MEDICARE COMPLIANCE
Welcome to Synergy’s blog page dedicated to the topic of Medicare compliance. Our team of Medicare experts share their InSights and knowledge on the latest developments and best practices for law firms to stay compliant with the MSP. Stay up-to-date with the latest trends and strategies to ensure that you have the information you need to navigate the complex world of Medicare compliance. Our blogs provide practical tips and advice for ensuring that your clients receive the medical care they need while complying with Medicare’s requirements. Let our experts guide you through the intricacies of Medicare compliance and help you stay on top of the latest developments in this rapidly-evolving field.
By Jason D. Lazarus, J.D., LL.M., MSCC
Medicare’s clear as mud position on post-settlement care coverage in liability settlements poses significant challenges for personal injury attorneys. Understanding and addressing the potential denial of future injury-related care is crucial to safeguarding your clients’ future eligibility and ensuring compliance with the Medicare Secondary Payer Act (MSP). This blog post explores the unregulated frontier of Medicare futures and the critical steps law firms must take to navigate these complexities.
Medicare’s Potential Denial of Future Care
Personal injury settlements today come with a new, daunting reality: the threat of Medicare denying future care for injury-related conditions. This risk is automatically triggered by the Mandatory Insurer Reporting (MIR) system, which reports settlements over $750 along with specific injury-related ICD codes. Once a denial occurs, the appeal process is long and arduous, often spanning multiple levels of internal Medicare appeals and federal courts. This can be particularly devastating in catastrophic injury cases, where denied care severely impacts the victim’s quality of life.
Understanding the Risks and Liabilities
Historically, trial lawyers did not worry about Medicare’s payment for future care post-settlement. However, this landscape has changed dramatically. Consider a scenario where a Medicare beneficiary’s settlement triggers a denial of future care because the settlement included funds for future medical expenses. This reality was highlighted in 2018 when a personal injury victim received a denial notice from Medicare, stating that “you may have funds set aside from your settlement to pay for your future medical expenses and prescription drug treatment related to your injury(ies).” The denial was related to a 2014 personal injury settlement wherein the Medicare beneficiary was paid money as damages for future injury related care.
The Evolution of MSAs
For years, personal injury settlements did not consider Medicare’s secondary payer status, shifting the burden to Medicare for future care. This changed in 2001 when CMS introduced MSAs for Workers’ Compensation cases to prevent shifting the burden from primary payers to Medicare. This compliance tool ensures that settlement funds for future medical expenses are used before Medicare becomes the primary payer.
Addressing Medicare Compliance Related to Futures
There is no one-size-fits-all solution for Medicare compliance related to futures. Each case requires a thorough, individualized analysis. If future medical expenses are funded by the settlement, doing nothing is risky. A client facing a denial of care may endure a lengthy appeals process, deciding between paying out-of-pocket or delaying care.
For trial lawyers, the risk of malpractice claims looms if they fail to advise clients properly about setting aside funds. Though no cases have yet seen Medicare pursuing law firms for failing to establish Medicare Set-Asides (MSAs), recent Department of Justice actions on MSP compliance emphasize the importance of addressing Medicare related issues.
Fundamental Concepts Related to Set-Asides
Set-asides are only necessary when dealing with current Medicare beneficiaries or those expecting to become beneficiaries within 30 months. Although no statute or case law mandates MSAs, they are similar to special needs trusts used in Medicaid or SSI settlements. Clients should be educated about MSAs to protect future Medicare eligibility for injury-related care just like with SNTs. MSAs can also be used to strategically set a baseline for medical damages in negotiations.
Why Consider Setting Up an MSA?
Despite the absence of a legal requirement for MSAs, conducting a legal analysis to determine the necessity of setting aside funds is crucial. This issue primarily concerns plaintiffs, with the penalty for non-compliance being the potential loss of future Medicare coverage for injury-related care. CMS recommends establishing an MSA to protect future Medicare eligibility, ensuring Medicare becomes the primary payer once the MSA is exhausted.
