Civil Monetary Penalty Proposed Regulations Are Here

By on February 14, 2020
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The Medicare Secondary Payer law rendering a potential $1,000 per day penalty for noncompliance against primary payers has finally been demystified to some extent. The proposed regulation issuing guidance about Medicare Secondary Payer Civil Monetary Penalties relative to Section 111 reporting was unofficially disseminated on February 13, 2020, and the full text can be found here. The official document is scheduled to be published in the Federal Register on 2/18/2020 and available online at https://federalregister.gov/d/2020-03069.

By way of history, this rule has been in progress since 2013, pursuant to the Strengthening Medicare and Repaying Taxpayers Act (SMART Act) of 2012, which amended the Medicare, Medicaid and SCHIP Extension Act of 2007. The 2007 law rocked the industry by calling for mandatory penalties against NGHP primary payers of $1,000 per day per claimant for failure to properly report Section 111 data to Medicare. The SMART Act softened this, making the penalty discretionary rather than mandatory. The details of what would constitute a full penalty, diminished penalty and/or safe harbor from Civil Monetary Penalties have not been promulgated by the Agency until now. As of this date, no penalties have been assessed against NGHP primary payers. Having a rule in place could change this.

With 44 pages in all, there is a great deal of content within the proposed rule, the highlights of which are summarized below. As always, the Gordon & Rees Medicare Compliance Group will issue an Official Comment to this proposed rule. We will accept client feedback regarding this rule, through April 15, 2020, as Official Comments which must be received no later than 60 days from the date of official publication.

If more information is needed and/or you have questions about how this may impact your business please contact us at Section111 Reporting Section111Reporting@grsm.com.

Highlights:

• The regulation outlines proposed specific criteria for when CMPs would not be imposed, in circumstances when a NGHP entity fails to comply (either on its own or through a reporting agent) with Section 111 reporting guidelines.
• CMPs will be levied in addition to any MSP conditional payment reimbursement obligations.
• The rule is prospective and CMS will evaluate compliance based only upon files submitted by the RRE on or after the effective date of the final rule.
• There will be a formal appeal process for RREs if they disagree with the CMPs assessed against them.

CMS generally identified three categories of CMPs:

  • Failure to report
  • Submitting responses to recovery efforts contradicting reporting
  • Submitting records with errors that exceed CMS’s error tolerance threshold
    Statute of Limitations:
  • CMS may only impose a CMP within 5 years from the date when the non-compliance was identified by CMS. The regulation outlines specifically how this will be calculated for each of the three proposed types of CMPs.
    • If an RRE fails to report within the required timeframe (no more than 1 year from the TPOC date), the penalty would be calculated on a daily basis, based on the actual number of individual beneficiaries’ records that the entity submitted untimely.
    TPOC Reporting:
  • Penalty would be up to $1,000 (as adjusted annually for inflation based on 42 CFR part 102) for each calendar day of noncompliance for each individual, as counted from the day after the last day of the RRE’s assigned reporting window where the information should have been submitted, through the day that CMS received the information, up to a maximum penalty of $365K per individual per year.
    ORM Reporting:
  • If an RRE fails to report an ORM termination date, the penalty would be calculated based on the number of calendar days that the entity failed to report updates to the record. The penalty would be up to $1,000 (as adjusted annually for inflation) per calendar day of noncompliance for each individual, for a max annual penalty of $365K per year.
  • Please note, while most of the penalties listed are prospective, the ORM termination reporting is retroactive if not terminated properly.
    CMPs Will be Imposed for the Following Errors:
  • If the RRE exceeds any error tolerance(s) threshold in any 4 out of 8 consecutive reporting periods.
  • The initial and maximum error tolerance threshold would be 20% (representing errors that prevent 20% or more of the beneficiary records from being processed).
  • CMS intends for this tolerance to be applied as an absolute percentage of the records submitted in a given reporting cycle.
  • CMS will maintain current notification process where RREs receive notice via response file and direct outreach (email and, in more serious cases, telephone calls) when there are errors with their file submissions.
  • An RRE is out of compliance for the entire reporting period when the RRE exceeds the error tolerance threshold. (90 calendar days equals one reporting quarter)
  • CMS is proposing a maximum 20 percent per file submission error tolerance. The errors that would be used to determine whether the error tolerance is met shall be defined by CMS 6 months prior to imposition of any CMPs.
  • CMPs would be imposed on a tiered approach if the RRE exceeded the error tolerance(s) in the entity’s fourth above-tolerance submission. Penalties and calculation percentages are outlined in detail within the regulation; however, we have included the chart below directly from the regulation that summarizes the tiered penalty approach CMS is proposing. For a more detailed discussion of this, please reference the proposed regulation itself.
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• No CMP will be imposed in the following circumstances where all applicable conditions are met:

