Looking Back on 2012 and Looking Ahead to 2013

2012 REVIEW

The year 2012 proved to be an active one for CMS.  New contracts were awarded, a Medicare Secondary Payer Recovery Portal was implemented, Medicare Set-aside proposals were log-jammed then cleared in December, comments were requested on a very interesting proposal and courts spoke out about Medicare Secondary Payer issues.  Read more about those topics below.

New Medicare Secondary Payer Contracts Awarded During 2012
The task of Medicare Secondary Payer Integrity Contractor (MSPIC) was awarded to StrategicHealthSolutions, LLC (Strategic). The MSPIC task is the systems integration component of the new Coordination of Benefits and Recovery matrix program created by CMS. Strategic, along with its contractor Neil Hoosier and Associates, will provide program management support to ensure that all components of the matrix program function together as efficiently and effectively as possible. See Strategic's Press Release here. 
The Medicare Secondary Payer Business Program Operations Contract (BPOC) was awarded to Integriguard LLC, doing business as HMS Federal. According to the contract award notice, this contractor will centralize the Coordination of Benefits (COB) and Medicare Secondary Payer Recovery (MSPR) operation by consolidating the activities of collection, management, and reporting of information related to Medicare beneficiaries' insurance coverage and the collection of conditional payments.   
General Dynamics Information Technology was awarded a contract by CMS to provide information technology services for the MSP program. View the press release here.

CMS Implements the Medicare Secondary Payer Recovery Portal
The Medicare Secondary Payer Recovery Portal (MSPRP) went live in July 2012. The portal allows users to access and update information online and eliminates the need for some correspondence and telephone calls. Users can electronically perform the following activities:

1. Upload Proof of Representation and Consent to Release documents,
2. Request updated conditional payment amount or a copy of the current conditional payment letter,
3. View and dispute claims listed on a conditional payment letter, and
4. Input settlement information and upload settlement documents.

Documentation Needed to Dispute or Appeal Conditional Payment Claims
In order to dispute or appeal conditional payment claims, CMS currently requires a Proof of Representation form authorizing the party filing the dispute or appeal to do so. In workers' compensation claims, the Proof of Representation must be signed by the workers' compensation insurance carrier if the insurance carrier has retained a third party to handle the conditional payment claim issues. In liability claims, the Proof of Representation form must be signed by the Medicare beneficiary. This effectively prevents a liability insurance carrier from challenging conditional payment claims and the liability insurance carrier is left to rely on the assistance of the Medicare beneficiary and his or her attorney to dispute or appeal conditional payment claims. In light of the SMART Act, we anticipate that there will be changes regarding the documentation needed to challenge conditional payment claims in the near future.  We will keep you posted.

New MSA Review Contractor's Review of Submissions
As many are aware, on July 2, 2012, Provider Resources, Inc. took over review of Workers' Compensation Medicare Set-aside (WCMSA) proposals. Since then, the turnaround time on many proposals that were submitted after July 2 has been 60 days or less, although some have taken 90 days or more. This is a definite improvement from the 10 months to one year timeframe we were seeing with the previous review contractor. While we are hopeful that CMS will continue to review submissions in a more timely fashion, parties settling any workers' compensation case in which CMS approval is sought should still allow adequate time for that process.

CMS Finally Issues Determinations on Backlogged Files
As of November 29, 2012, CMS began issuing approval letters on all files that have been pending review prior to the new CMS review contractor taking over on July 2, 2012. Some of these files had been pending at CMS for over one year. This will finally allow many parties to settle claims that have been sitting stagnant for months.
In addition, CMS indicated in their approval letters for these backlogged files that the submitter is responsible for calculating the annuity terms if the Medicare Set-aside is to be funded through a structured settlement. This is very good news as it eliminates the burden and costs of revising settlement documents, Medicare Set-aside Agreements and structured settlement documents which is necessary when CMS slightly revises the terms submitted.

CMS Considering Comments on Proposed Rulemaking for Protecting Medicare's Interests as it Pertains to Future Medical Treatment
On June 15, 2012, the Federal Register issued a notice that comments would be accepted and reviewed for proposed rulemaking related to protecting Medicare's interests as it concerns future medical treatment. The proposed rulemaking consisted of seven options that CMS is considering for claims involving automobile and liability insurance (including self-insurance), no-fault insurance, and workers' compensation and in which future medical care is claimed or released. The overall intention of these proposed options is to provide a more efficient and clear means that beneficiaries may use to ensure that Medicare's interests have been adequately protected. The period for accepting comments ended on August 14, 2012. Comments that were received before the end date can now be viewed here.  We still await a response to the comments and clarification of which of the proposed options will be enacted.

Medicare Coverage of a TENS Unit
CMS recently changed its guidelines with regard to Medicare-coverage of a Transcutaneous Electrical Nerve Stimulation (TENS) unit. CMS indicated that a TENS unit is not reasonable and necessary treatment for chronic low back pain and will not be covered by Medicare when prescribed for treatment of the same. Chronic low back pain is defined as "an episode of low back pain that has persisted for three months or longer; and is not a manifestation of a clearly defined and generally recognizable primary disease entity." For claims settled before June 8, 2012 that include an MSA that contains pricing for a TENS unit, CMS will consider funds spent for a TENS unit prescribed for treatment of chronic low back pain as an appropriate expenditure of the MSA funds. For claims not settled prior to June 8, 2012, CMS will re-review the MSA proposal and remove pricing for the TENS unit prescribed for chronic low back pain. After this has been done, a claimant should not use the MSA funds for a TENS unit prescribed for chronic low back pain as doing so would be an inappropriate expenditure of MSA funds.

