By Daniel Anders, Chief Compliance Officer, Tower MSA Partners
If the title of this article has drawn you in, then you likely are somehow touched by Medicare Secondary Payer (MSP) compliance, whether as an attorney representing a claimant or carrier or claims professional working with no-fault, workers’ compensation or liability claim. The question going through your mind is what has Medicare come up with now to make my job more difficult?
Indeed, MSP compliance has significantly expanded over the last 17 years. Since the advent of the Medicare Set-Aside review process in 2001, the Centers for Medicare and Medicaid Services (CMS) has added policies and contractors to its enforcement mechanisms under the Medicare Secondary Payer Act. MSAs led to an extensive growth in CMS’s Medicare conditional payment recovery efforts, including the 2010 launch of Section 111 Mandatory Insurer Reporting for liability, no-fault and workers’ compensation insurance. Section 111 reporting now allows CMS and its contractors to not only identify primary plans or payers for which it can seek to recover conditional payments, it also allows them to identify instances where payment can be denied because a primary payer accepted responsibility for payment stemming from the injury.
Then Medicare Advantage (MA) plans entered the fray. Federal courts have held MA plans can largely “step into the shoes” of Medicare and exert the same rights as CMS to recover under the Medicare Secondary Payer Act. This means the potential for both pre- and post-settlement reimbursement claims and double damages against the primary plan if a suit is filed.
What are these MA plans, what rights are bestowed upon these plans and what practices should you have in place to ensure you are not taken advantage of by a MA plan?
The Medicare Alternative: Advantage Plans
Upon enrollment with Medicare, a Medicare beneficiary has a choice. He or she can enroll in Original Medicare, the government-run program that has been in place since 1966, or a private program called a Medicare Advantage plan under Part C of the Medicare statute. MA plans contract with CMS and receive a set sum per enrollee. The primary advantage of a MA plan is that it usually provides complete medical coverage, including prescription drugs, as opposed to Original Medicare which will generally require a beneficiary to obtain and pay for a Medigap plan and a Part D prescription drug plan. MA plans often also offer vision, hearing and dental coverage, which is not covered under Original Medicare. The disadvantages of a MA plan are that provider choice may be limited through an HMO or PPO network and, depending upon the plan, it may not cost less than Original Medicare.
According to the Kaiser Family Foundation, in 2017, one-third of Medicare beneficiaries were enrolled in MA plans and this is predicted to grow. (And in some states like California, Florida and Pennsylvania, MA plan enrollment exceeds 40%). The top three plans are UnitedHealth Group, Humana and CVS Health. Consequently, running into Medicare beneficiary claimants enrolled in MA plans should now be a regular occurrence for attorneys and claims handlers.
“Stepping into the Shoes” of Medicare
CMS takes the position that these plans have the same rights as Medicare. A December 4, 2011 CMS memo unequivocally stated that Part C Medicare Advantage Plans and Part D Prescription Drug Plans have the same rights of recovery under the MSP Act as CMS. Yet, despite CMS’s pronouncement, MA plans have had to go to court to enforce these rights and they have largely prevailed at the lower and appellate court levels, at least over the past five years.
Humana Takes the Litigation Lead
Humana, the second largest MA plan provider, took the lead in litigation by filing several suits around the country against insurance carriers seeking reimbursement of payments it made that were related to claimed injuries. The result is the now seminal case of In re Avandia Mktg., Sales Practices & Products Liab. Litig., 685 F.3d 353 (2012) from the U.S. Third Circuit Court of Appeals. As a precursor to Humana’s suit, a suit had been filed and settled against the drug manufacturer GlaxoSmithKline by thousands of claimants who had used the diabetes drug Avandia with alleged ill-effects. Glaxo acknowledged it was primary to Medicare and it withheld funds to reimburse Medicare its conditional payments for enrollees in Original Medicare. However, Glaxo denied it had any responsibility to reimburse MA plans. Humana filed suit against Glaxo and prevailed with the Appellate Court holding the MA plan may sue the primary plan under the private cause of action provision of the Medicare Secondary Payer Act, including seeking double damages.
The reasoning in the Avandia ruling was the foundation for another significant decision in the case of Humana v. Western Heritage Insurance Company, 832 F.3d 1229 (2016), from the 11th Circuit Court of Appeals. This case reveals the error of relying upon settlement language to protect the carrier from an MA plan reimbursement claim.
