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Medicare Compliance News!

CMS Alert: Time Frame for Conditional Payment Debts

CMS issued an alert August 5, 2015, regarding a change in the time frame in which outstanding conditional payment debts are referred to the Department of Treasury (DOT) for collection.

Beginning October 1, 2015, delinquent debts for both Non-Group Health Plans (including self-insurance, liability, no-fault, and workers’ compensation) and Group Health Plans will be referred to the DOT for collection 120 days after payment is due.  Currently, debts are referred to the DOT when payment is 180 days past due.

This reduction in the time frame for referral of delinquent debts is an outcome of the Digital Accountability and Transparency Act (DATA Act), which was signed into law in May 2014.

Read the full alert here.

US District Court: Contractual Obligation Does not Demonstrate Primary Payer Responsibility

In MSPA Claims 1, LLC v. Liberty Mut. Ins., No. 1:15-cv-21417-UU, 2015 U.S. Dist. LEXIS 99188 (S.D. Fla. July 22, 2015), an individual was injured in a motor vehicle accident. The individual had personal injury protection (PIP) insurance through Liberty Mutual Insurance and a secondary policy through Florida Healthcare Plus (FHCP), a Medicare Advantage Organization (MAO). FHCP conditionally paid for the insured’s medical expenses and later assigned its right to reimbursement to MSPA Claims 1, LLC. MSPA Claims 1 brought the present action requesting a declaratory judgment that Liberty Mutual is obligated to reimburse Medicare and a private cause of action for double damages under the Medicare Secondary Payer Act (MSPA).

Liberty Mutual filed a motion to dismiss, providing several arguments for why dismissal was appropriate in this case, including that MSPA Claims 1 had not properly demonstrated the defendant’s primary payer responsibility. In deciding the case, the District Court looked to the Eleventh Circuit’s decision in Glover v. Liggett Grp., Inc., 459 F.3d 1304 (11th Cir. 2006), where the Court held that demonstration of primary payer responsibility is a condition precedent to bringing a claim under the MSPA. The Court reasoned that without such a condition precedent, the federal court’s jurisdiction would be drastically expanded, and the primary payer would be unable to contest liability without the risk of a double damages penalty. Although Glover involved a tortfeasor, the reasoning in Glover is also applicable in cases where the responsibility to pay arises out of a contractual obligation. Here, the Court noted that even where there is a contractual obligation, the insurer should be able to contest liability without being subject to double damages. As such, the Court held that while a contractual obligation can be part of the demonstration of responsibility, that contractual obligation alone does not establish a responsibility to pay. Thus, because the plaintiff’s sole evidence of primary payer responsibility was the contractual obligation, the District Court held that primary payer responsibility had not been demonstrated. The plaintiff’s claim was dismissed with leave to re-file once the plaintiff can establish the condition precedent by pursuing a subrogation or breach of contract claim in state court.

The defendant also argued that a claim under the MSPA is not assignable and that the MSPA does not create a private cause of action for MAOs. However, because the Court dismissed the cause of action for failure to state a claim, these arguments could not be addressed.

We will continue to monitor this case and will keep you informed of any new developments.

Delaware Superior Court: Importance of MAOs in Medicare System

In Honey v. Bayhealth Medical Center, Inc., 2015 Del. Super. LEXIS 378, a Superior Court in Delaware recently bolstered the importance given to Medicare Advantage Organizations in recent months by finding that, with regards to the application of the state’s collateral source rule, an MAO is subject to the same limitations as Medicare, rather than those attributed to private insurers. This determination supports the status that MAOs have been gaining recently within the court decisions. While the application of the rule to Medicare had previously been addressed by the Delaware Supreme Court in Stayton v. Delaware Health Corporation, the Supreme Court did not address how the rule applies to MAOs. In deciding whether to treat the MAO as akin to Medicare or a private insurer, the Honey Court looked to the Third Circuit’s decision in In Re Avandia as support and noted that an MAO is “a federal program” and “squarely within the traditional Medicare system.” 

This recent decision further evidences how more and more courts are likening MAOs to Medicare and remains a trend that we will closely monitor.

Summer Conference Schedule: We want to see YOU!

Alabama Self-Insurer's Association Summer Conference

August 9-11, 2015 at Hilton Sandestin Resort

Come visit with us at 

Booth #9

and register to win

$100 Visa Gift Card

>>--<<-->>--<<-->>--<<-->>--<<

Workers' Compensation Institute's
70th Annual Educational Conference
August 23-26 2015, at Orlando World Center Marriott

Come visit with us at 

Booth #1025

and register to win

$100 Visa Gift Card

CMS Update: Webinar Announcement

CMS posted a webinar announcement today concerning the transition of NGHP recovery activities to The Commercial Repayment Center (CRC). Follow the link here for the entire announcement.

In order to participate in the webinar, please note the following:

Date: Tuesday, August 25, 2015 

Start time: 2:00 PM EST

Registration and webinar logon URL: https://event.webcasts.com/starthere.jsp?ei=1071085

The announcement stated:

“Effective October 2015, the CRC will assume responsibility for the recovery of conditional payments where CMS is pursuing recovery directly from a liability insurer (including a self-insured entity), no-fault insurer or workers’ compensation (WC) entity as the identified debtor.  The following should be noted regarding the planned workload transition: 
• The transition only includes those cases where CMS is pursuing recovery from the liability insurer, nofault insurer or WC entity directly. 
• Beneficiaries and their attorneys will continue to work with the BCRC where CMS is pursuing recovery from the beneficiary.”

If you have any questions concerning this transition, feel free to call or email and we will be happy to answer them.

CMS Alert: ICD-10 Reporting Reminder

CMS issued an alert as a reminder that Responsible Reporting Entities and their agents must report ICD-10-CM diagnosis codes on claim reports with a CMS date of incident on or after October 1, 2015. The apparent intention of this alert is to emphasize that the timing of this reporting requirement has not changed.


