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CMS Provides Notice Regarding LMSA Regulations/Guidance
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CMS Provides Notice Regarding LMSA Regulations/Guidance

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Once again, the Centers for Medicare & Medicaid Services has provided an indication that while regulations and/or guidance is on its way regarding the protection of Medicare’s future interests for liability and No Fault settlements, the proposed rule regarding these have been moved to August 1, 2020 or perhaps further into the future (again). Technically, the information indicates that the Notice of Proposed Rule Making would “clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items services related to liability insurance (including self-insurance), no fault insurance, and worker’s compensation settlements, judgments, awards, or other payments. Specifically, this rule would clarify that an individual or Medicare beneficiary must satisfy Medicare’s interest with respect to future medical items and services related to such settlements, judgments, awards, or other payments. This proposed rule would also remove obsolete regulations.” The information is also indicating that regulations CMS determines to be obsolete will be removed. See the disclosure published in the Spring 2020 Federal Register Unified Agenda here.

Many in the MSP compliance industry believe that while the regulations and guidance could be focused on clarifying both the need to protect Medicare’s future interests and the way to protect those interests for each of the Non Group Health Plan (NGHP) primary plan types (Liability, Self-Insurance, No Fault, and Workers’ Compensation), it seems more likely that this particular group of regulations and/or guidance will focus primarily on liability and No Fault settlements. This is because both regulations and guidance have already been published specific to protecting Medicare’s future interests in Workers’ Compensation settlements in both the Code of Federal Regulations and via the Workers’ Compensation Medicare Set-Aside Arrangement – WCMSA Reference Guide Version 3.1.

Regulations regarding this issue would be promulgated by CMS to appear in 42 CFR 405 and/or  42 CFR 411 and would apply to the Medicare Secondary Payer Act (MSP) found at 42 U.S.C. 1395y(b).  The removal of obsolete regulations could apply to any of the NGHP types.  The MSP, as governing federal law, applies to all of the NGHP types listed above, prohibits Medicare from paying when a primary plan’s funds are used to compensate an injured individual as a result of an injury, and provides extraordinary remedies to allow Medicare to recover payments it has made (called conditional payments) when it pays for an injured party’s medicals without regard to the dates of service for those payments.

Take Aways
  • Considering and protecting Medicare’s past interests has become the industry standard and quite honestly a “no brainer” for all NGHP settlement types – liability, self-insurance, No Fault, and Workers’ Compensation.
  • Whether the announced guidance comes this August or not, doesn’t it make sense to help ensure that Medicare’s future interests are protected in accordance with existing federal law, i.e. the MSP?
  • Helping to ensure that Medicare is not prematurely billed for injury related futures for any settlement type is the right thing to do and helps protect the Medicare Trust Funds.

Count on Medivest to help guide you through some of the complexities associated with MSP compliance.

 

 

2100 Alafaya Trail, Suite 201   •   Oviedo, FL 32765

Toll free: 877.725.2467   •   Fax: 407.971.4742  

Workers’ Compensation and Covid-19 – Update 2
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Workers’ Compensation and Covid-19 – Update 2

Click here for a downloadable copy of this blog

On March 20th, we discussed what actions Washington State’s Workers’ Compensation Agency was taking that would allow medical providers and injured workers to file claims for work related/industrial exposure to COVID-19. Since then, other states have also taken action and created new policies in regards to the COVID-19 outbreak.

Kentucky

Last month, Kentucky was one of the States that adopted policy to provide workers compensation benefits to healthcare workers and first responders exposed to COVID-19. On April 9th, 2020 Governor Andy Beshear of Kentucky extended the provision of those benefits to additional types of employees. In his executive order, Gov. Beshear ordered that an employee could receive temporary total disability (TTD) payments for the period of time that the employee was quarantined if that employee met certain criteria.

The burden of proof lies with the employee to show that the COVID-19 exposure was caused by the work conditions. The employee’s removal to quarantine has to be ordered by a physician.  If the employee can show the connection and removal by a physician, TTD payments can now be received for the quarantine period even if the employer denies liability.

The expanded list of those now eligible for TTD payments include healthcare workers, first responders, corrections officers, members of the military, activated National Guard, domestic violence shelter workers, child advocacy workers, rape crisis center staff, Department for Community based Services workers, grocery workers, postal service workers, and child care workers permitted by the Cabinet for Health and Family Services to provide child care in a limited duration center during the State of Emergency.

