By Tom Hagy

Leslie MacLean of Waters & Kraus in Dallas is the firm’s point person on negotiating lien amounts with Medicare.   MacLean presented her firm’s practical approach to ensuring compliance, something she has done for many years, during HB’s Medicare Mandatory Reporting Requirements Conference on Sept. 21, 2010, in Los Angeles.

MacLean started off by advocating an information gathering system with a theme of “early and often.”

“We identify early on in the intake process who is a Medicare beneficiary and what our obligations are,” MacLean said.  In the conditional payment negotiation process the goal for plaintiffs’ lawyers, she said, is to have procedures that you can share with defense counsel “so they understand that you understand what your obligations are.”

Steps to Resolving a Lien

Once you have identified that your client is Medicare eligible, she said, you set them up in the Medicare system; obtain and verify the conditional payment summary; obtain, verify and then pay the final demand; and then work toward obtaining a clearance letter.

“In order to negotiate you have to understand what number it is you’re going to be negotiating from,” MacLean said.  “So you have to first set up a file with Medicare.   In obtaining and verifying a conditional payment summary you have got to first provide the coordinator of benefits and their contractor with documents.  For workers comp and no-fault liability a blanket consent form is acceptable.   For liability cases you’ve got to have a specific form that authorizes the law firm to obtain information over the course of the time you’re representing the client for services that they received that Medicare paid for, and you’ve got to be able to show the contractor that you have the authority to represent that client.”

MacLean said the letter she uses indicates that she is including the consent-to-release form and that she wants Medicare to indicate what conditional payments they’ve made.

In the event the client is deceased, additional documents are required, such as a signed court order or copy of the will, “something that lets these folks know that you have the authority to negotiate and to deal with them on these issues.”

Confirming the Codes & Services

“Once you send [the information], in 60 days, if you’re lucky, you will get something in the mail that says ‘we have paid X amount thus far in conditional payments and we believe that these are all related to the claim that you’ve asserted.’   The code and the amount is something you want to review, and you want to make sure that the codes are correct and that the services provided are consistent with the injuries that your client has suffered,” she said.

MacLean explained that Waters & Kraus has a team of medical paralegals and other professionals that reviews the conditional summary payments.  “They have become very familiar with the codes and they will go through and try to determine what, if any, treatment that is not related to the condition,” she said.

Disputed Charges

MacLean said there is a very specific procedure you have to employ.  “You have to circle the disputed charges and request a revised conditional payment summary.  You do this until you get the answer that you believe is accurate in terms of what Medicare has paid in conditional payments on behalf of your client.  You also want to look at whether or not there are unauthorized providers or there’s unauthorized treatment or whether a particular carrier has denied coverage.  If you’re going to dispute a conditional payment . . . . you need to issue a letter that says ‘look, we do not believe the following treatments are related to my client’s mesothelioma in this case and we would like you to review one more time and basically agree with us.’

“You have to go through that procedure until you are comfortable that the amount they show is consistent with the amount you believe to be accurate,” MacLean said.  “Every step can take 60 to 75 days so it can be a long and laborious process.”

The Golden Egg:  The Clearance Letter

Once you reach the point where you’re comfortable with your number, she told the audience, you request a final demand from Medicare.  “We do the work to allow Medicare to ultimately reduce the amount of the lien.  Once you have the final demand and you believe it’s consistent with conditional payment summary, we have an internal policy [at Waters & Kraus] that we pay it within 30 days of receipt.  The law says 60 days.   As part of that process you request a clearance letter” – which MacLean called the “golden egg.”

“[The clearance letter] is what you want to receive from Medicare indicating that the file has been closed and that you have satisfied any obligation you have in terms of repayment of the lien,” she said.

The Formula

How the reduction is calculated is set out in 42 CFR §411.37.  “If the Medicare payments are less than the settlement or judgment amount the recovery is computed as follows:  [Medicare] determine[s] the ratio of the procurement costs to the total judgment or settlement payment.  They apply the ratio to the Medicare payment.  The product is the Medicare share of the procurement costs, then they subtract the Medicare share of procurement costs from the Medicare payments.  The remainder is the Medicare recovery amount.”

MacLean provided the following example:  “We had a case that settled for $475,000 . . . . the client’s portion, as we reported to Medicare, was to be $316,507.20.  We previously received a conditional payment summary in the amount of $42,000, but once Medicare applied the formula, they wrote us and said ‘you only owe us $28,000.’  We agreed with that assessment, and we paid very quickly.  That was the end of that.”

In the event you receive a Medicare payment that equals or exceeds the judgment or settlement amount, the recovery amount is the total judgment or settlement payment minus the procurement costs, MacLean explained.

“[In] an extreme example we had two defendants, one settled, the other went to trial.  So we had a gross settlement of $35,000.  We had a 40% contingency contract.  We had a $162,000 in expenses and we said [to Medicare], “This is what we’ve got.  How do you want us to handle it?’”  They replied that they wanted  additional information, such as the contingency fee contract and the settlement agreement. Once the information was submitted and reviewed, Medicare said in a letter that they were not going to pursue their rights and that they were going to close their file.  “So, those situations do occur,” MacLean said.

Make Everyone Comfortable

The Waters & Kraus attorney said that the most important thing from both the plaintiff and defense perspective is transparency.   A plaintiff attorney’s communication should be:  “We want to get you the information that you need to satisfy your job as a defense lawyer, your job as a carrier, and make everyone comfortable with the procedures.”  MacLean said she has found this approach has worked fairly well.

Reasons for Disputes

One of the audience members asked:   How often to you find that there is a dispute between you and Medicare regarding the amount of the recovery?  And how often does that result from improper ICD9 codes?

MacLean responded:  “I would say about 80% of the time we find things we don’t believe are related to the injuries our client has sustained.  As for whether there is a coding mistake or something they believe is related that we don’t believe is related, I would say less coding error and more our position that a particular treatment is not related to mesothelioma treatment,  for example.”

She went on to say they have found Medicare “pretty responsive” when she sends them a letter and indicating what she believes are unrelated treatments and expenses.   “We have found that to be a pretty successful way to reduce our clients’ liability,” MacLean concluded.