The full text of the alert can be found here.

CMS Update: Section 111 NGHP User Guide

On July 13, 2015, CMS issued an updated Section 111 NGHP User Guide. In an effort to prevent false positives in partial SSN searches, CMS increased the number of additional criteria needed to return a match. When submitting a beneficiary using a partial SSN of five digits, all four of the remaining criteria- first initial, surname, date of birth, and gender- must now be matched exactly.

Additionally, the new User Guide replaces the term “TPA” with “recovery agent” and provides dedicated fields for RREs to submit recovery agent information on the TIN reference file. The Section 111 URL was also changed to https://www.cob.cms.hhs.gov/Section111/LoginWarning.action.

The current User Guide is available here.

CCWC: Stop by Booth #20

Attending the conference? 

Visit us at 

Booth #20 

and register to win a $100 Visa Gift Card

Melisa C. Zwilling Set to Speak at the National Workers' Compensation Conference

Melisa C. Zwilling will be presenting at the 24th Annual National Workers' Compensation and Disability Conference® in Las Vegas, November 11 - 13.

We are inviting you to join us there and be a part of the nation's leading training event for workers' comp and disability management professionals.

The organizers have given us a special discount to offer you – $100.00 off the going rate. To attend at this special discount, just register by Nov. 9 with Promo Code SPKR15.

Meet Melisa! Attend her Session:

MSAs: Getting Them Right to Lower Settlement Costs

Thursday Nov. 12, 2015: 3:30-4:45 p.m.

Or Stop by Our Booth:

Register to Win a Visa Gift Card!

Booth #1025

Eleventh Circuit District Court Dismisses MAO Private Cause of Action

Medicare Advantage Organizations (MAOs) right to recovery under the private cause of action provision of the Medicare Secondary Payer Act (MSP) continues to be a hot issue in court decisions as more and more Plans seek recovery under this provision.

As you may recall, a private cause of action exists under the Medicare Secondary Payer (MSP) Act when a primary plan fails to pay for Medicare’s conditional payment. Additionally, the private cause of action allows for double damages. See 42 USC §1395y(b)(3)(A). While decisions on this issue continue to fall both ways, currently the Third, Fifth and Eleventh circuits are allowing MAOs a right to recovery under this provision. The provision further requires that a primary plan's responsibility be demonstrated “by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan's insured, or by other means.” 42 U.S.C. § 1395y(b)(2)(B)(ii).

The issue of demonstrating responsibility was recently addressed in MSP Recovery, LLC v. Progressive Select Insurance Company, 2015 U.S. Dist. LEXIS 47784 (11th Cir. April 1, 2015). In the case at issue, a Medicare beneficiary held coverage through a Medicare Advantage Plan (MAP) when he was injured in a car accident. The medical bills related to the accident should have been paid through his PIP coverage with Progressive, the Defendant in this case. The Defendant, however, did not immediately pay the related bills. As such, those bills were covered by the MAO. MSP Recovery, LLC, Plaintiff, through assignment by the MAO, filed for recovery against the Defendant’s PIP coverage due to the Defendant’s failure to provide reimbursement. Although the Court followed the Third Circuit’s holding in In re Advandia, and found that the MAO did in fact have a private cause of action under the MSP, the Plaintiff’s claim was eventually dismissed for failure to demonstrate responsibility to reimburse. We will continue to monitor all upcoming decisions for discussions on this issue.

CMS Announces Transition of NGHP Recovery to Commercial Repayment Center

Currently, Medicare's Benefits Coordination and Recovery Center (BCRC) handles the recovery of conditional payment claims in workers' compensation, liability, and no-fault cases, and the Commercial Repayment Center (CRC) handles the primary portion of the recovery of Medicare payments from group health plans.  CMS recently announced that beginning in October 2015, the CRC will start handling the recovery process in workers' compensation, liability, and no-fault cases when CMS is pursuing reimbursement directly from the primary payer.  The BCRC will no longer handle the recovery of claims from the primary payer but will continue handling the recovery process when CMS is pursuing reimbursement from the beneficiary.

CMS indicated that in the coming months they will schedule webinars and town hall telephone conferences to discuss the transition process.  We will let you know when we receive notice from CMS that any webinars and telephone conferences are scheduled.

CMS also announced that beginning January 1, 2016, "where an insurer or workers’ compensation entity has reported to CMS that it has ongoing responsibility for medicals (ORM) for specific care, CMS’ claims processing contractors will use the information provided by the insurer or workers’ compensation entity to determine whether Medicare is able to make payment for those claims."  CMS reiterated the importance of RREs reporting accurate ICD-9 and ICD-10 codes to ensure that Medicare issues payments appropriately.  Under the current language of the CMS NGHP Section 111 User Guide, RREs are required to start reporting ICD-10 codes for claims with a CMS date of injury on or after October 1, 2015.

For more information visit CMS here.

Case Study: Are Unnecessarily High MSAs Driving your Settlement Out of Range?

Quite often we are asked to provide second-opinion review of MSA allocations that were prepared by another vendor.  We have consistently found that a majority of those allocations are incredibly inflated and include unnecessary treatment and medications.  Though inflated MSA allocations help ensure a high CMS approval rating, they drive many settlements out of range.  In cases that are able to settle, they cost a tremendous amount of money that simply does not need to be spent on MSAs.

To illustrate this point, we decided to highlight a file we recently reviewed which resulted in the client saving $160,034.  In this case, the employer/insurer planned to settle below the $25,000 CMS review threshold. The treating physician had provided written confirmation that the claimant, a Medicare beneficiary, would "not need future medical care related to [the] work injury or illness based on a reasonable degree of medical certainty."  However, uncertain of how CMS would view the case, the employer/insurer referred the file to another vendor for advice.