  1. If you report a claim timely; and
  2. Comply with TPOC reporting thresholds and any other reporting exclusions; and
  3. Don’t exceed any error tolerances in any 4 out of 8 consecutive reporting periods; and
  4. If the RRE fails to report required information because they were unable to obtain the necessary information from the beneficiary following a good faith effort to obtain this information which is defined in the regulation as communicating the need for the information twice by mail and at least once by phone or electronic communication. The RRE should maintain these records for a period of 5 years.

Disclaimer: Please note, this article is intended to be a high-level summary of the proposed regulation and is not intended to be an exhaustive review of every detail and requirement contained within the text of the proposed regulation. We will be providing a Webinar Series to discuss the fine details, business implications and best practices surrounding Section 111 Mandatory Insurer Reporting for NGHPs.

Let us know if you want to schedule a meeting to discuss in detail how this rule impacts your business.

Filed under CMS, Legislation, Medicare, Medicare Secondary Payer, Medicare Set Aside, Section 111 Tagged with , ,

Long Awaited Regulations Pushed Back, Again

By on November 22, 2019
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Rulemaking for Civil Monetary Penalties and regulations believed to promulgate formality to Liability and No-Fault Medicare Set-Asides has been pushed back to December 2019 and February 2020, respectively.

Rules clarifying when and how penalties may be issued for Section 111 Medicare Mandatory Insurer Reporting noncompliance could possibly be issued by year’s end. The industry has been anticipating this rule since the initial $1,000 per day per claim penalty was softened into a discretionary penalty per the SMART Act of 2012, enacted in 2013. The updated notice can be viewed here.

Rulemaking for an LMSA or NFMSA policy no longer appears to be imminent. The last date published was October of 2019, which is now delayed another three months, at least. CMS approached such policymaking in 2012, redacting it in 2014 only to revisit it again in 2016. The industry remains in a holding pattern, which will continue through the first several months of 2020, if not longer. https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201910&RIN=0938-AT85

The Office of Information and Regulatory Affairs’ (OIRA) Office of Management and Budget (OMB) page shows some changes to the Miscellaneous Medicare Secondary Payer Clarifications and Updates proposed rule. Of note is the priority for this rule, which has been shifted from Economically Significant to Other Significant.

According to the OIRA/OMB Frequently Asked Questions, page, a proposed rule that is Economically Significant can be defined as follows:

“A regulatory action is determined to be “economically significant” if OIRA determines that it is likely to have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. For all “economically significant” regulations, the Executive Order directs agencies to provide (among other things) a more detailed assessment of the likely benefits and costs of the regulatory action, including a quantification of those effects, as well as a similar analysis of potentially effective and reasonably feasible alternatives.”

The term “Significant” is also defined on the OIRA page, and it can be distinguished from Economically Significant status as the proposed rule could:

  • Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;
  • Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or
  • Raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in this Executive order.

The OIRA page further distinguishes “Significant” status as follows:

The Executive Order requires that significant regulatory actions be reviewed by OIRA before they are published in the Federal Register or otherwise issued to the public. The Executive Order also requires agencies to provide an explanation of the need for the regulatory action and an assessment of potential costs and benefits. OIRA generally designates between 500-700 regulatory actions as significant each year.

