Client Alert: Obama Signs Medicare Lien Reform Legislation Into Law

President Obama signed into law changes to the Secondary Payer Act as passed by Congress. This legislation is important because it changes reporting requirements for settlements and judgments with Medicare and Medicaid beneficiaries, and the process by which parties may request demand letters from the Center for Medicare and Medicaid Services (“CMS”).

Section 201 applies to both workers’ compensation and liability claims. It is effective nine months after the deadline by which CMS must promulgate final regulations to carry out the legislation. Section 201 details a process by which parties may request a demand letter from Medicare that is effective for a period of time before disposition of the case. Parties must provide CMS with 120 days notice of a reasonably expected settlement date. CMS has 65 days to produce a demand letter, but can extend this timeframe by an additional 30 days. Parties may then retrieve the demand information from the CMS website and rely on it so long as the settlement occurs within 120 days of notice and 3 days from the last download of the website. Section 201 also provides for a dispute process. If elected, the Secretary’s determination is final and not subject to appeal. This procedure is an alternative, and does not replace that procedure that is currently in place. Finally, Section 201 grants the insurance carrier a right of appeal provided notice is given to the Medicare beneficiary.

Under section 202, for all liability claims excluding ingestion, implantation, and exposure cases, there is no obligation to repay Medicare under 42 U.S.C. § 1395y(b)(2)(B)(ii) or to report under 42 U.S.C. § 1395y(b)(8) if a claim falls below the annual threshold as set by the Secretary of Health and Human Services. The amount of the threshold for a given year shall be published by the Secretary by November 15 of the previous year. CMS must still report to Congress on thresholds for workers’ compensation and no fault cases. Section 202 becomes effective on January 1, 2014.

Section 203 amends the Mandatory Insurance Reporting law to change the civil penalty amount from $1,000 for each day of non-compliance concerning a given claimant, and gives Medicare discretion by adding the language, “up to.” Section 203 also requires Medicare, within 60 days of enactment, to solicit proposals for safe harbor situations, and propose final safe harbor regulations for good faith efforts when a Medicare beneficiary cannot be identified.

Section 204, for all claims subject to Mandatory Insurance Report, allows insurance companies responsible for electronic reporting to report without requiring them to use a Medicare beneficiary’s social security number or Health Care Identification Claim Number. Thus, insurance carriers no longer have the burden of protecting such sensitive information. Section 203 is effective 18 months after enactment, but the Secretary may apply to Congress for a 12 month extension.

Section 205, for all workers’ compensation, liability, and no fault claims, limits actions to enforce reimbursement claims and penalties to three years from Mandatory Insurance Report of a settlement, judgment, award, or other payment. To trigger protection, the claim must be electronically reported under 42 U.S.C. § 1395y(b)(8). Section 205 is effective six months after enactment.

This document is intended to provide you with information about product liability related developments. The contents of this document are not intended to provide specific legal advice. This communication may be considered advertising in some jurisdictions.

January 14, 2013