HCFA'S RESPONSE REGARDING
ATTORNEY'S FEES IN MEDICARE CASES

Obtaining fees under the Medicare program for representing beneficiaries before the Medicare Agency and in the federal district court is an on-going problem. Of particular concern is whether the Social Security Act structure and limitation on the amount of a fee that an attorney can collect under Title II of the Social Security Act applies in Medicare cases. This provision is linked to Medicare through an agency-created cross-reference in the Code of Federal Regulations.

The fee issue ties in with a reluctance of attorneys to handle Medicare cases. Private practitioners have been slow to take on representation for a variety of reasons, particularly the complex and ever-changing nature of the subject matter, including coverage rules and policies.

Practitioners also raise issues about their ability to collect fees. Common concerns include: (1) if fees are to be handled according to the rules of Title II of the Social Security Act, how is a fee to be established based on a past-due award when Medicare is not that type of program; (2) how to address the practical reality that the Administrator of the Medicare program does not approve fees; and (3) whether one can charge for legal assistance on Medicare matters that are not the subject of a dispute about payment or coverage, for example, consultations about whether to remain in fee-for-service Medicare or whether to participate in one of the new Medicare managed care options.

In a letter dated August 11, 2000, HCFA stated its position that it does not believe it has the requisite authority to reimburse attorneys who represent Medicare beneficiaries in Medicare appeals; that it cannot implement the Title II fee structure and limitation. This clarification is an important step in furthering Medicare representation and client services.

A.    Title II of the Social Security Act.
Under Title II of the Social Security Act, the claimant and his or her representative must agree on a fee, not to exceed the lesser of 25% of the total amount of such past-due benefits (before an actual reduction) or $4,000. This agreement must be presented in writing to the Commissioner of Social Security prior to the time of the Commissioner=s determination regarding the claim. The fee is to be approved by the Commissioner at the time of the favorable determination and the fee specified in the agreement shall be the maximum fee, except as provided in '406(a)(3) as that relates to adjustments in the amount of the fee.

Upon rendering a favorable judgement, the court may determine and allow as part of its judgment a reasonable fee for representation in court proceedings. The fee award for this representation may not exceed 25% of the total past-due benefits to which the claimant is entitled based on the judgement of the court.

B.    The Medicare Program (Title XVIII) of The Social Security Act.

Generally under Medicare Part A, payment is made to providers and suppliers of services in a variety of care settings, including hospitals, skilled nursing facilities, home health agencies, and hospice programs. Beneficiaries are responsible for copayment and deductible amounts. Beneficiaries do not receive a monthly cash benefit as they do under Social Security.

Similarly, under Medicare Part B, the Supplemental Insurance Program, beneficiaries do not receive a cash benefit. Rather, payment is made for services provided to doctors and other Medicare providers of services who have in effect a provider agreement or other appropriate agreement to participate in Medicare.¹¹ Payment is made to the individual, or to a physician or other supplier on behalf of the individual, for medical and other health services.¹² Generally, Medicare covers 80 percent of the reasonable cost of the service, with the beneficiary being responsible for a 20 percent co-payment amount.¹³ Beneficiaries must also satisfy an annual Part B deductible amount,¹⁴ and a blood deductible amount.¹⁵

In addition, Congress adopted a fee schedule approach to the payment of physician services, beginning on a phase-in basis, in January 1992.¹⁶ Costs may be further reduced for beneficiaries who receive services from providers and suppliers who participate in the Medicare physician/supplier assignment program.¹⁷ Physicians who Aaccept assignment@ accept the Medicare reasonable charge amount as payment in full.¹⁸ The charges of physicians and suppliers who do not participate in the physician assignment program are subject to a Medicare limiting charge amount which is no more than 115% above the Medicare reasonable charge amount.¹⁹

Persons electing services through Medicare=s new Part C, the Medicare+Choice Program,²⁰ may have limited cost-sharing obligations depending on the health plan option chosen.²¹ Generally, Medicare+Choice Organizations (MCOs) receive a capitated rate for providing services to Medicare beneficiaries.²²

A. Work Group on Severing the Link to Title II
Current thinking among Medicare advocates is that the Social Security fee structure and limitation on fees does not apply in Medicare cases. To pursue this view and to focus attention and advocacy on the importance of this question, the Public Policy Committee of the National Academy of Elder Law Attorneys, along with the Center for Medicare Advocacy, Inc., the National Senior Citizens Law Center, the Medicare Rights Center, and the Consumer Coalition for Quality Health Care formed a working group. The working group is in contact with the Health Care Financing Administration (HCFA), the agency that administers the Medicare Program within the Department of Health and Human Services. Communications have focused on the reality that in Medicare cases, unlike Title II cases, there is not a lump-sum retroactive payment (past-due amount) from which to base an award, and thus the link to this aspect of the Social Security Title II regulations is inapplicable.