Of interest is the bit about the proposed rule raising novel legal or policy issues arising out of legal mandates. Of further interest is the removal of some of the abstract language on the OIRA agenda page, which removes the following part of the rule’s description,

“Currently, 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.”

This leaves only the following description of the rule in the Abstract: “This proposed rule would ensure that beneficiaries are making the best healthcare 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.” Essentially, Medicare is no longer indicating that the Beneficiaries do not have guidance about future medical. This could possibly correlate to the prior Medicare Learning Network publications the Agency had disseminated to medical providers, suppliers and facilities. These publications suggested that Medicare Beneficiaries could be billed directly for services if Section 111 reporting was filed, demonstrating a primary payment plan’s availability, with Medicare as a Secondary Payer. The removal of language that there has been no guidance by Medicare could indicate positioning for greater accountability about Medicare Set-Aside usage. This is consistent with recent changes in the Workers’ Compensation Medicare Set-Aside Reference Guide (WCMSA) Version 3.0, which requires a Beneficiary’s acknowledgement of MSA content, intent, submission processes and associated administration within the Consent Form, as of April 1, 2020. See our article on this here.

What has not changed in the Abstract is Medicare’s suggestion that any proposed rule will be voluntary in nature, although the change to “Significant” status broaches the possibility that there could be a policy concern or legal mandate involved.

GRSM’s Medicare Compliance Group will continue to monitor the status of any forthcoming rulemaking.

Filed under CMS, Legislation, Medicare, Medicare Secondary Payer, Medicare Set Aside

The Ghost of Cases Past – MSPA Claims LLC, v. Scottsdale Insurance Co.

By on January 18, 2019
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For those familiar with the slew of MSP Recovery cases that have been ruled upon in the past six (6) months, it will come as no surprise that another court, specifically the United States District Court for the Southern District of Florida, found that MSPA Claims LLC lacked standing when bringing suit against the Defendant.

Echoing the recently decided cases brought by MSP Recovery and its subsidiaries, the Court again in MSPA Claims v. Scottsdale Insurance found that Plaintiff lacked standing as proof of assignment of rights was not present and as such, granted Defendant’s motion for dismissal. Facts that are almost identical to MSPA Claims 1, LLC v. Ocean Harbor and MSPA Claims 1, LLC. v United Auto. Ins. Co., 204  F. Supp. 3d 1342, 1345 (S.D. Fla. 2016), Plaintiff asserted rights were assigned from Florida Healthcare Plus to La Ley Recovery which then assigned rights of recovery to MSP Recovery. The Court disagreed and specifically noted that although Plaintiff argued Florida Healthcare Plus approved assignment to La Ley to MSPA Claims, prior to receivership, the assignment did not predate the receivership. More pointedly, the Court stated it “is unclear how Florida Healthcare Plus could have approved the assignment…valid if MSP Claims was not yet formed as a company in 2014 when the receiver took over Florida Healthcare Plus[1].”

As such, the Court granted Defendant’s motion for dismissal without prejudice.

With yet another ruling dismissing a claim brought by MSP Recovery, the Floridian courts appear to sharpen their scrutiny regarding cases brought by assignees of rights by Medicare Advantage Plans. The pressing question however, is will other jurisdictions look to these cases as persuasive case law in their own courts? The Gordon Rees Medicare Group will continue to monitor these cases and bring you updates as they become available.

[1] MSPA Claims 1. LLC v. Scottsdale Ins. Co., 2018 U.S. Dist. LEXIS 218675

Filed under Legislation, Medicare Secondary Payer, Medicare Set Aside, Uncategorized

LMSA Rules by September?

