Tag Archives: CPL

CMS Issues Notice of Proposed Rulemaking Regarding an Appeals Process to be utilized by Applicable Plans for Conditional Payment Disputes

On December 27, 2013, CMS issued a NPRM relating to circumstances where “applicable plans” (liability insurance, no-fault insurance, and workers’ compensation law or plans) can appeal recoveries which are sought by Medicare under the MSP directly against applicable plans. Organizations or individuals seeking to have commentary considered should provide their recommendations via one of the approved delivery methods as specified in the NPRM no later than 5 pm on February 25, 2014.

The appeals process proposed within this NPRM will strictly be for “applicable plans” as Medicare beneficiaries currently have existing appeal rights where the beneficiary is listed as the debtor. Because there is currently no appeals process for applicable plans in a similar situation, and the SMART Act called upon CMS to create an appeals process for applicable plans, this NPRM has been issued in the efforts to give applicable plans the same rights to appeal as a beneficiary currently has available.

As it relates to the SMART Act, Section 201 specifically requires Medicare to promulgate regulations establishing a right of appeal and appeals process under which the applicable plan involved, or an attorney, agent, or third party administrator on behalf of such plan, may appeal a statement of reimbursement amount. Therefore, this NPRM has been issued to comply with the aforementioned requirement of the SMART Act.

While CMS has noted that the industry has expressed interest in an appeal process for determinations regarding WCMSAs, this NPRM does not address this issue (CMS noted that it will be addressed separately). PMSI is hopeful that CMS will address this issue separately in the near future as an appeals process for WCMSAs would bring additional clarity and consistency toward the WCMSA and CMS approval process.

Noteworthy portions of the NPRM on the Appeals Process proposed:

  • The applicable plan must be the identified debtor in the initial demand.
  • Additionally, if the applicable plan is the identified debtor in the initial demand, the beneficiary cannot dispute the recovery amount/conditional payment amount.
  • The applicable plan cannot appeal unless and until an initial demand has been issued and Medicare is pursuing recovery directly from the applicable plan.
  • Because Medicare has the right to recover conditional payments from the beneficiary, the primary payer, or any other entity that has the proceeds from payment by the primary plan, Medicare’s decision regarding who/what entity it is pursuing recovery from is not subject
    to appeal.
  • Notice of intent to appeal- where the applicable plan is the identified debtor, the beneficiary would receive notice of the applicable plan’s intent to appeal. On the other hand however, if the applicable plan is not the identified debtor, it would not receive notice of a
    beneficiary’s intent to appeal.

PMSI will be submitting commentary for the NPRM and recommends that all interested parties do so as well as the comments received will greatly impact the appeals process for applicable plans.

The NPRM can be found in the Federal Register here: http://www.gpo.gov/fdsys/pkg/FR-2013-12-27/pdf/2013-30661.pdf

Haro v. Sebelius Reversed (in part): Medicare May Seek Upfront Reimbursement of Conditional Payments Despite Pending Appeals/Waivers

Some of us in the industry may remember an interesting case back from May of 2011 where a class of Medicare beneficiaries successfully obtained an injunction against CMS for certain conditional payment reimbursement practices. The two conditional payment practices that Haro sought to enjoin were: 1) requiring pre-payment of an MSP reimbursement claim before the correct amount is administratively determined where the beneficiary either appeals or seeks a waiver, and 2) holding plaintiff attorneys financially responsible for MSP reimbursement if they do not hold or immediately turn over to Medicare their clients’ injury compensation awards. For our prior blog on the district court case, please click here.

The original case involved Patricia Haro (“Haro”) and two other Medicare beneficiaries who all owed conditional payments to CMS but sought appeals or waivers of that amount. The beneficiaries collectively alleged that it was improper for CMS to require upfront payment of the conditional payment amount while an appeal or waiver of the reimbursement amount was pending. Attorney John Balentine, who represented Haro in her personal injury lawsuit, joined the lawsuit alleging that it was improper for CMS to require attorneys to hold settlement funds until Medicare is reimbursed. Additionally, Balentine alleged that the MSP does not support an attorney being held personally liable for unreimbursed conditional payments.

The injunctions as well as the class certification granted by the district court have now been reversed by a recent decision out of the Ninth Circuit Court of Appeals.[1] More specifically, although the Ninth Circuit found that the plaintiff Haro demonstrated standing on behalf of the class of Medicare beneficiaries, and Haro’s attorney independently demonstrated standing to raise his individual claim, the Ninth Circuit concluded that the beneficiaries’ claims were not adequately presented to the agency at the administrative level, and therefore the district court lacked subject matter jurisdiction pursuant to 42 U.S.C. d 405(g). The Appellate court reached the merits of the attorney’s claim, but concluded that the Secretary’s interpretation of the MSP provisions were reasonable; lastly, the Circuit Court did remand the beneficiaries’ due process claim for consideration.