Florida

Florida followed Washington and Kentucky, and as of the end of March, Florida Chief Financial Officer Jimmy Patronis ordered the state’s Division of Risk Management (DRM) to review workers’ compensation claims submitted by state workers “required to interact with potentially infected individuals.” Those workers includes those employees known in Florida as “Frontline Workers“: law enforcement, firefighters, EMTs, paramedics, correctional officers, health-care workers, child safety investigators and Florida National Guardsmen.

The Florida League of Cities also announced in March that the Florida Municipal Insurance Trust would cover municipal first responders’ COVID-19 claims.

Illinois

This week, Illinois has taken a progressive step with the introduction of an emergency amendment to the Illinois Workers’ Compensation Commission’s rules of evidence under Part 9030 titled Arbitration, establishing a rebuttable presumption of a causal connection between employment and contraction of COVID-19 for both First Responders and Frontline Workers who contract COVID-19 as a result of their employment.

This is different than any other state in terms of the burden of proof.  In most states, the burden is on the injured or ill worker to prove the causal connection.  In Illinois, at this time, the burden will be on the employer to rebut this presumption that the causation exists.

In Illinois and other states, attorneys representing injured workers should evaluate whether there may be new expanded coverage in their state for their clients who contract COVID-19 as a result of employment related activities. They should consider whether such coverage may exist under the respective state’s Workers’ Compensation statutes or any other state law that may apply.

Some states, like Illinois, also have an Occupational Diseases Act which could be applicable, and if so, would pay benefits based on rates established under the applicable version of Illinois’ Worker’s Compensation Act.

Changes in Workers’ Compensation and Liability Cases

COVID-19 has driven changes that affected both the Workers’ Compensation and Liability industries outside of state and local government regulation. For additional information how the Workers’ Compensation industry has been affected please click here, and to find out how the Liability industry has been affected follow this link.

We hope each of you stays safe at this time.  Medivest is fully functional during this period and ready to assist parties with MSP compliance and lien resolution services. For assistance in these matters please call us at 1.877.725.2467 or contact us here.

 

2100 Alafaya Trail, Suite 201   •   Oviedo, FL 32765

Toll free: 877.725.2467   •   Fax: 407.971.4742  

Workers’ Compensation Claims Being Filed Due to Contracting COVID-19/Coronavirus
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Workers’ Compensation Claims Being Filed Due to Contracting COVID-19/Coronavirus

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The state regulated Workers’ Compensation agency for Washington State has already set up online methods for medical providers and injured workers to file work related/industrial exposure claims for COVID-19/Coronavirus, and even added a hotline for injured workers to call to be able to report likely exposure to COVID-19/Coronavirus. Because COVID-19/Coronavirus is so new and so contagious, it is hard to predict how likely it will be that claims of work related exposure will be accepted by Workers’ Compensation carriers or Boards that hear appeals of denials of exposure claims.   Some factors the Washington State Department of Labor & Industries listed that should be considered before filing a claim are:

  • Was there an increased risk or greater likelihood of contracting the condition due to the worker's occupation (such as a first responder or health care worker)?
  • If not for their job, would the worker have been exposed to the virus or contracted the condition?
  • Can the worker identify a specific source or event during the performance of his or her employment that resulted in exposure to the new coronavirus (examples include a first responder or health care worker who has actually treated a patient with the virus)?

The Washington State online message suggests that “if the above criteria are not met, it is not necessary to file a Workers’ Compensation (WC) claim; however, a claim may still be filed if requested by the worker or if the provider is uncertain if the case meets the criteria.”  The site goes on to explain that instances where contraction of COVID-19 is only incidental to the workplace or common to all employment, giving an example of an office worker contracting the condition from a fellow employee, a claim for WC exposure to and contraction of COVID-19 would be denied.

Because WC is governed by state law, while the factors considered will likely be similar, the decision making resulting from the evaluation could vary state by state.

We hope the curve of exposure associated with this pandemic will flatten soon and we can get back to our ordinary lives, but in the meantime, we send positive thoughts and healthy wishes to all of our first responders, healthcare workers, service industry employees, and everyone else affected by this fast spreading virus!

Philadelphia-Based Personal Injury Law Firm Agrees to Resolve Allegations of Unpaid Medicare Debts
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Philadelphia-Based Personal Injury Law Firm Agrees to Resolve Allegations of Unpaid Medicare Debts

Today marks yet another case where a plaintiff firm has entered into a settlement with Medicare over failure to consider Medicare’s interest with conditional payments. Like previous cases, the law firm will be required to pay a lump sum to the US government. In addition, they must:

1. Name a person responsible for paying Medicare secondary payer debts
2. Train the employee to ensure that the firm pays these debts on a timely basis
3. Review any additional outstanding debts to ensure compliance
4. Provide written certifications of compliance.