Unfortunately, that vendor lacked experience and understanding of CMS guidelines.  They didn't recognize that an MSA was completely unnecessary in the case!  The client should have been told that CMS had clearly stated in a memorandum issued on April 22, 2003, which was incorporated into the WCMSA Reference Guide, that an MSA is not necessary when the following conditions are met:

• The facts of the case demonstrate that the injured individual is only being compensated for past medical expenses (i.e., for services furnished prior to the settlement);
• There is no evidence that the individual is attempting to maximize the other aspects of the settlement (e.g., the lost wages and disability portions of the settlement) to Medicare’s detriment; and
• The individual’s treating physicians conclude (in writing) that to a reasonable degree of medical certainty the individual will no longer require any Medicare-covered treatments related to the WC injury.

Instead of advising the client that an MSA allocation was completely unnecessary, the vendor prepared and charged the client for a $160,034 MSA.  The allocation included medications that were no longer prescribed, treatment for an unrelated condition, a surgery that the treating physician clearly noted was not recommended and treatment that was not even covered by Medicare.  Relying on our advice and the WCMSA Reference Guide, the client was able to settle the claim as originally planned, well below the CMS review threshold.

We describe scenarios like this in terms of buying a car.  If you go to a dealership and offer to purchase a car for $10,000 above sticker price, of course your offer will be accepted and you'll get a new car.  You'll also have made the salesperson and dealership very happy!  However, most of us use better judgment and don't conduct business like that.  We try to save as much of our money as possible while getting a good quality, reliable vehicle.  We firmly believe that our clients are much better served by our knowledge, experience and aggressive advocacy skills when it comes to Medicare Compliance issues.  We help ensure that Medicare is protected while also conserving our client's resources as much as possible.  Though we may lose money on individual cases when we advise clients not to pay us to prepare MSA allocations that aren't necessary, we prefer to build trusted relationships with them that last for years.

If you have an MSA allocation you feel is unnecessarily high or that has priced you out of settlement range, let us know.  We would be happy to prepare a second-opinion review to see if we can save you money while ensuring that you are in complete compliance with Medicare Secondary Payer laws, regulations and guidelines.

IMRs in California Accepted by CMS in Carr Allison MSA Allocations

Under California workers' compensation law, as of July 1, 2013, medical treatment disputes for all dates of injury are resolved through the Independent Medical Review (IMR) process. Specifically, Section 4610.6(g) of the California Labor Code provides that "[t]he determination of the independent medical review organization shall be deemed to be the determination of the administrative director and shall be binding on all parties."

As a general matter, CMS should recognize a binding decision on the merits under state law that certain treatment or prescriptions are not compensable.  However, last year we discussed the IMR process with CMS and were informed that the WCRC, the CMS contractor that reviews MSAs, had not been giving appropriate consideration to IMR Final Determinations in cases submitted by other vendors.  The contractor simply did not understand the binding nature and legal effect of IMR Final Determinations.

Carr Allison was at the forefront of discussions with CMS regarding IMR Final Determinations and WCMSA policy, explaining the IMR process and applicable section of the California Labor Code to the CMS Central Office.  We are pleased that those efforts paid off, as CMS has recognized IMR Final Determinations following our discussions.  In fact, in a very recent case, we negotiated a $66,438 MSA reduction with CMS based on the findings of an IMR Final Determination.  CMS agreed to exclude medications that were found by the IMR Final Determination to not be reasonable or necessary.

As a law firm, we are committed to aggressively advocating to CMS any legal basis for reducing MSAs.

If you have any questions about reductions based on IMR Final Determinations or applicable state laws, please do not hesitate to contact us.

CMS Alert: Matching Criteria for SSNs

On June 18, 2015, CMS issued an Alert entitled "Modification of Matching Criteria Used When Reporting Partial Social Security Numbers for Liability Insurance (Including Self-Insurance), No Fault Insurance, and Workers’ Compensation."  The text of that alert is copied below:

New Matching Criteria for Partial SSNs
In order to determine if individuals are Medicare beneficiaries, the following information is used:
•HICN or SSN
•First initial of the first name
•First 6 characters of the last name
•Date of birth (DOB)
•Gender

Effective immediately, the matching criteria for partial SSNs will be changed. When an exact match on the partial SSN is found, then four out of the four remaining data elements must be matched to the individual exactly. The matching criteria for HICNs and full SSNs will remain the same.

Reporting Compliance Considerations
NGHP RREs are encouraged to submit the HICN or full SSN when available to ensure the most accurate match is attained. Failure to match to a Medicare beneficiary with the full or partial SSN does not negate the RRE's Section 111 mandatory reporting requirement when a reportable claim exists.

The entire alert can be found here.

Section 111: Rule on Penalties Not Expected Until December 2016

Under the SMART Act, CMS is supposed to issues rules specifying "practices for which sanctions will and will not be imposed."  In December, 2013, CMS issued an Advanced Notice of Proposed Rulemaking seeking comments on circumstances in which penalties should and should not be imposed.  The comment period closed in February, 2014 and since then the industry has been awaiting proposed rules from CMS.  After CMS issues proposed rules, the public will be allowed to submit comments during a 60 day period, and then CMS will issue final rules.

Previously, CMS had indicated that they would issue proposed rules in July, 2015.  However, CMS has now indicated that they will not be issued until December, 2016.  Of course, it is possible that this time frame will change again and that CMS will issue proposed rules at a later date.  We will continue to keep you updated and let you know once any proposed and final rules are issued.  Until they are, RREs should focus on ensuring that they are reporting under Section 111 correctly and not be overly consumed with fear of retribution from CMS.
If you have questions or would like an audit of your Section 111 reporting program and processes, please let us know and we will be happy to help.

Melisa Zwilling named 2015 Woman Leader in the Law by Fortune Magazine

Congratulations to Carr Allison Medicare Compliance Group Chair:

Melisa C. Zwilling

For the second year in a row, Ms. Zwilling has received the honor of being named one of Fortune Magazine's Women Leaders in the Law. Congratulations on your achievement!

