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North Carolina Federal Court Finds Provision on Anticipation of Medicare Eligibility within 30 Months of Settlement Does Not Concede Potential Social Security Disability

By , July 8, 2016 4:17 pm

051816_1352_VirginiaFed1.jpgOn June 1, 2016, the United States District Court for the Eastern District of North Carolina published its opinion on Boone v. Colvin, concluding that in deciding Plaintiff’s credibility pertaining to her Supplemental Security Income (SSI) application, the administrative law judge (ALJ) incorrectly used a portion of the workers compensation settlement agreement addressing future Medicare eligibility. Because the issue was entitlement to SSI, not Disability Insurance Benefits (DIB), the fact that the settlement agreement indicated there was no reasonable expectation that Plaintiff will be Medicare eligible within thirty months of the settlement, did not mean Plaintiff conceded or agreed she was not disabled under the Social Security Administration rules for SSI benefits.

Case History

Ms. Boone, the Plaintiff in this case, had an accident in the course and scope of her employment on December 2, 2004. As a result of her industrial accident, she suffered a disc herniation at L4-5, which was initially treated with pain management. Ultimately, she had an artificial disk implantation on February 5, 2007. Thereafter, she reached maximum medical improvement on July 5, 2007 with permanent light duty restrictions and a 15 percent partial disability rating. After negotiating with her employer/carrier, on March 30, 2009, she agreed to and was awarded a $75,000 settlement by a workers’ compensation judge, terminating any and all entitlement to indemnity and medical benefits she may have had pursuant to the North Carolina workers’ compensation law. After attorney fees and costs, she netted $56,000.

The workers’ compensation settlement agreement contained a provision regarding future medical benefits. Because she was not then a Medicare beneficiary, had not applied for social security disability benefits and was not within 30 months of reasonably anticipating becoming a Medicare beneficiary, the agreement included language stating “it is not the intention of the instant settlement agreement to shift responsibility for future medical benefits to the federal government. Having considered Medicare’s potential interest in future medical expenses, the parties have agreed no Medicare set aside amount is necessary by way of this claim. In determining no set aside is necessary, the parties considered various matters, including but not limited to the following: Plaintiff is not Medicare eligible and there is no reasonable expectation that Plaintiff will be Medicare eligible within the next thirty (30) months. It is noted that the future need for medical care and treatment is disputed in this case as previously noted in this agreement. It is further noted that this settlement agreement specifically forecloses the possibility of future payment of medical benefits incurred after the date of the settlement agreement.”

Although the opinion does not indicate whether at a previous point the Plaintiff may have been insured for Disability Insurance Benefits (DIB), by the time she applied for social security benefits, she was not insured for DIB, therefore applied only for Supplemental Security Income (SSI). Almost six years after her date of accident, and more than three years after her settlement, Plaintiff filed an application for SSI on July 14, 2010, alleging a disability onset date of December 2, 2004, her workers’ compensation date of accident. The application was denied initially and upon reconsideration, and a request for a hearing was timely filed. While waiting for the hearing to be scheduled, on May 9, 2011, the North Carolina Department of Health and Human Services (NCDHHS) allowed Plaintiff Medicaid benefits.

On February 9, 2012, a video hearing was held before an ALJ. The ALJ issued a decision denying Plaintiff’s claims on March 9, 2012. Plaintiff timely requested review by the Appeals Council. More than a year later, on April 15, 2013, the Appeals Council allowed the request and remanded the case with instructions that the ALJ further evaluate Plaintiff’s medically determinable mental impairments, evaluate the May 9, 2011 decision by the NCDHHS allowing Plaintiff Medicaid benefits and give further consideration to Plaintiff’s residual functional capacity (RFC), providing appropriate rationale for it with specific supporting references to evidence of record.

On December 5, 2013, a second hearing was held before a different ALJ On March 24, 2014, the ALJ issued a decision again denying Plaintiff’s claim for SSI. Plaintiff timely requested review by the Appeals Council. More than a year later, on June 25, 2015, the Appeals Council denied the request for review. Almost 11 years after her date of accident, and more than 5 years from the date of her application for SSI, on August 31, 2015, Plaintiff commenced this proceeding for judicial review of the ALJ’s decision.

