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CMS Provides Notice Regarding LMSA Regulations/Guidance
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CMS Provides Notice Regarding LMSA Regulations/Guidance

Click here for a downloadable copy of this blog

Once again, the Centers for Medicare & Medicaid Services has provided an indication that while regulations and/or guidance is on its way regarding the protection of Medicare’s future interests for liability and No Fault settlements, the proposed rule regarding these have been moved to August 1, 2020 or perhaps further into the future (again). Technically, the information indicates that the Notice of Proposed Rule Making would “clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items services related to liability insurance (including self-insurance), no fault insurance, and worker’s compensation settlements, judgments, awards, or other payments. Specifically, this rule would clarify that an individual or Medicare beneficiary must satisfy Medicare’s interest with respect to future medical items and services related to such settlements, judgments, awards, or other payments. This proposed rule would also remove obsolete regulations.” The information is also indicating that regulations CMS determines to be obsolete will be removed. See the disclosure published in the Spring 2020 Federal Register Unified Agenda here.

Many in the MSP compliance industry believe that while the regulations and guidance could be focused on clarifying both the need to protect Medicare’s future interests and the way to protect those interests for each of the Non Group Health Plan (NGHP) primary plan types (Liability, Self-Insurance, No Fault, and Workers’ Compensation), it seems more likely that this particular group of regulations and/or guidance will focus primarily on liability and No Fault settlements. This is because both regulations and guidance have already been published specific to protecting Medicare’s future interests in Workers’ Compensation settlements in both the Code of Federal Regulations and via the Workers’ Compensation Medicare Set-Aside Arrangement – WCMSA Reference Guide Version 3.1.

Regulations regarding this issue would be promulgated by CMS to appear in 42 CFR 405 and/or  42 CFR 411 and would apply to the Medicare Secondary Payer Act (MSP) found at 42 U.S.C. 1395y(b).  The removal of obsolete regulations could apply to any of the NGHP types.  The MSP, as governing federal law, applies to all of the NGHP types listed above, prohibits Medicare from paying when a primary plan’s funds are used to compensate an injured individual as a result of an injury, and provides extraordinary remedies to allow Medicare to recover payments it has made (called conditional payments) when it pays for an injured party’s medicals without regard to the dates of service for those payments.

Take Aways
  • Considering and protecting Medicare’s past interests has become the industry standard and quite honestly a “no brainer” for all NGHP settlement types – liability, self-insurance, No Fault, and Workers’ Compensation.
  • Whether the announced guidance comes this August or not, doesn’t it make sense to help ensure that Medicare’s future interests are protected in accordance with existing federal law, i.e. the MSP?
  • Helping to ensure that Medicare is not prematurely billed for injury related futures for any settlement type is the right thing to do and helps protect the Medicare Trust Funds.

Count on Medivest to help guide you through some of the complexities associated with MSP compliance.

 

 

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Update on Medicare Conditional Payment Enforcement Actions
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Update on Medicare Conditional Payment Enforcement Actions

Click here for a downloadable copy of this blog

In March 2020, the U.S. Attorney’s Office, as an enforcement arm of the U.S. Department of Justice, filed a lawsuit on behalf of the Department of HHS and its sub agency, CMS, against an attorney in Texas alleging failure of the attorney representing a party injured in a motor vehicle collision to properly reimburse Medicare for conditional payments.  The case is U.S. v. Carrigan & Anderson, Case 4:20-cv-00991, Filed 03/18/2020 in U.S. District Court for the Southern District of Texas, Houston Division.

That would not really seem like big news as we have written about several conditional payment enforcement actions by the U.S. Attorney’s Office/Department of Justice over the past few years against plaintiff attorneys for a failure to properly inquire with CMS’s Beneficiary Coordination & Recovery Center (BCRC) contractor and address amounts to be reimbursed to CMS.[1]

However, unlike some of the other cases, the plaintiff attorney in this case took proactive steps attempting to address Medicare’s past interests in the liability settlement.  Unfortunately, the steps taken were misguided.  Had the attorney requested a compromise or waiver and/or appealed the demand amount by CMS, he would have likely faired better.