Conclusion
Medicare beneficiaries who attempt to shift the burden of future injury-related care to Medicare after a settlement may face denial of coverage. Medicare interprets the MSP Act as requiring consideration of their future interests. While set-asides are not legally mandated, they are recommended by CMS to protect future Medicare eligibility. Failure to address this issue can result in denied care and significant complications for clients and attorneys alike.
Turn to Synergy for experts who can help create a Medicare compliance strategy for your firm to mitigate liability risks and protect clients. Inadequate compliance processes can result in financial liabilities and worse yet damage to your firm’s reputation. Having a Synergy expert perform a Medicare Expert Case Evaluation (MECE) helps you educate your client related to future potential denial of care and then document your file appropriately. Ensure your Medicare processes protect both your clients and your practice by partnering with Synergy for total Medicare compliance.
By Jason D. Lazarus, J.D., LL.M., MSCC
Representing Medicare-eligible clients in personal injury cases introduces a layer of complexity since it requires compliance with the Medicare Secondary Payer Act (MSP). As trial lawyers, your duty extends beyond securing settlements; you must ensure clients are safeguarded against the potential pitfalls of non-compliance with MSP regulations. Before touching on compliance, it is first important to understand Medicare’s various components and their implications for the injured.
Medicare Program Overview
Medicare is divided into four parts:
Part A – Covers inpatient hospital and skilled nursing facility care.
Part B – Covers outpatient medical services, including physician visits and durable medical equipment.
Part D – Provides prescription drug coverage through private insurers.
Part C (Medicare Advantage Plans) – Offers an alternative, bundling Parts A, B, and D through private insurers.
Eligibility for Medicare typically begins at age 65 or after two years of receiving Social Security Disability Insurance (SSDI) benefits, crucial for many injury victims who qualify due to disability.
The Challenge of MSP Compliance
The MSP Act, established to curb federal healthcare costs, stipulates that Medicare acts as a secondary payer when other insurance (e.g., workers’ compensation, liability insurance and no-fault) is available. This secondary payer status necessitates careful navigation to ensure that Medicare’s interests are considered, particularly when dealing with conditional payments and future medical costs.
Navigating Conditional Payments and Medicare Set-Asides
Two primary issues arise related to MSP compliance:
Conditional Payments – Medicare payments made prior to settlement, which must be reimbursed/ addressed
Medicare Set-Asides (MSAs) – Future medical expenses that Medicare would otherwise cover.
The Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 2007 heightened the focus on MSP compliance by introducing the Section 111 Mandatory Insurer Reporting (MIR) requirements. Insurers must report the Medicare status of claimants, along with relevant details, to Centers for Medicare & Medicaid Services (CMS)upon settlement. Failure to comply by defendant Responsible Reporting Entities can result in significant penalties which is why you may experience hypervigilance with defense counsel related to Medicare.
Practical Challenges and Solutions
The advent of MIR has introduced challenges, such as ensuring the accurate reporting of medical diagnosis codes (ICD codes) and the correct date of accident. Errors in reporting these data points can lead to problems such as more complicated conditional payment resolution or potential future Medicare claims being denied. To mitigate these issues, trial lawyers should:
Work with opposing counsel to ensure accurate information is reported.
Only agree to precise release language that addresses MSP compliance without imposing unnecessary burdens on the injured party.
Stay informed and proactive in resolving conditional payments and considering MSAs where applicable.
Conclusion
Understanding and navigating Medicare compliance under the MSP Act is essential for trial lawyers. The complexities introduced by the MSP and MMSEA demand a thorough grasp of the regulations and a strategic approach to settlements involving Medicare beneficiaries. By doing so, lawyers can protect their clients’ interests and ensure compliance, avoiding the costly repercussions of non-compliance. Ensuring compliance not only protects clients but also shields the legal practice against potential liabilities. By acknowledging the complexities of MSP compliance and proactively addressing the associated challenges, trial lawyers can better serve their clients and navigate the maze of Medicare settlements with confidence.
