2012 Medicare Trustees Annual Report

Continuing Short Term and Long Term Financial Difficulties

The Medicare program has two components. Hospital Insurance (HI) and Supplementary Medical Insurance (SMI).  HI, otherwise known as Medicare Part A, helps pay for hospital, home health, skilled nursing facility, and hospice care for the aged and disabled. SMI consists of Medicare Part B and Part D. Part B helps pay for physician, outpatient hospital, home health, and other services for the aged and disabled who have voluntarily enrolled. Part D provides subsidized access to drug insurance coverage on a voluntary basis for all beneficiaries and premium and cost-sharing subsidies for low-income enrollees. Medicare also has a Part C, which serves as an alternative to traditional Part A and Part B coverage. Under this option, beneficiaries can choose to enroll in and receive care from private “Medicare Advantage” and certain other health insurance plans that contract with Medicare. These plans receive prospective, capitated payments for such beneficiaries from the HI and SMI Part B trust fund accounts.

The Social Security Act established the Medicare Board of Trustees to oversee the financial operations of the HI and SMI trust funds. The Social Security Act requires that the Board, among other duties, report annually to the Congress on the financial and actuarial status of the HI and SMI trust funds. A complete copy of the 2012 report submitted by the Board can be found on the CMS website.

In summary, total Medicare expenditures were $549 billion in 2011. The Board projects that, under current law, expenditures will increase in future years at a somewhat faster pace than either aggregate workers’ earnings or the economy overall and that, as a percentage of GDP, they will increase from 3.7 percent in 2011 to 6.7 percent by 2086 (based on the Trustees’ intermediate set of assumptions). If lawmakers continue to override the statutory decreases in physician fees, and if the reduced price increases for other health services under Medicare are not sustained and do not take full effect in the long range, then Medicare spending would instead represent roughly 10.4 percent of GDP in 2086. Growth of this magnitude, if realized, would substantially increase the strain on the nation’s workers, the economy, Medicare beneficiaries, and the federal budget.

The Trustees project that HI tax income and other dedicated revenues will fall short of HI expenditures in all future years under current law. The HI trust fund does not meet either the Trustees’ test of short-range test of financial adequacy or their test of long-range close actuarial balance.

The Part B and Part D accounts in the SMI trust fund are adequately financed under current law, since premium and general revenue income are reset each year to match expected costs. Such financing, however, would have to increase faster than the economy to match expected expenditure growth under current law.

The financial projections in this report indicate a need for additional steps to address Medicare’s remaining financial challenges. Consideration of further reforms should occur in the near future. The sooner solutions are enacted, the more flexible and gradual they can be. Moreover, the early introduction of reforms increases the time available for affected individuals and organizations—including health care providers, beneficiaries, and taxpayers—to adjust their expectations. Congress and the executive branch must work closely together with a sense of urgency to address the exhaustion of the HI trust fund and the growth in HI, SMI Part B, and SMI Part D expenditures.

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About the Author: Rafael Gonzalez is Director of Medicare Compliance & Post-Settlement Administration. He brings over 20 years of experience in the Workers’ Compensation and Liability insurance industries with a specific focus on Medicare Compliance. Rafael has been responsible for all areas of Medicare Set Aside Allocations (MSAs) including the preparation of MSAs and their approval by the Center for Medicare & Medicaid Services.  At Gould & Lamb, Rafael’s duties include assisting clients with Medicare Compliance issues, specifically on Post-Settlement Administration and client education.

Gould & Lamb is a global leader of MSA/MSP Compliance Services in the country, serving domestic and international insurance companies, third-party administrators and self-insured entities.

Appeal of Denied Medicare Benefits

Christie Luke Vice President OperationsDenial of Medicare benefits (even non-accident related Medicare benefits) are increasing. A beneficiary may face denial of benefits for medical treatment related or unrelated to a workers’ compensation, liability, or no-fault claim.

Denial of medical benefits that are unrelated to the claimed injury or illness can occur for many reasons. On many occasions bills are improperly submitted by medical providers.  If a bill erroneously documents that the treatment is related to a workers’ compensation/other insurance claim or is not supplied at all, Medicare may deny coverage until the bill is properly resubmitted.  In other instances, incorrect or vague diagnoses codes are provided via reporting pursuant to Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007, causing CMS to deny future benefits.

