Close

1.877.725.2467 info@medivest.com

Author Archive for: nreifler

Medicare Liens – Protecting Medicare’s Past Interests – The First Step of Medicare Secondary Payer (MSP) Compliance for The Plaintiff Attorney
by

Medicare Liens – Protecting Medicare’s Past Interests – The First Step of Medicare Secondary Payer (MSP) Compliance for The Plaintiff Attorney

Note: If you would like to read the edited version of this article as it appears in Advocate Magazine you can download a copy of it here.

A. How and When Medicare Liens Arise

Under the Medicare Secondary Payer Act, found at 42 U.S.C. §1395y(b) (MSP), Medicare has a right to be reimbursed for payments it has made for a Medicare beneficiary’s medical treatment when the Medicare beneficiary is compensated for the treated injury by a third-party source. While Medicare’s rights to recovery under the MSP are so strong that they have been described as a super lien, that does not mean that your client has to always pay the full amount requested by Medicare.

The MSP right to reimbursement includes both a direct statutory right and a subrogation right, with a variety of recovery remedies available to the U.S. Government. In some jurisdictions, similar MSP recovery rights extend to privately administered Medicare benefits under Part C (Medicare Advantage Organizations or MAO’s) and Part D Prescription Drug Plans via the MSP’s private cause of action provision. The recovery rights described exist without regard to the date of service for the medical items, services, or expenses (medicals). Most attorneys know that they should check to see if traditional Medicare or a MAO has paid for medicals related to a compensated injury and address paying the amount or negotiating payment for same from the settlement proceeds. This article will explore ways to secure satisfactory lien resolution, focusing on traditional Medicare liens.

It should be noted that if a Medicare beneficiary begins billing Medicare or a MAO for injury related medicals after the settlement date/date compensated for the tort claim, recovery rights associated with those post settlement medicals exist in the same way that recovery rights exist for pre-settlement injury related Medicare covered medicals. Under such a post settlement scenario, the need for a Medicare lien investigation and resolution could essentially start all again.

B. Medicare Secondary Payer statute, 42 U.S.C. § 1395y(b) (MSP)

1. History of the Medicare Act and the Medicare Secondary Payer Act.

a. Background and Scope – Both arise from the Social Security Act of 1935. Medicare is a federally funded single payer national healthcare insurance administered by the U.S. federal government, through the Department of Health & Human Services (HHS) under authority of the Social Security Act of 1935. Medicare is funded by a payroll tax, premiums and surtaxes from beneficiaries, and general revenue. HHS delegates running the Medicare program and interpreting Medicare law and implementing regulations to the law to the Centers for Medicare & Medicaid Services (CMS). Medicare covers medical expenses not on the list of exclusions found in 42 U.S.C. §1395y(a)(1) typically for U.S. Citizens (although exceptions exist allowing eligibility for some non-US Citizens as well), who are 65 and older, or younger than 65 with disability status determined by the Social Security Administration as well as people with end stage renal disease (ESRD) and amyotrophic lateral sclerosis (ALS or Lou Gehrig’s Disease). It is made up of parts such as Part A (mainly inpatient hospital insurance and skilled nursing care) and Part B (doctor visits, durable medical equipment, outpatient hospital care and some physical and occupational therapy and some home health care), the two together are known as traditional Medicare; Part C, covering Part A and B services but administered by private insurers; and Part D, covering Prescription Drug Plans (PDPs) that are also administered by private insurers.

b. SSDI is for people who qualify under the Social Security Administration’s definition of disability. SSDI payments start about 5-6 months after SSDI eligibility is determined depending on the date eligibility is first established. Individuals approved for SSDI also become eligible and qualify for Medicare two years after they begin receiving the SSDI payments. Both SSDI and Medicare are entitlement-based in contrast with Medicaid and SSI, that are largely needs-based.

c. Since the Medicare law’s inception in 1965, Medicare has been secondary to Workers’ Compensation. Therefore, if an injury occurred while at work, the Workers’ Compensation carrier would take responsibility for payment of those injury related medicals in accordance with the applicable state statutory rates and procedures. However, in 1965, there was no provision in the law pertaining to payment of medical bills related to liability claims for injured Medicare beneficiaries. Therefore, Medicare would (most often) pay for all medical treatment within its scope, leaving private insurers (other insurance) to work out who would cover non-Medicare covered services.

2. The Medicare Secondary Payer Act (MSP) was Enacted in 1980.

a. In 1980, the Medicare Secondary Payer Statute (MSP) was enacted. 42 U.S.C. §1395y(b) et seq. is commonly called the MSP Act or MSP Statute and is also referred to as the Medicare Secondary Payer provisions of the Social Security Act (SSA). While it has different statutory references, it is the same law and has parallel sequences of each number and letter after the section 1395y or 1862 as follows: 42 U.S.C. § 1395y(b) = 42 U.S.C. §1862(b) of the SSA.

b. The MSP mandates Medicare to be a secondary payer to other forms of health insurance such as group health plans (GHPs), as well as other payment sources such as non-group health plans (NGHPs) when these primary plans are responsible for payment.

c. A “primary plan” is defined in 42 U.S.C. §1395y(b)(2)(A) to mean “a group health plan or large group health plan to the extent that clause (i) applies, and – a workers’ compensation law or plan, – an automobile or liability insurance policy or plan (including a self-insured plan) – or no fault insurance, to the extent that clause (ii) applies. An entity that engages in a business, trade or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part. 42 U.S.C. 1395y(b)(2)(A)(ii).”

d. All plans other than the group health or large group health plans are categorized by the Centers for Medicare & Medicaid Services (CMS) as Non Group Health Plans (NGHPs). While the MSP applies to Group Health matters, it is in the NGHP area that the MSP compliance industry focuses its attention. NGHPs are those entities that demonstrate obligations of payment as primary payers by either statute (think workers’ compensation or no fault insurance) or by virtue of resolution of claims through settlement, judgment, award or other payment (think liability matters), regardless of whether liability is admitted. Most liability releases specifically deny liability for alleged liability claims. The payment obligation that triggers the MSP arises in the tort scenario when payment is made. There are no defenses listed in the MSP associated with how the demonstration of the obligation arises; when a party begins to make payments under a statute or contract for insurance such as workers’ compensation or under the state’s no fault law under terms of an insurance contract, or when a party settles a liability case, the payment obligation is “demonstrated” and the party responsible for payment is by the MSP, primary to Medicare.

e. The MSP was enacted to curb the rising costs of Medicare and designed to make insurers responsible for payment of injury related treatment primary payers and Medicare, the secondary payer. See Humana Medical Plan, Inc. v. Western Heritage Insurance Company, 832 F.3d 1229, 1234 (11th Cir. 2016). Regulations interpreting the MSP are found at 42 C.F.R. §411 et. seq.

f. To accomplish the goal of curbing Medicare costs, the MSP general rule – 42 U.S.C. §1395y(b)(2)(A) – prohibits Medicare from making payment when a primary plan should make the payment. Specifically, a Medicare payment may not be made
“to the extent that –
(i) payment has been made, or can reasonably be expected to be made, with respect to the item or service as required under paragraph (1) [pertaining to GHPs], or
(ii) payment has been made or can reasonably be expected to be made under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance.”

g. There is only one exception to the prohibition of Medicare making payment when there is a primary payer that should make the payment. The exception authorizes Medicare to make payments called conditional payments if a primary plan “has not made or cannot reasonably be expected to make payment with respect to such item or service promptly.” 42 U.S.C. §1395y(b)(2)(B)(i).

  • Prompt or promptly, when used in connection with primary payments, except as provided in § 411.50, for payments by liability insurers, means payment within 120 days after receipt of the claim. 42 C.F.R. § 411.21.
  • Under 42 C.F.R. §411.50, prompt or promptly, when used in connection with payment by a liability insurer means payment within 120 days after the earlier of the following:
    (1) The date a claim is filed with an insurer or a lien is filed against a potential liability settlement.
    (2) The date the service was furnished or, in the case of inpatient hospital services, the date of discharge. 42 C.F.R. § 411.50

The payments allowed to be made by Medicare are considered “conditioned on reimbursement” to Medicare by the primary plan. These payments could occur either before a settlement or after a settlement so settling parties should always address and make sure to resolve conditional payments a/k/a Medicare liens that arose prior to settlement from the settlement proceeds (even if negotiated to a compromised/reduced number) and additionally, due to the MSP, settling parties should also consider how to avoid conditional Medicare payments after a settlement.

h. Congress enacted the MSP provisions to address enforcement of Medicare as a secondary payer to WC and included the various other types of insurance as primary plans at that time.

i. Between 1980 and 2001, there was very little enforcement of the MSP.

j. CMS Memos of note. In July 2001, CMS issued the Patel memo which mentioned Medicare Set-Asides (MSAs) for the first time. In 2011 – the Stalcup Memo from the Dallas CMS Regional Office was the first time liability MSAs (LMSA’s) were mentioned in a CMS memo with the most detailed guidance on CMS’s position of a need to consider and protect Medicare’s interests for liability as well as Workers’ Compensation settlements to protect the Medicare Trust Funds in a manner consistent with the MSP.

k. The MSP gives Medicare both direct “lien rights” (42 U.S.C. §1395y(b)(2)(B)(iii)) to be able to collect its conditional payments as well as subrogation rights whereby the MSP subrogates the United States to “any right under this subsection of an individual or any other entity to payment with respect to such item or service under a primary plan.” 42 U.S.C. §1395y(b)(2)(B)(iv). This can be an important distinction when it comes to how CMS and courts interpret whether and to what extent an apportionment calculation may be performed to the outstanding conditional payment amount by discounting procurement costs including attorney’s fees and costs in securing the settlement, judgment or award. Actions by the U.S. on behalf of HHS/CMS via the MSP’s direct right of recovery (through the Department of Treasury or potentially the Department of Justice) against entities responsible for payment or those that have received some of the settlement proceeds is separate from its right of subrogation to recover reimbursement of Medicare conditional payments. The MSP’s direct right of recovery has in some cases been interpreted to not be limited by the equitable principle of apportionment stemming from the subrogation right. See Social Security Act, § 1862(b)(1), (b)(2)(B)(ii), as amended, 42 U.S.C.A. § 1395y(b)(1), (b)(2)(B)(ii); 42 C.F.R. § 411.24(c). Zinman v. Shalala, 67 F.3d 841 C.A.9 (Cal.1995).
Read More

Medicare Advantage Plan MSP Private Cause of Action Suits – Eleventh Circuit Update
by

Medicare Advantage Plan MSP Private Cause of Action Suits – Eleventh Circuit Update

Medicare Advantage Plan MSP Private Cause of Action Lawsuit Update

1. MSPA Claims 1, LLC v. Tenet Florida, Inc. — F.3d —- 2019 WL 1233207 18-11816 (11th Cir. March 18, 2019).

On March 18, 2019, in MSPA Claims 1, LLC v. Tenet Florida, Inc., the 11th Circuit Court of Appeals made it clear that while Medicare law as a whole and the Medicare Secondary Payer Act (MSP)[1] provisions in particular may be confusing, the MSP’s private cause of action provision [2] is clear[3]. MSPA Claims 1 (MSPA) appealed its dismissal by Defendant Tenet at the district court level in the Southern District of Florida. Because some changes had taken place since the dismissal, the appellate court indicated that MSPA was on solid legal footing if it had sued a primary plan instead of a medical provider. The take away of the Tenet case is that Medicare beneficiaries or entities such as Medicare Advantage Plans/Medicare Advantage Organizations (MAOs) that wish to bring private cause of action claims under the MSP may not bring those claims against medical providers and must only bring those MSP private cause of action double damages (MSP PCOA) claims against primary plans that fail to timely pay or reimburse the aggrieved party.

As a reminder, the MSP makes Medicare secondary to all primary plans including both Group Health Plans and Non Group Health Plans. Non Group Health Plan primary plans include Automobile Insurers, Liability Insurance (including Self Insurance),Workers’ Compensation (WC) Plans or Insurance, and No Fault Insurance.

In many other MSP PCOA MAO cases that have been reported, MAO’s have typically sued primary plans that failed to pay. Most courts that have evaluated the issue of the right of the MAO’s to bring MSP PCOA claims have acknowledged the right of MAO’s or their assigns to bring MSP PCOA claims against primary plans. By contrast, the Tenet case involved an assignee of a MAO that sued a medical provider. The dismissal of MSPA at the district court level for this case focused on deficiencies in MSPA’s assignment chain and not on which entity could be sued under the MSP private cause of action. The key MSP PCOA language that was analyzed in the Tenet case is as follows:

There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).

42 U.S.C. § 1395y(b)(3)(A).

Comparing the limitations associated with the private cause of action with the public cause of action granted by the U.S. government in the MSP, the Eleventh Circuit clarified in Tenet that “[u]nlike the private cause of action, the government’s cause of action broadly permits lawsuits against ‘any entity that has received a payment from a primary plan’ – a grant that includes medical providers.” Id. (citing 42 U.S.C. § 1395y(b)(2)(B)(iii)(the MSP direct cause of action by the U.S.); Haro v. Sebelius, 747 F. 3d 1099, 1116 and U.S. v. Stricker, 524 F. App’x 500, 504 (11th Circ. 2013)(unpublished)). This means that while providers, attorneys, Medicare beneficiaries, or other entities that receive payment from a primary plan can be sued by the U.S. under the MSP for double damages, only primary plans themselves can be sued under the MSP PCOA.

Before reaching its decision, the Tenet court went through an analysis to confirm subject matter jurisdiction by determining whether MSPA had standing to pursue the claim. To that end, MSPA would need to show that it suffered an injury-in-fact, that was fairly traceable to the defendant’s conduct, and which was redressable by a favorable judicial decision. Id. at 2. The underlying federal claim revolved around the failure of the provider, Tenet, to pay a $286 medical bill on time. The bill was eventually paid approximately seven months late. Interestingly, the Eleventh Circuit explained that late payment was enough to show a concrete “injury-in-fact”. The Tenet court also explained why the assignment hurdles that had stopped MSPA at the district court level had been overcome at the time of the court’s decision. The district court evaluated the two-level assignment chain when the assignment chain was weak because the assignor, Florida Healthcare Plus (FHCP), had entered receivership proceedings and previously repudiated its assignment to La Ley, the entity that assigned the MSP PCOA claim to MSPA. The Eleventh Circuit in Tenet explained that just one week before its decision, FHCP entered into a settlement agreement with La Ley and MSPA that confirmed La Ley’s assignment of FHCP’s claim to MSPA and fully resolved the MSP Act assignment. Id. at 4. The court also dispelled Defendant/Appellee Tenet’s notion that an anti-assignment clause in a Hospital Services Agreement with assignee FHCP concerning the prohibition to assign hospital services would apply to the right of FHCP to assign its right (it received from the MAO) to La Ley that in turn assigned to MSPA the right to bring the MSP PCOA claim.

The Eleventh Circuit used established statutory interpretation rules to reach its final decision. MSPA argued that because paragraph (2)(A) that the private cause of action references makes a cross-reference to paragraph (2)(B), which establishes MSP conditional payment reimbursement and recovery (see MSP recovery actions by the U.S. and information on Medicare lien resolution and the new electronic payment functionality of the Medicare Secondary Payer Recovery Portal) rights, those recovery right concepts from paragraph (2)(B) should be incorporated back into the private cause of action. Essentially, MSPA was arguing that because other entities that receive payments from primary plans had obligations to reimburse Medicare for conditional payments and (2)(B) applies those recovery rights to this larger number of entities (“any entity that receives payment from a primary plan”), that the MSP PCOA could also be brought against any such entity that received a payment from a primary plan. This cross reference within a cross reference argument was shot down by the Tenet court as a “stretch.” Id. at 6. Alternatively, MSPA asked the court to rule in its favor based on authority from CMS promulgated regulations that afford MAOs the same MSP recovery rights as Medicare including the right to sue medical providers. Id. at 6 (citing 42 C.F.R.§§411.24(g), 422.108(f)). However, the Tenet court found the MSP statute to be clear and unambiguous and therefore, determined it unnecessary to look to the less authoritative CMS regulations for help with its interpretation of the MSP. Id. at 6. Because neither defendant was a primary plan, MSPA’s claim was dismissed.

