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Opioid Addiction Reduction is Goal of New CMS Rule
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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
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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
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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
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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).

New WCRC MSA Review Contractor Capitol Bridge, LLC Introduced by CMS
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New WCRC MSA Review Contractor Capitol Bridge, LLC Introduced by CMS

There was nothing earth shattering from the Workers’ Compensation Review Contract (WCRC) webinar/conference call last week introducing Capitol Bridge, LLC (Capitol Bridge) as the new WCRC MSA review contractor that will begin reviewing proposed Medicare Set-Aside (MSA) submissions for the Centers for Medicare & Medicaid Services (CMS) beginning March 19, 2018. The call focused on Workers’ Compensation MSA (WCMSA) reviews and no questions were fielded, and therefore, no new information was provided, regarding potential Liability MSA (LMSA) or No Fault MSA (NFMSA) reviews.

Capitol Bridge takes over the WCRC as CMS’s MSA review contractor beginning March 19, 2018.
The computer user interface through the web portal will be the same as before.

The mailing address will also be the same as in the past, but the phone, fax and e-mail beginning March 19, 2018 will be as follows:

Phone: 833-295-3773
Fax: 585-425-5390 (sounded like this method was discouraged)
e-mail: WCRC@capitolbridgellc.com

Timeframes for reviews and re-reviews are projected to remain the same with a 10-day period from submission for Capitol Bridge to request additional documentation and a 20-day period from receipt of all required documentation for a MSA review decision to be transmitted to a party proposing a MSA allocation.

The acceptance date is still the submission date regardless of the method of submission (CMS web portal, BCRC P.O. Box, facsimile transmission).

One sign that Capitol Bridge Bridge intends to make the review process more efficient is that that there will no longer be a limit to the number of cases that a person may speak to a Capitol Bridge representative about on a single call. A Capitol Bridge representative also mentioned that it intends to use automation to help streamline and improve its MSA review process.
CMS review policy questions should be submitted to CMS and not Capitol Bridge.

No policy changes regarding review of MSAs were announced and it was mentioned that the current WCMSA Reference Guide (version 2.6) is not changing.  Therefore, submission of any MSA for review will continue to be a voluntary process.  The Request for Proposal (RFP) for this new WCRC MSA review contract called for centralized review of all MSA’s (previously only WCMSA reviews were centralized) so this will likely lead to more efficiency regarding the more commonly reviewed WCMSAs, as well as consistency with LMSA and NFMSA reviews (previously left to the discretion of CMS Regional Offices), once they get underway.  Stay tuned for information on how often LMSAs or NFMSAs are reviewed by Capitol Bridge in the future.  While it was not mentioned on the call, you might find this CMS website information on common MSA submission errors and hints helpful when considering submission of MSAs to CMS.

MSA Reviews to Increase for Liability, No-Fault and WC MSAs
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MSA Reviews to Increase for Liability, No-Fault and WC MSAs

On March 1, 2018, the Centers for Medicare & Medicaid Services (CMS) announced a 2018 Workers’ Compensation Review Contractor Transition Webinar will take place this Wednesday, March 7th, 2018.  The webinar, hosted by CMS, will introduce Capitol Bridge, LLC (Capitol Bridge), the contractor that will assume the responsibility of the Workers’ Compensation Review Contract (WCRC) functions including review of various Medicare Set-Aside proposals (MSA reviews)[1], effective March 19, 2018.

The webinar format will include opening remarks and a presentation by CMS concerning the transition and hopefully, more details about the scope of the contract, followed by a question and answer session with the audience.

Date: Wednesday, March 7, 2018 Start time: 1:00 PM ET

Registration and webinar login URL: https://engage.vevent.com/rt/cms2/index.jsp?seid=863 Or Conference call number: 877-251-0301 Conference ID: 9369188

The announcement can be seen here.

We previously announced the request for proposal (RFP) for this contract on our blog. According to the original RFP, this contract may include long-awaited expansion of MSA reviews beyond Workers’ Compensation MSAs (WCMSAs), to include reviews of Liability MSAs (LMSAs) and No-Fault MSAs (NFMSAs).  The contract value for review of MSAs was increased from last year’s 6 million dollar a year figure, to 60 million dollars a year, likely due to the contemplated increase in the number of MSA reviews and expanded scope of the reviews described in the RFP.  We also previously referenced CMS’s amended WCMSA Reference Guide, Version 2.6 that announced CMS’s statement that professional administration is highly recommended for MSAs.  That reference guide also updated some MSA review and re-review procedures that could add some additional work to the MSA review process for Capitol Bridge.

The new WCRC change includes centralization of all MSA reviews, so instead of CMS Regional Offices (RO) handling reviews of LMSAs on a discretionary basis, the ROs will likely provide final approval of the WCRC contractor’s recommendations for all types of MSAs now.  In 2005, CMS pulled the review of WCMSAs from the regional offices and handed that responsibility to one of the predecessor WCRC contractors.  This new change in procedure for review of more MSAs including some LMSAs, could improve consistency of all types of MSA reviews. It’s hard to say yet how smooth the process will be or the expected timing for the various MSA reviews.  The webinar may help clear up some of these questions.

Capitol Bridge is scheduled to receive 60 million dollars per year for the one-year contract with four renewal options for one year each.  The RFP’s Statement of Work gave notice that there could be anywhere from 600 to 11,000 LMSA reviews a year.  Arch Systems and Ken Consulting competed with Capitol Bridge for this contract and previously protested the bid award.  The bid protest was denied on December 12, 2017, paving the way for CMS to move forward with Capitol Bridge.

History of WCRC MSA Reviews:

There has never been a requirement to submit any type of MSA to CMS for review.  CMS has had a voluntary review process for WCMSAs since the early 2000’s.  Around 2003, a WCRC was awarded by CMS for review of voluntarily submitted WCMSAs according to threshold dollar amounts.  The current threshold amounts for CMS to review WCMSAs are $25,000 for settlements involving injured beneficiaries on Medicare at the time of settlement, or $250,000 for settlements involving injured parties who have a reasonable expectation of becoming Medicare beneficiaries within 30 months of the date of settlement (applicable claimants).  Around 2005, CMS centralized the review of WCMSA proposals with the WCRC contractor providing recommendations to the respective CMS Regional Office (RO) regarding whether proposed MSA amounts adequately protected Medicare’s interests, as a secondary payer under the Medicare Secondary Payer statute (MSP)[2].  The procedure has been for the WCRC contractor to either agree with the proposed WCMSA amount, or recommend a higher amount or a lower amount to the CMS RO. The CMS RO has usually followed recommendations from the WCRC contractor, and for those WCMSAs that were approved, would provide the submitter an approval letter.

Liability MSAs have been a bone of contention in the MSP stakeholder community for a long time and settling parties have had to read between the lines of the law and regulations, sometimes arguing whether regulations intended for workers’ compensation matters should be applied to liability claims.  Parties and even courts have looked to CMS and its memos, such as the Stalcup Memo[3], for guidance on how to adequately protect Medicare’s interests for applicable liability claimants’ LMSAs.  Questions have persisted as to whether LMSAs could be reviewed, would be reviewed, were recommended, or were even required.  There is still no law or regulation mandating or directing the method of review of LMSAs and to date, there are no threshold dollar amounts relating to LMSA reviews.  The decision of whether to review a LMSA has traditionally been left to the discretion of each CMS RO and some ROs have routinely declined to review any LMSAs.

Commentary:

Will there be dollar thresholds for the new MSA types under consideration?  How many new LMSA reviews will Capitol Bridge be able to perform over the next year?  Once a process is implemented for LMSA reviews, will this encourage liability settlements and provide clarity to settling parties?  How will Capitol Bridge address differences in case valuation between liability and workers’ compensation cases?  Workers’ compensation claims do not take into consideration comparative negligence or depending on jurisdiction, contributory negligence; factors that can reduce, or even bar recovery in liability claims, depending on the jurisdiction and facts involved.  Claimants considering settlement of workers’ compensation cases often follow strict statutory procedures in order to obtain settlements, but do not have to consider insurance policy limits or statutory caps on future medical expenses like plaintiffs in personal injury cases.  Will apportionment of LMSA amounts now follow an Ahlborn methodology in the absence of CMS regulations directly on point?

