The Current State of Medicare Advantage Plans and Recovery Rights under the MSP

Medicare Advantage Plans (MAPs), also known as Medicare Part “C”, are private insurance plans which provide Medicare benefits to beneficiaries. A beneficiary may opt to receive their Part A and B Medicare benefits through a MAP rather than through traditional Medicare. Often times, MAPs offer more flexibility in benefit options and pricing than traditional Medicare. Additionally, all Part D prescription benefits are provided by MAPs as Medicare does not provide Part D prescription benefits directly. It has been estimated that approximately 25% of Medicare beneficiaries are enrolled in some type of MAP, and that number is expected to increase over time.

If you handle workers’ compensation or liability claims, you may be wondering what MAPs have to do with recovery rights under the MSP or the extent of those rights.   

It has been questioned for some time whether MAPs simply have a contractual right to recover conditional payments made when a primary payer exists, or if they have similar rights to Medicare, in that they could pursue an action for double damages for a primary payer’s failure to reimburse Medicare conditional payments. Below is a brief timeline which displays where we are today and references the recent impactful cases, Parra v. PacifiCare of Arizona, and In Re Avandia Marketing as well as CMS’ input on this issue through a memorandum.   

December 5, 2011– CMS issues a memorandum in support of MAPs having the right to collect for payment of services where Medicare is not the primary payer. CMS even goes as far as to state that MAPs can exercise the same rights of recovery that the Secretary exercises under the existing MSP regulations. This memorandum was likely prompted by the initial decisions in Parra and In Re Avandia which found that MAPs simply had a contractual right to recovery, and did not have the same rights as Medicare to recover conditional payments. For a copy of this memorandum, please click here

July 12, 2012– The District Court decision from In Re Avandia is overturned in the Third Circuit Court of Appeals. The Third Circuit finds that MAPs have the same rights to recovery as Medicare, and additionally MAPs have a right to pursue a private cause of action for double damages under the MSP for conditional payments that are not reimbursed. To view our legal bulletin on this case, please click here.

April 15, 2013– The U.S. Supreme Court denies certiorari/review of the In Re Avandia case; therefore the decision in the Third Circuit stands.

April 19, 2013– The Ninth Circuit affirms the initial decision in the Parra case which found that MAPs do not have the same rights to recovery as Medicare does and can recover conditional payments by way of their contract with the beneficiary.

So where are we today? Currently we have two circuits, the Ninth and Third Circuit, which have differing views on MAP recovery rights. Both circuits agree that MAPs have the right to recover conditional payments; however they disagree as to what extent MAPs can utilize that right. We recently had the U.S. Supreme Court deny taking cert in the In Re Avandia case; therefore, even if Parra is appealed to the U.S. Supreme Court, it is unlikely that the Supreme Court will take the case. With the conflict among the circuits, eventually the Supreme Court will need to hear this issue or we will need formal legislation to definitively address the issue.

In the meantime, primary payers would be wise to err on the side of caution and ensure that MAP demands are addressed, so as to not risk a private cause of action for double damages. Best practices in this time of uncertainty would be to question the Medicare beneficiary if they are currently or have ever been enrolled in a MAP. With that knowledge, the primary payer can at least be aware of any potential conditional payment demands by that MAP and seek to reimburse those payments before the risk for double damages sets in. Settlements that occur within the Ninth Circuit where the Parra case was decided is seemingly the only jurisdiction currently not subject to double damages, at least for now.

Based upon recent history, the status of MAPs and their recovery rights under the MSP is certainly going to continue to evolve, and PMSI will continue to stay abreast of any new developments.

2 thoughts on “The Current State of Medicare Advantage Plans and Recovery Rights under the MSP

  1. LINDA BRECKINRIDGE

    Is there any new information regarding Medicare Advanatage Plans and Recovery Rights under the MAP? Also, if there is no settlement with the claimant, does a MAP have an independent recovery right?

    Reply
    1. Settlement Solutions Post author

      Hello Linda and thank you for your question. To date, there is no new information regarding MAP Plans and their Recovery rights other than Humana filing lawsuits in various jurisdictions on this very issue seeking to expand MAP plans’ recovery rights (please see our blog dated July 29, 2013 for more information on this). These cases are still in process and there is no resolution on them yet, but we will certainly be sure to keep the blog updated with any new information. With regard to your second question, a MAP should not have a right to recovery unless a settlement, judgment, or award has occurred similar to traditional Medicare conditional payments. Please let us know if you have additional questions.

      Reply

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