By B. Josh Pettingill, MBA, MS, MSCC
Traditional Medicare vs. Medicare Advantage Plans
There is often confusion between “Traditional Medicare”, Part A and Part B coverage and Medicare Advantage Plans. It is critical to identify exactly what benefits your client is actually receiving before the resolution of their case. The best time to confirm public benefit eligibility is during the intake of the case. In addition to a detailed client interview, a copy of all health insurance cards should be requested. That way, appropriate Medicare secondary payer (MSP) compliance or other planning can be undertaken ahead of resolution of the case.
Some clients elect out of Part A and B of Medicare coverage and instead opt for Part C, Medicare Advantage plan coverage. What happens when your client is on a Medicare Advantage Plan in terms of MSP compliance? Do Medicare’s future interests still need to be taken into account? Should a Medicare set aside (MSA) still be a consideration? Before we address these questions, let’s take a look at the difference between Traditional Medicare Plans versus Medicare Advantage Plans.
Traditional Medicare Eligibility – Part A and Part B
In order to be eligible for Medicare benefits, you must fall into one of the following categories:
- You are age 65, a US citizen and have worked for at least 10 years, earning 40 credits.
- You have a disability and have been receiving Social Security Disability Insurance (SSDI) for more than 24 months.
- You have been diagnosed with End-Stage Renal Disease.
- You have been diagnosed with Amyotrophic Lateral Sclerosis (ALS), commonly known as Lou Gehrig’s Disease.
If you are unsure if your client is eligible to receive Social Security benefits, then a Social Security Consent for Release of Information form can be submitted to your local Social Security office to verify eligibility. This form is also known as the Form SSA-3288. The form can be downloaded at http://www.ssa.gov/forms/ssa-3288.pdf.
Part A & Part B Coverage
Medicare Part A (hospital insurance) covers inpatient care at a hospital, skilled nursing facility (SNF), and hospice. Part A also covers services like lab tests, surgery, doctor visits, and home health care. Medicare Part B (medical insurance) covers doctor and other health care providers’ services, outpatient care, durable medical equipment, home health care, and some preventive services.
If your client only has Part A and Part B as their primary source of health insurance, then Medicare may refuse payment for accident related care post-settlement that the client was compensated for in the underlying settlement. Through the Section 111 reporting requirement, Medicare has developed a comprehensive system to track all current Medicare beneficiaries. Beginning later this year, Medicare is implementing the new ICD coding system. ICD-10 has 141,000 codes—more than 8 times the 17,000 codes in ICD-9. The additional codes will enable responsible reporting entities to be more specific on claim forms in reporting the care provided to plaintiffs. What this means for plaintiffs is that when they go to treat for accident related care in the future, if treatment consists of a body part or ICD code previously reported to Medicare as part of the settlement, CMS may send a letter of denial. Consequently, the plaintiff may lose their Medicare benefits for accident related care indefinitely, until they have properly reimbursed Medicare for any past claims they have denied, as well as sufficient funds have been spent down to adequately protect their interests. In order to avoid this happening, a Medicare set aside can be established at the time of settlement.
Medicare Advantage Plan – Part C
Medicare Advantage Plans, also referred to as “Part C” Plans, were established under the Social Security Act as an alternative to traditional Medicare. Medicare Advantage Plans are a type of Medicare health plan offered by a private company that contracts with Medicare to provide all Part A and Part B benefits.
Part C Coverage
Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. If your client is enrolled in a Medicare Advantage Plan, most Medicare services are covered through the plan and are not paid for under original Medicare. Most Medicare Advantage Plans offer prescription drug coverage as well. In order to be eligible for a Medicare Advantage Plan, you must be eligible for Medicare Part A and Part B. Source: www.Medicare.gov
If the plaintiff has a Medicare Advantage Plan, they are not using traditional Medicare coverage. A Medicare Part C Plan is comparable to any other private health insurance plan. Medicare Part A and Part B claims payments are processed through CMS. In contrast, Medicare Advantage Plans are offered by private insurance companies, who receive compensation from the federal government to provide all Part A and B benefits to enrollees, but do not process claims through the CMS. CMS cannot deny a claim if the bill is never submitted to them. With a Medicare Advantage Plan, all the medical claims are processed by a private insurance company.