2. MSPA Claims 1, LLC v. Infinity Property & Casualty Group, 2019 WL 1238852 (N.D. Al. March 18, 2019).

This second case was decided on the same day as the Tenet case but was heard at the federal trial level in the U.S. District Court in the Northern District of Alabama. This court falls within the same appellate jurisdiction (Eleventh Circuit) that decided the Tenet case. The same MSPA plaintiff discussed in the Tenet case above filed suit as an assignee of two different MAO’s on behalf of Medicare beneficiaries identified with their initials as representative examples (exemplars) for each of the two MAO’s. The asserted claims were MSP PCOA claims against insurance company, Infinity Property & Casualty Group, an undisputed primary payer. If the facts in this Infinity case were the same as those in the Tenet case except that the Defendant in this Infinity case was a primary payer instead of a medical provider, the case would have not been dismissed. However, the facts in this case were distinguishable from those of the Tenet case beyond who was sued. In the first claim of the Infinity case, MSPA was found by the court to have failed to show that Florida Healthcare Plus (FHCP – the same entity that was involved in a chain of assignments in the Tenet case), a MAO, had paid any medical bill connected to a claim of the exemplar Medicare beneficiary identified as D.W. The court seemed perturbed in announcing that Plaintiff MSPA knew what the court required but “due to a lack of either diligence or ability” failed to produce it. MSPA Claims 1, LLC v. Infinity Property & Casualty Group, 2019 WL 1238852 at 7 (N.D. Al. March 18, 2019). Without the connection to show that the MAO made a payment on behalf of the Medicare beneficiary, the Infinity court declared MSPA lacked standing to bring the claim.

The second claim of the Infinity case involved a MAO named Simply Healthcare Plans, Inc., its Management Service Organization (MSO) named InterAmerican Medical Center Group, LLC, and an exemplar Medicare beneficiary identified as B.G. The Infinity court pointed out that while the Eleventh Circuit in Western Heritage ruled that MAO’s accrue MSP PCOA recovery rights at the time they make conditional payments, the appellate court had not yet decided if the MSP statute also provides a private cause of action to MSO’s. Id. at 7 (citing Humana Medical Plan Inc. v. Western Heritage Ins., 832 F.3d 1229 (11th Cir. 2016). The Infinity court noted that district courts in the Eleventh Circuit and elsewhere overwhelmingly ruled that it does not. Id. (citing MSPA Claims I, LLC v. Liberty Mut. Fire Ins., 322 F. Supp. 3d 1273, 1283 (S.D. Fla. 2018); MAO-MSO Recovery II, LLC et al. v. State Farm Mut. Auto. Ins., 1:17-CV-1541-JBM-JEH, 2018 WL 2392827, at *7 (C.D. Ill. May 25, 2018). The Infinity court cited one case in which a district court did not rule out the possibility of MSO’s having MSP PCOA rights, citing MAO-MSO Recovery II, LLC v. Mercury General, 17-2525-AB and 17-2557-AB, 2018 WL 3357493, at *7 (C.D. Cal. May 23, 2018). The Infinity court followed the Eleventh Circuit’s Western Heritage reasoning that because the MSP does not provide conditional payment reimbursement authority to MSO’s and does not obligate MSO’s to make secondary payments to be reimbursed, the obligations of a MSO would be contractual as opposed to statutory. Id. at 8. Therefore, the court declined to expand the scope of potential plaintiffs under the MSP PCOA beyond those listed in Western Heritage (a MAO when the MAO makes a conditional payment for healthcare services, by a Medicare beneficiary when the Medicare beneficiary had healthcare services paid by Medicare (or a MAO), or a healthcare provider when that healthcare provider has not been fully paid for services provided to a Medicare beneficiary).

The Infinity court also pointed out some potential flaws in the assignment chain to the MSO from another entity called IMC which by contract, needed to approve the assignment of any purported MSP rights from the MSO to MSPA unless it was “ministerial in nature.” Because the evidence presented that the assignment was ministerial in nature failed to explain how it met the definition of that term in the contract, it failed the preponderance of the evidence standard, and the Infinity court found MSPA failed to show a valid assignment under its potential MSO claim.

Take Aways:

In the Eleventh Circuit (covering Florida, Georgia and Alabama), it is now clear that the following can sue a primary plan (only) under the MSP’s private cause of action:
• (1) a MAO when the MAO makes a conditional payment for healthcare services,
• (2) a Medicare beneficiary when the Medicare beneficiary had healthcare services paid by Medicare (or a MAO), or
• (3) a healthcare provider when that healthcare provider has not been fully paid for services provided to a Medicare beneficiary
____________________________________________________________
[1] 42 U.S.C. 1395y(b)(2) et seq.

[2] 42 U.S.C. § 1395y(b)(3)(A).

[3] MSPA Claims 1, LLC v. Tenet Florida, Inc. — F.3d —- 2019 WL 1233207 18-11816 (11th Cir. March 18, 2019) (citing The Federalist No. 62, at 421 (James Madison) (Jacob E. Cook ed., 1961) and MSP Recovery, LLC v. Allstate Ins. Co., 835 F. 3d 1351, 1358 (11th Cir. 2016).

Protecting Medicare’s Past Interests (How Securing Medicare Lien Resolution Will Help Protect Dwindling Medicare Trust Funds)
by

Protecting Medicare’s Past Interests (How Securing Medicare Lien Resolution Will Help Protect Dwindling Medicare Trust Funds)

During the 21 years between 1980 and 2001, it is no secret that the Centers for Medicare & Medicaid Services (CMS) did very little to enforce the Medicare Secondary Payer statute (a series of provisions beginning at 42 U.S.C. §1395y(b) commonly referred to as the MSP).  This is surprising because the MSP prohibits Medicare from making payment when a primary payer should pay but makes only one exception for Medicare to be able to make payments conditionally provided it gets paid back.  Therefore, in those 21 years, protecting Medicare’s past interests would seem to have been on the minds of all settling parties on either side of Non Group Health Plan (NGHP) claims – Automobile, Liability (including self-insurance), Workers’ Compensation, or No Fault cases involving Medicare beneficiaries.

With enforcement actions by the U.S. becoming a reality, most parties to settlement have come to learn the importance of identifying conditional payments made by Medicare prior to judgments, settlements, awards or other payments. However, early on, many plaintiffs and their attorneys ignored their obligations to consider and protect both Medicare’s past and future interests, most often without consequences. Regarding Medicare’s past interests, they were hoping to never hear from Medicare again. Regarding Medicare’s future interests, they hoped that Medicare would not deny injured Medicare beneficiaries’ injury related treatment. While there still seems to be some clarification on the horizon coming from CMS with respect to the legal obligations to protect Medicare’s future interests, there is no longer doubt regarding parties’ obligations to address Medicare’s past interests and satisfy conditional payments.  However, negotiating the amount that CMS will accept as full payment, often through a process called the Medicare compromise process, may actually help protect the Medicare Trust Funds that the MSP was originally designed to protect[1].

Medicare has two Trust Funds. One for Part A that covers hospital insurance for the aged and disabled and one for both Part B that mainly covers doctors’ visits and Part D that covers prescription medications, for the same population of Medicare enrollees. It was announced in June 2018 that the Part A Hospital Insurance (HI) Trust Fund is projected to be depleted in 2026, three years earlier than predicted just a year ago. The Part B and D Trust Fund is not as bad off due to a financing system with yearly resets for premium and general revenue income and is projected to have adequate funding for the next ten years and beyond.

Total Medicare expenditures were reported to be $710 billion in 2017. Medicare expenditures were projected to increase at a faster pace than either aggregate workers’ earnings or the economy, and to increase from approximately 3.7 percent in 2017 to between 6.2 percent and 8.9 percent as a percentage of Gross Domestic Product (GDP) by 2029, causing substantial strain on our nation’s workers, the economy, Medicare beneficiaries, and the Federal budget.

A 2018 Annual Report of the Boards of Trustees of the two Medicare Trust Funds recommended a legislative response [2] to help protect the Part A Trust Fund. However, instead of waiting years for Congress to act, if parties to third party or workers’ compensation settlements involving Medicare beneficiaries [3], proactively address both past and future interests of Medicare, that could help slow Medicare Trust Fund depletion, in line with the above-described intent of the MSP.

With good reason, many MSP compliance discussions focus on considering and protecting the future interests of Medicare and the allocation and administration tools designed to protect Medicare’s future interests.  Equally, if not more important due to the enforcement mechanisms currently in place, parties should address and protect Medicare’s past interests through Medicare lien resolution.  Because we know the obligation to address Medicare’s past interests exists, doesn’t it make sense to be proactive and seek opportunities to reduce/compromise the amount CMS will accept to fully resolve reimbursement of its conditional payment demands/Medicare liens? While it might seem that CMS would frown upon compromise requests, doesn’t it make more sense for CMS to encourage an open line of communication with settling parties and grant discounts to those who take the time to comply with the law as opposed to those settling parties that shirk their respective MSP responsibilities and ignore Medicare’s past interests?

CMS held a webinar today regarding an April 2019 upgrade to the Medicare Secondary Payer Recovery Portal (MSPRP) scheduled to allow for electronic payment of conditional payments for all NGHP matters. The portal’s payment functionality should speed up the payment of known non-disputed conditional payment amounts. For parties interested in reducing exposure to high interest rates (close to 10% currently) associated with late payment of conditional payment demands, this new electronic payment functionality of the MSPRP should be welcome news. Ideally, there will be an opportunity to reduce the requested conditional payment amounts by the procurement costs associated with obtaining the settlements. However, Medicare lien resolution often involves more than just reducing the injured party’s conditional payment obligation by the procurement costs.  As even better news, the compromise and waiver processes will not be affected by the electronic payments process.  Therefore, even when conditional payment/Medicare lien amounts are paid electronically via this new MSPRP process, CMS will still consider compromise or waiver requests, and issue refunds to the party providing payment (or as directed and authorized in writing by the paying party).

 


[1] The MSP is a series of statutory amendments to the Medicare law from 1965 which in turn amends the Social Security Act of 1935.

[2] Because this is the second consecutive finding that the difference between Medicare’s outlays and its financing sources will exceed 45 percent of Medicare’s outlays within 7 years, a Medicare funding warning was issued, requiring the President to submit proposed legislation to Congress within 15 days after the submission of the Fiscal Year 2020 Budget. Congress would then be required by law to consider the legislation on an expedited basis.

[3] The future interests of Medicare should be considered for any settlement regardless of claim type or Medicare enrollment status because the MSP does not make distinctions regarding Medicare’s payment status as a secondary payer for different claim types or about workload review threshold standards that currently exist in the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide published by CMS.  Those workload review thresholds allowing review by CMS are triggered for WCMSAs involving Medicare beneficiaries for judgments, settlements, awards, or other payments (“Settlements”) over $25,000, and injured parties with a reasonable expectation of becoming enrolled in Medicare within 30 months of Settlement for Settlements over $250,000.  Section 8.1 of the new WCMSA Reference Guide makes it clear that even for WC cases where the workload review thresholds are not met, Medicare’s future interests should be considered via a future care plan (using “plan for future care” to allow the reader to determine the method by which the plan for the future care of the injured party should be prepared – even if not recommending, certainly implying a method such as commonly seen in Medicare Set-Aside allocation reports), or else the settling parties will be placed “at risk for recovery from care related to the WC injury up to the full value of the settlement.”  The industry is still waiting for regulations in the Code of Federal Regulations by CMS clarifying this issue for liability cases.  This coming fall, there may be further clarification regarding consideration and protection of Medicare’s future interests via new Advanced Notice of Proposed Rulemaking in the NGHP area, with the hope that any resulting regulations will address comparative/contributory negligence, causation, policy limits, non-economic damages, and other factors unique to liability cases.

 

 

Announced and Unannounced Changes in the New WCMSA Reference Guide Now in Version 2.9 – A Peak Behind the CMS Curtain
by

Announced and Unannounced Changes in the New WCMSA Reference Guide Now in Version 2.9 – A Peak Behind the CMS Curtain

CMS published the latest version of the WCMSA Reference Guide as Version 2.9 (Reference Guide or Guide) on January 4, 2019. In addition to changes announced in Section 1.1 of the Reference Guide titled Changes in This Version of the Guide, there are several other changes made that were not announced. The announced changes were as follows:

Version 2.9 of the guide includes the following changes:

• To eliminate issues around Development Letter and Alert templates auto populating with individual Regional Office (RO) reviewer names and direct phone numbers, these will now display the generic “Workers’ Compensation Review Contractor (WCRC)” and the WCRC customer service number “(833) 295-3773” (Appendix 5).
• Per CMS’ request, certain references to memoranda on cms.gov have been removed.
• The CDC Life Table has been updated for 2015 (Section 10.3).
• Updates have been provided for spinal cord stimulators and Lyrica (Sections 9.4.5 and 9.4.6.2)

Below, in numerical order, please find some of the main changes made by CMS, many of which were not announced in Section 1.1 quoted above. Sections, titles and additions have been bolded for emphasis and ease of reading.

A change in Section 4.1.1, titled Commutation and Compromise, on page 4, was one of the announced changes, and omits the previous Reference Guide’s reference to the July 2001 WC Regional Office (RO) Memorandum known in the industry as the Patel Memo. This is consistent with the statement in Section 1.0 that the Reference Guide “. . . reflects information compiled from all WCMSA Regional Office (RO) Memoranda issued by CMS, from information provided on the CMS website, from information provided by the Workers Compensation Review Contractor (WCRC), and from the CMS WCMSA Operating Rules. The intent of this reference guide is to consolidate and supplant all historical memoranda in a single point of reference. Please discontinue the reference of prior documents.” The concept is that the Reference Guide is the policy of CMS and prior documents or Memos it has issued should not be referred to or otherwise used to support a party’s position regarding matters addressed in the Reference Guide unless it continues to be referenced in the Reference Guide.

Section 4.2, titled Indications That Medicare’s Interests are Protected, has a new unannounced on page 5 bullet stating:

• CMS’ voluntary, yet recommended, WCMSA amount review process is the only process that offers both Medicare beneficiaries and Workers’ Compensation entities finality, with respect to obligations for medical care required after a settlement, judgment, award, or other payment occurs. When CMS reviews and approves a proposed WCMSA amount, CMS stands behind that amount. Without CMS’ approval, Medicare may deny related medical claims, or pursue recovery for related medical claims that Medicare paid up to the full amount of the settlement, judgment, award, or other payment.

Medivest’s take on the subject: CMS makes it sound enticing for Workers’ Compensation entities by using the word “finality.” Many parties have used the voluntary process to obtain approvals but have felt there has been a lack of consistency in review standards, especially from one contractor to another. Blogs and websites of many other companies that prepare Medicare Set-Aside (MSA) allocations indicate that they have experienced an increase in surprise counter highers over expenses like off-label prescription drug use as well as some other medical services when submitting WCMSAs to CMS for approval. As a result of what may have been perceived as a lack of consistency or perhaps a lack of confidence that the counter highers reflect real-world evidence-based needs of injured parties, many settling parties have seemed less inclined to choose submission as a regular practice, even when WC settlements fall within the CMS workload review thresholds, opting instead to follow the Medicare Secondary Payer Act, 42 U.S.C. § 1395y(b) et. seq. (MSP), and its corresponding regulations, instead of the voluntary policies of CMS.

On pages 8-9, under Section 8.1, titled Review Thresholds, two new unannounced examples have been included as follows:

Example 1: A recent retiree aged 67 and eligible for Medicare benefits under Parts A, B, and D files a WC claim against their former employer for the back injury sustained shortly before retirement that requires future medical care. The claim is offered settlement for a total of $17,000.00. However, this retiree will require the use of an anti-inflammatory drug for the balance of their life. The settling parties must consider CMS’ future interests even though the case would not be eligible for review. Failure to do so could leave settling parties subject to future recoveries for payments related to the injury up to the total value of the settlement
($17,000.00).

 

Example 2: A 47 year old steelworker breaks their ankle in such a manner that leaves the individual permanently disabled. As a result, the worker should become eligible for Medicare benefits in the next 30 months based upon eligibility for Social Security Disability benefits. The steelworker is offered a total settlement of $225,000.00, inclusive of future care. Again, the steelworker [typo fixed] is offered a total settlement of $225,000.00, inclusive of future care. Again, there is a likely need for no less than pain management for this future beneficiary. The case would be ineligible for review under the non-CMS-beneficiary standard requiring a case total settlement to be greater than $250,000.00 for review. Not establishing some plan for future care places settling parties at risk for recovery from care related to the WC injury up to the full value of the
settlement.

Medivest’s take on the subject: These examples illustrate CMS’s position that Medicare’s future interests need to be considered even if the dollar amount of the judgment, settlement, award or other payment does not meet the CMS workload review thresholds. The examples emphasize that CMS considers the establishment of a plan for future care to be a priority and that CMS is serious about protecting Medicare’s future interests. These examples further spell out that CMS reserves the right to request an injured party to fully exhaust the amount of money equal to the entire settlement (not mentioning anything about allowing for a reduction of procurement costs such as attorney’s fees and costs expended to obtain the settlement typically allowed to be deducted under MSP regulations when parties timely request to resolve conditional payment/Medicare liens) when an injured party who is compensated for future medicals, fails to establish a plan for future care.

On page 9 under Section 9.0, titled WCMSA Submission Process Overview, CMS allows for a WCMSA proposal to be submitted either by paper or CD to the Benefits Coordination & Recovery Center or online via the WCMSA Portal (WCMSAP) and clarifies that these are the only acceptable submission delivery methods to be used.