Beneficiaries may also be denied benefits related to a workers’ compensation, liability or no-fault claim.  As required by the Medicare Secondary Payer Act, a beneficiary is responsible for exhausting Medicare Set-Aside funds to cover their future medical expenses which would otherwise be paid by Medicare.  At the time of settlement, it is important to advise the claimant of their obligation to protect Medicare’s interests regarding past and future medical expenses.

The right to appeal decisions denying care or benefits is a five-step process that starts with standard or expedited review by the entity making the original determination, with progression through administrative channels and to federal court, if necessary.  Beneficiaries and Medicare-participating health-care providers can file Medicare appeals when a claim is denied or even partially denied.

So, the question is, what remedy should be offered to the injured party whose benefits have been denied?  In addition to diligence on the part of Responsible Reporting Entities (RREs) including prompt and accurate reporting, confirming CMS records acceptance, and ensuring that misreported information is corrected and resubmitted, injured parties should be advised to utilize the normal appellate process within Medicare regarding denied treatment or benefits.

Although very similar to the Medicare Managed Care Appeals and Grievances as well as the Medicare Prescription Drug Appeals and Grievances process, the original Medicare Part A and B, Fee for Service, process has its own appeals process and procedures.

Appealing Medicare Decisions

Once an initial claim determination is made, beneficiaries (as well as participating providers, physicians and other suppliers) have the right to appeal.  However:

  • Physicians and other suppliers who do not take assignments on claims have limited appeal rights.
  • Beneficiaries may transfer their appeal rights to non-participating physicians, or other suppliers who provide the items or services and do not otherwise have appeal rights.
  • Form CMS-20031 must be completed and signed by the beneficiary and the non-participating physician or supplier to transfer the beneficiary’s appeal rights.
  • All appeal requests must be in writing.

Five Levels in the Appeals Process

Medicare offers five levels in the Part A and Part B appeals process:

1. Redetermination by Fiscal Intermediaries, Carriers or Medicare Administrative Contractors

The Centers for Medicare & Medicaid Services (CMS) contracts with private insurance companies (called “carriers” for Part B, “fiscal intermediaries” for Part A, or “Medicare administrative contractors”) to perform many processing functions on behalf of Medicare, including local claims processing and first level appeal adjudication functions.  A redetermination is an examination of a claim by the fiscal intermediary, carrier or Medicare administrative contractor personnel that are from the individual(s) who made the initial determination. The appellant (the individual filing the appeal) has 120 days from the date of receipt of the initial claim determination to respond to the contractor.

The appellant should attach any supporting documentation to their redetermination request. Contractors will generally issue a decision (either a letter or a revised remittance advice) within 60 days of receipt of the redetermination request. The redetermination request should be sent to the contractor that issued the initial determination to file an appeal. A minimum monetary threshold is not required to request a redetermination.

2. Reconsideration by a Qualified Independent Contractor

A party to the redetermination may request a reconsideration if dissatisfied with the redetermination. Section 521 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) included provisions aimed at improving the Medicare fee-for-service appeals process. Part of these provisions mandate that all second-level appeals (for both Part A and Part B) be conducted by qualified independent contractors.  The qualified independent contract reconsideration process allows for an independent review of medical necessity issues by a panel of physicians or other health care professionals. A minimum monetary threshold is not required to request a reconsideration.  However, a written reconsideration request must be filed within 180 days of receipt of the redetermination (a request for a reconsideration may be made on Form CMS-20033).

The request should clearly explain why the appellant disagrees with the redetermination. A copy of the MRN, and any other useful documentation should be sent with the reconsideration request to the qualified independent contract identified in the MRN. Evidence not submitted at the reconsideration level may be excluded from consideration at subsequent levels of appeal unless “good cause” is shown for submitting the evidence untimely.  Reconsiderations are conducted on-the-record and, in most cases, the qualified independent contract will send its decision to all parties within 60 days of receipt of the request for reconsideration.

3. Hearing by an Administrative Law Judge (ALJ)

If at least $130 remains in controversy following the qualified independent contract’s decision, a party to the reconsideration may request that a hearing be conducted by Administrative Law Judge within 60 days of receipt of the reconsideration.

