Important Change Regarding Medicaid Secondary Payer Claim Compliance

On February 9, 2018 President Trump signed into law a new budget deal. The new law also contained an important change regarding Medicaid Secondary Payer compliance.

What Optum Had Been Anticipating

Optum Settlement Solutions had been anticipating an Oct 1, 2017 effective date for state Medicaid agencies to begin enforcing the Medicaid Secondary Payer Act enacted in Section 202(b) of the Bipartisan Budget Agreement of 2013, referred to as the “Murray-Ryan bill”. The act permitted state Medicaid agencies to recover all payments Medicaid made related to the underlying personal injury claim before settlement. The recovery was to occur regardless of whether the damages/injuries claimed were related to the medical component of damages within a personal injury settlement or third party settlement.

Practically speaking, each state Medicaid agency was entitled to recover proceeds from a personal injury settlement if the Medicaid paid for medical treatment related to the underlying accident, up to the total settlement amount if that was indeed what Medicaid had paid.  Had the federal law not been reversed, some Medicaid recipients may have been left with no money in their pockets after settlement in order for Medicaid to recover money spent.

What Has Changed Overnight

Section 53102 of the Bipartisan Budget Act of 2018 fully
repealed Medicaid’s expanded recovery rights regarding third party, personal injury settlements. The new legislation overturned what had been anticipated for several years.

The new budget permanently repealed the ability of Medicaid to recover up to the total settlement amount. Now Congress has restored the ability of Medicaid recipients to settle third party liability claims. In other words, the recent repeal allows Medicaid recipients to pursue and settle third‐party insurance claims without fear that all of the settlement proceeds will go towards repaying Medicaid.

What This Means for the Claim Handler

Liability insurers and claim handlers are not totally off the hook. Medicaid still has recovery rights in third party liability settlements and Medicaid will still be permitted to recover some of their payments via third party liability units within each state Medicaid agencies. However, the new legislation will improve the ability to settle the claim and removes the need to pay higher settlement amounts because the claim involves a Medicaid recipient.

Claim handlers will still receive notices from Medicaid reminding you not to settle without contacting Medicaid for their recovery demand. However, these rights will be limited based upon the agreement of the parties as to how funds are allocated under the settlement.

Who Deserves Credit

We applaud the Finance Committee Chairman, Orrin Hatch, Senator Rob Portman, as well as the House Energy and Commerce Health Subcommittee Chairman Michael Burgess, and the House and Senate leaders, who have been worked over the last several years to eliminate this provision. The Medicare Advocacy Recovery Coalition (MARC) has been pressing for a reversal for several years. Our thanks to the MARC Chairman, Greg McKenna for staying behind this effort.

What Optum Can Do For You

If you have a claim you would like to settle and are not sure the claimant is a Medicaid recipient, Optum can contact the state Medicaid liability recovery unit and provide them notice of the pending settlement and request an itemization of payments Medicaid has made pertaining to the underlying claim.

If you have a Medicaid demand seeking recovery of medical expenses related to the personal injury claim that includes unrelated treatment for pre-existing or co-morbid conditions, Optum can dispute and negotiate the amount you owe Medicaid.

CMS Introduces new Commercial Repayment Center (CRC) Contractor in Transition Webinars

Effective February 8, 2018, a new contractor will assume responsibility of the Commercial Repayment Center (CRC) functions. This includes recoveries where another entity had primary payment responsibility under a Group Health Plan arrangement, as well as conditional payments where CMS is pursuing recovery directly from a liability insurer (including a self-insured entity), no-fault insurer or workers’ compensation (WC) entity as the identified debtor.

CMS will be hosting webinars to introduce this new CRC Contractor. The webinars include a brief introduction and presentation, followed by a question and answer session.

Join us for one or both of these information sessions

Group Health Plan information session
January 17, 2018 at 1:00 p.m. EST
Register here:
Conference number: 877-251-0301
Conference ID: 2696839

Non-Group Health Plan information session
January 18, 2018 at 1:00 p.m. EST
Register here:
Conference number: 877-251-0301
Conference ID: 8389587

Please login 15 minutes before the start time due to the large number of participants.

