Synergy’s blog brings you the settlement services industry’s foremost thought leadership on matters of healthcare lien resolution, Medicare Secondary Payer compliance, government benefit preservation, settlement consulting, trust solutions for injury victims, and attorney fee deferral. Visit often to discover helpful insights on important areas of settlement-related compliance issues or subscribe to our Synergy InSights here.
June 9, 2022
On June 6th, 2022, the United States Supreme Court decided in a 7-2 decision to allow Florida Medicaid, pursuant to Section 409.910 of the Florida Statutes, to recover its lien from all medical damages past and future. This decision has nothing to do with future eligibility for Medicaid post settlement, that is still protected by special needs trusts, instead, it allows a state Medicaid agency to pursue its lien against all medical damages in the case. This is a departure from the dictates of Ahlborn which protected a Medicaid recipients’ property right in their settlement as dictated by the federal anti-lien provisions.
Gallardo argued that the anti-lien provisions in the Medicaid Act prohibited Florida Medicaid from attempting to recover its lien from anything other than the amounts properly allocable to past medical expenses. The Supreme Court held otherwise finding that it falls within an exception to the anti-lien provisions that served as the pillars of the Ahlborn decision. Further, the court held that the assignment provisions in the Medicaid Act requires a Medicaid beneficiary, as a condition of eligibility, to assign all rights to payments for medical care from a third party back to the state Medicaid agency. And states must enact recovery provisions that allow for the state to recover from liability third parties when a Medicaid beneficiary is injured, and Medicaid pays for that care. While the court upheld the property right and anti-lien prohibitions against recovery from non-medical damages, it held it didn’t protect damages that were for medical care.
The bottom line of the holding is as follows:
“Under §1396k(a)(1)(A), Florida may seek reimbursement from settlement amounts representing “payment for medical care,” past or future. Thus, because Florida’s assignment statute “is expressly authorized by the terms of . . . [§]1396k(a),” it falls squarely within the “exception to the anti-lien provision” that this Court has recognized. Ahlborn, 547 U. S., at 284.”
Justice Sotomayor’s dissent in Gallardo is right on point about the inequity of the majority’s opinion related to Medicaid liens and from what elements of damages a state agency can recover from: “It holds that States may reimburse themselves for medical care furnished on behalf of a beneficiary not only from the portions of the beneficiary’s settlement representing compensation for Medicaid-furnished care, but also from settlement funds that compensate the Medicaid beneficiary for future medical care for which Medicaid has not paid and might never pay. The Court does so by reading one statutory provision in isolation while giving short shrift to the statutory context, the relationships between the provisions at issue, and the framework set forth in precedent. The Court’s holding is inconsistent with the structure of the Medicaid program and will cause needless unfairness and disruption.” Justice Sotomayor also recognized that due to the majority’s ruling, many injury victims would have less dollars from their settlement to place into federally-authorized special needs trusts that protect their ability to pay for important expenses Medicaid will not cover. This is exactly what had been done for the benefit of Gallardo when her case was settled but now she will have less go into that trust since more money will have to go to reimburse Florida Medicaid.
So, what does Gallardo mean for injury victims? A state Medicaid agency or its recovery contractor can now take the position that the recovery right applies to past and future medicals so when you do an Ahlborn analysis, it would be the appropriate reduction percentage (using a pro-rata formula) applied to the entire value of medical damages to see if there is a reduction in the lien. Pre-Gallardo, some states were already taking that position as well as some recovery contractors. From a practical perspective, in cases with a large life care plan or a lot of future medicals, there may not be a reduction at all in the lien. It is going to be important that the non-economic damages get properly valued with some multiplier times specials to make strong arguments for a reduction.
In the end, Medicaid beneficiaries will not net out as much from their settlements as they should. Some cases may not be brought, and more injury victims will wind up quickly back on Medicaid post recovery. It is an unfortunate end result and just bad law.
To read the full opinion, click HERE
This decision doesn’t mean though all is lost, but you need experts to help you navigate through the lien resolution minefield. Contact Synergy to help find your way to the best outcome for your client.
To read a whitepaper for a summary of the law pre-Gallardo, click HERE.