In Section 9.4.5, titled Medical Review Guidelines, under the subsection heading Spinal Cord Stimulators on page 22, the following language was added to change the former policy of not including lead implantation in revision surgeries to the newly adopted policy whereby “Routine replacement of the neurostimulator pulse generator includes the lead implantation up to the number of leads related to the associated code. Revision surgeries should only be used where a historical pattern of a need to relocate leads exists.”

In Section 9.4.5, titled Medical Review Guidelines, under the subsection Pricing for Spinal Cord Stimulator (SCS) Surgery on page 22, the following text was inserted “SCS pricing is based on identification of: 1.) Rechargeable vs. Non-rechargeable and 2.) Single vs. Multiple Arrays (leads). If unknown, CMS will default to non-rechargeable single array.”

In Section 9.4.5, titled Medical Review Guidelines, under the subsection Pricing for Spinal Cord Stimulator (SCS) Surgery on page 22, the following language was deleted: “Preadmission Testing will be included where appropriate.”

In Section 9.4.5, titled Medical Review Guidelines, under the subsection Pricing for Spinal Cord Stimulator (SCS) Surgery, a table titled Table 9-3: Spinal Cord Stimulator Surgery CPT Codes on page 24, was expanded from three procedure (CPT) codes previously listed for Post Placement System Testing to a total of 12 including the same Post Placement System Testing as well as a series of CPT codes for Pre-Placement Psychological Testing, Anesthesia, and various other codes for the implantation procedures, etc. along with detailed descriptions of each.

In Section 9.4.6.2, titled Pharmacy Guidelines and Conditions, under the subsection Medically Accepted Indications and Off-Label Use, on page 28, there are now two detailed examples of off-label use instead of only one off-label use example in the prior version. The additional language appears in bold as follows:

Example 1: Lyrica (Pregabalin) is cited in MicroMedEx for an off-label medication use related to neuropathic pain from spinal cord injury, and a number of scientific studies indicate that Pregabalin shows statistically significant positive results for the treatment of radicular pain (a type of neuropathic pain). Spinal cord neuropathy includes injuries directly to the spinal cord or its supporting structures causing nerve impingement that results in neuropathic pain. Lyrica is considered acceptable for pricing as a treatment for WCMSAs that include diagnoses related to radiculopathy because radiculopathy is a type of neuropathy related to peripheral nerve impingement caused by injury to the supporting structures of the spinal cord.

 

Example 2: Trazodone” – which was previously described as – “Trazodone is approved by the FDA for the treatment of major depressive disorder,
but is commonly given off-label to treat insomnia. So the WCRC would include trazodone in a WCMSA if used to treat insomnia, if it is related to the workers’ compensation injury.”

Medivest’s take on the subject: This seems to be a situation where the new WCRC has been including more off-label drugs in its counter highers than the prior contractor, with the expensive drug Lyrica, gaining the most industry attention. Entities submitting WCMSAs for approval should be aware of the language referred to on page 28 of the Reference Guide that cites the Medicare IOM (Internet Only Manual) rules concerning Medicare covered off-label usage. The standard is as follows, “FDA approved drugs used for indications other than what is indicated on the official label may be covered under Medicare if the carrier determines the use to be medically accepted, taking into consideration the major drug compendia, authoritative medical literature and/or accepted standards of medical practice accepted, taking into consideration the major drug compendia, authoritative medical literature and/or accepted standards of medical practice.” Because this standard is so broad and the CMS and its WCRC seems to be taking an expansive approach to what types of off-label use is determined to be includable, parties seeking to control costs but still interested in CMS submission should consider professional consultations with treating physicians as to whether there are less costly medications and/or alternate treatment/prescription doses that can be utilized, implemented, and confirmed as equally effective, prior to submission.

Under Section 10.4 Section 20 – Life Care / Future Treatment Plan, page 43, a new statement “A Future Treatment Plan is required in the absence of a Life-Care Plan” makes it clear that there is a minimum requirement for future treatment to be listed in a submitted allocation in absence of a Life-Care Plan.

Medivest’s take on the subject: This is not really news because the term Future Treatment Plan existed in the prior Reference Guide’s title for this section. This seems to be a way to bring some consistency to the idea and to tie the term Future Treatment Plan together with the terms Future Treatment and Future Treatment Summary that also appear (and previously appeared) in the section.

In Section 10.5.2, titled Use of WC Fee Schedule vs. Actual Charges for WCMSA, on page 43, the state of Virginia was removed from the list of states that do not have a state Workers’ Compensation (WC) Fee Schedule. The states that do not have a WC fee schedule currently are Indiana, Iowa, Missouri, New Hampshire, New Jersey, and Wisconsin. The Reference Guide instructs, “Do not use a fee schedule in a state that does not have a fee schedule.”

Under Section 16, titled Re-Review, there are three subheadings describing circumstances under which a party may request a Re-Review. Under the subheadings of Mathematical Error and Missing Documentation on page 55, the following unannounced Note was inserted:

Notes:
• Disagreement surrounding the inclusion or exclusion of specific
treatments or medications does not meet the definition of a mathematical error.

• Re-Review requests based upon failure to properly review already submitted records must include only the specific documentation referenced as a basis for the request.

Under the third subheading titled Amended Review, the criteria and information remained the same, but the information was reformatted as follows with a phrase added to last note bullet in bold:

• CMS has issued a conditional approval/approved amount at least 12 but no more than 48 months prior.

• The case has not yet settled as of the date of the request for re-review.

• Projected care has changed so much that the submitter’s new proposed amount would result in a 10% or $10,000 change (whichever is greater) in CMS’ previously approved amount.

• Where a re-review request is reviewed and approved by CMS, the new approved amount will take effect on the date of settlement, regardless of whether the amount increased or decreased.

• This new submission may be delivered in both paper and portal formats. Please see the WCMSAP User Guide for more information.

In order to justify that the projected care would result in a 10% or $10,000 change (whichever is greater), the submitter must return CMS’ Recommendation Sheet that was included in CMS’ conditional approval letter and identify the following:

• Line items that were included in the approved amount, but are for care that has already been provided to the beneficiary. Please identify where references to records indicating that the care has already been provided can be found in the updated proposal.

• Line items for care that is no longer required. Please identify where references to replacement treatment can be found in the updated proposal.

• If additional care is required that was not otherwise included in CMS’ conditional approved amount, please add line items.

Notes:
• In the event that treatment has changed due to a state-specific requirement, a life-care plan showing replacement treatment for denied treatments will be required if medical records do not indicate a change.

• The approval of a new generic version of a medication by the Food and Drug Administration does not constitute a reason to request an amended review for supposed changes in projected pricing.

• CMS will deny the request for re-review if submitters fail to provide the above-referenced justifications with the request for re-review.

• Submitters will not be permitted to supplement the request for re-review, nor will they be developed.

Under Section 17.3 Use of the Account on Page 57, the bolded language replaced prior language on the subject:

“Please note: If payments from the WCMSA account are used to pay for services other than Medicare-allowable medical expenses related to medically necessary services and prescription drug expenses for the WC settled injury or illness, Medicare will deny all WC-injury-related claims until the WCMSA administrator can demonstrate appropriate use equal to the full amount of the WCMSA.”

Medivest’s take on the subject: CMS is indicating that Administrators have the burden to show appropriate use of MSA funds and therefore, must keep accurate records to prevent mistaken denial of injury related Medicare covered claims by Medicare after MSA funds are exhausted.

Under Chapter 18 titled CMS Submission, after the sentence, “Additionally, the contractor must ensure that Medicare makes no payments related to the WC injury until the WCMSA has been used up”, the following language was added on page 60:

This is accomplished by placing an electronic marker in CMS’ systems used to pay or deny claims. That marker is removed once the beneficiary can demonstrate the appropriate exhaustion of an amount equal to the WCMSA plus any accrued interest from the account. For those with structured settlements, the marker is removed in any period where the beneficiary exhausts their available funds; however, it is replaced once the anniversary fund deposit occurs until the entire value of the WCMSA is demonstrated as entirely exhausted.

Medivest’s take on the subject: This is the first indication of an “electronic marker” and gives an idea of how the CMS computer system will be flagging those injury related medicals submitted for payment by Medicare, but that Medicare may deny.

In Appendix 4, WCRC Proposal Review Reference Tools on page 69, the link to CMS Memos and written references to CMS Memos going back to 2001 were removed.

All references in Appendix 5. Sample Letters to Sherri McQueen, as Acting Director, were changed to Sherri McQueen, Director, Financial Services Group Office of Financial Management.

In the Development Letter Sample, the CMS Regional Office Contact reference and contact phone numbers were removed and replaced with “the Workers’ Compensation Review Contractor (WCRC) at (833) 295-3773” on pages 81 and 85.

Medivest’s take on the subject:  The WCRC now has the responsibility to field calls regarding submission of WCMSAs instead of the CMS Regional Offices.

Medivest will continue to follow changes in policy at CMS and in the actions of its Workers’ Compensation Review Contractor, Capitol Bridge, LLC, and will keep our readers up to date on developing trends.

How to Secure Medicare Lien Resolution (While Protecting Medicare’s Past Interests)
by

How to Secure Medicare Lien Resolution (While Protecting Medicare’s Past Interests)

Planning to protect Medicare’s future interests should be part of any diligent Medicare Secondary Payer Act[1] (MSP) compliance analysis.  However, because enforcement actions by the U.S. under the MSP have focused on reimbursement of Medicare for payments occurring prior to settlement, Medicare lien resolution (i.e. investigating and negotiating satisfactory payment of Medicare conditional payment reimbursement demands), should be placed at the top of the MSP compliance list by primary payers and those representing injured parties. We recently wrote about conditional payment correspondence from the Centers for Medicare & Medicaid Services (CMS) through its BCRC and CRC contractors, the updated functionality of the Medicare Secondary Payer Recovery Portal (MSPRP), and the importance of obtaining correct conditional payment amounts so settlements can move forward while protecting Medicare’s past interests. When the U.S. government’s conditional payment reimbursement amount (Medicare lien amount) is larger than a potential settlement amount or the payment of the full lien amount will take up a good portion of a Medicare beneficiary’s net settlement, a beneficiary will be less interested in settling. Enter Medicare lien resolution.

Medicare Lien Resolution Road Map

When we perform Medicare lien resolution, our goal is to get CMS to evaluate the Medicare lien amount compared to the net amount to be received by injured party after fees and costs are deducted. Additionally, we sometimes ask CMS to evaluate the Medicare lien amount compared to the weakened financial position/physical condition of the Medicare beneficiary after an accident. When the net settlement is unfairly low compared to the Medicare lien amount, CMS will often reduce the lien prior to settlement. There are several federal statutes and accompanying regulations that provide authority for CMS to reduce (compromise) or sometimes waive Medicare liens. The statutes and regulations outline standards and factors that may be considered for full or partial reductions of Medicare lien amounts. These factors often focus on the ability of the injured party to pay the lien, costs the government would incur to pursue collecting the lien, as well as the injured party’s financial/physical circumstances.

Medicare Lien Waiver Process

The Medicare lien waiver process is a more involved process than the compromise process. Waiver requests typically focus on the financial position of the injured Medicare beneficiary, who may have higher expenses and/or lower income after sustaining an injury. After settlement occurs and funds are transferred, while the MSP technically still allows the U.S. to pursue the primary payer (entity responsible for payment) when a Medicare beneficiary fails to satisfy a Medicare lien, the Medicare beneficiary is most often considered the debtor and pursued by CMS initially through the Benefits Coordination and Recovery Center (BCRC).  Attorneys for Medicare beneficiaries can also be caught in the MSP cross hairs.  Waiver requests for a Medicare beneficiary are sent to the BCRC. In turn, the BCRC typically asks for a SSA-632 form to be filled out with a variety of financial information about the beneficiary. Waiver determinations may be made by BCRC staff and are usually based on financial hardship.

To speed up the process and increase the likelihood of a positive outcome, it is a best practice when requesting a waiver to provide a full financial picture of the beneficiary, including either a completed SSA-632 form or as much of the information requested by that form as can be obtained, so BCRC staff will have adequate information to reach a fair determination. A waiver may be granted when continuing the collection would be against “equity and good conscience.” The process takes about 120 days from start to finish for a waiver determination to be made. If a conditional payment demand has been paid, a waiver or compromise request may still be made, and a refund will be considered. If the BCRC makes a determination to refund all or part of the prior payment, the refund will typically take an additional 3-4 weeks, depending on whether payment had been made to the BCRC directly or whether it was made to the Department of Treasury after a referral of the debt to Treasury by the BCRC.

Medicare Lien Compromise Process

If there is not a significant financial or physical hardship to the Medicare beneficiary, but the dollar amount of the projected settlement is low compared with the likely settlement value and/or the Medicare lien amount, an alternative to a waiver request is a Medicare lien compromise request. To request a compromise, a third-party representative may offer to pay a specific dollar amount on behalf of the beneficiary to fully compromise the outstanding Medicare debt/lien amount. The requester must include the settlement amount (or settlement offer), the amount they are asking CMS to accept as full payment, and the actual or projected attorney fees and costs associated with procuring the settlement. Attorney fees and costs are omitted when the beneficiary is not represented by counsel. CMS, through the BCRC, either responds by accepting the offer or presenting an alternate proposed amount. At that point, the beneficiary must pay the countered amount or if accepted, pay the accepted amount within 60 days of the BCRC response, or else the offer is no longer valid.

Letting a representative act on your client’s behalf in communicating and negotiating with CMS has helped lawyers save time and put more money in the pockets of their clients, while helping parties to the settlement comply with the MSP with respect to Medicare’s past interests.  Count on Medivest to help you with your Medicare lien resolution needs.


[1] 42 U.S.C. § 1395y(b)(2) et seq.

Notice of Proposed Rulemaking for Protecting Medicare’s Future Interests on the Horizon (For Auto, Liability (and Self-Insurance), No Fault, and Workers’ Compensation Cases)
by

Notice of Proposed Rulemaking for Protecting Medicare’s Future Interests on the Horizon (For Auto, Liability (and Self-Insurance), No Fault, and Workers’ Compensation Cases)

This week, under a “Miscellaneous Medicare Secondary Payer Clarifications and Updates” title, the Office of Management and Budget (OMB) provided information that in September of 2019 there will be a Notice of Proposed Rulemaking (NPRM) issued by the Department of Health and Human Services (HHS) and CMS, its sub agency that runs Medicare, to “ensure that beneficiaries are making the best health care choices possible by providing them and their representatives with the opportunity to select an option for meeting future medical obligations that fits their individual circumstances, while also protecting the Medicare Trust Fund.” The abstract acknowledges that “[c]urrently, Medicare does not provide its beneficiaries with guidance to help them make choices regarding their future medical care expenses when they receive automobile and liability insurance (including self-insurance) no fault insurance, and workers’ compensation settlements, judgments, awards, or payments, and need to satisfy their Medicare Secondary Payer (MSP) obligations.” Interestingly, the projected NPRM will be geared to clarifying MSP obligations to protect Medicare’s future interests regarding injury related future medicals regardless of the case type.

Stakeholders in the MSP compliance community must always look first to the Medicare Secondary Payer statute (a series of provisions beginning at 42 U.S.C. §1395y(b) commonly referred to as the MSP) to help determine how to best comply with the statute. However, while the MSP prohibits Medicare from making payment when a primary payer should pay and makes an exception for Medicare to be able to make payments conditionally provided it gets paid back, no part of the MSP or any related regulation references the term Medicare Set-Aside (MSA) or addresses what a Medicare beneficiary’s obligations are under the law as it relates to Medicare’s future interests.

Because the law does not directly address MSAs or future interests of Medicare, parties look to case law interpreting the MSP, regulations issued by CMS, a Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide published by CMS, and MSP compliance companies and attorneys, to help guide MSP compliance decision making. While CMS has issued memos discussing MSAs and have clarified that there is no difference under the law between workers’ compensation and liability cases in terms of the need to consider and protect Medicare’s interests, uncertainty has remained as to the “how” and “when” as opposed to the “why”.

MSP stakeholders have been waiting for clarification from CMS regarding Liability Medicare Set-Asides (LMSAs) and No Fault MSAs for quite some time. It is generally understood that an injured party that receives payment from an injury complies with the MSP regarding Medicare’s future interests, when he or she does not prematurely bill Medicare for injury related Medicare covered medicals. In the workers’ compensation context, because CMS sets workload review thresholds at over $25,000 when an injured worker is a Medicare beneficiary and at over $250,000 when the injured worker has a reasonable expectation of becoming a Medicare beneficiary within 30 months, this has been a standard that many in the industry look to when trying to determine when to protect Medicare’s future interests in injury cases outside of the workers’ compensation field. This “when” has not yet been clarified by CMS. Confusion over the “how” to protect Medicare’s future interests has surrounded LMSAs because liability cases often settle for amounts lower than full case value due to questions over causation, comparative or contributory negligence or hybrids of those concepts, policy limits, caps on damages, along with the allowance for a variety of non-economic damages in liability cases. While the abstract describing the future Notice of Rulemaking does not use the term Medicare Set-Aside or MSA, it describes precisely what Medicare Set-Asides are designed to address.

