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As Medicare Conditional Payment Appeal Rules for Plans/Payers Become Effective 4/28/15, CMS to Host Webinar to Explain New Process and Offer Tips and Suggestions for Plans/Payers

By , April 24, 2015 11:54 am

RG Helios Professional Pictures (2)On April 22, 2015, the Centers for Medicare and Medicaid Services Financial Services Group (CMS) published a memo announcing the latest changes on “Appeal Rights for Applicable Plans for Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation.”

By way of background, the memo indicates that “on February 27, 2015, CMS issued a final rule implementing certain provisions of the Strengthening Medicare and Repaying Taxpayers Act of 2012 (SMART Act). This final rule established a formal appeals process for applicable plans in situations where the Secretary seeks Medicare Secondary Payer (MSP) recovery directly from an applicable plan. The rule is effective on April 28, 2015 and applies to demand letters issued on or after April 28, 2015.”

As defined in the new regulations, “applicable plans include liability insurance (including self-insurance), no-fault insurance, and workers’ compensation laws or plans. The SMART Act further requires that the Medicare beneficiary who received the items and/or services in question be notified of the applicable plan’s intent to appeal. The final rule can be found at 80 FR 10611, February 27, 2015.”

If an MSP recovery demand is issued to the beneficiary as the identified debtor, the beneficiary has formal administrative appeal and judicial review rights. Prior to this regulation however, “recovery demands issued to the applicable plan as the identified debtor had no formal administrative appeal rights or judicial review.” However these new rules change that as” the appeals process established in the final rule parallels the existing process for claims-based beneficiary and other appeals for both non-MSP and MSP, and is used for appeals involving both prepayment denials as well as overpayments.”

The memo explains that the final rule establishes a formal multilevel appeal process for applicable plans where MSP recovery is pursued directly from the applicable plan. This process includes:

  • An “initial determination” (the MSP recovery demand letter),
  • A “redetermination” by the contractor issuing the recovery demand,
  • A “reconsideration” by a Qualified Independent Contractor,
  • A hearing by an administrative law judge (ALJ),
  • A review by the Departmental Appeals Board’s Medicare Appeals Council, and
  • Judicial review.

The memo makes it clear that “the applicable plan is the only entity with appeal rights/party status when Medicare pursues recovery directly from the applicable plan. The beneficiary is not a party to applicable plan appeals. However, CMS is required to provide notice to the beneficiary of the applicable plan’s intent to appeal and will provide such notice if the applicable plan files a request for a redetermination.”

The memo also explains that “proper proof of representation must be submitted in writing prior to or with a request for appeal in order for an attorney, agent or other entity to file an appeal on behalf of an applicable plan or act on behalf of an applicable plan with respect to an appeal that has been requested.” Appeal requests without proper proof of representation will be dismissed. “Proper proof of representation may be submitted with a request to vacate the dismissal, but the better course of action is to make sure that proper proof of representation has been submitted when requesting a redetermination.” Separate proof of representation is required even where an applicable plan may have identified an agent for recovery correspondence as part of the Medicare, Medicaid & SCHIP Extension Act of 2007 Section 111 reporting process.

The memo indicates that “the applicable plan may appeal the amount of the debt and/or the existence of the debt. However, the regulation does not permit applicable plans to appeal the issue of who is the responsible party/correct debtor. Requests for appeal on the basis that the applicable plan is not the correct debtor will therefore be dismissed. Medicare’s decision regarding who or what entity it is pursuing recovery from is not subject to appeal.”

CMS’ memo can be found here.

In order to assist and inform interested parties and stakeholders, CMS also announced it will be presenting a webinar on “Applicable Plan” Appeals. The presentation will include “an introduction to the appeals process (as the process is new to applicable plans), information on the appeals process specific to applicable plans, and tips/suggestions to applicable plans regarding the recovery process, including appeals.” The webinar will be held on April 28, 2015 at 1:00 PM Eastern time, and sign-ups are now open. CMS has asked that those planning on attending begin logging in approximately 15 minutes before the start time, due to the large number of anticipated participants.