More details can be found in the press release here.

Over the past year, there has been a clear trend showing Medicare being very intentional about enforcing the MSP in liability cases. This case is just the latest to go along with several other recent cases:

We all know the MSP explicitly names liability insurance as a primary plan. In conjunction with the most recent round of notifications from the Office of Management and Budget (OMB) regarding the release of a NPRM clarifying methods of protecting Medicare’s interests post settlement for liability cases, these recent settlements with plaintiff firms highlight Medicare’s intent to have parties to liability settlements protect Medicare’s interests in compliance with the MSP just as is expected in Workers’ Compensation claims.

Partner with Medivest to help uncover public benefits, diagnose, and prepare preservation and legal compliance plans prior to settlement. MSP compliance is an exercise in protecting Medicare’s past interests via the investigation and resolution of payment obligations regarding past payments made by Medicare or Medicare Advantage Plans (liens) and its future interests regarding expected medical treatment in the injured party’s future (MSAs). Let our nursing staff perform a medical review to project the injury related future medicals broken down into both Medicare covered and non-Medicare covered medicals. For Medicare or any case involving recovery claims by any public or private source, allow our lien resolution department to use its proprietary software and experience to confirm amounts being requested are injury related and negotiate reductions beyond the ordinary procurement costs typically allowed. For Medicare cases, there is no charge for the portion of the reduction associated with those procurement cost reductions. Let us support you on your next case.

Law Firm Pays Over $90,000 to Settle A Failure to Reimburse Medicare Claim Brought by U.S. Attorney for the District of Maryland
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Law Firm Pays Over $90,000 to Settle A Failure to Reimburse Medicare Claim Brought by U.S. Attorney for the District of Maryland

Once again, a law firm was alleged to have failed to properly reimburse Medicare for conditional payments made by Medicare for injuries that were compensated in at least one settlement on behalf of an injured client. The press release, which can be found here involves a fact pattern a little different from a few other recent recovery actions by the U.S. Government related to alleged MSP violations. Often attorneys will refer liability cases to other attorneys or firms that handle personal injury, premises liability, and medical malpractice claims. The attorney that refers the case is typically allowed to share in the attorney’s fees obtained upon successful resolution. The fees obtained by the referring lawyer/firm are supposed to approximate and reflect a reasonable amount for the amount of work they do. Some attorneys do a thorough intake procedure and maintain contact with the client throughout the representation, are copied on all correspondence, and may provide input on strategy and procedure. After all, they have a responsibility to the injured party that originally contacted them in the first place. This matter involved six cases the U.S. Attorney’s office was investigating and of the six, four had been referred by the investigated firm to co-counsel. The firm was held responsible for the alleged failures to reimburse Medicare, regardless of whether they were a referring firm for a case handled by another firm or whether they were the handling the claim from start to finish.

We have provided other instances over the past few years where settlements were made with the Department of Justice including here and here.

However, Plaintiff attorneys in particular should be on high alert because the most recent enforcement actions have been focused on attorneys that disbursed funds to their clients after case finalization but failed to ensure that Medicare’s conditional payments were paid or otherwise resolved.

Take Aways:

  • Because the MSP grants both a direct lien right and a subrogation right to the U.S. to collect Medicare’s conditional payments, parties to a settlement should inquire, evaluate and confirm all injury-related Medicare expenditures for past medicals at the time of settlement.
  • Even if you “only” refer an injury case to another attorney who may do a majority of the work on the case, you should take an interest in verifying the existence of any liens that need to be addressed.
  • Due diligence is required for both the defense and plaintiff side to avoid unnecessary MSP legal exposure.
  • In addition to checking and verifying the correct demand amounts from CMS contractors, prior to settlement, steps should be taken by all parties to expand lien search inquiries beyond traditional Medicare (and Medicaid) to determine whether a Medicare Advantage Plan/Organization (MAP/MAO) or Prescription Drug Plan (PDP) made any conditional payments that could be recovered under the MSP. This is because the MSP private cause of action provision has been held in at least two federal circuits to apply to MAO’s and would likely be held to apply to PDP’s too.
  • There is value in evaluating Conditional Payment Summary forms that accompany the conditional payment correspondence from Medicare to confirm all entries on the form are injury-related and/or determine whether some entries should be disputed.
  • During the lien investigation process, parties should analyze whether a compromise (reduction) of a lien or potentially a waiver may be appropriate.

