CMS Update: Section 111 Reporting Issues

On December 10, 2014, CMS held an NGHP telephone conference to address issues with Section 111 reporting.

In the first part of the call CMS went over recent alerts that have been issued regarding the use of partial Social Security Numbers for the query process, the reporting of Recovery Agent information, and changes in how CMS names its Section 111 response files.  As we previously reported, on September 10, 2014, CMS issued an Alert providing that, beginning January 5, 2015, where a NGHP RRE cannot obtain an individual’s HICN or full SSN, the RRE may report the following data elements that will enable CMS to properly identify a Medicare beneficiary:

•Last five digits of SSN
•First Initial
•Surname
•Date of Birth
•Gender

*The September 10, 2014, Alert is available for download here. 

*CMS issued a follow-up Alert on November 25, 2014, providing technical guidance on partial SSN submissions. This Alert is available for download here.

As discussed in the call, on November 10, 2014, CMS issued an Alert on reporting Recovery Agent information under Section 111.  This Alert provides that beginning July 13, 2015, for RREs that have a separate agent that assists with tasks related to MSP recovery demands, RREs may provide CMS with information about the agent in fields 16 through 22 on the TIN reference file.  This process will replace the current process for RREs to submit TPA information on the TIN reference file.  If an RRE provides CMS with Recovery Agent information on the TIN reference file, both the RRE and the Recovery Agent will receive any recovery correspondence sent as a result of information reported under Section 111.

*The November 10, 2014, Alert is available for download here.

As CMS also discussed, CMS issued an Alert on October 27, 2014, providing that beginning April 6, 2015, the naming convention for Section 111 response files will be modified to ensure that all response file names are unique.

*The October 27, 2014, Alert is available for download here.

CMS said that an updated NGHP User Guide incorporating these changes would be issued in January 2015.

CMS confirmed in the question and answer session that RREs would be unable to test query submission files with partial SSNs prior to January 5, 2015.  CMS also stated that RREs that prefer to query with full SSNs may continue to use the prior model language on collection of HICNs and SSNs that does not address the option of providing a partial SSN, even though the prior model language is no longer available on the CMS website.

CMS also answered questions related to loss of consortium claims.  CMS confirmed that if a Release specifically releases an RRE from a loss of consortium claim, the settlement would reportable under Section 111 even if state law specifically does not allow a claimant to assert a loss of consortium claim.  CMS indicated that the same applies to any type of claim that cannot be legally asserted.  If a claim is specifically released, the fact that it could not have been legally asserted does not make it not reportable.  CMS said that they are still considering an Alert providing guidance on loss of consortium claims, though CMS gave no time frame for providing the Alert.

In addition, CMS addressed questions related to short term travel, hospital confinement, and accident only policies.  CMS indicated that an accidental death benefit paid under an accident policy would not need to be reported since it is paid without regard to medical expenses being incurred.  CMS did say, however, that payments made under a hospital confinement policy would be reportable, even though the payments would not be made specifically for medical expenses and are payable in a set amount.  This information is consistent with the statement in the User Guide that “Accident & Health, Short Term Travel and Occupational Accident Products are considered no-fault insurance by CMS and reportable as such under Section 111.”  It is interesting to note, however, that the following definition of no-fault insurance under 42 CFR 411.50(b) is more narrow: “No-fault insurance means insurance that pays for medical expenses for injuries sustained on the property or premises of the insured, or in the use, occupancy, or operation of an automobile, regardless of who may have been responsible for causing the accident.  This insurance includes but is not limited to automobile, homeowners, and commercial plans. It is sometimes called ‘medical payments coverage’, ‘personal injury protection’, or ‘medical expense coverage’.” The types of policies at issue do not specifically pay for injuries sustained on the property of the insured or in the use of an automobile, though they obviously could.

We will continue to provide you with all additional updates as they are released.

MSP Update: Court fails to certify a class in Avandia

The Eastern District of Pennsylvania decided a case in the Avandia series.

Humana filed a motion to certify a class, arguing that certification of a class will facilitate efficient resolution of the two categories of unresolved MSP Act claims, which are 1) those in which the MAO is not a signatory to a private lien resolution program, and 2) those in which the MAO is a signatory to a private lien resolution program, but the settling claimant does not opt to resolve his or her lien through that program. The Court found against Humana and failed to certify the class, noting that Humana "has failed to prove the requirements of commonality and predominance, and failed to demonstrate the superiority of the class action to adjudicate the controversy."

We are continuing to follow this case and will update you with information as it released.

CMS Issues Subsequent Alert on Reporting HICNs and SSNs

CMS issued a subsequent Alert on November 25, 2014 to provide additional instructions for entry of partial Social Security Numbers (SSN) as specified in the original Alert issued on September 10, 2014. As provided in that Alert, where a NGHP RRE cannot obtain an individual’s full SSN or Medicare Health Insurance Claim Number (HICN), the RRE may report the last five digits of the individual’s SSN, first initial, surname, date of birth, and gender. If the RRE cannot obtain the partial or full SSN or the HICN, the attempts to do so must be documented. The Model Language has been revised to reflect an RRE’s efforts to obtain the partial SSN. This revised language can be found here.

The subsequent Alert provides technical guidance regarding partial SSN submission as well as steps for remaining in compliance with Section 111 following the receipt of a response.  For RREs planning to submit using partial SSNs, the following technical requirements apply:

• For RREs using HEW software, a new version must be downloaded to accommodate the revisions. This software will be available on January 5, 2015.
• For RREs using their own X12 translator, a revised X12 270/271 Companion Guide must be obtained. This guide is currently available for download here.

*These technical changes do not apply to RREs who do not plan to submit using partial SSNs.

In order to remain in compliance with Section 111, it is critical to understand the response messages received when an RRE submits a partial SSN.  A new Disposition Code “DP” and new Beneficiary Not Found page have been added and indicate there were multiple Medicare beneficiary records identified based upon the partial SSN and data submitted.  When this message is received, it is not to be treated as a Disposition Code “51" which indicates that the individual is not identified as a beneficiary based on the information provided.  Where an RRE receives Disposition Code “DP” or a message indicating multiple matching records exist, the following steps must be taken to remain in compliance with the Section 111 reporting requirements:

• Verify the the SSN, name, gender and date of birth were entered accurately and resubmit;
• Enter the full SSN (if available) and resubmit;
• If the system is still unable to locae a distinct match after resubmission, contact BCRC at 1-855-798-2627. The RRE should provide the claim information to the customer service representative to file a self-report.

