that the beneficiary did not contribute to the injury; rather, the beneficiary worked in good faith with Medicare and did not intend to evade their repayment obligation.
2. One of the following criteria must be met:
- recovery “would cause financial hardship by depriving a beneficiary of income required for ordinary and necessary living expenses”; or
- recovery would “[b]e against equity and good conscience.”
MSP Manual, Chapter 7 § 50.13, 50.10.
According to the MSP Manual, Medicare will grant the waiver request if the beneficiary needs the proceeds for basic living expenses, if the beneficiary’s income is at a poverty level standard, or if there is an unforeseen financial circumstance. MSP Manual, Chapter 7 § 50.14.
Navigating the Waiver Application Process
To apply for a Medicare Lien Financial Hardship Waiver, perform the following steps:
1. Complete the Request for Waiver of Overpayment Recovery Form, Form SSA-632-BK.
Obtain the Request for Waiver of Overpayment Recovery Form. Include the beneficiary’s financial information and supporting documentation. You may request a full or partial waiver of the lien amount based on the beneficiary’s financial situation.
2. Submit the Request to the Benefits Coordination & Recovery Center (BCRC).
To submit the waiver request, submit the Form SSA-632-BK, with supporting financial documentation, to the Benefits Coordination & Recovery Center (BCRC).
3. Best Interest of the Program Waiver
Medicare has one other statutory authority to waive the repayment obligation in whole or in part. Section §1862(b) of the Social Security Act outlines what is referred to as the Best Interest of the Program Waiver.
Under the provision, the Centers for Medicare & Medicaid Services (CMS) “may waive (in whole or in part) the provisions of this subparagraph in the case of an individual claim if the Secretary determines that the waiver is in the best interests of the program established under this title [42 USCS §§ 1395 et seq.].” 42 USCS § 1395y.
Only CMS staff may exercise the authority to waive liability under this provision. If CMS denies the waiver request, you may not appeal the denial. MSP Manual, Chapter 7 § 50.18; 42 CFR § 405.926(h).
There are no clear guidelines for submitting a Best Interest of the Program Waiver request. Therefore, this should not be the primary avenue to seek a waiver of Medicare’s interest. However, submitting a waiver request under this section along with a compromise request to CMS may be an effective strategy.
4. Compromise – Balancing Interests and Limitations
Medicare also has the authority to compromise a reimbursement claim under the Federal Claims Collection Act (FCCA), 31 USC § 3711.
The authority to agree to the compromise rests with CMS. CMS will look to the following factors when determining whether to agree to a compromise under this section:
- if there is an inability to pay within a reasonable period;
- if it would be challenging to pursue Medicare’s claim in litigation;
- or the cost of collecting the claim would be more than the amount collected.
CMS has the authority to waive up to $100,000 but may consult with the DOJ, which has the authority to waive debts over $100,000. MSP Manual, Chapter 7 § 50.3.
How to Seek a Medicare Reimbursement Compromise
The attorney or beneficiary must make a written request with the MSP contractor that handled the claim. The MSP contractor must then forward the request to CMS. MSP Manual, Chapter 7 § 50.5.
Conclusion: Simplifying Medicare Lien Reductions
Navigating the complexities of Medicare liens in personal injury settlements is more than just a legal obligation; it is a critical skill that can significantly influence your client’s financial well-being. This guide has demystified four strategic approaches to reduce Medicare liens following the issuance of the Final Demand Letter. Each method offers a unique pathway to safeguarding your vital client’s interests.
Links to Important Resources
Medicare Secondary Payer Manual:
- A comprehensive guide detailing Medicare’s coordination of benefits and recovery processes.
- Access the MSP Manual here
CMS – Centers for Medicare & Medicaid Services:
- The official website offers a wealth of information on all aspects of Medicare, including liens and recovery.
- Visit the CMS Website
Medicare Lien Appeal Form
- Medicare Redetermination Request Form CMS-20027.
Waiver Form
- Request for Waiver of Overpayment Recovery Form SSA-632-BK.