It is crucial for prospective settling parties to investigate conditional payment reimbursement amounts or work with an entity familiar with lien investigation procedures.
Medivest provides lien resolution services to help parties satisfactorily negotiate outstanding public and private health care matters including Medicare liens, Medicaid liens, Veterans Administration/TriCare liens, hospital liens, and doctors’ bills. Our lien resolution team works hard to dispute non-claim related bills, resolve and reduce outstanding bills/liens, and will seek refunds for amounts already paid when appropriate. Please reach out to discuss lien resolution today.

Updates on CMS’ Self-Administration Toolkit for Workers’ Compensation Medicare Set-Aside Arrangements
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Updates on CMS’ Self-Administration Toolkit for Workers’ Compensation Medicare Set-Aside Arrangements

The Centers for Medicare & Medicaid Services released Version 1.3 of the Self-Administration Toolkit for Workers’ Compensation Medicare Set-Aside Arrangements (WCMSAs) on October 10, 2019. The latest Self-Administration Toolkit Version 1.3 is now available to download here. Furthermore, the newest version 5.9 of the WCMSAP User Guide was updated on October 7, 2019. That can be accessed here. It contains updates similar to those found in the updates to the Self-Administration Toolkit discussed in this article.

The three most notable changes included in Version 1.3 are as follows:

1.  A new method for submitting annual attestations electronically via the WCMSA portal (WCMSAP).

Section 8: Annual Attestation – of the Self-Administration Toolkit conformed its language to that of the WCMSA Reference Guide, Section 19.2 titled Death of The Claimant, and can be viewed here. Now, self-administering claimants can access and submit attestations via the same WCMSAP web portal that professional administrators use.

If you are a beneficiary administering your own account, you can submit your year attestation online by accessing the WCMSA Portal through the MyMedicare.gov website.

If you are a representative or other identified administrator for the account, you can log in directly to the WCMSA Portal to submit the yearly attestation. To access, go to https://www.cob.cms.hhs.gov/WCMSA/login

The WCMSAP User Guide, available under the Reference Materials header once you log in to the site, has details regarding the submission of attestations online.

CMS will be hosting two (2) webinars regarding the recent WCMSAP enhancements which will allow Medicare beneficiaries or their representatives to submit annual attestations electronically for approved WCMSAs.

  1. Workers’ Compensation Medicare Set-Aside (WCMSA) Electronic Attestation Enhancement Webinar. Click here for more information regarding this seminar taking place on Wednesday, October 30, 2017 at 1:00pm EST.
  2. Workers’ Compensation Medicare Set-Aside (WCMSA) Electronic Attestation Enhancement for Professional Administrators. Click here for more information regarding this seminar
    taking place on Wednesday, November 6, 2019 at 1:00pm EST.

 

2.  A more detailed description of why WCMSA accounts are kept open for a period of time after the death of the Medicare beneficiary when WCMSA funds have not permanently exhausted.

Section 10: Inheritance – Added language regarding notifying the BCRC when death of the Medicare beneficiary occurs before the WCMSA is permanently exhausted. A summary follows: In such cases, the respective Medicare Regional Office (RO) and the BCRC will coordinate to help ensure all timely filed bills related to the WC claim have been paid. This may involve keeping the WCMSA account open for some time after the date of death, as health care providers can submit their bills to Medicare up to 12 months after the date of service. Any remaining WCMSA funds may be paid in accordance with the respective state law and administration agreement if applicable, once Medicare’s interests have been protected. Often the settlement itself will state how to spend funds after the death of the claimant and payment of care-related expenses.

 

3.  Updated mailing addresses for the Benefits Coordination and Recovery Center (BCRC)

Section 12: Where to Get Help – The mailing address to where WCMSA Proposals, Final Settlements, and Re-Review Requests are to be sent was updated to be consistent with the current WCMSA Reference Guide. That address is:

WCMSA Proposal/Final Settlement
P.O. Box 13889
Oklahoma City, OK 73113-8899

On Page 18 of the Self-Administration Toolkit

The mailing address for situations when the WCMSAP or MyMedicare.gov portals are not being used, self-administering claimants may submit attestations yearly account attestations and expenditure letters to the following address:

NGHP
P.O. Box 138832
Oklahoma City, OK 73113

 

Medivest will continue to monitor changes occurring at CMS and will keep its readers up to date when such changes are announced. For questions, feel free to reach out to the Medivest representative in your area by clicking here or call us direct at 877.725.2467.