The full technical Alert can be found at by clicking here.

Update: December Webinar Rescheduled

January 22, 2015

 @ 1:00 PM CST

The webinar originally scheduled for December 10, 2014 at 1:00 PM CST has been moved, the webinar will now take place January 22, 2015 at 1:00 PM CST.We apologize for any inconvenience this rescheduling may cause but look forward to your participation in January.

  



Register today: https://www4.gotomeeting.com/register/279820751

Attendees will receive one CEU credit for the states of AL, AK, FL, GA, IN, KY, LA, MS, NC, NH, OK, OR, and TX, if needed.

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TO OUR FRIENDS AND CLIENTS!

YOUR FAMILY AT 

CARR ALLISON MSA

Carr Allison MSA Welcomes New Attorneys

Carr Allison MSA is proud to welcome: 

 Caylan M. Holland 

Jessica A. Mohr 

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State Court Vacates Settlement After Surgery is Performed Prior to Workers’ Comp Board Approval

In McCarroll v. Livingston Parrish Council, 2014 La. App. LEXIS 2570, the First Circuit Court of Appeal of Louisiana affirmed the judgment of the Office of Workers’ Compensation (OWC), which vacated the approval of a settlement between the Livingston Parrish Council and Louisiana Workers’ Compensation Corporation (LWCC), an employer and its insurer, and Mr. McCarroll, their employee.

Mr. McCarroll was injured in December 2003 and began receiving workers’ compensation benefits soon thereafter. In July 2008, one of Mr. McCarroll’s doctors recommended cervical fusion, which Mr. McCarroll declined at the time. In early January 2009, the parties agreed to the terms of a settlement, including a $98,684 Medicare Set Aside (MSA), which included $21,793.00 for the recommended, yet declined, cervical surgery. The MSA was submitted to CMS for review and approved on February 2, 2009. Mr. McCarroll underwent the cervical fusion surgery on February 16, 2009.  A little over two weeks later, on March 2, 2009, Mr. McCarroll executed the Settlement Agreement and Release, and LWCC received the settlement documents signed by Mr. McCarroll and approved by the OWC on March 9, 2009. The attorney for the Council and LWCC signed the agreement on March 10, 2009. In accordance with the Order of Approval, LWCC funded the $110,000 indemnity settlement and $32,045 MSA seed.

When Mr. McCarroll’s surgery was performed prior to OWC approval of his MSA, the seed money could not be used to cover the costs of the surgery, so on March 10, 2011, almost exactly two years later, Mr. McCarroll filed a petition.  He asserted that Medicare refused to pay for any medical expenses that were incurred prior to the March 9, 2009 approval of the workers’ compensation settlement and that LWCC refused to pay for any medical treatment from late January 2009 up to the March 9, 2009 approval of the settlement, a time period including Mr. McCarroll’s surgery.

At trial, the LWCC claims specialist testified that she did not know that the seed money could not be used to pay the bill for the surgery if Mr. McCarroll had his surgery prior to the settlement being approved by the OWC. Mr. McCarroll then testified that he thought, upon signing the settlement agreement, his medical expenses would all be paid, and that he would not have signed had he known otherwise. The OWC stated in its written reasons that “[n]o one involved in this case at that time envisioned that Medicare would deny coverage because the surgery was done before the settlement was signed by the OWC.”  Consequently, the OWC vacated the settlement, as what was signed by the parties and subsequently approved was no longer the anticipated agreement.

Based on the standard of review that the court must apply to Workers’ Compensation cases, the OWC’s findings of fact must be made with “manifest error-clearly wrong.” The First Circuit Court of Appeal could not find where the OWC manifestly erred in vacating the Order of Approval, as the misunderstanding led to a misrepresentation that, although unintentional, was sufficient to set aside the agreement.

CMS Withdraws Proposed Rule Regarding Medicare Set-Asides and Liability Claims

On October 8th, the Centers for Medicare and Medicaid Services (“CMS”) withdrew its Notice of Proposed Rulemaking (NPRM), which proposed regulation of future medicals for settlements in liability claims.

The proposed regulation was intended to provide guidance on how to protect Medicare’s interests in liability situations.  Unlike the recommendations given for a workers’ compensation claim, CMS does not have a recommended policy regarding the provision of future medicals in a liability claim. The NPRM appeared to be CMS’ attempt to establish such guidelines.  The withdrawal of the NPRM has not changed the way we advise with regard to protecting Medicare’s interest from a future medical perspective in liability claims.  Despite the lack of clear guidance on how to provide for future medicals in liability claims, the law still requires that the burden of paying for a claimant’s future medicals not be shifted to Medicare.  Therefore, it is still advisable in certain cases to either designate a portion of the settlement proceeds for future medical expenses, and in large settlements, in order to effectively evaluate the potential cost of future treatment, to consider a Medicare Set-aside.

CMS Updates Section 111 Reporting Guide: Expands definition of "Spouse" to include same-sex marriages

In the updated User Guide released on October 6th, 2014, with regards to Medicare Secondary Payer (“MSP”) policies, CMS redefines "spouse" to include partners in a same-sex marriage. The result of this redefinition is that any legal same-sex marriages entered into in a U.S. jurisdiction that recognizes same-sex marriages, the District of Columbia, or a U.S. territory or a foreign country will be recognized for MSP purposes.  Although the provision will not be effective until January 1, 2015, if an employer, insurer, third party administrator or other plan sponsors so chooses, they may currently use the broader definition of spouse.                                                          
Due to this change, if an individual, based on the Social Security Administration's rules, is entitled to Medicare as a spouse, that individual is a "spouse" for purposes of the MSP Working Aged provisions. Similarly, if a marriage is valid in the jurisdiction in which it was performed as noted above, both parties to the marriage are "spouses" for purposes of the MSP Working Aged provisions. Additionally, if a plan sponsor (employer, insurer, etc.) has a more expansive definition of spouse, it may take over primary payment responsibility for the "spouse". If the "spouse" is reported as such pursuant to Medicare, Medicare, & SCHIP Extension Act of 2007 ("MMSEA") Section 111, Medicare will both pay and pursue recovery accordingly.

