Medicare Expected to Remain Solvent for Two Years Longer than Previously Projected

The Medicare Trustees just announced that the Medicare Hospital Insurance trust fund is expected to remain solvent for two years more than recently projected, meaning until the year 2026. Marilyn Tavenner, Administrator of the Centers for Medicare and Medicaid Services (CMS), stated that, under the Affordable Care Act, CMS is taking steps "to improve the delivery of care for seniors with Medicare," which aim to "reduce spending while improving the quality of care, and are an important down payment on solving Medicare’s long term financial issues."

According to CMS, other factors that contributed to the improved outlook include lower Part A spending in the past year and lower projected costs of the Medicare Advantage program. The Affordable Care Act is expected to reduce spending in the Medicare Advantage program by a higher amount than previously projected. In addition, Medicare spending per beneficiary has been growing more slowly in recent years.

New Jersey Court Determines Adequacy of Liability Medicare Set-aside

In DuHamell v. Renal Care Group East, Inc., et al. and Catherine Ney v. Renal Care Group East, Inc., et al., 2012 N.J. Super. LEXIS 201 (decided December 7, 2012, and released for publication May 16, 2013), plaintiffs DuHamell and Ney mediated their liability claims with the defendants.  During the mediation, the parties agreed to settle all claims pending a liability Medicare Set-aside determination by CMS.  Upon submission of the settlement terms to CMS, however, CMS informed the parties that it did not have the resources to review the proposed liability Medicare Set-asides.  CMS added that its letter declining the opportunity to review the matter was not a safe harbor (or a release) from the parties' obligations to protect Medicare. 

 

Given the response from CMS to their proposal, and because the settlement agreement provided that a CMS determination would be obtained before the settlement could be finalized, the plaintiffs believed they were unable to settle their claims.  With no recourse other than taking the claims to trial, the plaintiffs turned to the court and requested (1) confirmation that the proposed Medicare Set-asides appropriately protected Medicare's interests and (2) an enforcement of the settlement agreement.

 

While most of the settlement terms were kept confidential, the record does reveal that Ney proposed an MSA of $13,689.25 and DuHamell proposed an MSA of $114,246.00.  The court agreed to review the adequacy of the proposed MSAs in the interests of fairness and public policy.  The court opined that, "to require plaintiffs to force their case to trial when they have reached an amicable resolution outside of court runs contrary to New Jersey's strong public interests in encouraging settlements." Id. at *8.  After reviewing the plaintiffs' expert reports regarding the proposed set-aside amounts, the court found that Medicare's interests were appropriately protected and that the figures were both reasonable and reliable.  Thus, the plaintiffs' unopposed motion to enforce the settlement agreement was granted.

 

DuHamell joins the growing number of cases in which liability plaintiffs and defendants are turning to the courts to resolve the issue of whether a designated sum of money is sufficient to protect Medicare's potential future interests.  It should be noted that liability MSAs are not required.  If a Medicare beneficiary settles a claim and money is being paid, even in part, because of the future medical expenses that will be incurred, however, Medicare's future interest in settlement proceeds should be considered in some manner.  In an increasing number of cases, one or both parties are insisting on "approval" of designated Medicare Set-aside amounts from some type of governing authority.  Even though Medicare is not bound by state court judgments, with no established method for CMS review and approval of liability settlements and an inconsistency between Regional Offices as to whether review will be granted, parties are left with little alternative but to turn to the state courts for assistance.

Workers' Compensation Medicare Set-aside Reform Bill Introduced in Congress

United States Representatives Dave Reichert (R-WA) and Mike Thompson (D-CA) introduced a bill in Congress this week that would amend the Medicare Secondary Payer Act and create significant changes to Medicare Set-asides and the CMS approval process in workers' compensation cases. The title of the proposed legislation is the "Medicare Secondary Payer and Workers' Compensation Settlement Agreements Act of 2013."

 

If enacted, the bill would establish a 60-day turnaround time for CMS to review MSA proposals in workers' compensation cases. For cases in which CMS does not approve the MSA proposal, CMS would be required to provide a specific explanation for each increase in order for the determination to be valid.

 

The bill would also create a formal appeals process for parties in a workers' compensation case to challenge CMS determinations. If CMS does not approve the MSA proposal, parties would have 60 days to file a reconsideration request, and CMS would have 30 days to respond or the original MSA proposal would automatically be deemed approved. Parties would have 30 days to request an ALJ hearing after an unfavorable response to a reconsideration request. If the ALJ issues an adverse decision or fails to issue a decision within 90 days, parties would then be able to seek judicial review of the CMS determination.

 

In disputed workers' compensation cases, the bill would allow the MSA amount to be proportionally reduced based on the extent to which the settlement amount reflects a compromise of the total amount of benefits that could have been payable under state law. This would allow disputed cases to be settled more easily and at lower costs, as CMS currently does not recognize such reductions for workers' compensation MSAs.