Regarding the beneficiaries’ claims, the reasoning the Ninth Circuit Court of Appeals gave as to why it lacked subject matter jurisdiction is that the beneficiaries did not properly present their claims to CMS. More specifically, the court stated that the beneficiaries did not provide an opportunity for the Secretary to consider the claim and never previously alleged that her interpretation of the MSP provisions exceeded her authority. Although the beneficiaries presented reimbursement disputes and sought waivers or appeals of the reimbursement amount, they did not make an argument to the Secretary that she was exceeding her authority under the MSP by seeking up front reimbursement. Essentially, the Court of Appeals stated that the beneficiaries had to make this argument directly to CMS through the conditional payment negotiation/appeal process before bringing the issue to court. However, the court did remand the beneficiaries’ due process claim for further analysis.

Regarding attorney Balentine’s claims, the Ninth Circuit conducted a thorough analysis of both his standing to bring the claim and the reasonableness of his claim. Regarding standing, since Balentine is not a Medicare beneficiary and therefore could not present his challenge through the same administrative channel as Medicare beneficiaries, the court was able to make an exception and therefore was able to maintain subject matter jurisdiction over the claim.

However, regarding reasonableness, the Circuit Court looked to the MSP provision that states that “an entity that receives payment from a primary plan, shall reimburse [Medicare] for any [secondary payment] if it is demonstrated that such primary plan . . . had a responsibility to make [a primary] payment,” 42 U.S.C. § 1395y(b)(2)(B)(ii), but it does not define “entity.” Therefore, the question for the court was whether an attorney could be considered an “entity.” In looking at this, the court determined that there is no statutory basis to distinguish between entities that receive payment from a primary plan and end-point recipients. Essentially, an attorney does receive payment from a primary plan in a literal sense. Additionally, the 2003 MSP amendments indicate that Congress intended a broad construction of “entity that receives payment from a primary plan.” Lastly, the court found that the Secretary’s interpretation of the MSP is reasonable in that it increases the likelihood that proceeds will be available for reimbursement to Medicare.

So what does this reversal out of the Ninth Circuit mean? With the injunctions against CMS now being lifted, we may see CMS again sending conditional payment demands to collection agencies while waiver or appeals are being pursued. This was a practice that was put on hold after the district court decision was issued back in 2011. The decision as it relates to the attorney’s claim is not surprising; many of us remember cases such as U.S. v. Harris from a few years ago where a plaintiff attorney was held personally liable for unreimbursed conditional payments by CMS.

What we should learn from this case is 1) beneficiaries should always ensure that claims have been properly presented and that they have exhaust administrative remedies before bringing an issue with the conditional payment amount itself or CMS’ conditional payment recovery practices to review by a court; and 2) while it is unlikely that CMS will begin sending conditional payment demands to collections while an appeal or waiver is being pursued as they did in the past, CMS now technically has the legal right to do so with the injunctions being lifted; therefore, settling parties should be aware of this possibility. Additionally, parties should be aware, as always, that interest will accrue on final demands not paid within 60 days of their issue date.

PMSI will continue to follow the remand of the beneficiaries’ due process claims and any future updates on the Haro case.


[1] Haro v. Sebelius, 2013 U.S. App. LEXIS 18353 (September 4, 2013).

Fifth Circuit Affirms: Medicare Cannot Recover Conditional Payments where Treatment is Unauthorized under State Law

We previously blogged about a case wherein Medicare was unable to recover conditional payments due to the fact that the claimant sought unauthorized treatment under Texas workers’ compensation law. Please click here to read our prior blog.

On appeal, the Firth Circuit has affirmed this decision; please see Caldera v. The Insurance Company of the State of Pennsylvania, 2013 U.S. App. LEXIS 9706 (May 14, 2013).

It is likely that this decision will be appealed to the U.S. Supreme Court, and until such time the Supreme Court decides whether or not to hear the case, this decision remains controversial. Some view this decision as a burden shift to the taxpayer, due to the fact that Medicare was unable to recover payments where a claimant did not exhaust his state workers’ compensation administrative remedies.

Others view this case as a wise decision and beneficial for workers’ compensation carriers due to the fact that the treatment sought by the claimant in this case was unauthorized under Texas workers’ compensation; therefore the workers’ compensation carrier did not become primary and responsible for repayment to Medicare.

PMSI will continue to follow this case and will keep its subscribers updated on any developments with regard to a possible appeal to the U.S. Supreme Court.

Reminder: PMSI to Host CE Accredited Webinar

Next week, Heather Schwartz, Esq., MSCC, CHPE, CLMP, CMSP will offer her expertise in reference to the SMART Act and other MSP legal updates on Tuesday, April 16, 2013 from 1 PM -2 PM EDT.

The webinar is complimentary and 1 hour of CEU and CLE credit has been applied for in multiple states; all attendees who successfully complete the Webinar will be provided with a Certificate of Attendance. For more information on obtaining CEU or CLE credit for this webinar and to Register, please click here.