Tag Archives: MSA

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.

HB 2649 and SB 1514: Congress’ Renewed Attempt to Streamline the Workers Compensation and Medicare Set Aside Settlement Process

Article by Rafael Gonzalez, Esq. Vice President, Strategic Solutions HELIOS Settlement Solutions

Article by
Rafael Gonzalez, Esq.
Vice President, Strategic Solutions
HELIOS Settlement Solutions

US House Bill 2649 and US Senate Bill 1514 were filed on June 4, 2015 by US Representative Reichert and US Senator Portman to amend title XVIII of the Social Security Act to provide for the application of Medicare secondary payer rules to certain workers’ compensation settlement agreements and qualified Medicare set-aside provisions. Co-sponsored by US Representative Thompson and US Senator Nelson, the bills were read twice and referred to the House Ways and Means, and thereafter referred to the House Energy and Commerce Committee, and on the Senate side, referred to the Committee on Finance. What follows is a summary of the proposed companion bills as introduced.

Settlements Under $25,000 are Exempt

House Bill 2649 and Senate Bill 1514 amend Section 1862 of the Social Security Act (42 U.S.C. 1395y) by adding a new subsection (p). The first change the bill introduces is a threshold for “certain workers compensation settlements whereby a workers’ compensation law or plan shall not be treated as a primary plan.” The bill proposes that “any workers’ compensation settlement agreement that does not exceed $25,000 or such greater amount as the Secretary may specify in regulations” would exempt the plan or claimant from having to take Medicare’s future interests into consideration. In other words, in any workers compensation settlement under $25,000 with a current Medicare beneficiary, Medicare would become the primary payer for any medical care related to the workers compensation claim, as neither the claimant nor employer/carrier would have to set aside any monies from such settlement to protect Medicare’s future interests.

Also exempt from taking Medicare’s future interests into account would be settlements where “the settling claimant is not eligible for Medicare benefits as of the effective date of the agreement; and is unlikely to become so eligible within 30 months after such effective date, settlements where the claimant subject to such agreement is not eligible for payment of medical expenses incurred after the effective date of the agreement from the workers’ compensation law or plan of the jurisdiction in which such agreement will be effective, or settlements in which such agreement does not limit or extinguish the right of the claimant to payment of medical expenses incurred after the effective date of such agreement by the workers’ compensation law or plan of the jurisdiction in which the agreement will be effective.”

Claimants Unlikely to Become Medicare Eligible

House Bill 2649 and Senate Bill 1514 indicate that “a workers’ compensation claimant shall be deemed unlikely to become eligible for Medicare benefits within 30 months after the effective date of the agreement unless, as of the effective date of the agreement, such claimant is insured for disability insurance benefits and the individual has been awarded such disability insurance benefits, the individual has applied for such disability insurance benefits, the individual has been denied such disability insurance benefits but anticipates appealing that decision, the individual is in the process of appealing or refilling for such disability insurance benefits, the individual is at least 62 years and 6 months of age, or the individual is medically determined to have end-stage renal disease but does not yet qualify for Medicare benefits based on such disease.”

Determination of Total Settlement Amount

House Bill 2649 and Senate Bill 1514 propose to define the total settlement amount of the agreement as “the sum of monetary wage replacement benefits, attorney fees, all future medical expenses, repayment of Medicare conditional payments, payout totals for annuities to fund the expenses listed above, and any previously settled portion of the workers’ compensation claim.”

Qualified Medicare Set Aside

House Bill 2649 and Senate Bill 1514 further amend Section 1862 of the Social Security Act (42 U.S.C. 1395y), by adding a method to satisfy the Secondary Payer requirements through the use of a Qualified Medicare Set Aside. Although the bills do not require any notice to CMS of the actual creation of a Qualified Medicare Set Aside, the amount of the set aside, how much was set aside for treatment and for prescription needs, whether funded through a lump sum or structured, and if self administered or professionally administered, the bills make it clear that “if a workers’ compensation settlement agreement includes a Qualified Medicare Set Aside, such set aside shall satisfy any obligation with respect to future payment reimbursement related to such claim.” The bills also indicate “submission of a Qualified Medicare set-aside to the Secretary is not required,” but would remain a voluntary choice of the settling parties.