As described, the proposed rule would address the protection of Medicare’s future interests in each of the Non Group Health Plan (NGHP) categories described in the MSP and its regulations, those being automobile and liability insurance (including self-insurance) no fault insurance, and workers’ compensation cases. The OMB notification defines the future action as a NPRM. Prior to the distribution of the Notice of Rulemaking, agencies typically publish a notice in the Federal Register called an Advance Notice of Proposed Rulemaking or ANPRM, to “test out” a proposal or to solicit ideas before drafting its actual Notice of Proposed Rulemaking.  The ANPRM is often an intermediate step for an agency to let the public know it intends to take official action in creating a regulation in the Code of Federal Regulations pertaining to a statute. The statute this NPRM would relate to is the MSP. An ANPRM had been announced in 2012 and it sought public comment but was subsequently withdrawn.

We have also written about some private MSP stakeholder meetings in 2018 during which CMS indicated that, while subject to change, denial of service would be their primary enforcement mechanism with respect to injury related Medicare covered future medicals in the liability area when specifically discussing Liability Medicare Set-Asides (LMSAs). With the addition of a Mandatory Insurance Reporting (Section 111 Reporting) section in the MSP effective in 2009, and the collection of Medicare beneficiary injury data by CMS now approaching 10 years, it seems inevitable that denials of service will increase for Medicare beneficiaries who fail to set money aside to cover their injury related Medicare covered items, services, and expenses. Due to the private stakeholder meetings CMS has had, it is not known whether CMS will provide an ANPRM prior to the NPRM.

Therefore, it remains to be seen how soon regulations clarifying the obligations of parties to protect Medicare’s future interests will be promulgated. Medivest will continue to keep you apprised as this important Medicare future interest matter progresses.

Medicare Lien Investigation/Lien Resolution (Is Ignorance of MSPRP Procedures or Other CMS Access Channels a Valid Defense?)
by

Medicare Lien Investigation/Lien Resolution (Is Ignorance of MSPRP Procedures or Other CMS Access Channels a Valid Defense?)

Not following proper lien investigation procedures for the investigation and negotiation of Medicare liens can have far-reaching consequences on settling parties. Lien investigation means finding the dollar amount of conditional payments made by Medicare that are related to an injury for which another entity has the primary responsibility to pay under the Medicare Secondary Payer Act (MSP)[1].  For a plaintiff and their attorney or even a defendant paying a third party settlement, there could be MSP conditional payment exposure with potential recovery actions from the U.S. government. In many areas of law, a party seeking to enforce a lien needs to first file a document in court, providing notice to the party against whom it seeks to enforce the lien.  The U.S.’s direct[2] statutory right to reimbursement of its conditional payments pursuant to the MSP does not require the filing of a document in court prior to becoming enforceable but does have a 60-day notice period from The Centers for Medicare & Medicaid Services (CMS), the agency that runs Medicare, after which interest begins accruing for parties that fail to pay CMS contractor final demands.  While the procedures establishing Medicare’s conditional payment reimbursement rights differ from other lien procedures, this direct reimbursement right of the U.S. under the MSP is often referred to as a lien right.

The Plaintiff in Mayo v. NYU Langone Medical Center, a New York state trial court case, seems to have gotten a second chance at settlement when the court vacated a Settlement Agreement in the amount of $725,000 when Plaintiff’s counsel received a letter soon after settlement requesting a much higher Medicare reimbursement than was originally discovered. While the court’s decision worked in favor of the Plaintiff this time, (giving the Plaintiff and attorney a second crack at a higher settlement or trial), if the motion was denied, the attorney might have been accused of committing legal malpractice.

In Mayo, the Plaintiff and Defendant each received different conditional payment letters from the Centers for Medicare & Medicaid Services (CMS). While not ideal, this can occur when duplicate files are generated from the two different contractors that CMS uses for collecting conditional payment reimbursements, often referred to as Medicare liens, stemming from liability/auto/self-insured, workers’ compensation and/or no-fault cases. The Plaintiff’s letter from the Benefits Coordination and Recovery Center (BCRC) indicated that Medicare’s conditional payment amount was $1,811.95. The Defendant’s letter from the Commercial Recovery Center (CRC) indicated that Medicare’s then existing lien amount for conditional payments was $2,824.50. Before requesting or obtaining a Final Demand from the CMS web portal, the parties created a written Settlement Agreement, agreeing to settle the matter in its entirety for $725,000 inclusive of what the parties contemplated as a “Medicare-final” conditional payment reimbursement of no more than $2,824.50. The Defendant never signed the Settlement Agreement. Prior to settlement funds being disbursed, a Final Demand from CMS was received by the Plaintiff, the Executor of an Estate of a Medicare beneficiary, asking for repayment of the shocking amount of $145,764.08.

The Plaintiff attempted to appeal the Final Demand amount at the first few administrative stages but was not able to be heard by a U.S. District Court because he failed to exhaust his administrative remedies.  Instead of completing all four administrative appeals before seeking federal court review, the Plaintiff went to state court and asked the court to void the Settlement Agreement. The Plaintiff argued that despite being in writing, the Settlement Agreement was unenforceable because it had not been signed by a representative for the Defendant and that there was a mutual mistake of fact concerning the Medicare lien amount. The court agreed with both arguments.

The CMS web portal, called the Medicare Secondary Payer Recovery Portal or MSPRP, was improved in July of 2018, to make it even easier for settling parties to obtain up to date conditional payment/lien reimbursement amounts. Congress, through the SMART Act amendments to the MSP[3], regulated by 42 C.F.R. § 411.39 of the Code of Federal Regulations, contemplated parties being able to rely on a download of a time and date stamped Final Conditional Payment Letter from the Medicare Secondary Payer Recovery Portal (MSPRP) provided there was proper notification/reporting of a pending settlement within 120 days prior to the anticipated settlement and after giving CMS at least 65 days to search for conditional payments to be reimbursed. The updated functionality of the web portal provides a tool allowing authorized users to view conditional payment correspondence and request electronic or paper copies of same.

On November 19, 2018, CMS announced a webinar on upcoming self-reporting functionality that will be added to the MSPRP in January 2019.  Medivest will monitor this MSPRP enhancement and has representatives that regularly communicate with CMS via phone, fax, mail and the CMS MSPRP web portal to help parties stay up to date with CMS and avoid misunderstandings like the one that occurred in the Mayo case.

Take Aways:

• It is crucial for prospective settling parties to investigate conditional payment reimbursement amounts or work with an entity familiar with lien investigation procedures.

• There is value in evaluating Conditional Payment Summary forms that accompany the conditional payment correspondence from Medicare to confirm all entries on the form are injury-related and/or determine whether some entries should be disputed[4].

• In addition to checking and verifying the correct demand amounts from CMS contractors, prior to settlement, steps should be taken by all parties to expand lien search inquiries beyond traditional Medicare (and Medicaid) to determine whether a Medicare Advantage Plan or Organization (MAP/MAO) made any conditional payments that could be recovered under the MSP.

• If a Claimant/Applicant is a Medicare Advantage Plan member and any payments by the Medicare Advantage Plan should have been paid by a primary payer, steps should be taken to get those conditional payments reimbursed promptly.

• During the lien investigation process, parties should analyze whether a compromise (reduction) of a lien or potentially a waiver may be appropriate.

• Medivest provides lien resolution services to help parties satisfactorily negotiate outstanding public and private health care matters including Medicare liens, Medicaid liens, Veterans Administration/TriCare liens, hospital liens, and doctors’ bills. Our lien resolution team works hard to dispute non-claim related bills, resolve and reduce outstanding bills/liens, and will seek refunds for amounts already paid when appropriate. Please reach out to discuss lien resolution today.


[1] 42 U.S.C. § 1395y(b)(2) et. seq.

[2] The MSP also provides the U.S. subrogation rights, subrogating the U.S. to the rights of any Medicare beneficiary as follows:

(iv) Subrogation rights

The United States shall be subrogated (to the extent of payment made under this subchapter for such an item or service) to any right under this subsection of an individual or any other entity to payment with respect to such item or service under a primary plan.

42 U.S.C.A. § 1395y (West)

[3] The MSP law says,

(III) Use of timely web download as basis for final conditional amount
If an individual (or other claimant or applicable plan with the consent of the individual) obtains a statement of reimbursement amount from the website during the protected period as defined in subclause (V) and the related settlement, judgment, award or other payment is made during such period, then the last statement of reimbursement amount that is downloaded during such period and within 3 business days before the date of the settlement, judgment, award, or other payment shall constitute the final conditional amount subject to recovery under clause (ii) related to such settlement, judgment, award, or other payment.

42 U.S.C. § 1395y(b)(2)(B)(vii)(III).

The protected period defined in subclause (V) is a 65-day period that can sometimes be extended another 30 days after a party, their attorney or other representative (such as a MSP Compliance company) has notified CMS through the MSP recovery web portal of a pending liability insurance (including self-insurance), no-fault insurance, or workers’ compensation settlement, judgment, award or other payment (“Settlement”). The entire process is outlined in the Code of Federal Regulations (C.F.R.) at 42 C.F.R. § 411.39. If after the 65 day Protected Period, the date/time stamped Final Conditional Payment Letter is downloaded within three days of a settlement, parties may reasonably rely on that Final Conditional Payment Letter. There seems to be some uncertainty whether the MSPRP Final Conditional Payment Letter may be re-requested at a later date if the settlement occurs later.

[4] There should be primary diagnosis codes obtained from the insurance carrier’s/Responsible Reporting Entity’s report of the claim under Section 111 of the Medicare Secondary Payer Act (MSP). It is important to parse out payments for co-morbid and other non-injury related payments made by Medicare that don’t count as conditional payments because disputes may only be made once during this process. Once disputed, unless CMS responds within 11 days from receipt, the dispute will be considered granted.

Does Self-Administration Ever Make Sense?
by

Does Self-Administration Ever Make Sense?

Injured parties receiving lump sum settlements tend to spend their settlement money quickly. This quick spend risk is often described as dissipation risk. Statistics in a personal injury practice guide by The Rutter Group indicate that somewhere between 25 and 30% of accident victims spend all settlement money within two months of receiving the funds and that up to 90% of accident victims use all settlement proceeds within five years[1]. It would, therefore, seem prudent for attorneys representing injured parties to caution their clients about the quick spending tendency and to discuss ways to reduce that risk. One method to help reduce dissipation risk is the use of structured settlements with regular tax-free annuity payments, discussed in footnotes 4-6 of a prior blog article. Another option is using a professional administrator for payment of medical needs through Medical Custodial Accounts (MCAs) or via Medicare Set-Aside (MSA) accounts specifically designed to protect Medicare’s Trust Funds by preventing premature billing of Medicare for future injury related Medicare covered medical items and services (future medicals).  MSAs, which can and are often funded via structured settlement arrangements, are most often considered when the injured party is a Medicare beneficiary or has a reasonable expectation of becoming one within 30 months of judgment, settlement, award or other payment (settlement) (30-month Medicare window[2]), and the settlement compensates future medicals that would ordinarily be covered and reimbursable by Medicare.

The Centers for Medicare & Medicaid Services (CMS) suggests in section 17.0 of its Workers’ Compensation Medicare Set Aside Arrangement (WCMSA) Reference Guide, currently in Version 2.8, that WCMSAs “should be administered by a competent administrator” and provides examples such as a professional administrator, a representative payee, the claimant, etc. Other than cases with traumatic brain injuries for which a court may render a person legally incompetent, the question becomes whether there should be a minimum level of competence for a person to be deemed capable of self-administering a WCMSA or a Liability MSA (LMSA).

CMS explains the administration process in section 17.5 of the WCMSA Reference Guide. Requirements for administration are summarized by CMS as follows:

• Claimants should submit annual self-attestations, just as professional administrators would.

• WCMSA funds must be deposited into interest-bearing accounts separate from any personal savings or checking accounts.

• WCMSA funds may only be used for medical services and prescription drug expenses related to the workers’ compensation injury that would normally be paid by/otherwise reimbursable by Medicare.

• CMS provides some examples of care/items that Medicare does not pay for including acupuncture, routine dental care, eyeglasses or hearing aids, and suggests that claimants get a copy of the booklet entitled “Medicare & You” for a more detailed list of non-Medicare covered items.

• CMS cautions that “if funds from the WCMSA are used to pay for services other than Medicare-allowable medical expenses related to medically necessary services and prescription drug expenses, Medicare will not pay injury-related claims until these funds are restored to the WCMSA account and then properly used up.”

• Even if a person is not a current Medicare beneficiary, the requirements and prohibitions are the same as if the injured party were a Medicare beneficiary.

• While whether to submit a WCMSA to CMS for review is voluntary, Claimants that lose Medicare entitlement after such CMS approval, “. . . are not entitled to release of WCMSA funds if they lose their Medicare entitlement. However, the funds in the WCMSA may be used for medical expenses specified in the WCMSA until Medicare entitlement is re-established or the WCMSA is exhausted.”

Are the above bullets easy to understand and follow? Does the WCMSA Reference Guide language clearly explain what is expected? Even if a person can understand what they are reading, are injured parties likely to comply with the described procedures?

Regarding WCMSAs, The National Council on Compensation Insurance, Inc. (NCCI) published a February 2018 research brief updating its 2014 study on WCMSA reviews. According to the 2018 NCCI brief, approximately 98% of all WCMSAs (from the study’s 11,000 MSA data sample between 2010 and 2015) were self-administered.

Shouldn’t CMS want to try to plug this 98% administration compliance hole? CMS has “highly recommended that settlement recipients consider the use of a professional administrator for their funds”, does that language go far enough to protect the Medicare Trust Funds, one of which (covering Medicare Part A hospital insurance) is on track to be exhausted in 2026, three years earlier than projected just a year ago?

Are injured parties flying blind when self-administering their MSA funds? How does the dissipation risk described above affect injured parties’ decision-making process? There is an entire industry devoted to helping injured parties consider and protect Medicare’s interests in accordance with the Medicare Secondary Payer Act[3] and that keep up with CMS policies on WCMSAs, LMSAs, and administration. Regardless of whether CMS might ever mandate professional administration, insurance carriers and attorneys for injured parties should want competent and professional compliance partners to dispute and negotiate Medicare conditional payment reimbursements, estimate future injury related Medicare covered medicals, and above all else, to help injured parties competently administer their Medicare Set-Aside funds.

After all, should injured parties really be the ones making payments, coordinating benefits and/or negotiating bills? Can they really be expected to keep up with the detailed accounting and  reporting expected by CMS? CMS has shown a rekindled interest in both review of WCMSAs and LMSAs with the increased scope of work and dollar amount of its awarded WCRC Contract and in its recoveries of conditional payments. Because best in class administrators provide network discounts for Durable Medical Equipment and Prescription Drug pricing through Pharmacy Benefit Managers (PBMs), professional administration can help ease the burden of MSP compliance and save injured parties money.

Take Aways:

• Professional administration should be thoroughly discussed with injured parties by their attorneys. After all, lawyers are not only attorneys, but “Counselors at Law”.

• Insurance carriers and their attorneys should see also see value in minimizing MSP exposure.

• Even when outside the commonly referred to 30-month Medicare window, when future medicals are in play, parties to a settlement should strongly consider the use of a professional administrator, regardless of whether the primary driver is to coordinate and negotiate bills, or to reduce dissipation risk.

• The need for professional administration becomes even more apparent when the injured party is within the 30-month Medicare window, now combining the advantages of wiser spending with reduced MSP exposure.

• Allowing non-competent individuals to self-administer MSA funds turns a blind eye on our nations’ at-risk Medicare Trust Funds.

• MSP enforcement by CMS regarding past medicals will likely continue to proceed via the conditional payment recovery process. MSP enforcement by CMS regarding future medicals will likely be addressed through denial of Medicare coverage for injury related medicals when beneficiaries ignore the law or don’t keep accurate records of their Medicare covered medical spending.


[1] The Rutter Group, “California Practice Guide: Personal Injury” Chapter 4.

[2] CMS workload thresholds established for suitability of review of WCMSAs, as listed in the current WCMSA Reference Guide, have one tier for claimants who are Medicare beneficiaries and one for claimants with a reasonable expectation of becoming enrolled in Medicare within 30 months of judgment, settlement, award or other payment.

[3] 42 U.S.C. §1395y(b)(2) et. seq.