For more information please visit the CMS website here.

Save the Date: What You Need to Know to Avoid Problems with Medicare

Join us on 

November 20, 2014

 @ 1:00 PM CST

Staying up-to-date on Medicare Secondary Payer issues can be a real challenge. Join us for this one hour webinar during which attorney Melisa Zwilling, Chair of the Medicare Compliance Group at the law firm of Carr Allison, will discuss recent developments in this area, including some very important court decisions.  In addition, she will discuss how you can save big dollars on both conditional payment claims and MSAs.

  

Register today: https://www4.gotomeeting.com/register/673760199

Attendees will receive one CEU credit for the states of AL, AK, FL, GA, IN, KY, LA, MS, NC, NH, OK, OR, and TX, if needed.

Fifth Circuit District Court Holds Medicare Advantage Plans May Assert Private Cause of Action Against NGHPs

As we previously reported, last year, Humana filed several lawsuits asserting private causes of action and seeking double damages for medical expenses paid by Humana Medicare Advantage Plans that were allegedly payable under the defendants' no-fault and med pay policies.  Humana voluntarily dismissed each of the lawsuits except for the lawsuit in the Western District of Texas.  In that case, the Magistrate Judge previously issued a Report and Recommendation advising the court to dismiss Humana's claims under the Medicare Secondary Payer Act (MSPA) on the basis that the private cause of action under the MSPA is not applicable to Medicare Advantage Plans.

Recently, the court issued an order finding that the Magistrate's Report and Recommendation should be rejected and denying the defendants' motion to dismiss.  The court agreed with the decision of the Third Circuit Court of Appeals in re: Avandia Marketing, Sales Practices, and Products Liability Litigation, 685 F.3d (3rd Cir. 2012), holding that Medicare Advantage plans may assert a private cause of action against a primary plan under the MSPA.

We will continue to follow this case and will keep you informed on any developments, as this case will likely be appealed to the Fifth Circuit Court of Appeals.  As we discussed last year, Humana is seeking broad restitution for medical expenses paid for any Humana plan enrollee when the defendants were the primary payer and had no-fault or med pay coverage, in addition to double damages.  If Humana prevails on its claims, the amount of damages awarded could be staggering.

Please let us know if you have any questions or concerns about resolving Medicare Advantage and Part D Prescription Drug Plan liens.  If you are uncertain whether a claimant is enrolled in a Medicare Advantage or Part D Prescription Drug Plan, we can help confirm that information.  We are currently assisting a number of clients with resolving Medicare Advantage and Part D Prescription Drug Plan liens, and we will be glad to help ensure that you are protected.

Changes in TPOC Reporting Thresholds

On October 1, 2014, the mandatory TPOC reporting thresholds changed for workers' compensation and liability claims. For workers' compensation claims with TPOC dates on or after October 1, 2014, the mandatory cumulative TPOC reporting threshold is $300.00.  For liability claims with TPOC dates on or after October 1, 2014, the mandatory cumulative TPOC reporting threshold is $1,000.00.  For no-fault claims, all TPOCs must still be reported since there is no de minimis TPOC reporting threshold.

Sixth Circuit District Court Denies Insurer’s Motion to Dismiss MSP Private Cause of Action

Last week, in Nawas v. State Farm Mut. Auto. Ins. Co., 2014 U.S. Dist. LEXIS 12365, a U.S. District Court in Michigan, following precedent set by the Sixth Circuit, denied a defendant’s motion to dismiss a private right of action under the Medicare Secondary Payer Act (MSPA). The Plaintiff, Mr. Nawas, sued his insurance company, State Farm, after they declined to pay his medical bills, which caused Medicare to step in and conditionally pay for his treatment.

State Farm put forth two reasons that the complaint against them should be dismissed.  One argument was that the plaintiff has no private cause of action under MSPA because he did not allege that State Farm denied his coverage based on the fact that he was entitled to Medicare. That argument was subsequently withdrawn following the Sixth Circuit’s reversal of the district court’s ruling in Michigan Spine & Brain Surgeons, PLLC v. State Farm Mut. Auto. Ins. Co., 758 F.3d 787 (6th Cir. 2014).  State Farm then argued that the Plaintiff’s claim was premature, because such a claim under the MSPA cannot be pursued until State Farm’s obligation to pay Plaintiff has been established by a judicial determination or settlement.

State Farm relied heavily on the fact that the MSPA requires a judicial determination or settlement that establishes a defendant’s “responsibility to make payment.” They built their argument on two cases. Relying heavily on the decision in Bio-Medical Applications v. Central States, 656 F. 3d 277(6th Cir. 2011), the court determined that when Congress amended the MSPA in 2003, they did so in order to reinforce the legal responsibility of tortfeasors, not all potential defendants. The court reasoned that the “demonstrated responsibility” language included in the 2003 amendment of the MSPA was not meant to prohibit or delay direct actions against non-tortfeasor defendants, including private insurance companies like State Farm. They agreed with the Bio-Medical Court’s reasoning that the addition to the MSPA regarding demonstration of responsibility is only logical when in the context of the tort and should not be applied to a case involving an insurance contract, where the carriers assume the responsibility of paying by virtue of their contract with the petitioning party. The court went on to say that their decision not to dismiss was implicitly supported by the Sixth Circuit’s recent decision in Michigan Spine, which allowed a claim to proceed against the defendant - State Farm in that case as well - prior to any “demonstrated responsibility” on the part of the defendant to pay an underlying no-fault claim.

Please note that this is not the final decision in this case. Instead, the court’s decision denying dismissal only allows the parties to proceed and litigate their claims based on the merits of the case.

Private Cause of Action Provision Successful Against NGHPs, Even When Medicare's Conditional Payments Reimbursed Within Sixty Days of Formal Demand

As we reported last month, the Sixth Circuit Court of Appeals issued a decision which confirmed that a non-group health plan can be subject to the private cause of action provision of the Medicare Secondary Payer Act Michigan Spine & Brain Surgeons, PLLC v. State Farm, 2014 F. App’x 0154P (6th Cir. July 16, 2014).  The private cause of action provision provides double damages for a private party who files suit against an entity that has failed to fulfill its responsibility for primary payment of a beneficiary’s medical expenses.