Upcoming Event: Iowa Workers' Compensation Symposium

Join us!

 53rd Annual Iowa Workers' Compensation Symposium

June 18-19, 2015

Des Moines Marriott Downtown

Stop by

 Booth 18

and register for your chance to win a $100.00 VISA gift card

We look forward to seeing you at the

  18th Annual Tennessee Workers' Compensation Educational Conference, this week, June 8-10 

at the Nashville Airport Marriott

Stop by Booth #18 and drop off your business card for a chance to win a Visa Gift Card!

Michigan Court of Appeals Allows Plaintiff to Pursue Private Cause of Action against No-Fault Insurer

In Holmes v. Farm Bureau Gen. Ins. Co., No. 320723, 2014 Mich. App. LEXIS 1031 (Mich. Ct. App. May 19, 2015), Holmes was injured in a motor vehicle accident. Her automobile insurance policy through Farm Bureau General Insurance (Farm Bureau) provided underinsured motorist coverage, including PIP coverage. Notably, however, Farm Bureau did not pay for Holmes’ medical treatment. Instead, the treatment was paid for by Medicare and Medicare AARP Supplemental Insurance.  Holmes filed suit against Farm Bureau and argued that the Medicare Secondary Payer Act (MSPA) created a private cause of action for double damages where medical expenses were paid by Medicare that should have been paid by a primary payer- here, the no-fault insurer Farm Bureau.  The Michigan Court of Appeals agreed.

The Court first looked to the language of the insurance policy itself, which established Farm Bureau’s responsibility to pay, and concluded that the policy language plainly indicated that Farm Bureau coverage was primary.  The policy included language acknowledging that, as a matter of law, the parties could only contract for a policy which makes Medicare the secondary payer.  The Court then turned to the MSPA and, finding the statutory language to be clear, held that a private cause of action exists that allows individuals to file suit against a primary payer for funds improperly paid by Medicare and double damages may be recovered.

We will continue to follow this case and will keep you informed of any developments as the parties proceed and litigate their case. **Updated to add: We do expect this case to proceed to  federal court, as a state court should not have subject matter jurisdiction over claims arising under the MSPA.

Generic Drugs, Big Savings!

Recently, one of the most commonly prescribed opioids in workers’ compensation cases, Oxycontin, has become available in generic form in the following dosages:  20 mg, 40 mg and 80 mg.  By utilizing this drug in the generic form, the savings can be tremendous since the generic costs between $2.21 and $2.74 per pill less than the brand.

Another frequently prescribed drug in the workers’ compensation arena is Nexium, which is often used to help prevent gastro-esophageal reflux due to the use of non-steroidal anti-inflammatory drugs (NSAIDs).  Nexium’s patent expired and the drug is now available in generic form.  The cost of generic Nexium is $0.90 to $1.00 less per pill than the brand, depending on the dosage.  Accordingly, use of the generic can save a substantial amount of money, particularly when priced over the remainder of a claimant’s lifetime.

Need help determining if your claimant's drugs have a generic form? Contact us today! 

Summary: CMS Webinar on Applicable Plan Appeals

In case you missed the webinar on May 5, 2015, we have provided a summary of the webinar below:

CMS held a webinar to discuss the new administrative appeals process for applicable plans. The new regulations establishing a formal right of appeal and an administrative appeals process for applicable plans went into effect on April 28, 2015, and will allow applicable plans to go through an administrative appeals process if CMS issues a formal demand for conditional payment claims naming the applicable plan as the debtor. The appeals process is only available for demands issued against an applicable plan on or after April 28, 2015.

CMS explained that the appeals process is only available after Medicare has issued an "initial determination" (i.e., a formal demand) and includes the following steps: (1) redetermination by the contractor that issued the demand letter; (2) reconsideration by a Medicare Qualified Independent Contractor; (3) hearing with an Administrative Law Judge; and (4) review by the Medicare Appeals Council. After an applicable plan has exhausted these steps, the plan may then seek judicial review. It is important to keep in mind that by not appealing conditional payment claims through the administrative appeals process within the appropriate time frames, applicable plans will lose the right to seek judicial review or otherwise appeal the amount owed.

CMS noted that the demand letter and any subsequent appeal determinations will specify any time frame or other requirements to proceed to the next level of appeal. CMS also reiterated that the beneficiary is not a party to applicable plan appeals but the beneficiary will receive notice of any appeal that is filed.

The applicable plan may designate a representative to handle the administrative appeals process on its behalf by providing a valid Proof of Representation form. CMS confirmed that appeal requests submitted by a representative without a proper Proof of Representation form will be dismissed. A request to vacate the dismissal may be submitted with a proper Proof of Representation form.

CMS discussed that the applicable plan may appeal the amount and/or existence of the debt. However, applicable plans cannot appeal Medicare's decision to seek reimbursement from the applicable plan rather than the beneficiary.

CMS announced significant policy changes in how they will issue demand letters to applicable plans. In the past, CMS has reduced demands for procurement costs (i.e., attorney's fees and costs). In the webinar, however, CMS stated that they would not apply the procurement cost reduction for demands issued against applicable plans. We asked CMS to explain this position, as 42 C.F.R. § 411.37(b) indicates that demands issued against primary payers should be reduced for procurement costs. CMS said that they did not want to give any reduction for applicable plans for opposing their recovery. However, CMS also said that they would review all questions submitted. We are hopeful that CMS will review 42 C.F.R. § 411.37(b) and agree that demands issued against applicable plans should be reduced for procurement costs. Because CMS will typically list the insurer/self-insured employer automatically as the debtor in workers' compensation cases, a refusal by CMS to recognize the procurement cost reduction will lead to a significant increase in demand amounts in workers' compensation cases. However, we have seen CMS apply the procurement cost reduction in some demands issued after April 28, 2015, with the insurer listed as the debtor, and we are hopeful that this will continue.

