Medicare is the federal health insurance program that covers people who are 65 or older and certain younger individuals with disabilities. Medicaid is the state health insurance program that covers eligible recipients.
If you are a Medicare, or a Medicaid recipient and you are injured, these insurance policies may cover the cost of your medical care. However, if the costs paid are the result of an injury, and you have a successful personal injury claim and receive any judgment or settlement funds, you will be required to repay Medicare and Medicaid for any payments they make as a result of the injury.
The more significant issue for victims is that in order to protect its right to reimbursement, Federal Law mandates that there is an automatic lien on any compensation you receive from your personal injury claim. The lien gives Medicare a claim to the judgment or settlement funds. Any victim should now that Medicare’s lien is superior to any other person or entity, including you as the injured and insured party. Unlike cases involving private health insurance, Medicare offers limited flexibility to negotiate away, or negotiate down, its lien amount. Further, the agency that handles Medicare liens, and this negotiation, is a complicated process.
The State of Nevada has a similar system for medicaid recipients, as State Law also mandates an automatic lien on any compensation you receive from your personal injury claim, and is handled is a very similar fashion as the Medicare lien process.
How does this impact unsuspecting victims. An injured victim uses their health insurance to pay for their medical care. The adjuster then offers a sum of money that the victim accepts not realizing that they have to take a portion of that settlement and pay back the Medicare/Medicaid lien. Further, while the reporting process can be complicated, insurance carriers report any settlement or judgment electronically. This can result with the adjuster extending a settlement offer that the injured/insured accepts, but never actually recovers as the adjuster then sends the settlement check to pay off the Medicare/Medicaid lien that the injured person never knew existed.
The reality is that once a report is made, you will receive notice of the amount of the Medicare/Medicaid lien. The notice also will contain a list of all treatments and charges for which Medicare believes it should be reimbursed. You or your attorney should review the list of treatments and charges for accuracy because Medicare is entitled to reimbursement only for medical treatment that is related to your personal injury claim
You can contest the itemized listing, and challenge unrelated medical expenses. Once any unrelated medical expenses are removed from the list of charges, Medicare will send a final payment demand within approximately 30 days. At that point, you or your attorney have a legal responsibility to either pay Medicare the amount of reimbursement covered by the Medicare lien, or to proceed with an appeal if there is reason to believe the amount of the lien is in error.
Unfortunately, once any unrelated medical expenses are removed, federal law prevents Medicare from accepting a lowered negotiated sum in all but a few rare situations. The intent of the law is that, in most cases, Medicare will be able to recover the entire amount of payments it made for injury-related medical care. This is the case even if the settlement or judgment amount is less than the Medicare lien. If that is the case, Medicare is entitled to receive the entire amount of the settlement or judgment, after a reduction for "procurement costs" (which are usually the attorneys' fees paid to get the settlement or judgment).
The Potential Requirement of a Medicare Set Aside
In some cases, as the injured party, you may be required to take into account the cost of any future treatment stemming from accident-related injuries. This can occur when you receive a settlement or judgment as a Medicare insured (or someone who soon will become a Medicare insured) and it is determined that your injury will require future care for which Medicare will be billed.
If that is the case, the law requires that Medicare's future interest be taken into account before disbursing the settlement or judgment funds. This might include establishing a "Medicare Set Aside" ("MSA") to pay for medical care for which Medicare would otherwise be responsible. If the requirement of future medical care is a realistic possibility, the best course of action is to speak with an experienced attorney who can help with the process and determine what's necessary to appropriately take into account Medicare's future interest.
Who Will Ever Know?
Don't be surprised to learn that if you fail to report your settlement or judgment, there is still a good chance that Medicare will find out. Medicare flags payments it makes for certain medical treatments that often result from injuries associated with personal injury claims. So, if you break a bone and seek medical treatment, you will likely receive correspondence from Medicare asking if you suffered the injury on account of another's negligence. You must truthfully respond to such requests and any others from Medicare. Failure to do so may jeopardize your eligibility and may even be a criminal offense.
Medicare and Medicaid have become increasingly stringent in making sure that their insureds reimburse them out of the proceeds from any personal injury settlements or judgments. Some would argue that this is an unwarranted and inconvenient obligation (after all, didn't you pay Medicare taxes for years in order to be entitled to collect it?). However, failure to report may result in even more unpleasant alternatives.
So addressing Medicare and Medicaid liens quickly is essential in the claims process, and should never be overlooked. These liens are not exclusive as Tricare can also impact a settlement. A victims lack of knowledge or understanding of these statutory liens does not alter their impact. Getting guidance and assistance is often essential, and we are here if you have any questions about the process.