GOULD & LAMB PEST PRACTICES

Introduction

The following Claims Handling Manual is intended to provide a brief explanation of the elements of
Medicare compliance and how to utilize Gould & Lamb in those efforts. It contains G & L’s
Leading practices, developed and gleaned through providing Medicare compliance products and
services to the global insurance market for U.S. claims. It is divided into the major components of
compliance and includes G&L’s recommendations to fulfill the obligations imposed on carriers,
TPAs, self insured entities and beneficiaries drawing on statutory analysis, federal regulation and
written guidance and policy published by the Centers for Medicare and Medicaid Services. G&L
has included model settlement language and Liability protocols covering most common scenarios
encountered by the parties to be considered in the drafting of releases and in the settlement process.

1. Medicare Query Function

In order to determine Medicare eligibility, a Medicare Query function must be performed on all
claims involving injured Americans or eligible immigrants who have been assigned a Social
Security number.

This is accomplished by sending Gould and lamb the required “Big 5” data elements: legal first
name, legal last name, gender, date of birth and Social Security number.

The Query Function will result in one of two responses from Medicare:

1. “Y” indicates that the injured party is a Medicare beneficiary.

2. “U” indicates that Medicare beneficiary status is “undetermined.”

A “Y” response requires the claims handler to investigate and resolve Medicare’s interests in the
case.

2. Conditional Payments/Liens

In many instances, Medicare will have paid for medical services received by a beneficiary following
an injury. Medicare is said to have paid “conditionally” subject to their right to reimbursement from
the primary payer at the time of settlement, judgment or award. Pursuant to the Medicare
Secondary Payer Act, Medicare is precluded from paying for a beneficiary’s medical expenses
when payment “has been made or reasonably can be expected to be made under a workers’
compensation plan, an automobile or liability policy or plan (including a self-insurance plan), or
under no-fault insurance.”

Page 1 of 5
Primary Payers are defined in U.S. Code of Federal Regulation, Section 411.20,
as:

Workers’ Compensation plans

Liability carriers or plans
Automobile No Fault plans
United States Longshore & Harbor Workers’ Compensation plans
Jones Act plans

In addition, 42 U.S. Code §1395y(b)(2)(b) allows for recovery of double damages, plus interest, and
costs of litigation against primary payers who fail to reimburse Medicare for conditional payments.

Accordingly, it is critical to identify the proper amount of the conditional payment(s) made by
Medicare in any claim and to be certain that Medicare’s subrogation rights have been satisfied.
Failure to resolve conditional payments could result in CMS recovering up to the entire settlement
amount (minus certain procurement costs) from the Medicare beneficiary and seeking double
damages from the primary payer as noted above.

3. Medicare Advantage (Part C) liens

Many Medicare beneficiaries have elected to receive Medicare coverage by contracting to have
their benefits delivered by a private healthcare provider rather than through traditional Medicare.
“Medicare Advantage Plans” provide the same benefits as Medicare parts A and B, but premium
payment and delivery of services are somewhat different.

Upon settlement, judgment or award, Medicare Advantage plans will, like Medicare itself, assert
their right to recover from the settlement pursuant to 42 U.S. Code of Federal Regulations
§422.108.

Recently, the U.S. Third Circuit Court of Appeals held that Medicare Advantage Plans have the
same rights to recovery as does Medicare itself. Thus, it is recommended that G&L be involved in
the Part C lien recovery process as well.

4. Medicaid Liens

Medicaid is a U.S. health program administered by the individual States. These health care benefits
are available to U.S. citizens and eligible immigrants who qualify with low income and resources.
Upon receipt of a settlement, judgment or award, benefits that that been paid by the State must be
reimbursed according to State Law. Failure to repay a Medicaid lien may result in interruption of
benefits, and/or litigation.

It is important to note that U.S. citizens and eligible immigrants may be dual Medicare and
Medicaid beneficiaries.

Page 2 of 5
5. Medicare Set Aside Allocations (MSA)

The establishment of a Medicare Set Aside account is designed to relieve Medicare of the obligation
to provide future medical care for a beneficiary who requires continued care related to an accident.
A portion of settlement funds are held in a separate, interest- bearing account and are to be used for
Medicare covered accident related future medical services.