CMS’s larger contract for WCMSA reviews and prospective foray into a stepped-up LMSA review procedure announced in June of 2016 and again in October 2017, is coming to fruition.  Over the coming years, we will most likely see more formalized guidance develop for review of LMSAs and perhaps at some point, new regulations governing the area as well.  Through its new Commercial Repayment Center (CRC) contractor, Performant, CMS seems more focused on enforcement of the Medicare Secondary Payer statute (MSP) and recovering conditional payments for medical care related to workers’ compensation, liability and no-fault claims.  This is a good thing for the Medicare Trust Funds and U.S. taxpayers.  Expanding and formalizing a voluntary review process for LMSAs seems to be another logical step to fulfill the intent of the MSP in protecting Medicare’s interests.


[1] MSA allocations are reports, based on prior medical treatment records and expenses, that estimate future injury-related Medicare allowable medical expenses for an injured party (future medical expenses).  The funds covering those projected future medical expenses are referred to as MSAs and mean not only the projected costs (often in the form of a MSA allocation report) but also the arrangement whereby those funds are set aside in an account to be used solely for those applicable future medical expenses.  A (Medicare) Set-Aside Arrangement is defined by CMS in its Medicare Secondary Payer Manual to be “[a]n administrative mechanism used to allocate a portion of a settlement, judgment or award for future medical and/or future prescription drug expenses.  A set-aside arrangement may be in the form of a Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA), No-Fault Liability Medicare Set-Aside Arrangement (NFSA) or Liability Medicare Set-Aside Arrangement (LMSA).”

[2] 42 U.S.C. 1395y(b) et. seq.

[3] See Sally Stalcup, MSP Regional Coordinator, Region VI (May 25, 2011 Handout); See also, Schexnayder v. Scottsdale Ins. Co., 2011 WL 3273547 at 5 (W.D. La. 2011) (adopting policy from the Stalcup memo in Court’s findings of fact).

Medicaid Beneficiaries Keep More Settlement Proceeds Under Bipartisan Budget Act of 2018
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Medicaid Beneficiaries Keep More Settlement Proceeds Under Bipartisan Budget Act of 2018

A section of the Bipartisan Budget Act (BBA) of 2018[1], signed into law by President Trump on February 8, 2018, repealed Section 202(b) of the BBA from 2013,[2] that previously enabled states to extend Medicaid lien recoveries beyond medical expenses to any category of damages in third party liability settlements, judgments or awards (BBA repeal).  Those repealed Section 202(b) BBA provisions, sometimes referred to as the Murray/Ryan legislation, sharply deviated from and effectively overruled the U.S. Supreme Court’s 2006 decision in Arkansas Department of Health and Human Services v. Ahlborn, [3] and the 2013 Wos v. E.M.A. decision that affirmed Ahlborn.[4]  Ahlborn and Wos limited Medicaid liens solely to the medical damages portion of a Medicaid beneficiary’s liability settlement or judgment.

The good news for Medicaid beneficiaries and their attorneys is that the BBA repeal brings back Ahlborn and Wos as the law of the land.[5]  The Ahlborn decision makes it easier for Medicaid beneficiaries to know the maximum amount of Medicaid liens especially when settling parties agree on what the full case value amount would have been if there was 100% liability on the part of the tortfeasor and an allocation is performed for applicable past and future medical damages.  While Ahlborn involved analysis of a Medicaid lien without any allocation between various types of alleged damages at the time of settlement, the case has been analogously cited in Medicare Secondary Payer Act (MSP) cases by courts for its reasonable apportionment methodology.  In Ahlborn, the Supreme Court applied the ratio between net proceeds to the injured party (which in MSP cases is typically obtained by taking the settlement amount and subtracting procurement costs, attorney’s fees and government conditional payment liens[6]) and the full value of the case, to the amount stipulated as 100% of medical expenses, to reach a reduced proportionate amount as the Medicaid lien amount for the medical expenses.  The Supreme Court in Wos, affirmed Ahlborn, holding North Carolina’s Medicaid lien statute that presumed 1/3 of any tort settlement would represent medical expenses, violated the federal Medicaid anti-lien statute,[7] because the state Medicaid statute’s automatic 1/3 calculation could reach beyond actual medical expenses of injured parties, depriving them of a property rights interest in other portions of their settlements.  The Wos Court referenced 16 states that had judicial or statutory methods available to allocate medical damages[8] and suggested that North Carolina had:

. . . ample means available to allocate Medicaid beneficiaries’ tort recoveries in an efficient manner that complies with federal law. Indeed, if States are concerned that case-by-case judicial allocations will prove unwieldy, they may even be able to adopt ex ante administrative criteria for allocating medical and nonmedical expenses, provided that these criteria are backed by evidence suggesting that they are likely to yield reasonable results in the mine run of cases. What they cannot do is what North Carolina did here: adopt an arbitrary, one-size-fits-all allocation for all cases. 

Wos v. E.M.A. ex rel. Johnson, 568 U.S. 627,641, 133 S. Ct. 1391, 1401, 185 L. Ed. 2d 471 (2013).

Section 53102 of the BBA of 2018 repealed Section 202(b) of the BBA of 2013 in its entirety.  While the effective date of Section 202(b) of BBA of 2013 had been delayed to October 1, 2017 (this is why the BBA repeal was made retroactive to September 30, 2017), it would have discouraged Medicaid beneficiaries and their attorneys from entering into settlements, especially in cases with high proportionate amount of medical bills paid by Medicaid in relation to overall settlement amounts.  The BBA repeal now keeps Medicaid from reaching into non-economic damages such as pain and suffering, loss of enjoyment of life and loss of consortium in liability matters, as well as away from economic non-medical damages, such as lost wages in workers’ compensation claims.  The repeal will mean that Medicaid beneficiaries will more often than not, get more money in their pockets, furthering a longstanding policy recognized by the Supreme Court of encouraging parties to settle matters out of court.

Take Aways:

  • Under the Ahlborn standard, it would seem that parties should attempt to work out allocations of various damages categories associated with their settlement, including a breakdown of past versus future medical expenses, the total amount of any conditional payments made by Medicare, Medicare Advantage Plans or Medicaid, along with the ratio of net settlement proceeds to the injured party compared to an estimated 100% liability full case value. This will help provide a reasonable apportionment percentage to consider applying to future injury related Medicare allowable medical expenses.  CMS currently only recognizes liability apportionment percentages determined by courts after evaluation of these issues “on the merits” and does not have a clear policy toward liability apportionment review for settlements outside of court.  However, when parties go through a rigorous good faith process to estimate the various damages, expenses and reasonable ratio as described above, it would certainly conserve judicial resources.
  • If the claim or claims released are different than those alleged, the parties should be specific as to which body parts and injuries are included in the released claim, ideally including the applicable ICD codes involved. This may help prevent future Medicare coverage confusion over what is or is not injury related.
  • Pursuant to the Medicare Secondary Payer Act, 42 U.S.C. § 1395y(b) (MSP), when an injured Medicare beneficiary wants to settle a third-party liability case, not only must Medicare be reimbursed for any conditional payments made prior to the date of settlement, Medicare’s interests must always be considered, and when future medical expenses are implicated, Medicare’s interests must be protected for those future injury related Medicare allowable medical expenses.  42 U.S.C. § 1395y(b)(2)(A). A similar analysis applies to Medicaid lien interests because while the BBA repeal limited the reach of Medicaid liens, it did not eliminate them.
  • In Ahlborn, the medical allocation portion was achieved not at the time of settlement but by stipulation during the subsequent federal court case. The Wos court pointed out that allocations can also be achieved by judicial decree, administrative hearings or even administrative rulemaking.[9]
  • The Centers for Medicare & Medicaid Services (CMS), the agency that runs the Medicare program, could save parties time and money by adopting Ahlborn’s methodology of equitable apportionment of medical expenses in new regulations to clarify how to best apportion future medical expenses in Medicare implicated third party liability cases.  Using guidance from the workers’ compensation field doesn’t work for apportionment ratios because workers’ compensation doesn’t have comparative negligence concepts and doesn’t have settlements for less than full value.  Allowing an Ahlborn methodology would not only provide consistency between how Medicare and Medicaid conditional payment liens will be handled, it would provide necessary guidance to prospective settling parties while protecting the Medicare Trust Funds.  Based on the Wos Court’s statement about adopting administrative criteria for allocation of medical and non-medical expenses, it seems like a renewed rulemaking push would be welcomed by many courts.  Clear rulemaking direction from CMS regarding liability MSAs would likely be welcomed by settling parties, their attorneys and those in the MSP industry too!

[1] Bipartisan Budget Act of 2018 “SEC. 53102. Third party liability in Medicaid and CHIP.