By and on December 10, 2018
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Once again the possibility of regulations from the Department of Health and Human Services regarding Liability Medicare Set-Asides (LMSA) and No-Fault Medicare Set-Asides (NFMSA) has been brought into the spotlight.  In recent days, the Office of Information and Regulatory Affairs’ Office of Management and Budget published a notice of proposed rulemaking to provide guidance to Medicare beneficiaries and to protect the Medicare Trust Fund.  The full notice can be found here.  Per the abstract:

“This proposed rule would 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. Currently, 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, this proposed rule in regards to Liability Medicare Set-Asides (LMSAs) is noted to have “economically significant” priority. According to the Office of Management and Budgets, “significant” regulatory actions are defined in an executive order as those that: ‘Significant regulatory actions are defined in the Executive Order as those that have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in this Executive order.”[1] Furthermore, a Notice of Proposed Rulemaking (NPRM) is expected to be decided upon in September 2019. Although the actual proposed rule was unavailable for review, to those of us that are familiar with the industry, rules for LMSA and NFMSA have been anticipated for some time.  However, this is the first indication of movement outside the Department of Health and Human Services.

This posting by the Office of Management and Budget is the first step to development of regulation and is not yet a proposed rule. This publication is simply notification that CMS is currently in the process of putting together a proposed rule.  Once the draft is prepared it will be published in the Federal Register and after publication any interested parties in the rule will be provided 60 days to comment.  Once the period for comment closes, CMS will decide whether to proceed with development of the regulation.

It is unclear as to whether CMS will seek ongoing feedback from interested stakeholders. As of this date, no Town Hall has been scheduled.

Gordon & Rees has previously written official comments for prior notices of proposed rulemaking and is equipped to do so on behalf of interested stakeholders. If you are interested in this service, please contact us. As this process develops Gordon & Rees will continue to keep you apprised of the progress.

[1] Department of Management and Budget FAQs. https://www.reginfo.gov/public/jsp/Utilities/faq.myjsp

Filed under CMS, In the News, Legislation, LMSA, Medicare Secondary Payer

IDS Property Casualty Insurance Class Certification Reversed, Remanded

By on October 30, 2018
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As previously reported, the Third District Court of Appeal for the State of Florida recently reversed and remanded the class action certification for MSPA Claims 1, LLC v. Ocean Harbor. On October 24, 2018, the same Court reversed and remanded the only other certified class action suit brought by MSPA Claims 1, LLC.

Citing Ocean Harbor specifically, the Third District Court again opined that in this case, MSPA has failed to establish that common issues predominate over individual issues. Applying the same rationale as Ocean Harbor, the Court noted “to quantify the claims of the putative class members will require a comprehensive and distinct analysis of each underlying PIP claim and automobile accident…Plainly this is one of those cases where merely proving entitlement to reimbursement from IDS for payments made by Florida Healthcare Plus on behalf of MA., in no way proves the cases of the other class members.” IDS Prop. Cas. Ins. Co. v. MSPA Claims 1, LLC, 2018 Fla. App. LEXIS 15107

The Court then went on to reverse as well on the alternate ground of standing. Harkening back to MSPA Claims 1, LLC. v United Auto. Ins. Co., 204  F. Supp. 3d 1342, 1345 (S.D. Fla. 2016), the Court ruled that the approvals of assignment did not occur until after the initial complaint had been filed. The parties in question did not assign benefits until June 1, 2016 as a part of a settlement agreement. However, MSPA filed its amended complaint on March 8, 2016, several months prior to the Receiver’s approval. As previously found, standing must exist at the inception of a case. As IDS had based its attack on standing on validity of the assignment, standing was not present[1].

As such, the Court reversed and remanded for proceedings consistent with the opinion.

It would be remiss to not point out that this was MSP Recovery’s only other certified class action suit. With its reversal and remand, the future of these class action proceedings seems dimmer and dimmer, at least in the Third District Court of Appeal for the State of Florida.

 

[1] The court does note that this case does differ from MSP Recovery LLC v. Allstate Insurance Co., 835 F. 3d 1351 (11th Circ. 2016) which similarly argued lack of standing. In that IDS argued that MSPA’s private cause of action against IDS was barred by the federal anti-assignment statue. This was rejected by the Eleventh Circuit.