Appellants must also send notice of the ALJ hearing request to all parties to the qualified independent contract reconsideration and verify this on the hearing request form or in the written request. ALJ hearings are generally held by video-teleconference (VTC) or by telephone.  Appellants may also ask the Administrative Law Judge to make a decision without a hearing (on-the-record). Hearing preparation procedures are set by the Administrative Law Judge. CMS or its contractors may become a party to, or participate in, an ALJ hearing after providing notice to all parties to the hearing. The Administrative Law Judge will generally issue a decision within 90 days of receipt of the hearing request.

4. Review by the Medicare Appeals Council within the Departmental Appeals Board, (hereinafter “the Appeals Council”)

If a party to the ALJ hearing is dissatisfied with the Judge’s decision, the party may request a review by the Appeals Council. There are no requirements regarding the amount of money in controversy. The request for Appeals Council review must be submitted in writing within 60 days of receipt of the Administrative Law Judge’s decision, and must specify the issues and findings that are being contested.   In general, the Appeals Council will issue a decision within 90 days of receipt of a request for review (though that timeframe may be extended for various reasons).

5. Judicial Review in U.S. District Court

If at least $1,300 or more is still in controversy following the Appeals Council’s decision, a party to the decision may request judicial review before U.S. District Court Judge.  The appellant must file the request for review within 60 days of receipt of the Appeals Council’s decision.

While there may not be a remedy to stop denials of Medicare and/or medical benefits or treatment, there are certainly steps to mitigate the occurrence. Ensuring prompt and accurate reporting of data, and confirming CMS records acceptance, is a key first step.  In addition, if a beneficiary’s benefits are denied, it is imperative they are advised of the normal appellate process they can use within Medicare.  This combination of initial data being provided along with clear and accurate rules being provided to beneficiaries is critical to protecting future benefits.

About the Author: Christie Britt is the Vice President of Operations overseeing the extensive operations of Gould & Lamb.   She has vast knowledge of Medicare Set Asides and Post-Settlement Administration from an insurance claims perspective. Christie is MSCC certified and has her Green Belt Certification in Six Sigma.  She is also a member of the National Association of Medicare Set Aside Professionals (NAMSAP) and the Workers’ Compensation Claims Professionals (WCCP).

Gould & Lamb is a global leader of MSA/MSP Compliance Services, serving domestic and international insurance companies, third-party administrators and self-insured entities.

Key Consideration in Claim Settlement Process

Tom Blackwell, VP Sales & MarketingIt is apparent that self administered allocations present a greater risk than initially thought.  As litigation emerges and Mandatory Insurer Reporting becomes effective, the Insurance Industry has recognized the exposure future medical settlements represent to all parties involved, including defense and plaintiff attorneys.

If the plaintiff improperly disburses MSA funds, Medicare may deny/suspend benefits. Suspension of benefits has and will expose plaintiff attorneys to a private cause of action, pursuant to the Medicare Secondary Payer Act.  Suits may also be filed against carriers under the Unfair Claims Practices Act.

As the current population ages and the number of Medicare beneficiaries under the age of 65 increases, the Medicare program finds itself supporting more beneficiaries with fewer contributors to the program.  By 2020, the Medicare program will disburse over one trillion dollars annually. It is believed that Medicare will make all efforts to ensure that the program remains (somewhat) solvent.  As a result, The Center for Medicare & Medicaid  Services (CMS) will scrutinize allocations and focus on their Medicare Secondary Payer (MSP) rights.

Payments From Set-Aside Fund Must Follow Stringent Guidelines As Outlined In Claims Settlement Agreement

Claims Settlement Process

If payments from a set-aside fund are not properly distributed as outlined in the settlement agreement (i.e. MSA report; fee schedule, ICD9 codes and CPT codes), the injured party may lose their Medicare benefits.  In addition, the injured party is left without the financial resources necessary to obtain medical treatment related to the accident. The injured party is placed in a position of having to replenish and refund the misappropriated claim settlement funds.

Carriers, TPAs and Self Insured’s subject to Mandatory Insurer Reporting will provide Medicare with the necessary information to determine who is the primary payer or if a right of recovery on individual claims exists.

