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01/Jul/2021

On June 28th, Centers for Medicare & Medicaid Services (CMS) made two announcements. The first is notice of the updated MMSEA Section 111 Group Health Plan (GHP) User Guide, while the second concerns a new technical alert regarding the inclusion of Part D information in Section 111.

Updated MMSEA Section 111 Group Health Plan (GHP) User Guide and GHP 270/271 Health Care Eligibility Benefit Inquiry and Response Companion Guides

A summary of the updates that have been made in Version 6.2 of the MMSEA Section 111 GHP User Guide are listed here:

The CMS electronic file transfer (EFT) file-naming conventions for inbound and outbound files have been updated (Section 8.1.1).

To provide more accurate direction to submitters, instead of receiving the RX 07 error code (Beneficiary does not have Part D enrollment), Disposition Code 51 will be returned for those records where the submitted individual is not entitled to Medicare Part D (Appendix D).

A new Modifier Type Code (PVR) and Name (From a provider) have been added for unsolicited MSP response files, and the DTM code (Name of employer submitting the Data Match Questionnaire Response) has been removed (Section 7.2.10.6).

The following will become effective December 11, 2021:

Under the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT Act) for Patients and Communities, Section 111 Responsible Reporting Entities (RREs) who provide primary prescription drug coverage must submit this information through the Section 111 process. To support their efforts, the Query-Only Response File layout will be updated to provide the most recent Part D enrollment information for beneficiaries. Additionally, process steps for installing and configuring the HIPAA Eligibility Wrapper (HEW) software will also be provided (HEW Query-Only Response File Record – Version 4.0.0, Appendix I).

The full guide can be downloaded here at CMS.gov.

Medicare Secondary Payer (MSP) Mandatory Reporting Provisions Section 111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 2007

The purpose of the latest alert is to notify Group Health Plan (GHP) RREs of changes being made to the Query Only Response File. Effective December 13, 2021, RREs will need to provide current Part D enrollment information for a beneficiary if the profile indicates that it provides network primary prescription drug coverage via Section 111 reporting. Additionally, three new fields will be added to the Query Only Response File layout.

The full alert can be downloaded here at CMS.gov.

For questions regarding these updates and how they may affect you and/or your clients workers’ compensation or liability settlements, please contact Medivest here or call us at 877.725.2467.


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02/Jun/2021

How Attorneys in Washington and Other States Should Prepare Their Clients and Themselves for Lump-Sum Settlements

Last month, Washington state governor Jay Inslee signed a bill into law that will allow injured workers to receive Workers’ Compensation (WC) settlements as lump-sum settlements for the first time.  Included in the bill, S.B. 5046 was an emergency clause that made it take effect immediately once it was signed.  Previously, injured workers in Washington state were required to receive WC settlements via structured settlement (annuitized) payments over time.  The COVID-19 Pandemic may have influenced this change and only time will tell if the decision will be good for the State of Washington.  Funding of WC settlements by structured settlements have always provided a sort of safety net so that if a WC claimant failed to preserve settlement funds in any one year, there would be another round of funding to help cover the medical needs of the claimant going forward.

 

Are There Risks with Lump-sum Settlements?

Lump-sum settlements offer the advantage of receiving money immediately, which can be helpful when large bills are looming overhead. However, injured workers who receive lump-sum settlements are naturally prone to misuse the medical portion of their settlement funds for several reasons. Disregarding any malicious intent, its not uncommon for misuse to occur due to:

  • Lack of Expertise – Inability to seek or negotiate for the best price on products and services due to a lack of knowledge about fee schedules, rates, coordination of benefits, medical billing department practices and policies, and negotiation.
  • Dependence on Willpower – Decisions are at the mercy of the beneficiary’s self-control.
  • Outside Influences – Life circumstances, including needs and wants, or even manipulation by family members or friends creates pressure to spend imprudently.