Administrative Law Judge Findings

Plaintiff was 42 years old on the date she filed her application for SSI and 45 years old on the date of the hearing, therefore considered a younger individual. 20 C.F.R. § 416.964(b)(3). The ALJ found that she had at least a high school education. 20 C.F.R. § 416.964(b)(4). The ALJ further found that Plaintiff had past relevant work as a driver, fire watcher, transporter and child care provider.

Applying the five-step sequential evaluation analysis of 20 C.F.R. § 416.920(a)(4), the ALJ found at step one that Plaintiff had not engaged in substantial gainful activity since the date of her application. At step two, the ALJ found that Plaintiff had the following medically determinable impairments that were severe within the meaning of the Regulations: post-laminectomy syndrome, lumbosacral spondylosis and chronic back pain. At step three, the ALJ found that Plaintiff’s impairments did not meet or medically equal any of the Listings.

Due to concerns about the Plaintiff’s credibility, the ALJ next determined that Plaintiff had the RFC to perform a limited range of light work. Based on her determination of Plaintiff’s RFC, the ALJ found at step four that the Plaintiff was not capable of performing her past relevant work. At step five, the ALJ accepted the testimony of the vocational expert and found that there were jobs in the national economy existing in significant numbers that the Plaintiff could perform, including jobs in the occupations of silver wrapper, routing clerk and advertising material distributor. The ALJ therefore concluded that Plaintiff was not disabled from the date of her application, July 14, 2010, and therefore not entitled to SSI.

Evaluation of the Workers’ Compensation Agreement

On appeal, Plaintiff asserted that the ALJ’s decision should be reversed and SSI benefits awarded or, alternatively, that the case should be remanded for a new hearing on the principal grounds that the ALJ erroneously evaluated the state Medicaid decision and the workers’ compensation settlement into which Plaintiff entered into on March 30, 2009 in determining Plaintiff’s credibility.

At the second step of the assessment, the ALJ found that Plaintiff’s allegations were not fully credible. The ALJ stated that “the claimant’s statements concerning the intensity, persistence and limiting effects of her symptoms are not entirely credible.” The ALJ provided specific reasons for her credibility determination, including an assessment of the workers’ compensation agreement.

The ALJ deemed the “not reasonably eligible for Medicare within 30 months of settlement” provision inconsistent with Plaintiff’s claim of disability. In other words, the ALJ found that because the claimant herself agreed in the workers’ compensation settlement agreement there was no reasonable expectation she would become Medicare eligible within 30 months; in effect, “she conceded that she agreed she was not disabled under the Social Security Administration rules at that time.”

Improper Use of Medicare Eligibility Provision to Evaluate Credibility

On appeal, Plaintiff contends that “the agreement and the specific Medicare eligibility provision does not relate at all as to whether or not she meets Social Security requirements.” The court finds merit in this point indicating that “while entitlement to a period of disability and disability insurance under Title II of the Act (DIB) establishes entitlement to Medicare benefits, 42 U.S.C. § 426(b)(2)(A)(i), entitlement to SSI does not. Plaintiff’s agreement to the provision could reflect simply Plaintiff’s pursuit of SSI rather than DIB.”

The Commissioner of the SSA agrees that the ALJ was evaluating the Medicare eligibility provision from a DIB perspective and that the ALJ erred in doing so. “The Commissioner concedes that the ALJ’s interpretation of the agreement was ill-founded.” The Commissioner argues, nonetheless, that the ALJ’s error in discounting Plaintiff’s credibility on the basis of the provision in the workers’ compensation agreement is harmless. She cites to the other significant evidence the ALJ discusses in support of her credibility assessment. The court here however indicates that “while the evidence is admittedly extensive, the court cannot say that the ALJ’s error was harmless.”

One reason is that the ALJ did not indicate the weight she gave the inconsistency she found between the provision in the workers’ compensation agreement and Plaintiff’s claim of disability. “The decision fails to foreclose the possibility that the ALJ’s error significantly tainted her view toward Plaintiff’s credibility and her evaluation of other evidence bearing on Plaintiff’s credibility.”