Filed under In the News, Legislation, Medicare, Medicare Advantage Plans, Medicare Secondary Payer

MSPA Claims 1 LLC v. Infinity Auto – No Collection Without Recollection

By on October 30, 2018
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For MSP Recovery LLC, it apparently takes more than two things to make a thing go right. Collecting fees is now out of sight.

The United States District Court for the Southern District of Florida, dismissed yet another MSP Recovery LLC subsidiary claim with prejudice. It seems this time around the Plaintiffs could not establish that MSPA Claims 1, a subsidiary of MSP Recovery, was in fact acting on behalf of the now defunct Florida Healthcare Plus, Inc. Medicare Advantage Organization, despite producing affidavits speaking to the relationship from top brass within both companies.  The assignment was allegedly first with La Ley Recovery Systems prior to MSPA Claims 1.

On October 19, 2018, The Southern District of Florida, ruled in the case of MSPA Claims 1, LLC v. Infinity Auto Ins. Co., granting summary judgment. The Court also dismissed the case with prejudice.

In the present case, the Court allowed over sixteen months of discovery to go forward with this claim. Despite this timeframe, Plaintiff relied on only two affidavits to establish standing (based upon assignment from FHCP to La Ley Recovery) for the claim: the first of the Defense’s own attorney John. H. Ruiz and the second of Susan Molina, CEO of FHCP. Putting aside that it is generally improper for a lawyer in a case to testify as to his legal opinion regarding facts in the case[1], the Court found that the testimony about conversations between Attorney Ruiz and Susan Molina was “merely Mr. Ruiz’s mental impression following conversations…” that “does not lay the necessary factual predicate for Mr. Ruiz’s lay opinion testimony.”[2]

The Court then went on to examine the Affidavit of Susan Molina, who essentially attested to not remembering specific conversations with John Ruiz and did not specifically recall approving assignment to La Ley Recovery. The Court very clearly points out what is missing from the affidavit: a positive statement that express assignment was given to La Ley Recovery.

After that analysis, the Court found in a very familiar fashion, that the Plaintiff lacked standing even despite the Plaintiff’s position that such was demonstrated via the settlement agreement between FHCP and its liquidators. As has been held in several previous MSP Recovery cases, a settlement agreement cannot retroactively establish standing after a case is filed. As no assignment was found and standing was lacking, the Court dismissed the matter with prejudice.

 

[1] Hickman v. Taylor, 329 U.S. 495, 67 S Ct. 385, 394, 91 L Ed. 451 (1947)

[2] MSAP Claims 1, LLC v. Infinity Auto Ins. Co., 2018 U.S. Dist. LEXIS 181446

Filed under In the News, Legislation, Medicare, Medicare Advantage Plans, Medicare Secondary Payer

Ocean Harbor Class Certification Reversed, Remanded

By on October 1, 2018
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Another blow was just dealt to MSP Recovery. On September 26, 2018, the Third District Court of Appeal for the State of Florida reversed and remanded the class action certification that had gained so much attention when it was granted last year.

This case has its genesis with MSPA Claims 1, LLC, a subsidiary of MSP Recovery acting on behalf of Florida Healthcare Plus, Inc., a now defunct Medicare Advantage Organization (MAO), and other similarly situated entities. MSPA filed a class action against Ocean Harbor Casualty Insurance Company for failure to reimburse medical bills. MSPA sought double damages via the Medicare Secondary Payer Act’s private cause of action, 42 U.S.C. § 1395Y(b)(3)(A). MSPA contended that class action was appropriate as some or all of the thirty-seven (37) MAOs in Florida might be in a similar situation. The trial court determined that common issues existed because the Plaintiffs’ right to reimbursement was “automatic,” given that a payment was made on behalf of a Medicare enrollee who was also insured by the Defendant and that such payment was not reimbursed.