 

Workers’ Compensation claimants may face sanctions from the Centers for Medicare & Medicaid Services (CMS), the agency charged with administering the Medicare program, which include denial of future medical care under Medicare for the WC related injury that was compensated, and obligation of repayment to Medicare for conditional payments made by Medicare, which can potentially be up to double the amount owed or otherwise carry high interest on unpaid Medicare Secondary Payer statute (MSP) debt. However, consequences of misuse of funds are not limited to just the claimants. Their attorneys may also share responsibility.

 

What Does This Mean for Attorneys in Washington State?

Attorneys in Washington, and any other state that allows lump-sum payments for Workers’ Compensation settlements, must make every effort to ensure that their clients are considering Medicare’s future interest in their settlement and have a plan for future care that will protect Medicare from being prematurely billed for any injury related and Medicare allowable future medical component of the WC settlement. CMS identifies the legal support providing why an attorney could be in its cross-hairs as a target of a MSP recovery penalty for a claimant’s misuse of funds in its April 22, 2003 memorandum.

  1. CMS may sue for repayment from all parties involved in the settlement, including the claimant’s attorneys. Double damages may also be sought against the “primary payer” under the authority of 42 CFR 411.24(c)(2), and if the government is unable to recover against the “primary payer,” against the “beneficiary.” 42 CFR 411.24(l)(1).
  2. CMS outlines the “ethical and legal obligations” of attorneys representing Workers’ Compensation claimants when their clients chose to “ignore Medicare’s interests in a Workers’ Compensation case,” citing to the CFR section that gives CMS a claim against the attorneys.

 

How to Protect Future Medicals and Your Own Future

For the protection of all parties involved, CMS highly recommends Professional Administration for a Medicare Set-Aside account.  It effectively eliminates or significantly reduces the likelihood of misuse of MSA funds, assuring the settling parties remain in compliance with the letter and spirit of the MSP thereby protecting both the claimant and attorney. Additionally, Medivest’s Professional Administration services can often stretch the medical portion of the settlement funds, helping to ensure that medical funds are available for a longer period of time than if self-administered.

Medivest can help you navigate through Medicare Secondary Payer compliance complexities while you work toward a desired settlement outcome. Call us to today to speak to one of our highly trained settlement consultants for a free lien and MSP futures case consultation. For more information about Medivest or to refer a case, please call 877.725.2467 | Monday – Friday 8 am to 5 pm EST.


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29/Apr/2021

 

The Centers for Medicare & Medicaid Services (CMS) released a revised Workers’ Compensation Medicare Set-Aside Arrangement (WCMSAReference Guide (“Reference Guide”) Version 3.3 on April 19, 2021. This Reference Guide replaces Version 3.2 which was released on October 5, 2020. There are a few notable changes when comparing the two Reference Guides.  The blue highlights below indicate the updated changes provided in Reference Guide Version 3.3.

CMS’s Version 3.3 Reference Guide includes the following changes:

  • The CDC Life Table link was updated (Section 3).
  • Language around surgeries to be covered by seed money in a structured settlement was clarified, and a disclaimer was added to the proposal review reference tools list in Appendix 4, along with the Conduent Strataware® tool (Sections 5.2 and 9.4.4, Appendix 4).
  • Miscellaneous clarifications were added as follows (Sections 9.4.5, 10.2, 16.2, and 4):
    • On pricing: include refills when pricing intrathecal
    • On documentation: clarification was added on Consent to Release
    • On WCMSA Portal case access: clarification was added on case access for Professional Administrators who are not the original
  • The Major Medical Centers table was updated for a Missouri entry (Appendix 7).

To download the new WCMSA Reference Guide v3.3 Click Here.

 

Change 1 – CDC Life Table Updated Link

Section 10.3

Please see the WCMSA site (http://go.cms.gov/wcmsa) for additional information.”

 

Change 2 – Seed Calculations Include Cost of First Surgery/Procedure for Each Injured Body Part

 Section 5.2

Language around surgeries to be covered by seed money in a structured settlement was clarified.