CMS Releases NGHP Section 111 User Guide v5.3

CMS has released an updated NGHP User Guide, version number 5.3. The updates address the new Medicare Beneficiary Identifier (MBI) initiative in the Introduction, Overview and Appendices chapters.

As required by the Medicare Access and CHIP (Children’s Health Insurance Program) Reauthorization Act (MACRA) of 2015, CMS will be discontinuing all Social Security Number (SSN) based Medicare identifiers and distribute new 11-byte Medicare Beneficiary Identifier (MBI) cards by April 2019. CMS has exempted all Medicare Secondary Payer (MSP) processes from exclusive use of the MBI. Non-Group Health Plan RREs are permitted to continue to report for Section 111 mandatory insurer reporting using: full SSN, Health Insurance Claim Number (HICN), or MBI. Please note, all fields formerly labeled as “HICN” have been relabeled as “Medicare ID” and CMS will be able to accept either a HICN or the new MBI.

Following is a summary of updates appearing in this release:

The Medicare Identifier on Section 111 Response Files

The most current Medicare ID (HICN or MBI) will be returned in the Section 111 response files in the “Medicare ID” field. Consequently, if an RRE submits information with an HICN and the Medicare beneficiary has received their MBI, the MBI will be returned. Otherwise, the most current HICN will be returned. RREs may submit subsequent Section 111 information for this Medicare beneficiary using either the HICN or MBI.

Medicare Identifier on Outgoing Correspondence

As part of the New Medicare Card Project changes, all correspondence from the Benefits Coordination and Recovery Center and Commercial Repayment Center will use the Medicare identifier most recently provided when creating or updating a MSP record. Therefore, if the most recent information received used an HICN, all subsequent issued correspondence will be generated with the HICN as the Medicare ID. If the most recent information received used an MBI, all subsequent issued correspondence will use the MBI as the Medicare ID.

Direct Data Entry (DDE) Users: Claim Searches

Either the MBI or the HICN can be used in the Medicare ID field when searching for claims on the Claim Listing page. All claims that match will display regardless of the Medicare Identifier used to establish the claim.

Retiree Drug Subsidy (RDS) Unsolicited Response Files

RDS Unsolicited Response Files will contain the HICN or MBI in the “Medicare ID” field, as sent by the RDS system (applicable for Group Health Plans only).

General Updates

RREs can use a SSN to query the Health Eligibility Wrapper (HEW) 270/271 query process. The most current Medicare identifier, either HICN or MBI will be returned in the “Medicare ID” field.

The contact protocol for the Section 111 data exchange escalation process (see Section 8.2).

The ICD-10 exclusions for 2018 (see Chapter 5 Appendices, Appendix I and Appendix J).

CMS will continue to review reporting requirements and post any applicable updates in the form of revisions to Alerts and the user guide as necessary.

A consolidated PDF file of all these updates is available upon request. Please email if you would like to receive a consolidated, searchable file.

Prescription Medication Updates That May Affect Your Medicare Set-Aside

We continually monitor pricing of the most common medications seen in Workers’ Compensation Medicare Set-Aides (WCMSAs) in order to identify pricing changes affecting MSAs positively. The month of December brought a price drop for gabapentin 800mg tablets commonly used to treat neuropathic pain.

Below is the product confirmed to have a reduced AWP and confirmed in the Centers for Medicare and Medicaid Services (CMS) WCMSA portal.

Product name NDC Code Dosage form Strength AWP unit price reduction
Gabapentin 00904-6586-61 TAB 800 mg $2.16

Please note RED BOOK® AWP (Average wholesale price) is subject to change and this pricing is subject to an increase or decrease in the future.  

CMS will utilize the lowest AWP published by RED BOOK when reviewing a WCMSA, therefore the lower pricing of these medications will immediately impact the prescription costs for WCMSAs (both present as well as prior WCMSAs that have not settled and there is no CMS determination issued) where these drugs are prescribed.

It is our recommendation carriers, TPAs and claim handlers review cases where the above noted medication is prescribed to determine the benefit from decreased cost. We will proactively reach out to our clients in reference to previously completed WCMSA’s where this medication was prescribed and  continue to monitor future portal changes and generic equivalents introduced to the market in order to keep the industry informed.