Moreover, Plaintiff’s claim of disability relies substantially on her allegations of pain and other limitations resulting from her back impairment. “Because symptoms, such as pain, sometimes suggest a greater severity of impairment than can be shown by objective medical evidence alone, any statements of the individual concerning his or her symptoms must be carefully considered if a fully favorable determination or decision cannot be made solely on the basis of objective medical evidence.” Soc. Sec. Ruling 96-7p, 1996 SSR LEXIS 4, 1996 WL 374186. Thus, “the credibility of Plaintiff’s statements about her pain and other symptoms and their functional effects are of particular importance to the propriety of her disability claim.”

In addition, the court here alludes to the fact that Plaintiff was not well equipped to understand the interrelation between DIB, SSI, Medicare, Medicaid and workers compensation. “She is not a lawyer and does not have a college degree. As noted, the ALJ found at one point that she obtained a GED, but only had an

eighth grade

education. While Plaintiff expressly represented in the workers’ compensation agreement that she had read and fully understood it, the implicit concession the ALJ found arguably falls outside the scope of simply understanding the agreement. There does not appear to be any evidence showing that Plaintiff’s lawyer or anyone else explained to her any impact the provision in question could have on a claim by her for Social Security disability-based benefits. The ALJ herself does not appear to have properly understood the statutory interrelation on which she grounded her finding.”

Conclusion

The court concludes that the ALJ committed prejudicial error in her evaluation of Plaintiff’s credibility. As a result, the court recommends this case should be remanded for further administrative proceedings. In making this ruling, the court expressed no opinion on the weight that should be given to any piece of evidence, as that is a matter for the Commissioner to decide.

Although this is an SSI case, which sometimes affects Medicare eligibility, this is a worrisome case for many reasons. First, it clearly demonstrates that even when injured individuals stipulate in their settlement agreements there is no reasonable anticipation of Medicare enrollment within 30 months of settlement, when injured individuals apply for benefits and allege a retroactive date of disability onset which matches the date of accident, if successful, Medicaid or Medicare coverage may also become effective within 30 months of the date of the settlement. Those who have been following Medicare Secondary Payer compliance over the last fifteen years see CMS pursuit of a primary payer or applicable plan for reimbursement of any conditional payments it may make related to the accident that gave way to eligibility for benefits and therefore Medicare coverage.

Second, the case shows how the language and ideas expressed in a workers compensation, auto, longshore, medical malpractice, no-fault, products, or general liability settlement, agreement, release or stipulation matter and may be significant to other parties, including federal agencies like the SSA and CMS. As the ALJ did here, it is no longer unthinkable for an ALJ deciding entitlement to DIB benefits, which has a direct correlation to Medicare, to use the language regularly included in such agreements when contemplating MSP compliance to conclude that no anticipation of Medicare eligibility within 30 months of settlement means the claimant concedes he or she is not disabled.

Third, the case provides a blue print for potential federal false claims. Given the direction that false claims case law has gone over the last several years, it is no longer inconceivable to think that the federal government would interpret the language used by litigants, such as the parties in this case, as a purposeful shift to taxpayers for the future responsibility of any and all medical expenditures related to the settled non group health plan claim.

As part of our MSP compliance services, Optum Settlement Solutions offers a review of clients’ settlement release, agreement or stipulation by our legal team to ascertain if Medicare’s interests have been properly considered and appropriate protective language has been included. Our legal team, with years of experience as claims handlers, trial attorneys, appellate lawyers and MSP compliance counselors, will discuss ideas and strategies as well as provide recommendations and suggested language to comply with MSP statutory, regulatory and case law mandates.

Appropriate Authorization: Required CMS Forms to Resolve Conditional Payments

By , June 28, 2016 11:58 am

signing-paperPursuant to the Medicare Secondary Payer Act (42 USC Section 1395y(b)(2), Medicare does not pay for items or services to the extent that “payment has been, or may reasonably be expected to be made through a liability insurer (including a self-insured entity), no-fault insurer or workers’ compensation entity (Non-Group Health Plan (NGHP).” However, if Medicare pays for items or services related to the NGHP claim, then the Benefits Coordination & Recovery Center (BCRC) is responsible for ensuring that Medicare gets repaid for any such conditional payments when a settlement, judgment, award, or other payment is made. If no settlement, judgment, award, or other payment is made, and the NGHP has accepted ongoing responsibility for medical (ORM), the Commercial Repayment Center (CRC) is responsible for ensuring that Medicare gets repaid for any such conditional payments. https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Beneficiary-Services/Medicares-Recovery-Process/Medicares-Recovery-Process.html