  • Medivest’s Takeaway: Of these announced changes, the change of most significance is the clarification that CMS expects seed calculations to be evaluated for each affect body part of an injured worker. Text has been inserted in multiple locations for this purpose. We have placed references to the applicable Reference Guide section where the updated language appears and have quoted various portions of the existing language along with the revised/inserted language for context below, with the revised language appearing in blue highlight.
  • CMS’ Update: “A WCMSA can also be established as a structured arrangement, where payments are made to the account on a defined schedule to cover expenses projected for future years. In a structured WCMSA, an initial deposit is required to cover the first surgery or procedure for each body part, and/or replacement and the first two years of annual payments. The initial deposit (“seed money”) is followed by subsequent annual deposits (or a shorter time period if CMS agrees to such), based on the anniversary of the first deposit. If in any given coverage year, the deposited funds are not exhausted (i.e., used up, spent), they are carried forward to the next period and added to the next annual deposit. The whole fund, including carry-forwards, must be exhausted before Medicare will pay primary for any WC injury-related medical expenses. If the fund is exhausted appropriately in a given annual period, Medicare will pay primary for further WC injury-related medical expenses during that period. In the next annual period, the replenished WCMSA funds again must be used, until the WCMSA amount is appropriately exhausted.”

 

Section 9.4.4

  • Medivest’s Takeaway: Slight changes were also made under 9.4.4 Medical Review, Step Six, to clarify that seed calculations are to be performed for each affected body part/injured area as follows:
  • CMS’ Update – Section 9.4.4: “When annuity is selected, the submitter provides a proposed “seed” or initial deposit amount. This amount should include the cost of the first surgery/procedure for each body part, if any. The seed includes the first two years of the annual amount. See Section 05 – Cover Letter in this guide for instructions on how to calculate the seed amount, with an example.54r3efd

The seed includes the cost of the first surgery/procedure for each body part, including all costs such as prescription drugs, physician fees, anesthesia fees, and facility fees. If the surgery is preceded by an associated trial, i.e., trial SCS or trial intrathecal (IT) pump, the cost of the trial is also included since it is considered part of the same procedure. If there are no surgeries, the first procedure (if any, such as injections) is included. Series of spinal injections are not included, but series of knee visco supplementation are included if three are anticipated to be accomplished as a series of three weekly injections.

The first replacement of Durable Medical Equipment (DME), prosthesis, or orthotics is included in the seed funds if the cost of such items exceeds $500.

The seed includes the cost of surgeries, procedures, drugs, or replacement items as noted above. It does not include the cost of diagnostic studies, complications, and hospitalizations for non-surgical treatment.”

Other locations where the per body part is referenced include in 10.1 Section 05-Cover Letter:

on page 39:

. . .

“Note: Where the WCMSA is to be funded by a structured settlement, the cover letter

must disclose whether any portion of the projected prescription drug expenses has been included in the lump sum required to cover the first surgery/procedure for each body part,

and/or replacement and the first two years of annual payments.”

. . .

As well as in two places on page 40 under the same section:

Example:

Total WCMSA = $301,826.90

Cost of first surgery for each body part, and/or the first procedure/replacement =

$10,191.40”

. . .

“Step 2. Identify the cost of the first surgery for each body part and the first

procedure/replacement ($10,191.40)”

 

Appendix 4-1 | WCRC Proposal Review Reference Tools

  • CMS’ Update: “Strataware® is a tool, for repricing medical bills to state mandated fee schedules, as well as usual, customary and recommended (UCR) rates.”

 

Change 3 – Pricing Updates Includes refills when pricing intrathecal pumps

Section 9.4.5 | Medical Review Guidelines Intrathecal (IT) Pumps

Pricing clarification was updated for Intrathecal pumps to stress that pump refills should be projected for the claimant’s life expectancy.

  • CMS Update:The WCRC follows the most recent guidance from CMS on intrathecal (IT) pump pricing and frequencies. Permanent placement of IT pump devices are included every 7 years: the claimant’s life expectancy is divided by 7, decimals are dropped, and the whole number is used for determining replacement over the life expectancy. Pricing includes necessary pump refills over the claimant’s life expectancy.”

Pricing for Spinal Cord Stimulator (SCS) Surgery

. . .

Consider the number of leads to be used.

