Saturday, November 15, 2014

Medicare misconceptions

Medicare Advantage Misconceptions Abound, written by D. Gary Reed, of Humana Inc., Louisville, KY was published in The October 2014 edition of The Health Lawyer, a publication of the Health Law Section of the American Bar Association. This article provides an excellent overview of the Medicare Advantage program and corrects some of the misconceptions that lawyers and judges have about certain aspects of the program. Unfortunately, the article does overlook one fairly subtle point.

The points made in the article include -
  • There is confusion among the courts as to how many "Parts" the Medicare statute has.
  • The courts sometimes erroneously characterize participation in a Medicare Advantage plan as "opting out of" Medicare.
  • They frequently erroneously refer to a Medicare Advantage plan's Medicare coverage as "an insurance policy." (But Part B coverage itself is characterized as insurance.)
  • They frequently distinguish between original Medicare and Medicare Advantage by saying that original Medicare pays benefits directly. In truth, both original Medicare and the Medicare Advantage program involve payment of benefits through contractors.
  • They frequently refer to CMS making Medicare payments to beneficiaries. In truth, Medicare nearly always pays its benefits to providers, not directly to beneficiaries.
But, under a section called "Implications for Medicare Advantage," he misleadingly paints both beneficiaries and primary payers with the same brush.

When a Medicare Advantage plan asserts a claim for reimbursement after a beneficiary obtains a monetary recovery, he says, "personal injury attorneys often respond by running into court for relief" and they assert that a determination that conditionally paid Medicare benefits must be repaid "has nothing to do with Medicare benefits." He suggests that lawyers making that argument should be sanctioned for making that argument, because numerous cases have held that a reimbursement decision is also subject to the requirement that the administrative appeal process be pursued before the issue may be brought before a court.

What he does not mention is that, while that position is accurate when the reimbursement demand is made against the Medicare beneficiary, the claimant who has recovered money against a defendant, it is not accurate, and never has been accurate, when the reimbursement demand is made against the liability or no-fault carrier as primary payer. This is a discrepancy which affects both original Medicare and Medicare Advantage.

It is true that "initial determinations" as to benefits arise under the Medicare statute and must be handled administratively, whether or not they are made by a payment contractor under original Medicare or by a Medicare Advantage plan. But the discussion ignores the fact that a demand made against a primary payer for reimbursement under the MSP laws or by a Medicare Advantage plan is not an "initial determination" and cannot be handled under the administrative appeal process.
Note: The following discussion is now outdated as a result of the issuance of the Final Rule in late February 2015. See our June 2015 posting on this topic.

The 4,413-page Medicare Claims Processing Manual, published by CMS and available online, specifies that a reimbursement demand made upon a primary payer is not an "initial determination" that would allow the primary payer to invoke the administrative appeal process.

As we noted in our our March 9, 2014 posting, CMS has proposed a new regulation that would provide for an administrative remedy after a reimbursement decision. In its announcement in the Federal Register, 78 FR 78802, at p. 78804, CMS stated:
"Currently, if an MSP recovery demand is issued to the beneficiary as the identified debtor, the beneficiary has formal administrative appeal rights and eventual judicial review as set forth in subpart I of part 405. If the recovery demand is issued to the applicable plan as the identified debtor, currently the applicable plan has no formal administrative appeal rights or judicial review. CMS’ recovery contractor addresses any dispute raised by the applicable plan, but there is no multilevel formal appeal process. 
"In order for an action to be subject to the appeal process set forth in subpart
I of 42 CFR Part 405, there must be an 'initial determination.' We propose, in §405.924, Actions that are initial determinations, to add a new paragraph §405.924(b)(15) providing that a determination that Medicare has a recovery claim where Medicare is pursuing recovery directly from an applicable plan is an initial determination with respect to the amount of or existence of the MSP recovery claim. . . The MSP provisions in section 1862(b) of the Act establish that Medicare has a direct right of recovery against a primary payer. Currently under §405.926(k), determinations under these provisions that Medicare has a recovery against a particular primary payer, are not initial determinations for purposes of part 405 subpart I. "
There is simply no administrative remedy currently available for the primary payer in the event of a wrong reimbursement decision. That is the very reason that CMS has proposed adding reimbursement decisions to the regulations. Until that new rule is adopted, there is no way for a primary payer to correct an error in the process of asserting a reimbursement claim other than seeking relief from a court.

