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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. 

THANK YOU 

FOR A GREAT YEAR!

WISHING OUR 

CLIENTS AND FRIENDS

A HAPPY NEW YEAR

AND CONTINUED SUCCESS IN 2015


Carr Allison MSA