Medicare Liens for Prescription Drug Costs

    By now, your practice includes a process for protecting Medicare’s lien interest in your personal injury cases. This includes what Medicare paid for hospital care (Part A) and doctors’ services (Part B) before your case is resolved – i.e. past medical care.  You might not have encountered liens for “Part D” benefits – which covers prescription drug costs.  However, in the near future you should expect to see these charges in Medicare liens. At the end of this article are a few pointers to consider.

Evolution of Medicare Part D

    A little background will help. Part D was added to the Medicare Act in 2003 and is a voluntary outpatient prescription drug benefit plan. CMS does not pay for prescriptions like it does for hospital or doctor care. Rather beneficiaries enrolled in traditional Medicare can purchase a “stand alone” plan from a private company called a “sponsor” to cover their prescription costs with the coverage varying from plan to plan.  Beneficiaries who enroll in Medicare Advantage Plans (MAP) often have a “Part D” component as part of their coverage or enroll in a “stand alone” Part D plan offered by the same MAO. As the number of beneficiaries switch over to MAOs, the number of enrollees in Part D plans will rise like sea levels in a climate change crisis! As of 2018, Part D enrollees numbered more than 48 million.

New CMS Guidelines Encourage Recovery Against Plaintiffs

    In September of 2018, CMS updated its Medicare Prescription Drug Benefit Manual (Part D Manual) and we are starting to see new practices implemented.  Of import is CMS directing Part D sponsors to effect proper secondary payer recovery efforts.  Part D plan compliance falls into two lanes: - deny coverage in the context of tort liability claims, or pursue recovery from liability settlements or other primary first-party insurance coverage. 

    The updated manual aligns Part D coverage and the sponsors’ responsibilities under the Secondary Payer Act with the rights and responsibilities of the organizations that provide Medicare Part C benefits. [see, 42 U.S.C. § 1395w-102(4) (recovery rights afforded to MAOs “apply in the same manner” to Part D); 42 C.F.R. § 423.462 (Medicare secondary payer procedures that apply to MAOs under § 422.108 also apply to Part D plans)].

    If you follow this space, you know that MAOs are aggressively asserting recovery rights under the Secondary Payer Act. The trend is to make the demand directly to the third-party carrier after the case is settled and paid.  Such a demand under 42 C.F.R. 411.37(e) seeks the full lien, without the procurement costs reduction provided to beneficiaries under 411.37(c), with the additional threat of double damages.  

Take Action to Get Ahead of Part D Drug Cost Issues

    The rights referenced above provide a significant incentive for MAOs with Part D components and stand-alone Part D sponsors to aggressively assert recovery rights against liability recoveries. It’s only a matter of time before these plans also start asserting Medicare’s “future interest” rights. That wave will commence as soon as CMS issues its “rules” concerning set-asides in the third-party liability context.

    Practice Point One:  Identify the Part D carrier as soon as possible.  Put them on notice of the liability claim and get the payment itemization for use in your past medical special damages and future damage work ups.  If you must deal with a lien for these payments, you better have included them in your recovery efforts! 

    Practice Point Two: Be cautious of blanket indemnity/hold harmless (I/HH) language in your liability settlement documents. A liability carrier receiving a SPA demand from a MAO/Part D sponsor will reflexively tender the matter to the plaintiff under the I/HH clause. This can of worms can cause significant problems for the plaintiff and counsel. 

    
    Here at The Lien Project, we intensively pursue lien and reimbursement issues, so you can stay 100% focused on getting the best results for your clients.  We aim to seamlessly integrate into any case, at any stage – but the earlier we are involved, the better the results we expect to deliver.

    If you find yourself at the “problem” stage - we are here to help as well.  With a focus on the best interests of your client, we can find the answers and solutions you need to keep moving forward.

    The legal stuff: This email is merely an informative communication. It does not constitute legal advice, nor imply a legal relationship to the addressee. It is a communication of attorney John Rice’s availability for professional employment.

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