The SMART Act, passed in 2012 and signed into law in January 2013, required that the Secretary of HHS adopt regulations to provide for administrative appeals by primary payers from reimbursement decisions - which was the proposal made in March 2014. We expect that, when the final rule is adopted, this "wrinkle" will disappear. 

Saturday, October 18, 2014

Follow-up on McDonald case

Clinton McDonald was severely injured in an on the job motor vehicle accident in Kentucky on May 10, 2007. He died from his injuries several months later, on November 5, 2007. According to the court decision, Medicare paid over $180,000 in medical expenses. Defendant contested the workers compensation claim on a causation issue - whether McDonald's death was caused by the injuries. The decision does not reveal whether it took the position that the medical expenses paid by Medicare were unrelated to the injuries, although that would seem to be the central question.

The following were the key dates:
  • The final decision by the workers compensation agency was issued on 12-28-09
  • On 9-13-12, a year and nine months later, the current lawsuit was filed. The defendant had not reimbursed CMS in that time. 
  • Defendant received the conditional payments letter on 9-18-12 and a reimbursement demand letter on 10-25-12. The amount was $184,514.24.
  • That amount was paid by the defendant to the Medicare reimbursement contractor on 12-11-12.
The District Court for Kentucky's Western District observed, as to the issue raised in its previous ruling *, that it was now bound to follow the recent decision of the 6th Circuit in Michigan Spine and Brain Surgeons. That, however, was not the most significant ruling by the court. More important was the determination that the plaintiff had established an entitlement to double damages under the private cause of action provision, found at 42 UCS 1395y-b-3-A.

The imposition of double damages on the defendant which has already paid the reimbursement amount to the Medicare reimbursement contractor, at first glance in compliance with the applicable statutory and regulatory requirements, appears to be an unfair result. But there is more under the surface.

There is no information in this opinion as to what happened between December 2009 and September 2012. Certainly, during that time Indemnity knew that it had the obligation to pay the medical expenses, and it knew that Medicare had paid those expenses. That payment by Medicare would be regarded as a conditional payment, with a reimbursement obligation. It is beyond question that Indemnity knew that it had a reimbursement obligation.

One possibility would be that Indemnity was pursuing an appeal of the decision of the state workers compensation agency during that time, but if that were the case, we would expect that that would be one of the arguments that Indemnity would have made against the imposition of the double recovery penalty. It made no such argument, it would appear.

It seems likely that Indemnity simply decided to wait until it received the conditional payments letter and the final reimbursement demand letter before paying the amount it owed. While that may be a technical compliance with the law, it was not enough in this case.

The court commented:
Indemnity's "no harm; no foul" argument disregards the two years between the order for payment by O'Reilly or its carrier from the Worker's Compensation Board and the filing of this suit during which Indemnity did nothing to notify or reimburse Medicare. As the Estate's filing of the suit prompted payment in the amount of $184,514.24, the Estate is entitled to the double damage in that amount to reward the Estate for its efforts.
When the payment of workers compensation benefits was made to the estate, in compliance with the December 2012 ruling, is unknown. Whether and when this payment was reported to CMS under the MMSEA requirements is unknown. Whether it was that reporting that triggered the issuance of the conditional payments letter is unknown.

The court does not mention it directly, but there is an affirmative reporting obligation by the defendant, one which predates the now well-known reporting under MMSEA after money has been paid. The rule, 42 CFR 411.25, provides:
§ 411.25   Primary payer's notice of primary payment responsibility.