June 9, 2022
The “reasonable value” of healthcare is an issue that weaves throughout our entire system. Even so, there’s no concrete definition of what exactly is “reasonable value”. Dr. Gerard Anderson of Johns Hopkins University School of Public Health has defined it as 40% to 45% above the cost of care. No-fault insurance statutes in many states define reasonable value in their fee schedules for accident care. Certain TPA’s managing employer-based health plans peg reimbursement at a “reasonable value” defined as a stated percentage above Medicare rates in their plans (often called “Reference Based Pricing” or “RBP Plans”). Meanwhile, hospital systems and the largest insurers enter into complex Provider Agreements, agreeing in advance to what both parties agree is reasonable reimbursement for hundreds of millions of covered lives in the United States.
Reasonable value of health care also appears, in personal injury actions as evidence of medical special damages caused by a tortfeasor, but under a slightly different definition. The definition of “reasonable medical damages” (the amount owed by a tortfeasor for the medical specials incurred by his or her victim) is arguably distinguishable from the amount owed to a hospital, by a patient. While a certain nexus does obviously exist, other evidentiary issues and considerations exist in tort cases, which do not exist in the simpler, more direct “payer-provider disputes” which are more akin to the hospital lien scenario.
All States and even Hospitals, are Different
The legal framework around hospital liens is set by statutes and case law interpreting them and varies widely from state to state. Forty states, and the District of Columbia, have enacted hospital lien statues. Because all states are so very different, you must follow the law and the facts of your case, when determining whether a hospital lien is attached to an injury settlement, and in developing the best strategy for reducing hospital liens and debts.
For example, California hospitals enjoy liens against injury recoveries by statute (§3045), which are limited to the lesser of “reasonable hospital charges” or 50% of a limited recovery. The burden is on the hospital to prove the “reasonableness” of its charges when seeking interpleaded funds. Not surprisingly, California law is largely consumer-friendly, in this regard, holding “[t]he full amount billed by medical providers is not an accurate measure of the value of medical services because many patients pay discounted rates, and standard rates for a given service can vary tremendously, sometimes by a factor of five or more, from hospital to hospital in California.” Therefore, the statute requires “that the charges for such services were reasonable.” State Farm Mut. Auto. Ins. Co. v. Huff, 216 Cal. App. 4th 1463, 1464 (2013). Conversely, Ohio is one of the nine states with no statewide lien statute, but the common law is similarly friendly, holding that “[i]t is a settled general rule that a physician or surgeon is, in the absence of an agreement as to the amount of his compensation, entitled to recover the reasonable value of his services. Miami Valley Hosp. v. Middleton, 2011-Ohio-5069, ¶ 1 (Ct. App.); however, the case goes on to cite Supreme Court authority suggesting “customary charges” (i.e., full billed charges) are prima facia evidence of reasonable value absent evidence to the contrary.
Another example of state law diversity can be found in Florida. Florida hospital liens are a creature of County Ordinance, with only nine of the state’s sixty-seven counties enjoying valid, ordinal lien rights. This is after many counties lost their rights pursuant to the Supreme Court of Florida’s opinion in Shands v Mercury which struck down as unconstitutional, all county lien laws created by Special Act of the Florida Legislature, . Consequently, many Florida hospitals (and indeed hospitals in many other states) have elected to simply create hospital liens against third party recoveries, by contract.
Another state with no statewide lien statute is Pennsylvania. The Superior Court of Pennsylvania has held:
Where, as here, there is no express agreement to pay, the law implies a promise to pay a reasonable fee for a health provider’s services. Eagle v. Snyder, 412 Pa. Super. 557, 604 A.2d 253 (Pa. Super. 1992). Thus, in a situation such as this, the defendant should pay for what the services are ordinarily worth in the community. Id. Services are worth what people ordinarily pay for them… Under the law, the Hospital is entitled to the reasonable value of its services, i.e., what people pay for those services, not what the Hospital receives in one to three percent of its cases. Accordingly, the damage award in this unjust enrichment action simply is unwarranted. In light of the applicable law, the Hospital should be awarded its average collection rate for each year in question. This value would be reasonable.
Temple Univ. Hosp., Inc. v. Healthcare Mgmt. Alts., Inc., 2003 PA Super 332, ¶¶ 26-27, 832 A.2d 501, 508 – 509.
