A Practical Approach to Evaluating the Interplay Between State Lien Law and Medicare Regulations in Liability Cases
By Josh Sacks, The Law Offices of Josh Sacks, P.C.
Many trial lawyers have confronted the increasingly common scenario in liability cases in which a hospital asserts a lien for the full amount of a hospital bill despite the fact that the injured individual is a Medicare beneficiary. The reason a hospital engages in such a practice is transparent: the hospital wants to maximize its revenue. A hospital lien for a full bill may be exponentially higher than the reimbursements provided by Medicare. For an attorney seeking to maximize recovery for his or her client, the difference between a hospital lien and a Medicare procurement-reduced interest might be the difference between being able to take a case in the first place or having to decline because of the dramatic difference in amounts.
In order to evaluate the propriety of a hospital lien under circumstances in which the patient is a Medicare beneficiary, it is necessary to understand the particulars of Georgia’s Hospital Lien Law and the Medicare statutes and regulations implicated in a liability case. Such an exercise is not for the inexperienced or faint of heart. Hospital lien collection practices and Medicare’s statutory and regulatory framework are complex and evolving.
Both State and Federal law require hospitals to adhere to certain filing and claim submission timeframes and to more substantive requirements relating to the reasonableness and necessity of the charges, as well as the election of either a lien or Medicare reimbursement, but not both. If a hospital fails to adhere to these requirements, the consequences may range from the inability to collect on a lien or Medicare reimbursement to more serious penalties affecting Medicare participation (in extreme cases).
Georgia’s Hospital Lien Law
Georgia’s hospital lien provisions are not found within the broader health care provisions of the Georgia Code but rather are set out within traditional property encumbrances under Title 44 (“Property”). Chapter 14 of Title 44, entitled “Mortgages, Liens, and Security,” is the location of the particulars for filing and protecting hospital liens, among other types of interests, such as mechanics liens (Part 3), liens for laundries (Part 7), and liens for the repair of equipment (Part 7A).
The location of the hospital lien statute within the Georgia Code highlights its purpose: it is a lien on something; it is a property right on a specific asset. It is not a damages claim for someone who does not pay their bill. It does not affirm a hospital’s right to collect on a debt (which is covered by different provisions). It is a mechanism for a hospital to assert a formal lien on a patient’s cause of action, for “reasonable” charges incurred on account of injuries attributable to the cause of action itself.(1) The lien is “only against such causes of action and shall not be a lien against such injured person, such legal representative, or any other property or assets of such persons and shall not be evidence of such person’s failure to pay a debt.”(2)
In order to perfect a lien, a hospital must first send the patient and potential tortfeasors and their insurers (to the best of the hospital’s knowledge) a notice that the lien is not against the patient or the patient’s property or assets, and is not evidence of a failure to pay a debt.(3) Once the notice is properly and timely sent, then the hospital shall file in the superior court of the county in which it is located and in the superior court of the county in which the patient resides, a verified statement with the patient’s name and address, the name and location of the hospital and operator of the facility, the dates of admission and discharge, and the amount claimed.(4) A hospital has 75 days following discharge to file the requisite statement.(5)
Medicare’s Reimbursement Framework for Liability Cases
So the question is: what happens when a patient who is otherwise subject to the hospital lien provisions is a Medicare beneficiary/participant? The answer is: the federally mandated Medicare payment system outlines specific and distinct payment and reimbursement criteria for the hospital. The complicated interplay between the applicable Medicare provisions is streamlined and explained through summary regulations. These regulations set forth the various scenarios and timeframes involved.
It is important to note that in the liability context, Medicare is considered a secondary payer.(6) That is, when other insurance is available, the other insurance is considered primary and is expected to pay first. If liability is not clear or payment may not be made within certain anticipated timeframes (referred to as “prompt payment”), then Medicare may pay so that there is no gap in the patient’s coverage and ability to get necessary healthcare. If Medicare pays for services for which a tortfeasor may be liable, the payments are made conditionally. In other words, when the patient recovers from a tortfeasor or an insurer, and the recovery includes special damages for hospital charges reimbursed by Medicare, then Medicare is entitled to recover its payments (minus a statutory procurement percentage).
Medicare’s Regulations Relating to Liability Cases and Hospital Liens
As it relates to how hospital liens and Medicare’s secondary payer provisions interact, the federal regulations are instructive.(7) The first important regulation explains that a hospital cannot bill Medicare if “prompt” payment is expected from a liability insurer or other responsible entity. “Prompt” is defined as 120 days from the earlier of either the insurance claim or the treatment date. In the in-patient hospital setting, it is generally the date of discharge.(8) If a hospital reasonably expects payment within 120 days from an insurer arising from a liability claim, then (a) the hospital will likely file a lien; and (b) Medicare will not be billed.
If a hospital does not reasonably anticipate that payment will be made within 120 days, then the hospital may elect to bill Medicare (it is not required to do so). If it does not bill within 120 days, such billing ultimately must take place within twelve calendar months from the date of service. After that timeframe passes, if the hospital has not billed Medicare, two things will likely happen: first, Medicare will not pay; and, second, the hospital still cannot bill the patient, except for usual co-pays and deductibles. Therefore, if a hospital either deliberately or inadvertently does not submit its bills to Medicare for reimbursement within twelve calendar months of the date of service, it generally has no recourse against the patient, except for non-covered services (services Medicare would not cover if properly billed), co-pays, and deductibles. The hospital, however, may continue to assert a timely filed and preserved lien against a liability case.