(a) Modification of third party liability rules related to special treatment of certain types of care and payments.—

(1) IN GENERAL.—Section 1902(a)(25)(E) of the Social Security Act (42 U.S.C. 1396a(a)(25)(E)) is amended, in the matter preceding clause (i), by striking “prenatal or”.

(2) EFFECTIVE DATE.—The amendment made by paragraph (1) shall take effect on the date of enactment of this Act.

(b) Delay in effective date and repeal of certain Bipartisan Budget Act of 2013 amendments.—

(1) REPEAL.—Effective as of September 30, 2017, subsection (b) of section 202 of the Bipartisan Budget Act of 2013 (Public Law 113–67; 127 Stat. 1177; 42 U.S.C. 1396a note) (including any amendments made by such subsection) is repealed and the provisions amended by such subsection shall be applied and administered as if such amendments had never been enacted.

(2) DELAY IN EFFECTIVE DATE.—Subsection (c) of section 202 of the Bipartisan Budget Act of 2013 (Public Law 113–67; 127 Stat. 1177; 42 U.S.C. 1396a note) is amended to read as follows:

“(c) Effective date.—The amendments made by subsection (a) shall take effect on October 1, 2019.”.

(3) EFFECTIVE DATE; TREATMENT.—The repeal and amendment made by this subsection shall take effect as if enacted on September 30, 2017, and shall apply with respect to any open claims, including claims pending, generated, or filed, after such date.  The amendments made by subsections (a) and (b) of section 202 of the Bipartisan Budget Act of 2013 (Public Law 113–67; 127 Stat. 1177; 42 U.S.C. 1396a note) that took effect on October 1, 2017, are null and void and section 1902(a)(25) of the Social Security Act (42 U.S.C. 1396a(a)(25)) shall be applied and administered as if such amendments had not taken effect on such date.”.

[2]   Section 202(b) of the BBA of 2013, Public Law 113-67, amended portions of the Medicaid law pertaining to “recovery of Medicaid expenditures from beneficiary liability settlements” including:

  1. a) In 42 U.S.C. §1396a(a)(25)(B) [also known as § 1902(a)(25)(H) of the Social Security Act], pertaining to cases where a legal liability is found to exist after Medicaid paid for medical assistance and the amount of reimbursement that could be reasonably expected would exceed recovery costs, language was changed to indicate that the State or local agency would [now] seek reimbursement for such assistance instead of the prior restriction  “to the extent of such legal liability”; and language in §1396a(a)(25)(H) pertaining to the State’s acquired rights of the beneficiary in recovering payment from liable third parties was removed “payment by any other party for such health care items or services” and inserted “any payments by such third party”;
  2. b) In 42 U.S.C. §1396k(a)(1)(A) [also known as §1912(a)(1)(A) of the Social Security Act] instead of limiting the Medicaid lien recovery to “payment for medical care from any third party” that language was removed to expand the Medicaid lien recovery right to “any payment from a third party that has a legal liability to pay for care and services available under the plan.” [without regard to the type of damages being paid in a settlement]. See RESOLUTION MAKING CONTINUING APPROPRIATIONS, PL 113-67, December 26, 2013, 127 Stat 1165.

[3] Arkansas Dept. of Health and Human Svcs. v. Ahlborn, 547 U.S. 268, 126 S. Ct. 1752 (2006) (holding Medicaid’s federal anti-lien provision, 42 U.S.C. §1396p(a)(1), to pre-empt state’s “effort to take any portion of a Medicaid beneficiary’s tort judgment or settlement not ’designated as payments for medical care.’”  Id. at 284.

[4] Wos v. E.M.A. ex rel. Johnson, 568 U.S. 627, 133 S. Ct. 1391, 1401, 185 L. Ed. 2d 471 (2013).

[5] The Ahlborn case started as a state court automobile negligence case that settled out of court for $550,000 when the young plaintiff, Heidi Ahlborn, suffered brain damage and loss of future earning capacity, among other damages from the accident.  The parties did not allocate among the various damages categories in the settlement but the allegations in the underlying case included claims for Ms. Ahlborn’s future medical care.  Medicaid asserted a lien against the settlement proceeds in the amount of $215,645.30, the total amount Medicaid had spent for Ms. Ahlborn’s care from the accident.  Ms. Alborn filed a declaratory judgment action in U.S. District Court claiming the reach of the Medicaid lien by the state agency violated the anti-lien provisions of federal Medicaid law.  All parties then stipulated that Ahlborn’s full claim was reasonably valued at $3,040,708.12 and that the settlement amount was approximately 1/6th of that full value.  The U.S. District Court granted the state Medicaid agency’s motion for summary judgment but on appeal, the Eighth Circuit reversed, holding the state agency to only be entitled to that portion of the judgment that represented payments for medical care.  The Eighth Circuit reduced the lien from $215,645.30 to $35,581.47, the amount the state agency stipulated had represented compensation for medical expenses (approximately 1/6 of the original claimed lien amount).   The Supreme Court affirmed.

[6] See Hinsinger v. Showboat Atlantic City, 18 A.3d 229 (Super. Ct. NJ 2011)(applying 42 C.F.R. § 411.37 to a liability case with future medical expenses and holding attorney’s fees incurred in procurement of settlement payable from funds allocated to a Medicare set-aside); see also, Benoit v. Neustrom, et al., 2013 WL 1702120 (W.D. La. 2013) (net to plaintiff calculated after deducting attorney’s fees, expenses and Medicare conditional payment amounts).

[7] 42 U.S.C. §1396p(a)(1).

[8]  Wos v. E.M.A. ex rel. Johnson at 641 (“States have considerable latitude to design administrative and judicial procedures to ensure a prompt and fair allocation of damages. Sixteen States and the District of Columbia provide for hearings of this sort, and there is no indication that they have proved burdensome. Brief for United States as Amicus Curiae 28–29, and n. 7.”).

[9] Id. at 641.

 

 

MSP Private Cause of Action Assignments: Worth Billions?
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MSP Private Cause of Action Assignments: Worth Billions?

Many people in the Medicare Secondary Payer industry know that some courts have granted Medicare Advantage Plans recovery of conditional payments from primary payers (primary plans) under the Medicare Secondary Payer statute, 42 U.S.C. § 1395y(b)(2) et seq. (MSP) and its MSP private cause of action provision, 42 U.S.C. § 1395y(b)(3)(A).  What may not be apparent is that many of the cases involving Medicare Advantage Plans are related by something other than just the type of insurance involved.  There is a group of companies based in South Florida, most represented by the same law firm, that uses a proprietary data collection system to help pursue these claims.[1]  If you haven’t seen or heard any news about the many lawsuits seeking these recoveries based on assignments from Medicare Advantage Plans, you probably will soon.  Just this week, a U.S. District Court in Wisconsin examined two such cases and while it recognized the general right of an assignee to sue based on an assignor’s injuries, dismissed the cases for lack of standing when plaintiffs failed to include sufficient facts about the assignments from Medicare Advantage Plans to establish standing.[2]  The MAO-MSO RECOVERY II et al. v. American Family Mutual Insurance Company court cited to over a dozen other similar cases by similar plaintiffs (represented by the same law firm mentioned below, or affiliates of same), many of which are in the initial pleading phase across the country.[3]  

Medicare Advantage Plans a/k/a Medicare+Choice plans or Part C Plans, fall under Medicare Part C[4], and are often referred to in case law as Medicare Advantage Organizations (MAOs).  MAOs allow Medicare beneficiaries to elect benefits through private HMO plans or other managed care arrangements administered by private entities instead of by the government agency responsible for implementing the Medicare program, the Centers for Medicare & Medicaid Services (CMS).  Our prior blog article discussed the 3rd Circuit (In re Avandia[5]) and 11th Circuit (Western Heritage[6]) appellate cases that paved the way for MAOs in those circuits to pursue MSP[7] private cause of action claims for double damages[8], when suing to recover conditional payments from primary plan payers[9] under the MSP.

