Category Archives: Legal Matters

You Are Being Watched

All non-group health plans (NGHP) including all property & casualty insurers who insure auto no-fault (Med Pay/PIP) claims, workers’ compensation claims, premises Med Pay claims, get your assumption and/or termination of ongoing responsibility for medicals (ORM) reporting in order, a firm called MSP Recovery is coming after you. A recent 11th Circuit decision in MSPA Claims 1, LLC v. Ocean Harbor Casualty Insurance (Case No. 2015-1946-CA 06) is granting class certification paving the way for recovery of millions of dollars for Medicare or Medicare Advantage plans nationwide.

According to a recent article in Daily Business Review, MSP Recovery, LLC, has the ability to determine if someone who has an incident, such as a car accident or a slip-and-fall and an insurance carrier has reported assumption of ongoing responsibility of medicals (ORM) to the Centers for Medicare and Medicaid Services (CMS) for primary payer responsibility .

MSP Recovery, LLC has developed a sophisticated system to identify no-fault claims by collecting and matching data including CMS reports, police reports, ambulance transport records, insurance declaration sheets, and no-fault personal injury protection/medical payout sheets.

MSP Recovery, LLC plans to file lawsuits across the country on behalf of many Medicare Advantage plans (MAPs) to recover conditional payments in which an applicable plan has demonstrated responsibility to pay by assumption and reporting to CMS of ORM.

Your Data is Being Mined

Presumably, MSP Recovery, LLC is able to use the Medicare Secondary Payer Recovery portal (MSPRP) to identify specific Medicare beneficiaries that have had ORM reported from the police or ambulance reports.

For commercial general liability policies covering premises slip and fall cases, if there is a no-fault/med pay policy provision, then the applicable plan is required to report ORM via Section 111 mandatory insurer reporting (MIR). If a med pay claim is made by the Medicare beneficiary after being treated, these claims can be identified via an ISO Claim Search subscription.

Since compensable workers’ compensation claims involving Medicare beneficiaries are required to report to CMS assumption of ORM, state departments of industrial relations may be accessed as well.

What do I do to avoid being brought into a Class Action?

Do not assume and report ORM if a no-fault claim has not been made by a Medicare beneficiary, where no treatment is sought, or if there is a legitimate statutory or coverage basis for the claim denial.

Do not forget to report to CMS an accurate ORM termination date. ORM should be terminated when policy limits have been exhausted, the policy period has expired, when CMS has approved an MSA after settlement, when there is a settlement that included medical expenses, or where there is a judgment or arbitration award that has occurred that disposed of related medical expenses.

Do not ignore or refuse to pay Medicare or MAPs who have demanded or notified you of potential conditional payments you may owe.

When in doubt, consult us. For questions, please contact Optum Settlement Solutions Division at 888-672-7674 or contactus@helioscomp.com

The SPARC Act and Compliance with Medicare Advantage plans PART D prescription drugs

Haro v. Sebelius- Medicare Conditional Payment CollectionIn September, Congressman Tim Murphy (R-PA) and Congressman Ron Kind (D-WI) introduced bipartisan legislation into the U.S. House of Representatives to improve the Medicare Secondary Payer (MSP) Act as it pertains to the Medicare Prescription Drug (Part D) program. The Secondary Payer Advancement, Rationalization and Clarification (SPARC) Act (H.R. 6120) would clarify the Part D Medicare Secondary Payer (MSP) provisions with specific parameters to follow when resolving claims that involve Medicare beneficiaries who have related claims that were paid by Medicare Part D insurance plans.

The SPARC Act is anticipated to diminish the ambiguity associated with the Medicare Secondary Payer (MSP) claim compliance process and allow for efficient repayment of amounts owed from claims to be paid directly to the Medicare Part D Prescription Drug Plans (PDPs). Since the MSP provisions of the Social Security Act prohibit Medicare from making payment where payment has already been made or can reasonably be expected to be made by a primary plan, the payments made by the Part D plan are paid conditionally, with the expectation that the conditional payments would be reimbursed, once primary payment responsibility is demonstrated by accepting ongoing responsibility for medical (ORM) expenses and/or by settlement, judgment or award.

Current Medicare beneficiaries with workers’ compensation, no-fault, and/or liability claims experience uncertainty and delays in settling claims, because it is difficult to find out how much money has to be repaid to Part D Plans upon settlement. As such, the Part D plans are not promptly reimbursed for medications prescribed to Medicare beneficiaries that are related to the treatment of their injuries.

