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.