Analysis Services: CMS LCDs (L34705 and L35648) can be billed every 30 days and more frequently in the first month. It should be priced four times in the first 30 days, monthly for the first year, and twice a year after the first year.

5. LCD L34705 – SCS (Dorsal Column Stimulation) – “Generally, electronic analysis services (CPT codes 95970, 95971, 95972, and 95973) aren’t considered medically necessary when provided more often than once every 30 days. More frequent analysis may be necessary in the first month after implantation.

6.  LCD L35648 – SCS for Chronic Pain – Under Utilization Guidelines: “Generally, electronic analysis services (CPT codes 95970, 95971, 95972 and 95973) aren’t considered medically necessary when provided more often than once every 30 days. More frequent analysis may be necessary in the first month after implantation.

 

Section 10.2 | Consent to Release Note

  • CMS’ Update: “Consent to Release documents must be signed (by hand or electronically) with the full name of either the claimant, matching the claimant’s legal name, or by the claimant’s authorized representative, if documentation establishing the relationship is also provided. It must be a full signature, not initials.”

 

Section 16.2 | Amended Review

On WCMSA Portal case access: clarification was added on case access for Professional Administrators who are not the original submitter.

  • CMS’ Update:
    • 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. Requests for changes to treatment plans will not be accepted without supporting medical documentation.
    • 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.
    • Re-review and amended review requests may be made electronically or by mail.

See the WCMSAP User Guide at https://www.cob.cms.hhs.gov/WCMSA/assets/wcmsa/userManual/WCMSAUserManual.pdf for details on electronic submission. Professional Administrators who are not the original submitter, see Section 19.4.

 

Section 19.4 | Change of Submitter

Provides Helpful Information to Professional Administrators that did not submit the WCMSA on How to Gain Access on the WCMSA Portal case access: clarification was added on case access for Professional Administrators who are not the original submitter.

 

  • CMS’ Update: Professional Administrators whose EIN does not match the EIN of the original submitter, contact BCRC to gain access to the case via the WCMSA Portal; otherwise you must submit by mail. Submitter changes will not be accepted after settlement, and does not constitute a reason for a re-review (See Section 16.0 for re-review requirements). CMS will not provide copies of existing documentation to the new submitter. Any documentation must be obtained from the incumbent submitter or insurer.”

 

Change 4 – The Major Medical Centers table was updated for a Missouri entry (Appendix 7)

Click Here for the updated list of Major Medical Centers by State, NPI, and ZIP Code with the new Missouri entry.

 

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. For any specific questions regarding MSAs of any type click here.


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05/Apr/2021

NPRM: Miscellaneous Medicare Secondary Payer Clarifications and Updates (CMS-6047)

The Office of Information and Regulatory Affairs Office of Management and Budget (OIRA/OMB) issued a Notice of Proposed Rulemaking (NPRM) for the Centers for Medicare & Medicaid Services (CMS) dated 03/00/2021 found here.

Essentially the proposed rule would clarify existing Medicare Secondary Payer Act (MSP) obligations associated with payment for future injury related and Medicare allowable medical items, services, and expenses, including prescription drug expenses (Future Medicare Allowable Medicals) related to settlements, judgments, awards, payments, or other arrangements (Settlements) paid by primary plans such as liability insurance plans (including self-insureds), No Fault plans, or Workers’ Compensation plans.  Specifically, this rule would clarify that an individual Medicare beneficiary is responsible to satisfy Medicare’s interests with respect to Future Medicare Allowable Medicals related to such Settlements, in addition to the already well known and regulated obligation for Medicare beneficiaries and their attorneys to satisfy Medicare’s past interest in such Settlements by verifying the existence of and resolving any conditional payments (i.e. “Medicare liens”) stemming from Settlements.

This proposed rule would also remove obsolete regulations.  While it is projected to focus on the protection of Medicare’s interests in the previously unregulated liability and No Fault Settlement market, the new NPRM could provide additional clarification regarding protecting Medicare’s future interests in Workers’ Compensation Settlements as well

Is this NPRM update laying the groundwork to issue the long awaited LMSA Regulations/Guidance?  Only time will tell.  Medivest will continue to monitor the OIRA/OMB website for any NPRM updates to keep you informed.  You can be assured that Medivest is here to help guide you through some of the complexities associated with MSP compliance.