In order to understand the Appeal Court’s ruling, the underlying class certification must be first examined. According to Fla. R. Civ. P. 1.220(a), the prerequisites to class certification are numerosity, commonalty, typicality and adequate representation, in additional to the satisfaction of other requirements under Fla. R. Civ. P. 1.220(b). Under 1.220(b), one of three subsections must be satisfied. The subsections are: (b)(1) prosecution of individual actions for members of the class creates a risk of inconsistent adjudications and incompatible standards of conduct; (b)(2) relief sought by the class is injunctive or declaratory in nature, rather than predominantly monetary damages, or (b)(3) that common issues of law or fact predominate over issues affecting only individual class members, and thus the class action is superior to other methods of adjudication.  The trial court certified this class based on subsection (b)(3), referencing Porsche Cars N. Am., Inc. v. Diamond, “In a (b)(3) class action, not all issues of fact and law are common, but common issues predominate over individual issues.” 140 So. 3d 1095-96 (Fla. 3d DVA 2014) (citing Fla. R.Civ. P. 1.220(b)(3)).

The Appeal Court reconsidered predominance under Fla. R. Civ. P. 1.220(b)(3), stating “the appropriateness of the class certification turns largely on whether issues common to the class will predominate.” The Appeal Court noted that this matter was an “intersection” of Florida class action law, Medicare Secondary Payer law and Florida no-fault insurance law. In exploring the obligation to reimburse Medicare under the MSP Act and also Florida no-fault insurance law, the Court aptly examined not only that a payment was made by Medicare, but also whether Ocean Harbor was required to make the payment in the first place. Through this exercise, the Appeal Court questioned the “automatic” requirement to reimburse Medicare simply due to a demonstrated responsibility to make a payment, as the MSP does not eliminate the terms and conditions of the state no-fault law. Specifically, the Court referenced 42 C.F.R Section 411.51, stating “Medicare does not pay until the Beneficiary has exhausted his or her remedies under no-fault insurance” (emphasis added). In blending the federal Medicare law with the state no-fault law, the Court first observed that the MSP’s private cause of action does not arise until a payment could reasonably be expected to be made under no-fault insurance. In turn, the Court stated that MSPA must prove that not only was a proper conditional payment made, but that Ocean Harbor was required to make the payment in the first place under the state no-fault law.

MSPA relied upon the holdings in In re: Avandia Marketing[1], and Humana Medical Plan v. Western Heritage Ins[2], two predominant circuit court cases conferring the private cause of action on the Plaintiff(s). In each of these two cases, the responsibility to make a payment was in reference to the primary plan’s pre-existing settlement of a claim relating to the tort from which the medical bills arose. The Appeal Court distinguished the facts of Ocean Harbor from these two landmark cases, in that no pre-existing settlement was being referenced as creating a responsibility for payment. Rather, the demonstrated responsibility was to be established “by other means,” thereby cancelling these cases out as precedent, bringing this matter within the MSP Recovery LLC v. Allstate[3] tutelage. In Allstate, the 11th Circuit held that even without a settlement, a demonstrated responsibility for payment could be established through proof of the primary plan’s contractual obligation to make a payment. The burden of proving this is on the Plaintiff.

According to Florida no-fault law, there are exclusions from the obligation to make payments, and also necessary procedures that if not followed, are grounds to decline payment. The Appeal Court observed that “payment under Florida no-fault law proceeds on a factually intensive bill-by-bill and case-by-case basis,” and that MSPA would be required to prove the Defendant was required to pay each particular bill. Ocean Harbor would likewise be permitted to raise defenses regarding each particular bill, thus resulting in a series of mini-trials to determine whether payment is required under Florida no-fault law. The Appeal Court stated in its conclusion “Proof that certain medical bills paid by MSPA’s alleged assignor should have been paid by Ocean Harbor as a primary payer will not establish that other medical bills paid by a different MAO should also have been paid by Ocean Harbor as a primary payer.” Accordingly, a finding of predominance was precluded, rendering the case inappropriate for class action certification. As such, the class certification was reversed and the case remanded.