Prior to settlement, the attorney properly provided notification of the claim to the BCRC triggering the search by the BCRC for claim related conditional payments.  The case settled for $70,000.00 and the plaintiff attorney provided notification of the settlement to the BCRC.  Presumably, the plaintiff and attorney had received a copy of an earlier Conditional Payment Letter.  Within a few weeks after the settlement notification was provided, the BCRC delivered a demand letter in the amount of $46,244.74, demanding payment within the standard 60 day time period  from the date of the demand and informing of the right to appeal its demand amount.

The attorney creatively filed a motion with a state court in Texas challenging the amount demanded by Medicare and provided notice of same to the BCRC.  He called the motion, Motion To Determine Portion of Plaintiff’s Settlement That Constitute Reimbursement of Medical Payments Made in and Regarding Settlement.  The court reviewed submitted evidence including an affidavit signed by plaintiff counsel suggesting the claim settled at 1/10th its full case value, and issued an order reducing the amount to be paid to Medicare by 90% to a figure of $4,700.00.  Plaintiff counsel submitted a copy of the order to the BCRC.  The full demand amount went unpaid and began accruing interest at nearly 10% APR on the 61st day post-demand (for current demands, the annual interest percentage rate is now over 10%).

As of March 18th, 2020, when the U.S. filed its recovery action in U.S. District Court, the alleged reimbursement amount had increased to $53,445.93 including interest. The U.S. requested recovery of its fees and costs but interestingly did not request double damages.

The U.S. Attorney’s position is that state courts lack authority to make determinations of federal law including amounts owned to Medicare under the Medicare Secondary Payer Act, 42 U.S.C. Section 1395y(b)(2) (MSP).   Furthermore the complaint asserts that because there is an administrative procedure in place under the current MSP regulations, if the plaintiff and attorney disagreed with the demand amount, the administrative appeals process should have been followed, i.e. that there was a failure to exhaust administrative remedies, an express condition precedent to seek redress in U.S. District Court for appeal of Medicare Initial Determinations such as the amount of a demand or a denial of a waiver.

Take Aways

Dispute and Appeal
  • Review each conditional payment letter to verify each reimbursement claimed is injury related
  • Dispute all non-injury related claims in a timely manner before the matter settles or before CMS issues its final demand
  • If unhappy with a CMS reimbursement of conditional payment demand, consider appealing through CMS’s administrative appeals process
  • You have 120 days to request a first level appeal in writing

In the meantime, consider one of the other post demand dispute processes allowed that may offer your client relief from what you consider to be an unreasonable demand.  Depending on the outcome, the appeal may not be necessary.

Compromise Requests 
  • Requesting a compromise to the BCRC offering a sum certain to resolve the claim laying out arguments based in equity similar to the ones made to the state court judge in the case above and/or according to regulations governing compromises by the U.S. Government existing in the CFR
  • Compromise requests are forwarded by the BCRC to the applicable CMS Regional Office (RO) and a response is provided within 45 days of the BCRC’s receipt of the request
  • Responses will either be accepted, countered, or rejected
Waivers
  • If not happy with the response to the compromise request and if the financial condition of the plaintiff is such that they have a hard time meeting their day to day living expenses, a waiver request could be an alternative option
  • Waiver requests entail filling out a detailed Social Security Administration financial form called the SSA 632-BK
  • To make its decision, CMS will evaluate resources of the plaintiff, income, the amount of the settlement, outgoing expenses, and hardship factors and may take up to 120 days from start to finish so you need to be mindful of the appeal deadline for the original demand.

 

[1] January 2020 DOJ US Attorney https://www.medivest.com/philadelphia-based-personal-injury-law-firm-agrees-to-resolve-allegations-of-unpaid-medicare-debts/ Philadelphia plaintiff firm settles for $6,604.59,

Nov 2019  US Attorney General – Baltimore plaintiff firm settles with Medicare for $91,406.98

March 2019 DOJ US Attorney  – Maryland plaintiff firm settles with Medicare for $250k

June 2018 DOJ US Attorney – Philadelphia plaintiff firm settles with Medicare for $28k

 

2100 Alafaya Trail, Suite 201   •   Oviedo, FL 32765

Toll free: 877.725.2467   •   Fax: 407.971.4742  

Hospital Lien Collection Practices Case in Colorado (Medicare and Medicaid Beneficiaries Beware!)
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Hospital Lien Collection Practices Case in Colorado (Medicare and Medicaid Beneficiaries Beware!)