In short, the carrier, Western Heritage, knowing prior to a liability settlement that a claim for reimbursement existed from Humana, attempted to add Humana to the settlement check. The Florida state court disagreed with Western Heritage’s adding Humana to the check and ordered the check be issued to the plaintiff only. It was agreed Western Heritage would issue the check to the plaintiff, but that plaintiff’s attorney would hold funds in trust pending the result of litigation between the plaintiff and Humana concerning the proper reimbursement amount.
Humana would not recognize the subsequent state court decision reducing its reimbursement claim and filed suit against Western Heritage seeking full reimbursement plus double damages. The court agreed with Humana, citing the reasoning in the Avandia decision and further emphasized this pertinent CMS regulation:
If a beneficiary or other party fails to reimburse Medicare within 60 days of receiving a primary payment, the primary plan “must reimburse Medicare even though it has already reimbursed the beneficiary or other party.” 42 C.F.R. § 411.24(i)(1). This regulation applies equally to a MAO. See id. § 422.108(f).
The court went on to not only award double damages, but to find that double damages are mandatory when a MA plan prevails against a primary plan under the Medicare Secondary Payer Act.
MSP Recovery Lawsuits
With Humana laying the groundwork with its successful appellate court decisions, next came MSP Recovery, a Miami law firm, which purchases MA plan reimbursement claims and then files suit against primary plans seeking reimbursement, including double damages. MSP Recovery received a significant win when the U.S. Court of Appeals for the 11th Circuit found a contractual obligation (PIP or No-Fault) is sufficient to demonstrate responsibility for a private cause of action under the MSP Act. MSP Recovery, LLC v. Allstate, et. al., 835 F.3d 1351 (11th Cir. 2016). This decision opened the door to MSP Recovery seeking class certification for now over 100 lawsuits nationwide on behalf of MA plans seeking reimbursement against no-fault or med pay plans.
Taking Action to Identify Medicare Advantage Plan Enrollees
Not all jurisdictions have addressed the rights of MA plans under the MSP Act. However, as demonstrated by Avandia, Western Heritage and several lower court decisions, when presented with the issue of reimbursement rights under the MSP Act, the courts have found in favor of the MA plans. Accordingly, ignoring these plans is no longer an option. Instead, primary plans must take action to identify claimants enrolled in these plans, the names of the plans and to determine whether any claim for reimbursement exists.
Identification of enrollees in MA plans is problematic. CMS has a straightforward process to identify Original Medicare beneficiary claimants, generally through the Section 111 reporting query process or through contact with the Benefits Coordination and Recovery Center. However, due to what it claims are privacy concerns, CMS will not directly provide the primary plan or its recovery agent any information on whether the claimant is enrolled in a MA plan or the name of the plan or plans. This is quite frustrating to primary plans that see the results of the court decisions, but cannot access the information necessary to identify whether the claimant is a MA plan enrollee or the names of the plan or plans in which they are or were enrolled.
Given CMS’s intransigence on providing this information, the chief method for determining whether a claimant is enrolled or was enrolled in a MA plan since the date of injury is to ask the claimant, or if represented, the claimant’s attorney. This may be a direct inquiry, discovery request or incorporated into the terms of the settlement or release.
While the general practice should be to make this inquiry any time the claimant is a Medicare beneficiary, certain circumstances flag the potential of a claimant being enrolled in an MA Plan. First, if a request to CMS’s recovery contractor reveals that no payments were made under Original Medicare, then it is possible the claimant is enrolled in a MA plan. (It is important to understand that CMS’s recovery contractors have no information on payments made by a MA plan. The MA plan must be directly contacted for this information.) Second, ask the question, who paid the claimant’s medical? If not paid on the WC claim, not paid by Original Medicare and not paid by a Group Health plan, then there is a high probability it was paid by a MA plan.