(a) If it is demonstrated to a primary payer that CMS has made a Medicare primary payment for services for which the primary payer has made or should have made primary payment, it must provide notice about primary payment responsibility and information about the underlying MSP situation to the entity or entities designated by CMS to receive and process that information.

 (b) The notice must describe the specific situation and the circumstances (including the particular type of insurance coverage as specified in §411.20(a)) and, if appropriate, the time period during which the insurer is primary to Medicare.

 (c) The primary payer must provide additional information to the designated entity or entities as the designated entity or entities may require this information to update CMS' system of records.
It is likely that Indemnity never made any report to CMS under this rule. While that report would not be required as long as it continued to assert that the expenses were not related to the accident - if that indeed was its position - once the workers compensation agency had made its ruling in December 2009, assuming no appeals were pursued after that point, that report was required under that regulation.

What is the takeaway lesson? This case still does not establish that a defendant which contests a claim does so at the risk of an adverse ruling under the double indemnity provision, although there will probably be plaintiffs' attorneys who will argue that it does. What it does suggest is that, once the defendant's position on the merits of the claim is rejected by the court or agency, the defendant should take affirmative steps  to deal with the known Medicare reimbursement obligation within a reasonable time rather than waiting for the reimbursement contractor to send its notice. The required notice under section 411.25 should be made, in writing, and if there is no response, the defendant should follow it up with additional notices in writing. It is very unlikely that a defendant which makes such efforts would suffer the imposition of double damages under the MSP statute.

* (We discussed the first ruling in the McDonald case here in October 2013, just a year ago. Thanks to Franco Signor for alerting us to the followup ruling.)

Updates

A couple of new developments as recently reported on the Franco Signor weblog

1. The Humana v Farmers case in the Texas Federal court (the one remaining case after the strategic dismissal of three others by Humana) finally has a decision by the Article III judge. The court has rejected most of the magistrate’s recommendation and has found that a Medicare Advantage plan does have the right to pursue a "private cause of action" under the Medicare Secondary Payer laws. The judge purported to be following the In re Avandia case from the 3rd Circuit, but of course that case did not involve this unusual issue. Implicit rather than explicit in the judge's ruling is a determination that Medicare Advantage plans do have the rights that CMS has under the Medicare Secondary Payer laws, thus putting the Eastern District of Texas in the Avandia rather than the Care Choices camp.

Our previous writeups on this case: 


This case remains very perplexing, since Humana and the court are pursuing the issue as one of the applicability of the "private cause of action" theory. In truth, Humana's theory does not need the private cause of action language at all. Its argument, in essence, is that it stands in the shoes of CMS and can assert a reimbursement right to the same extent as the Coordination of Benefits and Recovery contractor can do, on behalf of CMS, under the Medicare Secondary Payer law. The private cause of action theory under the MSP laws inures to the benefit of an outsider to the relationship between obligor and obligee under the reimbursement statute. It simply has no proper role to play in the Texas lawsuit.

Considered fairly, the issue that the courts address by the misuse of the phrase "private cause of action" in this context is whether the reimbursement claim arises under Federal law, thus raising a Federal question and permitting the case to be heard in the Federal courts.

2. CMS has withdrawn its previous Advance Notice of Proposed Rulemaking on the issue of creating Medicare Set-Asides in liability cases. This does not mean that CMS will not issue a proposed rule in the future. It does probably mean that it will not do so soon. Thus the same analysis and recommendations will continue to apply: set-asides are not mandatory in liability cases, CMS will probably not review and approve such set-asides, but a voluntary set-aside is a very reasonable consideration for certain cases, particularly large-dollar cases involving significant expected future medical expenses for a Medicare beneficiary. There is no reason for a defendant to insist upon a set-aside in a liability case, but there is every reason to agree and cooperate if the plaintiff's attorney suggests, for the protection of his client, that that step be taken.

Medivest reports that the ANPRM was withdrawn because the proposed rule, after having been developed, was rejected by the Office of Management and Budget, for reasons not apparent. 