 

OIRA/OMB has issued similar proposed release date Notices of Proposed Rule Making (NPRM) for CMS regarding this RIN 0938-AT85 as follows:

 

 

To stay up to date regarding any changes with LMSA Regulations/Guidance, please visit Medivest’s blogs:

 

Take Aways

  • Considering and protecting Medicare’s past interests has become the industry standard and 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, it makes 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.

 


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01/Sep/2020

Click here for a downloadable copy of this blog

On Friday August 21, 2020, the U.S. Attorney’s Office for the Middle District of Pennsylvania announced a $53,295 settlement of Medicare Secondary Payer Act, 42 U.S.C. §1395y(b)(2) (“MSP”) debt.  The settlement described in the press release demonstrates the U.S. Government’s continued interest and intent in enforcing the recovery provisions of the MSP.

Headlines on MSP recovery often focus on plaintiff attorneys who fail to adequately address Medicare conditional payment reimbursement claims, often called Medicare liens by attorneys and Medicare beneficiaries.  However, at fault parties and their insurance carriers need to pay close attention to these MSP recovery actions.  That is because the MSP provides for joint and several liability of primary plans such as liability carriers and self-insureds, including the potential for double damages, even after settlement proceeds have been paid and a release has been signed.

While the plaintiff attorney is the focus of the headline “Harrisburg Law Firm Pays $53,295 To Reimburse Medicare Program” the press release indicates that one of the defendants in the underlying improper drug dispensing case, paid $33,750 of the $53,295 to the U.S. for settlement of the MSP debt.  Insurance carriers or self-insureds sometimes insist on forwarding the lien payment to Medicare because they don’t want to pay a settlement to the plaintiff, only to later be asked to pay the Medicare portion (or more) again, if the plaintiff’s attorney has not timely paid the lien.

There is no information about why the plaintiff’s firm did not pay the amount demanded, but ultimately paid $19,545.15 toward the debt in this settlement with the U.S. Government.  The conditional payments were described in the press release as being $84,353 with the ultimate settlement amount being $53,295.  This seems to indicate that a 36.82% procurement cost reduction was allowed.  The settlement did not include a double damages request or even include any additional interest.

It is not clear from the press release whether there were any appeals over the amount of Medicare’s demand “determination” that led to the delayed payment of the lien and whether the release agreement contemplated the defendant/primary plan agreeing to pay the Medicare debt from withheld settlement funds.   Did the parties do their due diligence in investigating the debt?  Did they coordinate with each other over whether any Conditional Payment Letters contained amounts not related to the claimed/released injuries?  Did they coordinate their respective settlement notification/reporting to make sure that the ICD codes reported from the plaintiff and defense were aligned, and to help prevent an overreach in the future by Medicare in potentially flagging more than just injury related claims.

Could it have been similar to the recent Osterbye case in which the parties seemed to rely on Conditional Payment Letters as opposed to the official Medicare demand at the time of settlement? See JOSEPH C. OSTERBYE, as Administrator of the ESTATE OF…, Slip Copy (2020) 2020 WL 3546869, June 30, 2020.  In Osterbye, the Administrator of an estate of a deceased Medicare beneficiary sued the U.S. Government and the primary plan defendant alleging that there was a mistake of fact as to the amount owed to Medicare when the plaintiff failed to recognize that two files had been opened for the same case.  The plaintiff alleged that the defendant had “initiated” a separate conditional payment claim with Medicare without disclosing to plaintiff the amount of the separate conditional payment amount and arguing that plaintiff would not have settled the case if he had known that Medicare had a lien for over $100,000.00.  At the time of settlement, the Conditional Payment Letter that the plaintiff was in possession of only indicated about $13,000.00 in conditional payments.  In Osterbye, the NJ U.S. District Court denied the defendant’s motion to dismiss on the basis that the settlement may have been entered into based on mistake of fact indicating that the facts of the settlement will have to be investigated.   A similar issue was also addressed in the Langone state court case referenced in a prior blog article where parties mistakenly relied on Conditional Payment Letters instead of a demand letter.