The bills indicate that a Medicare set-aside shall be deemed to be a Qualified Medicare set-aside if “the Medicare set-aside amount reasonably takes into account the full payment obligation of the settling payer, based on the illness or injury giving rise to the workers’ compensation claim involved, the age and life expectancy of the claimant involved, the reasonableness of and necessity for future medical expenses for treatment of the illness or injury involved, the duration of and limitation on benefits payable under the workers’ compensation law or plan involved, and the regulations and case law relevant to the State workers’ compensation law or plan involved.”

A Qualified Medicare set-aside shall include “payment for items and services that are covered and otherwise payable under the Medicare system as of the effective date of the workers’ compensation settlement agreement and that are covered by the workers’ compensation law or plan. The Qualified set-aside amount “shall be based upon the payment amount for items and services under the workers’ compensation fee schedule (effective as of the date of the agreement) applicable to the workers’ compensation law or plan involved.”

Compromise Settlements and the Use of Percentage Reduction MSAs

In the case of a compromise settlement agreement, defined in the bills as a “workers’ compensation settlement agreement in which the workers’ compensation claim has been denied or contested, in whole or in part, by a workers’ compensation payer involved under the workers’ compensation law or plan applicable to the jurisdiction in which the agreement has been settled that does not provide for a payment of the full amount of benefits sought or that may be payable under the workers’ compensation claim,” contrary to CMS current policy which does not permit any reduction of set asides resulting from a compromise settlement, House Bill 2649 and Senate Bill 1514 propose that “a claimant or workers’ compensation payer who is party to the agreement may elect to calculate the Medicare set-aside amount by applying a percentage reduction to the Medicare set-aside amount.

Such percentage reduction would be used “with the total settlement amount that could have been payable under the applicable workers’ compensation law or similar plan involved had the denied, disputed, or contested portion of the claim, had it not been subject to a compromise agreement.” The percentage reduction “shall be equal to the denied, disputed, or contested percentage of such total settlement.” However, such election may be made “only with the written consent of the other party to the agreement .” If the claimant or workers’ compensation payer elects to calculate the Medicare set-aside amount under this percentage reduction formula, “the Medicare set-aside shall be deemed a Qualified Medicare set-aside.

Voluntary Approval Process

As previously indicated, House Bill 2649 and Senate Bill 1514 propose that the creation of a Qualified Medicare set-aside satisfies secondary payer obligations. However, “a party to a workers’ compensation settlement agreement that includes a Medicare set-aside may submit to the Secretary the Medicare set-aside amount for approval of the set-aside as a Qualified Medicare set-aside.

If in fact parties seek such approval, the bills indicate that “not later than 60 days after the date on which the Secretary receives a submission, the Secretary shall notify in writing the parties to the workers’ compensation settlement agreement of the determination of approval or disapproval.” If the determination disapproves such submission, “the Secretary shall include with such notification the specific reasons for the disapproval.” In the case of a failure by the Secretary to mail or deliver the notice of the determination within 60 days, “the party involved may file an appeal directly to the administrative law judge within 30 days after such failure.

Medicare Set Aside Appeals Process

House Bill 2649 and Senate Bill 1514 propose that “a party to a workers’ compensation settlement agreement that is dissatisfied with a determination may file a request for reconsideration with the Secretary not later than 60 days after the date of notice of such determination.” The Secretary “shall conduct and conclude such reconsideration within 30 days from the date that the request for such reconsideration was filed.” If a party to the workers’ compensation settlement agreement is dissatisfied with the Secretary’s reconsideration, “that party may file an appeal within 30 days of date of receipt of the notice of the decision and request a hearing before an administrative law judge.” In the case of a failure by the Secretary to mail or deliver the notice of the reconsideration decision within 30 days, “the party involved may file an appeal directly to an administrative law judge not later than 30 days after such failure.”

Although other federal administrative procedures for similar type appeal processes do not include such time limitations, and without any funding to carry out such time sensitive tasks, House Bill 2649 and Senate Bill 1514 indicate that “an administrative law judge shall conduct and conclude a hearing on a decision of the Secretary or a determination with respect to which the Secretary failed to render a timely decision within 90 days, beginning on the date that a request for such hearing was timely filed.” Bypassing the usual appeal to the Appeals Council, the bills propose that a decision by an administrative law judge constitutes a final agency action and “is subject to judicial review.” In the case of a “failure by an administrative law judge to render a decision within 90 days, the party requesting the hearing shall be entitled to judicial review of the decision.”

Administration of Medicare Set Asides

House Bill 2649 and Senate Bill 1514 propose that, effective 30 days from the date of enactment of the bills, “with respect to a claim for which a workers’ compensation settlement agreement is or has been established, a claimant or workers’ compensation payer who is a party to the agreement may elect, but is not required, to transfer to the Secretary a direct payment of the Qualified Medicare set-aside.”