MSP Law Firm, PLLC (MSP Law Firm) based in Miami, has been active in helping clients get assignments from MAOs and in pursuing suits asserting the MAOs’ rights as secondary payers, for double damages pursuant to the MSP private cause of action.  Numerous entities the firm represents or has represented (over 30 named LLCs are listed on the Florida Department of State website, many with common ownership) have sued primary plans such as no-fault insurers in this manner.  It appears that these entities have been part of lawsuits in at least 23 states with some of the cases being classified as multidistrict litigation cases (MDL), with many filed as class actions.  The firm’s website lists 79 class actions with two of the state-based cases having obtained class certification.  On November 16, 2017, one of the class certified cases had a preliminary $5 million settlement approval granted.[10]  According to an April, 2017 Daily Business Review article, John Ruiz, a MSP Law Firm partner, indicated there was a possibility of over a billion dollar verdict in another class action case, and in an August, 2017 Bloomberg BNA Daily Healthcare Report article, he indicated that the MSP Law Firm was readying 1,500 more lawsuits to be filed.[11]

The MSP Law Firm clients referenced in these MAO cases have alleged that they were assigned MSP private cause of action claims from the MAOs so that they could “step into the shoes” of the MAOs for those assigned rights.[12]  It is hard to say whether these cases will succeed when so many are still in the initial pleading phase.  On January 9, 2018, there was early signal, if not an indication, that at least one court in the 7th Circuit[13] may follow the 3rd  and 11th Circuits in granting the MSP private cause of action right to a MAO or its assignee, for claims against primary plans that fail to provide for primary payment or appropriate reimbursement.[14]  The MAO-MSO RECOVERY II et al. v. State Farm Mut. Auto. Ins. Co. (State Farm) case is another example of this type of MAO assignment case, this time in a U.S. District Court case in Illinois.  Because the Amended Complaint in the State Farm case was dismissed (with an allowance for the MAO-MSO entity to amend within 21 days), the court’s side discussion of the legal issues, known in the legal field as dicta, cannot be used as precedent.  However, the court recognized that other federal district courts have followed the reasoning and holdings of the 3rd Circuit (In re Avandia) and 11th Circuit (Western Heritage) cases.[15]  The State Farm court gave an indication that it confirmed both the right of a MAO to the MSP private cause of action and the right of an entity that has been assigned that right, to enforce it, signaling a strong potential that this court will follow the In re Avandia and Western Heritage reasoning if the Amended Complaint is amended a second time, and the case proceeds.

A similar issue arose in a U.S. District Court case in South Florida with some of the same plaintiffs in MAO-MSO Recovery II, LLC v. Boehringer, where in October 2017, the District Court for the Southern District of Florida dismissed a first Amended Class Action Complaint when plaintiffs failed to say which MAOs they received assignment from or “the dates of the assignments, or essential terms.”[16] In the second Amended Complaint, plaintiffs added a new plaintiff named MSP Recovery Claims, Series, LLC after finding a Medicare Advantage Plan member who had suffered an injury from taking Boehringer’s blood thinning drug, Pradaxa.  While many of these cases have been lodged against no-fault carriers with contractual payment obligations, the required “demonstrated responsibility” under the MSP for payment in the Boehringer case arose from tort liability.  Because the Pradaxa defendants settled a liability case, they became primary plan payers under the MSP by virtue of the settlement, regardless of whether they admitted liability.  On December 12, 2017 the Boehringer court dismissed the case for lack of standing because the most recent assignment for a newly named plaintiff took place after the original lawsuit was filed.  A new case will likely be filed by the entity the court said would have standing.

It is likely that these cases and other similar cases pursuing MSP private cause of action claims[17] will be active again very soon.  When complaints get dismissed, they are most often dismissed without prejudice, allowing the matters to proceed with amended pleadings.  If the plaintiffs in the above-described subject cases provide more specific descriptions of the assignments (such as naming the MAO’s they received assignment from under protective order if the MAO’s do not wish to be named, attaching copies of assignments to their complaints, and naming individual Medicare Advantage Plan members negatively affected by no payment or slow payment by primary plan payers), the proverbial floodgates of litigation could be opened.

Not all of the above-described MSP private cause of action MAO assignment cases are being held up at the pleading phase.  Yesterday, on February 21, 2018 a U.S. District Court in the Southern District of Maryland allowed two of these putative class action cases by MAO-MSO Recovery II, LLC, et al. to proceed against Government Employees Insurance Company (GEICO), one involving GEICO as a no-fault insurance primary plan and the other involving GEICO as a liability primary plan concerning settlements paid on behalf of its insureds, after denying GEICO’s motions to dismiss for lack of standing and failure to state a claim upon which relief could be granted.[18]  This means that responsive pleadings will need to be filed and discovery will get underway.  While it does not necessarily mean that class actions will be certified for these cases, (the judge ruling that issue would not be ready to be heard until a motion for class certification was filed by plaintiffs), now two additional MSP private cause of action MAO assignment cases are proceeding.

Take Aways:

  • There seem to be a growing number of courts recognizing the right of MAOs to the MSP private cause of action.  In addition to the 3rd and 11th Circuits, the right to the private cause of action by MAOs has also been favorably decided in federal district courts in the Eastern District of Virginia, the Eastern District of Tennessee, the Eastern District of Louisiana and the Western District of Texas.[19]
  • Primary payers including no-fault carriers, workers’ compensation carriers, liability carriers and self-insureds, should understand that Medicare Advantage Plans or their assigns, are filing MSP private cause of action of suits regularly and asking for double damages.
  • Prior to settlement, steps should be taken by all parties to expand lien search inquiries beyond traditional Medicare, Medicaid and SSDI searches to rule out Medicare Advantage Plan membership.
  • 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.
  • No-fault carriers that deny initial bills but later pay their policy limits for claims might still be held liable for amounts above those limits if courts rule in favor of MAOs or their assigns in MSP private cause of action claims for double damages (with the double portion of the double damages reaching past those limits).
  • The Court in the settled MSPA Claims 1 class action case listed in endnote 1 and 8 below examined the data mining “system” developed by the MSPA Claims 1 plaintiffs and its counsel.  Based on testimony from plaintiffs’ counsel and system experts, the Ocean Harbor court determined that plaintiffs could identify the amounts owed by using the Ocean Harbor’s electronic data, the MAO’s data, and data acquired from outside sources like the Department of Motor Vehicles, ISO and CMS. [J.A. 001484:13-18, Ruiz Testimony, June 2, 2016; J.A. 002000:15-25, 002001:1-3, Ruiz Testimony, Sept. 13, 2016].
  • If the plaintiffs in these MAO assignment cases can find the information, then the defendants should also be able to find the amounts claimed as owed under the MSP.  It seems that the information was all obtained during discovery and unless prevented through motions for protective orders (never guaranteed), will likely continue to be sought and obtained during litigation by these or similar plaintiffs.
  • Have a litigation plan in place and discuss it with your counsel.  With so much on the line, it is clearly time to set up operations to help minimize payment delays and the likelihood of a double damages claim!

[1] See Samantha Joseph, Deep Data Dive Lets Miami Firm Accomplish What Erin Brockovich Couldn’t, DAILY BUSINESS REVIEW, January 22, 2018, available at https://msprecovery.com/in-the-media/?dzsvg_startitem_dzs-video0=0&dzsvg_startitem_dzs-video1=0 (reporting on firm’s clients’ proprietary data mining  “system” using algorithms to cull data from automobile crash reports, medical files and government databases); See also, MSPA Claims 1, LLC v. Ocean Harbor Cas. Ins., No. 2015-1946-CA 06 (Fla. Cir. Ct Miami-Dade February 02, 2017) (class action settlement of $5 million given preliminary approval November 16, 2017).

[2] MAO-MSO Recovery II, LLC, MSP Recovery LLC, and MSPA Claims 1, LLC v. American Family Mut. Ins. Co. and American Family Ins., Case Nos. 17-cv-175-JDP; 17-cv-262-JDP, 2018 WL 835160 (W.D. Wi. Feb 12, 2018).

[3] Id. at 1. (citing MAO-MSO Recovery II, LLC v. Allstate, No. 17-cv-2370 (N.D. Ill.) (motion to dismiss pending); MAO-MSO Recovery II, LLC v. Erie Indemnity Co., No. 17-cv-81 (W.D. Pa.) (motion to dismiss pending); MAO-MSO Recovery II, LLC v. Farmers Ins. Exch., No. 17-cv-2559 (C.D. Cal.) (motion to dismiss granted with leave to replead); MAO-MSO Recovery II, LLC v. GEICO, No. 17-cv-964 (D. Md.) (motion to dismiss [denied – see endnote 18 below]); MAO-MSO Recovery II, LLC v. Liberty Mut. No. 17-cv-10564 (D. Mass.) (amended complaint filed); MAO-MSO Recovery II, LLC v. Mercury Gen., No. 17-cv-2557 (C.D. Cal.) (motion to dismiss granted with leave to replead); MAO-MSO Recovery II, LLC v. Nationwide, 17-cv-00263 (S.D. Ohio) (motion to dismiss pending); MAO-MSO Recovery II, LLC v. Progressive, No. 17-cv-686 (N.D. Ohio) (motion to dismiss pending); MAO-MSO Recovery II, LLC v. State Farm, No. 17-cv-321 (S.D. Ill.) (motion to granted with leave to replead); MAO-MSO Recovery II, LLC v. USAA, No. 17-cv-21289 (S.D. Fla.) (motion to dismiss pending); MAO-MSO Recovery II, LLC v. USAA Cas. Ins. Co., No. 17-20946-CIV (S.D. Fla.) (motion to dismiss granted with leave to replead); MAO-MSO Recovery II, LLC v. Boehringer Ingelheim Pharm., Inc., No. 17-cv-21996-UU (S.D. Fla.) (motion to dismiss granted with leave to replead). Plaintiffs filed at least one other similar case and then voluntarily dismissed it. MAO-MSO Recovery II, LLC v. AAA Auto Club, No. 17-cv-601 (C.D. Cal.)).