The purpose of the provision is to provide financial incentive for the general public to assist the Government in recovering Medicare’s conditional payments. While the purpose of the provision is clear, its application to claims has been a source of dispute. 

In 2011, the Sixth Circuit held that health care providers could assert a private cause of action against a group health plan. Bio-Medical Applications of Tenn., Inc., v. Cent. States Southeast & Southwest Areas Health & Welfare Fund, 656 F.3d 227 (6th Cir. 2011). From the court’s analysis in Bio-Medical, the Sixth Circuit extrapolated that there could not be a private right of action against a non-group health plan.  However, the Sixth Circuit was presented that exact issue last month, in Michigan Spine, and determined that Congress must have intended the private cause of action to be read broadly, to include both group health plans and non-group health plans.

The United States District Court for the Western District of Kentucky recently applied the precedent set in Michigan Spine and awarded double damages to a beneficiary’s estate, whose suit prompted repayment of Medicare’s conditional payments. Estate of Clinton McDonald v. Indem. Ins. Co. of N. Am., 2014 U.S. Dist. LEXIS 121902 (W.D. Ky. Aug. 28, 2014).  In McDonald v. Indem. Ins. Co., Clinton McDonald was severely injured in a motor vehicle accident that occurred during the scope of his employment and died several months later. During that time, Medicare paid for medical treatment related to the accident. The employer disputed whether McDonald’s death was as a result of the accident; however, in December 2009, the Workers’ Compensation Board found that his death was caused by the work-related accident and ordered the Defendant employer or its workers’ compensation insurance carrier to pay for McDonald’s medical expenses.

Over two years after the Defendant was ordered to pay McDonald’s medical expenses, the Estate of Clinton McDonald (Estate) filed suit under the private cause of action provision of the Medicare Secondary Payer Act seeking double damages as the Defendant had not reimbursed Medicare for McDonald’s medical expenses. Shortly after suit was filed, the Defendant received a conditional payment letter from Medicare, followed by a formal demand asking for payment in the amount of $184,514.24. The Defendant reimbursed Medicare for the full amount, as instructed, and sought to have the suit brought by the Estate dismissed.

The Estate argued that their suit ultimately led to Medicare being reimbursed, which is exactly what the private cause of action provision was implemented to accomplish. The Court agreed, finding that the Estate’s suit prompted payment, and therefore entitled them to an award of $184,514.24 for their efforts. The Court noted that an outcome supporting the Defendant’s “no harm; no foul” argument would have been contrary to the language of the private cause of action provision. The Court reasoned  “Once a private cause of action claim has been lodged against a defendant, a defendant cannot escape the double damages provided for in that provision by paying single damages to Medicare.”

This string of cases emphasizes the importance of ensuring that Medicare is reimbursed for its conditional payments.  Responsibility for reimbursement of conditional payments should be addressed during settlement negotiations and clearly set out in settlement documents.  Parties should keep in mind that a court/board decision ordering payment of medical expenses could encompass conditional payments made by Medicare, like in McDonald.  If this scenario arises, parties should immediately take steps to determine if payment to Medicare is necessary in to avoid the potential of being subject to double damages.

Court Determines MSA Funds Not To Be Considered When Calculating Pension Plan Offset Amounts

In Rood v. New York State Teamsters Conf. Pension & Ret. Fund, 2014 U.S. Dist. LEXIS 115722, the Plaintiff alleged a claim for disability pension benefits under the Employee Retirement Income Security Act (ERISA) and filed suit following a recalculation of his pension benefits, where the Defendant, a multi-employer plan that provides pension funds, included the amount of the Plaintiff’s Medicare-set Aside (MSA) in its calculation to offset the amount of monthly benefits he should receive.

The language of the Plan provides that the amount of Fund Disability Benefits the participant receives will be reduced by the amount of their worker’s comp benefits, “unless such amounts also are used to offset other payment sources (i.e., Social Security disability awards, long-term disability, etc.) for which he may be entitled.” The Plan’s language specifically names Social Security disability awards and long term disability as examples of this exception, and the Plaintiff argued that his MSA should be similarly considered under the title of “other payment sources.” The Court agreed and found that the “etc.” following the two enumerated categories left the language of the Plan open to interpretation. Because the MSA is used to offset another payment source, Medicare, the funds in the Plaintiff’s MSA should not have been included when the Defendant recalculated the Plaintiff’s pension benefits.  The Court’s analysis focused on the fact that the Plaintiff was only able to use part of his Worker’s Compensation Award without any restrictions since the portion allocated to the MSA is strictly for medical expenses otherwise reimbursable by Medicare and is not accessible by the Plaintiff.

CMS Issues Alert on Reporting HICNs and SSNs

On September 10, 2014, CMS issued an Alert providing that, beginning January 5, 2015, CMS will no longer require Medicare Health Insurance Claim Numbers (HICNs) or Social Security Numbers for Section 111 reporting if the RRE reports certain data allowing CMS to identify Medicare beneficiaries. This Alert implements the SMART Act requirement that CMS revise its Section 111 reporting requirements to allow RREs to report claims without providing the claimant's HICN or SSN.

The Alert provides as follows:
In accordance with Section 204 of the Strengthening Medicare and Repaying Taxpayers Act of 2012 (SMART Act), the Centers for Medicare and Medicaid Services (CMS) is modifying the existing requirements related to the submission of HICNs and SSNs when NGHP RREs report settlements, judgments, awards, or other payments. CMS highly recommends, but does not require, that NGHP RREs submit the HICN or full SSN as part of their reports, as it significantly increases CMS’ ability to accurately identify an individual as a Medicare beneficiary. However, effective January 5, 2015, where a NGHP RRE cannot obtain an individual’s HICN or full SSN, RREs may report the following data elements that will enable CMS to properly identify a Medicare beneficiary:

•Last five digits of SSN
•First Initial
•Surname
•Date of Birth
•Gender

If NGHP RREs are unable to obtain or do not provide the HICN, full SSN, or any of the above listed data elements, they must document their attempts to obtain this information.
(RRE’s may use the model language provided by CMS located in the Downloads section of the Mandatory
Insurer Reporting (MIR) for NGHP page at http://go.cms.gov/mirnghp.)
A subsequent Alert will be published prior to the January 5, 2015 implementation, which will include additional instructions for entry of the partial SSN into the Claim Input File or Query Input File. Please continue to visit the MIR NGHP section of the CMS.gov web site at http://go.cms.gov/mirnghp for the most current information.