This private insurance company will serve as the primary payer for accident related treatment. Therefore, an argument could be made that as long as the Part C coverage is maintained, the plaintiff will never use Medicare Part A or Part B. Consequently, there is no shift in the burden to Medicare to pay for future accident related treatment.
Risks to Consider
The decision to implement an MSA is ultimately the plaintiff’s decision to make. The reality is if the plaintiff were to ever lose their Part C coverage, then a burden shift to Medicare will occur. Medicare Part A and Part B will become the primary payer of accident related treatment. We often have clients who still elect to establish a MSA account to ensure there is an insurance policy in the event they ever lost their Part C coverage.
Legal Basis for Protecting Medicare’s Future Interests
The legal basis for addressing Medicare’s future interests comes from Section 1862(b)(2)(A)(ii) of the Social Security, Act [42 USC 1395 y(b)(2)] which precludes Medicare payment for services to the extent that payment has been made or can reasonably be expected to be made promptly under liability insurance. The fundamental question every attorney must ask when resolving a claim has to be, “does the resolution of this claim shift the burden to Medicare to pay for future accident related care?” Medicare is always supposed to be secondary to all forms of insurance according to federal law. This means that when there is a primary payer for injury related care, they are supposed to pay first. With a Part C Plan, the burden of future medical expenses in a personal injury case will not be shifted to Medicare.
Should an MSA be a Consideration for a Plaintiff with a Medicare Advantage Plan?
Part C plans have begun asserting that they have the same rights as Medicare under the MSP and its implementing regulations. Case law is evolving on that issue but the leaning seems to be towards that interpretation of the MSP. That being said, MSAs were created by CMS as a means to protect Medicare’s future interests. MSAs come from Medicare’s interpretation of the MSP and not from any regulation, statute or case law. Accordingly, it would be a significant stretch to say that a Part C plan could insist upon a set aside when Medicare itself does not have legal basis to insist upon them in liability settlements.
Despite the foregoing, it is important to bear in mind that an injury victim while currently enrolled in Part C could switch back to Parts A/B (traditional Medicare). If the client believes they will maintain their Part C Plan for their lifetime, then they may opt not to do an MSA since there will never be a shift in burden to CMS for future medicals. However, if they were to go back to traditional Medicare, CMS may deny claims for accident related care indefinitely. CMS has made it clear that it the plaintiff counsel’s obligation to determine whether or not a Medicare set aside (MSA) should be implemented. Synergy has developed a multifaceted process to ensure plaintiff attorneys are addressing the protection of Medicare’s future interests as to comply with the Medicare Secondary Payer Act. This simple, straightforward process guides plaintiff attorneys as to adequately comply with plaintiff’s obligations under the Medicare Secondary Payer Act.
Step 1: Evaluation of Case
Synergy’s experienced staff will gather case specific information and necessary documentation.
Step 2: Findings
Relying on their expertise and experience, Synergy will recommend a Medicare Compliance solution.
- No MSA letter
- MSA Consultation: plaintiff executed wavier and acknowledgment for counsel
- MSA Estimate
Step 3: Deliverable
If it is determined that the MSA is not applicable, then Synergy provides a letter to counsel memorializing Medicare’s interests have adequately been taken into account (No MSA letter). If it is determined an MSA is appropriate, then Synergy can provide:
- Plaintiff executed wavier for counsel (Client does not want MSA despite recommendation)
- MSA Estimate (MSA analysis with future cost projection)
- Allocation (Full “Cadillac” MSA)
If you have a client who is a current Medicare beneficiary that is going to require accident related care in the future and there are funds earmarked towards future medical treatment, a Medicare set aside should be considered and fully explained to the client. If you have a client who is enrolled in a Medicare Advantage plan, then they must be properly advised on the potential risks of losing Part A&B coverage should they need to go back to them. There are numerous ways to deal with Medicare secondary payer compliance to ensure both your firm, as well as your clients are protected. The recommended course of action remains the same for plaintiffs on Part A, Part B or Part C coverage: Consult, Advise and Document (“CAD”). Consult competent experts such as those at Synergy. Advise the client regarding potential implications if they are a Medicare beneficiary and receive money for future medicals. Document your file regarding what you did to address Medicare’s future interests and go on to the next case.