Court Orders MSA in Liability Case
In a recent liability case, Cribb v. Sulzer Metco (US) Inc., NO. 4:09-CV-141-FL, 2012 U.S. Dist. LEXIS 134900 (E.D.N.C. September 5, 2012), the plaintiff, a Medicare beneficiary, filed a motion seeking the court's approval of the settlement and determination of the need for and amount of a Medicare Set-aside.  The parties were unable to obtain a determination from CMS regarding the appropriate MSA amount, as the Atlanta CMS Regional Office, which serves North Carolina, is currently not reviewing MSAs in liability cases.
The court considered a letter from the treating physician recommending medical surveillance and providing a cost estimate of $4,330.00 for the same.  The court found that the estimated costs of the plaintiff's future medical expenses were reasonable and that the parties were not attempting to maximize other aspects of the settlement to Medicare's detriment.  The court concluded, as a matter of law, that the plaintiff was responsible "for future medical items or services which would otherwise be covered by Medicare, that are related to what was claimed and released in this lawsuit."  Id. at *4.
Based on its consideration of the evidence and law, the court found that an MSA in the amount of $4,500.00 adequately protected Medicare's interests.  As such, the court ordered the plaintiff to establish an MSA in the amount of $4,500.00, to be "deposited into an interest bearing account, which will be self-administered by him for the purpose of paying any future medical items or services that would otherwise be covered or reimbursable by Medicare that are related to what was claimed and released in this lawsuit."  Id. at *6.
The court in Cribb is one of a number of federal courts that have recognized that MSAs are appropriate in liability cases.  Parties who take the opposite position would likely find a court unsympathetic if they settle without considering Medicare's interests and Medicare later asserts a claim.

Medicare Advantage Plan Recovery is not Prevented by New York's General Obligations Law Sec. 5-335
In Trezza v. Trezza, 2012 N.Y. App. Div. LEXIS 9000 (decided December 26, 2012), a plaintiff settled a claim stemming from a motor vehicle accident. After settlement, a Medicare Advantage plan asserted a reimbursement claim against the settlement proceeds, and the plaintiff argued that reimbursement was unavailable because of New York's General Obligations Law Sec. 5-335, a statute enacted in 2009. The New York statute provides that parties who enter into a settlement are not subject to a claim for reimbursement unless there is a statutory right for the same, and the plaintiff argued that this meant the Medicare Advantage plan had no right to any of the settlement proceeds. The Supreme Court of New York, Appellate Division, decided that under Medicare Part C, Medicare Advantage organizations have the ability to create a contractual right to reimbursement, but this is not a statutory right. Because the New York statute at issue is preempted by Part C of the Medicare Act, however, the Medicare Advantage plan is still entitled to reimbursement from the settlement proceeds.
This decision comes on the heels of Medicare Advantage plan's repeated attempts to seek post-settlement reimbursement from defendants (i.e., "primary plans"). These efforts have seen mixed results: in the Third Circuit - i.e., Delaware, New Jersey, and Pennsylvania - a reimbursement claim based upon the Medicare Secondary Payer Act against a primary plan has been successful. Outside of the Third Circuit, however, Medicare Advantage plans' reimbursement claims against primary plans (when based upon the Medicare Secondary Payer Act's private right of action) have been rejected by various courts.

COMING UP IN 2013

There is no doubt that 2013 will be filled with numerous changes as far as Medicare Secondary Payer issues are concerned.  Below are some of the changes we can expect early on.

CMS Will Begin Covering Benzodiazepines on January 1, 2013
Beginning January 1, 2013, Medicare will begin covering benzodiazepines. Medicare will also begin covering barbiturates, but only when they are prescribed to treat epilepsy, cancer, or a chronic mental disorder. Benzodiazepines include medications such as Diazepam (Valium), Restoril (Temazepam), Clonazepam (Klonopin) and Ativan (Lorazepam) and are often prescribed to treat anxiety, insomnia and for muscle relaxation. If a claimant is prescribed a barbiturate for one of the above conditions or a benzodiazepine, as of January 1, 2013, the medication will need to be included in the Medicare Set-aside.

CMS Adopts New Life Table for MSA Calculations
Beginning January 19, 2013, CMS will begin using the Center for Disease Control's life table for the total population (2008) for calculations of life expectancies for workers' compensation Medicare Set-asides. This will apply to new files submitted on or after January 19, 2013, as well as files that are re-opened on or after that date.  For your reference, the 2008 life table can be found here.

Final Rule Promulgated Which Clarifies When ICD-10 Codes Will be Used: October 1, 2014
HHS has announced that CMS and Section 111 reporting will convert from ICD-9 codes to ICD-10 codes on October 1, 2014. These codes are used by primary plans to identify the alleged injury when a plan assumes ongoing responsibility for medicals, or a settlement occurs, with a Medicare beneficiary. Prior to September of this year, when the final rule was promulgated, interested parties anticipated the transition to occur in October of 2013.

SMART Act

Congress moved swiftly this week to pass a bill which, among other items, included language from the SMART Act.  The legislation will now head to President Obama.  Once signed by the President, the Act will do the following:

1. Establish a 3 year statute of limitations for Medicare to assert a claim/lien;
2. Allow parties to obtain a final conditional payment claim demand BEFORE a settlement, judgment or award;
3. Remove the requirement for social security numbers for Section 111 Reporting;
4. Provide a right of appeal for insurance companies and self-insureds for conditional payment claims/liens;
5. Make issuance of Section 111 penalties discretionary; and
6. Establish minimum thresholds for Medicare to seek recovery.

These long-awaited changes are more than welcomed!