Fortunately, this change in reporting requirements will help RREs in cases involving Medicare beneficiaries who refuse to disclose their HICN and full SSN due to privacy concerns. It is still recommended, however, to obtain SSNs and HICNs if possible.

We will provide you with an update once CMS issues a subsequent Alert. If you have any questions, please do not hesitate to let us know.

Don't Forget to Register! Free CEU Webinar happening September 16, 2014

Be sure to register today and join us on September 16, 2014 at 1:00 PM CST for a free webinar! Attorney Melisa Zwilling will discuss the most recent Medicare compliance developments you need to know. In addition, she will share information on how you can save tremendous dollars on both conditional payment claims and MSAs.  This webinar will cover both liability and workers' compensation topics. Click on the following link to register and secure your spot now:  

https://www4.gotomeeting.com/register/159112759

CE credit for this webinar is available for AL, CA, FL, GA, KY, LA, MS, NC, NH, OK, and TX.  In order to receive CE credit, you must provide your license number and the state for which credit is requested at the time of webinar registration.

Update on Collection of Prescription Drug Information via WCMSAP

On August 19, 2014, CMS issued an alert addressing an upcoming enhancement to the Workers Compensation Medicare Set-Aside Portal (WCMSAP) concerning collection of prescription drug information.

Starting October 6, 2014, WCMSAP users will be able to directly input prescription drug information into the online portal, which will then calculate the proposed prescription drug portion of the WCMSA proposal. This enhancement will include new data-entry pages that will allow users to indicate if a claimant is taking or expecting to take prescription drugs as a result of the workers’ compensation injury. Additionally, users will be able to utilize a search tool and select drugs by searching the drug name, National Drug Code (NDC), or a manufacturer name. Once a drug has been chosen and added to the portal case, the portal will display drug name, dosage, NDC, PPU (price per unit) and the number of years based on life expectancy. Users can then enter the frequency of the drug use and the system will determine the expected drug costs.

The forthcoming features will be available for all new and existing Work-In-Progress cases submitted on or after October 6, 2014. Prescription drugs will continue to be verified and priced using the monthly Redbook Drug Reference in effect at the date of submission.

As the date of implementation draws near, CMS will publish a new alert including images of the new WCMSAP prescription drug pages, as well as more detailed information.

Please check back with us for the most up to date information!

Registration Link for Free CEU Webinar Covering Medicare Compliance Updates

Staying current on Medicare Secondary Payer issues can be a challenge. Join us on September 16, 2014 at 1:00 PM CST for a free webinar during which attorney Melisa Zwilling will discuss the most recent Medicare compliance developments you need to know. In addition, she will share information on how you can save tremendous dollars on both conditional payment claims and MSAs.  This webinar will cover both liability and workers' compensation topics. Click on the following link to register and secure your spot now:  

https://www4.gotomeeting.com/register/159112759

 

CE credit for this webinar is available for AL, CA, FL, GA, KY, LA, MS, NC, NH, OK, and TX.  In order to receive CE credit, you must provide your license number and the state for which credit is requested at the time of webinar registration.

New CMS Alert Concerning Reporting in Exposure, Ingestion and Implant Cases

On August 19, 2014, CMS issued an alert addressing Section 111 reporting obligations and Medicare's recovery of conditional payment claims in liability cases involving alleged injuries due to exposure, ingestion, or implant prior to December 5, 1980. The alert clarifies that CMS will look to the dates alleged in the "most recently amended operative complaint or comparable supplemental pleading" to determine whether Section 111 reporting is required and whether Medicare will seek recovery of conditional payment claims. The alert provides as follows:

 

In the following situations, Medicare will assert a recovery claim against settlements, judgments, awards, or other payments, and the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) Section 111 MSP mandatory reporting rules must be followed:

• Exposure, ingestion, or the alleged effects of an implant on or after December 5, 1980, is claimed, released, or effectively released in the most recently amended operative complaint or comparable supplemental pleading; 
• A specified length of exposure or ingestion is required for the claimant to obtain the settlement, judgment, award, or other payment, and the claimant’s date of first exposure plus the specified length of time in the settlement, judgment, award or other payment equals a date on or after December 5, 1980. This also applies to implanted medical devices; and
• A requirement of the settlement, judgment, award, or other payment is that the claimant was exposed to, or ingested, a substance on or after December 5, 1980. This rule also applies if the settlement, judgment, award, or other payment depends on an implant that was never removed or was removed on or after December 5, 1980.

When ALL of the following criteria are met, Medicare will not assert a recovery claim against a liability insurance (including self-insurance) settlement, judgment, award, or other payment; and MMSEA Section 111 MSP reporting is not required. (Note: Where multiple defendants are involved, the claimant must meet all of these criteria for each individual defendant for a settlement, judgment, award, or other payment from that defendant to be exempt from a potential MSP recovery claim and MMSEA Section 111 reporting):

• All exposure or ingestion ended or the implant was removed before December 5,1980;
• Exposure, ingestion, or an implant on or after December 5, 1980, has not been claimed in the most recently amended operative complaint (or comparable supplemental pleading) and/or specifically released; and
• There is either no release for the exposure, ingestion, or an implant on or after December 5, 1980, or where there is such a release, it is a broad general release (rather than a specific release), which effectively releases exposure or ingestion on or after December 5, 1980. The rule also applies if the broad general release involves an implant.

Any operative amended complaint (or comparable supplemental pleading) must occur prior to the date of settlement, judgment, award, or other payment and must not have the effect of improperly shifting the burden to Medicare by amending the prior complaint(s) to remove any claim for medical damages, care, items and/or services, etc.

Where a complaint is amended by Court Order and that Order limits Medicare’s recovery claim based on the criteria contained in this alert, CMS will defer to the Order. CMS will not defer to Orders that contradict governing MSP policy, law, or regulation.

