PRACTICE POINTERS: MEDICARE LIENS FOR PRESCRIPTION DRUG COSTS
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By now, your practice likely includes a well-developed process for protecting Medicare’s lien interest in your personal injury cases. This typically involves Medicare payments for hospital care (Part A) and physician services (Part B) made prior to case resolution—i.e., past medical care. However, you may not yet have encountered liens for “Part D” benefits, which cover prescription drug costs. In the near future, you should expect to see these charges included in Medicare lien claims. Below are a few key insights to help you stay ahead.
Evolution of Medicare Part D
A bit of background helps set the stage. Medicare Part D was introduced in 2003 as a voluntary outpatient prescription drug benefit. CMS itself does not directly pay for prescriptions—instead, traditional Medicare beneficiaries purchase a “stand-alone” plan from a private company (called a “sponsor”) to cover their medication expenses. Coverage and benefits vary from plan to plan.
Beneficiaries enrolled in Medicare Advantage Plans (MAOs) often receive prescription coverage through a built-in Part D component or by enrolling in a stand-alone Part D plan offered by the same MAO. As more beneficiaries shift to MAOs, enrollment in Part D plans has skyrocketed—totaling more than 48 million by 2018.
New CMS Guidelines Encourage Recovery Against Plaintiffs
In September 2018, CMS updated its Medicare Prescription Drug Benefit Manual (Part D Manual), and we are now seeing its effects in practice. One significant development is CMS directing Part D sponsors to actively pursue recovery through proper secondary payer enforcement. Sponsors must either:
- Deny coverage in the context of tort liability claims, or
- Seek recovery from settlements and primary insurance coverage.
The updated manual aligns the recovery responsibilities of Part D sponsors with those of Medicare Advantage Organizations. In fact, the law expressly states that recovery rights under Medicare Part C “apply in the same manner” to Part D plans. [See 42 U.S.C. § 1395w-102(4); 42 C.F.R. § 423.462, incorporating MAO recovery procedures from § 422.108.]
If you’ve been following developments in this space, you’re aware that MAOs have become aggressive in asserting recovery rights under the Secondary Payer Act (SPA). These demands are often made directly to third-party carriers after the case has settled. Worse, recovery agents routinely attempt to bypass the procurement cost reduction that typically applies to beneficiaries under 42 C.F.R. § 411.37(c), opting instead to invoke § 411.37(e) and seek the full amount—plus threats of double damages.
Take Action to Get Ahead of Part D Drug Cost Issues
With the regulations now aligning Part D rights with those of MAOs, you can expect Part D sponsors to follow suit in aggressively asserting recovery claims. And yes—it’s only a matter of time before they begin asserting Medicare’s “future interest” rights. That wave will begin as soon as CMS finalizes its long-anticipated rules regarding set-asides in third-party liability settlements.
Practice Point One: Identify the Part D carrier early. Put them on notice of the liability claim and request a full payment itemization. This can be useful in calculating both past medical specials and future medical damages. If you're going to be dealing with a lien for these charges, you'd better be sure you've included those costs in your damage model.
Practice Point Two: Watch out for broad indemnity/hold harmless (I/HH) provisions in settlement agreements. When a liability carrier receives a SPA demand from a MAO or Part D sponsor, their standard move will be to tender the issue back to the plaintiff under the I/HH clause. This can open up a can of worms for both the plaintiff and counsel—and it's a risk you want to avoid wherever possible.
Explore More Resources with Lien Project Network
For a deeper dive into lien resolution strategies, settlement planning, and reimbursement challenges, explore our educational modules. Lien Project Network serves as a trusted resource for plaintiff attorneys, providing insights on financial planning, public benefits, and structured settlements in the context of lien management.
Need Assistance? Work With The Lien Project, PC
If you need expert legal assistance in navigating lien resolution, reimbursement claims, or settlement planning, our team at The Lien Project, PC is ready to help. As an LPN member, you earn credits that can be applied toward lien reduction and resolution services provided by The Lien Project, PC, allowing you to offset up to $900 per year. Your investment in continuing education through Lien Project Network not only enhances your lien resolution skills but also reduces the cost of engaging legal experts when needed.
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