CMS Low Dollar Recovery Threshold Remains $750 for 2019

There will be no change in the low dollar threshold for Medicare conditional payment reimbursement in 2019. The SMART (Strengthening Medicare And Repaying Taxpayers) Act of 2012 serves to avoid governmental waste by setting an annual amount in which the costs associated with reimbursement outweigh the benefits. The SMART Act provides that the Secretary must calculate and publish not later than November 15th a low dollar threshold amount applicable in the following year for settlements, judgments, awards or other payments in which Medicare Conditional Payment reimbursement need not be reimbursed given the costs associated with recovery. This threshold corresponds also to the $750 threshold for Medicare Mandatory Insurer Section 111 reporting requirement.

On Friday, November 15th, The Centers for Medicare and Medicaid Services released their updated Computation of Annual Recovery Thresholds for Non-Group Health Plans.  Below are the Agency’s findings:

  • The 2019 reporting threshold remains $750 for no-fault, workers’ compensation and liability cases.
  • The estimated cost to process any individual case is $297
  • The average Medicare conditional payment demand amount for settlements of $500 is $368 (74%)
  • The average Medicare conditional payment demand amount for settlements around $750 is $518 (69%)

These metrics once again demonstrate exceedingly high percentages of cost versus recovery for low dollar settlements. The SMART Act applies a common sense approach to recovery efforts, given such costs associated with reimbursement and the interest of avoiding wasteful spending of government money,. The complete notice can be found in the link here>> CMS Computation-of-Annual-Recovery-Thresholds-for-NGHP–2019.pd

Should you have any questions regarding the above or need any Medicare compliance assistance, please do not hesitate to contact Gordon & Rees Medicare Compliance Group at mstockdale@grsm.com or 412-588-2277

Ocean Harbor Class Certification Reversed, Remanded

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.

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[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)

Social Security Releases 2018 Trustee Report: Expect More Aggressive Measures from CMS.

On June 5, 2018, the Social Security Board of Trustees released it’s annual report on the long-term financial status of the Social Security Trust Funds.  Per this report, the Old—Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2034 and Medicare by 2026. This projection remained the same from the previous year. More importantly, while the assets of the combined OASI Trust Funds increased by $44 billion in 2017, the total annual cost of the program is projected to exceed total annual income in 2018 for the first time since 1982, and remain higher throughout the 75-year projection period.

These figures are especially worrisome for those of us in the industry as Medicare has become increasingly more aggressive in recovery of payments, denial of payments, and garnishment of benefits. As the total annual cost of the program is expected to exceed the annual income, it is reasonable to conclude that more forceful tactics by the agency will be implemented to protect the Fund. Furthermore, civil penalties and other previously under utilized measures may be on the horizon. We at Gordon & Rees are committed to bringing you the most up to date information regarding this matter and will continue to report as new developments occur.