Turn to Synergy for experts who can help create a Medicare compliance strategy for your firm to mitigate liability risks and protect clients. Inadequate compliance processes can result in financial liabilities and worse yet damage to your firm’s reputation. Ensure your Medicare processes protect both your clients and your practice by partnering with Synergy for total Medicare compliance. Learn more here.
By: Rasa Fumagalli, JD, MSCC, CMSP-F
The United States Supreme Court overruled the Chevron doctrine in the recent case of Loper Bright Enterprises et al v Raimondo , Secretary of Commerce , et al. ( No. 22-451, 604 U.S. ____(2024)22-451). The Chevron doctrine was previously established by the Supreme Court in the 1984 Chevron U.S.A. Inc v Natural Resources Defense Counsil, Inc. case ( 467 U.S. 837 (1984)) which involved the Environmental Protection Agency’s (EPA) interpretation of the language of the Clean Air Act Amendments of 1997. In agreeing with the EPA’s interpretation, the Court established a two-step approach for review of agency action. The first step requires an examination of whether Congress has directly spoken to the precise question at issue. If it has not, a court should defer to the agency’s interpretation if it has offered a permissible construction of the statute, even if it is not the same reading a court would have reached.
In overruling the Chevron doctrine in the Loper Bright Enterprises case, the Supreme Court considered challenges to a rule promulgated by the National Marine Fisheries Service pursuant to the Magnuson-Stevens Act, 16 U.S.C. Section 1801 et seq, which incorporates the Administrative Procedure Act (APA) 5 USC sec 551 et seq. Although the government argued that the Supreme Court should defer to the agency’s interpretation, the Court held that the APA instead required it to exercise independent judgment in deciding whether an agency has acted within its statutory authority. Under the APA, courts should not defer to an agency interpretation of law simply because a statute is ambiguous. The Court’s decision contains a lengthy examination of the judiciary’s responsibilities when it comes to interpreting law and adjudicating cases and controversies. Agency interpretations of federal statutes should be accorded respect instead of deference.
So how will the death of Chevron deference impact parties that are seeking to comply with the Medicare Secondary Payer (MSP) Act and regulations in their settlements?
As a starting point, it is important to remember that CMS is the agency charged with interpreting the Medicare Secondary Payer Act (MSP Act or MSPA). The language of the MSP Act and supporting regulations specifically state that Medicare is precluded from making payments for services to the extent that payment has been made or can reasonably be expected to be made promptly under any of the following” (i) workers’ compensation; (ii)liability insurance; (iii) no-fault insurance. (42 U.S.C.§1395y(b)(2)(A)(ii), 42 C.F.R.§411.20 (a)(2)). A primary payer’s responsibility for payment may be demonstrated by “a judgment, payment conditioned upon the beneficiary’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary payer or the primary payer’s insured or by other means…” (42 C.F. R§411.22). These provisions are enforced through Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) which provides for mandatory insurer reporting for Medicare beneficiaries who receive settlements, judgments, awards or other payments.
The interpretation of the MSP has been described by many courts as notoriously “complex.” The true impact of the death of the Chevron deference won’t be known until we see litigation against the Center for Medicare and Medicaid Services (CMS) related to its interpretation of the MSPA. The main areas that may lead to this litigation might involve the additional mandatory insurer reporting requirement of the amount of the Workers’ Compensation Medicare Set-Aside as well as civil monetary penalty calculations. In addition, since workers compensation settlements have a great deal of agency guidance when it comes to post settlement injury related care, ie the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide, and a Medicare Set-Aside review process, it wouldn’t be surprising to see challenges to CMS’ actions in this area. On the other hand, Liability MSA’s have only been addressed by two CMS memos and remain largely unregulated. The best course of action for liability settlements continues to be a case specific approach which includes a discussion with the Medicare beneficiary client about the potential impact of a Medicare denial of post settlement injury related care when a settlement includes an element of future medical. The consultation and supporting documentation provided by an MSP compliance expert will show that Medicare’s interests were reasonably addressed in the settlement.
