CMS Issues Alert Concerning Delay of Transition to ICD-10 Codes

President Obama signed into law the Protecting Access to Medicare Act of 2014. The new law delays the implementation of ICD-10 codes from October 1, 2014 to October 1, 2015. As a result of this new law, CMS has issued notice that, effective immediately, Responsible Reporting Entitles are to postpone reporting ICD-10-CM diagnosis codes on their production Claim Input File and Direct Data Entry (DDE) submissions until

October 1, 2015. RREs may continue to submit ICD-10-CM diagnosis codes on test Claim Input File submissions.
 
The full text of the CMS alert can be found at: http://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Mandatory-Insurer-Reporting-For-Non-Group-Health-Plans/Downloads/New-Downloads/Delay-in-transition-from-ICD-9-CM-diagnosis-codes-to-ICD-10-CM-diagnosis-codes-for-Liability-Insurance-Including-Self-Insurance-No-Fault-Insurance-and-Workers-Compensation.pdf

Some Workers' Compensation Courts Recognize the Importance of Considering Medicare's Potential Interests in Every Case

Medicare Secondary Payer Act compliance has become such a commonplace concern that some courts recognize the need to consider this issue in every workers' compensation claim that settles. A prime example of this is Nebraska's workers' compensation court, which requires, pursuant to Rule 47(B)(12) of its rules of procedure, that every application identify whether the claimant is a Medicare beneficiary, is eligible for Medicare, or has a reasonable expectation of becoming eligible for Medicare within 30 months of the settlement's execution. The rule further provides that if the claimant has a reasonable expectation of becoming a Medicare beneficiary within 30 months, the application should further identify the date of expected Medicare eligibility. If the claimant is actually a Medicare beneficiary at the time of the settlement's execution, the application must acknowledge the status of conditional payment claims research and that the employer will be responsible for Medicare's asserted, related claims.

 

This blanket approach to evaluate Medicare's potential interest in every case is laudable, and we encourage defendants to approach their settlements in this way (even if the governing court does not mandate that an application include this language). We would further encourage the parties to consider the use of a Medicare Set-aside in those cases with Medicare beneficiaries (or with claimants who have a reasonable expectation of becoming a beneficiary within 30 months of settlement). Of course, a Medicare Set-aside's calculation and creation depends upon a number of factors. We welcome the chance to assist parties with their analysis of these issues, regardless of whether it is on a case-by-case basis or whether it is in the development of consistent, internal procedures and policies.

Don't Forget to Report Termination of ORM!

It is important to remember to report termination of ORM once the RRE’s responsibility for paying for medical expenses ends, such as through closure of future medical expenses in workers’ compensation cases and exhaustion of policy limits for no-fault claims. In situations where ORM has ended and it would otherwise be appropriate for Medicare to pay for treatment related to an injury at issue in the claim, it is particularly important for termination of ORM to be reported promptly. Otherwise, Medicare will very likely continue to deny payment for any treatment related to the injury.

In order to avoid Medicare continuing to deny payment for the claimant’s treatment, RREs have the option of making an immediate report of termination of ORM by calling Medicare’s Benefits Coordination and Recovery Contractor at 1-855-798-2627. It is important to note that reporting termination of ORM by phone does not relieve the RRE from responsibility to electronically report termination of ORM.

RREs may also report termination of ORM electronically prior to their next quarterly file submission period. CMS allows RREs to submit claim input files outside of their assigned file submission period, which CMS has indicated is primarily for the purpose of allowing RREs to more quickly report termination of ORM. RREs cannot submit more than one claim input file every 14 days, and RREs must still submit a claim input file during their assigned file submission period even if another claim input file has already been submitted during the quarter.

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.