If a client asks you “What is a Medicare lien?” it is important to offer an informed response. Further, as a personal injury attorney, navigating the complexities of Medicare liens can be crucial to successful case resolution. Medicare plays a fundamental role in many personal injury settlements. It poses unique challenges and requirements that can significantly impact the outcome of a settlement. This guide provides you with essential knowledge to handle these liens effectively.
What is a Medicare Lien?
A Medicare “lien” is a legal claim by the Medicare program on a person’s personal injury lawsuit settlement or judgment. This occurs when someone receives Medicare benefits for treatment of an injury caused by another’s negligence. In such cases, Medicare may have the right to recover the amount it paid for medical treatment from any settlement or judgment that the person receives in a personal injury lawsuit.
Medicare does not use the term “lien” to describe its entitlement to reimbursement. Instead, Medicare describes itself as the “secondary payer” and its payments as “overpayments.” The “primary payer” is the at-fault party or other responsible coverage. Once the primary payer is deemed liable, then the obligation to repay Medicare arises.
What is Medicare?
Medicare is a federal health insurance program in the United States that provides coverage to people 65 or older, people under 65 with specific disabilities, and people with end-stage renal disease. The program was established in 1965 and is funded through payroll taxes, premiums paid by beneficiaries, and government subsidies.
Medicare is divided into several parts, including:
- Medicare Part A: Hospital Insurance that covers inpatient hospital stays, hospice care, skilled nursing facility care, and some home health care services.
- Medicare Part B: Medical Insurance that covers doctor visits, outpatient services, preventive care, and some medical equipment and supplies.
- Medicare Part C: Medicare Advantage Plans that are offered by private insurance companies and provide coverage for all the services covered under Parts A and B, and may also include additional benefits such as vision, dental, and prescription drug coverage.
- Medicare Part D: Prescription Drug Coverage that helps pay for prescription drugs.
How Will a Medicare Lien Affect a Personal Injury Settlement?
There are several possible ways that a Medicare lien may affect a personal injury case.
- The existence of a Medicare lien results in additional administrative overhead. A Medicare beneficiary or their attorney must report the case to Medicare if the primary payer did not already report it.
- During the case, the attorney must request updated conditional payment summaries to ensure that the parties are working with correct numbers and to seek the removal of any unrelated or improper charges from Medicare’s conditional payment summary.
- A Medicare lien can complicate the settlement process. For example, the defense may refuse to settle a case without a final demand letter. Or, if you settled the case with incorrect Medicare lien numbers, the results can be disastrous for your client and possibly result in a malpractice claim. Fortunately, Medicare has created the Final Conditional Payment process, whereby you can obtain a final number from Medicare that you can rely on for three business days.
- If the Medicare lien is a large portion of the settlement or exceeds the settlement amount, Medicare has a priority right of recovery against the entire settlement minus attorney’s fees and costs. After paying back Medicare, the
- Failure to comply with Medicare’s rules or timely reimburse Medicare can result in liability against the beneficiary and the attorney.
What is the Medicare Lien Statute?
Under the Medicare Secondary Payer (“MSP”) statute, Medicare will not pay for any treatment that has been paid or may reasonably be expected to be paid through workers’ compensation insurance, liability insurance, or no-fault insurance. 42 U.S.C. § 1395y(b)(2)(A).
However, if the other insurance will not pay promptly, Medicare may make conditional payments for treatment conditioned on repayment when the other insurance does issue payment. 42 U.S.C. § 1395y(b)(2)(B).
Medicare has both a right of subrogation and a priority right of recovery to recover conditional payments. Medicare’s subrogation right grants it the right to step into the shoes of any individual or entity and seek payment from the primary plan. 42 U.S.C. § 1395y(b)(2)(B)(iv). Medicare’s priority right of recovery is stronger than its right of subrogation, as it takes precedence over claims of other parties, including Medicaid. 42 U.S.C. § 1395y(b)(2)(B)(ii); MSP Manual, Chap. 7, § 50.5.1.
Why is it called the Medicare Super Lien?
We call a Medicare Secondary Payer obligation a ‘super lien’ because Medicare’s priority right of recovery takes precedence over all other liens or interests on the settlement.
Does a Medicare Lien Have a Statute of Limitations?
The statute of limitations for Medicare to file suit to recover its lien is three years from when it received notice of the “settlement, judgment, award, or other payment made [by the primary plan]…” 42 U.S.C. § 1395y(b)(2)(B)(iii).
What is the Medicare Lien Reduction Formula?
Medicare will reduce its total lien to pay a pro-rata share of “procurement costs,” which are its term for the attorney’s fees and costs. Federal regulations lay out the formula for how much Medicare will demand from your personal injury settlement, depending on whether the Medicare lien is less than or exceeds the settlement amount.
Medicare Enforces These Liens Against Beneficiaries and Their Lawyers
It is imperative to comply with the Medicare reporting and reimbursement requirements laid out under federal law. The U.S. government has broad authority to enforce these obligations against the beneficiary and any other entity that has received a payment, including the attorney.
The federal regulations state: “CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, state agency or private insurer that has received a primary payment.” 42 CFR § 411.24(g).
Medicare can obtain double damages against any primary plan that fails to make payment. At least one court has held that Medicare can also assess double damages against “any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity,” which includes a beneficiary and their attorney. 42 U.S.C. § 1395y(b)(2)(B)(iii); Humana Ins. Co. v. Paris Blank LLP, 187 F. Supp. 3d 676, 680 (US. Dist E.D. Vir. 2016).
Further, the regulations provide Medicare with an entitlement to interest for the non-payment. 42 CFR § 411.24(m).
The Final Word on Medicare Liens
In conclusion, understanding Medicare liens is crucial for personal injury attorneys. Given their significant impact on settlements, meticulous compliance is imperative. This guide has provided a high-level overview of the key factors in Medicare lien resolution. Effectively navigating these liens is essential for safeguarding clients’ interests and ensuring favorable outcomes.