As a final example of lien law diversity, I turn to Maryland and Virginia. Maryland does have a lien statute which limits liens to reasonable charges, but Maryland is the last of the “all payer” states. Accordingly, in simplified terms, all Maryland patients pay essentially the same amount whether insured, on Medicare, or self-pay Hospital charges in Maryland are vetted and approved by a State Commission, making “reasonable value” arguments nearly impossible. Virginia actually has two different hospital lien statues; one for hospitals operated by the Commonwealth, and a second for all other hospitals. Commonwealth hospital liens are not limited to “reasonable charges” in the main section of the statute, but enforcement provisions limit collection to “reasonable charges.” So arguably, reasonableness is required. Unfortunately, the Attorney General’s Office, who collects upon Commonwealth liens in Virginia, does not agree and insists on full billed charges unless an equitable distribution of a limited settlement is required.
As these diverse examples illustrate, it is critically important to follow the law and facts of your case, in the hospital’s jurisdiction, when it comes to determining the validity of a lien against a given recovery, and the legal definition/interpretation of “reasonable value.”
Reduction Strategies – What IS “Reasonable Value,” Anyway?
Over the past fifteen years, I have worked with and presented to hundreds of lawyers and law firms, in Florida and more recently, nationwide. Despite the previously explored legal diversity regarding the validity of liens and the common-law interpretation of reasonable value, lawyers tend to approach hospital lien negotiations in a surprisingly similar way. This is basically, a “blind” negotiation of the amount allegedly due, seeking a “discount” from full billed charges. Both sides, unfortunately, frame reductions as “discounts,” as if full billed charges are owed merely because the hospital wrote them on the lien. If nothing else, this semantic misstep sets the wrong tone, and hands all the negotiation leverage to the hospital. Under the statutes, ordinances, and the common law of all but a few states, the true power paradigm is the exact opposite. Patients and their attorneys have the money, and the law expressly limits hospitals to “reasonable charges” and saddles the hospital with the burden of proof. The only proof of reasonableness a hospital can ever muster is that they charge everyone the same rates. However, as we know, less than a few percent of patients pay those amounts and overcharging everyone equally isn’t evidence of reasonableness, anyway. Shockingly, personal injury attorneys allow themselves to be lumped in with those few percent and request “discounts” as if the hospitals are granting favors. Simply put, reframe the negotiation; put you and your client properly in the driver’s seat where you belong.
I start most presentations by asking injury firms what their average reductions are. The typical, average responses are, 1) we never accept less than a 20% discount, 2) a thirty percent discount is about average, and 3) a forty percent discount is a homerun, and we’ll recommend accepting it. Understandably, many clients are indeed happy with a 40% reduction in the amount initially shown on the Closing Statement, especially on large billsas that reduction can be a substantial amount of money. And for the avoidance of doubt, these are average results from years of questions, this is normal so if they sound familiar, that is not a bad thing. However, I do want to share why and how there are deeper reductions available.
“Inverting the Argument”
The answer is simple in theory, a bit more complex in practice. Theoretically, reduction results (notice I do not call them “discounts”) are better when you negotiate “up” from reasonable value of care that is due and owing under most state law, rather than down from the unilateral, arbitrary, and unreasonable full billed charges which nobody ever pays.
In practice, this theoretical shift requires definition and calculation of the reasonable value of the care rendered. While more complex than simply proceeding with negotiations without any data at all, defining reasonable value and calculating it are not impossible. Case law in most states, and leading hospital billing experts suggest that the “cost” of treating patients, is a reasonable benchmark. Accordingly, a workable definition of reasonable value, and in my opinion the easiest definition of “reasonable value” for Judges and lay-people alike to understand, is “cost of care plus a reasonable profit.” And thankfully, cost of care in the hospital setting is calculable.