 

New Section 111 Reporting User Guide Published by CMS (But No New Information Provided on Penalties for Noncompliance)
by

New Section 111 Reporting User Guide Published by CMS (But No New Information Provided on Penalties for Noncompliance)

On October 1, 2018 the Centers for Medicare & Medicaid Services (CMS) published a new user guide for entities in the Non Group Health Plan (NGHP[1]) category, regarding Section 111 Mandatory Insurance Reporting under the Medicare Secondary Payer Act’s (MSP)[2] amendment called the Medicare, Medicaid, and SCHIP[3] Extension Act of 2007 (MMSEA). The MMSEA reporting obligations are commonly referred to as Section 111 Reporting or simply Section 111 because they were listed in Section 111 of the Public Law amendment to the MSP[4]. Section 111 requires NGHP entities or in some cases, Third Party Administrators for NGHP entities, as Responsible Reporting Entities (RREs), to report data to CMS about injury claims. The reporting which must be electronically transmitted, is sent to CMS through its Benefits Coordination & Recovery Center (BCRC) contractor, and includes a large amount of information identifying Medicare beneficiaries, their injuries, their legal representatives, dates of injury, dates of payment, whether injury-related payments are ongoing or are paid in lump sums etc., provided the annually updated dollar threshold for reporting (currently $750 for accident or exposure cases) is met.

The updated MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation USER GUIDE (Section 111 User Guide) is now in version 5.4.

Only two changes were announced in the new version of the Section 111 User Guide. The first change was the addition of an updated Paperwork Reduction Act disclosure and the second change was an update to the contact protocol for the Section 111 data exchange escalation process. The updated contact protocol is listed in its entirety below:

8.2 Contact Protocol for the Section 111 Data Exchange
In all complex electronic data management programs there is the potential for an occasional breakdown in information exchange.
If you have a program or technical problem involving your Section 111 data exchange, the first person to contact is your own EDI Representative at the BCRC. Your EDI Representative should always be sought out first to help you find solutions for any questions, issues or problems you have. If you have not yet been assigned an EDI Representative, please call the EDI Department number at 646-458-6740 for assistance.

Escalation Process

The CMS and the BCRC places great importance in providing exceptional service to its customers. To that end, we have developed the following escalation process to ensure our customers’ needs are met. It is imperative that RREs and their reporting agents follow this process so that BCRC Management can address and prioritize issues appropriately.

1. Contact your EDI Representative at the BCRC. If you have not yet been assigned an EDI Representative, please call the EDI Department number at 646-458-6740 for assistance.

2. If your Section 111 EDI Representative does not respond to your inquiry or issue within two business days, you may contact the EDI Director, Angel Pagan, at 646-458-2121. Mr. Pagan’s email is apagan@ehmedicare.com.

3. If the EDI Director does not respond to your inquiry or issue within one business day, you may contact the BCRC Project Director, Jim Brady, who has overall responsibility for the EDI Department and technical aspects of the Section 111 reporting process. Mr. Brady can be reached at 646-458-6682. His email address is JBrady@ehmedicare.com. Please contact Mr. Brady only after attempting to resolve your issue following the escalation protocol provided above.

When initially enacted on December 29, 2007, the enforcement clause under 42 U.S.C. §1395y(b)(8)(E) announced that applicable plans “shall be subject to a civil money penalty of $1,000 for each day of noncompliance with respect to each claimant.” That clause was changed with the SMART Act amendment to the MSP on January 10, 2013, effective at the beginning of 2014, to the phrase “may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant.” In this same 2013 SMART Act MSP amendment, an additional paragraph was added requiring the Secretary of the U.S. Department of Health and Human Services (Secretary) to publish a notice in the Federal Register soliciting proposals during a 60-day period, specifying practices by which enforcement sanctions would or would not be imposed under subparagraph (E). After proposals were to be submitted and considered, the Secretary, in consultation with the Attorney General, and after a 60-day comment period, was to publish in the Federal Register proposed specified practices for which enforcement sanctions will and will not be imposed and to later issue final rules specifying applicable enforcement practices. About a year after the SMART Act amendment was enacted, CMS sought comment through an advanced notice of proposed rulemaking (ANPRM) for the types of practices that would or would not result in civil money penalties, along with other related questions.  Final rules have still not been announced.

CMS wants “clean data” to be reported through Section 111 and has a process in place to test and reject reporting that does not meet CMS’ data quality rules.  How and when penalties for noncompliance with Section 111 will really be enforced will likely not be answered until CMS, through the Secretary of HHS, takes the required regulatory steps of issuing final rules on the subject.  Therefore, while most insurance companies and TPAs have set up internal systems to comply with Section 111, or paired with reporting agent vendors to help them comply, there is still time for Responsible Reporting Entities to establish a system to report Section 111 data without fear of reprisal.

Interestingly, another SMART Act initiative is now in its final stages of completion.  That initiative has been the gradual removal of Social Security Numbers from Medicare ID numbers through the replacement of the SSN-based Health Insurance Claim Number (HICN) with a new non-SSN-based Medicare Beneficiary Identifier (MBI).  CMS has estimated this project to be completed by April 2019.  It has mailed almost 35 million new Medicare cards to date with a majority of seven total “waves” of mailing completed. Will CMS begin tackling the reporting conundrum next? While companies doing reporting may still use the HICN and are not yet required to use the MBI in Section 111 Reporting, it would be wise for companies to plan ahead and ready themselves for transmission of the new MBI format Medicare ID in the future.


[1] Entities in the NGHP category include Liability Insurance (including Self-Insureds), Workers Compensation Plans, and No-Fault Insurance.

[2] 42 U.S.C. § 1395y(b)(2) et seq.

[3] SCHIP stands for State Children’s Health Insurance Program

[4] Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) (P.L. 110-173, Title I, §111(a)), found within the MSP at 42 U.S.C. § 1395y(b)(8).

 

Conditional Payment Collections – Make It Stop!
by

Conditional Payment Collections – Make It Stop!

When Medicare makes a payment for medical items, services or expenses that another entity (Primary Plans or Primary Payers[1]) should pay under the Medicare Secondary Payer Act (MSP) [2], the payments that are made by Medicare are called conditional payments.  Under the MSP provisions and its regulations, Medicare is entitled to be reimbursed for its conditional payments. The U.S. Department of Treasury (Treasury) has authority to collect conditional payments after being referred MSP debt cases from the Centers for Medicare & Medicaid Services (CMS), the agency that runs the Medicare program, when Primary Payers/settlement parties fail to timely pay final demands for conditional payments issued by CMS contractors.  Treasury collection tools include the Treasury Offset Program, that allows Treasury to divert tax refunds or government benefits that would otherwise flow to Medicare beneficiaries or Primary Plans, as well as Private Collection Agency actions. If conditional payments are not timely paid to Treasury, the U.S. may also file lawsuits directly under the MSP through the Secretary of the U.S. Department of Health and Human Services (Secretary). Appealing the amount of the debt and/or requesting a reduction of the conditional payment demand amount via the compromise process is supposed to stop or at least delay the collections process while the appeal/compromise request is pending.

At the October 2018 educational conference of the National Alliance of Medicare Set-Aside Professionals in Baltimore, during a presentation led by Ted Doyle, V.P. Healthcare Markets for Performant Recovery, Inc., the Commercial Repayment Center (CRC) contractor for CMS, several members of the audience voiced concerns over the CRC prematurely referring conditional payment collections cases to Treasury. The frustration focused on the difficulty of getting prematurely referred debt recalled from Treasury. It seems that even when people take steps to appeal the debt and/or request reductions via the compromise (or waiver) process, collections can sometimes mistakenly proceed. Jacqueline Cipa, the Deputy Director for the CMS Division of MSP Program Operations, recommended diligent follow up by requesting an internal “elevation”/review with the appropriate CMS contractor and suggested that if a Treasury referral error is not corrected, to reach out to her via e-mail at Jacqueline.cipa@cms.gov.

The CRC contractor is usually the entity in charge of collecting conditional payment reimbursements from commercial Primary Payers prior to any Treasury involvement[3].  The Benefits Coordination & Recovery Center (BCRC) contractor for CMS, on the other hand, is the only entity to initiate collection attempts for reimbursement of conditional payments from Medicare beneficiaries. Primary Payers such as insurance carriers or Third Party Administrators (TPAs) sometimes use reporting agents for their MSP Section 111 Mandatory Insurance Reporting obligations under the MSP[4].  Those reporting agents are often the ones that are sent conditional payment correspondence, demand letters, intent to refer letters, and potentially, Treasury collection letters. If a reporting agent fails to provide notification to the respective carrier or TPA it reports for, a conditional payment collection could develop and be referred to Treasury before the carrier/TPA knows about it. Under that scenario, a lack of communication between the reporting agent and its client might lead to a referral of conditional payment debt without it technically being premature.  However, if a debt is referred to Treasury as a result of an error, the responsible party should take immediate steps to recall the debt. If using a third party for reporting purposes, consider setting up a calendar system to follow up with any reporting agents to help prevent an inadvertent Treasury referral.

Regardless of whether a referral to Treasury has been made or not, it is wise to make a written request for a Redetermination (first level appeal) and to also consider whether a compromise (or even waiver in cases regarding Medicare beneficiaries) might be appropriate. There is a five-level appeal process if a party decides to appeal conditional payment reimbursement debt. The first four levels of appeal are administrative remedies and the fifth is a court based remedy, with a review by a U.S. District (federal) Court. If the matter is timely appealed at any level, collection action through the BCRC, CRC, or Treasury should stop until the respective appeals stage is completed.

A party is timely with its first level of appeal by providing a written request for a Redetermination within 120 days of a final demand. The appeal phase directly after a Redetermination is called a Reconsideration.  It must be requested within 180 days of the Redetermination, may include new evidence, and is decided by a Qualified Independent Contractor (QIC). The third level of appeal must be requested within 60 days of the Reconsideration decision, is generally only based on the evidence previously presented during the first two appeal phases (unless good reason is shown why it was left out previously), and is heard before an Administrative Law Judge(ALJ). If the ALJ decision is unfavorable, the fourth appeal level is a request for Council Review within 60 days of the decision and takes place before the Medicare Appeals Council.  The final appeal goes before a U.S. District Court and must be filed within 60 days of the Medicare Appeals Council Review. The entire process of exhausting administrative remedies takes a minimum of 420 days and is required before a party is allowed to appear before a federal judge.

Because going to federal court takes so much time and can become quite expensive, especially during the last two stages of appeal, parties have found it beneficial to enter into negotiations with the appropriate CMS contractor/CMS Collection Officer/Regional Office as appropriate for compromises of the conditional reimbursement amounts while the appeals process is taking place. The compromise/negotiation process can be established and run at the same time as the appeals process. Many times, matters can be satisfactorily resolved before having to move to even the second level of appeal. Medivest is available to help parties negotiate conditional payment reimbursement amounts/liens and appeal conditional payment amounts. Please contact us to discuss best practices regarding conditional payment negotiations/appeals.


[1] Both Group Health Plans and Non Group Health Plans (NGHPs) are Primary Plans under the MSP. Entities in the NGHP category include Liability Insurance (including Self-Insureds), Workers Compensation Plans, and No Fault Insurance.

[2] 42 U.S.C. § 1395y(b)(2) et seq.

[3] For commercial matters, it is most often the CRC contractor that sends these letters, although for matters prior to October 2015, and more recently during backlogs associated with the changeover to the new CRC contractor, the BCRC has initiated files for some commercial repayment matters. Parties are urged to pay careful attention to which entity sends each letter and to provide development information or other responses and/or requests to the respective entity that sends the letter.

[4] Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) (P.L. 110-173), found within the MSP at 42 U.S.C. § 1395y(b)(8).

New WCMSA Reference Guide Version 2.8 Published by CMS
by

New WCMSA Reference Guide Version 2.8 Published by CMS

The Centers for Medicare & Medicaid Services (CMS) released its latest Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide as Version 2.8 on October 1, 2018. The changes announced by CMS in this latest version of the WCMSA Reference Guide are described below:

• The discontinuation of Social Security Number (SSN)-based Medicare identifiers by CMS and the distribution of a new 11-byte Medicare Beneficiary Identifier (MBI)-based card to each Medicare beneficiary by April 2019 as required by Section 501 of the Medicare Access and CHIP (Children’s Health Insurance Program) Reauthorization Act (MACRA) of 2015 was confirmed. Fields formerly labeled as “Health Insurance Claim Number” (HICN) have been relabeled as “Medicare ID” and will accept either the traditional HICN or the new MBI[1].

• Information regarding the Verifying Jurisdiction and Calculation Method for Medical Review was updated. Under Section 9.4.4 Medical Review of the WCMSA Reference Guide, CMS explains that the Workers’ Compensation Review Center/Contractor (WCRC) follows ten steps in its medical review process. The fifth step is to verify the jurisdiction and calculation method. Updates have been made to this fifth step of medical review, specifically in the tables describing the order of jurisdictional precedence (broken down between updated Table 9-1 covering “Normal Pricing) and the new table, Table 9-2 covering “Other Pricing”). The general rules for verifying jurisdiction have not changed[2].

The order of jurisdictional precedence will follow the charts listed in Table 9-1 and Table 9-2.

Table 9-1 is the same as in version 2.7 except for scenario number 6, where it now explains (by example) that if the WC carrier’s attorney does not have an address in the state in which the WC claim was filed, pricing will be based on the zip code where the injury occurred.

Table 9-2 is a new table for the WCMSA Reference Guide with highlights listed below.

  • If a case is filed with the U.S. Department of Labor Office of Workers’ Compensation Programs (OWCP); pricing is based using the OWCP Fee schedule
  •  If submitted documentation indicates that a proposed WCMSA amount is based on a Longshore Harbor Workers’ Compensation Act (Longshore Act) settlement; pricing is based on the OWCP fee schedule for the zip code of claimant’s residence, unless the submitter specifies actual charges
  • If a state WC fee schedule does not exist based on the jurisdiction evaluation referenced above (Indiana, Iowa, Missouri, New Jersey, Virginia, and Wisconsin); pricing is based on actual charges, even if the submitter proposed the use of a fee schedule
  • If a state WC fee schedule exists based on the jurisdictional evaluation described above; pricing is based on the most current version of the fee schedule posted publicly

• The link to the CDC Life Expectancy Table has been updated in Section 10.3 paragraph number 7 as follows: All rated ages shall be accompanied by a written justification on how such age was determined. For example, if a rated age obtained from life insurance companies for like injuries/illnesses is the method of evaluation, include documentation to support the life expectancy. CMS will project the cost of the claimant’s future treatment over the claimant’s life expectancy, using the Centers for Disease Control (CDC) Tables. Please see the WCMSA site for information on the latest tables to use.

While not new, it is always good to remember the following caution by CMS:

Do not include the following:

  • Actuarial charts or life expectancy charts from the CDC or elsewhere, or statements that there are no rated ages.

  • Do not include any documents on rated ages that contain redacted data. They will not be considered.

Questions you may have about these changes or any other matters covered in the WCMSA Reference Guide are welcomed by Medivest.


[1] Examples of where the new MBI is incorporated into the WCMSA Reference Guide include:

• Page 3 of the WCMSA Reference Guide refers to this update when contacting the Benefits Coordination & Recovery Center (BCRC) to confirm the injured person’s Medicare ID (HICN, MBI or SSN).
• Page 33, under Section 05 – Cover Letter (WCMSA submission letter) indicates: Claimant’s Medicare ID (HICN or MBI) as displayed on their Medicare card or their SSN, if not yet entitled to Medicare, is required in the submission.
• Page 63, Appendix 2: The Abbreviations List now includes MBI – Medicare Beneficiary Identifier.
• Page 67, an update to the definition of Social Security Number: The SSN is an identification number issued by the Social Security Administration and used instead of a Medicare ID (HICN or MBI) when the Medicare ID is not present.
• The sample letters found in Appendix 5 replace SSN or HICN with Medicare ID or Medicare ID/SSN.

[2] This section explains the general rule that jurisdiction for fee schedule selection and pricing depends upon where the WC claim is filed (the state that will control any WC hearing). It then lists some specifics.  “If the claim is filed in the same state of residence as the claimant, pricing shall be calculated based on the zip code of the claimant. If the claimant resides in a state other than the state of jurisdiction for the WC claim, pricing is calculated based on the zip code associated with the employer’s address. If the employer is not located in the state where the WC claim is filed, pricing is calculated based on the zip code of the claimant’s attorney. If the claimant is not represented by an attorney, pricing is calculated based on the zip code of the WC carrier. If the carrier is also not located in the state where the WC claim is filed, pricing is calculated based on the zip code of the carrier’s attorney.”

Updated Medicare Secondary Payer Recovery Portal (MSPRP) and User Guide
by

Updated Medicare Secondary Payer Recovery Portal (MSPRP) and User Guide

The Centers for Medicare & Medicaid Services (CMS) has a web portal called the Medicare Secondary Payer Recovery Portal (MSPRP) used by settling parties or those with authorization[1], to investigate and confirm the dollar amount of injury related medicals paid by Medicare. When Medicare makes injury related payments for medical items and services prior to a judgment, settlement, award or other payment to a Medicare beneficiary, those payments are called conditional payments and need to be reimbursed to Medicare, or otherwise resolved via lien resolution. CMS uses its Benefits Coordination and Recovery Center (BCRC) contractor to both gather information about claims and their pending resolutions from beneficiaries and carriers and to most often pursue collection of the Medicare beneficiaries for recovery of conditional payments contemplated to be paid back pursuant to the Medicare Secondary Payer Act (MSP)[2]. CMS uses its Commercial Repayment Center (CRC) to develop recovery cases against commercial entities that are primary to Medicare under the MSP including both Group Health Plans (GHPs) and Non Group Health Plans (NGHPs). An entity classified under the NGHP designation would include any liability insurance plan including an auto-insurer or a self-insured entity, a workers’ compensation plan, or a no fault insurer.