Sunday, September 7, 2014

Understanding Michigan Spine

An important point to note about the Michigan Spine and Brain Surgeons decision, discussed in our last post: The case does not mean that a claimant will always prevail in a case filed against a no-fault carrier when a claim under the private cause of action and double damages provisions is included. What it means, as it stands now, is that the defendant will not be able to obtain early dismissal by way of summary judgment based on the "demonstrated responsibility" argument. A further point is that Bio-Medical Applications and Michigan Spine are binding as precedent only in Federal courts in Michigan. State courts are free to accept or disregard these rulings.

Sunday, July 20, 2014

Michigan Spine and Brain Surgeons - still grappling with Bio-Medical

Ever since the decision by the Sixth Circuit Court of Appeals in the case of Bio-Medical Applications of Tennessee, Inc. v. Central States Southeast & Southwest Areas Health & Welfare Fund, 656 F.3d 277, 285 (6th Cir. 2011), there has been confusion on the question of when and how a plaintiff can assert a claim for double damages under the "private cause of action" (PCA) provision of the Medicare Secondary Payer Act. When we first analyzed the Bio-Medical Applications decision, we noted that it had used language that is likely to create problems for no-fault insurers in the future.

As a background:
  • Prior to 2011, several cases, including the 11th Circuit in Glover v. Liggett Group, 459 F.3d 1304 (11th Cir. 2006) as well as two decided by the Federal court in the Western District of Michigan, had held that an insurer may not be sued under the PCA provision until the insurer's responsibility to pay had been established. This was often referred to as the "demonstrated responsibility" standard. The rationale was that an insurer should not be subjected to this extraordinary penalty unless it can be shown to have evaded a clear responsibility to pay the charge. A liability insurer does not have a clear responsibility to pay until its insured has been found negligent and a judgment has been entered against its insured.
  • Bio-Medical Applications involved a group health insurer (a union's health and welfare fund) which had terminated a beneficiary's coverage after and as a result of the fact that the beneficiary had become eligible for Medicare. That is an action clearly prohibited under the Medicare Secondary Payer statute.
  • In its decision, the Sixth Circuit ruled that the demonstrated responsibility requirement would not be recognized in the case of a group health insurer.
  • In making this ruling, unfortunately, the Court used language that was unnecessarily expansive. The demonstrated responsibility requirement, it stated, applies only to tortfeasors, and does not apply when the claim is made against a defendant whose responsibility arises under "an insurance contract" rather than under a tort claim.
  • As a further ruling, the court in Bio-Medical Applications also held that the "demonstrated responsibility" limitation applies only to lawsuits brought by CMS against a payer, not to claims by individual plaintiffs under the PCA provision.
The court's reasoning was that "the concept of demonstrated responsibility makes sense only in the context of tort (where no evidence of responsibility exists until it is adjudicated ex post), rather than in the context of an insurance contract (where insurers assume the responsibility of paying for enumerated contingencies ex ante)" and that "an insurance contract automatically demonstrates a traditional private insurer’s responsibility to pay." Ironically, the Court sought to distinguish Glover, and in doing so noted that its language "swept [too] broadly," but in the process its own language and reasoning failed to note that some insurance contracts do not automatically demonstrate a responsibility to pay. A no-fault insurer's agreement obligates it to pay only for those medical services that arise out of a motor vehicle accident, not for all medical services.

We noted at the time that the court's language "will no doubt lead plaintiffs to try to resurrect these arguments in cases involving alleged delays in payments under no-fault insurance, since no-fault insurance is a contractual obligation rather than an obligation based on tort."

Sure enough, in Michigan Spine and Brain Surgeons, PLLC, v. State Farm Mutual Automobile Insurance Company, coming out of the Eastern District of Michigan, the Bio-Medical Applications case was cited as controlling, but with a twist that we had not expected.