Every hospital which accepts Medicare patients (which, because hospitals must treat everyone seeking emergency care, effectively means every hospital in the US) submits, annually, a Hospital Cost Report (CMS Form 2552-210). These Reports contain data detailing the costs incurred and charges billed by every department and can be used to estimate the “cost of care” of any given line item of service on any hospital bill. What is the reasonable value of a CT Scan at Jackson Memorial Hospital in Miami? If the total revenue data and total cost data from JMH’s annual Hospital Cost Report are merged for the CT Scan department, a “cost to charge” ratio can be derived and applied to the charges for any single scan, yielding an estimated and defensible “cost of care,” and then, “reasonable value.” This methodology is used by experts not only in testimony before Congress, but also in studies published in highly respected healthcare journals like HEALTH AFFAIRS. Reports can be obtained:
- From CMS via FOIA Request (or searched via various online cms.gov websites/portals)
- From hospitals directly by subpoena or in discovery (if litigating the hospital lien)
- From various data vendors online (just google “hospital cost report”)
SYNERGY SETTLEMENT SERVICES uses its proprietary database and algorithm to quickly calculate “cost of care” and “reasonable value” of any hospital bill and uses that analysis to negotiate up from reasonable value, nationwide.
The Lien/Debt Dichotomy
There is a critical difference between a lien and a debt, which dictates not only best practices in reducing/resolving liens, but also the legal and ethical exposure associated with the same. Liens can ONLY be created by statute/ordinance, or by agreement/contract; whereas debts exist whenever a patient has received care which has not been paid for (even if there is no injury case or recovery at all). A “LIEN” is a legal interest in the proceeds being held in Trust; it is merely a security interest in the proceeds (not a legal right to collect money from a patient). Think of a mortgage. When a homeowner borrows money to buy a house, she or he owes a debt to the bank, but the bank also creates a mortgage which attaches that debt to the real property, as security. The bank could loan someone money to buy a house without creating a mortgage, and the person would still owe the bank the same amount as if there was a mortgage. The only difference is the person could sell the house and pay nothing to the bank from the proceeds of that sale. The same is true of hospital debts and liens.
Accordingly, it is important to determine whether a medical bill/account is a LIEN, or a mere DEBT, and if a lien, whether its contractual or statutory, before engaging in negotiations. The steps you take for resolving a lien are different than the steps you take for resolving a debt.
If there is a valid lien against the proceeds, review the language of the statute or contract creating the legal interest in the settlement proceeds (lien). Next, estimate the “reasonable value,” and calculate the “equitable distribution” amount (provider’s pro-rata portion of an equitable share of the settlement – usually 1/3 of settlement, or 50% of NET). Then lastly, negotiate for the better/lower of “equitable amount” or “reasonable value.” And remember, many lien statutes and some contractual liens obviate or codify “equitable distribution” formulae – always follow the applicable law/language.
If there is not a valid lien against the proceeds, the best strategies to employ are different. First, I strongly recommend obtaining written confirmation that the provider is not pursuing a lien against the client’s settlement. Next, determine if your client even wants to resolve the “mere debt” from the settlement proceeds (remember, you have no ethical responsibilities towards ordinary creditors). If not, you may disburse proceeds upon demand, but I do recommend obtaining signed acknowledgment of the debt, from your client. Only if your client does wish to resolve the debt from her or his proceeds (which I recommend you advocate for), should you negotiate for reasonable value or an equitable reduction. But importantly, note that absent an agreement otherwise, equitable reduction merely resolves liens, as a matter of law. Accordingly, be sure to include language that the provider agrees to accept the equitable amount as “payment in full,” to release all debt.
Responsibility to “Discover” Liens?
Generally, it is a lienholder’s responsibility to put you on notice of their lien. However, Ethics Committees often impute some level of due diligence onto Injury Attorneys in these, as in most other, circumstances. To minimize exposure, I always recommend Injury Attorneys ask all known medical providers if they are pursuing lien rights and if so, to provide documentation of the same. If providers confirm they are not pursuing a lien, it is up to the client whether to pay from proceeds, or not. If a provider confirms they are pursuing lien rights (and provide evidence of such rights in the way of a properly filed HOSPITAL CLAIM OF LIEN or a contractual lien signed by the client), you must hold the encumbered proceeds in Trust and either negotiate a release or adjudicate the lien, if negotiations impasse. And lastly, if a provider refuses to respond or refuses to provide documentary evidence of their lien, I recommend sending several written requests, including deadlines for provision of evidence of a lien and a date for distribution. As a rule of thumb, the more evidence of your due diligence, the better. So, I typically conclude my efforts with a NOTICE OF WAIVER OF LIEN RIGHTS, advising again that any alleged rights will be waived, and monies will be disbursed, on a specific date.