Therefore, parties involved in resolving liability, workers’ compensation or no fault claims should continue to focus their attention on and use the MSPRP. This July, CMS released an updated version of the MSPRP User Guide (Version 4.2) after increasing the functionality of the portal to help provide a more efficient process for both beneficiaries and insurers (and respective representatives/recovery agents) to obtain updated conditional payment information. Changes to the MSPRP, discussed in a CMS webinar on August 16, 2018, included allowing authorized persons/entities access to view correspondence sent and received on files in chronological order, to request electronic or paper copies of conditional payment correspondence, to confirm primary diagnosis codes on payment summary forms, and to even request a waiver for lien resolution (only after a recovery demand has been issued) and/or file a first level appeal concerning a determination of the conditional payment amounts to be reimbursed to Medicare. Future enhancements to the MSPRP may include a more convenient way for Medicare beneficiaries or authorized agents to notify the BCRC of pending cases and a way to make conditional payment reimbursements via the portal.

For cases that arose prior to October 1, 2015 and anytime that a backlog may exist, the BCRC also may pursue collections from commercial entities for recovery of conditional payments. For example, the BCRC is currently helping the CRC contractor, Performant Recovery, Inc. with a backlog it inherited when it took over the CRC contract from CGI in February of 2018[3]. While slightly confusing, case numbers are based on what entity sends the letter instead of based on the type of case. Therefore, the BCRC uses its traditional numbering system for all of its cases regardless of whether it is pursuing a beneficiary or a commercial entity, so it is important to pay attention to who sends the letter and what the letter is requesting, instead of concentrating on the case number. The entity that sends the letter is the entity to which you should address responses and follow up correspondence. The CRC on the other hand, is solely focused on commercial collections. When the CRC initiates a NGHP collection, the MSPRP is the web portal to access to check on the conditional payment reimbursement.

CMS recently announced that it will host a webinar providing an overview of the functions of a currently existing web portal called the Commercial Repayment Center Portal (CRCP) that involves claims outside the NGHP scope. While the CRCP involves the CRC, this upcoming CMS webinar (September 19, 2018) only pertains to CRC’s recoveries in the Group Health realm. There has been no indication from CMS that the CRCP functions would or even might be expanded to accommodate CRC collections for NGHP matters that will instead remain with the MSPRP.

In addition to the authorization backlogs referenced above, there seems to have been a delay in obtaining conditional payment amounts in writing from the new CRC contractor via phone communication or traditional written correspondence. Hopefully, the updates to the MSPRP web portal will begin to help alleviate some of the delays that have been experienced by prospective settling parties by allowing for timely electronic confirmation of receipt of authorizations and access to updated conditional payment information.


[1] All authorizations are forwarded to the BCRC. Authorization for a Medicare beneficiary will typically require a Proof of Representation form signed by the Medicare beneficiary (or someone legally authorized to act on their behalf if they are incapacitated) in favor of the representative along with written documentation from the attorney for the Claimant/Applicant/Plaintiff documenting the chain of representation and intent for the representative to be able to transmit and receive information and act on behalf of the beneficiary for CMS purposes. Authorization for a commercial entity will typically require a Consent to Release form signed by the Medicare beneficiary and a Letter of Authority from the commercial entity/carrier demonstrating the intent for the representative to be able to openly communicate and act on the commercial entity’s behalf with CMS via a “two-way street”.
[2] 42 U.S.C. § 1395y(b)(2) et. seq.
[3] Jacqueline Cipa, Department Director, Division of Medicare Secondary Payer (MSP) Program Operations for CMS, explained in a presentation at the Workers’ Compensation Institute (WCI) annual conference in Orlando in August 2018 that there is a backlog for confirmations of receipt of authorization documents at the CRC of up to 45 days.

Liability Medicare Set-Asides (LMSAs) – A Glimpse into the Future
by

Liability Medicare Set-Asides (LMSAs) – A Glimpse into the Future

Last week, the National Alliance of Medicare Set-Aside Professionals (NAMSAP) released a bulletin by Tom Stanley, co-chair of NAMSAP’s Liability MSP Advisory Committee, describing what he learned in a private meeting with the Centers for Medicare & Medicaid Services (CMS) in April 2018. In the meeting, which focused solely on liability Medicare Set-Asides (LMSAs), CMS representatives indicated that there will be an 18-month timeframe before rolling out a LMSA review program. Also, similar to the choice of whether to submit a Workers’ Compensation Medicare Set-Aside allocation report (WCMSA) for review by CMS for Workers’ Compensation claim resolutions that meet CMS established monetary and Medicare eligibility thresholds[1], the choice of whether to submit a LMSA to CMS for review under the new program would also be voluntary.

Other points brought up by CMS for LMSAs are paraphrased below:

• Denial of services for the affected body parts/injury is considered a “primary enforcement mechanism.”
• The injured party must receive something free and clear through judgment, settlement, award, or other payment (“Settlement”).
• Review of a LMSA would not occur until a Settlement has been reached.
• That a LMSA (and presumably the administration of the money set aside) is exclusively the responsibility of the plaintiff and that defendants, and their insurers, are not a “target” of CMS with respect to LMSAs.
• CMS would publish a LMSA Reference Guide.
• Individuals meeting the “eligibility” threshold for LMSAs would remain the same as the current WCMSA system – those Medicare beneficiaries or injured parties who have a reasonable expectation of Medicare enrollment within 30 months.
• There is no projected change in the law and pursuant to the Medicare Secondary Payer statute (MSP)[2], Medicare’s interest must be considered in every claim.
• A workload threshold of above $250,000 is anticipated – “NO SAFE HARBOR”. This level is analogous to the above $25,000 workload threshold for WCMSAs.
• For Settlements above $250,000 and up to $750,000, CMS review/approval would be available and encouraged by CMS. CMS would apply “a formula” to determine the LMSA amount. Starting with the total Settlement amount, CMS would subtract certain expenses and apply a discount factor to the total Settlement.
• Settlements above $750,000 would be presumed to fund all future medicals (considered full commutations) and for those cases, CMS would recommend the preparation of traditional LMSAs.

We have explained in the past that the creation of a Medicare Set-Aside (MSA) is not required by law for any type of case. However, in the Stalcup Memo[3], CMS provided its interpretation of the MSP by saying “[t]he law requires that the Medicare Trust Funds be protected from payment for future services whether it is a Workers’ Compensation or liability case. There is no distinction in the law.” Furthermore, while clarifying that a MSA allocation report is not mandated by CMS, the Stalcup memo announced that “[s]et aside is our method of choice and the agency feels it provides the best protection for the program and the Medicare beneficiary. The long-awaited LMSA review process may have been delayed (prior hints from CMS were that LMSA reviews might start as early as July 2018) due to a realization by CMS that reviewing LMSAs will be a huge undertaking with many factors to consider.

Take Aways from Meeting on LMSAs:

• When the injured party receives something (free and clear) through Settlement etc., that payment triggers the need to evaluate and protect Medicare’s interests.

• If you don’t consider and protect Medicare’s future interests at the time of Settlement and take steps to not prematurely bill Medicare, Medicare can deny payment for those body parts claimed and/or released by Settlement.

• Plaintiff counsel should take steps to educate themselves and their clients on all aspects of MSP compliance and formulate strategies to reasonably consider Medicare’s interests when Settlements fund future medicals and injured clients fall within the Medicare eligibility “window”.

• CMS should seek help from stakeholders in the MSP compliance community, the judiciary, and financial analysts to examine historical data to consider developing more than one formula to be able to reasonably address varying liability case types and differing legal and factual scenarios.

• The percentage of the net Settlement proceeds a beneficiary will receive as a ratio to the full value of the case after deducting procurement costs, attorney’s fees, and Medicare liens etc. can vary greatly and should be taken into consideration.

• There are many reasons liability cases may settle for less than full value including questions of causation, policy limits in place, and percentages of fault that can vary by state, under theories of applicable comparative negligence, contributory negligence or some hybrid thereof.

• The idea that CMS may now consider evaluating apportioned LMSA allocations and taking some of the factors leading to reduced Settlement values into consideration when reviewing LMSAs seems to be a step in the right direction.


[1] The current WCMSA threshold is for Workers’ Compensation claims with a judgment, settlement, award, or other payment (“Settlement”) above $25,000 for current Medicare beneficiaries and above $250,000 and for those with a reasonable expectation of becoming enrolled in Medicare within 30 months of the Settlement.

[2] 42 U.S.C. §1395y(b)(2) et seq.

[3] Sally Stalcup, MSP Regional Coordinator, Region VI (May 25, 2011 Handout).

Medicare Lien Enforcement – Time to Take Notice
by

Medicare Lien Enforcement – Time to Take Notice

In addition to Medicare being a secondary payer to workers’ compensation as it has been since Medicare was established in 1965, the Medicare Secondary Payer Act of 1980, found at 42 U.S.C. §1395y(b) et seq. (MSP) made Medicare secondary to auto, liability (including self-insureds), and no-fault insurance. These entities or insurance plans, including workers’ compensation plans, are referred to in the MSP as primary plans (Primary Plans).

The MSP allows the U.S. to pursue a double damages recovery for two times the amount Medicare conditionally paid toward injury-related medicals when a Primary Plan should have made those payments. Medicare lien enforcement lawsuits seeking conditional payment recovery by the U.S. must be brought within three years “. . . after the date of receipt of notice of a settlement, judgment, award, or other payment . . . .” Conditional payment recovery suits have historically been focused on protecting Medicare’s past interests although technically, conditional payments can also occur after a settlement. There have been conflicting results in courts over whether the double damages remedy applies only to a Primary Plan or extends to those receiving money from a Primary Plan, such as Medicare beneficiaries (Beneficiaries) or their attorneys.

Pursuant to 42 C.F.R. § 411.24(h), reimbursement of Medicare must occur within 60 days and if not, interest may accrue at close to ten percent under 45 C.F.R. § 30.13. Due to this high rate of interest and the looming threat of double damages, the standard in the lien resolution industry is to pay the amount demanded and request a partial refund, unless a resolution can be reached before settlement with the Centers for Medicare & Medicaid Services (CMS), the agency that runs Medicare. CMS is allowed to compromise (reduce) and even waive Medicare recoveries based on various factors listed in several federal statutes and regulations. Under 45 C.F.R. § 30.14(a), a debtor may either pay the debt within the 60-day period from the final demand or be liable for interest during a 120-waiver determination period, while on appeal, or while any formal or informal review of the debt is pending.

We have written about conditional payment/Medicare lien recovery actions by the U.S. pursuant to the MSP before. Cases have been brought against Beneficiaries, their attorneys, and/or Primary Plans on behalf of CMS.

Medicare Lien Recovery Cases Against Beneficiaries and/or their Attorneys.

On June 18, 2018, the Department of Justice announced in a press release that an attorney/law firm entered into an agreement to repay the U.S. $28,000 after failing to ensure that the attorney/law firm client reimbursed Medicare for conditional payments made related to the underlying injury. The law firm had already disbursed the net settlement funds to its client. The law firm of Rosenbaum & Associates in Philadelphia entered into a settlement with the DOJ agreeing to pay the government this money after the U.S. alleged attorney Rosenbaum failed to timely repay MSP debt. The firm additionally agreed to designate a person at the firm to be responsible for paying MSP debts, to train the designated employee to ensure that the firm pays these debts on a timely basis; and to review any outstanding debts with the designated employee at least every six months. Attorney Rosenbaum also acknowledged that he may be liable under the False Claims Act (31 U.S.C. § 3729 et seq.) for wrongful retention of government overpayments arising from the failure to timely repay the MSP debt.

Other cases have confirmed the above-referenced recovery rights of the U.S. to timely Medicare lien reimbursement. For example, a U.S. District Court granted summary judgment for $11,367.78 plus interest against an attorney for a Beneficiary, holding the attorney liable when Medicare’s conditional payments were not addressed/timely reimbursed from a third party settlement because the attorney’s contingency fee was paid from the proceeds of Primary Plan’s (liability) payment. See U.S. v. Harris, 2009 WL 891931 (N.D. W.Va. 2009) aff’d 334 Fed. Appx 569 (4th Cir. 2009). See also, U.S. v. Weinberg, 2002 WL 32356399 (E.D. Pa. 2002)(Partial judgment was entered in favor of the U.S. against the Defendant attorney on the issue of liability).

In U.S. v. Sosnowski, 822 F. Supp. 570 (W.D. Wis. 1993), the U.S. was entitled to recover MSP conditional payments from a Beneficiary and his attorney but was denied the award of double damages because the court interpreted the MSP as only allowing double damages to be assessed against Primary Plans and determined that neither the injured Beneficiary nor the Beneficiary’s attorney was a Primary Plan. If CMS gets more efficient at searching for all possible conditional payment reimbursement options, we could begin seeing more recovery actions and lawsuits against plaintiff attorneys and their Beneficiary clients.

Medicare Lien Recovery Cases Against Estates of Beneficiaries.

Cases in which CMS has proceeded against an estate of a Medicare beneficiary have yielded varying results. For example, CMS was successful in Benson v. Sebelius, 771 F. Supp. 2d 68, 75 (D.D.C. 2011) (Because plaintiff claimed his mother’s medical costs in pursuing his wrongful death action, medical expenses of mother were taken into consideration in calculating and negotiating wrongful death settlement award, and release to landlord where slip and fall occurred included any and all claims and rights including associated medical liens, no error was found when Medicare Appeals Board (in a de novo review) allowed CMS to recover its full medical expenses lien minus its procurement costs from the wrongful death settlement) (citing Mathis v. Leavitt, 554 F.3d 731, 733 (8th Cir.2009) (“Because appellants claimed all damages available under the Missouri wrongful death statute, the settlement, which settled all claims brought, necessarily resolved the claim for medical expenses.”); Cox v. Shalala, 112 F.3d 151, 154–55 (4th Cir.1997) (determining that Medicare was entitled to reimbursement for medical expenses from the proceeds of a wrongful death settlement because the settlement included recovery for decedent’s medical expenses); see also Brown v. Thompson, 374 F.3d 253, 262 (4th Cir.2004) (holding that CMS was entitled to reimbursement from the proceeds of a medical malpractice settlement pursuant to the MSP).

However, when the underlying wrongful death claim made no claim for medical expenses, there is a stronger argument that the Medicare lien does not extend to the estate of a deceased Medicare beneficiary. See Bradley v. Sebelius, 621 F.3d 1330 (11th Cir.2010) (The U.S. was denied the ability to recover Medicare’s conditional payments when no medical expenses of decedent Medicare Beneficiary were claimed in wrongful death action by survivors).

Medicare Lien Recovery Cases Against Primary Plans/Insurance Companies.

In a Northern District of Alabama case, the U.S. was not allowed to bring a direct MSP action (that would have allowed double damages) against a liability insurer that already settled its case and paid the Beneficiary, but had to bring a subrogation action pleading and proving that the liability carrier knew or should have known of Medicare’s conditional payments at the time payment was made to the Beneficiary. In re Silicone Gel Breast Implants Products Liability Litigation (MDL 926), 174 F.Supp.2d 1242; (N.D.Ala.2001), affirmed in part, reversed in part and remanded 345 F.3d 866, certiorari denied 124 S.Ct. 2907, 542 U.S. 946, 159 L.Ed.2d 828.

In Aetna Life Ins. Co., v. Nellina Guerrera et al., No. 3:17-CV-621 (JCH), 2018 WL 1320666, (D. Conn. Mar. 13, 2018), still pending in District Court, grocery store Big Y’s motion to dismiss was denied after Big Y, the alleged tortfeasor in the liability action, settled and paid a Medicare beneficiary, making it a Primary Plan. Aetna, a Medicare Advantage Plan, was allowed to proceed with a MSP private cause of action for double damages against Big Y. However, the court granted motions to dismiss by the Beneficiary and the Beneficiary’s attorney, because it held that the MSP’s definition of Primary Plan did not specifically include them.

Take Aways:

• Because the MSP grants both a direct lien right and a subrogation right to the U.S. to collect Medicare’s conditional payments, parties to a settlement should inquire, evaluate and confirm all injury-related Medicare expenditures for past medicals at the time of settlement.
• Due diligence is required for both the defense and plaintiff side to avoid unnecessary legal exposure.
• Additionally, because the intent of the MSP is to prevent premature billing of Medicare for injury-related future Medicare allowable medicals, parties to settlements should always consider Medicare’s future interests and decide on reasonable actions to protect those interests when such future medicals are compensated in any settlement.[4]


[1] 42 U.S.C. § 1395y(b)(2)(B)(iii).

