Sunday, January 31, 2016

Reallocating recovery efforts

As a followup to our January 9 posting, there is now some clarification of the division of responsibility between the Commercial Repayment Center (CRC) and the Coordination of Benefits and Recovery Contractor. In a "webinar" presentation entitled Non-Group Health Plan New Workload to the Commercial Repayment Center, CMS has said that the CRC will be responsible for pursuing recovery of Medicare payments from a primary payer as the "identified debtor" when:
  • the recovery efforts commenced after October 15, 2015,
  • the payer notifies CMS that it has ongoing responsibility for medicals (ORM), and
  • this responsibility is not in dispute. 
Thus, in the case of a contested claim for PIP benefits when the responsibility to pay medical expenses is disputed, whether or not litigation has begun, the responsibility for pursuing recovery should continue to be that of the Benefits Coordination and Recovery Center (BCRC).

CMS, in its notices and published materials, distinguishes between two concepts for which it uses its favored acronyms - ORM and TPOC.

ORM means "Ongoing Responsibility for [payment of] Medical." The PIP carrier does have an ongoing responsibility to pay the medical expenses which are related to a particular motor vehicle accident. In some cases, when some medical expenses have been incurred and paid, the payment of others is denied because the carrier takes the position that they are not causally related to the accident. In other cases, the PIP carrier will deny all coverage after a certain date, based on a medical examination and opinion to the effect that the injured person has reached maximum medical improvement and cannot benefit from further treatment. In both cases, it would be improper for CMS to characterize the unrelated medical expenses as ORM. Yet the CRC may well do so.

TPOC means "Total Paid on Claim." It is an acronym used by CMS to refer to a one-time payment, either by settlement or judgment, and clearly will apply to a liability case based on a tort theory. It will also apply to the settlement of a disputed PIP case or to a judgment paid after a jury verdict in favor of the injured party.

In Michigan, of course, the responsibility of the PIP carrier encompasses both ongoing payment of medical expenses and, when a disputed first-party lawsuit is settled or tried, a lump-sum payment made to the plaintiff. After a settlement and payment of a lump sum, the PIP carrier often continues to have a responsibility to pay medical expenses as they are incurred. The CMS categories just do not fit the Michigan system very well.

If the PIP carrier receives a Conditional Payments Notice from the CRC when a claim is being contested or litigated, it must respond and contest it within the time that is provided, in order to avoid having the claim established as a debt owed by the company to CMS. Failure to respond will likely be regarded as a waiver of the defense.

Ahlborn amendments delayed to October 2017

We have reported to our clients over the years that the U.S. Supreme Court had ruled, in the case of Arkansas Department of Health and Human Services v Ahlborn, 547 US 268 (2006), that a state which seeks recovery of medical expenses paid under the Medicaid program from a beneficiary who has recovered a judgment or settlement from a third party in a tort case must reduce its claim proportionally to account for the extent to which the tort claimant has compromised the full value of his case. If the full liability value of the liability case was $100,000, for instance, and the plaintiff settled for $25,000, for whatever reason, the Medicaid repayment claim would be likewise limited to 25% of the amount paid.

The Ahlborn rule was reaffirmed by the U.S. Supreme Court in Wos v. EMA Ex Rel. Johnson, 568 US _____, 133 S. Ct. 1391, 185 L. Ed. 2d 471 (2013). (See our previous posting on Wos.) It has been followed by numerous lower courts.

The Bipartisan Budget Reconciliation Act of 2013, Public Law 113-67, included language which was intended to overturn the Ahlborn ruling by removing from the Medicaid statute the limiting language cited by the Supreme Court. This change was to be effective on October 1, 2014. In two later statutes, however, the Protecting Access to Medicare Act of 2014, Public Law 113-93, section 211, and the Medicare Access and CHIP Reauthorization Act of 2015, Public Law 114-10, section 220, this date was delayed. As of now, the effective date will be October 1, 2017.

What is not certain from the amending language is whether this change will apply to reimbursement claims filed, tort cases settled, tort cases commenced, or injuries sustained after the new effective date. No doubt the courts will be asked to make that determination as an interpretation of legislative intent.

Saturday, January 9, 2016

Getting a final reimbursement demand figure before settlement

CMS now has its MSP pre-settlement final reimbursement demand procedure in place.

Previously, when settling a lawsuit where Medicare has paid medical expenses, it was necessary to settle the case, using the best available information to estimate what the final reimbursement demand figure would be, submit the settlement information to the recovery contractor (COBRC), and await the "reimbursement demand letter" from the contractor. Then one of the parties, usually the plaintiff's attorney, would have to submit repayment within 60 days.

Under the new program, once the parties are ready to settle the case, they must notify the COBRC that a settlement is expected within the next 120 days. When the parties are ready to settle the case, timing will be crucial. There are several requirements that must be met in order to ensure that the reimbursement demand figure obtained using this process will be binding:

  • The plaintiff has one and only one opportunity to obtain a demand figure from CMS. 
  • The settlement must occur within three days of obtaining the figure. 
  • The parties must submit settlement information, using the MSP Portal, within 30 days. 

Under the procedure as announced, either party can obtain the figure in many cases, but since virtually all of the COBRC's procedures involve reports and information flowing between the attorney for the claimant and the COBRC, it is best that this process also be spearheaded by the attorney for the plaintiff if he or she is cooperative and knowledgeable. If a case for first-party no-fault benefits is settled, and the carrier will continue to pay medical expenses into the future, CMS characterizes it as a claim involving ongoing responsibility for medicals (ORM) and in that case, it appears, the COBRC will only deal with the plaintiff or his attorney.

As expected, CMS says that the recovery amount will not be available to a primary payer or its representative (claim handler or attorney) without a authorization signed by the Medicare beneficiary.

New recovery contractor

CMS has announced that, for new MSP recovery claims initiated after October 5, 2015, recovery efforts directed at primary payers (insurers and self-insured entities) as the "identified debtor" will be handled by the Commercial Repayment Center (CRC). Recovery claims initiated before that date, and those involving the Medicare beneficiary as the "identified debtor," which should include most litigated cases, will continue to be handled by the Coordination of Benefits and Recovery Contractor (COBRC).

The CRC was previously tasked with handling reimbursement issues relating to group health plans.

CMS has posted a presentation (PDF) which provides some details. In light of CMS's track record, we will not be surprised to see notice letters and conditional payments letters originate from either of these contractors, despite the announced demarcation line. The best approach will be to respond to whichever contractor initiates contact.