The Missouri Bar Continuing Legal Education

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The Missouri Bar

Continuing Legal Education

Note: The Missouri Bar Continuing Legal Education publications and programs are intended to assist Missouri attorneys. Publications are distributed and programs presented with the understanding that The Missouri Bar, its committees, authors, reviewers, and speakers do not thereby render legal, accounting, tax, or other professional advice. The material is presented as research information to be used by attorneys, in conjunction with other research deemed necessary, in the exercise of their independent professional judgment. Original and fully current sources of authority should be researched. Any forms provided are intended for illustration and discussion purposes only. The forms should not be used in preparing instruments for a client unless the drafter is certain of the legal and tax consequences under the circumstances and context they are used in.

For more information on MoBarCLE Publications and Programs, visit www.mobarcle.org.

Published by

The Missouri Bar 326 Monroe Street Jefferson City, Missouri 65101

www.mobar.org Phone: 573/635-4128 Facsimile: 573/659-8931 Copyright The Missouri Bar.

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Barbara J. Gilchrist* Reginald H. Turnbull**

Chapter 5

M

EDICARE AND

S

UPPLEMENTAL

H

EALTH

I

NSURANCE

I. (§5.1) Introduction II. Medicare Program

A. (§5.2) Purpose B. (§5.3) Authority

C. (§5.4) General Description D. (§5.5) Administration III. Exclusions and Secondary Payers

A. (§5.6) Exclusions

B. (§5.7) Workers’ Compensation C. (§5.8) Liability Insurance

D. (§5.9) Process for Reporting and Resolving Medicare Claims in Secondary Payer Situations

1. (§5.10) Notice of Injury 2. (§5.11) Practice Tip 3. (§5.12) Right to Recovery

4. (§5.13) Challenge to Medicare Claim 5. (§5.14) Caution for Attorneys

E. (§5.15) Employer-Provided Health Insurance

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*Dr. Gilchrist received her B.A., 1973, from Wichita State University in social work; J.D., 1976, from Washington University; and Ph.D., 1999, from Saint Louis University School of Public Health. She is a professor at Saint Louis University School of Law.

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MEDICARE AND SUPPLEMENTAL HEALTH INSURANCE

IV. Medicare Eligibility

A. (§5.16) Eligibility Factors—Age and Disability B. (§5.17) Application

V. Medicare Benefits

A. (§5.18) Medicare Part A

1. (§5.19) Deductibles, Copays, and Premiums a. (§5.20) Spell of Illness

b. (§5.21) Copays for Hospitalization c. (§5.22) Skilled Nursing Facility Copays d. (§5.23) Hospice Copays

e. (§5.24) Premiums

f. (§5.25) Cost Sharing for Impoverished and Low-Income Persons

2. Part A Hospitalization Services

a. (§5.26) Requirements for Benefits b. (§5.27) Services Covered

c. (§5.28) Diagnostic-Related Groups d. (§5.29) Hospital Rehabilitation Services e. (§5.30) Psychiatric Inpatient Hospitalization 3. (§5.31) Part A Skilled Nursing Facility Services

a. (§5.32) Skilled Nursing Facility Services Benefits b. (§5.33) Skilled Nursing Facility Eligibility

Self-Determination 4. (§5.34) Part A Home Health

a. (§5.35) Home Health Service Requirements b. (§5.36) Services Covered and Not Covered by Home

Health

5. (§5.37) Part A Hospice Benefits a. (§5.38) Waiver of Acute Treatment b. (§5.39) Limitations

B. (§5.40) Medicare Part B 1. (§5.41) Premiums

2. (§5.42) Medicare Part B Deductible and Copays 3. (§5.43) Cost Sharing for Impoverished and Low-Income

Persons 4. (§5.44) Part B Benefits

5. (§5.45) Services Not Covered by Part B 6. (§5.46) Part B Home Health Services 7. (§5.47) Part B Preventive Services C. (§5.48) Part C—Medicare Advantage

1. (§5.49) Part C Services

2. (§5.50) Types of Medicare Advantage Plans 3. (§5.51) Quality Ratings of Plans

4. (§5.52) Missouri Plans 5. (§5.53) Practice Tip

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MEDICARE AND SUPPLEMENTAL HEALTH INSURANCE

D. Medicare Part D, Prescription Drug Plans 1. (§5.55) Introduction to Part D

2. (§5.56) Medicare Prescription Drug Benefit 3. (§5.57) Defined Standard Benefit

