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.