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Posts tagged: workers’ compensation

Government Shutdown and Impact to MSP and CMS (Part 2)

By , October 8, 2013 2:54 pm

On September 30th, we issued a blog about the government shutdown and predictions as to how it would affect the various operations at CMS and other entities charged with MSP operations. Please click here to read our prior blog.

As our subscribers are probably aware, it has now been over a week since the government shutdown commenced and it is unclear as to when it will cease.  PMSI would like to provide the following update to its subscribers:

CMS Approval Letters and the WCRC:

Over the past week, PMSI has still been receiving MSA approval letters from CMS, although fewer than usual. PMSI has learned from its contacts at the WCRC that the CMS Regional Offices are operating with a “skeleton crew,” and therefore some CMS approval letters are still being issued. However, approval letters are not being issued at normal volume and therefore the industry can expect fewer approval letters than usual until the shutdown ceases.

If a call is placed to any of the CMS Regional Offices, your call will be responded to with the following message: “Due to the absence of either a fiscal year 2014 appropriation, or a continuing resolution for the Department of Health and Human Services, our offices are in furlough and we are not able to respond to your message.”

Conditional Payment Processes and the MSPRC:

Over the past week, the MSPRC appears to be operating normally as predicted and the conditional payment process appears to not be affected.

As usual, PMSI will continue to keep our subscribers updated on the government shutdown and any affect it may have on the MSP processes.

Government Shutdown and Impact to MSP and CMS

By , September 30, 2013 4:48 pm

As of 2:30 P.M. EST this afternoon, the U.S. Senate has rejected the latest House “Continuing Resolution” needed to fund federal government operations beyond the end of the fiscal year, set to end tonight, September 30th at midnight.  Therefore, it appears very likely that the Government will shut down, at least for several days, starting tomorrow, October 1st.  

Most relevant to CMS and MSP operations, PMSI has learned through the MARC Coalition that although the shutdown will result in many CMS staff being furloughed, it will NOT result in termination of operations at the MSPRC. 

More specifically, CMS has indicated that all Coordination of Benefits/MSP contractors will be operating under normal hours, and that CMS does not expect any announcement to be posted.  It is presumed that the MSPRC and COBC are operating using FY13 funding. Thus, while the CMS staff may not be at work tomorrow, the contractors will continue normal operations.

PMSI will continue to follow the shutdown and will keep suscribers notified of any significant changes relevant to CMS and the MSP.

CMS Issues Interim Final Rule on Conditional Payment Web Portal Required by the SMART Act

By , September 23, 2013 5:18 pm

On September 20, 2013, CMS issued an interim final rule in the Federal Register which specifies the process and timeline for expanding the current MSP Web portal to comply with Section 201 of the SMART Act.  A copy of the interim final rule in the Federal Register can be accessed here. PMSI plans to continue its analysis of this interim final rule and provide comments to CMS regarding this rulemaking. In the meantime, we have provided an initial summary of the interim final rule.

Effective Date: The regulations are effective 60 days after publication in the Federal Register. Therefore, the effective date of the interim final rule is November 19, 2013. However, although the interim final rule will be “effective,” CMS states that it will implement all systems and process changes to the Web portal no later than January 1, 2016.

Comment Period: Comments must be received no later than 5 P.M. on November 19, 2013. Comments can be provided to CMS through 1 of 4 options provided within the interim final rule. These 4 options allow for submission of comments electronically, through regular mail, by express or overnight mail, and by hand or courier to CMS. PMSI encourages industry stakeholders to submit commentary to CMS on this interim final rule.

CMS’ Decision to Issue an Interim Final Rule instead of a Proposed Rule:

CMS noted that it normally publishes a notice of proposed rulemaking in the Federal Register and then invites public comment on the proposed rule. In this case, CMS found that notice-and-comment rulemaking was unnecessary due to the fact that the regulation provides an additional procedural option for stakeholders, but does not change any substantive provision of the MSP program or otherwise impact their administration of the MSP program. CMS also noted that implementing this through an interim rule was in the public interest because requiring a notice of proposed rulemaking and public comment thereon would delay public access to the Web portal. Nonetheless, CMS is still providing a 60-day public comment period.