Self administration by unqualified individuals is prevalent and increases the risks associated with claim settlements involving Medicare eligible individuals.  Carriers, TPA’s and Self-Insureds recognize the risk and are adopting protocols to combat their exposure by providing post settlement allocation services.  Administration Support services provide all parties to the settlement with the assurance that set-aside funds are disbursed properly and give recourse to the injured party once those funds have been exhausted.  Given the cost of defending against civil court actions, the benefits of providing or funding these services is a best practice for risk adverse insurance entities.

Why A Life Care Plan?

Life Care Plan Essential to Identify Lifetime Care and Cost After Catastrophic Injury

Patricia Rapson, RN, CCM, CLCP, CBIS, MSCCUnderstanding and planning for the life long care of individuals who have sustained catastrophic injury presents many unique challenges for a Life Care Planner. Because these injuries impact all aspects of life, the Life Care Plan must be able to address all the contingencies necessary to maximize functional independence and promote quality of life.

Life care planning is a relatively new sub-specialty which has seen tremendous growth over the past 30 years.  The Life Care Plan represents a dynamic document individualized accurate and current but which also evolves to deal with age related changes encountered throughout the life cycle.  Periodic plan reevaluation and updating is appropriate to ensure that it remains relevant.  Whenever possible this document is developed as a collaborative effort among the various involved parties and should reflect proactive goals which are preventative and rehabilitative in nature.  A well-written Life Care Plan serves as a guide for life long-term care.

Although many professionals offer life care planning services not all are certified by the International Commission on Health Care Certification ICHCCBoard certification by examination is available once certain strict criteria are met and establishes that a baseline level of knowledge and competency has been achieved.  Effective planners typically have many years of experience within their core profession and possess the ability to apply their knowledge and develop multidimensional life care plans which are reasonable appropriate and fiscally responsible.

A Life Care Plan Has Many Applications

Life Care PlanningToday life care plans are utilized in multiple settings. In the insurance industry, the life care plan is used to establish an accurate picture of the long-term needs and costs associated with the onset of a particular disability.   Complicated case issues are clarified and recommendations are presented in a structured and organized format.  Armed with information proactive decisions can be made with regards to ongoing claims management and/or resolution.

In litigation, the life care plan has proved to be a valuable tool for both plaintiff and defense attorneys.  Costs associated with the delivery of lifetime care are often used to establish and quantify the medical damages related to the case.  In addition, the life care planner also brings a unique perspective to the process educating the parties and assisting as council prepares for settlement or trial.  As experts life care planners provide testimony which is based on factual foundation as well as consistent valid and reliable methodologies.  When scrutinized and put to test properly developed life care plan stands on its own merits and can make a difference in the overall settlement and/or resolution of a complicated case.

Update on Medical Liens Florida Bar Contingency Fee Rule 4-1.5

Recent Sarasota Meeting Approves Change of Medical Liens Rule 4-1.5

In a recent blog post I wrote about how the Florida Bar Board of Governors was studying the attorney contingency fee rule to address the hiring of special attorneys to resolve subrogation and medical lien issues related to personal injury cases. The issue had been presented to the Board of Governors and I commented on how the passage will effect MSP compliance in Florida. The key issue was the question of whether referring medical liens to a second attorney, who would be paid on a reverse contingency fee, would violate the contingency fee cap in the rule itself. The Board Review Committee on Professional Ethics opined that if the total fees paid to both attorneys exceeded the limits in the rule, a problem is evident.

The Florida Bar Board of Governors, indeed, approved the change of Rule 4-1.5 at the board’s recent Sarasota meeting.  The Rule now allows a firm concentrating in medical liens to be brought in when it will benefit the client, as long as the client agrees and the fee paid to the second lawyer for the lien work does not, on its own, violate the fee limits in the Rule.

Medical Liens in Tort Litigation

The board again acknowledged that liens and medical lien resolution have become “an increasingly intricate area” of the law, particularly in tort cases. With the passage of the new portion of the Contingency Fee Rule, all tort litigants and interested parties acknowledge that medical liens, Medicare Secondary Payer Compliance and the interests of Medicare require special expertise and handling.

The change serves clear notice of the ever changing landscape in tort law and the mandate to protect the interests of Medicare.

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