[4] 42 U.S.C. 1395w(21)-(27).

[5] In re Avandia Mktg., Sales Practices & Prods. Liab. Litig., 685 F.3d 353 (3d Cir. 2012).

[6] Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229 (11th Cir. 2016).

[7] 42 U.S.C. 1395y(b).

[8] 42 U.S.C. 1395y(b)(3)(A).

[9] Primary plans regarding liability claims are known under the MSP as “applicable plans” and include the following: workers’ compensation laws or plans, no fault insurance, automobile or liability insurance policies or plans (including self-insured plans) all of which are categorized by Centers for Medicare & Medicaid Services (CMS) as Non Group Health Plans; meaning entities responsible for payment by contract or by liability settlement, judgment or award.

[10] MSPA Claims 1, LLC v. Ocean Harbor Cas. Ins., No. 2015-1946-CA 06 (Fla. Cir. Ct Miami-Dade February 02, 2017) (class action settlement of $5 million given preliminary approval November 16, 2017) (see also Samantha Joseph, Deep Data Dive Lets Miami Firm Accomplish What Erin Brockovich Couldn’t, DAILY BUSINESS REVIEW, January 22, 2018, available at https://msprecovery.com/in-the-media/?dzsvg_startitem_dzs-video0=0&dzsvg_startitem_dzs-video1=0 (reporting on firm’s clients’ proprietary data mining  “system” using algorithms to cull data from automobile crash reports, medical files and government databases); MSPA Claims 1, LLC v. IDS Property Casualty Ins., No. 2015-27940 (approval given by judge to plaintiffs to send class action notices in January 2018).

[11] Eric Topor, Managed Care Lawsuit Wave Inundating No-Fault InsurersBLOOMBERG BNA HEALTH CARE DAILY REPORT, August 18, 2017 (Entities described included MAO-MSO Recovery, LLC (now there is also a MAO-MSO Recovery II, LLC),MSPA Claims 1, LLC, MSP Recovery, LLC and MSP Recovery Claims, Series, LLC and while attorney Ruiz said none of the principals or partners at the MSP Recovery Law Firm have any ownership in the corporate entities that have been assigned the Medicare Advantage claims, his son is one of several owners of MSP Recovery Services, LLC, which owns MSPA Claims 1) available at http://msprecoverylawfirm.com/in-the-media/;  Celia Ampel, How a Miami Law Firm Plans to Recover Billions for Medicare, DAILY BUSINESS REVIEW, April 6, 2017, available at https://www.law.com/dailybusinessreview/almID/1202783135691; Katheryn Hays, 11th Circuit Puts Insurers on the Hook to Repay Billions, TUCKER DAILY REPORT, Sept. 2, 2016, available at  https://www.law.com/dailyreportonline/almID/1202766635114/?slreturn=20180012144002.

[12] MSP Recovery, LLC v. Allstate Ins. Co., 835 F.3d 1351 (11th Cir. 2016)(holding that the assignment interest was valid, partially relying on CMS regulations 42 C.F.R. §422.22(a) and (b) for guidance, finding that a contractual obligation from a settlement may serve as sufficient demonstration of responsibility for payment under the MSP private cause of action without a need to first sue for breach of contract to prove said responsibility.

[13] Covering Illinois, Indiana and Wisconsin.

[14] MAO-MSO Recovery II, LLC, MSP Recovery LLC, and MSPA Claims 1, LLC v. State Farm Mut. Auto. Ins. Co., Case No. 1:17-cv-01537-JBM-JEH, 2018 WL 340020 (C.D. Ill Jan. 9, 2018).

[15] Id.  (citing Humana Ins. Co. v. Paris Blank LLP, 187 F.Supp. 3d 676, 681 (E.D. Va. 2016); Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 94 F.Supp.3d 1285, 1290–91 (S.D. Fla. 2015); Cariten Health Plan, Inc. v. Mid-Century Ins. Co., No. 14-476, 2015 WL 5449221, *5-*6 (E.D. Tenn. Sept. 1, 2015); Collins v. Wellcare Healthcare Plans, Inc., 73 F.Supp.3d 653, 664–65 (E.D. La. 2014); Humana Ins. Co. v. Farmers Tex. Cnty. Mut. Ins. Co., 95 F.Supp.3d 983, 986 (W.D. Tex. 2014).

[16] MAO-MSO Recovery II, LLC v. Boehinger Ingelheim Pharm, Inc., No. 1:17-cv-21996-UU, 2017 WL 4682335 (S.D. Fla. Oct. 10, 2017).

[17] MAO-MSO Recovery II, LLC; MSP Recovery, LLC; MSPA Claims 1, LLC v. Infinity Prop. & Cas. Group, 2017 WL 6998950 (N.D. Oh. Aug. 23, 2017) (Pleading phase – Plaintiff’s Memorandum in Opposition to Defendant’s Motion to Dismiss); MAO-MSO Recovery II, LLC; MSPA Claims 1, LLC v. Liberty Mut. Holding Co., (D. Mass. June 28, 2017) (Pleading phase – Defendant’s Motion for More Definite Statement).

[18] MAO-MSO Recovery II, LLC, et al., v. Government Employees Ins. Co., Additional Plaintiff Party Names: MSP Recovery, LLC, MSPA Claims 1, LLC, No. PWG-17-711,PWG-17-964, 2018 WL 999920 (D. Md. Feb. 21, 2018).

[19] Humana Ins. Co. v. Paris Blank LLP, 187 F.Supp. 3d 676 (E.D. Va. 2016); Cariten Health Plan, Inc. v. Mid-Century Ins. Co., No. 14-476, 2015 WL 5449221 (E.D. Tenn. Sept. 1, 2015); Collins v. Wellcare Healthcare Plans, Inc., 73 F.Supp.3d 653 (E.D. La. 2014); Humana Ins. Co. v. Farmers Tex. Cnty. Mut. Ins. Co., 95 F.Supp.3d 983 (W.D. Tex. 2014).

 

 

How to Qualify for SSDI or Medicare (Even if a Non-US Citizen)
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How to Qualify for SSDI or Medicare (Even if a Non-US Citizen)

Some people may be surprised to learn that an individual does not always need to be a citizen of the United States to qualify for government benefits such as Social Security Income (SSI), Social Security Disability Insurance (SSDI) or Medicare.  Provided the individual receives or qualifies to receive SSI or SSDI benefits, and the person otherwise qualifies for Medicare, a non-US citizen (non-citizen) typically qualifies for Medicare Part A without having to pay a premium.  They would still need to pay a premium for Medicare Part B.  Before addressing how a non-citizen may become eligible to receive Social Security benefits and therefore, be one step closer to qualifying for Medicare, we will first look at the distinctions between SSI and SSDI and how US citizens become eligible for either.

SSDI and SSI Requirements for U.S. Citizens

For U.S. citizens to qualify for SSDI, they must be under 65, have earned enough work credits[1] by working and paying Social Security (FICA) taxes, and have a qualifying disability sufficient to meet the definition designated by the Social Security Administration (SSA).  A majority of those who apply for SSDI do not get accepted on the first try. Many injured individuals have found value in retaining attorneys to help with the application (and the commonly required appeals) process.

A major distinction between SSDI and SSI is that SSI does not require any work history or a disability, even though disability is one of the ways a person may qualify for SSI.  For example, those that are disabled but haven’t accumulated enough work credits to be eligible for SSDI, may qualify for SSI.  Furthermore, U.S. citizens who are 65 or older, or who are blind or are disabled, and have limited income and limited resources, and are not confined to an institution, are generally eligible for SSI.  Another important distinction between SSDI and SSI is that once a person receives SSDI benefits for two years[2], the SSDI recipient will be eligible for Medicare benefits.