If a hospital submits charges to Medicare—either within 120 days because it does not expect prompt payment, or after 120 days but prior to one year because it has concluded that it has a better reimbursement opportunity through Medicare than through a lien—it must withdraw any and all liens against personal injury causes of action, except to the extent there are deductibles/co-pays or non-covered services.(9) Importantly, non-covered services are different than services which are covered by Medicare but denied in a particular claim. And, the trigger for the withdraw of liens is the submission to Medicare, not Medicare’s actual payment. So, if a hospital tries to withdraw its claims for reimbursement to Medicare after it submits them or if a hospital tries to reimburse Medicare so it can again pursue its lien, under the prevailing regulations and instructions set out by the Medicare Secondary Payer Manual, the hospital still must withdraw the lien.(10) If the hospital collects on a lien after billing Medicare, then it must issue a refund to Medicare or to the patient, depending on the amount of the payments involved.(11)
Given the provisions of the federal statutes, regulations, and interpretive Secondary Payer Manual relating to hospital liens and Medicare payments, it is essential to determine whether or not a hospital has billed Medicare for any charges, and whether the lien claim reflects reasonable charges for necessary services. Investigation of both issues may provide critical data for use in attempting to reduce or eliminate a hospital lien altogether under the right set of facts.
There are several steps to take to determine whether a Georgia hospital has billed Medicare:
1. Request a full, itemized billing statement from the hospital with all payment and reimbursement information.
2. Review any Explanation of Benefits or Medicare payment reports sent to the patient in the months following the hospital stay.
3. Go online or have the client go online to the Medicare Portal (www.MyMedicare.gov) and see whether any payments were made for the hospitalization at issue.
4. Set up a Medicare Secondary Payer claim through the Non-Group Health Plan (NGHP) and the Benefits Coordination and Recovery Center (BCRC).
Look for any credits, payments, reimbursements, or pending claims in the materials. Remember that Medicare reimbursements may not be listed as “Medicare” in Georgia but might be identified through a contractor, such as Cahaba. There may also be references to “write-offs,” or reductions based on contracted limitations or benefits or reimbursement limits.
If there is evidence of any submission to Medicare for any tort-related hospital charge, then it is reasonable to take the position that the hospital has agreed to accept Medicare (or, the Medicare reimbursement rates) for the tort-related hospital charges. A hospital generally cannot pick and choose which otherwise covered services to submit to Medicare and which ones to bill in full. Secure the appropriate documentation of the hospital’s submission to Medicare and/or Medicare’s reimbursement or consideration of the hospital claim.
If the hospital has submitted some or all of the charges to Medicare, then the patient’s attorney should write a letter to the individual or business that filed the lien and demand that it be withdrawn immediately. In the letter, it is important to include documentation confirming that the hospital billed Medicare, and it is also helpful to cite the federal statute, the regulation, and the handbook. If a hospital willfully maintains a lien against a patient’s cause of action when there is clear evidence that it submitted its charges to Medicare, then it runs afoul of the overall Medicare participating provider agreement and may face significant consequences.
If there is no evidence that the hospital submitted charges to Medicare, it is essential to evaluate whether the lien reflects reasonable charges for services that were necessary to the patient’s incident-related injuries. Such evaluation occurs in the context of the distinct and separate lien claim or action, not the primary tort case; it is beyond the scope of this paper to wade into the debate about whether a challenge to the reasonableness of a hospital bill in a lien action somehow impacts the claim that the bill is reasonable in the underlying tort claim. Suffice it to say that it is settled law in Georgia that collateral source evidence is generally not allowed in the underlying tort case as a means of challenging the reasonableness of charges any more than evidence of liability insurance is permitted to suggest that the defendant may not suffer personal financial harm from a judgment. Altering that landscape would be a significant shift in the law and in policy.
In the lien action, however, the context, law, and policy considerations are different. The Supreme Court of Georgia has held that “where the subject matter of a lawsuit includes the validity and amount of a hospital lien for the reasonable charges for a patient’s care, how much the hospital charged other patients, insured or uninsured, for the same type of care during the same time period is relevant for discovery purposes.”(12) Discovery in the lien action should be aimed at determining what the hospital accepts as its customary and reasonable reimbursements from all sources, including Medicare, Medicaid, private health insurers, and others, for the same or similar services in the year or years leading up to the hospital charges at issue. Unlike a tort case, in the separate lien action, these data points are not collateral issues, but rather they are financial records that directly address the claim: the propriety of the property lien itself.
Georgia’s hospital lien law and Medicare’s federal statutory and regulatory framework present complicated overlapping and interrelated issues in tort cases. To evaluate and analyze the impact a hospital lien may have on a client who is a Medicare beneficiary, it is important first to determine whether the hospital sought payment at any time from Medicare for the tort-related treatments and second to consider the reasonableness of the amount of the lien in light of the accepted reimbursements of the hospital for the same or similar treatments. Getting up to speed on the legal landscape regarding these issues or reaching out to an attorney who keeps up with the latest statutes, regulations, and effective practical approaches is essential to a positive outcome.
About the Author
Josh Sacks is the principal at The Law Offices of Josh Sacks, P.C., where his main areas of practice are complex spinal cord, brain injury, and other catastrophic injury and wrongful death cases arising from car wreck, tractor-trailer claims, and medical malpractice. He has earned an AV “preeminent” rating from Martindale-Hubbell and has been recognized as a Georgia Super Lawyer. He has been lead or co-counsel in numerous jury trials. He earned his B.A. degree with honors from Amherst College, and his J.D. degree from the College of William & Mary, where the Sacks Moot Court Office bears his name.