B. Pursuing The HCFA Clarification
There is a general sense at HCFA that the Social Security fee structure and limitation should not apply in Medicare cases. In May of 2000, the work group sent a formal letter to HCFA, seeking written confirmation of HCFA=s current position.²³

On August 17, 2000, we received a response to our request for clarification. The brief response of HCFA, dated August 11, 2000, is quoted below in its entirety:

This letter serves as formal clarification that the Health Care Financing Administration (HCFA) lacks the requisite statutory authority to reimburse attorneys who represent beneficiaries in the Medicare appeals process. At this time, HCFA does not plan to amend the regulations at 42 C.F.R.'422.560 et. seq. to address the issue of whether Medicare pays attorneys fees.

If you require additional assistance, please do not hesitate to contact me on (410)786-6832, or Michele Edmondson of my staff at (410)786-6478.

Sincerely,

/S/

Margaret P. Sparr

Director

Beneficiary Membership Administration Group

The text of our letter to HCFA, dated May 22, 2000, is quoted below:

As you know from our on-going correspondence, the Center for Medicare Advocacy, Inc., along with the National Academy of Elder Law Attorneys (NAELA), is part of a work group looking at issues of access to services under the Medicare statute. An outstanding problem area is the impediment posed by the Social Security Act=s attorney=s fee limitation provision found at 42 U.S.C. ''406(a)(2)(A) (administrative review) and 406(b)(1)(A)(court review) and its applicability to Medicare cases. These provisions require Social Security approval of fees, and direct the awarding of fees from the cash benefit granted to the claimant.

It is our view that 42 U.S.C. ''406(a)(2)(A) and 406(b)(1)(A) do not apply to Medicare cases. As you know, an award of Medicare of Medicare benefits results in payment of a health care provider=s bill; no cash benefits are granted to the claimant.

Thus, as a practical matter, 42 U.S.C. ''406(a)(2)(A) and 406(b)(1)(A) do not address the reality of Medicare cases and practice. HCFA does not approve fees in Medicare cases and there is no past-due amount from which to take a fee.

A formal clarification from your office would be helpful. We await your formal response.

Sincerely

/S/

Alfred J. Chiplin, Jr.

Attorney

IV. Educating Attorneys and The Public
It is important to have from HCFA a formal statement that it believes it lacks the statutory authority to reimburse attorneys who represent beneficiaries in the Medicare appeals process. The statement is in effect an acknowledgment that HCFA does not have an operational mechanism to implement the Title II attorneys fee provisions described above.²⁴ This should free attorneys to develop fee arrangements for Medicare appeals work in keeping with state law practice and custom.

A.    Encouraging Attorneys to Do Medicare Work
Now that there is a favorable HCFA clarification, attorneys in all states should feel free to develop compensation arrangements with their clients by agreement, either expressed or implied.²⁵ Fees only need be reasonable.²⁶

Attorneys are encouraged to consider Medicare work broadly. They should look to their general practice experience and state law in developing fee agreements. In doing so, as a practical matter, what the market will bear is a primary consideration. In this regard, some attorneys have raised the practical question of Medicare work being generally quite time-consuming and thus potentially too costly for many clients, particularly those of modest means. In this regard, both clients and attorneys may find that as a practical matter taking on Medicare work may not be attractive.

A solution may be to see Medicare work as part of a package of services to be provided, and thus more feasible.²⁷ Advocates are encouraged to develop a number of approaches to this problem and to share them so that a catalogue of best practices is developed for dissemination and discussion.²⁸

B. Assistance for Attorneys Through the State Bar
Assistance in this area from state bar associations and designated subcommittees will be valuable.  Bar committees would necessarily function as a practice development resource for area of practice specializations, training, beneficiary education materials development and dissemination, and as repository for best practice approaches. Critical areas of practice development are:

Second, the work group has identified the need to intensify current working relationships with groups such as the network of Health Insurance Counseling Projects (HICAPs), also called the State Health Insurance Programs (SHIPs) or Insurance Counseling Assistance Projects (ICAs). Indeed, members of our working group are very much a part of this network of front-line advocates. These networks use a variety of staffing models, including staff-based projects, volunteer networks, and contract attorneys. Other front-line advocates include the several Medicare Advocacy Projects, which, in many instances, work directly with HICAPs, SHIPs, and ICAs, providing training, administrative advocacy, and litigation assistance.

Intensified working relationships include developing ideas for joint training projects designed for attorneys interested in developing a Medicare advocacy expertise. Efforts include working with this network to design brochures and pamphlets and other writings that would be useful in informing Medicare beneficiaries about the benefits and availability of legal representation through private attorneys.

Third, our workgroup has identified the need to intensify efforts to provide information to Medicare beneficiaries about the importance of attorney representation. As described above, much of this work involves working with beneficiary counseling and advocacy networks. In addition, there is a critical need to explore other avenues for reaching Medicare beneficiaries such as designing attractive and user-friendly websites, working inter-generationally with high school and junior high school students about Medicare issues and how they might assist parents and grandparents, and creative use of other media, including radio talk show formats, and billboards.

V. Conclusion
We encourage the pursuit of opportunities to educate bar members and Medicare beneficiaries about the importance of Medicare attorney representation. Similarly, bar groups are encouraged to continue the exploration of how they might be helpful to members in approaching Medicare representation as a practice specialty and the billing for such services.

*Footnotes are available upon request.  Please click here to request.

Copyright © Center for Medicare Advocacy, Inc. 01/08/2010