The district court initially ruled in February 2013, denying State Farm's summary judgment motion, that the decision in Bio-Medical Applications controlled in a claim brought against a no-fault insurer. 
"In sum, the Sixth Circuit held that the 'demonstrated responsibility' provision only applies to a lawsuit brought by Medicare for reimbursement and only limits the class of alleged tortfeasors whom Medicare can sue for reimbursement to those insurers who have been liable or have entered into a settlement for causing the harm that led to Medicare expenses."
After the initial decision was rendered in February 2013, State Farm requested reconsideration, arguing that the court had failed to address an alternative argument it had raised: that the claim brought by the provider cannot be permitted because the plaintiff did not allege that the no-fault insurer had denied his claim because he was Medicare-eligible. The court agreed, in a decision issued in November 2013, that its failure to consider that argument was a "palpable defect," granted reconsideration, and granted the motion based on the alternative argument. We discussed the decision on reconsideration in our previous posting at this site.

The rationale adopted by Judge Cox on reconsideration purported to follow the rationale of the Sixth Circuit in the Bio-medical Applications case: since the PCA provision says that a non-paying insurer may be sued if it fails to "provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A)," the plaintiff must establish that the defendant's denial was improper under both paragraph (1) and paragraph (2)(A). A group health plan can violate paragraph (1) if it denies a claim because the claimant is Medicare-eligible. The plaintiff provider in the case before him had not alleged that the defendant had done so, and of course State Farm is not a group health carrier at any rate. Relying on the rationale of the Bio-Medical Applications court that both (1) and (2)(A) must be violated, Judge Cox dismissed the case.

We noted in our discussion of the ruling on reconsideration, and the Sixth Circuit has now agreed, that this rationale adopted by Judge Cox would eviscerate the PCA provision altogether, since paragraphs (1) and (2)(A) address entirely different fields of insurance coverage.

The defendant on appeal did make that very point: If the defendant must be shown to have violated paragraph (1), and it is not a group health plan, it can never be sued under the PCA provision.

Paragraph (1) deals with group health insurance, and paragraph (2)(A) covers various other forms of insurance such as liability and automobile coverage. Paragraph (1) prohibits a group health insurer from "taking into account" a beneficiary's Medicare eligibility, while paragraph (2)(A) prohibits CMS from paying for a service that is payable by a primary payer. The result of the ruling that both paragraphs must be implicated if the PCA claim was to survive, the Sixth Circuit noted, "does violence to the rest of the statutory scheme and runs afoul of congressional intent."

The court ruled that the reference to an insurer's denial of coverage under "paragraphs (1) and (2)(A)" in Bio-Medical Applications was "dicta" (legally, a passing statement and not a ruling) and therefore not controlling as a matter of precedent. It quoted from Rinard v. Luoma, 440 F.3d 361, 363 (6th Cir. 2006): "questions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents."

Because the insurer in Bio-Medical Applications was a group health plan, the court in that case did not have any reason to make a ruling that would apply to other primary plans. Further, given the intent of the MSP law to control medical costs, the Court found that Judge Cox's interpretation would gut the provision and make it meaningless.

Setting aside the Bio-Medical Applications dicta, the Court then focused on the text of the statute itself, and commented (understating the point) that the statutory text is "somewhat contradictory." (In fact, it is just badly drafted.) Paragraph (2)(A) imposes its prohibition on CMS; that paragraph itself does not require coverage by or reimbursement by a primary payer. That being the case, the Court used the Chevron rule: "When statutory text is unclear, courts afford deference to and seek guidance from agency regulations." One regulation, 42 CFR 411.108, lists several scenarios that CMS considers "taking into account entitlement to Medicare" on the part of a group health plan, and the very first one, section 411.108(a)(1), lists "failure to pay primary benefits" as required under the regulations.