Pursuant to the Privacy Act of 1974 (5 USC Section 552a), Medicare “will not release information from a beneficiary’s record without appropriate authorization to do so.” For Medicare beneficiaries who have filed a claim for liability insurance (including self-insurance), no-fault insurance, or workers’ compensation, and a settlement, judgment, award, or other payment has been made, this means that the BCRC must receive either a “Proof of Representation” signed by the beneficiary and the beneficiary’s attorney or other representative or a “Consent to Release” signed by the beneficiary. https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Beneficiary-Services/Medicares-Recovery-Process/Downloads/POR-vs-CTR.pdf If no settlement, judgment, award, or other payment is made, and the NGHP has accepted ongoing responsibility for medical (ORM), this means that the CRC must receive a “Letter of Authority” signed by the Applicable Plan and its representative or agent. https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/InsurerServices/Insurer-NGHP-Recovery.html

Proof of Representation

The Proof of Representation (POR) is required when a beneficiary has authorized an individual or entity to act on the beneficiary’s behalf. “The representative has no independent standing, but may receive or submit information/requests on behalf of the beneficiary, including responding to requests from the BCRC, receiving a copy of the recovery demand letter if Medicare has a recovery claim, and filing an appeal (if appropriate) when that beneficiary is involved in a liability, workers’ compensation, or auto/no-fault situation.” Therefore, when using a POR, the exchange of information is a two way street. The individual or entity may receive and provide necessary information to or interact with the BCRC, on behalf of the beneficiary, in order to resolve Medicare’s recovery claim. https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Attorney-Services/Downloads/Liability-No-Fault-and-Workers-Compensation-Recovery-Process.pdf

An individual/entity with a POR will be able to “submit information/requests, receive copies of all mail related to the case (e.g., the Rights and Responsibilities letter, the Conditional Payment Letter, the Demand letter, etc.), receive identifiable health information, respond to requests from the BCRC, or resolve and dispute any potential recovery claim that Medicare may have” if there is a settlement, judgment, award, or other payment. https://www.cob.cms.hhs.gov/MSPRP/help/userManual/MSPRPUserManual.pdf

Consent to Release

The Consent to Release (CTR) is required when “a beneficiary has authorized an individual or entity to receive certain information from the BCRC for a limited period of time. The CTR does not give the individual or entity the authority to act on behalf of the beneficiary.” Therefore, when using a CTR, the exchange of information is a one-way street. The beneficiary has authorized the BCRC to provide privacy protected data to the specified individual/entity, but this does not authorize the individual/entity requesting information to act on behalf of/make decisions on behalf of the beneficiary. https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-Overview/Non-Group-Health-Plan-Recovery/Non-Group-Health-Plan-Recovery.html

An individual or entity with a verified CTR will be able to receive copies of all mail sent related to the case (e.g., the Rights and Responsibilities letter, the Conditional Payment Letter, the Demand letter, etc.). https://www.cob.cms.hhs.gov/MSPRP/help/userManual/MSPRPUserManual.pdf

Letter of Authorization

The Insurer Letter of Authorization (LOA), or sometimes also known as the Recovery Agent Authorization, is required “to inform Medicare that a liability insurer (including self-insured entities), no-fault insurer, or workers’ compensation entity wishes to be represented by another party. The identified representative can act on behalf of the insurer regarding an MSP recovery case and is authorized to take any actions or make any decisions needed to resolve Medicare’s recovery claim on behalf of the Applicable Plan, primary payer or debtor.” https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/InsurerServices/Downloads/Recovery-Agent-Authorization-Model-Language .pdf

An individual/entity with a LOA will be able to “submit information/requests, receive copies of all mail related to the case (e.g., the Conditional Payment Notice, the Demand letter, the Redetermination letter, the Reconsideration, etc.), receive identifiable health information, respond to requests from the CRC, or resolve any potential recovery claim that Medicare may have” if there has been no settlement, judgment, award, or other payment, and ORM is or has been accepted. https://www.cob.cms.hhs.gov/MSPRP/help/userManual/MSPRPUserManual.pdf