Practitioner’s Note: This Court delves into interesting territory in its determination that common issues of law or fact do not predominate over issues affecting only individual class members if there is a question about whether payment of each individual bill was ever required to begin with. A similar analysis can be applied as to whether it is appropriate to file suit for Medicare conditional payment reimbursement when each individual Medicare conditional payment may not be “ripe” for reimbursement. Like Florida no-fault law, there are processes and procedures in obtaining Medicare conditional payment information, as well as for making timely reimbursement. There are defenses. There is a statute of limitations. There are reasons why payments made by Medicare may be proper payments rather than conditional payments. This decision touches on the concept of exhaustion of administrative remedies, and references the SMART Act (Strengthening Medicare and Repaying Taxpayers Act of 2012), which provides primary payers an appeal process for Medicare conditional payment matters.  Many of the various court rulings in MAO litigation focus on demonstrated responsibility for reimbursement without considering whether it is actually timely or appropriate to reimburse Medicare. If MAOs wish to assert the same rights of reimbursements as traditional Medicare Parts A and B under the MSP laws, it would stand to reason that the same processes and procedures would apply. In day-to-day practice, the mere existence of Medicare conditional payments does not necessarily trigger the obligation to reimburse.

___________________________________________________________________

 

 

 

[1] In re: Avandia Marketing, 685 F.3d 353, (3rd Cir. 2012)

[2] Humana Medical Plan v. Western Heritage Ins, 832 F.3d 1229, (11th Cir. 2016)

[3] MSP Recovery, LLC v. Allstate Insurance Company, 853 F. 3d 1351 (11th Cir. 2016)

Filed under In the News, Legislation, Medicaid Third Party Liability Recoveries, Medicare, Medicare Conditional Payment, Medicare Secondary Payer, Medicare Set Aside

Potential Medicare Legislation and its Impact on The Medicare Approval Process

By on June 26, 2018
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The path from submission of a Medicare Set-Aside (MSA) to final approval can be riddled with many twists, turns and roadblocks along the way. Legislation has been introduced in the last several years to reform this process, but has failed to gain necessary momentum in both the House and Senate for passage. On June 18, 2018, a revised version of this legislation was introduced in the Senate by prior sponsors, Senators Portman (R-OH) and Nelson (D-FL). Senate Bill 3079, Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2018, amends title XVIII of the Social Security Act to include Medicare Set-Aside provisions and guidance for the Medicare approval process.

Bill Highlights

The revised version of this legislation contains many key provisions that would impact Workers’ Compensation Medicare Set-Asides. Some highlights of this Bill are as follows:

  • The Bill allows for an optional proportional adjustment to the MSA in certain circumstances. Specifically, a party to the settlement may elect to calculate a percentage reduction in the MSA “for the total settlement amount that could have been payable under the applicable workers’ compensation law…had the denied… portion of the claim not been subject to a compromised agreement.” Calculation of the MSA reduction is equal to the denied percentage of the settlement. It is unclear how this would actually be argued and implemented to reduce the MSA. Further, this option is only available if the party requesting this reduction has written consent to do so from the other party to the settlement.
  • Submission of a formal MSA proposal is still a voluntary process. In the event of submission, the Secretary of Health and Human Services has sixty (60) days from receipt of the submission to issue a decision approving or denying the MSA. If the MSA amount is denied, the reasons for denial must be clearly outlined in the denial letter.
  • The Bill also offers a formalized appeal process with the potential for judicial intervention. Specifically, subsequent to a request for reconsideration, the parties can request a hearing before an administrative law judge and judicial review of the Secretary’s final determination after the hearing.
  • Rather than self administer or have the MSA professionally administered the MSA fund can be sent directly to CMS. This is an option that could help relieve the financial stress which is currently on the Medicare Trust Fund. All parties must agree to elect this option. The legislation is silent on what would happen if the MSA funds were not depleted by the claimant.
  • In addition, the legislation provides that State Workers’ Compensation Laws should be final and conclusive as to any and all matters within the jurisdiction of the State in determining the reasonableness of settlement value; allocation of settlement funds; the projection of future indemnity or medical benefits expected to be paid under the State Workers’ Compensation Law; and the total amount that could have been payable for a claim in the event of a compromised agreement.