[2] Id.

[3] At a minimum, the MSP imposes legal responsibility for repayment of conditional payment amounts. Under subsection (b)(2)(B)(ii), “a primary plan and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made . . . .” Furthermore, under subsection (b)(2)(B)(iii) after describing the double damages remedy allowed by the U.S., the statute states, “[I]n addition, the United States may recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity.” The corresponding regulation, Title 42 of the Code of Federal Regulations Section 411.24(g) also explains this right in even more detail, “. . . CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.” Arguments have been made as to whether the language “under this clause” referenced above relates to the reimbursement right or also extends the double damages right of the U.S. against those receiving payment from a Primary Plan. Some courts have restricted double damages awards only to Primary Plans or commercial entities required to make payment under a Primary Plan.

[4] Sally Stalcup, MSP Regional Coordinator, Region VI (May 25, 2011 Handout) at 3 (“. . . IF there was/is funding for otherwise covered and reimbursable future medical services related to what was claimed/released, the Medicare Trust Funds must be protected”).

Florida Medicaid (AHCA) Liens Do Not Reach Post Settlement Medicals
by

Florida Medicaid (AHCA) Liens Do Not Reach Post Settlement Medicals

Unlike the Medicare Secondary Payer Act[1] that grants lien rights to the U.S. government to be reimbursed for past as well as future injury-related Medicare allowable medical items, services and expenses (Medicals), on July 5, 2018 the Florida Supreme Court (Court) ruled that Florida Medicaid liens extend only to past payments for Medicals and not to future payments for same. This decision resolved a conflict between two Florida District Courts of Appeal. In 2016, Florida’s First District Court of Appeal (1st DCA) affirmed an Administrative Law Judge’s (ALJ) ruling that the state’s Medicaid Agency, the Agency for Health Care Administration (AHCA), was allowed to lien both past and future medical portions of a Florida Medicaid recipient’s tort recovery.[2] However, in 2017, the 2nd DCA ruled in Willoughby v. Agency for Health Care Administration, 212 So. 3d 516 (Fla. 2d DCA 2017), that the AHCA was not allowed to lien future medical portions of a Florida Medicaid recipient’s tort recovery.

While Giraldo v. Agency for Health Care Administration, 2018 WL 3301563 (Fla. July 5, 2018) is technically not final because the time for the filing a motion for rehearing has not passed, it seems likely the decision will not change. Four judges concurred with the Opinion by Judge Lawson and one concurred in part on the substantive decision and dissented “in part” only regarding the weight of evidence used in calculating the past Medicals. Even if the court had remanded the case for additional factfinding regarding the value of past Medicals, the holding that a Florida Medicaid lien is limited to past Medicals should stand.

The Court held that the federal Medicaid Act’s “ceiling” provision[3] was clear in prohibiting a state Medicaid agency such as Florida’s AHCA, from placing a lien on the future medical expenses portion of a Medicaid recipient’s tort recovery.  The Court mentioned its decision seemed to also be compelled by the U.S. Supreme Court decisions in Alhborn and Wos, but because the language of the federal Medicaid Act was clear, there was no need to perform a separate analysis of the Ahlborn and Wos decisions.  The Court then remanded the case with instructions to the 1st DCA to direct the ALJ to reduce AHCA’s lien amount to $13,881.79 from $321,720.16. At the administrative hearing level, the estate of the deceased injured party presented uncontradicted evidence establishing $13,881.79 as the settlement portion allocated to the past medical expenses. Because the Court determined that there was no reasonable basis in the underlying record to reject the amount allocated for the past medicals, it held no further factfinding was required.

Quashing the decision of the 1st DCA and approving the Willoughby decision of the 2nd DCA, the Court held that the federal Medicaid law restricted Florida’s AHCA to lien only the past medical expenses portion of a Medicaid beneficiary’s third-party tort recovery to satisfy its Medicaid lien.

Take Away

Florida attorneys that have injured clients that are enrolled in Medicaid should be on high alert regarding reimbursement demands from AHCA. Attorneys with clients on Medicaid or possibly dual enrolled in both Medicare and Medicaid should investigate the existence of any liens and demand to be treated fairly by the respective government agency when negotiating conditional payment reimbursement/lien resolution.


[1] 42 U.S.C. §1395y(b) et seq.

[2] Giraldo v. Agency for Health Care Administration, 208 So. 3d 244(Fla. 1st DCA 2016).

[3] 42 U.S.C. § 1396a(a)(25)(H) “. . . [T]o the extent that payment has been made under the State plan for medical assistance for health care items or services furnished to an individual, the State is considered to have acquired the rights of such individual to payment by any other party for such health care items or services.”

The PAID Act Has a Nice Ring to It, Doesn’t It?
by

The PAID Act Has a Nice Ring to It, Doesn’t It?

The two Congressmen that worked together to introduce the bill that became the SMART Act of 2012, amending the Medicare Secondary Payer statute (MSP)[1], have teamed up again, this time on May 18, 2018, to introduce the PAID Act, which stands for Provide Accurate Information Directly Act.  The PAID Act, introduced as House Bill 5881, is aimed at helping Medicare beneficiaries and parties that settle injury cases with beneficiaries get more complete injury-related medical payment reimbursement information than they get now.  The PAID Act would require the Centers for Medicare & Medicaid Services (CMS), the sub agency under the Department of Health and Human Services (HHS) charged with the responsibility of running Medicare and creating regulations implementing the MSP, to provide insurance carriers and injured Medicare beneficiaries information about how much money has been spent toward injury-related Medicare covered medical items, services, and expenses (“Medicals”) by not only traditional Medicare (Parts A & B) as it does now, but privately administered Medicare Advantage (Part C) and Medicare Prescription Drug  (Part D) Plans, and the federally funded, predominantly state administered needs-based Medicaid plans, too.

As it exists, CMS provides various updates on mounting or finalized Medicals paid by traditional Medicare after being notified of upcoming settlements or receiving confirmation of settlements.  The updates are provided through the CMS web portal to parties that submit proof of authorization (Authorized Parties) to access the information.  The MSP provides direct statutory lien rights to the U.S. as well as equitable subrogation rights to the U.S. to arm Medicare with enforcement tools allowing it to be reimbursed for amounts conditionally paid that should be or should have been paid by Workers’ Compensation, Automobile Insurance, Liability Insurance including Self-Insurance, or No Fault Insurance (Primary Plans).  CMS provides the running total of the Medicare lien amount to help parties that want to settle know the amount to be paid to Medicare to satisfy its lien.  The SMART Act amendments to the MSP added a three year statute of limitations for the U.S. to bring recovery lawsuits enforcing Medicare’s conditional payment recovery rights and outlined demand amount update procedures and enabled regulations to be created by CMS, further defining  procedures for Authorized Parties to obtain updated and reliable information from the CMS portal on conditional payments by Medicare.

However, neither the MSP nor its SMART Act amendments contemplated the difficulties that Primary Plans, injured beneficiaries, and other Authorized Parties have experienced in getting updated information on prior injury-related medical payments made by Medicaid entities and/or the privately administered Medicare plans referenced above.  If CMS provided the payment information contemplated by the PAID Act in addition to the past payment of Medicals made by traditional Medicare, settling parties and their representatives would have a more efficient mechanism to determine proposed payment obligations toward a larger portion of past Medicals (collectively referred to in this article as Total Government Reimbursement Amounts).  When Workers’ Compensation Medicare Set-Asides (WCMSAs) are submitted to CMS for review or when any MSA allocation report is prepared, the standard is to project future costs for both medical services as well as prescription drug expenses.   However, CMS does not currently provide information about amounts paid for prescription drug expenses when parties or their authorized representatives request payment information through its web portal as those expenses are administered privately.  Therefore, the payment information available from CMS only provides part of the picture.

Primary Plans almost always condition payment of settlement funds on the agreement of beneficiaries to reimburse past conditional payments made by Medicare and often reference any applicable payment obligations to Medicaid[2] along with an acknowledgment by beneficiaries of their obligations to not prematurely bill Medicare for future Medicals pursuant to the MSP.  Payments for past Medicals by Part C, Part D and Medicaid Plans regarding settled injuries have not gotten the same attention that traditional Medicare conditional payments have because CMS is charged with the responsibility by the Secretary of HHS pursuant to the Federal Claims Collection Act[3]  to focus on the recovery rights of the U.S. under the MSP for conditional payments made through traditional Medicare.

The PAID Act sounds great in principle.  However, because the text of the bill will not be available until June 18, 2018, it is hard to say whether it will gain traction as written.  Because traditional Medicare’s lien rights are enforced by the U.S. pursuant to the MSP, the PAID Act will not likely need to reference prioritization of lien rights.  A wrinkle that has arisen is that private cause of action claims by Part C Plans or their assigns under the MSP are regularly being filed and it seems that MSP private cause of action claims could be filed by Part D plans too[4].  Sometimes, beneficiaries transfer between traditional Medicare coverage and Part C Plans from year to year.  Therefore, settling parties interested in addressing potential Medicare recovery rights should pay attention to the rights of Part C and Part D Plans for recovery of payment of past Medicals.  State legislatures, state Medicaid agencies, and courts asked to enforce Medicaid liens also need to consider the federal anti-lien statute[5] when addressing Medicaid lien matters alone or when Medicare has outstanding lien interests.

Putting the priority of Medicare liens over other liens to the side for a moment, the PAID Act would seem extremely helpful in providing a big picture look at the Total Government Reimbursement Amounts.  Congressman Gus Bilirakis (R-FL) stated that “this legislation will ensure that beneficiaries, Medicare and Medicaid have a clear and quick way to identify whether or not a participant has an MSP obligation, and provide information about how that obligation can be resolved.”  He further stated that “the PAID Act represents a ‘win-win-win’ for beneficiaries, plans, and the federal taxpayer.”  Congressman Ron Kind (D-WI) added that “Congress can save significant money for taxpayers and drive a better coordination of benefits if it mandates the sharing of certain information between CMS and settling parties.”

Medivest will continue to monitor the progress of this legislation and encourages readers to consider supporting it once the text of the PAID Act becomes available. The language of the bill will be available here next month.   Information about how to reach your local Congressional representative regarding the PAID Act may be found here.


[1] 42 U.S.C. §1395y(b) et. seq.  The MSP, a series of provisions that amend the Social Security Act and address both the order of payments for injury-related Medicare covered and otherwise reimbursable medical items, services and expenses like prescription drug expenses (Medicals) as well as the right of the U.S. Government to be reimbursed for any payments it makes for Medicals.

[2] Medicaid has lien rights derived from state law allowing it to reach portions of settlements that compensated medical bills paid by the respective state’s Medicaid agency as described under the U.S. Supreme Court’s decision in the Ahlborn case, cited in footnote four below and described in footnote five in our prior blog article, and as legislatively reinstated by the Bipartisan Budget Act (BBA) of 2018’s repeal of corresponding provisions of the BBA of 2013.

[3] 31 U.S.C. §3711, also known as the FCCA – requires the heads of legislative agencies to attempt to collect claims of the U.S. (and authorizes waivers and compromises of claims valued at up to $100,000 when a liable person does not have present/prospective ability to pay significant amount of claim or cost of collecting claim is likely to be more than amount recovered).

[4] The same MSP regulations in 42 C.F.R. § 422.108 are extended to Medicare Part D Plans via 42 C.F.R. § 423.462. Therefore, Part D Plans would likely be held to have the same MSP recovery rights as MAOs including the possibility of seeking double damages under the MSP private cause of action should a primary payer deny the Part D Plan reimbursement of due conditional payments.

[5] 42 U.S.C. § 1396p(a)(1).   See also, Wos v. E.M.A. ex rel. Johnson, 568 U.S. 627, 630, 133 S. Ct. 1391, 1395, 185 L. Ed. 2d 471 (2013)(“The anti-lien provision pre-empts a State’s effort to take any portion of a Medicaid beneficiary’s tort judgment or settlement not ‘designated as payments for medical care.’” citing Arkansas Dept. of Health and Human Servs. v. Ahlborn, 547 U.S. 268, 284, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006)).

Opioid Addiction Reduction is Goal of New CMS Rule
by

Opioid Addiction Reduction is Goal of New CMS Rule

On Monday, April 16, 2018, The Centers for Medicare & Medicaid Services (CMS) promulgated a rule[1], making both policy and technical changes to several programs including Medicare Advantage, Medicare Prescription Drug Benefit, Medicare-Fee-for-Service, Medicare Cost Plan and the PACE Programs. For the Medicare Secondary Payer (MSP) industry, the most pertinent part of this rule is that it will revise regulations for Medicare Advantage (Part C) and Prescription Drug Benefit (Part D) programs to allow implementation of provisions of the Comprehensive Addiction and Recovery Act (CARA), with a goal to reduce opioid misuse, addiction and/or overdose by Medicare beneficiaries, while still providing access to important pain management and treatment options. We recently wrote how CMS’ Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide review policies failed to provide a clear roadmap for reducing quantities (tapering) of prescription opioids over time to reduce the likelihood of opioid addiction.  While it is the medical providers that are on the frontline battling the addiction issue, regulatory amendments from CMS that encourage tapering and support evidence-based alternatives such as FDA approved medication assisted therapy (MAT), sound like steps in the right direction.

We agree with the National Alliance of Medicare Set-Aside Professionals’ (NAMSAP) position that CMS’s past policies haven’t done enough to address the opioid crisis. We applaud NAMSAP’s continuing efforts to bring this important issue to the attention of CMS and Congress. These efforts may have helped spur CMS to introduce the new rule[2] and the rule’s introduction seems to signal that CMS takes the opioid crisis seriously and desires to help curb opioid addiction.  We thank CMS for taking this step.  The rule will take effect on June 15, 2018, and Medivest will continue to monitor its implementation along with any legislative, regulatory or policy changes affecting the MSP industry.


[1] Medicare Program; Contract Year 2019 Policy and Technical Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit Programs, and the PACE Program, 83 FR 16440-01, 2018 WL 1783794 (F.R.).

[2] Other goals of the rule listed in its summary are to allow implementation of

. . . provisions of the 21st Century Cures Act, support innovative approaches to improve program quality, accessibility, and affordability; offer beneficiaries more choices and better care; improve the CMS customer experience and maintain high beneficiary satisfaction; address program integrity policies related to payments based on prescriber, provider and supplier status in MA, Medicare cost plan, Medicare Part D and the PACE programs; provide an update to the official Medicare Part D electronic prescribing standards; and clarify program requirements and certain technical changes regarding treatment of Medicare Part A and Part B appeal rights related to premiums adjustments.

Settlement Funds Protected by Professional Administration
by

Settlement Funds Protected by Professional Administration

Injured Medicare beneficiaries or those with a reasonable expectation of becoming enrolled in Medicare within 30 months of settlement (claimants) have a legal responsibility under the Medicare Secondary Payer statute enacted in 1980 (MSP)[1], to not prematurely bill Medicare for injury-related otherwise Medicare allowable, medical expenses (future medicals).  Because many claimants and even their attorneys still don’t know the MSP law exists or how to comply with it, many settlements for claimants don’t properly consider and protect Medicare’s interests as a secondary payer for future medicals.  Medicare Set-Aside (MSA) compliance programs consider Medicare’s MSP interests and implement actions to protect those interests.  MSP compliance companies rely heavily on two valuable tools that work best in conjunction to achieve MSP compliance goals; a MSA allocation report (also known as a Set-Aside arrangement) estimating future medicals, and administration of MSA funds, with spending restricted to applicable future medicals.  If administration of MSA settlement funds is handled by the injured claimant, it is referred to as self-administration and when performed by a company like Medivest Benefit Advisors, Inc., it is known as professional administration.