CMS also indicated that in cases where CMS has agreed to a waiver or compromise of its recovery for the beneficiary, CMS may still pursue recovery from the applicable plan. In the past, if CMS agreed to a waiver or compromise request for the beneficiary, CMS would typically not pursue recovery against the primary payer. This change in policy would make it significantly more difficult to settle some cases in which Medicare has a substantial amount of conditional payment claims compared to the total settlement amount.

CMS also stated in the webinar that for claims involving ORM, CMS may periodically issue formal demands before there is a TPOC.

Typically, CMS has waited to seek recovery until there is a settlement, judgment, or award in the beneficiary's favor. Now, applicable plans that have reported ORM may start receiving demands prior to any settlement, judgment, or award.

Under 42 C.F.R. § 411.24(b), "CMS may initiate recovery as soon as it learns that payment has been made or could be made under workers' compensation, any liability or no-fault insurance, or an employer group health plan." It is important to note, however, that applicable plans should be able to appeal charges for which primary payment responsibility has not been demonstrated. If a claim has not resolved through settlement, judgment, or award, and an applicable plan would not otherwise be responsible under state law or the terms of the plan for the charges at issue, the plan could argue that CMS does not have a valid recovery claim since primary payment responsibilty has not been demonstrated.

Applicable plans will often have an MSA vendor handle the conditional payment claim research process when settlement is anticipated. However, if CMS starts issuing demand letters periodically when the applicable plan has reported ORM under Section 111, an MSA vendor may not be involved when the demand is issued and the applicable plan may not otherwise be actively looking for any conditional payment claim correspondence. Any demand that CMS issues against an applicable plan based on information that is reported under Section 111 should be sent to the address for the RRE that is reported on the TIN reference file. It is important for RREs to ensure that they have a process established for handling in a timely manner any demand letters that are sent to the address reported on the TIN reference file. Applicable plans have 120 days to file an appeal after receipt of an intial demand letter, and CMS assumes receipt of the demand letter within 5 days absent sufficient evidence to the contrary. Fortunately, beginning July 13, 2015, CMS will allow RREs to report recovery agent information on the TIN reference file, which should reduce concerns about any potential demands going unnoticed.

If you have any questions about the new appeals process, please feel free to contact one of our knowledgeable attorneys here. We will continue to keep you updated on any policy changes with CMS.

CMS Reschedules Applicable Plans Webinar

CMS announced today that they have rescheduled the webinar on Applicable Plan Appeal Rights for May 5, 2015 at 1:00 PM EST.

Participats should log in at https://webinar.cms.hhs.gov/r7ekbgn9ais.  CMS requests that Participants begin logging in 15 minutes before the start time due to the anticipated large number of participants.

For more information please see our previous post on the webinar here.

CANCELLED: CMS Applicable Plans Webinar

Update: CMS just announced that their Central Office, located in Baltimore, is closing early today due to circumstances outside their control.  As a result, the Applicable Plans Appeals webinar that was scheduled for today has been canceled.  We will let you know when CMS reschedules the webinar.

CMS Applicable Plan Appeals [Webinar]

As we previously reported, CMS recently issued a final rule pursuant to the SMART Act creating regulations establishing a formal right of appeal and an administrative appeals process for applicable plans.  The new regulations will go into effect on April 28, 2015, and will allow applicable plans to go through an administrative appeals process if CMS issues a formal demand for conditional payment claims naming the applicable plan as the debtor.  An "applicable plan" is defined as "liability insurance (including self-insurance), no-fault insurance, or a workers' compensation law or plan."

CMS has scheduled a webinar for April 28, 2015 at 1:00 pm Eastern time to discuss the appeals process. CMS requests that viewers begin logging in 15 minutes before the start time due to the anticipated large number of participants. You may sign up by clicking here.

Attending RIMS '15?

Come see us at

Booth #1943 

District Court in the Eleventh Circuit Gives Humana a Private Cause of Action Under the MSP

Courts continue to follow the Third Circuit’s lead by finding that Medicare Advantage Organizations (MAO) have a private cause of action to pursue reimbursement under the Medicare Secondary Payer Act (MSP).

In the present case, Humana Med. Plan v. W. Heritage Ins. Co., (2015 U.S. Dist. LEXIS 31875), the United States District Court for the Southern District of Florida followed the direction of the Third Circuit's and, in granting Humana’s Motion for Summary Judgment, found that Humana has a private cause of action under the MSP and is entitled to recover double damages as a result of Western Heritage Insurance Company’s (“Western”) failure to reimburse Humana for medical expenses it advanced on behalf of Ms. Reale, the plaintiff in the prior liability claim.

Especially important is that prior to settlement of the liability claim, Western attempted to resolve the Humana lien by listing Humana as a payee on the settlement check. Due to a disagreement regarding the amount owed on the Humana lien, however, the state court ordered Western to pay the full settlement amount to Ms. Reale and Ms. Reale’s attorney to hold funds in trust to be used to reimburse medical liens. As a result of the state court’s Order, Western paid the full settlement to Ms. Reale with the understanding that she would then satisfy the existing liens, including those with Humana.  When Ms. Reale failed to pay those liens due to continued disagreement of the amount owed, Humana filed the case at hand against Western.

Humana filed the Motion for Summary Judgment seeking a declaration that Western was liable to Humana for charges paid on Ms. Reale’s behalf, despite the fact that the claims were already settled directly with Ms. Reale, and that they are entitled to double damages under the MSP private cause of action provision. The Court began their analysis by discussing the history behind Medicare and the MSP, which led to discussion of the Third Circuit’s analysis of the private cause of action provision in Avandia.

