CMS Issues Proposed Rule Regarding Applicable Plans’ Rights Of Appeal

CMS has issued a proposed rule implementing the aspects of the SMART Act that require the establishment of appeal rights for 'applicable plans' (liability insurance (including self-insurance), no-fault insurance, and workers' compensation law or plans) when Medicare pursues recovery of conditional payments against those entities. The proposed rule, which can be found at , enunciates the appeal process that will be available to applicable plans. Basically, the proposed process parallels the rights of appeal already available to beneficiaries. Because the debts involved are based upon the same conditional payments that would be at issue if recovery were directed toward the beneficiary, CMS believes that "it is appropriate to utilize the same multilevel appeal process for applicable plans" that a beneficiary currently has available.

Under the proposed rule, applicable plans will be entitled to appeal initial determinations by retooling the existing regulations (currently found in 42 CFR 405.900 - 405.946) as follows:

· the "Basis and Scope" section will be amended to reference the SMART Act provision that requires this appeals process;

· the "Definitions" section will now include 'applicable plan' and define it as liability insurance (including self-insurance), no-fault insurance, or a workers' compensation law or plan;

· Section 405.906 will be amended so that applicable plans will be provided notice when Medicare is seeking recovery from that plan. Note that being courtesy copied on a demand does not provide plans with appeal rights; appeal rights are only available if Medicare chooses to pursue the plan as a debtor. Also note that if the plan is named as a debtor (i.e., Medicare is pursuing recovery directly from the plan), the beneficiary will not be a party to any appeal the plan pursues.

· the "Appointed Representatives" section will be amended to allow the appointed representative of a plan to remain a valid representative for the duration of any appeal (unless the appointment is specifically revoked by the plan).

· the "Notice of initial determination" section will be amended to include specifications for the content of an initial determination when this finding is sent to an applicable plan. Specifically, the notice must include the reasons for the determination, the procedures for obtaining additional information regarding the basis of this decision, and how to request a redetermination if the plan is dissatisfied with the initial determination.

· the section "Actions that are initial determinations" will be amended to specify that a determination by Medicare this it has a recovery claim when pursuing recovery directly from a plan is an 'initial determination.' By doing so, CMS is identifying the event that triggers the appeals process (as the appeal process can only begin when there has been an initial determination). Along those same lines, the section "Actions that are not initial determinations" will be amended to note that Medicare's decision as to who it will pursue (between the beneficiary, the plan, the provider, etc.) is not an initial decision, nor is the finding that an employer 'facilitates' a group health plan;

· the proposed rule also adds a new section, "Notice to the beneficiary of an applicable plan's request for a redetermination," through which the beneficiary will receive notice of a plan's intent to appeal Medicare's attempts at direct recovery.

As an aside, CMS notes that an appeal process for Workers' Compensation Medicare Set-aside determinations is being considered and will be addressed separately. We look forward to this issue's further development, and will keep you apprised of any supplemental publications on these issues.

Comments on the proposed rule regarding applicable plans' appeal rights are welcomed and will be considered by CMS if received prior to 5 p.m. on February 25, 2104. We will be considering whether to submit our own comments to this proposed rule in the coming weeks. If you are interested in submitting comments as well, and would like our assistance in this process, please let us know.