Model Language

Optum Settlement Solutions is happy to assist to either amend or create the appropriate authorization form for you and/or your client. Proof of Representation model language may be found at https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Beneficiary-Services/Medicares-Recovery-Process/Downloads/Proof-of-Representation-Model-Language.pdf, Consent to Release model language may be found at https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Beneficiary-Services/Medicares-Recovery-Process/Downloads/Consent-to-Release-Model-Language-.pdf, and Letter of Authorization model language may be found at https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/InsurerServices/Downloads/Recovery-Agent-Authorization-Model-Language .pdf

CMS Once Again Considering Set Asides in Liability and No-fault Cases

By , June 17, 2016 9:15 am

031016_1424_CMSPublishe1.jpgOn June 8, 2016, the Center for Medicare and Medicaid Services (CMS) published an announcement on its website indicating that it is considering the expansion of its voluntary Medicare Set-Aside Arrangements (MSA) amount review process to include the review of proposed liability insurance (including self-insurance) and no-fault insurance amounts. The announcement also indicated that CMS plans to work closely with the stakeholder community to identify how best to implement this potential expansion. The announcement also informed that CMS will provide future announcements of the proposal and expects to schedule town hall meetings later this year.

As many of you will recall, this is not the first time CMS has announced their intention to expand their voluntary MSA program to liability and no-fault cases. As we previously reported, the CMS published an Advance Notice of Proposed Rulemaking (ANPRM) on June 14, 2012, soliciting comments on standardized options to protect Medicare’s interest with respect to Medicare Secondary Payer (MSP) claims involving automobile and liability insurance (including self-insurance), no-fault insurance, and workers’ compensation when future medical care is claimed or the settlement, judgment, award or other payment releases (or has the effect of releasing) claims for future medical care.

A look back at the 2012 ANPRM Proposed General Rule

The 2012 ANPRM tried to introduce many of the same processes and methodologies already used in workers’ compensation cases when attempting to take Medicare’s future interests into account. In other words, they proposed to expand the general rule that if an individual obtains a settlement, judgment, award or other payment and has received, reasonably anticipates receiving, or should have reasonably anticipated receiving Medicare covered and otherwise reimbursable items and services after the date of settlement, he or she would be required to satisfy Medicare’s interest with respect to future medicals related to his or her settlement using any one of several options.

Option 1

The individual/beneficiary pays for all related future medical care until his/her settlement is exhausted and accordingly documented. As a routine matter, Medicare would not review documentation in conjunction with this option, but would occasionally request documentation from beneficiaries selected at random as part of Medicare’s program integrity efforts.

Option 2

Medicare would not pursue “future medicals” if:

  • The amount of liability insurance (including self-insurance) settlement is a defined amount or less and the following criteria are met:
    • The accident, incident, illness or injury occurred one year or more before the date of settlement;
    • The underlying claim did not involve a chronic illness/condition or major trauma;
    • The beneficiary does not receive additional settlements; and
    • There is no corresponding workers’ compensation or no-fault insurance claim.
  • The amount of liability insurance (including self-insurance) settlement is a defined amount or less and all of the following criteria are met:
    • The individual is not a beneficiary as of the date of settlement;
    • The individual does not expect to become a beneficiary within 30 months of the date of settlement;
    • The underlying claim did not involve a chronic illness/condition or major trauma;
    • The beneficiary does not receive additional settlements; and
    • There is no corresponding workers’ compensation or no-fault insurance claim

Option 3

The individual/beneficiary acquires/provides an attestation regarding the Date of Care Completion from his/her treating physician.

A. Before Settlement

When the treating physician attests on behalf of the beneficiary regarding the Date of Care Completion, and the Date of Care Completion is before the settlement, Medicare’s recovery claim would be limited to the conditional payments made for Medicare-covered and otherwise reimbursable items and services provided from the Date of Incident through and including the Date of Care Completion.