There are three permissible methods of calculating the Qualified Medicare set-side when directly making such payment to the Secretary. First, “in the case of any Medicare set-aside in a compromise settlement agreement, the parties may use the percentage reduction formula to calculate the amount of the Qualified Medicare set-aside.” Second, “in the case of any Medicare set-aside, the amount based upon the payment amount for items and services under the workers’ compensation fee schedule (effective as of the date of the agreement) applicable to the workers’ compensation law or plan involved.” And third, “in the case of any Medicare set-aside, the payment amount applicable to the items and services under the Medicare system as in effect on the effective date of the agreement. Such transfer shall be made only upon written consent of the other party to the agreement.”

If the parties do not choose to make such direct payment to the Secretary, then House Bill 2649 and Senate Bill 1514 indicate that “nothing prohibits an individual from electing to utilize professional administration services or to self-administer payments of their Medicare Set-Aside in accordance with existing law.”

Protection from Liability

House Bill 2649 and Senate Bill 1514 propose that no claimant, payer, employer, administrator, or legal representative of the parties “shall be liable for any payment amount established under a Medicare set aside for an item or service provided to the claimant that is greater than the payment amount established under the workers compensation fee schedule (or in absence of such schedule, the medical reimbursement rate) under the compensation law of the jurisdiction where the agreement will be effective.” In order to provide uniformity, the bills indicate that “a provider may not bill (or collect any amount from) the workers compensation claimant, payer, employer, administrator, or legal representative an amount that is greater than the payment rate established under the Medicare set aside of the agreement.”

The bills further propose that “if a provider willfully bills (or collects an amount) for such an item or service in violation of same, the Secretary may apply sanctions against the provider in accordance with 42 USC section 1842(j)(2) in the same manner as such section applies with respect to a physician.”

State Workers’ Compensation Law is Final and Conclusive

House Bill 2649 and Senate Bill 1514 propose that “if a workers’ compensation settlement agreement is accepted, reviewed, approved, or otherwise finalized in accordance with the workers’ compensation law of the jurisdiction in which such agreement will be effective, such acceptance, review, approval, or other finalization shall be deemed final and conclusive as to any and all matters within the jurisdiction of the workers’ compensation law, including the determination of reasonableness of the settlement value; any allocations of settlement funds; the projection of future indemnity or medical benefits that may be reasonably expected to be paid under the State workers’ compensation law; and, in the case of a compromise agreement, the total amount that could have been payable for a claim which is the subject of such agreement.”

Private Cause of Action

House Bill 2649 and Senate Bill 1514 propose that paragraph (3)(A), the private cause of action provision of the Medicare secondary payer law, be amended to include the words “Subject to subsection (q),” before the beginning of the first sentence. Therefore, the bills propose the first sentence to read “Subject to subsection (q), there is established a private cause of action.”

Meeting Requirements of the Law

House Bill 2649 and Senate Bill 1514 propose that “if the parties to a workers’ compensation settlement agreement met the provisions of section 1862(b) of the Social Security Act (42 U.S.C. 1395y(b)) on the effective date of settlement, it shall be accepted as meeting the requirements of such section notwithstanding changes in law, regulations, or administrative interpretation of such provisions after the effective date of such settlement.” The bills indicate that “amendments made by the bill, unless otherwise specifically specified, shall apply to workers’ compensation settlement agreements with an effective date on or after October 1, 2015.”

This is the sixth version of similar proposals to amend the MSP Act specific to WCMSAs dating back to 2007. As in the past, as these proposals make their way through the legislative process, Helios Settlement Solutions will report on these bills’ score, reported savings or costs to taxpayers over the next 10 years as a result of the changes proposed, any co-sponsors in either chamber of Congress, any amendments made by members and committees, as well as CMS’ reaction and position on same.

Louisiana Federal Court Finds Beneficiary Failed to Exhaust Remedies, Also Concludes MAP Has Private Cause of Action, But Denies Double Damages

29106aeOn December 16, 2014, the United States District Court, for the Eastern District of Louisiana, published its opinion on Collins v. Wellcare Healthcare Plans, Inc., concluding that because the plaintiff, Collins (hereinafter referred to as Collins), did not exhaust the administrative remedies available under the MAO/MSP, the Court lacks subject matter jurisdiction to entertain her claim. The Court further finds that Wellcare has a private cause of action under the MSP and is entitled to reimbursement from Collins’ tort settlement. But the Court denies double damages because it remains a disputed material fact as to whether Collins’ tort settlement provided compensation for her medical expenses and as to whether the settlement released the tortfeasor from all liability.