4. (§5.58) Administrative Provisions

5. (§5.59) Part D Prescription Drug Coverage for Low-Income Persons

6. (§5.60) Part D Prescription Drug Coverage for High-Income Persons

7. (§5.61) Coordination of Medicare Part D With Missouri Rx Plan

VI. Medicare Supplemental Health Insurance A. (§5.62) Generally

B. (§5.63) Core Benefits C. (§5.64) Table of Benefits VII. Medicare Appeals

A. (§5.65) Introduction 1. (§5.66) Who Can Appeal 2. (§5.67) When to Appeal 3. (§5.68) Provider Penalties

4. (§5.69) Appeal Forms and Assistance With Appeals B. (§5.70) Issues of Eligibility

1. (§5.71) Reconsideration at First Level

2. (§5.72) Administrative Hearing at Second Level 3. (§5.73) Appeals Board at Third Level

4. (§5.74) District Court at Fourth Level C. Denials of Coverage

1. (§5.75) Reasons for Appeal 2. Part A and Part B Appeals

a. Steps

(1) (§5.76) Initial Determination (2) (§5.77) Redetermination (3) (§5.78) Reconsideration (4) (§5.79) Hearing

(5) (§5.80) Medicare Appeals Council Review (6) (§5.81) Judicial Review

b. (§5.82) Participants

(1) (§5.83) Quality Improvement Organization (2) (§5.84) Qualified Independent Contractor c. (§5.85) Hospitalization Appeals

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MEDICARE AND SUPPLEMENTAL HEALTH INSURANCE

f. (§5.88) Notice to Beneficiary (1) (§5.89) Initial Determination (2) (§5.90) Redetermination (3) (§5.91) Reconsideration

(4) (§5.92) Administrative Law Judge Hearing 3. Part B Appeals

a. (§5.93) Participants b. (§5.94) Notice to Beneficiary

c. (§5.95) Time and Amount Limitations

4. Part C—Health Maintenance Organization and Medicare Advantage Appeals

a. (§5.96) Grievance Procedures b. (§5.97) Steps in Appeal Process

c. (§5.98) Special Note About Hospital Coverage d. (§5.99) Options During Appeal

5. Part D Appeals

a. (§5.100) Grievance Procedures b. (§5.101) Steps in Appeal Process

6. National Coverage Determinations and Local Coverage Determinations

a. (§5.102) Overview b. (§5.103) Definitions

c. (§5.104) Standing to Challenge Local Coverage Determinations and National Coverage Determinations

d. (§5.105) Challenges to Local Coverage Determinations e. (§5.106) Challenges to National Coverage Determinations D. Practice Pointers

1. (§5.107) Access to Records 2. (§5.108) Informal Hearings 3. (§5.109) Appeals by Providers

4. (§5.110) Summary and Argument Before Medicare Appeals Council

5. (§5.111) District Court Appeal

6. (§5.112) Expedited Access to Judicial Review E. (§5.113) Attorney Fees

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MEDICARE AND SUPPLEMENTAL HEALTH INSURANCE §5.1

I. (§5.1) Introduction

Medicare is the program that provides health insurance for the aged and disabled. Missouri has unique connections to the establishment of Medicare because of former President Harry S. Truman. President Lyndon Johnson signed the Health Insurance for the Aged Act, Pub. L. No. 89-97, 79 Stat. 286, in Independence, Missouri, on July 30, 1965, at a ceremony honoring former President Truman, who while president first proposed federal health insurance under the Social Security program 20 years earlier in 1945. On January 20, 1966, President Johnson traveled again to Independence to present Medicare identification cards numbered 1 and 2 to President Truman and his wife, Bess, stating that, “We haven’t forgotten who is the real daddy of Medicare.”

Beginning in 2003, major changes have been made to the Medicare program, particularly by the following legislation:

 The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-173, 117 Stat. 2066, added a voluntary prescription drug benefit, provided voluntary private competition to the traditional Medicare program, added some other new benefits, and made some premium changes.