Take Aways:

While some insist MSP recovery obligations are solely a plaintiff’s concern, defendants should pay close attention to make sure the debt is satisfied or otherwise resolved – Medicare will issue a case closed letter once the debt is satisfied even when a compromise is reached for an amount lower than the demand

Not all courts will be as accommodating to the plaintiff’s attorney as in the Osterbye Court.  Instead of a second bite at the settlement apple, the plaintiff’s attorney in Osterbye could have just as easily been accused of legal malpractice by the injured party, if there was a lack of disclosure or lack of competence by the attorney in verifying the proper amount of Medicare’s demand

Plaintiff and defense should cooperate with each other over what steps are being taken to confirm conditional payment resolution, including whether either party has hired a third party to investigate, audit, and/or negotiate the demand balance

Both parties should know that it is imperative to obtain a demand letter as opposed to a Conditional Payment Letter prior to settling a case unless the correct procedures have been taken via the Medicare Secondary Payer Recovery Portal to provide the 120 day anticipation of settlement notification and to request the Final Conditional Payment Calculation within 3 days of a settlement the details of which need to be timely reported

Plaintiff attorneys should be proactive in addressing Medicare’s past interests in a settlement by auditing payment summary forms to dispute non-injury related items, should timely notify Medicare of the settlement details to obtain procurement cost reductions, and should also consider whether lien resolution via waiver or compromise of the procurement cost reduced demand may be a suitable option to help the injured party retain more of the settlement proceeds.

 


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08/Jul/2020

Click here for a downloadable copy of this blog

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.

Medicare Set-Aside Report

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.

 


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25/Mar/2019

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)).

 


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21/Mar/2019

Medicare Advantage Plan MSP Private Cause of Action Lawsuit Update

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

On March 18, 2019, in MSPA Claims 1, LLC v. Tenet Florida, Inc., the 11th Circuit Court of Appeals made it clear that while Medicare law as a whole and the Medicare Secondary Payer Act (MSP)[1] provisions in particular may be confusing, the MSP’s private cause of action provision [2] is clear[3]. MSPA Claims 1 (MSPA) appealed its dismissal by Defendant Tenet at the district court level in the Southern District of Florida. Because some changes had taken place since the dismissal, the appellate court indicated that MSPA was on solid legal footing if it had sued a primary plan instead of a medical provider. The take away of the Tenet case is that Medicare beneficiaries or entities such as Medicare Advantage Plans/Medicare Advantage Organizations (MAOs) that wish to bring private cause of action claims under the MSP may not bring those claims against medical providers and must only bring those MSP private cause of action double damages (MSP PCOA) claims against primary plans that fail to timely pay or reimburse the aggrieved party.

As a reminder, the MSP makes Medicare secondary to all primary plans including both Group Health Plans and Non Group Health Plans. Non Group Health Plan primary plans include Automobile Insurers, Liability Insurance (including Self Insurance),Workers’ Compensation (WC) Plans or Insurance, and No Fault Insurance.

In many other MSP PCOA MAO cases that have been reported, MAO’s have typically sued primary plans that failed to pay. Most courts that have evaluated the issue of the right of the MAO’s to bring MSP PCOA claims have acknowledged the right of MAO’s or their assigns to bring MSP PCOA claims against primary plans. By contrast, the Tenet case involved an assignee of a MAO that sued a medical provider. The dismissal of MSPA at the district court level for this case focused on deficiencies in MSPA’s assignment chain and not on which entity could be sued under the MSP private cause of action. The key MSP PCOA language that was analyzed in the Tenet case is as follows:

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).

Comparing the limitations associated with the private cause of action with the public cause of action granted by the U.S. government in the MSP, the Eleventh Circuit clarified in Tenet that “[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.” Id. (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)). This means that while providers, attorneys, Medicare beneficiaries, or other entities that receive payment from a primary plan can be sued by the U.S. under the MSP for double damages, only primary plans themselves can be sued under the MSP PCOA.