Requirements for Non-U.S. Citizens

If a person is a non-citizen and meets the following requirements, they may be eligible for Social Security benefits:

  • Non-citizens who are legal permanent residents
  • Active members or veterans of the U.S. military
  • Foreign workers who have paid FICA taxes for the required time period[3]
  • Other non-citizens who are not permanent residents but who can prove that they are here legally (i.e. refugees, those under political asylum, temporary visitors with non-immigrant visas, abuse victims, etc.)

There are many exceptions and rules regarding non-citizens’ status and SSI and SSDI eligibility.  Additionally, non-citizens that are allowed to work in the US but not required to pay FICA taxes (and don’t), are not eligible for SSDI.

Aside from standard SSDI eligibility requirements that everyone must meet*, there are two additional requirements that non-citizens must meet in order to qualify for SSDI:

1.  If an individual was assigned a Social Security number on or after January 2, 2004, the individual’s number must have been assigned based on their authorization to work in the U.S. or they must have B-1, D-1, or D-2 worker status.

2.  Before receiving disability benefits, the individual must show proof that they are in the U.S. legally.

Non-Citizens Returning to their Countries

Once an individual receives either type of Social Security benefits as a non-citizen, if, when and how these benefits will be distributed depends on the country that they are citizens of and how much time they may spend in that country, whether that country is on a restricted list, and whether that country has a bilateral Social Security agreement with the U.S.  Some countries that the SSA is restricted from sending Social Security payments to, such as those listed below, are disqualified from accepting Social Security payments.

  • Azerbaijan
  • Belarus
  • Cuba
  • Kazakhstan
  • Kyrgyzstan
  • Moldova
  • North Korea
  • Tajikstan
  • Turkmenistan
  • Ukraine
  • Uzbekistan
  • Vietnam

Ineligible Countries

Legal residents from Cuba, North Korea, and Vietnam may not receive disability benefits, even if they meet the other necessary requirements.

If a citizen of one of the above-listed countries, other than from Cuba, North Korea or Vietnam, goes back to their home country after working and living in the U.S. and otherwise qualifies for a form of Social Security Benefits, the SSA will not send the individual payments and cannot send the payments to someone else on their behalf (unless an exception is granted).  The SSA will withhold these payments and will only send them to the individual once they are in a country to which the U.S. may send those payments.  Generally, if the SSA is not restricted from sending payments to a particular country, but the country also does not have a bilateral Social Security agreement in place with the U.S., the SSA can send payments to the individual, but will stop the individual’s payments after the person has been outside of the U.S. for six months.  If the individual returns to the U.S. and stays for at least a month, they are usually eligible to begin receiving benefits again. The SSA’s website provides information and exceptions concerning these matters including the difference between a person receiving benefits based on their own earnings or residency in the U.S. versus receiving benefits based on the earnings or residency in the U.S. of a dependent or survivor.  A pamphlet that provides additional information is available on SSA’s website.

The Medicare Secondary Payer Act (MSP), 42 U.S.C. §1395y(b)(2), enacted in 1980 and aimed at preserving Medicare Trust Funds and reigning in Medicare costs that had up to that point been much larger than projected[4], is focused on both the timing of payments and the recovery of Medicare’s conditional payments[5] for medical expenses [6] of injured Medicare beneficiaries or injured people who have a reasonable expectation of becoming Medicare beneficiaries within 30 months from settlement, when another (primary) payer is responsible for payment or prompt reimbursement of the injured individual’s injury related Medicare covered medical expenses.[7]  There are several ways people fall into the reasonable expectation of becoming a Medicare beneficiary within 30-month time frame, including reaching 62.5 years of age, applying for SSDI, being denied but considering appeal of SSDI denial, being in the process of appealing the denial, or being diagnosed with end-stage renal disease or ALS, a/k/a Lou Gehrig’s disease.


[1]  The number of work credits needed varies based on the age of the individual at the time they become disabled.  Required credits start at 6 credits or 1.5 years of work during the three-year period before the disability started for people disabled in or before the quarter they turn 24 years of age and move up to a requirement for 40 qualifying quarters at or after they turn 62 years of age, with varying requirements in between.

[2]  The two years does not include the approximate six-month wait time between the date disability is approved and benefits begin.  Eligibility begins 30 days after established onset date (EOD) so along with a mandatory five-month waiting period, it is essentially six months before payments start or 30 months from EOD to Medicare eligibility.

[3]  *According to the SSA website, the required work requirements for non-citizens seem to be different from those of US citizens as well.  The requirement for non-citizens does not appear to have a sliding scale for work credits that US citizens are required to have.  Here is an example of some non-citizen requirements for SSDI eligibility from SSA’s website: “[t]hey are a Lawfully Admitted for Permanent Residence (LAPR) with 40 qualifying quarters of earnings.  Work done in the US by a person’s spouse or parent may also count toward the 40 qualifying quarters of earnings, but only for getting SSI. Quarters of earnings earned after December 31, 1996 are not counted if the individual, spouse, or parent worked or received certain benefits from the U.S. government based on limited income and resources during that period. If a person entered the U.S. for the first time on or after August 22, 1996 they may not be eligible for SSI for the first five years as a LAPR, even if they have 40 qualifying quarters of earnings.” More information regarding this topic is available here.  Sometimes depending on the country of citizenship, there may also be other ways for a non-citizen to qualify for SSI including living in the US for required periods of time or having a spouse or parent who has lived long enough in the U.S. (See https://www.ssa.gov/pubs/EN-05-10137.pdf).  You are encouraged to consult with an attorney practicing in the SSI and SSDI field to help determine whether any particular person may qualify for Social Security benefits.

[4]  Humana Med. Plan, Inc. v. Western Heritage Ins. Co., 2018 WL 549834 (11th Cir. Jan. 25, 2018) (declining to rehear 2016 11th Cir. case en banc and citing 5 James B. Wadley, West’s Federal Administrative Practice §6305 (2017)).

[5]  Or conditional payments by Medicare Advantage Plans that a primary payer should have paid.

[6]  Medical items, services and prescription drug expenses.

[7]  42 U.S.C. § 1395y(b)(2)(A)(ii) prohibits Medicare from making payment to the extent that “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.” Furthermore, under the Code of Federal Regulations, the Centers for Medicare and Medicaid Services (CMS) has rights to recover any conditional payments Medicare made that a primary payer should have made or reimbursed, specifically, “CMS may initiate recovery as soon as it learns that payment has been made or could be made under workers’ compensation, any liability or no-fault insurance, or an employer group health plan.” 42 C.F.R. § 411.24(b).

CRC Conditional Payment Recovery Report FY 2016
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CRC Conditional Payment Recovery Report FY 2016

In August of 2017, the Medicare Secondary Payer Commercial Repayment Center, also known as the MSP CRC or CRC for short, prepared its annual recovery report for Congress relating to Medicare Secondary Payer Statute (MSP)[1] conditional payment recoveries for fiscal 2016.  The CRC determined, largely from responses to over 29,700 demand letters, that $243.68 million of conditional payments made in FY 2016 were “correctly identified” for further recovery efforts.  The CRC reported returning over $88.35 million of these identified conditional payment dollars to the Medicare Trust Funds.[2]   This number was based on net collections of $106.29 million minus administrative and CRC contractor costs of $17.94 million.  Because recovery efforts for these conditional payments will continue in the future, the recovery amounts associated with the FY 2016 conditional payments will likely increase over time.

While the amount returned to the Medicare Trust Funds decreased from $125.05 million for FY 2015 conditional payments to $88.35 million for FY 2016 payments, this reduction should not be seen as a trend. The decrease between FY2015 and FY2016 was mainly from reduced Group Health Plan (GHP) recoveries resulting from “maturity of mandatory reporting” under Section 111 of the Medicare Secondary Payer (MSP) Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) and the CRC’s “resolution of pending available recoveries.”

The CRC is the generic name for the contractor hired by the Centers for Medicare & Medicaid Services (CMS) to be responsible for identifying and recovering primary payments made by Medicare when another entity had primary payment responsibility for medical items or services, including prescription drug expenses (“Medical Bills”), pursuant to the MSP.  The CRC became fully operational in 2014 under the company known as CGI Federal and initially focused its post-payment review and recovery efforts in the GHP field.