  • Expedited repayment procedures proposed by the SPARC Act are designed to avoid wasting claim, judicial, governmental and taxpayer resources, not to mention the Medicare Trust Fund. The SPARC Act would:
  • Require the Centers for Medicare and Medicaid Service (CMS), to convey settlement information to Part D Plans, coordinating benefits within 15 days of receipt
  • Require Part D drug plans to instruct pharmacies to bill entities that have accepted ORM benefits
  • Prevent Part D plans from paying for prescription medication when other plans are responsible

If the SPARC Act passes, it is expected to enable Medicare beneficiaries to settle claims sooner. It will also enable insurers to resolve claims quicker, with greater certainty, and the Part D Prescription Drug Plans, as well as the Medicare Trust Fund, will be efficiently reimbursed.

The bill, however, doesn’t specify how workers’ compensation insurers should account for the shifting of pharmacy costs to Medicare post settlement. It seems that injured workers would want apportion a part of the total settlement amount toward related prescription costs needed in the future; however, the SPARC Act, as written, would make workers’ compensation insurers responsible for prescriptions reimbursement until the settlement of a Medicare beneficiary’s workers’ compensation claim. Afterward, Medicare’s Part D plan would become the primary payer, thus eliminating the need for the workers’ compensation Medicare Set-Aside (WCMSA) arrangement to allocate for prescription drugs otherwise covered by the Part D plan. Regardless, many state workers’ compensation statutes may still require prescriptions to be allocated in the WCMSAs even if SPARC Act is enacted.

Centers for Medicare & Medicaid Services announces annual recovery thresholds for certain liability insurance, no-fault insurance and workers’ compensation payments

To fulfill the requirements of Section 202 of the Strengthening Medicare and Repaying Taxpayers (SMART) Act of 2012, Centers for Medicare & Medicaid Services (CMS) is required annually to review all of the costs related to collecting data and determining the amount of Medicare’s recovery claim, otherwise known as conditional payments. As of September 26, 2016, and for the remainder of 2016, CMS has announced its recovery and reporting thresholds.

CMS determined that it will maintain the current single threshold for physical trauma-based liability insurance settlements, where settlements of $1000 or less do not need to be reported and Medicare’s conditional payment amount related to these cases does not need to be repaid.

CMS also evaluated available data related to no-fault insurance and workers’ compensation settlements. Based on this data, CMS determined that it will establish a new threshold for no-fault insurance and workers’ compensation settlements. For FY 2016, settlements of $750 or less for no-fault insurance and workers’ compensation do not need to be reported and Medicare’s conditional payment amount related to these cases do not need to be repaid if the no-fault insurer or workers’ compensation entity does not otherwise have ongoing responsibly for medicals (ORM) that has been accepted and/or reported via Section 111 mandatory insurer reporting (MIR).

BACKGROUND

The Medicare Secondary Payer (MSP) provisions of the Social Security Act prohibit Medicare from making payment where payment has been made or can reasonably be expected to be made by a primary plan. If payment has not been made, or cannot reasonably be expected to be made promptly by a primary plan, Medicare may pay conditionally, with the expectation that the conditional payments would be reimbursed, once primary payment responsibility is demonstrated.

The primary plan, such as liability insurance, no-fault insurance or workers’ compensation, often demonstrates primary payment responsibility through a settlement, judgment, award or other payment (hereinafter, “settlement”). Accordingly, Medicare is obligated by statute to recover conditional payments it made for medical care related to the settlement. Medicare’s recovery is limited to the amount of the settlement less any attorney fees or costs the beneficiary incurred to obtain the settlement.

Medicare beneficiaries, their attorneys and primary plans report settlements to Medicare. Reporting is required so Medicare is able to determine if it made any conditional payments related to that settlement. Once reported, Medicare calculates its conditional payment amount, reduces that amount for attorney fees and costs, then issues a demand letter requiring reimbursement.

Medicare incurs costs to perform these activities. These costs include, for example, compiling related claims, calculating conditional payments, applying reductions, sending demands and providing customer service. In addition to the CMS costs associated with pursuing recovery, Medicare does not usually recover the full amount of the conditional payments. For example, there may be reductions to the demand to account for procurement costs (attorney fees and costs) or for full or partial waiver of recovery if certain criteria are met. Implementing a threshold facilitates CMS’ efficient use of its resources.

COST OF COLLECTION

The CMS estimated the average cost of collection for Non-Group Health Plan (NGHP) cases (which includes liability insurance (including self-insurance), no-fault insurance and workers’ compensation) as approximately $421 per case. This cost of collection was based on the amount paid (invoices) to the Benefits Coordination and Recovery Contractors for work related to identifying and recovering NGHP conditional payments. CMS relied on data from fiscal year 2015. The total dollar amount paid to CMS’ contractors was divided by the number of final NGHP demand letters issued during the aforementioned date range. The average cost of collection per case was calculated to be approximately $421.

To determine settlement thresholds, CMS compared the estimated cost of collection per NGHP case of approximately $421 to the average liability insurance demand amount per settlement range. The CMS Office of Financial Management did the same comparison of the estimated cost of collection to the average no-fault insurance and workers’ compensation demand amounts per settlement range.