Before reaching its decision, the Tenet court went through an analysis to confirm subject matter jurisdiction by determining whether MSPA had standing to pursue the claim. To that end, MSPA would need to show that it suffered an injury-in-fact, that was fairly traceable to the defendant’s conduct, and which was redressable by a favorable judicial decision. Id. at 2. The underlying federal claim revolved around the failure of the provider, Tenet, to pay a $286 medical bill on time. The bill was eventually paid approximately seven months late. Interestingly, the Eleventh Circuit explained that late payment was enough to show a concrete “injury-in-fact”. The Tenet court also explained why the assignment hurdles that had stopped MSPA at the district court level had been overcome at the time of the court’s decision. The district court evaluated the two-level assignment chain when the assignment chain was weak because the assignor, Florida Healthcare Plus (FHCP), had entered receivership proceedings and previously repudiated its assignment to La Ley, the entity that assigned the MSP PCOA claim to MSPA. The Eleventh Circuit in Tenet explained that just one week before its decision, FHCP entered into a settlement agreement with La Ley and MSPA that confirmed La Ley’s assignment of FHCP’s claim to MSPA and fully resolved the MSP Act assignment. Id. at 4. The court also dispelled Defendant/Appellee Tenet’s notion that an anti-assignment clause in a Hospital Services Agreement with assignee FHCP concerning the prohibition to assign hospital services would apply to the right of FHCP to assign its right (it received from the MAO) to La Ley that in turn assigned to MSPA the right to bring the MSP PCOA claim.

The Eleventh Circuit used established statutory interpretation rules to reach its final decision. MSPA argued that because paragraph (2)(A) that the private cause of action references makes a cross-reference to paragraph (2)(B), which establishes MSP conditional payment reimbursement and recovery (see MSP recovery actions by the U.S. and information on Medicare lien resolution and the new electronic payment functionality of the Medicare Secondary Payer Recovery Portal) rights, those recovery right concepts from paragraph (2)(B) should be incorporated back into the private cause of action. Essentially, MSPA was arguing that because other entities that receive payments from primary plans had obligations to reimburse Medicare for conditional payments and (2)(B) applies those recovery rights to this larger number of entities (“any entity that receives payment from a primary plan”), that the MSP PCOA could also be brought against any such entity that received a payment from a primary plan. This cross reference within a cross reference argument was shot down by the Tenet court as a “stretch.” Id. at 6. Alternatively, MSPA asked the court to rule in its favor based on authority from CMS promulgated regulations that afford MAOs the same MSP recovery rights as Medicare including the right to sue medical providers. Id. at 6 (citing 42 C.F.R.§§411.24(g), 422.108(f)). However, the Tenet court found the MSP statute to be clear and unambiguous and therefore, determined it unnecessary to look to the less authoritative CMS regulations for help with its interpretation of the MSP. Id. at 6. Because neither defendant was a primary plan, MSPA’s claim was dismissed.

2. MSPA Claims 1, LLC v. Infinity Property & Casualty Group, 2019 WL 1238852 (N.D. Al. March 18, 2019).

This second case was decided on the same day as the Tenet case but was heard at the federal trial level in the U.S. District Court in the Northern District of Alabama. This court falls within the same appellate jurisdiction (Eleventh Circuit) that decided the Tenet case. The same MSPA plaintiff discussed in the Tenet case above filed suit as an assignee of two different MAO’s on behalf of Medicare beneficiaries identified with their initials as representative examples (exemplars) for each of the two MAO’s. The asserted claims were MSP PCOA claims against insurance company, Infinity Property & Casualty Group, an undisputed primary payer. If the facts in this Infinity case were the same as those in the Tenet case except that the Defendant in this Infinity case was a primary payer instead of a medical provider, the case would have not been dismissed. However, the facts in this case were distinguishable from those of the Tenet case beyond who was sued. In the first claim of the Infinity case, MSPA was found by the court to have failed to show that Florida Healthcare Plus (FHCP – the same entity that was involved in a chain of assignments in the Tenet case), a MAO, had paid any medical bill connected to a claim of the exemplar Medicare beneficiary identified as D.W. The court seemed perturbed in announcing that Plaintiff MSPA knew what the court required but “due to a lack of either diligence or ability” failed to produce it. MSPA Claims 1, LLC v. Infinity Property & Casualty Group, 2019 WL 1238852 at 7 (N.D. Al. March 18, 2019). Without the connection to show that the MAO made a payment on behalf of the Medicare beneficiary, the Infinity court declared MSPA lacked standing to bring the claim.