 The Medicare Improvements for Patients and Providers Act of 2008, Pub. L. No. 110-275, 122 Stat. 2494, was passed by Congress over President Bush’s veto to enable more prevention services to be provided if identified by the Secretary of Health and Human Services, and it added more Medicare Supplement alternative plans.

 The Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, 124 Stat. 119, and the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029, changed premiums for higher-income persons, added benefits, and reduced subsidies to insurance companies to compete with traditional Medicare.

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§5.1 MEDICARE AND SUPPLEMENTAL HEALTH INSURANCE persons are also anxious about how they will pay for expenses of the new medical life-extending technologies. Similarly, persons with disabilities must depend on medical care to enable them to cope as independently as possible. Many elderly persons and persons with disabilities need assistance in recognizing:

 that Medicare does not pay for long-term care or dental benefits;

 when Medicare benefits have been improperly denied;  that the huge Medicare bureaucracy makes mistakes;

 that incentives exist to deny them services if medical need is a close call;

 that private alternatives to traditional governmental plans have limitations spelled out in contracts; and

 that Medicare appeals can result in coverage or payment for the medical care that they need.

Because of confusion about coverage, some seniors may even choose to forgo medical care because they are afraid that coverage might be denied, or they may pay directly for services that Medicare should have covered to avoid real or perceived hassles.

Missouri legal practitioners who counsel the elderly and persons with disabilities should be knowledgeable about traditional Medicare as well as have an overview of the private alternative Medicare Advantage program benefits, limitations, and appeal processes to assist their clients. In this chapter, the following are discussed:

 The traditional Medicare program

 Four types of Medicare benefits—Part A, Part B, Part C, and Part D

 Medicare supplemental insurance  The Medicare appeals processes

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MEDICARE AND SUPPLEMENTAL HEALTH INSURANCE §5.4

II.

Medicare

Program

A. (§5.2) Purpose

Medicare provides billions of dollars to pay some of the costs of health care benefits to people who are elderly (i.e., age 65 and older) or who are younger and disabled. The program is mostly oriented toward acute care with a few exceptions, e.g.:

 end-stage renal disease dialysis and treatment;

 ALS (Amyotrophic Lateral Sclerosis), also known as Lou Gehrig’s disease, treatment;

 some chronic services for home health patients; and  palliative care services for hospice patients.

B. (§5.3) Authority

The statutory bases for the Medicare program are in Title XVIII of the Social Security Act, 49 Stat. 620, 42 U.S.C. subchapter XVIII, §§ 1395–1395iii. Medicare regulations are found at 42 C.F.R. parts 405– 426. To further define services and coverage, the federal CMS (Centers for Medicare & Medicaid Services), which administers Medicare, has issued and continuously updates interpretive guidelines in IOMs (Internet-Only Manuals) of the Medicare statutes and regulations for operational purposes to CMS staff, Medicare providers and contractors, Medicare Advantage organizations, and state-survey agencies. The IOMs are organized by functional area (e.g., eligibility, entitlement, claims processing, benefit policy, program integrity) and are found at:

www.cms.gov/Manuals/IOM/list.asp

The IOMs can be especially useful for counsel in handling appeals.

C. (§5.4) General Description

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§5.4 MEDICARE AND SUPPLEMENTAL HEALTH INSURANCE Medicare pays some of the cost of some health care as limited by its “policy terms” found in the law, regulations, manuals, Medicare Advantage contracts, and prescription drug provider contracts. Generally, to be paid by Medicare, services must be medically reasonable and necessary to treat an illness or injury (defined also to include malformed body member). 42 U.S.C. § 1395y(a)(1)(A). Medicare pays for diagnosis, treatment, and rehabilitation. Medical care to be provided must be “skilled.” Coverage is excluded for custodial care (i.e., long-term care), except for hospice services. Section 1395y(a)(9). Some preventive service coverage features have been added in recent years. The program has premiums, copays, and deductibles for beneficiaries to pay.