But all of the examples provided under section 411.108, as the court itself noted, apply by their terms to group health plans and not to other primary providers. This follows the statute itself, which applies the "taking Medicare into account" prohibition only to group health plans. That is a reason to conclude that the regulation does not offer any assistance to the statutory analysis. Perplexingly, though, the court commented:
"We believe the regulations lead to the conclusion that paragraph (1)’s requirement of taking Medicare eligibility into account concerns only group health plans and not non-group health plans, which means that Michigan Spine’s claim against State Farm may proceed irrespective of the fact that State Farm denied coverage on a basis other than Medicare eligibility."
This is a classic non-sequitur. The first clause, from "the conclusion" up to the comma, is true. But it simply does not follow that a claim against a non-group health plan may proceed. It may be that that conclusion is proper, but we are not told how the court got there. Its logic is missing at least a step.

The court ruled that the "taking into account entitlement to Medicare" requirement can be met by a showing that a primary payer failed to make payment as required. The court thus suggested that the regulation patched over the deficient language of the statute. But the court chose not to further consider the fact that this phrase applies, under the statutory language and under the regulation, to group health plans only. Ultimately, the CMS regulation did nothing to patch that glaring hole.

Thus, the new ruling from the Sixth Circuit has done little to clear up the confusion caused by the sloppy legislative drafting and its own too-broad language used in Bio-Medical Applications

Unfortunately, further, the Sixth Circuit still did not address the point that we have made on these pages: it is not proper to apply a rule fashioned for group health carriers, which do have an obligation to provide plenary health coverage, to a no-fault carrier, whose obligation arises only under a specific set of factual conditions.

Importantly, the Court did not rule that MSBS was entitled to a ruling in its favor. Its more limited ruling was to reverse Judge Cox's ruling on the issue presented, and return the case to the District Court for further proceedings "consistent with this opinion". The District Court still has an opportunity to make a clear distinction between group health plans and other forms of insurance coverage in determining whether the primary payer's obligation to pay must be clearly established before the PCA may be invoked, and to correct the misunderstandings engendered by the broad language used by the Sixth Circuit in the Bio-Medical Applications case. As the Sixth Circuit has emphasized, a statement by a court on an issue that was not presented, argued, and decided is not deserving of precedential effect.

Sunday, March 30, 2014

MSP and the False Claims Act

The case of McCaslin v. Harris County Hospital District did not gain a lot of attention when it was filed or when it was settled. Robert E. McCaslin, Jr. was an employee working in the Patient Billing Services department of the defendant hospital. He filed a qui tam lawsuit, under seal, in the U.S. District Court for the Southern District of Texas in October 2003, alleging that the hospital routinely sent billings for services for patients who had been injured in accidents to Medicare (and Medicaid), rather than first sending the billings to primary payers as required under the MSP laws (and, we can assume, similar Texas Medicaid laws.) In addition, the hospital was improperly billing Medicare and Medicaid for treatment provided to jailed inmates. 

He first reported his concerns internally within the hospital, but was met with a response that the hospital was acting properly. Phillips and Cohen, the lawyers who represented him, reported "He objected many times to hospital officials about the failure to follow the secondary payer provision. But they ignored him and didn’t change their billing procedures even after the hospital held a Medicare billing seminar that discussed proper procedures in auto accident cases."

What is not revealed in any of the sparse reports on the case is whether the primary payers were liability carriers or other primary payers. When a liability case has been filed, this does not establish that the defendant in the case was negligent and that coverage is available under his liability policy. Apparently the protocol in Texas was to submit billings to the insurance carrier and give the carrier four months to respond. If it has not paid within that time, the billing may then be sent to Medicare for a "conditional payment," with the expectation that it will then be submitted for reimbursement to CMS under the MSP laws. The hospital, presumably, preferred to received a lower payment sooner and chose to omit the four-month submissions period, in light of the virtual certainty that the liability carrier would decline to make payment prior to a finding of responsibility on the part of its insured. 

When a "relator" (whistleblower) files a qui tam action in Federal court, the U.S. Attorneys office may intervene and take over the direction of the case. The U.S. Attorney did so in this case. The relator is entitled to a payment of 15 to 25 percent of the government's recovery in that event. 

It was reported in March 2007 that the hospital had agreed to a settlement for more than $15.5 million. 