It is important to keep in mind that although the Chevron doctrine has been overruled, agency interpretation will still be given a certain degree of respect or weight. Until a body of case law is developed in the area of MSP compliance, it is prudent to stay committed to resolving conditional payments, coordinating Section 111 mandatory insurer reporting and addressing Medicare’s potential interest in post settlement injury related care.
Synergy’s MSP compliance experts are here to help you navigate the complexities of the MSP Act and supporting regulations. Partner with Synergy to make sure your practice and your client are protected when it comes to the Medicare Secondary Payer Act.
Rasa Fumagalli, JD, MSCC, CMSP-F
It is well established that parties to a settlement involving a current Medicare beneficiary should consider Medicare’s potential interest in the settlement. This interest comes from the Medicare Secondary Payer (“MSP”) Act and supporting regulations which provide a framework for Medicare to recover conditional payments from settlements involving Medicare beneficiaries and to avoid making improper payments. The Act prohibits Medicare from making payments for services “to the extent that payment has been made or can reasonably be expected to be made under any of the following: (i) workers’ compensation; (ii) liability insurance; (iii) no-fault insurance” (42 C.F.R. § 411.20; 42 U.S.C. § 1395y(b)(2)(A)).
Since Medicare is a secondary payer, parties should address pre-settlement injury-related conditional payments and take appropriate steps to avoid the appearance of a cost shift of future injury-related medical to Medicare in certain settlements. Coordinated Section 111 Mandatory Insurer Reporting is beneficial whenever possible since this reporting serves to drive Medicare’s coordination of benefits. This enforcement mechanism began in January of 2011 and notifies Medicare of settlements involving Medicare beneficiaries.
Section 111 reporting is the responsibility of a Responsible Reporting Entity (RRE) to Medicare for liability, no-fault, and workers’ compensation plans and insurers. The RRE must report to Medicare if the plan has an Ongoing Responsibility for Medical (ORM) or if the Total Payment Obligation to the Claimant (TPOC) is greater than the reporting threshold of $750.00. Additionally, the RRE must query the Medicare system regularly to identify when a claimant becomes eligible for benefits while the claim is still open.
Under the Section 111 reporting requirements, the RRE must provide the injury victim’s first name, last name, date of birth, gender, Medicare Beneficiary Identifier (MBI), and Social Security Number (or the last five digits). Additionally, the RRE must report International Classification of Diseases (“ICD”) -10 diagnosis codes for the illnesses/injuries alleged, claimed or released in the Total Payment Obligation to Claimant (TPOC) settlement, judgment, award, or other payment. CMS encourages RREs to supply as many valid ICD-9/ICD-10 Diagnosis Codes as possible for the most accurate coordination of benefits. The TPOC report must also include the date and amount of the settlement.
Section 111 data collection plays a pivotal role in the enforcement of the MSP Act. An RRE’s or insurer’s reporting violations will subject them to civil money penalties as of October 11, 2024. CMS is also expanding their collection of Section 111 data in the area of workers’ compensation by adding a specific WCMSA data field. As of April 4, 2025, an RRE will now have to include the specific amount of the WCMSA, even if none is included, when reporting the Total Payment Obligation to Claimant (TPOC) data. The reporting requirement will apply to both CMS-approved and to non-submitted WCMSAs. This additional data will make it easier for CMS’ to deny post-settlement injury-related care. Although this additional reporting field only applies to workers’ compensation settlements, it is possible that this may be rolled out to liability settlements at some future date. Discussion of ways to make it even easier for Medicare Advantage Plans to access this information is also taking place behind the scenes.