Practice Tip: The two requirements of “medically reasonable and

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MEDICARE AND SUPPLEMENTAL HEALTH INSURANCE §5.5  2010 Medicare Handbook (Judith A. Stein &

Alfred J. Chiplin, Jr. eds., Aspen Publishers)  “The Medicare Improvement Standard: A

Barrier to Necessary Care,” Center News, Vol. XXXIV, No. 1, Winter 2010, available at:

www.medicareadvocacy.org/Projects/ Improvement/Improvement_09_03.26. ImprovementStandard.htm

D. (§5.5) Administration

As an exclusively federal program, Medicare policies and regulations are established by CMS, an agency with three centers:

1. Center for Medicare Management, which focuses on traditional Medicare (Parts A and B)

2. Center for Drug (Part D) and Health Plan (Part C) Choice, which focuses on the Medicare Advantage and prescription drug programs

3. Center for Medicaid and State Operations, which focuses on programs administered by the states while funded in whole or in part by the federal government

On client issues, advocates will often communicate with CMS field staff. The Centers have decentralized field-operations staff into 10 regions (Missouri, Iowa, Kansas, and Nebraska are in Region 7, which has its office in Kansas City). The 10 regions have staff further organized into 4 consortia based on the Agency’s “key lines of business” in an effort to have uniform issue management and consistent communication, each with an administrator also located in the field and responsible for coordinating operations in major program areas:

 Consortium for Medicare Health Plans Operations

 Consortium for Financial Management and Fee for Service Operations

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§5.6 MEDICARE AND SUPPLEMENTAL HEALTH INSURANCE See the CMS website for names of administrators and contact information:

www.cms.hhs.gov/home/aboutcms.asp

Some of the actual administration, however, is assigned to Medical Administrative Contractors (insurance companies under contract with CMS). The contractors review and authorize payment for claims for Medicare goods and services for Part A hospitals, SNFs, home health agencies, and hospice services. The contractors also review and pay claims for Part B services. In Medicare Advantage (Part C) and Prescription Drug (Part D) programs, the insurance companies that administer the plans apply CMS policies and their own private plan terms to make coverage decisions.

III. Exclusions and Secondary Payers

A. (§5.6) Exclusions

Certain exclusions apply to items or services covered by workers’ compensation insurance, third-party liability insurance (personal injury, automobile, professional malpractice, and household), no-fault liability insurance, and employer-furnished health insurance plans for active employees. As to workers’ compensation and liability insurance, the injured person already may be on Medicare because the individual is over the age of 65 or is disabled. Persons younger than the age of 65 who become injured on the job or in a non-job-related incident have to wait for 29 months (or until age 65) after the month the injury causing the disability occurred before qualifying for Medicare. Medicare may conditionally pay until a workers’ compensation or personal injury claim is settled or successfully adjudicated and paid.

B. (§5.7) Workers’ Compensation

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MEDICARE AND SUPPLEMENTAL HEALTH INSURANCE §5.9 Medicare is to be a secondary payer or payer of last resort with

work-related injuries even after a settlement or judgment is paid. For example, Medicare will only pay for medical services after a lump-sum settlement when the portion identified in the settlement for future medical services is exhausted. 42 C.F.R. § 411.47.

Practice Tip: Care should be taken by the employee’s workers’

compensation practitioner to reasonably allocate any settlement approved in the decision signed by the judge among several factors, including loss of future income, pain and suffering, and medical expenses. The portion for medical expenses needs to clearly delineate the extent of the coverage for work-related injuries or diseases and what other medical conditions, if any, are not part of the award.

C. (§5.8) Liability Insurance

Medicare payments will be denied, or if previously paid will be recovered, for services covered under automobile, professional malpractice, household, or any other personal injury liability insurance and no-fault insurance. Similar to what it does for workers’ compensation, Medicare may provide for services conditionally until payment is made in disputed matters. 42 U.S.C. § 1395y(b); 42 C.F.R. § 411.50(c).

Practice Tip: Attorneys for beneficiaries who are plaintiffs should

have reasonably apportioned in settlement agreements and judgments the shares for past and future medical expenses along with other factors, such as pain and suffering and lost income. A waiver from recovery from Medicare could also be obtained on grounds of financial hardship for the beneficiary or difficulty to collect the settlement. 42 C.F.R. § 411.28.

D. (§5.9) Process for Reporting and Resolving Medicare Claims in Secondary Payer Situations

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§5.10 MEDICARE AND SUPPLEMENTAL HEALTH INSURANCE taken over MSP recovery cases. Information about the process is found in a well-laid-out website, including “tool kits” for attorneys, Medicare beneficiaries, and insurers/agents, at:

www.msprc.info

The process is summarized in the following sections.