In conclusion, it is ultimately YOUR responsibility to determine if a medical bill is a “lien” or a mere “debt.” Liens are third-party “security interests” in the money you are holding in Trust; you must protect them, and you may not be the “sole arbiter” of a lien dispute. If lien amounts are not agreed in advance of care being rendered, your client owes only the “reasonable value” of the care they received. And that “Reasonable Value” is most easily defined and calculated as the “Cost of Care” plus a “Reasonable Profit.” And finally, always remember that SYNERGY SETTLEMENT SERVICES compliantly negotiates hospital and provider liens nationwide, so you don’t have to spend the time doing so. We are your strategic partner, ensuring you avoid all the many ethical and legal pitfalls of hospital lien resolution, while efficiently reducing hospital liens to an objectively reasonable amount, protecting your clients’ well deserved and hard-earned recoveries.
 GERARD F. ANDERSON, PhD is a professor of health policy and management and professor of international health at the Johns Hopkins University Bloomberg School Public Health, professor of medicine at the Johns Hopkins University School of Medicine, director of the Johns Hopkins Center for Hospital Finance and Management. His work encompasses studies of chronic conditions, comparative insurance systems in developing countries, medical education, health care payment reform, and technology diffusion. He has directed reviews of health systems for the World Bank and USAID in multiple countries. He has authored two books on health care payment policy, published over 250 peer reviewed articles, testified in Congress over 40 times as an individual witness, and serves on multiple editorial committees. Prior to his arrival at Johns Hopkins, Dr. Anderson held various positions in the Office of the Secretary, U.S. Department of Health and Human Services, where he helped to develop Medicare prospective payment legislation. See https://publichealth.jhu.edu/faculty/11/gerard-anderson
 In Florida for example, reasonable charges for non-emergency room care are defined as 200% Medicare, while the reasonable value of care rendered in the Emergency Room is 75% of the hospital’s billed charges.
 See American Hospital Association, Fact Sheet: Reference Based Pricing at https://www.aha.org/fact-sheets/2021-06-08-fact-sheet-reference-based-pricing.
 Ala. Code § 35-11-370; Alaska Stat. § 34.35.450; Ariz. Rev. Stat. Ann. § 33-931; Ark. Code Ann. § 18-46-101; Cal. Civ. Code § 3045.1; Colo. Rev. Stat. Ann. § 38-27-101; Conn. Gen. Stat. Ann. § 49-73; Del. Code Ann. tit. 25, § 4301; D.C. Code § 40-201; Ga. Code Ann. § 44-14-470; Haw. Rev. Stat. § 507-4; Idaho Code Ann. § 45-701; 770 Ill. Comp. Stat. Ann. 23/1; Ind. Code Ann. § 32-33-4-1; Iowa Code Ann. § 582; Kan. Stat. Ann. § 65-406; La. Rev. Stat. Ann. § 9:4751; Me. Rev. Stat. tit. 10, § 3411; Md. Code Ann., Com. Law § 16-601; Mass. Gen. Laws Ann. Ch. 111, § 70a; Minn. Stat. § 514.68; Mo. Ann. Stat. § 430.230; Neb. Rev. Stat. Ann. §§52-401 & 52-402; Nev. Rev. Stat. Ann. § 108.590; N.H. Rev. Stat. Ann. § 448-A:1; N.J. Stat. Ann § 2a:44-35; N.M. Stat. Ann. § 48-8-1; N.Y. Lien Law § 189; N.C. Gen. Stat. Ann. § 44-49; N.D. Cent. Code Ann. § 35-18-01; Okla. Stat. Ann. tit. 42 §§43 & 44; Or. Rev. Stat. Ann. § 87.555; R.I. Gen. Laws Ann.§§9-3-4 to 9-3-8; S.D. Codified Laws § 44-12-1; Tenn. Code Ann. § 29-22-101; Tex. Prop. Code Ann. § 55.001; Utah Code Ann. § 38-7-1; Vt. Stat. Ann. tit. 18, § 2253; Va. Code Ann. § 8.01-66.2; Wash. Rev. Code Ann. § 60.44.010; Wis. Stat. Ann. § 779.80
 “The Alachua County Lien Law, ch. 88-539, Laws of Fla., is a special law which creates a lien based on a private contract between a hospital and its patient, and is thus unconstitutional under Art. III, § 11(a)(9), Fla. Const.”