Medicare guidance and policy establishes that liability set aside allocations are the recognized
method of protecting Medicare’s interest in accident cases. CMS has developed a methodology for
review and approval of liability Medicare set aside allocations, depending on the venue of the claim.
In addition, CMS is considering formal rule making to codify its policy in this regard. G&L
recommends that set aside allocations be completed for Medicare beneficiaries that settle or release
future medical benefits or for injured parties who will become Medicare beneficiaries within thirty
(30) months of settlement.

Failure to establish a set aside account may result in denial of benefits to the beneficiary, continued
conditional payment lien accrual, and/or litigation commenced by the beneficiary against the
primary payer.

6. MMSEA, Section 111 Mandatory Insurer Reporting (MIR)

Mandatory Insurer Reporting (MIR) affects all claims, settlements, judgments, awards or payments
involving Medicare beneficiaries. The law applies to Liability, No-Fault, Self Insured and
Worker’s Compensation cases equally. The MSP remains unchanged and the laws are applicable to
situations where a beneficiary files a claim and/or a civil action against a third party seeking
damages for injuries received and medical expenses incurred as a result of that illness/injury.

The Medicare Secondary Payer Recovery Contractor (MSPRC) identifies health benefits available
to a Medicare beneficiary and coordinates the payment process to prevent mistaken payments. The
MSPRC collects, manages, and reports other insurance coverage. The MSPRC must be notified of
situations where medical services rendered to a beneficiary are related to a workers' compensation
injury, automobile accident, or other liability because in these instances, another payer has the
primary responsibility for payment of medical claims related to the injury. The Plaintiff, the
Plaintiff’s Counsel and the insurer have significant responsibilities and obligations under the MSP
law to notify the MSPRC of situations where medical services rendered to a beneficiary are related
to a workers' compensation injury, automobile accident, or other liability.
Prior to MIR, Medicare had no way to track MSP compliance in liability and no-fault auto cases.
With the new reporting requirements, vast amounts of data will be provided to Medicare on a
regular basis allowing identification and recovery on past conditional payments as well as access to
settlement documents to ensure Medicare’s interests have been considered when future exposure
exists. It is imperative that the Conditional Payments are resolved and an Allocation be included in
certain liability and no fault auto cases to protect the carrier/self insured, TPA, the Plaintiff, Plaintiff
Counsel and Medicare.

Page 3 of 5
Pursuant to the Medicare, Medicaid and SCHIP Extension Act of 2007, entities that are responsible
to pay claims to beneficiaries must electronically report to Medicare on the occurrence of
settlement, judgment or award. All claims that meet or exceed the following thresholds must be
reported:

2011 & 2012 = over $5,000

2013 = over $2,000
2014 = over $300
2015 = $0

7. Post Settlement Administration

In order to preserve allocated funds from premature exhaustion, improper use or diversion, G&L
offers two types of post settlement administration products. Both are monitored by Healthcare
professionals and medical cost experts to ensure that set aside funds are properly applied and that
Medicare reporting requirements are satisfied.

Self Administration Support Services – A Gould and Lamb service which provides a single
point of contact to guide beneficiaries through administrative procedures and Medicare
responsibilities. Gould and Lamb’s expert representatives are knowledgeable about State fee
schedules, reporting, care standards, disbursements and more to assure the beneficiary remains
informed and the risk of benefit loss is averted.

Professional Administration – A Gould and Lamb service for Medicare Set-Aside accounts,
medical custodian accounts, and Special Needs Trusts. The beneficiary is provided a dedicated Post
Settlement Administration Representative and afforded 24/7 access to account information via an
interactive, secure web-based portal.

8. Liability Protocols

Gould & Lamb has crafted settlement language that can be used in virtually all settlement situations
that involve Medicare. They have been compiled to assist insurers and self insured entities navigate
the issues presented by Medicare Secondary Payer Compliance and Mandatory Insurer Reporting.

The Protocols are divided into five (5) sections. Each section addresses a specific Medicare
Compliance concern. Contained in sections 3 and 5 are possible liability claim settlement scenarios
with a description and analysis of potential options. Section 4 provides templates for both
conditional payments and allocations.

When an Allocation template has been selected and a decision has been made regarding the
resolution of conditional payments, select a conditional payment template to insert in the body of
the Allocation template that has been selected. Please refer to the instructions page for further
information.

Page 4 of 5
Page 5 of 5