Medicare Must be Reimbursed for Conditional Payments Made on the Plaintiff's Behalf

In Taransky v. Sec’y of the United States HHS, 2014 U.S. App. LEXIS 14408 (3rd. Cir. July 29, 2014), the Plaintiff was injured from a fall at a New Jersey shopping center in 2005.  Throughout the settlement negotiations, Plaintiff’s attorney contacted Medicare multiple times in an effort to obtain the amount of Medicare’s conditional payment claim.  After settlement was reached, Plaintiff filed a motion in the New Jersey Superior Court requesting that the Court issue an order apportioning the settlement funds and, notably, stating that no portion of the settlement funds was for medical expenses because the New Jersey Collateral Source Statute precludes plaintiffs from recovering such expenses already paid by another source (in this case, Medicare).  Despite the fact that the settlement agreement specifically released all claims for medical treatment and medical expense benefits, the court granted her motion and issued an order stating that the settlement did not include any Medicare/medical expenses.

Shortly thereafter, Medicare issued a demand for reimbursement of conditional payment claims in the amount of $10,121.15.  The Plaintiff appealed Medicare’s demand (filing this suit after exhausting all administrative remedies), asserting that Medicare was not entitled to reimbursement from the settlement proceeds.

The Plaintiff argued that a tortfeasor cannot be considered a primary payer under the MSP Act and that the Medicare failed to prove that the tortfeasor had a “responsibility to make payment” for her Medicare expenses, which is a condition precedent for reimbursement.  In response, the Court pointed out that the 2003 amendments to the MSP Act expanded the act to include tortfeasors specifically.  Further, the Court followed existing precedent and held that “the fact of settlement alone, if it releases a tortfeasor for claims for medical expenses, is sufficient to demonstrate the beneficiary’s obligation to reimburse Medicare,” and found substantial evidence that the Plaintiff was compensated for her medical costs.

Finally, the Plaintiff argued she had no obligation to reimburse Medicare because of the New Jersey Superior Court Order stating that no part of the settlement was for medical expenses.  As we know, Medicare will not “seek recovery from portions of court awards that are designated as payment for losses other than medical services,” as long as the order is based on the merits of this case.  Unfortunately the New Jersey Superior Court did not evaluate the evidence or hear the parties’ arguments, and did not adjudicate any substantive issue in the primary negligence suit.  As such, the Court held that the Order was not “on the merits” and “need not be recognized by [Medicare].”  The Plaintiff was responsible for reimbursing Medicare for its conditional payments, despite the Superior Court’s allocation order.
                                           
As CMS has made clear, and as evidenced by this case, when medicals are a consideration in arriving at the settlement, Medicare must be reimbursed for conditional payments made on the claimant’s behalf. An order that is simply rubber-stamped by the court will not relieve the parties of such responsibility.

Providers May Assert Private Cause of Action Against NGHPs

In Michigan Spine & Brain Surgeons, PLLC v. State Farm, 2014 F. App’x 0154P (6th Cir. July 16, 2014), the Sixth Circuit Court of Appeals held that a health care provider could assert a private cause of action under the Medicare Secondary Payer Act against a non-group health plan.  State Farm had no-fault coverage for its insured and denied payment to Michigan Spine & Brain Surgeons on the basis that the treatment provided was related to a pre-existing condition rather than the insured’s accident.  Medicare subsequently paid for the treatment at issue, and Michigan Spine then filed a lawsuit against State Farm asserting a private cause of action under the Medicare Secondary Payer Act.

The Sixth Circuit previously held in Bio-Medical Applications of Tenn., Inc. v. Cent. States Southeast & Southwest Areas Health & Welfare Fund, 656 F.3d 277 (6th Cir. 2011) that health care providers could assert a private cause of action against a group health plan.  Michigan Spine argued that the Sixth Circuit’s holding in Bio-Medical Applications should extend to non-group health plans as well.  State Farm, however, argued that the private cause of action could not apply to non-group health plans based on the statutory language.  The Medicare Secondary Payer Act specifies that “[t]here 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).”  State Farm argued that the private cause of action should not apply to non-group health plans because only group health plans can fail to meet the requirements of both paragraphs (1) and (2)(A) of the Medicare Secondary Payer Act, since paragraph (1) only applies to group health plans.  The court, however, declined to adopt State Farm’s strict interpretation of the statute.  The court decided that Congress must have intended the private cause of action to be read broadly to both group health plans and non-group health plans.  The court took the position that it would not make sense to interpret the statute as requiring a non-group health plan to fail to comply with paragraph (1) in order to be subject to the private cause of action.  Therefore, the court held, a private cause of action could be asserted against a non-group health plan.  The Sixth Circuit remanded the case to the district court for further proceedings.

Although the Sixth Circuit did not mention it specifically, the Michigan Spine decision has the effect of overruling the Western District of Kentucky’s holding in Estate of Clinton McDonald v. Indem. Ins. Co. of North America, 3:12-CV-577, 2013 U.S. Dist. LEXIS 138068 (W.D. Ky. Sept. 25, 2013) that the private cause of action only applies to group health plans.

Save The Date: Free Webinar on Medicare Compliance Updates

Join us on  

September 16th, 2014 

@ 1:00 PM CST

for a free webinar where Melisa Zwilling will discuss current Medicare Compliance issues. 

Contact us today to reserve your spot!

FREE Continuing Education Webinars on Medicare Secondary Payer Topics

We are currently scheduling webinars to cover a variety of Medicare Compliance related topics over the next few months. If you need CEU credit for any state, please click here to contact us and let us know which state.  In addition, please note whether you have a preference for a specific topic. You may also visit our website by clicking here to request a webinar that is customized to meet your specific needs.

CMS Releases Revised User Guide for WCMSAs

CMS just released a newly-revised WCMSA User Guide.  The revisions include:

-  Addition of Section 4.1.4 concerning Hearings on the Merits of Cases;

- Clarification of initial submission requirements for medical records and payment records;

-  Miscellaneous modifications including removal of a reference to Drug Tables for physician-dispensed drugs and combination of User Guide sections on Drug Tapering and Drug Weaning;


-  Addition of Wisconsin to the list of states with no WC fee schedule; and

-  Addition of Appendix 6 which lists changes made in previous versions of the WCMSA User Guide.

The newly added section 4.1.4 provides as follows concerning a Hearing on the Merits of a Case:  

When a state WC judge approves a WC settlement after a hearing on the merits, Medicare generally will accept the terms of the settlement, unless the settlement does not adequately address Medicare’s interests. If Medicare’s interests were not reasonably considered, Medicare will refuse to pay for services related to the WC injury (and otherwise reimbursable by Medicare) until such expenses have exhausted the dollar amount of the entire WC settlement. Medicare also will assert a recovery claim if appropriate.