For those of you interested in learning more about what this new appeals process means for payers, please visit  this article on workcompwire.com where I discuss that the MSP Act has always provided the Medicare beneficiary with the right to seek an appeal if he or she disagreed with the amount of the reimbursement sought by Medicare. However, despite considering workers’ compensation plans, liability and no-fault insurers, and self-insurers as primary payers, the MSP Act did not include an appeals process for these non-group health plans (NGHPs). If a payer disagreed with Medicare’s assessment of a conditional payment owed, there was no formal process for an appeal. In 2013, the Strengthening Medicare and Reimbursing Tax Payers (SMART) Act proposed an amendment to the MSP, which would give NGHPs the right to appeal and a formal appeals process when Medicare pursued a recovery directly from them. After more than a year of collecting and considering public comment, CMS published the final rule, which becomes effective April 28, 2015. Finally, employers, carriers, and administrators in the workers’ compensation system will have a process to voice their disagreement or concerns with the items and amount of Medicare reimbursement.

Pennsylvania Federal District Court Enforces Settlement Agreement, Confuses Medicare Status, Conditional Payment Responsibility, and Future Concerns

By , April 23, 2015 4:04 pm

Rafael GonzalezOn March 23, 2015, the United States District Court for the Eastern District of Pennsylvania published its opinion on Villare v. GEICO Casualty Company, finding that since Plaintiffs had put forward uncontroverted evidence in the form of affidavits showing that Mr. Villare was not a Medicare beneficiary and that no Medicare lien existed, Plaintiffs had fulfilled their obligations under the settlement agreement and were therefore entitled to the $100,000 payment for which they bargained. The court makes it clear that if Geico wished to make the settlement contingent upon a letter from Medicare attesting that there was no Medicare lien and/or that there would not be any future Medicare lien, it could have done so during the settlement negotiations. Since it did not, Plaintiffs’ motion to enforce the settlement agreement was granted. More than this however, the case highlights the lack of understanding among liability litigants and the judiciary as to the requirements of the MSP Act, including the significance of being a current Medicare beneficiary or potentially becoming one within 30 months of the settlement date, the differences between resolving Medicare’s past conditional payments, and how to appropriately take Medicare’s future interests into account when settling future entitlement to medical care associated with the pending claim.

Plaintiffs James and Suzanne Villare sought to recover from their auto insurance company, Defendant Geico Casualty Company, after Mr. Villare was injured in a collision with an underinsured motorist. Following a settlement conference, the parties agreed to settle for $100,000.

The terms of the settlement, as memorialized in a February 12, 2015 letter from Defendant’s counsel, included Plaintiffs’ agreement “to satisfy any and all liens being asserted in this matter with these settlement funds.” However, upon reading the Release and Trust Agreement drafted by Geico, Mr. Villare was unable to sign the Release and Trust Agreement because it included an inaccurate provision attesting that he was not within 30 months of becoming eligible for Medicare. After striking the inaccurate sentence, the Villares signed the Release and Trust Agreement, including all other provisions requested by Geico. Geico however refused to send payment and as a result Plaintiffs filed a Motion to Enforce the Settlement Agreement.

Plaintiffs argued that the material terms of the settlement were (1) Geico would pay $100,000 in exchange for a full and final settlement of all claims, (2) Plaintiffs would execute a Child Support Affidavit, and (3) Plaintiffs would agree to satisfy any and all liens being asserted in this matter with the settlement funds. These settlement terms were memorialized in a February 12, 2015 letter from Geico’s counsel.

To consummate the settlement, Geico provided a Release and Trust Agreement for Plaintiffs to sign. Consistent with the settlement terms, the Release and Trust Agreement provided that any liens have been settled or satisfied, that Plaintiffs will satisfy such liens in the future, and that Plaintiffs will “defend, indemnify, and forever save harmless” Geico from any such liens that have been or may be asserted, including Medicare liens. However, the Release and Trust Agreement also requested that Plaintiffs represent that they have not received Medicare or Social Security benefits related to the accident, and that they will not be Medicare-eligible within 30 months.

The final sentence regarding Medicare eligibility within 30 months was problematic because Mr. Villare was 64 years old and would be Medicare eligible within 30 months when he turned 65. To remedy this problem, Plaintiffs signed and notarized a version of the Release and Trust Agreement that omitted the sentence about not becoming Medicare-eligible within 30 months. The signed version otherwise included all of the representations and indemnification provisions that Geico requested. Plaintiffs therefore argued that this signed agreement fulfilled their settlement obligations.

