Trial lawyers hail delay of MSP reporting requirements

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December 2, 2010

Trial lawyers hail delay of MSP reporting requirements 

New Medicare secondary payer reporting requirements under §111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 were to be implemented next month. A recently announced one-year moratorium on the requirements will ease case settlements, according to plaintiff attorneys.

By Allison Torres Burtka

A recently announced one-year moratorium on Medicare secondary payer (MSP) reporting requirements for claims involving liability insurance should make it easier to settle cases, plaintiff lawyers say. The moratorium was declared last month by the Centers for Medicare and Medicaid Services (CMS).

The reporting requirements—under §111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007—were to be implemented next month, and now CMS has delayed implementation until October 1, 2011. Section 111 requires certain entities to report information about the claim and the plaintiff if the plaintiff is entitled to Medicare benefits, and it penalizes these entities for failing to report.

"These penalties have created turmoil and delay for anyone trying to reach a settlement in any liability case," AAJ said in a statement. The association worked with CMS for months before the delay was announced.

Medicare beneficiaries, insurers, and plaintiff and defense attorneys have found their obligations under the Medicare Secondary Payer (MSP) Act confusing. Plaintiff attorneys say the lack of guidance and the potential penalties have made opposing counsel and insurance carriers reluctant to settle cases.

The moratorium should help clear the path to settlement, and it may signal CMS's willingness to reevaluate its MSP-related requirements, plaintiff lawyers say.

"[W]e believe that during this period, CMS will suspend the issuance of MSP guidance documents, which have often been contradictory and a source of confusion," AAJ said in the statement. "We will continue to work with both CMS and [the Department of Health and Human Services] during this period to reevaluate and clarify their Medicare secondary payer requirements."

Lawyers and insurers alike praised CMS's announcement. Peter Foley, vice president for claims administration at the American Insurance Association, said in a statement, "We welcome CMS's recognition that there is a need for serious and continued dialogue on the many issues that are still unresolved in the application of §111 to these claims."

Plaintiffs still must report their settlements to Medicare and must reimburse Medicare for payments it has made on their behalf. But the delay eases the defendant's reporting burden, so reaching a settlement should be easier, plaintiff lawyers say.

The MSP requirements are especially problematic for "cases that should be resolved without ever filing a lawsuit," said Walnut Creek, California, lawyer Elise Sanguinetti. For example, in a case involving limited insurance and serious injuries where the plaintiff has enormous out-of-pocket expenses, having to wait for clearance from Medicare delays the settlement, she said.

Lawyers have pushed for more clarity on other MSP-related issues as well, including when Medicare set-aside accounts are needed for future medical expenses and the difficulty of dealing with the MSP requirements in mass tort cases.

In September, the Eleventh Circuit addressed the issue of what Medicare could recover and held that CMS’s "MSP Manual" did not have the force of law. (Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010).) The Medicare Advocacy Recovery Coalition praised this decision and United States v. Stricker, in which the U.S. District Court for the Northern District of Alabama addressed the statute of limitations for MSP claims. The coalition noted in a statement, "While these decisions provide guidance on some discrete MSP issues, ultimately legislation is needed to reform these laws for the benefit of Medicare beneficiaries, taxpayers, and regulated organizations."

AAJ recently held a teleseminar on the moratorium and MSP requirements.

The American Association for Justice
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