In FY 2016, CMS expanded CRC’s recovery efforts to also include recovery of conditional payments made by Medicare when a Non-Group Health Plan entity such as a liability insurer (including self-insurance), no-fault insurer, or workers’ compensation entity (NGHP) had primary payment responsibility or ongoing payment responsibility for Medical Bills.  In October 2017, CMS announced that Performant Recovery, Inc., an experienced auditing and recovery contractor for both CMS and the Department of Treasury, and a subsidiary of publicly traded Performant Financial Corporation, will be taking over the CRC contract beginning February 12, 2018.  Recovery claims against Medicare beneficiaries will still be performed by the Benefits Coordination & Recovery Center (BCRC), the same group that CMS uses to collect Section 111 reporting data.  Performant, as the new CRC contractor, recently promised to coordinate its communication with the BCRC.

According to CMS, in 2011, Medicare spent $549.1 billion dollars while covering covered 48.7 million people.  The money used to run the program comes from the Medicare Trust Funds.

Take Aways:

  • It makes sense that Group Health Plans have been more compliant with promptly paying Medical Bills they have primary responsibility for and/or promptly reimbursing Medicare for conditional payments when the potential for double damages claims exist under the public cause of action provisions of the MSP by CMS[3] and under the private cause of action provisions of the MSP by Medicare Advantage Plans (MAPs) (or their assignees).[4]  Additionally, potential civil monetary penalties under Section 111 of the MMSEA of $1,000 for each day of noncompliance for each individual for which a report is to be submitted.[5]
  • It will be interesting to see how the recently awarded contract to an experienced government collector like Performant that takes effect February 12, 2018 [as referenced in our prior blog], the continued expansion of both Medicare and MAP recoveries into NGHP categories (along with the reviews of Liability Medicare Set-Asides (LMSAs) potentially beginning as early as the summer of 2018 by the newly awarded Workers Compensation Review Contractor (WCRC), Capitol Bridge, LLC[6], along with the potential for better communication and integration of data exchanges between Performant and the BCRC, may affect conditional payment recoveries in the years to come.

[1] 42 U.S.C. § 1395y(b)(2)

[2]  There are two trust funds; the first is called the Hospital Insurance Trust Fund and is funded by payroll taxes, income taxes on Social Security benefits, interest on trust fund investments, Medicare Part A premiums, and from people not eligible for premium-free Part A.  The second trust fund is called the Supplementary Medical Insurance Trust Fund and is funded by Congress, Medicare Part B premiums, Medicare prescription drug coverage (Part D) premiums, along with interest earned on the trust fund investments. Additional information is available here.

[3] 42 U.S.C. § 1395y(b)(2)(B)(iii).

[4] 42 U.S.C. §1395y(b)(3)(A).

[5]  42 U.S.C. § 1395y(b)(7)(B)(ii).

[6] On September 1, 2017, CMS announced the contract for WCRC for $60 million for one year with options for four one-year extensions to Capitol Bridge, LLC. Two other bidders protested the award but those bid protests were denied on December 12, 2017.  The original December 22, 2016 RFP announced the potential of anywhere from 600 to 11,000 additional LMSA reviews in addition to the WCMSA reviews expected.  On February 13, 2017, CMS amended the RPF with both a Statement of Work and Responses to Questions from bidders, making it clear that the additional reviews included both LMSAs and No-Fault MSAs (NFMSAs), again referenced the potential for 11,000 reviews, and indicated that “All LMSA/NFMSA processes shall mimic existing processes nearly identically through the establishment of threshold values.”

 

MSP CRC Recovery Contractor Update by CMS and Performant
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MSP CRC Recovery Contractor Update by CMS and Performant

On January 18, 2018, Centers for Medicare & Medicaid Services (CMS) announced in a joint conference call with the new Medicare Secondary Payer Commercial Repayment Center contractor (MSP CRC or CRC for short), Performant Recovery, Inc. (Performant)[1], that the CRC will continue to have the same phone number as before, but will have a new address and fax number as follows:

Medicare Commercial Repayment Center
NGHP ORM, PO Box 269003
Oklahoma City, OK 73216

Phone: 855-798-2627 (SAME)
Fax: 844-315-7627 (NEW)

The transition timeline is listed below:

CGI Federal will cease operations as contractor at 8 p.m. EST on Wednesday, February 7, 2018. Performant will commence operations as the new CRC contractor at 8 a.m. EST on Monday, February 12, 2018.  Performant will have access to all of the same information as CGI Federal and there shouldn’t be any information gaps when Performant takes over.

The fax line for CRC will be turned off on Monday, February 6, 2018, at 8 p.m. ET.  There will be no “normal” CRC operations on Thursday, February 8th or Friday, February 9th. The CRC’s 1-800 line IVR will be turned off at noon ET on February 9th and will not be staffed nor will it take incoming calls. While the CRC call center will open on February 8th and 9th, the information available to CRC’s representatives will be limited to whatever information existed at the close of business on Wednesday, February 7th.  During this time period, the MSPRC Portal will have limited functionality and parties will be able to pull information from the portal but will not be able to push information including disputes to CMS.

The CRC is the generic name for the contractor hired by CMS to be responsible for identifying and recovering primary payments made by Medicare when another entity had primary payment responsibility for medical items or services, including prescription drug expenses, pursuant to the Medicare Secondary Payer Act (MSP).[2]  The CRC became fully operational in 2014 under the company known as CGI Federal and initially focused its post-payment review and recovery efforts in the Group Health Plan (GHP) field.  In Fiscal Year (FY) 2016, CMS expanded CRC’s recovery efforts to also include conditional payments made by Medicare when a Non-Group Health Plan entity such as a liability insurer (including self-insurance), no-fault insurer, or workers’ compensation entity (NGHP) had primary payment responsibility or ongoing responsibility for payment of medical bills (ORM).

Take Aways:

  • Performant promised during the conference call to improve communication between CRC and the BCRC with a goal to make the transition for its takeover of CRC recoveries seamless.
  • Performant will follow the policies set forth by CMS so unless CMS makes a change in policy, there should not be any major changes in the overall business, other than hopefully quicker response times and shorter wait times on the phone.
  • The long-term goal, will most likely be for Performant to use its size, industry knowledge and technical experience to increase both volume and efficiency of CRC recoveries.[3]
  • Moving forward, primary payers will want to be aware of the potential for more concentrated efforts in the MSP recovery field.

[1] Performant, whose parent corporation, Performant Financial Corporation, is publicly traded on the NASDAQ stock exchange as PFMT, was one of four CMS contractors for the Recovery Audit Program (RAP) that in FY2015, returned a net of $147.5 million to the Medicare Trust Funds. Available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Recovery-Audit-Program/Downloads/FY2015-Medicare-FFS-RAC-Report-to-Congress.pdf. Performant currently handles two of the five regions for the RAP.

[2] 42 U.S.C. 1395y(b)(2).

[3] At full scale, Performant anticipates staffing the CRC program with over 250 employees operating out of Performant’s offices around the country.  November 7, 2017 Performant Press Release announcing 3rd Quarter Financial Results, available at https://globenewswire.com/news-release/2017/11/07/1176774/0/en/Performant-Financial-Corporation-Announces-Financial-Results-for-Third-Quarter-2017.html.

 

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LMSAs Not Required By Law, Federal Court Confirms
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LMSAs Not Required By Law, Federal Court Confirms

What Happened:

Silva v. Burwell[1] is a federal trial court case from late November 2017 in which the plaintiff, Silva, asked a federal court to declare whether a liability Medicare set-aside (LMSA) was required after funding of a proposed state court medical malpractice settlement had been conditioned upon getting such federal court confirmation.  The only unresolved issue was how future medical bills were to be handled because all of Medicare’s conditional payments for past medical expenses had been reimbursed by plaintiff as contemplated by the Medicare Secondary Payer provisions of the Social Security Act, often referred to as the Medicare Secondary Payer statute found at 42 U.S.C. Section 1395y(b) et seq. (MSP).

The state court defendants felt a LMSA was legally required and were concerned that Medicare might seek reimbursement for payments incurred post-settlement for treatment of the medical malpractice injury.  The plaintiff disagreed, arguing that there was no requirement under the law for LMSAs. Plaintiff pointed out that review thresholds by the Centers for Medicare & Medicaid Services (CMS) for MSAs exist only in the workers’ compensation context and do not extend to liability/personal injury settlements. Plaintiff asked CMS to set forth its position whether some portion of personal injury liability settlement funds must be set aside to cover “unknown, unspecific future medical expenses.”[2]

With such a non-specific question, it is not surprising that CMS did not respond. However, even if plaintiff had asked CMS for its position regarding known specific future medical expenses, the result would likely have been the same, as CMS doesn’t require Medicare set-asides (MSAs), doesn’t require submission of MSAs, and doesn’t have a practice or procedure for reviewing LMSAs like it does for workers’ compensation Medicare set-asides (WCMSAs).[3]  To satisfy a settlement condition and in an attempt to get funds released, plaintiff filed a declaratory judgment action in federal court against CMS and the former Secretary of the Department of Health and Human Services (Secretary) asking for several confirmations, including that no LMSA was required to pay plaintiff’s future medical expenses.