Summary of Proposed Timelines, Processes and Procedures for the Web portal:

  • Security Features and Timeline: CMS intends to implement a security feature known as multifactor authentication (a methodology to authenticate a user identity) no later than January 1, 2016. Until this multifactor authentication is developed and integrated into the Web portal, the Medicare beneficiary, an authorized attorney/other representative and an authorized applicable plan will only be able to view the total conditional payment amount associated with a beneficiary’s case. The beneficiary will be the only entity who can see all pertinent information.  Once multifactor authentication is implemented, all authorized parties will be able to view claim-specific data such as diagnosis codes, provider names and dates of service via the Web portal. In summary, more specific data around a conditional payment demand (other than the total amount) will not be able to be obtained through the Web portal by anyone other than the beneficiary until CMS implements this security feature. If the attorney or authorized representative or applicable plan intends to dispute the conditional payment amount, it will be extremely difficult to dispute unrelated charges without this specific claims data.
  • Processes and Procedures to Obtain a Final Conditional Payment Amount through the Web portal:
    • The beneficiary, his or her attorney or other representative, may notify CMS once and only once, via the Web portal, of an impending settlement, any time after Medicare’s contractor has posted its initial claims compilation (65 days after initial notice to the appropriate Medicare contractor) and up to 120 days before the anticipated date of settlement. It is important to note that notice to the “appropriate Medicare contractor” must still be given; therefore notice must now be given at least 185 days prior to the anticipated date of settlement. Not only does this require the beneficiary, his or her attorney or representative to still have to notify Medicare outside of the web portal, it also does not shorten the time period in which parties can settle after they give notice given to CMS.
      • CMS may extend this 65 day period for “exceptional circumstances;” however, not more than 1 percent of cases can qualify for this exception.
  • After Medicare posts its initial claims compilation, the beneficiary, his or her attorney or other representative must request and receive confirmation of a claims refresh via the Web portal before he or she will be able to obtain a final conditional payment amount. CMS will provide confirmation of the completion of a claims refresh through the Web portal no later than 5 business days after the electronic request is initiated. This requires an additional action by the parties before a final demand can be provided and delays the process by an additional 5 days.
  • If the beneficiary, his or her authorized attorney or other representative believes that there are unrelated claims in the most up-to-date conditional payment summary, a claim may be disputed once and only once.  Disputes submitted through the Web portal will be resolved within 11 business days of receipt of the dispute and any required supporting documentation. This dispute process is not an appeals process, and there will be no administrative or judicial review related to this dispute process. However, the beneficiary maintains his or her appeal rights regarding CMS’ MSP recovery determination, once CMS issues its final demand. Those appeal rights are explained in the final demand letter issued by CMS and more information may be found in 42 CFR part 405, subpart I. Only allowing one dispute through this process may not provide adequate resolution for the parties and having to still undergo the traditional appeals process may be time consuming.  In addition, the parties will not really have true finality prior to settlement.
  • After disputes have been fully resolved and the beneficiary, his or her attorney or other representative has executed a final claims refresh and obtained confirmation that refresh has been performed, he or she may download or otherwise request a time and date stamped final conditional payment summary through the Web portal. This form will constitute the final conditional payment amount if settlement is reached within 3 days of the date on the conditional payment summary form. It is unclear whether the parties will be able to re-download another conditional payment summary form that is time and date stamped if the parties do not end up settling within 3 days of the initial download. If the parties are only able to download a conditional payment summary form once, if the parties do not settle within 3 business days then they will still have to undergo the traditional MSP recovery process.
  • Within 30 days of securing the settlement, the beneficiary or his or her attorney or other representative must submit through the Web portal settlement information. CMS expects that the amount and type of settlement information required will be the same information that CMS typically collects to calculate its final demand amount. CMS expects to incorporate a method to allow settlement information to be entered or uploaded directly through the Web portal. While it is helpful that settlement information will be able to be provided through the Web portal, requiring this information within 30 days may be unrealistic. CMS even notes within the interim final rule that “providing settlement information within 30 days of the settlement may be challenging at times. . .”

PMSI will continue to follow this interim final rule and other developments from the SMART Act. For any questions on this interim final rule, please contact us at asktheexperts@pmsisettlement.com. We also encourage any commentary and ideas which can be provided during the comment period remaining open until November 19, 2013.

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

By , September 12, 2013 4:01 pm

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).

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