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Medicare Case Type Definitions: Liability & No-Fault

The most important part of Medicare lien resolution occurs months (or even years) before you send payment to the MSPRC.  That most important process is reporting to the Coordination of Benefits Contractor (“COBC”).  If you report the wrong date of incident you risk wasting months of work.  If you report the wrong injuries you risk a lien that is either too small or too big.  And if you report the wrong case type you risk restarting the whole process.

Case Type Matters

During the initial reporting phone call to the COBC you will be asked what is the type of case.  Most cases fit under one or two of the following choices:

  1. Workers’ Compensation;
  2. Liability; and,
  3. No-Fault.

If you report the case as Workers’ Compensation there are certain Medicare Set-Aside (“MSA”) consequences.  Liability is relatively straight forward and leads to the default processes.  No-Fault is often reported concurrent to Liability (meaning both are open for your file) and has added processes to close the file.  No-Fault also has special rules – specifically, the MSPRC does not follow 42 CFR 411.37 and does not apply the Medicare Procurement Formula.

So, the case type changes the way Medicare’s agents treat your file.

Medicare’s Definitions are Different than Your Definitions

Surprise! Medicare defines simple legal terms different than you do.

“No-Fault” – Medicare essentially defines No-Fault as any insurance payments provided on a continuing basis until policy limits are exhausted.  This almost always means personal automobile insurance, whether it is Personal Injury Protection (“PIP”), Med-Pay, or otherwise.  There isn’t much surprise to what No-Fault means – until you see what Liability means.

“Liability” – Medicare does not interpret Liability as any case where someone else is liable.  Rather, it simply means a lump-sum settlement.  Generally it is pretty simple.  But when you look at states with high “No-Fault” automobile insurance limits, this gets tricky.  For example, in New Jersey ($250,000 PIP limits) or Michigan (unlimited PIP), Medicare will consider the PIP payments as No-Fault payments, until the 1st Party/No-Fault case settles.  Once that case settles fora set amount (a lump sum), Medicare will consider that payment to be a liability payment.

What does this all mean?

If you’re in a state where Med-Pay or PIP is limited to $5,000 or $10,000 you should open both a No-Fault and Liability file with the MSPRC.  If you’re in a state with high limits on Med-Pay or PIP (like Michigan and New Jersey), you might only need the Liability file open with the MSPRC.

If you have any questions on this process, or would like lien resolution assistance, please contact us.


Ryan J. Weiner
Lien Resolution Services
This Blog/Web Site is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

About Ryan J. Weiner

Co-Founder of Lien Resolution Services, LLC, a national healthcare lien resolution firm. Our goal is to assist in the fair administration and resolution of healthcare liens on personal injury cases. Please visit our website for more information: www.lienresolutionusa.com.

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