B. After Settlement

When the treating physician attests on behalf of the beneficiary after settlement regarding the Date of Care Completion, Medicare would pursue recovery for related conditional payments it made from the Date of Incident through and including the date of settlement. Further, Medicare’s interest with respect to future medical care would be limited to Medicare covered and otherwise reimbursable items and services provided from the date of settlement through and including the Date of Care Completion.

Option 4

The beneficiary submits a proposed Medicare Set-Aside Arrangement amount for CMS’ review and obtains approval.

Option 5

The beneficiary participates in one of Medicare’s recovery options.

  • $300 Threshold: If a beneficiary alleges a physical trauma-based injury, obtains a liability insurance (including self-insurance) settlement of $300 or less, and does not receive or expect to receive additional settlements related to the incident, Medicare will not pursue recovery against that particular settlement.
  • Fixed Payment Option: When a beneficiary alleges a physical trauma-based injury, obtains a liability insurance (including self-insurance) settlement of $5,000 or less, and does not receive or expect to receive additional settlements related to the incident, the beneficiary may elect to resolve Medicare’s recovery claim by paying 25 percent of the gross settlement amount.
  • Self-Calculated Conditional Payment Option: When a beneficiary alleges a physical trauma-based injury that occurred at least 6 months prior to electing the option, anticipates obtaining a liability insurance (including self-insurance) settlement of $25,000 or less, demonstrates that care has been completed, and has not received nor expects to receive additional settlements related to the incident, the beneficiary may self-calculate Medicare’s recovery claim. Medicare would review the beneficiary’s self-calculated amount and provide confirmation of Medicare’s final conditional payment amount.

Each of the options is employed in such a way that Medicare’s interest with respect to future medicals is satisfied for the specified settlement. Therefore, when a beneficiary participates in any one of these recovery options, they have also met his/her obligation with respect to future medicals.

Option 6

The beneficiary makes an upfront lump sum payment depending on whether or not ongoing responsibility for medicals was imposed, demonstrated or accepted by defendant.

A. If ongoing responsibility for medicals was imposed, demonstrated or accepted from the date of settlement through the life of the beneficiary or life of the injury, CMS may review and approve a proposed amount to be paid as an upfront lump sum payment for the full amount of the calculated cost for all related future medical care.

B. If a beneficiary obtains a settlement, and ongoing responsibility for medicals has not been imposed on, demonstrated by or accepted by the defendant, the beneficiary may elect to make an upfront payment to Medicare in the amount of a specified percentage of beneficiary proceeds.

Option 7

If the beneficiary obtains either a compromise or a waiver of recovery, Medicare would have the discretion not to pursue future medicals related to the specific settlement where the compromise or waiver of recovery was granted. If the beneficiary obtains additional settlements, Medicare would review the conditional payments it made and adjust its claim for past and future medicals accordingly.

CMS Voluntarily Withdraws Proposed Options

Comments, suggestions and recommendations about these options or other ideas were welcomed and received by CMS. However, the overwhelming number of responses expressed frustration with all of these options, and toward CMS lack of authority to promulgate such rules. Although we believed interim final rules were submitted by CMS to the Office of Management and Budget (OBM) for review, such rules were never published. All stakeholders waited for more than two years until October 8, 2014, when without any explanation, CMS voluntarily withdrew the proposed rules. Many have suggested this was a preemptive move by CMS to avoid OBM rejecting the rules. Others have suggested that after hearing concerns from several national organizations representing various stakeholders, CMS decided to withdraw its proposal fearing legal challenges to such proposals.

Reconsidering Set Asides in Liability and Auto No-fault

Perhaps because of its success with workers’ compensation set-asides, the improved level of understanding and acceptance of the MSA process or simply the realization of the billions of dollars lost by not adopting a set-aside process in liability and no-fault cases, we all knew it was just a matter of time before CMS attempted again to adopt an MSA process to review proposed liability insurance (including self-insurance) and no-fault insurance MSA amounts. As CMS reconsiders their position we will continue to report on the potential expansion and any announcements of scheduled of town hall meetings. Should new requirements come to pass, you can also rest assured we’ll be actively engaged to help ensure a timely and compliance implementation. For questions or for more information, please contact us at asktheexpert@helioscomp.com.

CRC Returns $125 Million to Medicare from Group Health Plans Conditional Payments in 2015. No-Fault Insurers and Work Comp Plans are Next in 2016!