1. (§5.10) Notice of Injury

After an incident or accident occurs causing injury, the person is treated, and the treatment provider (e.g., physician/hospital) submits claims for payment, Medicare may make conditional payments for the items or services. The Medicare beneficiary or representative notifies a COBC (Coordination of Benefits Contractor), which has the responsibility of (1) gathering data from providers and liability and workers’ compensation insurers about the accident/incident/injury and (2) tracking such matters as insurance updates, address changes, and changes in coverage effective dates.

2. (§5.11) Practice Tip

Most practitioners have their clients report their claims to the COBC with their assistance, rather than directly without the clients, by calling the COBC Call Center:

1-800/999-1118

1-800/318-8782 (TTY/TDD)

Hours of Operation: Monday–Friday 8 a.m.–8 p.m. (ET) or by mailing a letter to:

MEDICARE–Coordination of Benefits P.O. Box 33847

Detroit, MI 48232-5847

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MEDICARE AND SUPPLEMENTAL HEALTH INSURANCE §5.13  the Health Insurance Claim Number (HICN)/Medicare

Claim Number;

 Medicare numbers and dates qualified (located on the client’s Medicare card below their name);

 the date of the injury/accident/incident;

 a description of the alleged injury or illness or harm;  the type of claim (liability, no-fault, or workers’ compensation);  the insurer’s name and address; and

 the attorney’s name, name of law firm, address, and phone number.

3. (§5.12) Right to Recovery

Counsel should submit a “Proof of Representation” document, including the model language from the attorney’s tool kit, and a copy of the fee agreement between the client and the attorney. Effective for cases established on or after October 1, 2009, a “Right to Recovery Letter” when the COBC is notified will no longer be issued by the COBC. The letter has been revised and renamed as the “Medicare Secondary Payer Rights and Responsibilities” letter to be issued by the MSPRC.

Note: If a “Right to Recovery Letter” issued by the COBC and

dated on or before September 30, 2009, was received, the instructions in that letter may be followed regarding submitting a “Consent to Release” document.

4. (§5.13) Challenge to Medicare Claim

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§5.115 MEDICARE AND SUPPLEMENTAL HEALTH INSURANCE the claim, request a hardship waiver, question it, or appeal it. If the beneficiary does not pay within 60 days, interest will be charged, and the matter will be referred to the Department of Treasury for collection.

5. (§5.14) Caution for Attorneys

If payment is not made on behalf of the beneficiary (and no appeal is taken or hardship waiver granted), the attorney named in the Proof of Representation may be ordered to pay. See 42 U.S.C. § 1395y(b)(2)(B)(iii); 42 C.F.R. § 411.24(g); United

States v. Harris, No. 5:08CV102, 2009 WL 891931 (N.D. W.Va.

Mar. 26, 2009) (unpublished opinion), aff’d, 334 Fed. Appx. 569 (4th Cir. 2009) (attorney was ordered to pay the claim).

E. (§5.15) Employer-Provided Health Insurance

Medicare payments may be secondary to payments for medical care and treatment services covered under an employer health insurance plan for an actively working beneficiary/employee. 42 U.S.C. § 1395y(b); 42 C.F.R. §§ 411.170, 411.172, and 411.175. In this situation, Medicare can pay for the beneficiary’s deductibles or coinsurance payments. 42 C.F.R. §§ 411.30–411.33.

IV.

Medicare

Eligibility

A. (§5.16) Eligibility Factors—Age and Disability

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MEDICARE AND SUPPLEMENTAL HEALTH INSURANCE §5.13

B. (§5.17) Application

Those seeking Medicare coverage based on age should apply online at: https://secure.ssa.gov/apps6z/iClaim/rib

or in person at the nearest Social Security office within 6 months of their 65th birthday. An application for Social Security or Railroad

Retirement will also suffice for Medicare without a separate application. Individuals who take early Social Security or Railroad Retirement will be automatically enrolled in Medicare when they reach age 65. If an application is made within 6 months of the applicant’s 65th birthday, the application is considered retroactive to

the 65th birthday. Medicare will still be available at age 65 as the full

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References

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