Why You Should Not Ignore Medicare’s Interests in Your Liability Settlements

Why You Should Not Ignore Medicare’s Interests in Your Liability Settlements

Protecting Medicare’s interests in a settlement is a legal requirement. In 1980 Congress enacted the Medicare Secondary Payer Statute (42 U.S.C. 1395y(b) or MSP), giving Medicare rights as a “Secondary Payer”. While the MSP does not specifically state how a party should protect Medicare’s future interests, the MSP law prohibits Medicare from making a payment where there is a primary payer involved but provides one exception for what is known as conditional payments. Medicare may make a payment under certain circumstances when a primary payer is involved such as a liability carrier or self-insured, and the primary payer has not yet demonstrated its payment obligation by settling a case or paying a judgment. These payments are called conditional payments because the Medicare payment is conditioned upon being reimbursed by the primary payer. The right to reimbursement is a direct statutory right of the U.S. for recovery of conditional payments, that carries steep interest assessments over 10% for demands not paid within 60 days and when left unpaid, can lead to recovery of double damages in litigation. The MSP also provides a right of subrogation where the U.S. is subrogated to the rights that Medicare beneficiaries have. It is important to know that along with the rights of the U.S. under traditional Medicare, which encompasses Medicare Part A and Part B, Medicare Advantage Plans also known as Medicare Advantage Organizations (Medicare Part C), and Medicare Part D Prescription Drug Plans, may assert a private cause of action under the MSP against primary payers and in some cases, those who receive payment from primary payers.

The MSP outlines what plans are deemed primary to Medicare. These plans or types of insurance are auto insurance, liability insurance including self-insured plans, workers’ compensation and no-fault insurance. Collectively, these are referred to as Non-Group Health Plans or NGHP. Medicare’s interests in a settlement applies not only to past payments (think Medicare liens) but to future medicals as well. When describing conditional payments and the right of the government to reimbursement, the MSP does not distinguish between pre-settlement conditional payments and post-settlement conditional payments. Therefore, Medicare’s rights to recovery may apply to post-settlement conditional payments anytime Medicare is prematurely billed for injury related medicals after settlement. In the Workers’ Compensation context, the policy of the Centers for Medicare & Medicaid Services (CMS), as the agency that runs Medicare, traditionally has looked to the employer or insurance carrier for the employer as the debtor for reimbursement of conditional payments arising prior to settlement. In the liability context, the Medicare beneficiary is considered the debtor for conditional payments. Because the MSP allows recovery from both the primary payer and any person or entity that receives payment from a primary payer such as the contingency fee of an attorney being paid from settlement proceeds, attorneys need to be aware of how to protect not only their clients but themselves from collection actions under the MSP.

Completing a Medicare lien investigation and reimbursing Medicare for past payments related to a claim is what most parties will do to consider Medicare’s past interests in a case. However, the most frequently overlooked piece when settling a liability claim is determining how much of the settlement money is being paid to compensate for future medicals and of that amount, how much of that would ordinarily be covered by Medicare. In other words, some trial attorneys may look at all the available damages when proceeding with a case but may not realize that they should also demonstrate a consideration of Medicare’s future interests regarding the future medicals. The repercussions of not addressing Medicare’s future interests in a case could result in Medicare denying payments for case related medical items, services, and/or expenses. This is Medicare’s primary enforcement mechanism post settlement. If done properly, actions taken during the representation of the injured plaintiff (whether enrolled in Medicare at the time of the representation or not) will help ensure that the injured Medicare beneficiary will have funds available to get the treatment they need and future Medicare entitlement for case-related body parts. Protecting Medicare, and the Medicare beneficiary, is a long-term play.

There are several options regarding how to consider Medicare in a settlement. The options will largely depend on the details of the case and there is not a single method that can be applied across the board. The Medicare Set-Aside (MSA) allocation is used frequently on workers’ compensation claims as a method to estimate Medicare’s future interests in a case. Medicare has offered guidance and put in place a voluntary submission process by which they will review MSA allocations that meet certain workload review threshold categories and will issue an approval (or counter approval) on the proposed amount. CMS, as the sub agency under DHHS that runs the Medicare program, publishes a WCMSA Reference Guide that outlines the format for MSA allocation reports and what information should be provided to have the MSA reviewed. Even though there is a well-established process for review of WCMSAs, there is no law requiring the completion of a MSA allocation on a WC case or any case.

