New Medicare Rules to Watch

June 16, 2009
TIP OF THE WEEK | Management

With the recent passage of SB 2499 (“Medicare, Medicaid, and SCHIP Extension Act of 2009”), all businesses with exposure to tort claims–including personal injury claims–need to be keenly aware of Medicare’s reimbursement rights. Medicare’s reimbursement rules are changing, and businesses should consider modifying their liability and settlement strategies. Importantly, there likely will be stiff penalties for businesses that do not follow the new requirements.

Here are a few tips that businesses should consider when navigating the murky waters created by the new law:

  • Reimburse Medicare for conditional payments. Medicare’s primary concern is to get reimbursed; it is less concerned about who is at fault. If a liability claim is settled, the settlement is evidence of responsibility, and Medicare can pursue its reimbursement right against the primary payer.
  • Notify Medicare of claims that implicate Medicare’s interests. It is vitally important that businesses be diligent in discovering whether a claimant is a Medicare beneficiary. This is a much easier task when formal litigation is involved because interrogatories and depositions can be used to require the claimant to answer pointed questions under oath about his or her Medicare status. However, it is not as simple in the pre-litigation stage, since the claimant has no obligation to truthfully report his or her Medicare status. Under the new rules, failure to notify Medicare in a timely manner can result in a fine of $1,000 per day, per claim.
  • Make sure that HIPAA compliance remains on your radar. With sensitive information comes great responsibility. Once a primary payer has obtained Medicare eligibility information which will likely include sensitive information such as Social Security numbers and/or Medicare HIC numbers–the primary payer must develop procedures for collecting, storing and transmitting such information while complying with HIPAA privacy rules.
  • Evaluate Medicare’s “future interests.” Some of the language within the new law is not very clear, and many industry participants believe that Medicare will require set-asides to compensate it for future conditional payments. This is already the case in the Workers’ Compensation arena.

Companies should keep these tips in mind and follow specific procedures to ensure that they are adequately complying with Medicare’s new reimbursement requirements. 

This week's Tip of the Week comes from Adams & Reese LLP, which has prepared a detailed litigation and discovery package aimed at helping companies obtain necessary information from claimants in order to satisfy Medicare’s new reporting requirements. Those interested in reviewing this information can David Toney at 713/308-0166 or