Geico, however, insisted that the Villares provide evidence that there were no outstanding Medicare liens in the form of a final letter from Medicare. In response, the Villares took additional steps to show that there were no Medicare liens. A legal assistant for Plaintiffs’ counsel contacted Medicare to inquire about Mr. Villare’s Medicare status and submitted an affidavit stating that Mr. Villare was not Medicare eligible, had no open Medicare claims, had no Medicare number, and that a Medicare representative stated that Medicare could not provide a letter about his claim status because he was not Medicare eligible and was not registered with Medicare. Mr. Villare also provided an affidavit attesting that he did not meet any of the requirements to be eligible for Medicare and had not submitted any claims to Medicare.

Plaintiffs therefore argued that they had complied with their obligations under the settlement agreement and had made a good faith effort to comply with Geico’s additional requests regarding Medicare liens. They requested the Court either order Geico’s counsel to deliver the settlement funds to them or set the case for trial.

Geico did not dispute the basic facts but argued that Plaintiffs had not yet satisfied the settlement agreement because they had not provided proof of satisfaction of any Medicare liens in the form of a letter from Medicare. Geico argued that Medicare has a 30-month “look back period” “which Medicare may review in determining the issuance of liens.” Additionally, Geico pointed to Medicare regulations that specify that a beneficiary must reimburse Medicare if he is covered by liability insurance and receives a liability insurance payment for medical services that Medicare covered. 42 C.F.R. § 411.24(h). Moreover, they were concerned that if the beneficiary failed to do so, the insurance company would have to reimburse Medicare, even if it had already reimbursed the beneficiary for the same claim. Id. § 411.24(i)(1).

Geico argued that Mr. Villare had represented during settlement negotiations that he would need future medical care as a result of the accident totaling $91,375 to $199,950 over the rest of his life. To the extent that such costs are covered by Medicare, Geico argued that Medicare could seek repayment from the Villares and/or from Geico under 42 C.F.R. § 411.24 and the look back policy. Geico also argued that the defense and indemnification language in the Release and Trust Agreement was insufficient because if Medicare was unable to collect a lien from the Plaintiffs, it was unlikely Geico would be able to enforce the defense and indemnification provisions.

Geico argued that it had offered two ways to resolve this dispute. First, it could place the settlement funds in escrow until Plaintiffs obtained a letter from Medicare attesting to the lack of a Medicare lien. Second, it had proposed that Plaintiffs and their counsel sign a separate Medicare Hold Harmless agreement, in which both Plaintiffs and their counsel would agree to indemnify Geico. Geico contended that the settlement agreement was a valid and binding contract, so this case should not be listed for trial and instead one of the two options Geico had suggested should be pursued.

The parties both agreed that a final and binding settlement was reached in this case and that the material terms included the Plaintiffs’ agreement “to satisfy any and all liens being asserted in this matter with these settlement funds.” Therefore, the only dispute was whether Plaintiffs have complied with that requirement.

The court indicates that at hearing, counsel for both parties agreed that the only known, outstanding lien is a lien from Aetna and that the Villares had agreed to pay the Aetna lien with the proceeds from the settlement. The court also pointed out that both counsel also agreed that there was no explicit discussion of Medicare liens or the Medicare look back period during the negotiations that resulted in the settlement agreement. The court also highlights that there is no dispute that the Villares have signed, notarized, and delivered to Geico’s counsel a version of Geico’s Release and Trust Agreement that includes all of the provisions requested by Geico except for one sentence that inaccurately represents that the Villares will not become Medicare-eligible within 30 months.

Notably, the court notes that the version signed by the Villares explicitly obligates them to “defend, indemnify, and forever save harmless” Geico “from and against any and all liens” arising out of the incident that is the subject of this litigation, “including, without limitation, any Medicare or Medicaid liens.” Furthermore, since Plaintiffs have put forward uncontroverted evidence in the form of affidavits showing that Mr. Villare is not currently Medicare eligible and, to date, is not the subject of any Medicare liens, the Court concludes that Plaintiffs have fulfilled their obligations under the settlement agreement and are entitled to the $100,000 payment for which they bargained.

The court makes it clear that if Geico wished to make the settlement contingent upon a letter from Medicare attesting that there were no current Medicare liens and/or that there will not be any future Medicare liens, it could have done so during the settlement negotiations. Since it did not, Plaintiffs motion to enforce the settlement agreement was granted.

As this case clearly shows Medicare Secondary Payer Act issues have arrived in liability cases. And as this case highlights, all of the parties involved, including plaintiff counsel, defense counsel, corporate defendant, insurer, and yes, even the judiciary must become familiar with and have a working understanding of the MSP Act. As the facts of this case indicates, no one was comfortable with or understood the intricacies and requirements of the MSP Act, including the significance of being a current Medicare beneficiary or potentially becoming one within 30 months of the settlement date, the differences between resolving Medicare’s past conditional payments, and how to appropriately take Medicare’s future interests into account when settling future entitlement to medical care associated with the pending claim.