If a court or other adjudicator of the merits (e.g., a state WC board or commission) specifically designates funds to a portion of a settlement that is not related to medical services (e.g., lost wages), then Medicare will accept that designation.

Let us know if you have any questions concerning these revisions.  To access the complete, revised WCMSA User Guide, click here.

Complimentary Medicare Secondary Payer Act Compliance Audits

Is your company in compliance with ALL of the requirements of the Medicare Secondary Payer Act?

Are you handling Medicare conditional payment claim/past lien research and resolution properly?

Do you adequately address Medicare's interests or utilize Medicare Set-aside Arrangements in appropriate cases?

Are you reporting cases pursuant to Section 111 timely and accurately?

Do you have a policy in place concerning each of these issues?

If you do have a policy in place, is it understood and followed by those dealing with claims on a daily basis?

If you aren't absolutely certain that the answer to each of these questions is yes, we can help you figure it out!  Click here to contact us today regarding our complimentary Medicare Secondary Payer Compliance Audits. 

CMS Issues Alert Concerning Delay of Transition to ICD-10 Codes

President Obama signed into law the Protecting Access to Medicare Act of 2014. The new law delays the implementation of ICD-10 codes from October 1, 2014 to October 1, 2015. As a result of this new law, CMS has issued notice that, effective immediately, Responsible Reporting Entitles are to postpone reporting ICD-10-CM diagnosis codes on their production Claim Input File and Direct Data Entry (DDE) submissions until

October 1, 2015. RREs may continue to submit ICD-10-CM diagnosis codes on test Claim Input File submissions.
 
The full text of the CMS alert can be found at: http://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Mandatory-Insurer-Reporting-For-Non-Group-Health-Plans/Downloads/New-Downloads/Delay-in-transition-from-ICD-9-CM-diagnosis-codes-to-ICD-10-CM-diagnosis-codes-for-Liability-Insurance-Including-Self-Insurance-No-Fault-Insurance-and-Workers-Compensation.pdf

Some Workers' Compensation Courts Recognize the Importance of Considering Medicare's Potential Interests in Every Case

Medicare Secondary Payer Act compliance has become such a commonplace concern that some courts recognize the need to consider this issue in every workers' compensation claim that settles. A prime example of this is Nebraska's workers' compensation court, which requires, pursuant to Rule 47(B)(12) of its rules of procedure, that every application identify whether the claimant is a Medicare beneficiary, is eligible for Medicare, or has a reasonable expectation of becoming eligible for Medicare within 30 months of the settlement's execution. The rule further provides that if the claimant has a reasonable expectation of becoming a Medicare beneficiary within 30 months, the application should further identify the date of expected Medicare eligibility. If the claimant is actually a Medicare beneficiary at the time of the settlement's execution, the application must acknowledge the status of conditional payment claims research and that the employer will be responsible for Medicare's asserted, related claims.

 

This blanket approach to evaluate Medicare's potential interest in every case is laudable, and we encourage defendants to approach their settlements in this way (even if the governing court does not mandate that an application include this language). We would further encourage the parties to consider the use of a Medicare Set-aside in those cases with Medicare beneficiaries (or with claimants who have a reasonable expectation of becoming a beneficiary within 30 months of settlement). Of course, a Medicare Set-aside's calculation and creation depends upon a number of factors. We welcome the chance to assist parties with their analysis of these issues, regardless of whether it is on a case-by-case basis or whether it is in the development of consistent, internal procedures and policies.

Don't Forget to Report Termination of ORM!

It is important to remember to report termination of ORM once the RRE’s responsibility for paying for medical expenses ends, such as through closure of future medical expenses in workers’ compensation cases and exhaustion of policy limits for no-fault claims. In situations where ORM has ended and it would otherwise be appropriate for Medicare to pay for treatment related to an injury at issue in the claim, it is particularly important for termination of ORM to be reported promptly. Otherwise, Medicare will very likely continue to deny payment for any treatment related to the injury.

In order to avoid Medicare continuing to deny payment for the claimant’s treatment, RREs have the option of making an immediate report of termination of ORM by calling Medicare’s Benefits Coordination and Recovery Contractor at 1-855-798-2627. It is important to note that reporting termination of ORM by phone does not relieve the RRE from responsibility to electronically report termination of ORM.

RREs may also report termination of ORM electronically prior to their next quarterly file submission period. CMS allows RREs to submit claim input files outside of their assigned file submission period, which CMS has indicated is primarily for the purpose of allowing RREs to more quickly report termination of ORM. RREs cannot submit more than one claim input file every 14 days, and RREs must still submit a claim input file during their assigned file submission period even if another claim input file has already been submitted during the quarter.

Release of Generic Lunesta Will Result in Substantial Savings in MSAs

Lunesta, a sedative commonly prescribed to treat insomnia, recently became available in generic form. Preparing Medicare Set-aside allocation reports using generic pricing as opposed to brand pricing will produce a savings of $1.31 per pill. This will result in a substantial savings for our clients.

Importantly, FDA approved generic drug products have to meet the same rigid standards as an innovator drug. All generic drugs approved by the FDA have been deemed to have the same quality, strength, purity and stability as brand-name drugs. In addition, the generic manufacturing, packaging, and testing sites must pass the same quality standards as those of brand-name drugs. Accordingly, we highly recommend that physicians who have been prescribing Lunesta as a brand be encouraged to consider prescribing the new, much more cost-effective generic instead.

CMS Publishes WCMSA Self-Administration Toolkit

On Friday, April 11, 2014, CMS published an extensive Workers' Compensation Medicare Set-aside Arrangement (WCMSA) Toolkit.  This guide is designed to assist Medicare beneficiaries with the task of properly administering their WCMSA accounts. 

Among other topics, the Toolkit includes information about the following: 

• How to set up a WCMSA bank account;
• Different mechanisms of funding;
• Permissible expenses that may be paid from a WCMSA account;
• How to discuss the WCMSA account with health care providers;
• How bills should be calculated and paid;
• Record-keeping instructions;
• Annual documentation that must be provided to Medicare;
• Final depletion of WCMSA funds;
• Structured WCMSA accounts;
• Carry-over or exhaustion of funds annually; and
• Contact information for self-administration assistance. 

