Potential Medicare Legislation and its Impact on The Medicare Approval Process

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.


What’s in a Name? MSP Recovery LLC Sanctioned in Latest MAO Litigation

MSP Recovery LLC, welcome to the Illinois federal courts. This may not be the jurisdiction for you. In a recent decision from the United States District Court for the Central District of Illinois, Peoria Division, not only did the legal group from Miami, now infamous for bringing hundreds of complaints against various insurance carriers under Medicare Secondary Payer reimbursement theories, fail to prevail in yet another effort to collect big money, but it ended up costing them and their attorneys $5,000 each in sanctions.

There are several written decisions about MSP Recovery LLC, many sounding familiar. Assignments, amended complaints, failure to state a claim – it all begins to run together. But when a court states: “This is when things got hairy” halfway through its written decision, something is going down.

The case of Recovery v. State Farm Mut. Auto. Ins. Co 2018 U.S. Dist. LEXIS 95789, U.S. District Court for the Central Dist. Of Ill. (June 7, 2018), began back in March of 2017 when the Plaintiffs filed their original complaint alleging that they were assigned the right to seek reimbursement from the Defendant for Medicare conditional payments made on behalf of a Medicare Advantage Organization. The Defendant filed a successful Motion to Dismiss on the grounds that there was no standing because no injury-in-fact had been alleged. The complaint alleged the Plaintiff had received assignments from the MAO to seek recovery under the MSP, however, the Plaintiffs failed to name the MAO.

On June 2, 2017, the Plaintiffs filed the first Amended Complaint, apparently adding nothing more of consequence to the original complaint than the names of a representative Beneficiary (R.F.) and a representative MAO called Health First Administrative Plans (HFAP). Without furnishing additional details to support an injury-in-fact, the Plaintiffs’ Amended Complaint did not establish standing and was subsequently dismissed.

Undaunted, a Second Amended Complaint was filed on January 30, 2018, substituting the previous representative Beneficiary R.F. with the more representative R.Y. The allegation was that R.Y. was an enrollee in HFAP and Defendant, as a primary payer under the MSP, failed to reimburse HFAP for medical items and services in a timely manner. Illustrating the relationship between MSP Recovery and HFAP, the Plaintiffs attached documentation including a Recovery Agreement and an Assignment document, in which Plaintiff MSP Recovery LLC assigned the rights of HFAP to MSP Recovery Claims Series, LLC. On March 6, 2018, the Defendant filed a Motion to Dismiss the Second Amended Complaint due to lack of standing.

Elsewhere, a court in the Southern District of Florida was busy working on another similar lawsuit filed by MSP Recovery LLC against Auto-Owners Insurance Group. In the course of this litigation it was determined by the testimony of HFAP’s Chief Operating Officer that HFAP was a company that performed administrative duties for a Medicare Advantage Organization called Health First Health Plans.

This distinction was news to the U.S. District Court for the Central District of Illinois, Peoria Division. And they were none too happy that while the Plaintiff had known about it since April 12th, it took a call from the Defendant on April 26th to notify the Court of the mistaken identity. The next day the Court ordered the Plaintiffs to file a response as to why the case should not be dismissed.

That’s when things got hairy.

Apparently the Plaintiffs did not think it was significant to know details like exactly which company assigned to them its rights of recovery. In their May 11, 2018 response to the Court, the Plaintiffs admitted that it was HFHP, not HFAP that had made conditional payments on behalf of R.Y., but had they had an opportunity to make a “minor clarifying” amendment to the Second Amended Complaint, they may have been more precise. Next that they stated that said potential clarification “would not change the substantive validity of the Health First assignments or R.Y.’s adequacy as an exemplar beneficiary,” a position the Court referred to as “palpably absurd and clearly wrong under the law.” The Court was further perturbed that MSP Recovery had not brought the identity of their intended Defendant to their attention until there was a threat of sanctions, rather than when they learned of the distinction weeks earlier.

When a lawsuit is filed, there are obligations that exist to ensure that the facts alleged are truthful and well-researched. The Federal Rules of Civil Procedure provide for sanctions against frivolous lawsuits, and case law indicates that the imposition of sanctions is allowable if the litigating parties should have known their position was groundless. By bringing a lawsuit against a company that does not make any medical payments, much less Medicare conditional payments on behalf of R.Y., a question exists as to whether MSP Recovery’s position was groundless. The law recognizes that corporations are separate and distinct legal entities and cause must be shown to ignore the corporate form.

The MSP Recovery LLC attorneys attempted to show they were not personally involved in the Auto-Owners matter, presumably to suggest they weren’t aware of the testimony, because they had not entered appearances in that case. The Court did not buy it, nor did they buy the Plaintiff’s explanation that the two separate companies are all part of the Health First “corporate family,” complicating their ability to identify the correct entity. And while this case is certainly not the longest legal battle in MSP history, it went on long enough for the Court to acknowledge the Plaintiff had wasted time and resources with its groundless claim.

Upon issuing the sanctions, the Court stated its purpose to “deter repetition of the conduct or comparable conduct by others similarly situated.” Given the prolific manner in which MSP Recovery LLC has been filing complaints that other courts have also determined to be less than adequate, it will be interesting to see whether this case results in a true deterrent or merely a slap on the wrist.


CMS Issues Opioid Roadmap

On June 11, 2018, CMS issued a purported roadmap in the future handling of opioid medications. Appearing to build off the proposed processes announced in February of this year, CMS has detailed a three-pronged approach to combating the opioid crisis. This three-pronged approach consists of:

  • Prevention of new cases of opioid use disorder (OUD)
  • Treatment of patients who have already become dependent on or addicted to opioids
  • Utilization of data from across the country to target prevention and treatment activities

Furthermore, CMS reported that they have been working on communications with beneficiaries to explain the risk of prescription opioids. Another strategy, reported by CMS is to endeavor to work with individual states to tailor programs to their populations. Citing work with seven states, which were not expressly identified, CMS argues such a strategy could aid unique state populations and their individual issues with the opioid issue.

CMS admits this roadmap is only a start and the plans and programs will continue to evolve. We at Gordon & Rees will continue to monitor these proposed processes and will report any updates as they develop.

Pennsylvania’s Governor Wolfe Vetoes Workers’ Compensation Formulary Bill

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.



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.