If passed, this legislation would become effective on January 1, 2019. Currently the legislation has been referred to the Committee on Finance.

Follow Up Thoughts:

The legislation is a step forward in defining and implementing a more consistent and clearer Medicare approval process. There are still issues however that remain outstanding including transparency in how the exact amount of the MSA should be calculated, how to create a more realistic approach to controlling prescription drug costs in Medicare Set-Aside allocations, and how these provisions will actually be implemented by CMS. This legislation is an attempt to formalize a more defined MSA process and may make the path to Medicare Set-Aside approval much less thorny and in the end, hopefully, much more rosy.

 

Filed under CMS, Legislation, Medicare Secondary Payer, Medicare Set Aside

Pennsylvania’s Governor Wolfe Vetoes Workers’ Compensation Formulary Bill

By on June 6, 2018
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Following in the footsteps of Texas, Ohio, and various other states, Pennsylvania’s legislature attempted to enact a drug formulary by amending the current Workers’ Compensation Act with Senate Bill 936. While passing in the House and Senate, Governor Tom Wolfe vetoed this proposed amendment.

Introduced on October 20, 2017 by various representatives, Bill 936 proposed that the department should select a nationally recognized, evidence-based prescription drug formulary for resolving issues related to drugs prescribed for or related to the treatment of work-related injuries. Expressly outlining a timeline in which comments would be taken, public notice of the formulary published, and when the final formulary would effect, Bill 936 also outlined the requirements to be considered when creating the prescription drug formulary.

After considerable debate and re-drafting, the bill was voted into the House and Senate on April 17, 2018. As indicated above, Governor Wolf then vetoed on April 27, 2018. Per a letter drafted by the Governor on May 27, 2018, Governor Wolfe noted “The implementation of a drug formulary as prescribed by this legislation will not improve overall health outcomes for Pennsylvania’s injured workers and will not stem the tide of the opioid crisis…many opioid medications are among the lease costly prescription medications on the market. Since the bill’s drug formulary is designed to steer physicians toward prescribing less costly drugs, it will not likely accomplish the often-stated objective of the bill’s promotors – curbing the opioid over-prescription.”

Interestingly, Governor Wolf’s rationale in vetoing the Bill was predicated on the fact that the formulary is aimed at cost-reduction and the limitation of opioids. However, per the language of the Bill itself this formulary was to be created after research and based upon evidence based medicine (which would most likely include the CDC’s recent recommendations regarding opioids), would be open for public comments which would arguably include injured workers’ and their advocacy groups, and would be reviewed yearly by the department based upon public comments received in November of each year. Admittedly, the Bill does state that the Pennsylvania Compensation Ratings Bureau shall calculate the savings achieved through the implementation of the prescription drug formulary, the assumption that the formulary is solely created for the cost-reduction of prescriptions in Workers Compensation claims appears to be faulty.

To further confuse the issue, Governor Wolf announced he signed an executive order aimed at curbing injured workers’ opioid prescriptions. Essentially mimicking much of the original Bill 936 directives, it is questionable whether such an order will be enforceable as state agencies do not have legal authority to limit prescription drugs on their own.

At the end of the day, Pennsylvania’s drug formulary has been tabled. However, several other states (i.e. Indiana and Massachusetts) have proposed legislation in place and are waiting on final voting. Although there is not much in the way of formal research on the benefits of drug formularies, the pioneer states like Texas, Ohio, and California have been implemented for a significant period of time and more empirical evidence of the benefits of such programs can be expected. Furthermore, this methodology is becoming increasingly more attractive to states in light of increasing insurance premiums and the opioid crisis. We at Gordon & Rees will continue to monitor the current legislation and report on any new developments.

 

 

Filed under In the News, Legislation, Medicare Secondary Payer, Opioids