In addition, the Toolkit contains numerous letters and examples that beneficiaries can give to health care providers and pharmacies explaining the WCMSA account and billing procedures.  The Toolkit also contains examples of appropriate record-keeping for WCMSA accounts.

To access the Toolkit, click here and scroll to the bottom under downloads.  If you have any questions about this, or any other Medicare Compliance issue, please do not hesitate to contact us.

Exhaustion of Administrative Remedies

In Darrell R. Cupp v. Dane F. Johns and Humana Ins. Co. , 2014 U.S. Dist. LEXIS 30537, U.S. District Court for the Western District of Arkansas, March 10, 2014, the court again upholds that parties must exhaust administrative remedies.  Plaintiff, Darrell Cupp, was injured in an automobile accident involving Defendant, Dane Johns. Humana, Cupp’s Medicare Advantage health insurance provider, paid approximately $25,000 in medical payments as a result of the accident. Cupp sued Johns in state court and later settled for $25,000. After the settlement, Humana asserted a subrogation lien. Cupp sought a declaratory judgment in state court that Humana was not owed reimbursement under state subrogation law. Humana removed to federal court and subsequently filed a motion to dismiss.
The court ruled in favor of Humana, holding first that Humana was within its rights under the Medicare Secondary Payer Act to seek subrogation of the conditional payments it made on behalf of Cupp after his accident. The court further held that the Medicare Act, Title XVIII of the Social Security Act, established a review and appeals process that Medicare Advantage Plan enrollees must use to dispute claims asserted by Medicare and Medicare Advantage Plans regarding the services an enrollee receives. Plaintiff Cupp did not use this process to dispute the claims asserted by Humana. Thus, the court held, it did not have jurisdiction to determine that Humana’s claims were wrongfully asserted.

 

Update on Humana Medicare Advantage Plan Litigation

    As we previously reported, last year Humana filed lawsuits in four federal district courts seeking recovery of medical expenses paid by Humana Medicare Advantage Plans.  In its complaints, Humana asserted private causes of action under the Medicare Secondary Payer Act seeking double damages or, alternatively, payment for the full amount that would have been paid by the defendants under no-fault and med pay policies if the defendants had issued payment directly to the providers for the charges asserted.  In addition, Humana sought a declaratory judgment finding that Medicare Advantage Plans are secondary to no-fault and med pay insurance and that the defendants must reimburse a Medicare Advantage Plan in situations when the defendants are a primary payer.  Further, Humana requested that each court order the defendants to provide broad restitution to Humana for medical expenses paid for any Humana plan enrollee when the defendants were the primary payer and had no-fault or med pay coverage.

    Initially, the parties submitted a joint motion to the U.S. Judicial Panel on Multidistrict Litigation seeking a transfer of venue for all cases to the Eastern District of Tennessee.  While the motion was pending, Humana voluntarily dismissed the lawsuits in the Eastern District of Tennessee, the Western District of Missouri, and the District of Kansas, which left only the case in the Western District of Texas still pending.  The defendants filed a motion to dismiss, and the court referred the defendants’ motion to a Magistrate Judge for review.

    Recently, the Magistrate Judge issued a Report and Recommendation advising the court to dismiss Humana’s claims under the Medicare Secondary Payer Act (“MSPA”), agreeing with the defendants’ position that the private cause of action under the MSPA does not apply to Medicare Advantage Plans.  The judge considered the decision of the Third Circuit Court of Appeals in In re: Avandia Marketing, Sales Practices, and Products Liability Litigation, 685 F.3d (3rd Cir. 2012), which held that Medicare Advantage plans may assert a private cause of action against a primary plan under the MSPA.  However, the judge noted that the Third Circuit’s decision was not binding authority outside the Third Circuit and found the Avandia decision unpersuasive.  In reaching the conclusion that Congress did not intend to extend the private cause of action to Medicare Advantage Plans, the judge pointed to the lack of reference to Medicare Advantage Plans in the statutory text of the private cause of action as well as the lack of any provision in the Medicare Advantage statute creating a right for Medicare Advantage Plans to sue primary plans.  As such, the judge determined, Humana’s claims under the MSPA should be dismissed.

    Following the Magistrate Judge’s Report and Recommendation, Humana filed an objection with the district court, which is currently pending review.  Regardless of the outcome of the district court’s decision, the case will very likely be appealed to the Fifth Circuit Court of Appeals.  If the Fifth Circuit agrees that Medicare Advantage Plans may not assert a private cause of action under the MSPA, the split between the Fifth and Third Circuits could be enough for the U.S. Supreme Court to grant certiorari and finally provide clarity to the still unsettled issue of the recovery rights of Medicare Advantage Plans.

Exhaustion of Administrative Remedies

A recent case, In re Asbestos Products Liability Litigation No. IV Maria Torres, No. 95-1173, 2014 U.S. Dist. LEXIS 24138 (E.D. Pa. Feb. 24, 2014), reiterates the principle that parties seeking to challenge Medicare’s recovery of conditional payment claims must exhaust their administrative remedies in order to be able to seek judicial review. In this case, Medicare had previously issued a formal demand for $24,585.13 and agreed to reduce its recovery to $12,292.00 after the plaintiff submitted a compromise request. Instead of going through Medicare’s administrative appeals process, the plaintiff then filed a motion for interpleader asking the court to hold that Medicare could not recover from the settlement because Medicare is not entitled to recover conditional payment claims from a surviving spouse who settles a claim under the Federal Employers Liability Act.
 
In opposing the plaintiff’s motion, the Department of Health and Human Services argued that the court did not have jurisdiction over the issue because the plaintiff had not exhausted her administrative remedies as required by the Medicare Act. The plaintiff, however, contended that the court had jurisdiction because she was seeking a determination that the Medicare Act did not apply, as she was arguing that Medicare was not entitled to recover from the settlement funds. Because the plaintiff’s claim was "wholly dependent upon determining whether or not CMS will correctly interpret the Medicare Act," the court held, the plaintiff’s claim did arise under the Medicare Act. Therefore, the court concluded, it did not have jurisdiction over the plaintiff’s claim because she had not gone through Medicare’s appeals process and exhausted her administrative remedies.