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Posts tagged: workers’ compensation

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

By , May 21, 2013 3:35 pm

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.


Update on Inclusion of Benzodiazepines and Barbiturates in WCMSAs

By , May 6, 2013 4:48 pm

As of January 1, 2013, Medicare expanded its Part D guidelines to include coverage for benzodiazepines and barbiturates for certain conditions. For more information on this new expanded coverage, when it will be covered, and how this coverage change is predicted to apply to WCMSAs, please see our prior blog here.

CMS recently issued an alert on their website which provides the date for which this new coverage guideline is to affect WCMSAs: June 1, 2013. Below is the text of the alert:

Effective June 1, 2013, all  Workers’ Compensation Medicare Set-Aside (WCMSA) proposals submitted to CMS for a review of the adequacy of the proposal amount are to include the pricing of benzodiazepines and barbiturates, where appropriate.

Please note that WCMSA cases submitted to CMS  before June 1, 2013, closed due to missing, incomplete and/or inadequate supporting documentation (or any  other reason), and subsequently re-opened after June 1, 2013, will also be subject to a review that includes the pricing of benzodiazepines and barbiturates.

As noted in our prior blog, the silver lining of this change is that the majority of barbiturates and benzodiazepines on the market have generic formulations which are fairly inexpensive. Therefore, if generics are prescribed, the impact of this change should not be significant to WCMSAs.


The Current State of Medicare Advantage Plans and Recovery Rights under the MSP

By , April 24, 2013 4:25 pm

Medicare Advantage Plans (MAPs), also known as Medicare Part “C”, are private insurance plans which provide Medicare benefits to beneficiaries. A beneficiary may opt to receive their Part A and B Medicare benefits through a MAP rather than through traditional Medicare. Often times, MAPs offer more flexibility in benefit options and pricing than traditional Medicare. Additionally, all Part D prescription benefits are provided by MAPs as Medicare does not provide Part D prescription benefits directly. It has been estimated that approximately 25% of Medicare beneficiaries are enrolled in some type of MAP, and that number is expected to increase over time.

If you handle workers’ compensation or liability claims, you may be wondering what MAPs have to do with recovery rights under the MSP or the extent of those rights.   

It has been questioned for some time whether MAPs simply have a contractual right to recover conditional payments made when a primary payer exists, or if they have similar rights to Medicare, in that they could pursue an action for double damages for a primary payer’s failure to reimburse Medicare conditional payments. Below is a brief timeline which displays where we are today and references the recent impactful cases, Parra v. PacifiCare of Arizona, and In Re Avandia Marketing as well as CMS’ input on this issue through a memorandum.   

December 5, 2011- CMS issues a memorandum in support of MAPs having the right to collect for payment of services where Medicare is not the primary payer. CMS even goes as far as to state that MAPs can exercise the same rights of recovery that the Secretary exercises under the existing MSP regulations. This memorandum was likely prompted by the initial decisions in Parra and In Re Avandia which found that MAPs simply had a contractual right to recovery, and did not have the same rights as Medicare to recover conditional payments. For a copy of this memorandum, please click here

July 12, 2012- The District Court decision from In Re Avandia is overturned in the Third Circuit Court of Appeals. The Third Circuit finds that MAPs have the same rights to recovery as Medicare, and additionally MAPs have a right to pursue a private cause of action for double damages under the MSP for conditional payments that are not reimbursed. To view our legal bulletin on this case, please click here.

April 15, 2013- The U.S. Supreme Court denies certiorari/review of the In Re Avandia case; therefore the decision in the Third Circuit stands.

April 19, 2013- The Ninth Circuit affirms the initial decision in the Parra case which found that MAPs do not have the same rights to recovery as Medicare does and can recover conditional payments by way of their contract with the beneficiary.

So where are we today? Currently we have two circuits, the Ninth and Third Circuit, which have differing views on MAP recovery rights. Both circuits agree that MAPs have the right to recover conditional payments; however they disagree as to what extent MAPs can utilize that right. We recently had the U.S. Supreme Court deny taking cert in the In Re Avandia case; therefore, even if Parra is appealed to the U.S. Supreme Court, it is unlikely that the Supreme Court will take the case. With the conflict among the circuits, eventually the Supreme Court will need to hear this issue or we will need formal legislation to definitively address the issue.

In the meantime, primary payers would be wise to err on the side of caution and ensure that MAP demands are addressed, so as to not risk a private cause of action for double damages. Best practices in this time of uncertainty would be to question the Medicare beneficiary if they are currently or have ever been enrolled in a MAP. With that knowledge, the primary payer can at least be aware of any potential conditional payment demands by that MAP and seek to reimburse those payments before the risk for double damages sets in. Settlements that occur within the Ninth Circuit where the Parra case was decided is seemingly the only jurisdiction currently not subject to double damages, at least for now.

Based upon recent history, the status of MAPs and their recovery rights under the MSP is certainly going to continue to evolve, and PMSI will continue to stay abreast of any new developments.


OxyContin Update from the FDA

By , April 22, 2013 9:28 am

On Tuesday, April 16th, the FDA announced that they will not approve any new drug applications for generic OxyContin that rely upon the approval of the original formulation of OxyContin.   The FDA also approved updated labeling for the newer, crush resistant formulation. The label will note that the reformulated product has physical and chemical properties to make abuse more difficult.

Purdue Pharma L.P. originally brought OxyContin (a long- acting opioid medication for the treatment of moderate to severe pain) on to the U.S. market in 1996, but in April 2010, the FDA approved a reformulated version of the drug that was resistant to crushing, chewing, breaking or dissolving in water to reduce its potential for abuse.    The FDA noted that even though the original formulation has analgesic benefits similar to the reformulated OxyContin it posed increased potential for certain types of abuse and the benefits did not outweigh the risks. Therefore, the original OxyContin was withdrawn from sale for safety reasons.

What does this mean for the workers’ compensation industry and those involved in the MSA process? As Purdue’s exclusive rights to produce the original formulation of OxyContin was set to expire next week, generic  pharmaceutical companies had begun looking at the prospect of gaining FDA approval to produce a lower cost version of the original OxyContin.  With Tuesday’s announcement by the FDA, Purdue will have several more years of exclusive rights over the reformulated, abuse-resistant OxyContin as its patent is not set to expire until the year 2025.  This means that the cost of the reformulated OxyContin will likely remain high which will lead to a large prescription allocation for injured individuals utilizing the medication for their workers compensation injury.  PMSI’s PBM has numerous clinical programs to help target these individuals and can work with our clients early in the process to reduce claim costs which will lead to lower MSA allocations.


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