The court relied on the Third Circuit’s interpretation of the MSP’s private cause of action provision in In re Avandia Sales Practices, and Products Liability Litigation, 685 F.3d (3rd Cir. 2012), which held that a plain reading of the MSP statute provided the MAO with a private cause of action and that even if the language were vague, the result would be the same as an ambiguity would require Chevron deference be given to the Centers for Medicare & Medicaid Services, and the same conclusion would be reached.  The Court found the Avandia Court’s analysis persuasive and held that MAOs such as Humana are within the purview of those who may bring a private cause of action under the MSP.  The Court then determined that Western qualifies as a primary payer under the MSP as a result of the settlement agreement between Western and Ms. Reale, in which Western reimbursed Ms. Reale for injuries she sustained. Therefore, even in light of Western’s agreement with Ms. Reale settling all claims, Western is still responsible for repayment to Humana for benefits they paid on Ms. Reale’s behalf.

In addition to finding that Humana has a private cause of action under the MSP and Western’s status as a primary payer, the Court evaluated Humana’s right to recover double damages.  The Court determined that upon settling the case with Ms. Reale, Western, as a primary payer, had a responsibility to reimburse Humana for medical expenses it paid on behalf of Ms. Reale, and failed to do so.  As such, the Court held that Western’s independent obligation to reimburse Humana and their failure to do so entitled Humana to double the amount they paid on behalf of Ms. Reale.

This is the first District Court in the Eleventh Circuit to follow the Third Circuit’s decision in Avandia, and provides further evidence that Medicare Advantage Organizations continue to gain momentum and favor with courts when it comes to their recovery rights.  It should be noted that, similar to the reimbursement rights of Medicare, the reimbursement rights of an MAO will not be bound by the terms of a settlement agreement.

If you are unsure whether a claimant is enrolled in a Medicare Advantage Plan or Part D Prescription Drug Plan, contact us today. We are happy to confirm enrollment and assist with the resolution of any such lien.

CMS Issues Final Rule Implementing Conditional Payment Appeals Process for Applicable Plans

On February 26th, 2015, CMS issued a final rule implementing provisions of the Strengthening Medicare and Repaying Taxpayers Act (the SMART Act), establishing a right of appeal and formal Medicare Secondary Payer (MSP) appeals process for applicable plans. The appeals process is for situations when Medicare seeks to recover payments from applicable plans, including liability insurance (including self-insurance), no-fault insurance, and workers’ compensation laws or plans. 




Some things to note regarding the final rule:

- The applicable plan cannot appeal unless and until an initial demand has been issued.
- Medicare has the right to recover conditional payments from the beneficiary, the primary payer, or any other entity that has the proceeds from payment by the primary plan; therefore, Medicare’s decision regarding the entity it is pursuing recovery from will not be   subject to appeal.
- The right to appeal is limited to the identified debtor, not a potential identified debtor. 
- The SMART Act provision amended only the MSP provisions for Medicare Part A and Part B (section 1862(b) of the Act) and does not apply to Part C or Part D plans pursuing an MSP based recovery. 

These regulations will become effective on April 28, 2015.  The posting on the Federal Register can be found here.

CMS Update: WCMSA Life Expectancy Calculations

As of April 1, 2015, CMS will begin referencing the CDC's Table 1: Life Table for the total population: United States, 2010, for WCMSA life expectancy calculations.  A copy of the CDC’s 2010 Life Table is available here.

Alert: CMS Issues Updated Section 111 NGHP User Guide

On February 2, 2015, CMS issued an updated Section 111 NGHP User Guide incorporating the following language from the August 19, 2014, Alert addressing liability cases involving exposure, ingestion, or implantation and December 5, 1980:

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.

The August 19, 2014, Alert also provides that Medicare will assert a recovery claim if "[e]xposure, 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" (emphasis added).  In addition, the Alert states that one of the conditions that must be met for Medicare to not assert a recovery claim is that "[e]xposure, 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" (emphasis added).

The new CMS User Guide does not include the underlined language above.  However, we have contacted CMS and confirmed that this language was left out inadvertently and the August 19, 2014, alert is still in effect.  We expect to see a new User Guide issued in the near future including the underlined language above and we will let you know when it has been issued.

The current User Guide is available here.

Upcoming Events: February

Carr Allison Medicare 

Compliance Group 

will be exhibiting at these upcoming conferences, stop by our booth and say hello!

ASIA Winter Workshop 

February 5-6, 2015

Sheraton-Birmingham, AL

IWCF- DWC Conference 

February 9-10, 2015

LAX Marriott-Los Angeles, CA

Carr Allison Medicare Compliance Group is now on Twitter!

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Reminder: Free CEU Webinar January 22

January 22, 2015

 @ 1:00 PM CST

JOIN US this Thursday for a 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 Medicare Compliance, Medicare Secondary Payer issues and important court decisions that may affect you. 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/279820751

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

US District Court: Adequacy of a Medicare Set-Aside in Liability Case

In Berry v. Toyota Motor, No. 1:11-CV-01611, 2015 U.S. Dist. LEXIS 3319, (W.D. La. January 10, 2015), a products-liability case, the United States District Court for the Western District of Louisiana was presented with a Joint Motion requesting a determination of whether Medicare's interests were adequately protected in the parties' settlement agreement and, specifically, whether a Medicare Set-aside (MSA) would be necessary. The plaintiff, Mr. Berry, was injured in a motor vehicle accident while driving his Toyota Corolla. The parties reached a confidential settlement agreement which was contingent upon the court finding that no MSA was required and that Medicare's interests were adequately protected.

In reaching its decision, the court considered affidavits from treating physicians confirming that treatment for the injuries related to the accident, had been completed and no future treatment was anticipated. The court also reviewed correspondence from Medicare confirming that all conditional payment claims paid by Medicare had been reimbursed. Based upon the evidence presented, the court held that an MSA was not necessary and Medicare's interests were adequately protected in the settlement.