By , June 1, 2016 9:44 am

Coordination of Benefits and RecoveryOn May 23, 2016, the Centers for Medicare and Medicaid Services (CMS) Coordination of Benefits and Recovery (COBR) Commercial Repayment Center (CRC) published its report to Congress as required by Section 1893(h) of the Social Security Act for Fiscal Year (FY) 2015.

This is the second annual report for the CRC, a national contractor utilized by CMS to identify and recover primary payments mistakenly made by the Medicare program when another entity had primary payment responsibility. The CRC’s work to date has only included the identification and recovery of mistaken primary payments when beneficiaries had coverage through an employer-sponsored Group Health Plan (GHP) arrangement in addition to their coverage under the Medicare program. Because as of October 1, 2015, the CRC began to identify and recover payments mistakenly made by Medicare when a Non-Group Health Plan (NGHP) applicable plan (that is, a Liability insurer, No-Fault insurer, or Workers’ Compensation entity) accepted Ongoing Responsibility for Medical (ORM) and thereby had or has primary payment responsibility, in FY 2016, CMS will expand the CRC’s workload to include the recovery of certain conditional payments where a NGHP applicable plan had or has primary payment responsibility.

As a result, the work process, ability to handle volume, identified mistaken payments, and astounding collections recovery reported here by CRC may be a telling sign of things to come in the NGHP world. If so, watch out self-insureds, liability insurers, no-fault insurers, and workers’ compensation entities or plans, as the CRC is transforming conditional payment recovery from a laissez-faire, slow moving, without deadlines process into a regimented, aggressive, deadline and results driven process.

Group Health Plans and Non-Group Health Plans

The report indicates that “Medicare Secondary Payer (MSP) program involves two broad categories: Group Health Plan (GHP) and Non-Group Health Plan (NGHP). The term “GHP” refers to the arrangement between the employer or other plan sponsor (such as a union or employee health and welfare fund) and the insurer or claims-processing TPA. The term “NGHP” specifically refers to Liability insurance (including self-insurance), No-Fault insurance or Workers’ Compensation. Under the provisions of 42 U.S.C. §1395y(b), the Medicare program can generally only make secondary payments when a payment has been made (or can reasonably be expected to be made) by these GHPs or NGHP applicable plans.”

Data Collection Through Mandatory Insurer Reporting

The report also provides that “CMS routinely collects information about any additional coverage a beneficiary may have or had for a specified period of time. Data collection activities include mandatory insurer reporting, as required by Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Section 111), codified at 42 U.S.C. § 1395y(b)(7) and (b)(8). This data is compiled and updated as necessary. When a medical claim is submitted for payment under Part A or Part B of the Medicare program, Medicare reviews the beneficiary’s records to determine if the Medicare program has primary payment responsibility, or if another entity has that responsibility.”

Identifying Mistaken Payments

In addition, the report also clarifies that “in certain situations after a Medicare claim is paid, CMS may receive new or updated information about health coverage other than Medicare benefits. The CRC reviews new and updated GHP records to determine whether Medicare may have mistakenly paid any claims as the primary payer. Once the CRC identifies mistaken payments, it recovers the payment from the GHP. In addition to recoveries it has initiated, the CRC maintains all open GHP recovery cases (and debts) that were established under previous MSP recovery contractors.”

During the time period for this report, the CRC only reviewed GHP MSP occurrences as they were received and updated to determine whether any primary payments were mistakenly made for a given beneficiary. As of October 1, 2015, the CRC has also been updating NGHP records to determine whether Medicare may have mistakenly paid any claims as the primary payer. In GHP situations, “when the CRC identifies a potential mistaken payment, it issues a Primary Payment Notice (PPN) to the entities that CMS believes had primary payment responsibility (typically the employer or other plan sponsor and the insurer or claims processing TPA).” In NGHP situations, when the CRC identifies a potential mistaken payment, it issues a Conditional Payment Notice (PPN) to the entities that CMS believes had primary payment responsibility (typically the self-insured, liability insurer, no-fault insurer, or workers compensation entity or plan).The notices “request information, but more significantly provide notice of any mistaken payments made by Medicare that may be the responsibility of the GHP or NGHP.”