Shands Teaching Hosp. & Clinics v. Mercury Ins. Co., 97 So. 3d 204, 207 (Fla. 2012)
 See Extreme Markup: The Fifty US Hospitals With The Highest Charge-To-Cost Ratios https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2014.1414
May 5, 2022
The following communication is in response to press release 2022-76 published by the Securities and Exchange Commission on May 2nd, 2022. Synergy Settlement Services, Inc. (SSS), its principals and the Foundation for Those with Special Needs (“Foundation”) are disappointed that the Securities and Exchange Commission has opted to file a lawsuit as outlined in the press release.
We strongly believe this Government action is unwarranted under the law and facts, we adamantly deny that any trust beneficiary or retained funds were improperly used and intend to vigorously defend this case in Court.
The SEC’s press release used salacious terms like “beach parties” and “golf tournaments” to describe events held by outside non-profits but seemingly insinuated that the events were thrown by Synergy. While those terms may help generate media headlines, it’s just not accurate. As an example, the alleged “beach parties” thrown by Synergy is actually referencing a contribution by The Foundation to a state “Civil Justice Foundation” that is a 501(c)(3). The mission of this organization, like others The Foundation has supported over the years, is to keep the civil justice system accessible.
Since its inception, The Foundation has donated hundreds of thousands of dollars to a variety of non-profit organizations doing incredible charitable work across the country.
Rest assured that as we work through the process of exonerating ourselves, we remain 100% committed to serving our clients and the families you fight for. This will not impact our operations or results. We remain steadfast in our dedication to the work of improving the lives of injury victims.
In episode 27 of Trial Lawyer view, host and Synergy CEO, Jason D. Lazarus, J.D., LL.M., CSSC, MSCC had an engaging conversation with Tom Feher from Feher Law. In this podcast edition, they talk about the importance of empathy in the life of a trial lawyer, how much organizations like LATLC give back to the community and they ended the conversation discussing the responsibility that trial lawyers have to serve the people they represent.
Learn more here.
April 14, 2022
It is well established that Medicare has a right of reimbursement for payments it made on behalf of a Medicare beneficiary when that beneficiary obtains a settlement from a responsible party. Medicare’s right of recovery is found in the Medicare Secondary Payer Act (MSP). Those payments are considered conditional because they are required to be paid back to Medicare once the other funds are received.
In general, under the MSP statute, Medicare does not pay for any services for which payment has been made or can be expected to be made by a primary plan. A primary plan’s definition has expanded over time and now includes group health plans, workers’ compensation coverage, automobile or liability insurance coverage and no-fault insurance. Medicare is the secondary payor and the primary plan is the primary payor. Medicare’s right to collect has expanded to include “any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.”
In 1997, Congress enacted Medicare Part C to provide an alternative to traditional Medicare. A Part C plan, also known as a Medicare Advantage plan, is another health plan option that a Medicare beneficiary may choose instead of traditional Medicare. These plans are offered by private insurance companies and approved by Medicare. They preempt state law. These plans also assert a right of recovery, and it is generally accepted that their right is similar to traditional Medicare. Medicare Advantage Plans arguably have a private cause of action for double damages in the case of where a primary plan fails to reimburse.
As case law has developed in various circuits, most have favored the Medicare Advantage plan. The Third Circuit case, In re Avandia Marketing Sales Practices and Products Liability Litigation, provided that Medicare Advantage plans do have a private right of action under the MSP. Specifically, the court noted that the language of 42 U.S.C. §1395y(b)(3)(a) included the right to seek double damages for not reimbursing the conditional payments made under any part of the MSP Act and not just the payments made by traditional Medicare. It is noteworthy that there has not been a court since Avandia to find that the Medicare Advantage plan does not have a private cause of action. The Ninth Circuit, in Parra v. PacifiCare of Ariz., Inc., found that the Medicare Advantage plan could not seek reimbursement, but it was a limited holding as the insurance carrier was seeking reimbursement from the beneficiaries of the deceased injured party.