With a federal law on the books prohibiting premature billing of future medicals to Medicare and the potential for those not complying with the MSP being denied Medicare benefits for the claimed/released injury, is it wise to allow injured parties to manage and administer post settlement future medicals?  The National Council on Compensation Insurance, Inc. (NCCI) recently published a research brief updating its 2014 study on Workers’ Compensation MSAs (WCMSAs) and WCMSA reviews and reported that between 2010 and 2015, approximately 98% of all WCMSAs from the study’s 11,000 MSA data sample were self-administered.  That seems outrageous when injured parties are notorious for quickly spending money received from lump-sum settlements.  Statistics in a personal injury practice guide by The Rutter Group indicate that somewhere between 25 and 30% of accident victims spend all settlement money within two months of receiving the funds and that up to 90% of accident victims use all settlement proceeds within five years.[2]  Spending sprees seem common with lottery winners, some professional athletes, and most likely other people that come into money quickly.   Congress considered the poor spending habits of settlement recipients when it enacted the Periodic Payment Settlement Act of 1982 (PPSA)[3],[4] and in subsequent related legislation.[5]  Because annuity payments paid under the PPSA are paid tax-free and injured parties can often be irresponsible with their spending when they receive lump-sum settlements, structured settlements are often a wise choice to help injured parties preserve settlement funds for their needs.[6]

Irresponsible spending of settlement funds by injured parties is sad, but when settlement funds are misspent by people other than the injured parties, it can be tragic.  A Wall Street Journal article recently highlighted this risk.[7]  In 1980, Nicole Herivaux lost the use of one of her arms due to alleged medical malpractice at the time of her birth in New York.  In 1983, the minor’s family settled a malpractice lawsuit in exchange for a structured settlement that paid monthly annuity payments and a few hundred thousand dollars in lump sum money that could be used for Nicole’s education, among other things.  The company that started making settlement payments initially deposited the annuity checks in Nicole’s mother’s name, “as guardian” of Nicole directly into a bank account.  That company later transferred the responsibility for making those payments to a different insurance company in 1995, when Nicole was 15 and still a minor.  Nicole Herivaux is now an adult with student loan debt and alleged in a 2018 lawsuit that the new company sent the annuity payments directly to her mother without any payment restriction or oversight and that her mother misused and inappropriately exhausted Nicole’s settlement funds.  If the settlement had included professional administration of a custodial account, money intended for the minor could have paid off Nicole’s education expenses and provided her a better chance to live with peace of mind, dignity and security.

The Centers for Medicare & Medicaid Services (CMS), the regulatory body running the Medicare program and charged with the responsibility of interpreting the MSP has promulgated regulations and issued memos helpful to determining reasonable and appropriate measures to comply with the MSP.  A 2011 memo from CMS’s Regional Office in Dallas from Sally Stalcup, as MSP Regional Coordinator, announced that Medicare Set-Aside is CMS’s “method of choice and the agency feels it provides the best protection for the program and the Medicare beneficiary.”[8]  From the context of the Stalcup memo, it is clear the use of the term “Set-aside” included a MSA arrangement described above, and that Set-asides (MSAs) would apply in both workers’ compensation and liability cases.  The Stalcup Memo also announced that “each attorney is going to have to decide, based on the specific facts of each of their cases, whether or not there is funding for future medicals and if so, a need to protect the Trust Funds.”

However, it is one thing to set money aside for the intended purpose and quite another to properly administer the money.  Even when an injured claimant hires an attorney to represent them to obtain a settlement, judgment or award (“settlement”), settlement funds reserved for future medicals can be misspent.  For example, attorney misconduct was found in a South Carolina Bar disciplinary case where an attorney representing a claimant failed to properly administer funds set aside to protect Medicare’s interests (MSA funds) as a secondary payer for future medicals.[9]  In another bar disciplinary case, an Illinois licensed attorney used trust funds for improper purposes when the trust funds were to be maintained in trust until it was determined whether they belonged to the attorney’s client or Medicare.[10]

Did the attorneys in these matters know how to report settlements to CMS’ Benefits Coordination & Recovery Center (BCRC) contractor, how to request Medicare conditional payment amounts, perform bill review and potentially dispute and finalize conditional payment lien amounts?  Did they consider whether their client’s injury and/or financial condition might lend itself to a conditional payment lien compromise or waiver request? Furthermore, did the attorneys know how to properly administer the MSA funds that were set aside for their clients’ future medicals?  If the attorneys had sought the advice of a competent company that performs these functions regularly, they would have been in a better position to protect their clients, protect the Medicare Trust Funds and protect their professional standing.

Allowing incompetent, injured claimants to self-administer their own MSA accounts cannot be a prudent way to protect Medicare’s interests in preserving the nation’s Medicare Trust Funds.  Even competent claimants likely experience difficulties attempting to self-administer MSA funds.  While CMS makes resources available to individuals intending to self-administer an MSA account including a WCMSA Reference Guide and a Self-Administration Tool Kit, but what percentage of injured claimants will read and follow the protocol of the 127-page WCMSA Reference Guide and the 31-page Self-Administration Tool Kit?

Self-administration is surely harder than filing a standard federal income tax return. Plenty of people find it helpful to use professional assistance or digital software to help them file their tax returns.[11]  A self-administering claimant needs to evaluate bills for medical items and expenses, including prescription drug expenses, to verify that they are both injury-related, Medicare allowable and otherwise reimbursable.  Once bills are reviewed, a decision still needs to be made as to how much should be paid.  Is the provider a Medicare-approved provider? Should the amount be the Medicare allowable rate, the provider’s bill rate or the usual and customary rate?  Is there a Group Health Insurance plan involved? Does it matter if the case stems from a liability case versus a workers’ compensation claim?  Does the Code of Federal Regulations say anything about these distinctions?  Does CMS provide guidance in this area via its website, its Medicare Learning Network, or WCMSA Reference Guide?  Have there been any cases evaluating these issues and was the claimant’s injury in a jurisdiction where case law might affect the amount of money to be set aside for those future medicals?  Will a claimant be able to keep records on their own sufficient to withstand CMS scrutiny to determine whether MSA account spending is MSP compliant?  Will the claimant remember to prepare and transmit required annual attestations of MSP accounting compliance?  Because the answer to these questions is only part of the MSP compliance puzzle, it is little surprise that CMS announced professional administration as recommended for MSA fund administration.  In addition to providing a full array of Professional Administration services, Medivest also offers a Self-Administration Kit/ service that provides customer service and claims support as well as discounts on durable medical equipment and prescription medication to help competent claimants take on self-administration.


[1] 42 U.S.C. § 1395y(b).

[2] The Rutter Group, “California Practice Guide:  Personal Injury” Chapter 4.

[3] Re: Section 130 Qualified Assignments, 2003 WL 22662008, at *3 (legislative history to the PPSA detailed that additions to the law helped provide certainty that periodic payments of personal injury damages are excluded from the gross income of the recipient. S. Rep. No. 97-646, 97th Cong., 2d Sess. 4 (1982)).

[4] Periodic Payment Settlement Act of 1982 (PL 97–473 (HR 5470), PL 97–473, January 14, 1983, 96 Stat 2605) (through tax benefits, the PPSA encourages use of structured settlements to resolve personal physical injury and physical sickness cases).

[5] Re: Section 130 Qualified Assignments, 2003 WL 22662008, at *18 (The public policy encouraging use of structured settlements by providing a tax subsidy was affirmed in JCX-15-99,  the Joint Committee on Taxation, Tax Treatment of Structured Settlement Arrangements from March 16, 1999 (pointing out perils of lump sum settlements when “. . . the individual may, by design or poor luck, mismanage his or her funds so that future medical expenses are not met.” JCX 15-99 accompanied H.R. 263, “The Structured Settlement Protection Act,” 106th Cong., 1st Sess. Section 5891 of the Code enacted by a subsequent version of that bill, H.R. 2884, on January 23, 2002).

[6] Under Section 104(a) of the Internal Revenue Code (I.R.C.), personal injury settlement proceeds are tax-free, but when paid in a lump sum, any investment earnings or interest paid on those funds as they grow over time is taxable.  Pursuant to Section 104(a)(2) of the I.R.C., each structured settlement payment over the entire period of payment of the annuity stream is tax-free to the victim.  The details of taxable consequences associated with interest gained after receipt of each annuity should be evaluated with a licensed tax professional in conjunction with a structured settlement advisor.

[7] Leslie Scism, Lawsuit Alleges MetLife Mistake Helped a Woman Keep Settlement Money From Her Daughter Insurer faces lawsuit over structured-settlement annuity related to old businessWALL STREET JOURNAL., February 21, 2018.

[8] Sally Stalcup, MSP Regional Coordinator, Region VI (May 25, 2011, Handout).

[9] In the Matter of Morris, 343 S.C. 651, 653-54, 541 S.E.2d 844, 845 (2001).

[10] In the Matter of: Charles Augustus Boyle, Attorney-Respondent, No. 268739, 2014 WL 10505032, at *2. (Attorney voluntarily relinquished his license to practice law after an investigation revealed among other misconduct, that he failed to pay his client’s medical bills from settlement proceeds in one case, failed to deposit settlement proceeds into a guardianship account established on behalf of a minor in another case, failed to notify Medicare that four other cases settled and failed to pay the Medicare conditional payment liens for those four cases).

[11] Excluding those individuals who responded “none of the above” to the question of how they file their taxes, gobankingrates.com reports from an internet poll that of just over 5,000 people, 36.8% said they use either an accountant (28.5%) or a brick and mortar tax company like H&R Block (8.3%) and  34.5% responded that they use tax filing software.

Prescription Opioid Addiction Prevention Bill Signed into Law in Florida
by

Prescription Opioid Addiction Prevention Bill Signed into Law in Florida

On March 9, 2018, Florida’s Governor, Rick Scott signed a bill into law that will reduce the length of time allowed for certain opioid prescriptions.  Florida’s House Bill 21, entitled Controlled Substances, increases regulation, training, and reporting required when controlled substances are prescribed and dispensed in Florida.  It was designed to curb prescription opioid addiction and enacted into law while the nation and state continue to see both prescription and non-prescription opioid drug overdose deaths surge.  When medically necessary, doctors will be able to prescribe up to seven-day supplies of some controlled substances like prescription opioids, but often, the new law will limit those type of prescriptions to three days at a time.  The shorter prescription time period was described in a recent article as an “inconvenience worth saving 50,000 lives nationwide” by bill proponent, House Speaker Richard Corcoran R-Land O’Lakes.

Part of the bill will require doctors’ offices to check and report into a statewide drug monitoring database to reduce the likelihood that patients are engaging in “doctor shopping” by visiting different doctors to get multiple prescriptions for the same injury.  The article mentioned that in Florida in 2016, there were 968 overdose deaths from prescription opioids alone, including 723  from oxycodone (brand name Oxycontin) and 245 from hydrocodone (brand name Vicodin).

On April 18, 2018, the Florida Board of Podiatric Medicine will be hosting a “Multi-Disciplinary” conference call/discussion regarding implementation of House Bill 21.

Date and Time of Call:  April 18, 2018, 12:00 p.m.

People interested may call (888) 670-3525 with participant code: 7342425515

A copy of the agenda may be obtained here.

The Centers for Disease Control and Prevention (CDC) has well documented the nation’s opioid crisis and the dramatic rise in prescription and non-prescription opioid overdose deaths since 1999.  Deaths from prescription opioids since 1999 seem to be outpacing the close to 4x rise in sales of these medications during this time period.  Between 2015 and 2016, opioid overdose deaths rose over 27%.

The risk of addiction and its consequences may be higher than people realize.  The CDC’s website indicates that in 2014, almost 2 million Americans abused or were dependent on prescription opioids and that up to 25% of people who receive prescription opioids over a long term for noncancer pain in primary care settings struggle with addiction.

The Food and Drug Administration (FDA) seems interested in curbing opioid addiction.  In late 2017, the FDA made two announcements regarding approval of medication assisted therapies (MATs) for opioid addiction.[1],[2]  MAT uses other medications to stabilize brain chemistry, reduce or block the euphoric effects of opioids, relieve people’s internal “cravings”, and normalize body functions.  The FDA previously approved formulations of buprenorphine, methadone, and naltrexone for opioid MATs.  More recently, the FDA approved the use of Sublocade™, a once-monthly injectable “depot” formulation of buprenorphine that allows for extended-release of the product over time.  Sublocade is now available on the market.

Regarding Medicare Set-Aside (MSA) allocation reports that estimate future injury related, otherwise Medicare allowable medical expenses, including prescription drug expenses, the Centers for Medicare & Medicaid Services (CMS) sets some time limits on prescriptions of hydrocodone and oxycodone in its Pharmacy Guidelines – Section 9.4.6.2 of its recently updated Workers Compensation Medicare Set-Aside Arrangement Reference Guide Version 2.7 (WCMSA Reference Guide or WCMSA Guidelines – the only updates for which were a new phone number for the Workers’ Compensation Review Contract (WCRC) contractor that took over WCRC Medicare Set-Aside (MSA) reviews this month and a new clarified CMS confidentiality statement).  While shorter than they used to be, these time limits are longer than those described in Florida’s new law.  For example, Hydrocodone combination products, now classified as Schedule II controlled substances (C-II), require new prescriptions at intervals no greater than 30 days.  In 2014 when they were classified as C-III controlled substances, new prescriptions used to last the earlier of five refills or six months.  However, there is an exception for C-II drugs whereby practitioners may issue up to three consecutive prescriptions in one visit granting patients potential authorization to receive a total of up to a 90-day supply.  WCMSA Guidelines changed on January 1, 2015, for all new cases submitted after that date to require at least 4 healthcare provider visits per year when C-II drugs are used continuously.

No recent prescription policy changes have changed the review process or recommended methods of preparing MSA allocation reports.  Companies that prepare MSA allocation reports for Medicare beneficiaries or those with a reasonable expectation of becoming enrolled in Medicare within 30 months (claimants) will still follow CMS WCMSA Guidelines for usage for injured claimants’ life expectancies.  While the WCMSA Reference Guide indicates that reviewers for the WCRC assess past pharmacy and medical history in cases of drugs prescribed on an “as-needed” (PRN) basis to determine “reasonably probable usage” for those drugs in the future, opioids for chronic pain management may be prescribed as an around-the-clock medication or PRN, depending on the situation.

CMS places a note in the subsection for “as-needed” prescriptions, reminding those preparing MSA allocation reports that “. . . non-compliance or non-adherence is not a reason to reduce a WCMSA amount.”  There are currently no clear CMS guidelines providing a roadmap for reducing quantities (tapering) of prescription opioids over time to decrease the likelihood of addiction.  The WCMSA Reference Guide states,

“Drug Weaning/Tapering Drug weaning commonly occurs with pain medications, such as opioids, especially when claimants’ work injuries improve. The WCRC takes all evidence of drug weaning into account, although in most circumstances the WCRC cannot assume that the weaning process will be successful. Usually, the latest weaned dosage is extrapolated for the life expectancy, but again, they assess all records when making these types of determinations. Where a treating physician believes tapering is possible and in the best interests of the claimant, CMS will consider all evidence in making a WCMSA determination, including medical evidence of current actual tapering.”

WCMSA Reference Guide 9.4.6.2 Version 2.7.

Let’s hope measures such as awareness education in provider and patient communities, reasonable prescription procedure changes and medication assisted therapies will all play a role in curbing opioid addiction among injured claimants and the U.S. population.


[1] https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm587312.htm

[2] Recent Notable FDA Approvals, December 13, 2017, Practical Law Legal Update w-012-1335.

 

 

 

 

Medicare Conditional Payment Recovery Report FY 2017 by CMS for MSP CRC Contract
by

Medicare Conditional Payment Recovery Report FY 2017 by CMS for MSP CRC Contract

In its recent annual report to Congress, the Centers for Medicare & Medicaid Services (CMS) stated that during fiscal year (FY) 2017 ending September 30, 2017, its Medicare Secondary Payer Commercial Repayment Center contractor (CRC), obtained $131.78 million in net recoveries for conditional and mistaken payments made by Medicare that should have been paid by primary payers such as Group Health Plans (GHPs), or liability insurers (including self-insureds), no-fault insurers or workers’ compensation entities/plans (the latter group collectively called Non-Group Health Plans or NGHPs, and all recoveries described above will be referred to as Medicare conditional payment recoveries).

Like last year, the NGHP – Medicare conditional payment recoveries represented a larger percentage of the CRC’s overall conditional payment recoveries, and the report indicated that continued reduction of GHP recoveries was again due to the “maturity of the mandatory reporting instituted under Section 111 [of the Medicare Secondary Payer statute’s[1]] Medicare, Medicaid, and SCHIP Extension Act of 2007″ [2] (Section 111 Reporting), as well as the CRC’s “resolution of pending available recoveries.”

The $131.78 million net was larger than both FY 2016’s net of $88.35 million and FY 2015’s net of $125.05 million.  Because the newest CRC contractor, Performant Recovery, Inc. (Performant), just took over the CRC recovery contract on February 12, 2018, these reported recoveries reflect efforts of the former CRC contractor.  Performant has promised more efficiency in its collection process and better coordination with the Benefits Coordination & Recovery Contractor (BCRC), the entity that receives both notifications of NGHP settlements, judgments, awards or other payments (settlements) from beneficiaries and their representatives, as well as Section 111 Mandatory Insurance Reporting information about injuries, settlements and responsibility for payments from Responsible Reporting Entity (RRE) insurance carriers.  One indication that CMS and/or Performant may be keeping a closer eye on conditional payment recoveries and working more efficiently is that the FY2017 payment recovery report was available on the CMS website in the first quarter this year as opposed to the third quarter a year ago.

CMS’s continued expansion of Medicare conditional payment recoveries into NGHP categories with Performant in the CRC driver’s seat should mean even higher Medicare conditional payment recoveries moving forward.


[1] 42 U.S.C. §1395y(b).

[2] 42 U.S.C. §1395y(b)(8) et seq. (P.L. 110-173).