Investigating and Resolving MA Plan Reimbursement Claims
CMS shares Section 111 Mandatory Insurer Reporting information with MA plans. This means the plans know when a WC or No-Fault plan is accepting ongoing responsibility for medicals or when a settlement has occurred. Now whether the MA plan chooses to pursue reimbursement is up to the plan. We saw Humana’s efforts to seek reimbursement for payments made deemed related to the claimed injury, but not all MA plans are this aggressive. Nonetheless, the best practice for a primary plan and the claimant prior to settlement should be to proactively contact the MA plan to determine whether it is asserting a reimbursement claim.
Much like with CMS and its recovery contractors, the CRC and BCRC, the MA plan will provide an itemization of charges with dates of services, names of providers, diagnosis codes and amounts claimed for reimbursement. If there are any bases for disputing the charges, such as unrelated diagnosis codes, then a dispute may be submitted to the MA plan, which will provide a response. Also, in situations of disputed or denied claims or where there are limited sums available in settlement of a case, the MA plans are open to discussing a compromise of their reimbursement claim. The terms on which the plan will compromise are generally more favorable than what CMS will agree to when it is recovery for payments made through Original Medicare.
Avoiding MA Plan Reimbursement Claims
In liability cases as well as denied and disputed WC claims, MA plan reimbursement claims may be unavoidable if the plan paid for injury-related medical care. However, the best method for a WC or no-fault plan to avoid reimbursement claims from these MA plans is to pay injury-related medical when appropriate (for a no-fault plan up to policy limits). This includes fulfilling the responsibility to report to Medicare, through the Section 111 reporting process the acceptance and termination of the Ongoing Responsibility for Medicals. Additionally, it means ensuring that the ICD-10 diagnosis codes reported to Medicare correctly represent the diagnoses being accepted on the claim. By taking these steps, a future MA plan reimbursement claim may be avoided.
The Best Defense is a Good Offense
While past practices encouraged a defensive approach of responding only when a claim for reimbursement arose from one of these MA plans, given the court decisions highlighted above, the best defense today is truly a good offense. In other words, do not wait for a MA plan to make a claim for reimbursement. Take a proactive approach to identifying claimants enrolled in MA plans and the names of the plans, investigate with the plan(s) whether a claim for reimbursement is to be made and review and resolve the charges determined to be related to the injury. Importantly, as these court decisions demonstrate, this is a task which cannot be solely turned over to the claimant or their attorney to handle.
Keep in mind that you are not alone when it comes to these MA plan reimbursement claims. Most attorneys and primary plans have been or will be encountering these claims. It is important to work with your MSP compliance vendor, who likely has experience in working with MA plans, to put in place best practices and training for you and your team. Further, your MSP compliance vendor can contact the relevant MA plan to obtain an itemization of charges claimed for reimbursement, dispute unrelated charges and provide guidance as to final payment. By following this guidance, you will not be taken advantage of by the Medicare Advantage plan, rather you will take the advantage in resolving any reimbursement claim.
About Daniel Anders
Daniel M. Anders, Esq., MSCC is the Chief Compliance Officer for Tower MSA Partners. A certified Medicare Set-Aside Consultant and attorney, he oversees the Medicare Secondary Payer (MSP) compliance program. Mr. Anders is responsible for ensuring the integrity and quality of the MSA program and other services and products and he provides education and consultation to Tower MSA clients on all aspects of MSP compliance.
Mr. Anders is the former Senior Vice-President of MSP Compliance for ExamWorks Clinical Solutions and he has extensive litigation experience from his prior position with the Chicago law firm of Wiedner & McAuliffe. He holds a Juris Doctor from Chicago-Kent College of Law and a Bachelor of Arts degree from Loyola University Chicago. Contact Mr. Anders at 847.946.2880 or daniel.anders@towermsa.com Fax: 888.331.4942 www.towermsa.com
About Tower MSA Partners
Headquartered in Delray Beach, Fla., Tower MSA Partners’ services include pre-MSA Triage, MSAs, physician peer reviews, CMS submissions, MSA administration, medical cost projections, life care plans, conditional payments, and Section 111 reporting. Tower leverages leading edge technology to proactively stage claims and works collaboratively with clients to identify issues and intervene to modify outcomes. Tower remains involved in the claims, through final resolution, MSA and/or other settlement. This model enables Tower’s clients to provide better care to injured workers, reduce claim and MSA costs, and obtain CMS acceptance of the MSA. For more information, visit www.towermsa.com and www.mspcomplianceblog.com.