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.

Medicare Advantage Plan (Part C) and Prescription Drug Plan (Part D) Liens

Over the past few years, the reimbursement rights of Medicare Advantage Plans and Medicare Prescription Drug Plans have become a very hot topic. With more litigation arising across the country, clients must pay special attention to these plans when settling cases.

Under "traditional" Medicare, beneficiaries receive coverage through Part A (hospital insurance) and Part B (medical insurance). Medicare beneficiaries may choose to enroll in a Medicare Advantage Plan under Part C as an alternative to traditional Medicare. Medicare Advantage Plans are offered by private health insurers as a replacement for coverage under traditional Medicare. If a beneficiary is enrolled in a Medicare Advantage Plan, the plan pays for the beneficiary's treatment that would otherwise be covered under Parts A and B. In addition to benefits that are otherwise payable under traditional Medicare, some Advantage plans also provide prescription coverage. Medicare beneficiaries may also receive prescription drug coverage by enrolling in a Prescription Drug Plan under Part D. Like Medicare Advantage Plans, Prescription Drug Plans are offered by private health insurers.

It is important to keep in mind when resolving conditional payment claims, that the conditional payment letters issued by the new Benefits Coordination Recovery Center (BCRC), formerly the Medicare Secondary Payer Recovery Contractor (MSPRC), ONLY apply to payments made under Parts A and B of traditional Medicare. They do NOT include information concerning Medicare Advantage or Prescription Drug plan liens. If a beneficiary is enrolled in a Medicare Advantage or Prescription Drug plan, the identity of that plan should be determined and the plan should be contacted individually to determine whether it intends to assert a lien.

The problem with Medicare Advantage and Part D Plans is the difficulty associated with discovering their existence, particularly if a beneficiary has changed plans. Unfortunately, although we are usually able to determine a beneficiary's current plan and see how long he or she has been enrolled, determining the existence of any prior plans is much more difficult. It requires significant additional research along with communication with the beneficiary. Once the lien information is received, we advocate aggressively to obtain the lowest claim possible. This entire process involves a great deal of time and effort.

Since Advantage and Part D Plans are clearly legally entitled under the MSPA to recover payments made on behalf of a Medicare beneficiary, the existence of such plans and any potential claims for reimbursement should be determined before a settlement is finalized. Given the current split in court decisions concerning Advantage plans' right to sue primary plans directly in federal court, Advantage plans are filing more lawsuits now seeking recovery than ever before. Whether they can sue a primary payer directly in federal court or not, their right to recover is undisputed and should not be ignored.

If you have any questions concerning Medicare Advantage Plans or Medicare Prescription Plans, please do not hesitate to contact us. We will be more than happy to discuss this important issue with you and help ensure that you are protected.

CMS Clears Up Uncertainty Regarding TPOC Reporting Threshold: $2,000 Threshold Remains in Place

Last week, CMS announced an "increase" in the $300 threshold below which claims do not have to be reported to Medicare and for which Medicare will not seek recovery of conditional payments.  That threshold was changed from $300 to $1,000 and was effective immediately with the publishing of the alert.  Given the wording of the CMS alert, it remained unclear, however, whether the $2,000 TPOC reporting threshold currently in place until October, 2014 was also changed.

Today, CMS issued an updated version of the NGHP User Guide which clarified the issue.  The new threshold does NOT affect the current $2,000 TPOC threshold.  The User Guide now provides as follows: 

• If the most recent TPOC Date is on or between October 1, 2013 and September 30, 2014, and the cumulative TPOC Amount is greater than $2,000, the TPOC(s) must be reported no later than the end of the RRE’s submission timeframe in the quarter beginning January 1, 2014.
•  For this date range, TPOCs greater than $300 through $2,000 may be reported, but there is no requirement to do so.
• If an add record is submitted for this date range with a total TPOC Amount less than or equal to $300, the claim report will reject with a CJ07 error. 
• If the most recent TPOC Date is on or after October 1, 2014, and the cumulative TPOC Amount is greater than $1000, the TPOC(s) must be reported no later than the end of the RRE’s submission timeframe in the quarter beginning January 1, 2015.
•  For this date range, TPOCs greater than $300 through $1,000 may be reported, but there is no requirement to do so. 
• If an add record is submitted for this date range with a total TPOC Amount less than or equal to $300, the claim report will reject with a CJ07 error.

The NGHP User Guide may be found by clicking here.  

New CMS Alert: Liability Settlements Below $1000 Do Not Have to be Reported and CMS Will Not Seek Reimbursement

On February 18, 2014, CMS issued two alerts concerning settlements in liability cases.  The first alert raised the minimum threshold for reporting liability settlements under Section 111 and for determining whether Medicare’s conditional payment claims must be reimbursed.  The threshold was raised from $300 to $1000.  In a second alert issued on the same date, CMS indicated that the new threshold applies immediately to physical trauma-based liability settlements only.  The threshold does not apply to settlements for ingestion, implantation or exposure or to workers’ compensation cases.  CMS stated: "CMS is increasing its current reporting threshold from $300 to $1000.  This new threshold is effective immediately.  This means that physical trauma-based liability settlements of $1000 or less do not need to be reported and recovery of  Medicare’s conditional payment amount from these settlements will not be pursued."  You may find each of these alerts at:

http://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Mandatory-Insurer-Reporting-For-Non-Group-Health-Plans/Downloads/New-Downloads/Computation-of-Annual-Liability-Insurance-Settlement-Reporting-and-Recovery-Threshold.pdf

and

http://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Mandatory-Insurer-Reporting-For-Non-Group-Health-Plans/Downloads/New-Downloads/Alert-Change-in-Reporting-Threshold-for-Certain-Liability-Settlements-Judgments-Awards-or-Other-Payments.pdf

We will continue to stay ahead of developments concerning the Medicare Secondary Payer Act and ensure that you remain informed.  Please contact us if you have questions regarding the most recent CMS alert or any other Medicare Compliance issue.