Issues related to the Medicare Secondary Payer Act are typically handled through administrative remedies. However, the court validated its authority to rule on these issues by pointing out that the United States was not a party to the suit and it was not a dispute or appeal of any decision made by the Centers for Medicare and Medicaid Services (CMS). Additionally, the court noted that unlike workers' compensation cases, liability cases do not have clear-cut guidelines for parties to follow and review may not be available. Thus, without other means to establish that Medicare's interests are adequately protected in settlement, parties must look to the courts to hear motions like the one in this case.

CMS Issues Updated Section 111 NGHP User Guide

On January 5, 2015, CMS issued an updated Section 111 NGHP User Guide (version 4.4).  The new User Guide incorporates the previous Alerts on reporting partial SSNs.  As we discussed in previous posts, 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 new User Guide was also updated to show that for liability claims not involving ORM, RREs will receive the CJ07 error code for reporting liability TPOCs with TPOC dates on or after October 1, 2014, with a cumulative TPOC amount less than or equal to the current $1,000.00 threshold.  Previously, RREs could optionally report below-threshold liability TPOCs with TPOC dates on or after October 1, 2014, if the cumulative TPOC amount was more than $300.00.  CMS also included new tables in the section in the User Guide on the liability TPOC threshold (section 6.4.3).  The new Table 6-5 shows liability TPOC reporting requirement for TPOC dates since October 1, 2011, along with information on optional reporting for below-threshold liability TPOCs with TPOC dates prior to October 1, 2014.  The new Table 6-6 shows when RREs will receive the CJ07 error code for reporting below-threshold liability TPOCs.

December 10, 2014 alert can be found here.
* Updated to include the link to the current NGHP User Guide, found here.

CMS Releases Updated WCMSA User Guide and Self-Administration Toolkit

WCMSA User Guide

Version 2.3 of the Workers’ Compensation Medicare Set-Aside (WCMSA) User Guide was released January 5, 2015. Importantly, language was added regarding hydrocodone compounds schedule change and the deadline for responding to development requests has been extended for cases submitted through the WCMSA Portal.

In Section 9.4.6.2, Pharmacy Guidelines and Conditions, language was added addressing the hydrocodone compound schedule change. The reclassification occurred in October 2014, changing these products from a C-III controlled substance to a C-II controlled substance. This is significant because C-IIs require a new prescription every thirty (30) days or less while C-IIIs only require new prescriptions after five refills or six months, whichever occurs first. Under the C-II regulations, a physician may issue up to three prescriptions in one visit which would allow the patient to receive a ninety (90)-day supply in one office visit. For WCMSAs submitted on or after January 1, 2015, a minimum of 4 healthcare provider visits per year must be allocated when schedule II controlled substances are used, unless the medical records document more frequent provider visits.

Additionally, the amount of time allowed for responding to development requests for cases submitted through the WCMSA portal was extended from ten (10) days to twenty (20) days. Once the time allowed has passed, CMS closes the file and treats the subsequent submission as a new case. See Sections 9.4.1 and 9.5.

Additional changes were made to clarify language found in previous versions. To view the updated WCMSA User Guide in its entirety and a list of all changes, click here.

Self Administration Toolkit

CMS also released a toolkit for the self-administration of Medicare Set-asides as a resource for claimants. The toolkit lays out the process and guidelines of self-administration, from the time the WCMSA account is first established through its exhaustion. It explains who claimants will work with to manage their account, discusses lump sum verses structured settlement accounts and even covers special circumstances, such as when a beneficiary's status changes. The full toolkit can be downloaded here.

Fifth Circuit Court gives MAO Private Cause of Action against a Tort Settlement

In Collins v. Wellcare Plans, Inc., the plaintiff filed a declaratory action against Wellcare Plans, Inc. (Wellcare), a Medicare Advantage Organization (MAO), seeking a declaratory judgment that Wellcare is not entitled to subrogation or reimbursement from her tort settlement funds.  The amount in dispute, and arguably paid by Wellcare, was held in trust by Plaintiff’s attorney and not disbursed with the other settlement funds. Wellcare subsequently filed a counterclaim, asserting that it has a statutory right of reimbursement, which expressly pre-empts contrary state law, and sought summary judgment.

The Court dismissed the plaintiff’s claim for lack of jurisdiction.  Plaintiff’s argument requires an interpretation of the Medicare Act and therefore, arises under the Medicare Act.  Thus, Plaintiff was required to exhaust the administrative remedies prior to seeking judicial review.  Jurisdiction over the Defendant’s counterclaim was proper; however, as MAOs are not required to exhaust the same administrative remedies.

In analyzing the defendant’s claim, the court found that a cause of action existed under the MSP. The court relied on the Third Circuit’s interpretation of the MSP in In re Avandia 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 MSP.  In Avandia, the Third Circuit found that a plain reading of the statutory language provided such a cause of action, as the section of the MSP that references causes of action is broad and does not include exclusionary language that would preclude MAOs from recovering against primary plans.  The Collins Court found that even if the language were vague, the result would be the same as an ambiguity would require Chevron deference be given to the Centers for Medicare & Medicaid Services, which has supported MAO’s recovery rights in at least two memos.

After determining that MAOs have a cause of action under the MSP, the court then turned to the question of whether, in this case, Wellcare could bring a cause of action under this provision.

The Collins court first analyzed whether or not the tort settlement should be treated as a primary plan for purposes of Wellcare’s recovery rights.  The Collins court followed the reasoning of the Fourth Circuit in Brown v. Thompson, 374 F.3d 253 (4th Cir. 2004), that there is no real distinction between attempting to obtain reimbursement from a tortfeasor or his insurer and attempting to obtain reimbursement from a beneficiary whose settlement was funded by a tortfeasor or his insurer. In both instances, the money essentially flows from the same source: a tortfeasor or his insurer, both of which are considered “primary plans” under the MSP.