Collins was injured in an automobile accident on August 21, 2009 and required medical treatment as a result of that accident. Collins claims that Wellcare, a Medicare Advantage Organization (MAO), provided a Medicare Advantage Private-Fee-For-Service health insurance plan to her and that Wellcare paid medical expenses on her behalf to several providers. Collins instituted an action against the tortfeasor and recovered damages.

Her attorney then deposited the amount paid by Wellcare into a special account. Collins sought a declaratory judgment that Wellcare is not entitled to subrogation or reimbursement for the amounts paid. Wellcare removed the case to federal court pursuant to the Court’s diversity jurisdiction. Wellcare filed an Answer and a Counterclaim, claiming that the Medicare Advantage Plan at issue has a statutory right of reimbursement and subrogation which expressly pre-empts contrary State Law. According to Wellcare, Collins has not exhausted her administrative remedies and her declaratory action should be dismissed. In its Counterclaim, Wellcare claimed that it paid a total of $181,261.97 for medical care and treatments received by Collins and is entitled to reimbursement from Collins’ tort settlement.

Wellcare argued that the Court should dismiss Collins’ claim because she failed to exhaust the mandatory Medicare exhaustion requirements pursuant to §405(g), and the Court therefore lacks subject matter jurisdiction over her claim. Wellcare argued that MAOs are secondary payers under the Medicare Secondary Payer Statute (MSP) and “share the same exact rights under the MSP as provided to the United States Government under traditional Medicare.” Wellcare stated that Medicare Part C “specifically gives MAOs a statutory right of secondary payer reimbursement where conditional benefits have already been paid.” Wellcare therefore argued that “congressional intent supports the conclusion that MAO plans are entitled to the same recovery rights as traditional Medicare.”

Collins argued that she is not required to exhaust administrative remedies because she brought the action in state court based on state law causes of action and does not seek any Medicare benefits or services. Collins contended that the contract between the parties stated that the administrative requirement is “invoked only ‘if you have problems getting the Part C medical care or service you request, or payment (including the amount you paid) for a Part C medical care or service.”

Collins did not assert a claim for benefits to the administrative agency and to the Secretary as required by 42 U.S.C. § 405(h). Instead she filed a declaratory action in state court which was removed to USDC. The Court finds that Section 405 (h) of Title 42 is more than an exhaustion requirement; it precludes federal courts from exercising jurisdiction over claims arising under the Medicare Act. The Supreme Court has held that all claims that “arise under” the Medicare Act must exhaust their administrative remedies prior to any judicial review. Heckler v. Ringer, 466 U.S. 602, 605 (1984).

The Court found that while Collins fashioned her claim as a declaratory judgment and invoked Louisiana State Law, she ultimately sought to retain her benefits based on an argument that the Medicare Act does not afford Wellcare a subrogation right. Such a declaration inherently demands an interpretation of the Medicare Act. Therefore, the Court found that Collins’ claim arises under the Medicare Act, and as such the Court lacks subject matter jurisdiction to entertain her claim.

The Court does not answer the question as to whether the MAO Statute provides Wellcare a cause of action because the Court finds that a cause of action exists under the MSP. This Court finds that the Third Circuit’s analysis In Re: Avandia (click here to see our prior blog on this case) is persuasive. The MSP’s statutory text does not include any narrowing language that would exclude MAOs from the private cause of action clause. The text therefore clearly indicates that MAOs are included within the purview of parties who can bring a private cause of action under the MSP.

Although having determined that Wellcare has a private cause of action pursuant to the MSP, the Court also finds that such a cause of action does not automatically afford a right to double damages. Rather, a primary plan must “fail” to provide reimbursement in order to afford an MAO the right to pursue double damages. Failure connotes an active dereliction of a duty, and the award of double damages is intended to have a punitive effect on plans who intentionally withhold payment. The Court here finds that there was no purposeful failure to provide reimbursement. Therefore, the intended punitive remedy of double damages is not appropriate given the facts here.

Collins also argued that Wellcare’s Counterclaim is barred because per 42 U.S.C. § 1395y(b)(2)(B)(vi), Wellcare had a three year period after it paid Collins the conditional payment to seek reimbursement. However, Wellcare urged the Court to apply the six year statute of limitations for government contracts contained within the Federal Claims Collection Act (FCA). This Court however was not persuaded by either party’s position.