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A state appellate court in Colorado just held that hospitals in Colorado may forego billing Medicare or Medicaid even when an injured party is a Medicare or Medicaid beneficiary, and may proceed against the injured party as long as the hospital follows certain procedures. See Harvey v. Centura Health Corporation and Catholic Health Initiatives, — P.3d —- (2020) Court of Appeals No. 19CA0091 January 30, 2020*.

Those procedures are that the hospital must first submit charges to the “property and casualty insurer and primary medical payer of benefits available” to the injured person when that person is injured as a result of negligence or wrongful acts of another person, before filing a lien. The state appellate court clarified that neither Medicare nor Medicare are primary payers of medical benefits and because of this, held that Hospitals in Colorado do not need to bill Medicare and/or Medicaid before filing a lien.

Therefore, Colorado hospitals interested in collecting larger amounts of money than Medicare and/or Medicaid will pay will likely forego billing Medicare and/or Medicaid, and will put the at fault party on notice of its charges, will bill the liability carrier for the at fault party, and then proceed to file a lien against the injured party likely to receive a third party liability settlement.

Of course the charges must be related to the underlying third party liability injury and must be reasonable and necessary. So even if a Colorado hospital lien is perfected, the injured party has a right to dispute whether the charges are injury-related and to contest the reasonableness or necessity of the charges.

Call Medivest when your injured client is facing a hospital lien to allow our specialists to first determine if all of the requested charges are related to the underlying injury, and to negotiate with the lien holder or its recovery agent regarding the amount of reasonable and necessary charges. Don’t let your client pay unreasonable or unnecessary hospital bills even when a lien is filed!

*While this case has not been released for publication in permanent law reports and could be subject to a petition for rehearing in the Court of Appeals or for Certiori in the Supreme Court of Colorado, it is important to be aware of hospital practices in this regard.

Philadelphia-Based Personal Injury Law Firm Agrees to Resolve Allegations of Unpaid Medicare Debts
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Philadelphia-Based Personal Injury Law Firm Agrees to Resolve Allegations of Unpaid Medicare Debts

Today marks yet another case where a plaintiff firm has entered into a settlement with Medicare over failure to consider Medicare’s interest with conditional payments. Like previous cases, the law firm will be required to pay a lump sum to the US government. In addition, they must:

1. Name a person responsible for paying Medicare secondary payer debts
2. Train the employee to ensure that the firm pays these debts on a timely basis
3. Review any additional outstanding debts to ensure compliance
4. Provide written certifications of compliance.

More details can be found in the press release here.

Over the past year, there has been a clear trend showing Medicare being very intentional about enforcing the MSP in liability cases. This case is just the latest to go along with several other recent cases:

We all know the MSP explicitly names liability insurance as a primary plan. In conjunction with the most recent round of notifications from the Office of Management and Budget (OMB) regarding the release of a NPRM clarifying methods of protecting Medicare’s interests post settlement for liability cases, these recent settlements with plaintiff firms highlight Medicare’s intent to have parties to liability settlements protect Medicare’s interests in compliance with the MSP just as is expected in Workers’ Compensation claims.

Partner with Medivest to help uncover public benefits, diagnose, and prepare preservation and legal compliance plans prior to settlement. MSP compliance is an exercise in protecting Medicare’s past interests via the investigation and resolution of payment obligations regarding past payments made by Medicare or Medicare Advantage Plans (liens) and its future interests regarding expected medical treatment in the injured party’s future (MSAs). Let our nursing staff perform a medical review to project the injury related future medicals broken down into both Medicare covered and non-Medicare covered medicals. For Medicare or any case involving recovery claims by any public or private source, allow our lien resolution department to use its proprietary software and experience to confirm amounts being requested are injury related and negotiate reductions beyond the ordinary procurement costs typically allowed. For Medicare cases, there is no charge for the portion of the reduction associated with those procurement cost reductions. Let us support you on your next case.