Once the court decided that the tort settlement should be treated as a primary plan, the court then addressed whether the Plaintiff’s settlement satisfies the MSP’s cause of action requirement that a plan fulfill both conditions denoted in § 1395y(b)(1) (“paragraph (1)”) and (b)(2)(a) (“paragraph(2)(a)”). Paragraph (1) describes group health plans while paragraph (2)(a) notes that Medicare organizations should be secondary payers when making conditional payments. Although some courts have interpreted the private cause of action to strictly apply to Group Health Plans (GHPs), the Collins court refused to do so.  Instead, it followed the Sixth Circuit’s decision in Michigan Spine, which held that the MSP provides a private cause of action for primary plans other than GHPs. The court noted that to limit the MSP private cause of action to GHPs would only “eviscerate” the private cause of action for non-group health plans.

The court then addressed the plaintiff’s arguments that Wellcare did not make a conditional payment because it did not actively seek out and identify a responsible party prior to making its payments. The court thoroughly disagreed and refused to place the burden of engaging in an active investigation on an MAO, as nothing in the statute supports such an interpretation. Moreover, in this case, Wellcare attempted to contact the plaintiff and her counsel for primary payer information and they failed to respond. As such, the court found that Wellcare did make a conditional payment in satisfaction of paragraph (2)(a).

Finally, the Court analyzed the double damages remedy of the private cause of action, which may be awarded when a primary plan fails to provide payment. The Court focused on the word “fail”, noting that “[f]ailure connotes an active dereliction of duty, and the award of double damages is intended to have a punitive effect on plans who intentionally withhold payment.”  Because the plaintiff set aside the money into a trust and sought the court’s direction, punishment was not justified in this case.  The court distinguished the double damages remedy from the private cause of action recognized, and limited double damages to parties who evidence a “failure to provide payment.”

This is the second court in the Fifth Circuit to follow the Third Circuit’s decision in Avandia. Decisions like this one evidence that Medicare Advantage Organizations continue to gain momentum and favor with courts when it comes to their recovery rights and from whom they are able to recover.

We will be glad to help ensure that you are protected by confirming whether a claimant is enrolled in a Medicare Advantage Plan or Part D Prescription Drug Plan and assisting with resolution of any such lien.

Register today! Free CEU Webinar: What's New in Medicare Compliance

January 22, 2015

 @ 1:00 PM CST

Start the new year by joining us for a 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 Medicare Compliance, Medicare Secondary Payer issues and important court decisions that may affect you. 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/279820751

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

Court Upholds Dismissal of Employee’s Action Seeking to Force Employer to Fund CMS-Approved Medicare Set-aside

In Hunter v. Rapides Parish School Bd., 2014 La. App. LEXIS 2657 (3rd La. Nov. 5, 2014), the Louisiana Third Circuit Court of Appeal affirmed the judgment of the Workers’ Compensation Judge (WCJ) dismissing an action in which the employee, Ms. Hunter, sought to force her employer, the Rapides Parish School Board (RPSB),  to fund a CMS-approved Medicare Set-aside (MSA).   Prior to the CMS determination, the parties reached a settlement agreement and it was approved by the WCJ.  The terms of the agreement required RPSB to pay Ms. Hunter $19,000.00 and to establish a Medicare Set-aside (MSA) in the amount of $79,937.77.

RPSB submitted the MSA proposal to CMS and received a rejection.  CMS required the MSA be valued at $94,265.00 instead. Following the CMS rejection, RPSB chose to pay medical expenses as they arose rather than fund the MSA and sent a certified letter to Ms. Hunter notifying her of the same.  Ms. Hunter subsequently sought to force RPSB to fund the CMS-approved MSA of $94,265.00.  However, she admittedly knew RPSB was submitting the MSA proposal to CMS and acknowledged that nothing in the settlement agreement required RPSB to fund an MSA in an amount higher than the amount she and RPSB had agreed upon.  For these reasons, the WCJ dismissed the action seeking funding of the CMS-approved MSA and the Third Circuit Court of Appeal of Louisiana affirmed the same.

Court Addresses Adequacy of MSA when Awarding Future Medicals in Liability Suit

In Tucker v. Cascade Gen., Inc., 2014 U.S. Dist. LEXIS 160265 (D. Or. Nov. 13, 2014), the Plaintiff, an employee of Cascade General, was injured while cleaning a ship owned by the United States. The Plaintiff filed a workers’ compensation claim against his employer, as well as a third party negligence action against the United States under the Longshore & Harborworkers’ Compensation Act. Tucker settled his claim against his employer, however, his claim against the United States went to trial.  At trial, Tucker requested an award of $614,341.00 for future medical expenses.  Tucker presented a life care plan and testimony from his treating physicians, among other evidence, in support of his request for the future medical award. Notably, CMS had approved a Medicare Set-aside in the amount of $334,840.00 for Tucker’s work injury. However, Tucker presented evidence  that much of his future treatment would not be covered by Medicare and thus, is not reflected in the CMS-approved Medicare Set-aside amount the same way as it is in the life care plan. In addition, Tucker argued that the MSA was calculated using the discounted rates which a longshore insurance carrier would pay and that there is no guarantee he would receive those rates.  The Court agreed with Tucker finding that “[t]he fees and charges set forth by the MSA do not provide a fair and comprehensive projection of the costs Tucker will incur for medical services over the course of his life” and awarded future medical costs of $614,341.00, the amount proposed in the life care plan.  
                                             
Interestingly, the government asked the Court to use the future treatment cost projected by the MSA (which CMS approved), but for the cost of medications, however, the government requested that the life care plan be used.  The Court notes that the United States was “selective in its use of [the MSA] as a ‘supportable methodology’ and providing ‘concrete evidence’ of costs.” 


This decision addresses a concern shared by many injured workers who are paying for their medical expenses with funds from a Medicare Set-aside.  According to Medicare’s guidelines, injured workers should be certain that no amount in excess of the applicable workers’ compensation fee schedule is paid from the MSA for medical treatment; however, there is no guarantee that the injured worker will receive the same discounted rate for services. Instead, injured workers must negotiate for the best rates at the time of service.