As of July 2019, Medicare has avoided setting up a formalized process for review of liability MSAs and has not issued formal guidance or regulations regarding liability MSAs. It is this lack of guidance or a formalized process (like there is in WC) that has led many to believe they do not need to be concerned with Medicare’s future interests in a case. The general approach is to determine whether Medicare made conditional payments pre-settlement and if so, pay the pre-settlement Medicare lien (or negotiate it to satisfactory resolution), and close out the case. This approach is only the first step in adequately addressing and protecting Medicare’s interests. If you only consider Medicare’s past interests, you are placing you and your clients at risk.

Medicare will actually be aware of the case and the associated injuries. They are tracking this information via the MSP’s Mandatory Insurer Reporting (MIR) provision that comes out of Public Law Section 111 and is most commonly known as Section 111 reporting. Section 111 reporting is codified in the MSP under 42 U.S.C. §1395y(b)(8) and establishes MIR for either ongoing payment obligations or total payment obligations demonstrated by payments made by auto insurance, liability insurance including self-insureds, workers’ compensation plans or insurance, or no-fault insurance. If payment of over $750 is made regarding a claim of an individual who is a Medicare beneficiary, the primary payer (source of funds) is required to electronically report the amount of the payment, the date of the payment, the name of the Medicare beneficiary, date of the incident, and all the medical codes associated with the claimed injury (sometimes referred to as the Big 5), and a huge number of other data fields to Medicare. The information becomes integrated into what is known as the common working file for that Medicare claimant. Medicare places electronic markers for the claimant and for the medical codes (ICDs and CPTs) associated with the claimed injury. This information is ultimately used to “track the case” to ensure that Medicare is reimbursed for past payments (liens) and to help Medicare avoid making payments for future medical care related to the case for which it is not the primary payer. Medicare uses this information to monitor the file, check for unpaid liens, and notify parties of discrepancies. The MSP initially described penalties of $1000 per day per claim but was later amended in 2012 with the SMART Act and now describes financial penalties of “up to $1,000 per day per claimant” for noncompliance of any primary payer. CMS has not yet promulgated regulations regarding exactly how civil money penalties will be assessed and whether there will be safe-harbors for bona fide errors associated with the reporting process.

The Office of Management and Budget (OMB) provided indications in December of last year that CMS will be providing two Notices of Proposed Rulemakings (NPRMs) related to the enforcement of the MSP. Each are scheduled to be issued no later than September 2019. While the first could relate to any NGHP cases, because WC already has both regulations in the Code of Federal Regulations addressing Workers’ Compensation cases as well as a Reference Guide concerning WCMSAs, and no-fault claims don’t typically have future obligations, many in the industry have surmised that this first rulemaking will address protecting Medicare’s future interests in liability cases and putting back on the table the adoption of regulations or at least guidance (like a LMSA Reference Guide) on a possible review and approval process with workload review thresholds for CMS review of Liability Medicare Set-Asides (LMSAs). The second NPRM that is scheduled for the same time period will relate to the civil monetary penalties associated with non-compliance with Section 111 reporting. Once these two NPRMs are released, the best practice compliance behaviors for parties on both sides of liability cases should become even more clear.

Medicare’s primary enforcement mechanism regarding protection of Medicare’s future interests and the Medicare Trust Funds is denial of payments for medicals related to compensated third party injuries. However, what happens when Medicare’s computer system doesn’t catch a body part or claim previously compensated in a third-party settlement? Anytime and every time Medicare pays for those injury related medicals when it should not have, those conditional payments accrue as a growing collection action on behalf of Medicare. Our company has seen demands for payment that have included requests for reimbursement of post settlement medicals. We have also seen an uptick in recovery actions by the Department of Justice concerning collection of conditional payments. In March of 2019, a law firm in Maryland agreed to pay $250,000 to resolve a Medicare conditional payment demand on a case where the firm had already disbursed net settlement proceeds to its client. Last June, it was a law firm in Philadelphia that reached settlement with the Department of Justice to reimburse Medicare for conditional payments that were not paid out of trust and had already been disbursed to the client. Just because a plaintiff’s medicals might have been paid for by Medicare after a settlement in the past, does not mean that Medicare won’t deny those items or services in the future, or that it won’t demand repayment when it determines it made conditional payments. Imagine what could happen if Medicare began searching every single payment it makes and brushing that payment up against every settlement over $750 reported by insurance carriers. This is the future and could lead to some eye-popping dollar figures related to parties and legal representatives that failed to pay past Medicare liens and regularly fail to prevent future Medicare liens.