The McCaslin case could be the first that has asserted failure to adhere to protocols under the MSP laws as a type of Medicare false claim, but it will certainly not be the last. The recent amendments to the False Claims Act under the  Fraud Enforcement and Recovery Act of 2009 and the 2010 Affordable Care Act to add "the retention of any overpayment" by a provider suggests that these claims will be more actively pursued under the False Claims Act in the next few years. 

(Under the Medicare law, an "overpayment" is a payment made by the Medicare program when it should not have made payment. Although CMS has always required that overpayments be repaid by providers, these new provisions are the first to identify failure to repay an overpayment, even by inaction, as a type of false claim subject to the FCA's penalties.) 

Monday, March 17, 2014

Humana loses first round in Texas

In the most recent development in the cases brought by Humana, acting as a Medicare Advantage (MA) plan, against Farmers Insurance Company, a magistrate judge in the Western District of Texas has issued his report and recommendation that Farmers' Motion to Dismiss be granted. We previously wrote about these cases in July 2013, September 2014, and January 2014.

Humana had sued Farmers claiming that it refused reimbursement based on claims paid by it to insureds who were covered by no-fault auto insurance. The complaint had included claims for double damages under the private cause of action language found in section b-3-A of the Medicare Secondary Payer statute.

The recommendation by the magistrate judge, issued on February 26, 2014 was that -
  • The court reject Farmers' argument, following the reasoning of Judge Sean Cox in Michigan in the Michigan Spine and Brain Surgeons case, that the private cause of action language of the statute cannot apply to any auto insurer which is not also a group health insurer. (Not a single auto insurer meets that criterion.)
  • The court reject Farmers' argument that an insurer which has not investigated whether there is other insurance available before making a payment cannot characterize that payment as a "conditional payment" under the statute.
  • The court accept Farmers' position that the statute does not include MA plans as entities entitled to assert a private cause of action.
  • The court reject Humana's reliance on 42 CFR 422.108-f, for the reason that deference to an agency's regulation is proper only when the statute in question is ambiguous.
  • The court reject Humana's argument that it should be able to obtain reimbursement as a matter of Federal common law.
The report made reference in its footnote 5 to the Care Choices decision, but did not adopt its decision or its reasoning outright. By contrast, it did reject the reasoning of the Avandia case, even thought it acknowledged that another Federal district court in Texas has cited it with approval, noting that that other Texas case did not even involve a Medicare Advantage plan.

Sunday, March 9, 2014

Proposed rule: administrative appeals on reimbursement claims

On December 27, 2013, CMS issued a proposed rule that would provide, for the first time, a right on the part of an insurer or other "primary payer" under the Medicare Secondary Payer statute and regulations to pursue an administrative appeal of a reimbursement decision by the Benefits Coordination & Recovery Center (as the reimbursement contractor is now known). 78 FR 78802. This was another requirement of the SMART Act. Once again, CMS is several months late in complying. It was required by the Act to have final regulations in place by October 2013.

Currently, CMS has in place procedures for a Medicare payment contractor to make a "determination" as to payment for a particular medical service and for the beneficiary to pursue an administrative appeal of an adverse decision. By contrast, when the former MSP Recovery Contractor asserted a reimbursement claim against a primary payer, this was not a "determination" and there was no administrative procedure for contesting the claim. Any contest would have to be pursued in the courts.

The amendments would define "applicable plans" as parties to the initial determination on the reimbursement issue. That phrase includes no-fault insurers, workers' compensation insurers, liability insurers, and self-insurance plans which receive a reimbursement demand letter from the BCRC. Importantly, receipt of a conditional payment letter would not trigger party status; it is only when the reimbursement demand letter is sent that that would occur. The proposal also notes that an insurer which receives a courtesy copy of a reimbursement demand letter sent to a beneficiary would not thereby become a party, and that an insurer which is a party is the sole party to that proceeding. In essence, CMS plans to choose one and only one party from whom it will seek reimbursement - the beneficiary or the insurer. We would expect that CMS will select the party who takes responsibility under a settlement agreement, but that is not mandatory. Under the proposal, the decision as to which party it will pursue is not itself a "determination" from which an appeal may be taken. If the effort to collect the reimbursement claim from the beneficiary is unsuccessful, however, CMS will undoubtedly change its tack and seek collection from the insurer. Nothing in the proposal would prohibit this step.

