Don Berwick, the Harvard professor who was tapped by the Obama administration to lead the overhaul of the massive Medicare and Medicaid programs, resigned just months before he was scheduled to leave his post. On November 29, Marilyn Tavenner, a former health official from Virginia, was installed by the administration to head the Centers for Medicare and Medicaid Services (CMS).
The change in leadership comes amid a very interesting series of events that, some would argue, signaled a more reasonable and responsible approach to Medicare’s recovery rights and activity.
Change in Conditional Payment Procedure
CMS recently made changes to the process and procedure of conditional payment recovery in liability cases. As has been widely reported, the Medicare Secondary Payer Recovery Contractor (MSPRC) published on their website an Alert. The Alert advised that starting September 6, 2011, in the case of a lump sum settlement of $300 or less, Medicare may not recover from that settlement, based on certain criteria. If the beneficiary’s settlement, judgment, award or other payment is related to an alleged physical trauma-based incident, the liability insurance (including self-insurance) settlement, judgment, award, or other payment is $300 or less, the beneficiary has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident and Medicare has not previously issued a recovery demand letter, recovery will not be pursued.
Also, the MSPRC has implemented a new and “simple” fixed percentage recovery option that is available to certain beneficiaries effective November 7, 2011. The Fixed Percentage Option gives beneficiaries who have physical trauma-based Liability insurance (including self-insurance) settlements of $5,000 or less the ability to resolve Medicare’s recovery claim by paying Medicare 25% of the total liability insurance settlement instead of using the current recovery process.
CMS Philosophy Change?
These procedural changes were made in the face of H.R. 1063, the “SMART” Act, followed by the Senate version of the Bill, S. 1718. While the Bill is multi-faceted, it includes a provision requiring CMS to ensure that the government does not spend more money pursuing a Medicare Secondary Payer (MSP) recovery claim than it will actually recover from that claim. A threshold would be set (annually by the CMS Actuary) at the amount of settlement likely to yield a MSP collection at or below the government’s recovery cost. Thus, the recent changes seem to suggest that CMS has determined that recoveries on settlements of less than $300 are not cost effective, nor is negotiating lien recovery on nuisance value settlements. It can be argued that CMS has begun the process of institutional reform that considers the realities of tort litigation while under Dr. Berwick’s leadership. While the efforts seem trivial in the short term, there appears to be evidence that the conditional payment process, at least, was being revamped without the need for legislation. How the change in leadership will effect the process is anyone’s guess. HPreview Changesowever, we may be on the precipice of institutional and philosophical changes at CMS that may make further legislative attempts at change unnecessary.
About the Author: Russell S. Whittle, Esq., is the Vice President of MSP Compliance for Gould & Lamb, LLC. In his twenty plus years of practice prior to joining Gould & Lamb, LLC, Mr. Whittle practiced primarily in the area of insurance defense, representing the interests of large insurers and employers in both workers’ compensation and general automobile liability matters.