We should also not lose sight of the fact that if an injured individual does not set aside funds for injury related Medicare covered medicals and settlement funds are no longer available, that individual may not be able to get the treatment they need. Sadly, we often see that the MSA funds are the only funds remaining after about five years following a settlement. On a positive note, if MSA funds are exhausted and exhausted properly with the attestations and accounting that CMS likes to see, Medicare will typically step in and become the primary payer for those case related items going forward. Even though there is no law requiring the preparation of a MSA allocation, it is the safest and most conservative approach that can be taken. The injured party will obtain a detailed report outlining anticipated future medical care costs that are normally covered by Medicare. Along with a non-qualified report that typically comes along with a MSA allocation, you will have a better economic picture of all items, services and expenses reasonably expected in the injured plaintiff’s future. Obviously there will often be cases with such significant injuries and accommodations to living and transportation that could also benefit from an evaluation by an economist to take inflation into consideration and Life Care Plans that examines case management costs and some other costs that may not be evaluated in a MSA to help round out the best evidence to build your client’s case.

With a healthy respect for the extraordinary reach of the MSP, if the MSA funds administered are the total amount of funds projected in a LMSA and CMS is notified of the settlement and the amount of the MSA (different from asking CMS to review a LMSA), chances are less likely that there will either be a denial of the payment of post settlement injury related Medicare covered medicals after proper exhaustion or that post-settlement conditional payments would ever arise. Of course, when LMSAs are apportioned, questions abound whether Medicare may ever demand exhaustion of a full projected MSA versus an apportioned dollar amount that takes various factors into consideration of why a liability case may settle for less than full value. We could receive some indication of answers once regulations are promulgated regarding liability futures. However, in the meantime, a MSA allocation offers valuable protections regardless of whether an apportionment is calculated, because the MSA helps limit the extent of Medicare’s reach into a settlement. Without it, the default position taken by CMS for liability cases is that without a plan for future care, the entire settlement will be treated as the amount compensated for as future Medicals. Therefore, CMS would look for the entire value of the settlement to be exhausted in payment of future Medicals before Medicare would pick up coverage for that injury. Contemplating the MSA allocation in the settlement and making sure MSA funds are spent according to Medicare guidelines via professional administration is the safest and most conservative approach that can be taken to not only protect Medicare’s interests in a case, but to protect an attorney and their client from collection actions by CMS, helping to provide peace of mind for your injured clients.

Law Firm to Pay $250,000 to U.S. For MSP Non-Compliance (Failing to Reimburse/Resolve Medicare Lien from Personal Injury Settlement Proceeds)
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Law Firm to Pay $250,000 to U.S. For MSP Non-Compliance (Failing to Reimburse/Resolve Medicare Lien from Personal Injury Settlement Proceeds)

The following is a press release from the U.S. Attorney’s Office for the District of Maryland on behalf of the U.S. Department of Justice (DOJ) announcing a Medicare Secondary Payer Act (MSP)[1] MSP non-compliance settlement with the U.S. by a plaintiff law firm from Maryland that failed to properly address or make Medicare conditional payment reimbursement (i.e. pay a Medicare lien) from the proceeds of a medical malpractice settlement secured for a firm client in 2015.  This MSP non-compliance settlement is similar to the one we wrote about from June of 2018 regarding a plaintiff law firm in Pennsylvania.

“Department of Justice
U.S. Attorney’s Office
District of Maryland
FOR IMMEDIATE RELEASE
Monday, March 18, 2019

Maryland Law Firm Meyers, Rodbell & Rosenbaum, P.A., Agrees to Pay the United States $250,000 to Settle Claims that it Did Not Reimburse Medicare for Payments Made on Behalf of a Firm Client

Baltimore, Maryland – United States Attorney for the District of Maryland Robert K. Hur announced that Meyers, Rodbell & Rosenbaum, P.A., a law firm with offices in Riverdale Park and Gaithersburg, has entered into a settlement agreement with the United States to resolve allegations that it failed to reimburse the United States for certain Medicare payments made to medical providers on behalf of a firm client.

“Attorneys typically receive settlement proceeds for and disburse settlement proceeds to their clients, so they are often in the best position to ensure that Medicare’s conditional payments are repaid,” said U.S. Attorney Robert K. Hur. “We intend to hold attorneys accountable for failing to make good on their obligations to repay Medicare for its conditional payments.”

According to the settlement agreement, in and prior to 2012, Medicare made conditional payments to healthcare providers to satisfy medical bills for a client of the firm. Under the Medicare statute and regulations, Medicare is authorized to make conditional payments for medical items or services under certain circumstances, with the requirement that when an injured person receives a tort settlement or judgment, those receiving the proceeds of the settlement or judgment, including the injured person’s attorney, are required to repay Medicare for the conditional payments.