CONCLUSION

Based on this information, CMS determined it will maintain the existing $1000 threshold. As such, physical trauma-based liability insurance settlements of $1000 or less do not need to be reported to CMS via Section 111 mandatory insurer reporting (MIR). In addition, Medicare’s conditional payment amount for these settlements does not need to be repaid.

For workers’ compensation and no-fault insurance settlements, CMS has established a threshold of $750, where the no-fault insurer or workers’ compensation entity does not otherwise have ongoing responsibly for medicals (ORM).

However, if a conditional payment demand is received for a claim falling below the threshold, the letter must not be ignored but instead acted upon by informing the recovery contractor of the settlement amount and date and checking to be sure accurate amounts, dates and ORM were not inadvertently reported via Section 111 mandatory insurer reporting (MIR).

New York Federal District Court Reminds that CMS Right to Reimbursement of Conditional Payments from Beneficiaries Accrue Only After a Primary Payment

051816_1352_VirginiaFed1.jpgOn July 11, 2016, the United States District Court for the Eastern District of New York published its opinion on Sexton v. Medicare, concluding the Court lacked subject matter jurisdiction over plaintiff’s claim; thereby granting the Secretary of the United States Department of Health and Human Services (HHS) motion to dismiss. The Court reminds us all that although Medicare’s right of action to recover overpayments from primary payers accrues as soon as it learns that payment has been made or could be made under workers’ compensation, any liability or no-fault insurance, or an employer group health plan, the Centers for Medicare and Medicaid Services (CMS) right of action against beneficiaries only accrues after the beneficiary has received a primary payment – a settlement, judgment, award or other payment.

Facts and Historical Background

On December 6, 2014, Kevin Sexton (plaintiff) was struck by a distracted driver in the Bronx. According to the complaint and police report, the driver of the other car was a licensed taxi or limousine driver insured by American Transit Insurance Company (ATIC). Plaintiff alleges that he suffered injuries including fractures of his tibia and fibula as a result of the accident and had a rod placed in his leg.

Because plaintiff was a Medicare beneficiary, Medicare paid certain medical expenses related to the December 6, 2014 accident. On February 3, 2015, the CMS, which administers Medicare on behalf of the HHS, sent plaintiff and his attorney a letter notifying him that Medicare had conditionally paid medical expenses totaling $678.60 for treatment of his accident-related injuries. The February 3, 2015 letter stated that plaintiff “may be required to reimburse Medicare for medical expenses.” The letter was clear, however, that plaintiff was not yet being billed. The letter stated, in bold type: “THIS IS NOT A BILL. DO NOT SEND PAYMENT AT THIS TIME.”

On June 10, 2015, CMS sent a fundamentally identical letter to plaintiff and his attorney identifying an additional $25,262.15 in conditional payments for medical expenses arising from plaintiff’s December 6, 2014 accident. Based on a letter filed by plaintiff on June 27, 2016, further payments have since been made by Medicare on plaintiff’s behalf.

Following his receipt of the February 3, 2015 letter from the CMS, plaintiff filed the instant action seeking to compel Medicare “to recover the funds from American Transit Ins. Co. or from the providers that Medicare knowingly paid by mistake instead of from” plaintiff. Defendant subsequently served a motion to dismiss on plaintiff, which plaintiff did not timely oppose. After defendant’s motion was filed, the court provided plaintiff with additional time to file an opposition. When plaintiff again failed to respond to defendant’s motion, the court deemed the motion fully briefed.

Defendant moved to dismiss this action on two bases. First, “defendant argues that plaintiff’s claim is not ripe for judicial review because plaintiff has not suffered an actual or imminent injury where defendant’s right to collect any purported Medicare overpayments from plaintiff rests on contingent, future events that may not occur.” Second, “defendant contends that plaintiff failed to avail himself of and exhaust administrative remedies and satisfy the prerequisites to defendant’s waiver of sovereign immunity and, thus, the action must be dismissed.”

The Medicare Secondary Payer Act

Where payment has been made, or can reasonably be expected to be made for medical expenses under a primary plan, Medicare generally will not pay the medical expenses42 U.S.C. § 1395y(b)(2)(A). If a primary plan has not made or cannot reasonably be expected to make payment promptly, however, Medicare may conditionally pay for medical expenses42 U.S.C. § 1395y(b)(2)(B)(i). Medicare may later seek reimbursement from a primary plan or an entity that received a payment from a primary plan42 U.S.C. § 1395y (b) (2) (B) (ii) (“A primary plan, and an entity that receives payment from a primary plan, shall reimburse Medicare for medical expenses if it is demonstrated that such primary plan has or had a responsibility to make payment”) 42 C.F.R. § 411.24(b). “A primary plan’s responsibility for such 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).