President Obama signed the Medicare and Repaying Taxpayers Act of 2012, also known as the SMART Act, in January 2013. Although the 3 year statute of limitations in it specifically applies to a cause of action brought by the United States, the Court finds that the statute of limitations applies to all causes of actions brought under the Medicare Secondary Act. Notably, the statutory language specifies that a cause of action “must be brought within 3 years of the time that a party is notified of a settlement.” Here, Wellcare contends that it sent Collins numerous inquiries about a possible settlement and only learned of her settlement through the filing of this lawsuit. Accordingly, the Court finds Wellcare is within the three-year statute of limitations period.

Collins disputes whether the settlement compensated her for her medical expenses. The MSP provides that a primary plan’s responsibility for reimbursement may be demonstrated by a settlement. The CMS regulations further buttress that statutory language and include regulatory language that mirrors the quoted MSP statutory language. See 42 C.F.R. 411.22(b)(2). Although the Court believed that Collins did likely receive compensation based on the nature of her claim, it remains a disputed material fact. Based on these disputed facts, the Court did not grant summary judgment as to the amount of reimbursement.

This case is yet another example where a court has granted the private cause of action right to a MAO, a trend that has been increasing in the past several years. As MAOs continue to become more aggressive in seeking reimbursement of conditional payments, Helios encourages payers to speak to us about our Part C Medicare Advantage Plans and Part D Prescription Drug Plans conditional payment investigations, analysis, negotiations, and finalization services. Additionally, we encourage you to speak with our area service representatives or regional managers about resolving all conditional payments.

CMS Issues NGHP User Guide Version 4.5; Reaffirms that Orders Contradicting the MSP will not receive Deference

heatherCMS has updated their User Guide for Non Group Health Plans. The update is dated February 2, 2015. The only update to the guide is the following:

The updates listed below have been made to the Policy Guidance Chapter Version 4.5 of the NGHP User Guide. As indicated on prior Section 111 NGHP Town Hall teleconferences, the Centers for Medicare & Medicaid Services (CMS) continue to review reporting requirements and will post any applicable updates in the form of revisions to Alerts and the User Guide as necessary.

The following update was made to Chapter III for this release: RREs generally are not required to report liability insurance (including self-insurance) or no-fault insurance settlements, judgments, awards or other payments where the date of incident (DOI) as defined by CMS was prior to December 5, 1980. For this release, new policy language was added to the following document: “Liability Insurance (Including Self-Insurance): Exposure, Ingestion, and Implantation Issues and December 5, 1980.” (Section 6.5)

  • Any operative amended complaint (or comparable supplemental pleading) must occur prior to the date of settlement, judgment, award, or other payment and must not have the effect of improperly shifting the burden to Medicare by amending the prior complaint(s) to remove any claim for medical damages, care, items and/or services, etc.
  • Where a complaint is amended by Court Order and that Order limits Medicare’s recovery claim based on the criteria contained in this alert, CMS will defer to the Order. CMS will not defer to Orders that contradict governing MSP policy, law, or regulation.

This information was provided in a previous August 19, 2014 CMS alert; therefore, it appears that CMS has simply incorporated that alert into the User Guide. However, it is noteworthy that CMS continues to point out it will not abide by court orders that contradict MSP policy, law, or regulation. Particularly in the liability context, this could certainly cause some anxiety for settling parties since without an official LMSA process, the courts are now often times issuing orders that no LMSA obligations remain. CMS could later look upon that court order and state that the order contradicted MSP regulations.

However, there are steps that parties can take to take into account Medicare’s interests and decrease the likelihood that CMS would find that the settlement/order contradicts MSP regulations. For example, in the recent liability case Berry v. Toyota Motor Sales (click here to read our blog on this case), the plaintiff was able to obtain opinions from its treating providers that no future medical treatment related to the claim would be needed. Since CMS has stated that if a treating physician certifies in writing that no future care is needed, no LMSA would be required, CMS would not later find that the order contradicted MSP policy in this case.

The fact that CMS has continued to reiterate its policy that it will not defer to court orders that contradict MSP policies and regulations should not come as a shock, and as previously stated, if parties take proactive steps to demonstrate the protection of Medicare’s interests, CMS would likely defer to the court’s decision on the matters relative to the MSP in the court order.

The new User Guide can be found here, and the August 19, 2014 alert can be found here. For questions, please contact heather.sanderson@helioscomp.com.