In December 2015, with the firm’s assistance and representation, the client received a $1,150,000 settlement in a medical malpractice action stemming from the client’s injuries. After Medicare was notified of the settlement, Medicare demanded repayment of the Medicare debts incurred from those conditional payments, but the firm refused to pay the debt in full, even when the debt became administratively final.

Under the terms of the settlement agreement, the firm agreed to pay the United States $250,000 to resolve the Government’s claims. The firm also agreed to (1) designate a person at the firm responsible for paying Medicare secondary payer debts; (2) train the designated employee to ensure that the firm pays these debts on a timely basis; and (3) review any outstanding debts with the designated employee at least every six months to ensure compliance.

This settlement reminds attorneys of their obligation to reimburse Medicare for conditional payments after receiving settlement or judgment proceeds for their clients. This settlement should also remind attorneys not to disburse settlement proceeds until receipt of a final demand from Medicare to pay the outstanding debt.

U.S. Attorney Robert K. Hur commended Eric Wolfish, Assistant Regional Counsel, United States Department of Health and Human Services, Office of the General Counsel, Region III, for his work in the investigation. Mr. Hur thanked Assistant United States Attorney Alan C. Lazerow, who handled the case.

# # #”

Take Aways:

  • Because the MSP grants both a direct lien right and a subrogation right to the U.S. to collect Medicare’s conditional payments, parties to a settlement should inquire, evaluate, confirm, and address all injury related Medicare expenditures for past medicals prior to, or at a minimum, at the time of settlement.
  • Because the MSP grants a private cause of action (MSP PCOA)[2] and Medicare Advantage Plans that privately administer traditional Medicare coverage for enrolled Medicare beneficiaries (MAO’s) have successfully availed themselves of this MSP PCOA against primary plans[3], parties should also inquire, evaluate, confirm, and address all injury related MAO payments for past medicals as described above.
  • While the Eleventh Circuit recently ruled that MSP private cause of action double damages could only be brought against primary plans[4], case law is not fully settled throughout the U.S. as to whether those other than primary plans like attorneys for Medicare beneficiaries would be liable for double damages under the MSP PCOA[5].  However, there is no doubt the double damages remedy clearly listed in the MSP’s direct cause of action provision applies in recovery actions by the U.S. Government against those who receive payments from primary plans, including Medicare beneficiaries and their attorneys[6].
  • When representing an injured party, doesn’t it make sense to address the issue at the time of representation instead of waiting to see whether the issue results in legal liability or a legal malpractice claim stemming from MSP non-compliance?
  • Due diligence is required for both the defense and plaintiff side to avoid unnecessary MSP non-compliance settlements/legal exposure.

[1] 42 U.S.C. 1395y(b)(2) et seq.

[2] “There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).” 42 U.S.C. § 1395y(b)(3)(A).

[3] See e.g. In re Avandia Mktg., Sales Practices & Prods. Liab. Litig.685 F.3d 353 (3d Cir. 2012)Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229 (11th Cir. 2016).

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

[5]  In Aetna Life Ins. Co., v. Nellina Guerrera et al., No. 3:17-CV-621 (JCH), 2018 WL 1320666, (D. Conn. Mar. 13, 2018), grocery store Big Y’s motion to dismiss was denied after Big Y, the alleged tortfeasor in the liability action and thus, a primary plan, settled and paid a Medicare beneficiary. Aetna, a MAO, was allowed to proceed with a MSP private cause of action for double damages against Big Y. However, the court granted motions to dismiss by the Medicare beneficiary and the Medicare beneficiary’s attorney, because under the MSP PCOA scenario, they were not primary plans.

[6] MSPA Claims 1, LLC v. Tenet Florida, Inc. — F.3d —- 2019 WL 1233207 18-11816 at 6 (11th Cir. March 18, 2019) (“[u]nlike the private cause of action, the government’s cause of action broadly permits lawsuits against ‘any entity that has received a payment from a primary plan’ – a grant that includes medical providers.” citing 42 U.S.C. § 1395y(b)(2)(B)(iii)(the MSP direct cause of action by the U.S.); Haro v. Sebelius, 747 F. 3d 1099, 1116 and U.S. v. Stricker, 524 F. App’x 500, 504 (11th Circ. 2013)(unpublished)).

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

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

Version 2.9 of the guide includes the following changes:

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

New WCMSA Reference Guide Version 2.8 Published by CMS
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New WCMSA Reference Guide Version 2.8 Published by CMS

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

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

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

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

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

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

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

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

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

Do not include the following:

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

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

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


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

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

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

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.

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).

 

 

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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