Recovering Mistaken Payments

Once the CRC has identified mistaken payments made by Medicare which are the responsibility of a primary payer, “the CRC then issues a letter that demands repayment (called a “Demand” letter) from the entities that should have paid as primary. This Demand notifies the identified debtors of the existence of the debt and includes claim specific information. The Demand also includes instructions for how to repay or rebut the debt, and consequences of failure to resolve the debt within the identified timeframe. In response to the Demand, identified debtors may make payment to Medicare. Interest is assessed on any unresolved balance after 60 days (interest accrues from the date the Demand is issued, but is not assessed unless there is an outstanding balance 60 days after issuance of the Demand). If any portion of the debt remains unresolved, the CRC will notify the identified debtor of Medicare’s intent to refer the debt to the Department of the Treasury for collection. Failure to resolve the debt after that notice is issued results in referral of the debt to the Department of the Treasury for collection.”

MSP CRC FY 2015 Results

The report highlights:

[I]n FY 2015, CRC issued 31,968 Demand letter packages relating to 41,847 individual beneficiaries, representing $585.19 million in potential mistaken payments made by the Medicare program. In response to these Demand letters, the CRC received information that validated $292.2 million as correctly identified mistaken payments, representing an increase of almost 25% over the $234.2 million identified in FY 2014. The CRC processed collections of $154.29 million on behalf of the Medicare program, which represents an increase of almost 140% over the $64.4 million in collections processed in FY 2014. Taking into account refunded excess collections of $4.69 million; the CRC posted $149.6 million in net collections. This is an increase of over 150% compared to the $59.3 million in net collections in FY 2014. Considering agency administrative costs of $24.55 million (including contingency fees paid to the CRC), CMS realized a return of $125.05 million dollars to the Medicare trust funds as a direct result of this program, an increase of 147% over the return of $50.6 million for FY 2014.

[ . . . ]

[T]he CRC’s net collections totaled $149.6 million in FY 2015. This amount includes mistaken payments identified through the end of FY 2015 (collection efforts will continue into FY 2016 for mistaken payments identified in FY 2015). A total of $144.21 million of these payments were direct payments (that is, checks received from debtors). During FY 2015 the CRC processed $10.08 million in collections from the Department of the Treasury on delinquent debts. In addition, $4.6 million in excess collections were identified and refunded to the identified debtors.

The Commercial Repayment Center and NGHP Recovery

The report continues:

As with other recovery contractors engaged by CMS and in accordance with the Tax Relief and Health Care Act, the CRC is paid on a contingency fee basis. The amount of the contingency fee is a percentage of the mistaken payment that the identified debtor has returned to the Medicare program. The CRC negotiated its specific contingency fee at the time of the contract award, and may only collect its fee once payment has been applied to a specific debt. In the event that excess collections have been made and a refund must be made to the identified debtor, the CRC must refund the contingency fee related to those collections.

As was started in October of 2015, during FY 2016,

[T]he CRC workload will expand to include the recovery of certain NGHP conditional payments where an applicable plan (a self-insured, liability insurer, no-fault insurer, or workers’ compensation entity or plan) had or has primary payment responsibility. The CRC will recover directly from the applicable plan as the identified debtor when the applicable plan reports that it has ORM or otherwise notifies CMS of its primary payment responsibility.

Conclusion

The identified and recovered amounts reported here by the CRC during FY 2015 are impressive. They may also be a telling sign of things to come in the NGHP world. If so, watch out self-insureds, liability insurers, no-fault insurers, and workers’ compensation entities or plans, as the CRC is transforming the conditional payment recovery world. Given the better information captured through mandatory reporting, the increase in the number of entities and individuals reporting such claims and thereby complying with the MSP law, now seeking pre-settlement reimbursement of such mistaken Medicare payments if ORM has been accepted, and the contingent nature of the fee awardable to the CRC for such recovery, the CRC is about to change 35 years of conditional payment resolution history in the no-fault, med-pay, PIP, and workers compensation industries. As always, Optum Settlement Solutions will continue to keep you updated on all activities associated with the CRC and its attempts to recoup conditional payments prior to settlement from self-insureds, no-fault insurers, liability carriers, and workers compensation plans when ORM has been accepted or established.

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