Having established that the plaintiff was not a current Medicare beneficiary, there were no conditional payments made by Medicare; therefore no liens to worry about. Since the plaintiff however was anticipated to become a Medicare beneficiary within 30 months of the settlement date, the parties were responsible for making sure Medicare’s future interests were protected so that Medicare remained a secondary payer post settlement. Neither the parties or the court here did anything to make sure Medicare’s future interests were protected. As a result, the litigants left the federal court house without any protection from CMS either denying future Medicare coverage to the plaintiff, requiring plaintiff spend the entire $100,000 settlement on future medical care related to the claim before Medicare becomes the primary payer, or if Medicare makes a conditional payment in the future, from seeking reimbursement from the plaintiff or defendant. And then of course there are the possibilities of MSP private cause of action by the plaintiff or medical providers or Medicare Advantage Plans (should plaintiff forego Parts A and B and instead opt for Part C coverage) or Medicare Prescription Drug Plans (should plaintiff keep Parts A and B and decide to also purchase Part D coverage) against defendant for double damages should Geico deny such request for reimbursement in the future. Unfortunately, because of the parties’ lack of understanding of the MSP Act, the possibilities for potential liability are endless.

At Helios, we have clinical and legal experts with many years of extensive experience in providing MSP services to general liability, auto, no fault, med pay, medical malpractice, products liability, and other forms of liability matters. Contact us to learn more about our mandatory insurer reporting, conditional payment resolution, and set aside services specifically configured for liability self insured, administrators, and insurers.

Florida Federal Court Dismisses MAP Private Cause of Action Due to Lack of Demonstration of Responsibility

By , April 16, 2015 2:49 pm

RG Helios Professional Pictures (2)On April 2, 2015, the United States District Court for the Southern District of Florida published its opinion on MSP Recovery, LLC v. Progressive Select Insurance Company, finding that since Plaintiff did not allege that Defendant’s responsibility to pay had been demonstrated by settlement, judgment, award, or any other means, the court granted Defendant’s motion to dismiss, dismissing the claim without prejudice, thereby allowing Plaintiff to reassert its claim after Defendant’s responsibility to pay under Section 1395y(b)(3)(A) has been demonstrated. The court followed the findings of the 11th Circuit in Glover v. Liggett Group and Phillip Morris, USA, in which that court concluded that a primary plan has a duty to reimburse a secondary payer MAO for conditional payments only “if it is demonstrated that such primary plan has or had a responsibility to make payment.”

Florida Healthcare Plus (FHCP) is a Medicare Advantage Organization (MAO). On February 20, 2014, one of its members, who had opted into FHCP’s Medical Advantage Plan (MAP), sustained injuries during a car accident. Though this member was also insured under a personal injury protection (PIP) policy issued by Defendant Progressive Select Insurance, FHCP conditionally paid for the cost of medical expenses associated with the accident. Notwithstanding the fact that Defendant’s PIP policy is a primary plan, Defendant refused to provide reimbursement.

On December 9, 2014, MSP Recovery, LLC, Plaintiff, who was assigned FHCP’s right to reimbursement, filed suit against Defendant in the County Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida to recover under 42 U.S.C. §1395y(b)(3)(A), a private right of action created by the Medicare Secondary Payer Act (MSP Act). Defendant removed the action to federal court on January 20, 2015, and then moved to dismiss.

Defendant moved to dismiss, arguing that Plaintiff lacked standing, that the Court lacked subject-matter jurisdiction, and that Plaintiff has failed to state a claim upon which relief may be granted.

As to standing, Plaintiff alleged that FHCP assigned its right to reimbursement to La Ley Recovery, and that La Ley Recovery then assigned that right to Plaintiff. Defendant asserted that this allegation is insufficient to establish standing for two reasons. First, Defendant argued that the allegation is conclusory because it is not supported by documentary evidence. Second, Defendant argued that the allegation is inadequate because the record contains contradictory evidence. Defendant’s arguments failed as the allegations in the complaint must be taken as true for purposes of the motion to dismiss.