The proposal would allow the insurer to designate a representative, such as an attorney, to receive notices and act on its behalf.

Importantly, the regulations are silent as to what can be appealed by the insurer. This means that the appeal may address (1) whether one or more particular payments are medically related to the incident for which the insurer is responsible and (2) whether the reimbursement demand is timely made.

Saturday, March 8, 2014

CMS revises its small settlements figure

On February 28, 2014, CMS issued its first annual "settlement recovery threshold" determination. Under the SMART Act, this is required by November 15 of each year, so CMS is about three months late. The new threshold is $1,000. Liability settlements (for physical trauma only) of $1,000 or less need not be reported, and repayment of conditional payments will not be required.

Sunday, February 23, 2014

CMS again reorganizes online MSP information

The websites maintained by the Centers for Medicare and Medicaid Services (CMS) have once again been shuffled and reorganized. The highlights as they relate to the MSP program:
  • CMS has now merged the operations of the former Coordination of Benefits Contractor and the former Medicare Secondary Payer Recovery Contractor into a new entity to be known as the Benefits Coordination & Recovery Center (BCRC).
  • In a decided step backward, there is no longer a separate web page providing information about the BCRC. Instead, anyone who wants information is directed to make a telephone call (to 1-855-797-2627), where someone will no doubt require information about the beneficiary, the insurance or other resource that might be obligated to pay, etc. 
  • The MSPRC.info page is still up, but informs users that it is not being updated and will be taken down by April 1. Visitors are directed to the Coordination of Benefits page for up to date information.
  • There is an informational page entitled "How Medicare works with other insurance" and another linked from it called "Who pays first."
  • Beneficiaries are informed at the second page that information about available group health coverage is collected with the Initial Enrollment Questionnaire. If the information changes, the beneficiary is again directed to make that phone call.
  • The page also has two drop-down menus with further statements about primary obligations (without using that phrase), conditional payments, and the repayment obligations, covering no-fault, liability, and workers' compensation claims.
The MSP Recovery Portal is apparently unchanged.

Information about the My MSP Payment Summary page is found on the Frequently Asked Questions page.

Finally, it does take some searching, but there are two relevant PDF publications that CMS makes available at this site:

Wednesday, January 22, 2014

Three of four Humana cases dismissed; Texas case proceeding

The Cariten v. Mid-Century case, about which we wrote here and here, was quietly dismissed by the plaintiff in November 2013. The Missouri and Kansas cases were likewise dismissed by Humana at the same time.  The attorneys in the case are not responding to inquiries about the dismissal. This likely means that Humana has determined that it was not likely to win the case on the merits before the court in Tennessee. Recall that an order had been sought to combine the other three cases under multi-district litigation (MDL) rules with the Cariten case in the Eastern District of Tennessee. These dismissals end that strategy by the Farmers companies. 

The case pending in the Western District of Texas, under the name Humana Insurance Company v. Farmers Texas County Mutual Insurance Company, remains pending and is the subject of a Motion to Dismiss, filed in December 2013 by the defendants. Briefing is to be completed by the end of January. When a decision will be made is unknown.

The likely explanation: Humana perceived that the MDL request would be granted, and knew that the controlling law in the Sixth Circuit, under the Care Choices case, does not support its claim that a Medicare Advantage plan has the same rights as ordinary Medicare under the Medicare Secondary Payer law. Its strategy in these four filings is a form of forum shopping, and it no doubt believes that the Federal court in Texas court is the most likely to rule in its favor. 

It appears that Care Choices will remain good law in the Sixth Circuit (which includes Michigan) for some time to come.