We previously wrote that new Medicare rules have made clients’ lives more difficult. See Getting a Personal Injury Recovery and the Medicare Lien; What a Mess!
The Medicare problem is getting worse.
To recap, new rules penalize defendants and their insurance companies if Medicare’s lien is not honored. This has caused the insurance industry to over-react and go into fear mode.
In many cases the insurance company will not pay until it gets clearance from Medicare even if Medicare is not involved! This is particularly galling because such clients are not getting paid needlessly for many extra months. That is because Medicare can take many months to answer. Therefore, these clients must wait anywhere from 4 to 8 months to get paid where there should not have been the wait.
Here is an example:
Sadie Dawkins was injured in an automobile accident. Her medical bills were paid by the insurance company of the car that struck her.
We reach a settlement. However, the insurance company wants an agreement that out of the settlement $10,000 will be set aside in an escrow account in the event that Medicare has a lien for any medical bills that it paid for her injuries. Defendant’s insurance company will not agree to a settlement otherwise.
The insurance company insists upon this because Ms. Dawkins is 70 years old and is on Medicare. However, all of her bills have been paid defendant’s insurance company through its No Fault coverage, and she has stopped treating. In any event, the insurance company insists on this set aside pending word from Medicare. We conservatively estimate that this $10,000 will be tied-up for at least 4 months.
Here is another example:
After about 5 years, we finally settle Billy Billings construction accident case at a private mediation.
Billings’s medical bills and lost income were paid by workers’ compensation. Billings stopped treating at least 2 years ago, and he made a lump-sum settlement with workers’ compensation at that time.
Even though Billings has stopped treating, defendants’ insurance companies want Medicare to state whether any portion of the settlement must be placed in a “set aside” for future medical treatment for injuries from the accident.
We protest that the rules do not require this. Furthermore, Billings has stopped treating for his injuries. Our protests fall on deaf ears. Essentially, we have to go through the motions or not get paid the settlement. Again, we conservatively estimate that Medicare will take at least 4 months to get back to us.
What a mess! In both cases the clients rightfully feel that they are being held-up.
We ask that in the event that there is a Medicare issue in your settlement that you understand that the delays in payment are out of our control.
Mark E. Seitelman, 10/6/10, www.seitelman.com.