As to subject-matter jurisdiction, Defendant argued that the Court lacks federal question subject-matter jurisdiction because 42 U.S.C. § 1395y(b)(3)(A), under which Plaintiff sues, does not provide a right of action for Medicare Advantage Organizations (MAO) seeking reimbursement for conditional payments from primary  plans. The Court disagreed with Defendant’s assertion and found that Section 1395y(b)(3)(A) extends to MAOs. See, e.g., In re Avandia Mktg., Sales Practices & Products Liab. Litig., 685 F.3d 353, 357-67 (3d Cir. 2012) (holding that Section 1395y(b)(3)(A) provides a private right of action to MAOs).

As to failure to state a claim, while Section 1395y(b)(3)(A) provides a private right of action to MAOs, the court points out that a primary plan has a duty to reimburse a secondary-payer MAO for conditional payments only “if it is demonstrated that such primary plan has or had a responsibility to make payment.” 42 U.S.C. § 1395y(b)(2)(B)(ii); Glover v. Liggett Grp., Inc., 459 F.3d 1304, 1308 (11th Cir. 2006). The Eleventh Circuit has interpreted this provision to require a prior “demonstration” of a primary plan’s responsibility to pay as a condition precedent to bringing suit under Section 1395y(b)(3)(A). Glover, 459 F.3d at 1309 (“Until Defendants’ responsibility to pay for a Medicare beneficiary’s expenses has been demonstrated (for example, by a judgment), Defendants’ obligation to reimburse Medicare does not exist under the relevant provisions.”).

Under the statute, “a primary plan’s responsibility for payment may 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). Here, Plaintiff did not allege that Defendant’s responsibility to pay has been demonstrated by any means. Therefore, the court granted Defendant’s motion to dismiss, dismissing the claim without prejudice, thereby allowing Plaintiff to reassert its claim after Defendant’s responsibility to pay under Section 1395y(b)(3)(A) has been demonstrated.

After a number of opinions from federal courts throughout the country allowing MAPs to use the MSP private cause of action provision to collect double damages without proving the primary payer was in fact responsible for such payments, this decision re-awakens the 11th Circuit’s 2006 opinion in Glover v. Liggett Group that found that in order for a MAP to seek reimbursement under the MSP private cause of action, the MAP, or other party/entity seeking reimbursement, must prove that the primary payer is responsible for such payments as a result of a settlement, judgment, award, or other means. As the only MSP vendor to have a specific team dedicated to resolution of MAP conditional payments, Helios continues to monitor both federal and state court opinions interpreting the MSP private cause of action to be able to provide all of our clients the very latest and most sound options and choices in appropriately, timely, and responsibly handling resolution of such conditional payments.

With 30 years experience in the areas of workers compensation, liability, social security, Medicare, Medicaid, set asides, and special needs trusts, Rafael Gonzalez, Esq. is currently vice president of strategic solutions at Helios, serving as a thought leader on all aspects of Medicare and Medicaid compliance issues, including mandatory insurer reporting, conditional payment resolution, Medicare set aside allocations, CMS approval, and MSA and SNT professional administration. He can be reached at rafael.gonzalez@helioscomp.com or 813.390.1645.

CMS Releases Updated NGHP User Guide Version 4.6

By , April 7, 2015 9:45 am

CMS released an updated User Guide for NGHPs, version 4.6, on April 6, 2015.

The update contained in the new version appears to have been previously released on a technical alert dated November 25, 2014 regarding the use of partial Social Security Numbers for NGHP Section 111 reporting. While these edits are bringing the User Guide up-to-date with the alerts, Helios encourages RREs and claim administrators to review the new User Guide in its entirety to ensure compliance.

The change noted in the revision history of the document lists the following items:

CR13592: In instances where a duplicate is returned, indicated by the disposition code “DP” or messaging on the Beneficiary Not Found page, users are instructed on what actions to take to remain in compliance with reporting requirements (Chapters IV & V). See Chapter 1 for details.

This change request relates to a scenario where a DP disposition code is returned by CMS when a 5-digit SSN is used to query beneficiary status, but cannot be matched to a single record. The resolution, as detailed in the User Guide 4.6 and the original alert, includes validating all the query related fields, submitting the full 9-digit SSN (if available) and then contacting the BCRC at 1-855-798-2627 if a distinct match can still not be made.

The updated chapters of the User Guide 4.6 can be found here.

For more information, please contact Frank Fairchok, Senior Manager of MedicareConnect at Frank.Fairchok@helioscomp.com.

For a consolidated, single PDF file version of the User Guide 4.6, please contact Helios at JustRegister@Helioscomp.com.

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