During an analysis of the MSP and whether there was a requirement for LMSAs, the court referenced CMS’s 2012 notice of proposed rulemaking[4] concerning potential regulatory clarification on LMSAs and pointed out that CMS never followed up on the notice.[5]  The Silva court then correctly determined that “no federal law or CMS regulation [currently] requires the creation of a MSA in personal injury settlements to cover potential future medical expenses.”[6] The Silva court shared the Sipler[7] court’s public policy concern that requiring apportionment of future medical expenses in personal injury settlements would discourage settlements due to being burdensome.[8] The court added that the repeated failure of CMS to clarify an official position on whether it requires LMSAs generally, or in specific cases when requested by personal injury litigants, was also proving burdensome to the settlement process.[9]

Result of the case:

The court then went through a “case or controversy” analysis to determine whether the plaintiff had standing for the court’s review.  A plaintiff who has not sustained an “injury in fact” will not have standing.  In this case, because there was a) no conflict between the law as it exists, and the way business was being done, b) not a sufficient likelihood that the government would seek reimbursement in the future (from plaintiff or defense) for failing to create a MSA in the liability case, and c) no requirement for CMS to confirm whether a LMSA was required, there was no injury in fact.  The lack of a duty by CMS to respond to plaintiff’s request was also described as preventing the case from being ripe.  Because there was not a sufficient injury and the matter was not ripe for review, the case was dismissed for lack of subject matter jurisdiction.[10]

Take Aways:

  • The law is clear.  No LMSA is required.  While the Silva court did not mention that CMS may potentially begin reviewing LMSAs as early as July 1, 2018, a change in procedure by CMS to review some LMSAs would still not change the law as it stands.
  • CMS has guidelines for reviewing WCMSAs and while CMS, via the Stalcup Memo, set forth CMS’s policy that a “set-aside” is its method of choice, the Stalcup Memo also made clear that “the law does not require a ‘set-aside’ in any situation.”[11]
  • The Stalcup Memo stressed the need to protect the Medicare Trust Funds if based on the specific facts of a case (and regardless of the type of case), there is funding for future medicals.[12]
  • While the Silva case did not clear up the law, it did not necessarily make it more confusing. Federal cases concerning the ripeness for review of LMSAs or performing review of LMSAs have remained in district courts. Unless a split emerges at the federal Circuit level, the US Supreme Court will not rule on the issue.  Liability cases are dependent on the facts and so are the questions about treatment of LMSAs.
  • Therefore, it will be up to CMS to propose and follow through with regulations governing LMSAs. A change in policy by CMS could be helpful for parties and courts, but won’t guarantee consistency. There are cases where federal district courts have reviewed LMSAs.  For example, in Schexnayder v. Scottsdale, a federal court agreed to review a LMSA and decided that parties to the liability settlement had adequately protected Medicare’s interests after CMS failed to review the LMSA.[13] Other federal district court cases have reviewed liability settlements and approved amounts to be set aside in LMSAs[14], or otherwise evaluated and determined that Medicare’s interests had been reasonably considered and protected.[15]
  • The Silva case highlights the time, expense and legal obstacles associated with trying to get clarification/confirmation from courts in the area of MSP compliance.
  • When medical expenses are implicated, it may be more productive for parties to invest their time and effort into accurately predicting and documenting what future Medicare allowable medical expenses are likely to be incurred instead of risking the time and expense of federal court review, and running the risk of a dismissal for lack of subject matter jurisdiction like in Silva, or an increase in the LMSA amount, like in the Welch v. American Assurance case cited in the endnotes.
  • What is required when future medicals are “in play” in liability (including self-insurance) settlements? The Stalcup Memo advised 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.”[16] Therefore, parties need to consider and protect the Medicare Trust Funds. Often, a LMSA is the best choice. There may be other options that could be considered if well documented and properly executed during administration.

[1] Silva v. Burwell, 2017 Westlaw 5891753 (D. New Mexico 2017).

[2] Id. 2-3.

[3] Sally Stalcup, MSP Regional Coordinator, Region VI (May 25, 2011 Handout); See also, Schexnayder v. Scottsdale Ins. Co., 2011 WL 3273547 at 5 (W.D. La. 2011) (adopting policy from the Stalcup memo in Court’s findings of fact).

[4] Medicare Program; Medicare Secondary Payer and “Future Medicals,”77 Fed. Reg. 35917-02, 35918 (June 15, 2012).

[5] Silva v. Burwell, 2017 U.S. Dist. LEXIS 195032 (D. New Mexico 2017) at 6 citing Aranki v. Burwell, 151 F. Supp.3d 1038, 1040 (D. Ariz. 2015).

[6] Id. at 11 citing Aranki v. Burwell, 151 F. Supp.3d 1038, 1040 (D. Ariz. 2015); Sipler v. Trans Am Trucking, Inc., 881 F. Supp.2d 635, 638 (D. NJ. 2012)(holding “no federal law requires set-aside arrangements in personal injury settlements for future medical expenses.”).

[7] Sipler v. Trans Am Trucking, Inc., 881 F. Supp.2d 635, 638 (D. NJ. 2012).

[8] See id. at 13.

[9] Id.

[10] Id. 12-13.

[11] Sally Stalcup, MSP Regional Coordinator, Region VI (May 25, 2011 Handout) at 1.

[12] See id. 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”).

[13] Schexnayder v. Scottsdale Ins. Co., 2011 WL 3273547 at 5 (W.D. La. 2011).

[14] See e.g. Benoit v. Neustrom, 2013 WL 170220 (W.D. La. 2013) (determining that there was an obligation for a LMSA); Cribb v. Sulzer Metco (US) Inc., 2012 WL 4787462 (E.D. NC 2012) (approving a $4,500 LMSA); and Welch v. American Home Assur. Co., (S.D. Miss. 2013) (increasing amount of LMSA over the amount recommended by Medicare Set-Aside expert in combo liability and WC case).

[15] See Finke v. Hunter’s View, Ltd., 2009 WL 6326944 (D. Minn. 2009)(LMSA not necessary after court determined that liability settlement amount was a significant compromise of the overall value of the claim, with a plaintiff who was not a Medicare beneficiary, would not become eligible for Medicare benefits within the foreseeable future, was covered under his spouse’s health insurance policy, and when Medicare would be reimbursed for conditional payments and not be billed in the “reasonably anticipated future.”)

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

Opioid Problem For Injured Workers Prompts New CA Regulations
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Opioid Problem For Injured Workers Prompts New CA Regulations

Under California Labor Code, doctors must provide evidence-based medical treatment. On December 1, 2017, evidence-based updates to the Medical Treatment Utilization Schedule were ordered by the Administrative Director of the California Division of Workers’ Compensation. On January 1, 2018, new formulary regulations that implement California Assembly Bill 1124, amending and adding sections to Chapter 525 of the California Labor Code go into effect.

An overall goal of these regulations is to provide for the health and safety of injured workers. As listed in the Statement of Reasons accompanying the formulary regulations through the CA Dept. of Industrial Relations website, additional goals of these new formulary regulations include:

• Providing “critical support for the effort to encourage safer prescribing of opioid pain relievers.”

• To “significantly reduce the rate of opioid-related adverse events, substance misuse and abuse.”

• To “streamline the provision of pharmaceutical treatment, and incentivize cost effective care within the current evidence-based MTUS and care delivery system.”

• To “promote the timely delivery of evidence-based medical treatment by eliminating prospective utilization review for exempt drugs used in accordance with the treatment guidelines.”

• To “reduce prescribing volume for some Non-exempt drugs – especially opioid analgesics – in an effort to lower rates of adverse events, drug-drug interactions, and, in the case of prescription opioid analgesics, potential misuse and abuse.”

The opioid prescription problem will likely be addressed by more states through similar regulations as the scope of the opioid problem grows larger and its effect on states’ workers is revealed.

See the text of the regulations and the accompanying Statement of Reasons here.