This article was co-authored by Krissi Gore, Senior Counsel and Priciella Maestas, Paralegal.

In an earlier post, we offered an introduction to medical liens and how they impact your recovery in a personal injury settlement (Understanding Lien Resolution | Wagstaff Law Firm). To recap, a medical lien is a claim for reimbursement against your personal injury settlement, and medical insurers have a statutory right to assert such liens. As your attorneys, we have a fiduciary duty to make sure your medical liens are resolved properly. Failure to do so could result in financial and legal liabilities and could also cause you to lose future health insurance benefits.

In this post, we're going to take a close look at one type of medical lien, a Medicare recovery claim. Under the Social Security Act, the Centers for Medicare & Medicaid Services (“CMS”) has a right to be reimbursed from a settlement award for medical expenses it has paid on behalf of a Medicare beneficiary. To enforce this right to reimbursement, a lien will attach to settlement proceeds that are awarded as compensation for the injury.

A threshold question for determining if there could be a Medicare lien against your settlement is whether you are eligible for Medicare. Generally, you become eligible for Medicare when you turn 65, although you could become eligible sooner if you have a disability or qualifying disease.

One of the first things we must do when your case settles is run a Verification of Eligibility for Medicare. This process can take up to 90 days. If it turns out you are not eligible, it means Medicare won't have a recovery claim against your case, which is always welcome news. But if you have been eligible for Medicare at any point in time—even if you became eligible well after your injury and the treatment related to your settlement—you will be obligated to go through the lien resolution process with Medicare. This means we must report your settlement to Medicare's Benefits Coordination & Recovery Center (BCRC).

For single event cases, Medicare liens are resolved “traditionally.” This means that Medicare looks to determine what medical expenses it paid in connection with your personal injury claim. During this process, Medicare will assert a “Conditional Payment” amount and provide a ledger of charges for treatments that it preliminarily has concluded are related to your claim. At that point, your attorney, or if applicable, the appointed lien resolution administrator, will evaluate the Conditional Payment ledger to see if any of the charges can be challenged as unrelated. If so, correspondence is sent to Medicare asserting a challenge. But if your attorney or lien resolution administrator agrees that the charges on the ledger are related to your injury and that the Conditional Payment amount accurately asserts the amount paid by Medicare in connection with your claim, we'll request a Final Demand letter from Medicare.

Once we receive the Final Demand, we have 60 days to pay your lien before interest begins to accrue. It is important to note that the Final Demand amount can end up being higher than the Conditional Payment amount. If you decide to challenge any of the new charges and appeal the Final Demand amount, we recommend paying the Final Demand before 60 days lapse in order to avoid both the accrual of interest and the risk of having the debt referred to the Department of Justice for legal action and/or the Department of the Treasury for further collection actions. If you win your appeal, any overpayments will be refunded by Medicare. 

Where a large group of cases resolve together, Medicare liens are often resolved “globally.” Under Medicare Global, Medicare determines how much it spent in total for a group of settling claimants, and then divides this amount among the group by assigning each claimant a percentage of that claimant's gross (total) settlement amount, subject to a cap, that it will accept in satisfaction of its lien. The percentage is determined by taking various factors into account (which can vary from tort to tort), such as when the injury occurred, whether the claimant was eligible for Medicare at the time, and when the claimant ultimately became eligible for Medicare.  

Medicare Global is considered more efficient than Traditional Medicare in that Medicare does not have to evaluate the actual payments that it made in connection with a personal injury claim, generally resulting in faster lien resolution. Medicare Global also has the benefit of capping lien exposure, something that is not available under Traditional Medicare. However, if you were eligible for Medicare at the time of your injury but you know that your medical claims were paid by an entity other than Medicare, you may be able to reduce your Medicare lien by opting out of Global Medicare in favor of Traditional Medicare, as you won't owe anything to Medicare if it didn't pay for your treatment. Before you opt out of Medicare Global, it is crucial that you confirm the other entity paid for your treatments, because if it turns out that Medicare paid for the treatments, your lien will not have the benefit of the Global cap, which could result in Medicare taking your entire net recovery.

We cannot overemphasize the importance of complying with the Medicare lien process as failure to do so could result in legal action or financial penalties against you. When your case settles, rest assured we will work together with you, the lien resolution administrator (if applicable), and CMS to make sure any Medicare lien you may have is handled properly.