The second claim of the Infinity case involved a MAO named Simply Healthcare Plans, Inc., its Management Service Organization (MSO) named InterAmerican Medical Center Group, LLC, and an exemplar Medicare beneficiary identified as B.G. The Infinity court pointed out that while the Eleventh Circuit in Western Heritage ruled that MAO’s accrue MSP PCOA recovery rights at the time they make conditional payments, the appellate court had not yet decided if the MSP statute also provides a private cause of action to MSO’s. Id. at 7 (citing Humana Medical Plan Inc. v. Western Heritage Ins., 832 F.3d 1229 (11th Cir. 2016). The Infinity court noted that district courts in the Eleventh Circuit and elsewhere overwhelmingly ruled that it does not. Id. (citing MSPA Claims I, LLC v. Liberty Mut. Fire Ins., 322 F. Supp. 3d 1273, 1283 (S.D. Fla. 2018); MAO-MSO Recovery II, LLC et al. v. State Farm Mut. Auto. Ins., 1:17-CV-1541-JBM-JEH, 2018 WL 2392827, at *7 (C.D. Ill. May 25, 2018). The Infinity court cited one case in which a district court did not rule out the possibility of MSO’s having MSP PCOA rights, citing MAO-MSO Recovery II, LLC v. Mercury General, 17-2525-AB and 17-2557-AB, 2018 WL 3357493, at *7 (C.D. Cal. May 23, 2018). The Infinity court followed the Eleventh Circuit’s Western Heritage reasoning that because the MSP does not provide conditional payment reimbursement authority to MSO’s and does not obligate MSO’s to make secondary payments to be reimbursed, the obligations of a MSO would be contractual as opposed to statutory. Id. at 8. Therefore, the court declined to expand the scope of potential plaintiffs under the MSP PCOA beyond those listed in Western Heritage (a MAO when the MAO makes a conditional payment for healthcare services, by a Medicare beneficiary when the Medicare beneficiary had healthcare services paid by Medicare (or a MAO), or a healthcare provider when that healthcare provider has not been fully paid for services provided to a Medicare beneficiary).

The Infinity court also pointed out some potential flaws in the assignment chain to the MSO from another entity called IMC which by contract, needed to approve the assignment of any purported MSP rights from the MSO to MSPA unless it was “ministerial in nature.” Because the evidence presented that the assignment was ministerial in nature failed to explain how it met the definition of that term in the contract, it failed the preponderance of the evidence standard, and the Infinity court found MSPA failed to show a valid assignment under its potential MSO claim.

Take Aways:

In the Eleventh Circuit (covering Florida, Georgia and Alabama), it is now clear that the following can sue a primary plan (only) under the MSP’s private cause of action:
• (1) a MAO when the MAO makes a conditional payment for healthcare services,
• (2) a Medicare beneficiary when the Medicare beneficiary had healthcare services paid by Medicare (or a MAO), or
• (3) a healthcare provider when that healthcare provider has not been fully paid for services provided to a Medicare beneficiary
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[1] 42 U.S.C. 1395y(b)(2) et seq.

[2] 42 U.S.C. § 1395y(b)(3)(A).

[3] MSPA Claims 1, LLC v. Tenet Florida, Inc. — F.3d —- 2019 WL 1233207 18-11816 (11th Cir. March 18, 2019) (citing The Federalist No. 62, at 421 (James Madison) (Jacob E. Cook ed., 1961) and MSP Recovery, LLC v. Allstate Ins. Co., 835 F. 3d 1351, 1358 (11th Cir. 2016).

 


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