One of the biggest concerns surrounding these Medicare Advantage plans and their right of recovery is finding them! For a plaintiff attorney trying to do the right thing and resolve traditional Medicare’s interest, this is an easy task. Using the Medicare portal or sending a fax, confirmation can be obtained as to whether traditional Medicare has made conditional payments. But Medicare Advantage plans could ultimately have “liens” that are hidden in plain sight since Medicare doesn’t provide Medicare Advantage lien information to plaintiff counsel. For a plaintiff attorney, he must rely on his client to provide information about Medicare Advantage plans that she has had over the course of her related medical treatment. In a protracted case, there is a possibility that the plaintiff had many different health coverages. For example, a Medicare beneficiary could choose traditional Medicare for one year and switch to an Aetna Medicare Advantage Plan the next and back to traditional Medicare at some other date in the future. And then possibly even have a different Medicare Advantage carrier, like Humana, the next year. This makes it extremely difficult for a plaintiff attorney to track down all of the liens and ensure that the universe of potential Medicare recovery rights are being addressed at the time settlement.
Until recently, there was not a centralized place to search whether a settling claimant had a Medicare Advantage plan. Both plaintiff and defense had no way to know which private insurance carrier may have provided Medicare Advantage coverage to a particular claimant. A plaintiff attorney or defense entity could check with traditional Medicare and confirm that Medicare does or does not have a Conditional Payment claim, but the same has not been true for private Medicare Advantage plans. With the possibility of these plans having the same rights as traditional Medicare and the further risk of double damages, this has created a very uneven playing field.
MSP industry stakeholders pushed for the changes created with the Provide Accurate Information Directly (PAID) Act as a means of helping them obtain data for Medicare Part C and D plans. The PAID Act was initiated by the responsible parties because lawsuits were being filed by Medicare Advantage Plans asserting recovery rights. These suits included claims for double damages under Medicare’s private cause of action provision. This was found to be unfair due to the insurer’s (and equally plaintiff counsel’s) inability to proactively identify claimants who are Medicare Advantage or Part D enrollees.
The PAID Act, which became effective December 11, 2021, should help even the playing field at least partially. It will help Non-Group Health Plan (NGHP) Responsible Reporting Entities (RRE) better coordinate benefits by providing beneficiary Part C and Part D enrollment information via updates to the Section 111 Query Response File. CMS will provide up to 3 years of enrollment data for both Part C and Part D plans. The data will be provided to the RREs as part of the NGHP Query Response File. The information that will be available will now provide RREs the contract number, contract name, plan number, coordination of benefits (COB) address, entitlement dates for the last three years of Part C (Medicare Advantage) and Part D coverage, and the most recent Part A and Part B entitlement dates.
The intention of the PAID Act was not to help plaintiff attorneys and Medicare beneficiaries but rather to help the RREs. It is presumed that this will allow the RREs to make active outreach to address Part C and Part D plans’ recovery rights, thereby ensuring they are not subject to any double damages. In turn, plaintiff attorneys should be able to obtain this information and know that they are protected as well. So, although not specifically meant to benefit plaintiff attorneys, the fact that RREs now has access to this information should allow an information share between the plaintiff attorney and the RRE so that the plaintiff attorney can have knowledge of the existence of these hidden liens. That will require some proactive collaboration with the other side over Medicare Secondary Payer issues. We do recommend being collaborative with the other side when it comes to Medicare compliance related issues since all parties have skin in the game.
 42 U.S.C. § 1395y.
 42 U.S.C. § 1395y(b)(2)(A).
 42 U.S.C § 1395y(b)(2)(A)(ii).
 42 CFR § 411.24(g).
 42 U.S.C § 1395w-26(b)(3).
 42 U.S.C. § 1395y(b)(3)(A).
 685 F.3d 353 (3rd Cir. 2012).
 Id.at 360.
 715 F.3d 1146 (9th Cir. 2013).
 “There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).” 42 U.S.C. § 1395y(b)(3)(A).
April 7, 2022
Some clients, post-accident, may have switched from Medicare Parts A/B over to a Part
C Medicare Advantage Plan. Therefore, even if you have gone through the resolution process
for your client and gotten the Medicare conditional payment related issues dealt with, you might
not be finished. What lurks out there is that a Part C Advantage Plan (hereinafter MAO) may
have paid for some or all of your client’s care. You may wonder how that is possible when you
were told that the client was a Medicare beneficiary and Part A/B was paid back for conditional
For more information, read this excerpt from my book ‘The Art of Settlement‘.
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