What if Medicare pays for my medical bills while I am waiting for my claim to settle?

A common question we hear during an injury case is do I have to pay medicare back after a personal injury settlement? Medicare is a government-run health care program that primarily benefits people over the age of 65. After an accident, Medicare will pay for medical bills. However, if the recipient receives a personal injury settlement or court award, Medicare has the right to seek reimbursement for any medical treatment related to the accident that led to the claim. These are known as “conditional payments” because Medicare makes them on the condition that it will recover them if the Medicare recipient receives a third-party reimbursement (like a defendant or an insurance company).

Suppose the costs Medicare pays result from an injury, and you win a personal injury claim and receive any judgment or settlement funds resulting from the injury. In that case, you must repay Medicare for any payments made as a result of the damage.

Furthermore, by law, Medicare has an automatic lien on any compensation you receive from your personal injury claim to protect its right to reimbursement. The lien allows Medicare a claim to the funds from the judgment or settlement, and it takes precedence over any other person or entity, including you, the insured party. In contrast to many cases involving private health insurance, Medicare allows little to no flexibility in negotiating the amount of its lien.

What Happens Now That Your Personal Injury Claim Has Been Resolved?

Any settlement or decision resulting from any personal injury claims for which Medicare has paid medical claims must be reported to Medicare within 60 days. Failure to report on time can result in hefty fines of up to $1,000.00 per day.

While there are numerous ways to report a personal injury claim’s resolution, the most convenient is to go to the Medicare website and report any settlement or judgment electronically. Within 120 days of receiving the report, you will be notified of the amount of the Medicare lien. The notice will also include a list of all services and expenditures for which Medicare feels it should be paid.

Because Medicare is only entitled to reimbursement for medical treatment that is related to your personal injury claim, you or your attorney should review the list of treatments and charges for accuracy (i.e., directly caused by the accident or other incident that led to your injury). For example, if you are in a car accident and break your leg, and then receive medical treatment for your broken leg from January to March, but also see your primary care physician in February for the flu, you are not required to reimburse Medicare for the payments associated with your flu treatment. Medicare’s lien will cover only the medical treatment you received for your broken leg.

Within 30 days of any unrelated medical expenses being removed from the list of charges, Medicare will send a final payment demand. At that point, you or your lawyer has a legal obligation to either pay Medicare the amount of reimbursement covered by the Medicare lien or to file an appeal if you believe the lien amount is incorrect.

Unfortunately, with the exception of a few rare circumstances, federal law prevents Medicare from accepting a lower negotiated sum once all unrelated medical expenses have been deducted. The goal of the law is for Medicare to recover the total amount of payments it made for injury-related medical care in the vast majority of cases. Even if the settlement amount is less than the Medicare lien, then Medicare is entitled to the entire settlement or judgment amount, less “procurement costs” (which are typically the attorneys’ fees and expenses paid to obtain the settlement or judgment).

The procedure is, without a doubt, taxing. However, in any personal injury case where Medicare has paid the first medical expenses, it’s a good idea to file a claim for reimbursement and report it.

The One-Third Reduction

If an attorney represents you, there is an exception to the general rule of “no reduction of the lien.” If this is the case, Medicare’s lien is usually reduced by one-third. This is Medicare’s recognition that the attorneys’ fees, which are frequently paid as a contingency fee at or near one-third of the judgment or settlement amount, already reduce the total recovery you receive from a judgment or settlement.

Who Will Ever Know?

You shouldn’t be surprised to learn that Medicare will likely find out if you don’t report your settlement or judgment. Medicare keeps track of payments it makes for specific medical treatments that are frequently the result of personal injury claims. So, if you break a bone and go to the doctor, you’ll probably get a letter from Medicare asking if someone else’s negligence caused the injury. Such requests, as well as any others from Medicare, must be answered truthfully. Failure to do so could jeopardize your eligibility and even result in criminal charges.

The personal injury lawyers at Cohen & Winters are well-versed in how to deal with Medicare payments for car accident injuries. We frequently  help clients in this situation. Are you in need of help from an experienced personal injury attorney who understands the nuances of medicare? Get in touch with our team to learn more about how we can help you navigate a confusing situation.