The government’s right to recoup overpayments permits it to recover directly from beneficiaries who receive primary payments42 C.F.R. § 411.24(g) (“CMS has a right of action to recover its payments from any entity, including a beneficiary that has received a primary payment”). If CMS determines that it has a right of recovery against a beneficiary, the agency will issue an “initial determination” identifying the “recovery claim against a beneficiary for services or items for which Medicare already paid.” 42 C.F.R. § 405.924(b) (14). The initial determination by CMS is administratively appealable42 C.F.R. §§ 405.940-978; 42 C.F.R. §§ 405.1000-1054, 405.1100-1140. After exhausting administrative appeals, an unsatisfied beneficiary may seek judicial review of the Secretary’s final decision. 42 U.S.C. § 405(g); 42 U.S.C. § 1395ff (b) (1) (A) “Judicial review of claims arising under the Medicare Act is available only after the Secretary renders a ‘final decision’ on the claim.”

Plaintiff Lacks a Claim That is Ripe for Adjudication

Defendant first argues that “the court lacks subject matter jurisdiction over plaintiff’s action because plaintiff has not suffered an actual or imminent injury.” Defendant contends that “Medicare’s claim for reimbursement has not yet accrued because no event has triggered a primary insurer’s obligation and plaintiff has not been requested to reimburse the program.” In other words, because Medicare may never become entitled to reimbursement from plaintiff, defendant posits, there is no live dispute between the parties.

Although CMS has the right of action to recover overpayments against primary insurers “as soon as it learns that payment has been made or could be made under workers’ compensation, any liability or no-fault insurance, or an employer group health plan,” 42 C.F.R. § 411.24(b); 42 U.S.C. § 1395y(b)(2)(B)(iii) its right of action against beneficiaries only accrues after the beneficiary has received a primary payment.42 C.F.R. § 411.24(g) (“CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.”); see also 42 U.S.C. § 1395y(b)(2)(B)(iii), which says “the United States may recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity.”

Plaintiff contends that “Medicare has improperly sought to recover purported overpayments directly from him, rather than from the insurer of the driver of the vehicle that struck him.” The February 3, 2015 letter CMS sent to plaintiff stated explicitly, however, that it “IS NOT A BILL” and that plaintiff should “NOT SEND PAYMENT AT THIS TIME.” The letter merely explained that plaintiff “may be required to reimburse Medicare for medical expenses related to his liability claim.”

The Court explains that “Medicare may eventually determine that a primary insurer is responsible for covering medical expenses related to plaintiff’s injuries. In that case, it may seek reimbursement against the primary insurer or, if plaintiff has received a payment, against plaintiff himself.”42 U.S.C. § 1395y (b) (2) (B) (iii). In other words, “if a primary insurer directly reimburses Medicare for all of the purported overpayments, Medicare would not seek repayment from plaintiff himself. Alternatively, Medicare may determine that there was no overpayment.” As the above hypothetical situations illustrate, plaintiff’s alleged injury is purely conjectural. Because he “alleges only a potential for injury that has not yet occurred and because that potential is born of nothing more than hypothesis and conjecture,” the Court concludes plaintiff lacks standing to sue.

As noted above, on June 10, 2015, plaintiff received a nearly identical letter naming additional conditional payments made by Medicare on plaintiff’s behalf. The June 10, 2015 letter, like the February 3, 2015 letter, provided that plaintiff “may be required to reimburse Medicare.” It did not establish Medicare’s right of recovery against plaintiff. Additionally, on June 27, 2016, defendant filed a letter with the court explaining that further conditional payments had been made by Medicare on plaintiff’s behalf. The letter, however, explained: “HHS is not aware of any events at this time that would give rise to a claim for recovery against Plaintiff under the Medicare Act.” Even if events since the filing of the complaint had demonstrated Medicare’s right to recover overpayments, plaintiff was obligated to establish his standing to sue at the outset of the litigation.

Conclusion

Because the court lacks subject matter jurisdiction to hear plaintiff’s claim against defendant, the court need not address defendant’s alternative arguments. For the foregoing reasons, the court concludes plaintiff’s complaint is dismissed with prejudice pursuant to Fed. R. Civ. P. 12(b)(1) for lack of jurisdiction.

The court reminds us all that although CMS has the right of action to recover overpayments against primary insurers as soon as it learns that payment has been made or could be made under workers’ compensation, any liability or no-fault insurance, or an employer group health plan, right of action against beneficiaries only accrues after the beneficiary has received a primary payment. That rule not only applies to beneficiaries, but also to providers, suppliers, physicians, attorneys, state agencies or private insurers that have received a primary payment. In other words, Medicare may recoup reimbursement from any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity.