There are two vital rules you need to follow when it comes to managing risk:
- Never trust a lawyer.
- See Rule #1, especially when that lawyer's interests are averse to yours.
Tongue-in-cheek aside, these rules make sense from a business perspective. Yet, when dealing with the matter of compliance to Medicare's personal injury claims reporting and recovery guidelines, far too many insurance carriers routinely break these rules, often to their detriment.
As an insurance executive, you would never allow a claimant’s lawyer to come in and have free access to your claim data. Not only are they not experts in the necessary skills to handle your money, they also have a significant conflict of interests: their goal is to get as much money for their client – and, by extension, themselves – as possible.
Yet, insurance carriers routinely hand the claimant’s lawyer the reins to handle processing and reimbursing Medicare to close out personal injury claims involving Medicare beneficiaries.
Why you wouldn’t want a Claimant’s Attorney to Handle Medicare Risk.
Here is a real-world situation that illustrates the worst-case scenario, but goes a long way to explain why entrusting your Medicare compliance to the claimant’s attorney can be so dangerous.
In this case, a claims adjuster was working with a claimant who was a Medicare beneficiary. The claimant’s lawyer was involved on their client's behalf, and they contacted the adjuster to basically say, “Let me handle the Medicare side of things, start to finish.”
The claims adjuster, being relatively inexperienced in processing Medicare claims, and happy to get the task off their plate, readily agreed, and went about processing the claim settlement as he normally would.
When all was said and done, the parties settled for $40,000 and the money was sent to the lawyer. But the claimant has never been paid.
Medicare has a lien on the claim in the amount of $8,000 they are owed in reimbursement for a conditional payment made early on. They sent their conditional payment letter to the lawyer. They've also never been paid, and likely never will because…
The lawyer has disappeared.
Now the claimant has nothing, the money is gone, and Medicare considers the claim out-of-compliance and is prepared to come after the insurance carrier for payment. Between paying the $8,000 CPL, covering fines for non-compliance, and interest on the lien, they could be paying upwards of $100,000 on this claim before it's all said and done.
The Average Scenario
Granted, that story is exceptional, but it is real.
We're certainly not implying that most lawyers intend to take criminal action or that they even have bad intentions. However, the fact remains that most attorneys simply do not have the knowledge – or the time to obtain the necessary knowledge – to accurately and consistently handle Medicare claims compliance procedures on your behalf.
Medicare rules are constantly in a state of flux, they're complicated to start with, and Medicare is not actively seeking ways to make them easier. They are, however, actively seeking ways to recover the money owed to them via stringent audits. So, the situation is becoming more serious by the day.
In addition to an attorney’s lack of expertise, there's the matter of a conflict of interest. It's not in a lawyer's best interest to negotiate down the Medicare lien because that would effectively lower the final settlement amount and therefore their own income from the case. So, if they simply pass along Medicare's initial reimbursement demand letter under the understanding that they are “handling Medicare start to finish,” a claims adjuster could very well overpay, perhaps by several thousand dollars.
Human error could easily factor into the situation as well, simply because the lawyer – even more so than the claims adjuster – may run into Medicare claims so rarely that forgetting what to do or taking action incorrectly is very likely.
The Best Possible Scenario
The best option for everyone involved is to put Medicare compliance in the hands of experts who handle these claims all day every day – Flagship Services Group.
- We're not paid on a percentage of the settlement, so we have nothing to gain by overpaying Medicare.
- We're intimately familiar with Medicare compliance rules and regulations because it's all we do every day.
- We guarantee full compliance for our claims services, so there is truly no risk now or in the future.
If you'd like to ensure your Medicare liability claims are reported and paid with 100% compliance, we can make that happen.