Category Archives: Medicare Secondary Payer (MSP)

Medicare Secondary Payer (MSP)

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).

Bid for WCRC with LMSA Capabilities Delayed by CMS

Earlier this year, the Centers for Medicare and Medicaid Services (CMS) solicited bids in an RFP for a Workers’ Compensation Review Contractor (WCRC) to review workers’ compensation Medicare Set Aside (WCMSA) proposals, which potentially include liability Medicare Set Asides (LMSAs). The bid was to be released on September 22, 2016, but has been delayed. When this deadline passed without the release of the solicitation, we were notified of the delay. CMS has postponed the award date and now anticipates releasing the bid sometime during the first quarter of fiscal year 2017, pending availability of funds. However, the dates are subject to change.

Although not certain, it is anticipated that guidelines for review of LMSAs or modifications to current WCMSA review thresholds will be shared prior to release of the solicitation. While we remain alert to potential changes in the future, our present services continue without change. Upon release of the bid and identification of WCMSA contractor, there are a few potential areas of consideration:

  • A new WCMSA contractor may delay MSA approval times
  • A new WCMSA contractor may result in inconsistencies in acceptance of what is allocated
  • Either the same or a new WCMSA contractor who is trained for LMSAs may result in inconsistencies and delays
  • The same WCMSA contractor may add LMSA reviewers for new guidelines which may result in inconsistencies and delays

If LMSAs are included in the responsibilities of the WCRC, guidelines for LMSAs are expected to be released. Guidelines will review threshold amounts and share an apportioning formula for use for both the extent of liability and the extent of injuries based upon a ceiling of policy limits. They are also expected to include total settlement amount, judgment rendered or arbitration amount awarded. In the meantime, efforts to equitably influence the LMSA guidelines are anticipated from CMS.

We expect further communication from the CMS in the coming months. Our teams remain engaged with these changes and will share information with you as it becomes available.

Appropriate Authorization: Required CMS Forms to Resolve Conditional Payments

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