 

As an alternative to establishing an MSA account, parties would have the option to pay MSA funds directly to Medicare. Under this provision, Medicare would have no further recourse against the parties with respect to future medical treatment. 

 

In workers' compensation cases where the total settlement does not exceed $250,000.00, the bill would create a "safe harbor" for parties to fully satisfy Medicare's future interests by paying 15% of the current settlement amount directly to Medicare. The bill would allow this provision to be modified if it is determined to have a negative financial impact on Medicare.

 

The bill would limit the amount providers may charge for services for which payment would be issued from an MSA account. Providers would be unable to charge more than the applicable fee schedule, and the parties would not be liable for any amount in excess of the fee schedule.

 

The bill would also create criteria for determining when MSP provisions apply in workers' compensation cases. In addition, parties to a workers' compensation settlement that complies with current federal law could not be subject to any liability imposed by CMS as a result of any subsequent changes in federal law. Further, under the terms of the bill, if a settlement is approved by an appropriate authority under state law, the approval would be binding on CMS with respect to all issues to which state workers' compensation law applies, including any allocation of settlement funds and the projected amount of future indemnity and medical benefits that would otherwise be payable under state law.

 

A press release concerning this bill may be found at:  http://reichert.house.gov/press-release/reps-reichert-and-thompson-introduce-bipartisan-medicare-secondary-payer-and-workers

 

Although the Medicare Compliance Group attorneys at Carr Allison have several concerns with the way the bill is worded, it is certainly a good start to address multiple problems that currently exist.  We will continue to monitor the progress of the bill and keep you informed of any updates from Congress.

Texas Court Finds Medicare Secondary Payer Act Does Not Preempt State Laws Concerning Workers’ Compensation Preauthorization Requirements

A Texas court was recently asked whether the Medicare Secondary Payer Act (MSP) "preempts a state law that requires a workers’ compensation claimant to obtain preauthorization from the relevant carrier before incurring certain medical expenses." Caldera v. The Insurance Company of the State of Pennsylvania, 2013 U.S. App. LEXIS 9706 (5th Cir. May 14, 2013). The plaintiff in this action injured his back in a work-related accident in 1995, and was receiving Medicare benefits by 1998. The plaintiff had back surgeries in 2005 and 2006, for which he did not seek preauthorization. Texas law states that a workers’ compensation carrier is not liable for services and treatments that require preauthorization unless such authorization is sought and granted by either the carrier or the commissioner. Tex. Lab. Code Ann. § 413.014(d). The plaintiff and carrier disputed the surgeries before the Texas Division of Workers’ Compensation, which eventually found for the carrier. The plaintiff sought review in state court and was successful; however that court did not require any payment from the carrier.

Included in the state action was a private reimbursement claim under the MSP seeking double damages against the carrier. The court noted that the plaintiff had not suffered any out-of-pocket loss related to this claim, and it did not appear that Medicare had sought recovery of these funds from either the plaintiff or the carrier. As readers are likely aware, the MSP contains a private right of action allowing citizens to assist Medicare in recovering funds erroneously paid by Medicare. A beneficiary can seek double damages if the carrier qualifies as a primary plan. The plaintiff argued that even though he did not seek preauthorization for his surgeries, as required by state law, the MSP preempts the state preauthorization requirement. The court replied that "[t]he MSP and its implementing regulations do not, however, extend so far as to eviscerate all state-law limitations on payment." 2013 U.S. App. LEXIS 9706 at *8. The court further noted that Medicare does not usually pay until a beneficiary has exhausted his remedies under the state workers’ compensation plan. MSP’s regulations allow Medicare to recover from a beneficiary when the beneficiary fails to make a proper claim under state law. See 42 C.F.R. § 411.24(l). Therefore, the regulations also "accept that Medicare may be unable to recover from a carrier because a beneficiary failed to file a proper claim under state law." 2013 U.S. App. LEXIS 9706 at *10.

Previous decisions in Texas found that when an individual’s right to recovery is limited by state law, the government’s right to recovery is equally limited. Because the plaintiff failed to meet the state preauthorization requirement, the plaintiff’s preemption argument failed. In conclusion, the court wrote that MSP was not intended to "override a primary payer’s ability to impose medical necessity requirements in accordance with state law." Id. at *15.

CMS Publishes New User Guide

CMS recently published a new NGHP User Guide for Section 111 reporting.  The new User Guide, version 3.6, incorporates the March 24, 2013, NGHP Alert as well as other changes to version 3.5.  

The User Guide may be accessed at http://www.cms.gov/Medicare/Coordination-of-Benefits/MandatoryInsRep/NGHP_User_Guides.html.