Law Firm Pays Over $90,000 to Settle A Failure to Reimburse Medicare Claim Brought by U.S. Attorney for the District of Maryland
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Law Firm Pays Over $90,000 to Settle A Failure to Reimburse Medicare Claim Brought by U.S. Attorney for the District of Maryland

Once again, a law firm was alleged to have failed to properly reimburse Medicare for conditional payments made by Medicare for injuries that were compensated in at least one settlement on behalf of an injured client. The press release, which can be found here involves a fact pattern a little different from a few other recent recovery actions by the U.S. Government related to alleged MSP violations. Often attorneys will refer liability cases to other attorneys or firms that handle personal injury, premises liability, and medical malpractice claims. The attorney that refers the case is typically allowed to share in the attorney’s fees obtained upon successful resolution. The fees obtained by the referring lawyer/firm are supposed to approximate and reflect a reasonable amount for the amount of work they do. Some attorneys do a thorough intake procedure and maintain contact with the client throughout the representation, are copied on all correspondence, and may provide input on strategy and procedure. After all, they have a responsibility to the injured party that originally contacted them in the first place. This matter involved six cases the U.S. Attorney’s office was investigating and of the six, four had been referred by the investigated firm to co-counsel. The firm was held responsible for the alleged failures to reimburse Medicare, regardless of whether they were a referring firm for a case handled by another firm or whether they were the handling the claim from start to finish.

We have provided other instances over the past few years where settlements were made with the Department of Justice including here and here.

However, Plaintiff attorneys in particular should be on high alert because the most recent enforcement actions have been focused on attorneys that disbursed funds to their clients after case finalization but failed to ensure that Medicare’s conditional payments were paid or otherwise resolved.

Take Aways:

  • Because the MSP grants both a direct lien right and a subrogation right to the U.S. to collect Medicare’s conditional payments, parties to a settlement should inquire, evaluate and confirm all injury-related Medicare expenditures for past medicals at the time of settlement.
  • Even if you “only” refer an injury case to another attorney who may do a majority of the work on the case, you should take an interest in verifying the existence of any liens that need to be addressed.
  • Due diligence is required for both the defense and plaintiff side to avoid unnecessary MSP legal exposure.
  • In addition to checking and verifying the correct demand amounts from CMS contractors, prior to settlement, steps should be taken by all parties to expand lien search inquiries beyond traditional Medicare (and Medicaid) to determine whether a Medicare Advantage Plan/Organization (MAP/MAO) or Prescription Drug Plan (PDP) made any conditional payments that could be recovered under the MSP. This is because the MSP private cause of action provision has been held in at least two federal circuits to apply to MAO’s and would likely be held to apply to PDP’s too.
  • There is value in evaluating Conditional Payment Summary forms that accompany the conditional payment correspondence from Medicare to confirm all entries on the form are injury-related and/or determine whether some entries should be disputed.
  • During the lien investigation process, parties should analyze whether a compromise (reduction) of a lien or potentially a waiver may be appropriate.

It is crucial for prospective settling parties to investigate conditional payment reimbursement amounts or work with an entity familiar with lien investigation procedures.
Medivest provides lien resolution services to help parties satisfactorily negotiate outstanding public and private health care matters including Medicare liens, Medicaid liens, Veterans Administration/TriCare liens, hospital liens, and doctors’ bills. Our lien resolution team works hard to dispute non-claim related bills, resolve and reduce outstanding bills/liens, and will seek refunds for amounts already paid when appropriate. Please reach out to discuss lien resolution today.

How to Qualify for SSDI or Medicare (Even if a Non-US Citizen)
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How to Qualify for SSDI or Medicare (Even if a Non-US Citizen)

Some people may be surprised to learn that an individual does not always need to be a citizen of the United States to qualify for government benefits such as Social Security Income (SSI), Social Security Disability Insurance (SSDI) or Medicare.  Provided the individual receives or qualifies to receive SSI or SSDI benefits, and the person otherwise qualifies for Medicare, a non-US citizen (non-citizen) typically qualifies for Medicare Part A without having to pay a premium.  They would still need to pay a premium for Medicare Part B.  Before addressing how a non-citizen may become eligible to receive Social Security benefits and therefore, be one step closer to qualifying for Medicare, we will first look at the distinctions between SSI and SSDI and how US citizens become eligible for either.

SSDI and SSI Requirements for U.S. Citizens

For U.S. citizens to qualify for SSDI, they must be under 65, have earned enough work credits[1] by working and paying Social Security (FICA) taxes, and have a qualifying disability sufficient to meet the definition designated by the Social Security Administration (SSA).  A majority of those who apply for SSDI do not get accepted on the first try. Many injured individuals have found value in retaining attorneys to help with the application (and the commonly required appeals) process.

A major distinction between SSDI and SSI is that SSI does not require any work history or a disability, even though disability is one of the ways a person may qualify for SSI.  For example, those that are disabled but haven’t accumulated enough work credits to be eligible for SSDI, may qualify for SSI.  Furthermore, U.S. citizens who are 65 or older, or who are blind or are disabled, and have limited income and limited resources, and are not confined to an institution, are generally eligible for SSI.  Another important distinction between SSDI and SSI is that once a person receives SSDI benefits for two years[2], the SSDI recipient will be eligible for Medicare benefits.

Requirements for Non-U.S. Citizens

If a person is a non-citizen and meets the following requirements, they may be eligible for Social Security benefits:

  • Non-citizens who are legal permanent residents
  • Active members or veterans of the U.S. military
  • Foreign workers who have paid FICA taxes for the required time period[3]
  • Other non-citizens who are not permanent residents but who can prove that they are here legally (i.e. refugees, those under political asylum, temporary visitors with non-immigrant visas, abuse victims, etc.)

There are many exceptions and rules regarding non-citizens’ status and SSI and SSDI eligibility.  Additionally, non-citizens that are allowed to work in the US but not required to pay FICA taxes (and don’t), are not eligible for SSDI.

Aside from standard SSDI eligibility requirements that everyone must meet*, there are two additional requirements that non-citizens must meet in order to qualify for SSDI:

1.  If an individual was assigned a Social Security number on or after January 2, 2004, the individual’s number must have been assigned based on their authorization to work in the U.S. or they must have B-1, D-1, or D-2 worker status.

2.  Before receiving disability benefits, the individual must show proof that they are in the U.S. legally.

Non-Citizens Returning to their Countries

Once an individual receives either type of Social Security benefits as a non-citizen, if, when and how these benefits will be distributed depends on the country that they are citizens of and how much time they may spend in that country, whether that country is on a restricted list, and whether that country has a bilateral Social Security agreement with the U.S.  Some countries that the SSA is restricted from sending Social Security payments to, such as those listed below, are disqualified from accepting Social Security payments.

  • Azerbaijan
  • Belarus
  • Cuba
  • Kazakhstan
  • Kyrgyzstan
  • Moldova
  • North Korea
  • Tajikstan
  • Turkmenistan
  • Ukraine
  • Uzbekistan
  • Vietnam

Ineligible Countries

Legal residents from Cuba, North Korea, and Vietnam may not receive disability benefits, even if they meet the other necessary requirements.

If a citizen of one of the above-listed countries, other than from Cuba, North Korea or Vietnam, goes back to their home country after working and living in the U.S. and otherwise qualifies for a form of Social Security Benefits, the SSA will not send the individual payments and cannot send the payments to someone else on their behalf (unless an exception is granted).  The SSA will withhold these payments and will only send them to the individual once they are in a country to which the U.S. may send those payments.  Generally, if the SSA is not restricted from sending payments to a particular country, but the country also does not have a bilateral Social Security agreement in place with the U.S., the SSA can send payments to the individual, but will stop the individual’s payments after the person has been outside of the U.S. for six months.  If the individual returns to the U.S. and stays for at least a month, they are usually eligible to begin receiving benefits again. The SSA’s website provides information and exceptions concerning these matters including the difference between a person receiving benefits based on their own earnings or residency in the U.S. versus receiving benefits based on the earnings or residency in the U.S. of a dependent or survivor.  A pamphlet that provides additional information is available on SSA’s website.

The Medicare Secondary Payer Act (MSP), 42 U.S.C. §1395y(b)(2), enacted in 1980 and aimed at preserving Medicare Trust Funds and reigning in Medicare costs that had up to that point been much larger than projected[4], is focused on both the timing of payments and the recovery of Medicare’s conditional payments[5] for medical expenses [6] of injured Medicare beneficiaries or injured people who have a reasonable expectation of becoming Medicare beneficiaries within 30 months from settlement, when another (primary) payer is responsible for payment or prompt reimbursement of the injured individual’s injury related Medicare covered medical expenses.[7]  There are several ways people fall into the reasonable expectation of becoming a Medicare beneficiary within 30-month time frame, including reaching 62.5 years of age, applying for SSDI, being denied but considering appeal of SSDI denial, being in the process of appealing the denial, or being diagnosed with end-stage renal disease or ALS, a/k/a Lou Gehrig’s disease.


[1]  The number of work credits needed varies based on the age of the individual at the time they become disabled.  Required credits start at 6 credits or 1.5 years of work during the three-year period before the disability started for people disabled in or before the quarter they turn 24 years of age and move up to a requirement for 40 qualifying quarters at or after they turn 62 years of age, with varying requirements in between.

[2]  The two years does not include the approximate six-month wait time between the date disability is approved and benefits begin.  Eligibility begins 30 days after established onset date (EOD) so along with a mandatory five-month waiting period, it is essentially six months before payments start or 30 months from EOD to Medicare eligibility.

[3]  *According to the SSA website, the required work requirements for non-citizens seem to be different from those of US citizens as well.  The requirement for non-citizens does not appear to have a sliding scale for work credits that US citizens are required to have.  Here is an example of some non-citizen requirements for SSDI eligibility from SSA’s website: “[t]hey are a Lawfully Admitted for Permanent Residence (LAPR) with 40 qualifying quarters of earnings.  Work done in the US by a person’s spouse or parent may also count toward the 40 qualifying quarters of earnings, but only for getting SSI. Quarters of earnings earned after December 31, 1996 are not counted if the individual, spouse, or parent worked or received certain benefits from the U.S. government based on limited income and resources during that period. If a person entered the U.S. for the first time on or after August 22, 1996 they may not be eligible for SSI for the first five years as a LAPR, even if they have 40 qualifying quarters of earnings.” More information regarding this topic is available here.  Sometimes depending on the country of citizenship, there may also be other ways for a non-citizen to qualify for SSI including living in the US for required periods of time or having a spouse or parent who has lived long enough in the U.S. (See https://www.ssa.gov/pubs/EN-05-10137.pdf).  You are encouraged to consult with an attorney practicing in the SSI and SSDI field to help determine whether any particular person may qualify for Social Security benefits.

[4]  Humana Med. Plan, Inc. v. Western Heritage Ins. Co., 2018 WL 549834 (11th Cir. Jan. 25, 2018) (declining to rehear 2016 11th Cir. case en banc and citing 5 James B. Wadley, West’s Federal Administrative Practice §6305 (2017)).

[5]  Or conditional payments by Medicare Advantage Plans that a primary payer should have paid.

[6]  Medical items, services and prescription drug expenses.

[7]  42 U.S.C. § 1395y(b)(2)(A)(ii) prohibits Medicare from making payment to the extent that “payment has been made or can reasonably be expected to be made under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance.” Furthermore, under the Code of Federal Regulations, the Centers for Medicare and Medicaid Services (CMS) has rights to recover any conditional payments Medicare made that a primary payer should have made or reimbursed, specifically, “CMS may initiate recovery as soon as it learns that payment has been made or could be made under workers’ compensation, any liability or no-fault insurance, or an employer group health plan.” 42 C.F.R. § 411.24(b).

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Happy Birthday to Medicare

 

This week, Medicare celebrates its birthday.  47 years ago on Monday, July 30th, President Lyndon Johnson signed into law the bill that created the Medicare Program.  Johnson signed the bill at the Truman Memorial Library in Independence, MO, with former President Henry Truman at his side. This was in recognition of Truman’s previous efforts to pass a national health insurance program.

President Johnson entered the room, to the traditional presidential anthem, “Hail to the Chief.”  He then opened his speech by giving tribute to former President Truman by saying,

The people of the United States love and voted for Harry Truman, not because he gave them hell–but because he gave them hope.  I believe today that all America shares my joy that he is present now when the hope that he offered becomes a reality for millions of our fellow citizens.

After signing the bill, Johnson presented Harry Truman with the very first Medicare card and Bess Truman, his wife, with the second, making them Medicare recipients number 1 and 2.

 

 

 

 

 

 

Prior to 1965, nearly half of the elderly had no health insurance and many others had inadequate coverage. Medicare was enacted to help assure that virtually all citizens age 65 or older would have health care coverage.

Medicare is a US federal health insurance program for people 65 or older and certain people younger than 65, who are disabled, have permanent kidney failure or Lou Gehrig’s disease.   The program helps pay the cost of health care but does not cover all medical expenses or the cost of most long-term care.  It is funded by payroll taxes and monthly premiums deducted from Social Security checks.  The Centers for Medicare and Medicaid Services (CMS) is the agency in charge of the Medicare program.

Medicare has four parts:  Part A (Hospital Insurance), Part B (Medical Insurance), Part C (Medicare Advantage) and Part D (Prescription Drug Coverage).

Medicare enrollment has steadily increased from about 18 million when the program began in 1966 to about 48 million today.  Total expenditures in 1966 were $3 billion vs. $549 billion in 2011.   The initial 1966 payroll tax of 0.35%, on the first $6,600 of wages, paid by both the employee and employer, is now at $1.45% with no wage limit.    According to the 2012 Medicare Trustees Report, the exhaustion date for Medicare Part A is the year 2024.  The acting CMS Administrator Marilyn Tavenner said,

The Trustees Report tells us that while Medicare is stable for now, we have a lot of work ahead of us to guarantee its future.

Medivest is a leading US company that offers assistance to those required to comply with the complex requirements of the Medicare Secondary Payer (MSP) Statue.  The MSP statute, enacted in 1980, essentially attempts to help preserve the Medicare Trust fund by insuring that if a Medicare beneficiary has other insurance coverage, that insurance should pay first before Medicare pays.

2012 Medicare Trustees Report

The Medicare Board of Trustees submitted their 2012 annual report to Congress, dated April 23, 2012.  Interestingly, the federal Social Security Act requires the board report annually to Congress on the financial and actuarial status of the Medicare Trust Funds.  This 2012 report is the 47th report that has been submitted.

Some key highlights of the report are:

  • Large uncertainties in the sustainable growth rate (SGR) formula, the “Affordable Care Act”, and other issues could mean that future Medicare costs could be much higher than those shown in the “current-law projection”.
  • In 2011, Medicare covered 48.7 million people; 40.4 million aged 65 and older and 8.3 million disabled.
  • Total expenditures in 2011 were $549.1 billion.
  • The estimated exhaustion date for the Hospital Insurance (HI) trust fund (aka Medicare Part A), remains at 2024.  HI expenditures have exceeded income since 2008 and have not met the Trustees’ formal test of short-range financial adequacy since 2003.
  • The Supplemental Medicare Income (Parts B and D) trust fund is adequately funded over the next 10 years and beyond because premium and general revenues are reset each year to match expected costs.

The Acting CMS Administrator Marilyn Tavenner said, “The Trustees Report tells us that while Medicare is stable for now, we have a lot of work ahead of us to guarantee its future.”

To view the actual report, click here.

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Treasury Predicts Medicare Shortfall By 2017

On Tuesday May 12, 2009, officials who oversee the Social Security trust fund announced that they now foresee a Medicare shortfall by 2017, two years earlier than was predicted just last year. This same report also predicts a Social Security exhaustion by 2037, which is actually four years earlier than was predicted last year.

Officials went on to state that the main reason for the change in the forecast is the demand for benefits have increased while money paid in has decreased. The increase in benefits has been attributed to growing unemployment and new tax breaks in the economic stimulus package that was passed earlier this year.

The release of this report gives a clear indication as to why the Center for Medicare and Medicaid Services (CMS) will require mandatory insurer reporting. It has become increasingly evident that the stress currently placed on our Social Security and Medicare systems by recent economic developments has brought about the need for this change.

To view this report in its entirety, please click here.