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

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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.