A recent settlement agreement between MSP Recovery, Inc. d/b/a LifeWallet, and 28 property and casualty (“P&C”) insurers highlights the significance of data sharing when it comes to the preservation of the Medicare Trust Fund. By way of background, LifeWallet has been on a lengthy mission to discover Medicare Advantage liens and enforce primary payer obligations on behalf of their assignments from various Medicare Advantage Organizations. ( See Synergy’s 4/20/2023 blog for additional information the cases https://synergysettlements.com/would-better-billing-by-providers-result-in-fewer-msp-recovery-claims-cases/) A key settlement term reflects the P&C Insurers’ agreement to share the last 10 years of processed claims data and to share data of future claims with LifeWallet in order to assist LifeWallet in their claims reconciliation abilities. A confidential cash payment from the P & C Insurers to LifeWallet is also being made to settle existing claims.
So how does all this data collection impact the injured party and their attorney? When it comes to conditional payment demands, a failure to address them in a timely manner may result in significant consequences. There may be Department of Treasury collection efforts, suits for double damages as well as an offset of the injured party’s benefits. An attorney may also face a legal malpractice claim or attorney disciplinary proceedings. Similar consequences exist for failing to address a Medicare Advantage Plan lien which can be easily missed due to lack of transparency. Similar to conditional payments, there can be collection efforts by entities like LifeWallet, which also can be for double damages, against personal injury law firms.
A recent attorney disciplinary proceeding entitled Disciplinary Counsel v. Adams, Slip Opinion No. 2024-Ohio-559, considered an Ohio attorney’s failure to address conditional payments in the attorney’s permanent disbarment. The disciplinary counsel filed a four-count complaint against Attorney Adams alleging the neglect of three client matters among other things. The first count involved Adams’ improper handling of a Medicare lien in the amount of $3,969.75, failure to distribute the settlement proceeds to the client, and a failure to refile a UM/UIM case within the statute of limitations.
As a result of Adams’ mishandling of the Medicare lien, the Department of Treasury notified the client that her monthly Social Security benefit would be reduced by up to 15% to satisfy the outstanding Medicare lien. Although the client notified Adams of this, he continued to avoid this issue and took no action to resolve. Meanwhile, the Medicare lien continued to increase due to interest being added on. Adam’s client also filed a legal malpractice complaint that resulted in a default judgment against Adams with compensatory and punitive damages, attorneys’ fees, plus court costs and prejudgment interest. In reviewing this count, the Ohio Board of Professional Conduct of the Supreme Court noted numerous ethical violations by Adams and ordered Adams to pay his client $12,971.74 in restitution. The Board further reviewed the three other counts and agreed with the initial hearing panel’s recommendation that Adams should be permanently disbarred from the practice of law in Ohio.
Although Adams’ actions were extreme, plaintiffs’ attorneys do face risks when it comes to Medicare Secondary Payer compliance issues. CMS’ collection of settlement data not only allows Medicare to recover for conditional payments made prior to settlements, but it also enables them to decline payment of post-settlement injury-related care in certain liability settlement. This risk is one that should be discussed and addressed whenever an attorney is representing a Medicare beneficiary in a personal injury matter that includes an element of future medical.
Conclusion:
Medicare Secondary Payer compliance issues should never be ignored. A proactive approach that screens the Medicare status of each client should be undertaken and updated throughout the duration of representation. It is also imperative that conditional payments and Medicare Advantage liens be addressed in a timely way. Injured parties should be advised about the potential impact of the Medicare Secondary Payer Act on their post-settlement injury-related care and files properly documented. We also recommend that counsel on both sides work together to make sure that the RREs report accurate and consistent Section 111 data to Medicare.
Synergy’s team of MSP compliance experts is here to help you navigate the maze of Medicare. Our MSP 360 services include an MSP compliance audit service, Medicare Expert Case Evaluation (MECE) consultation, Medicare Set-Aside services, and conditional payment negotiations. Reach out to our team today here.
June 9, 2023
Introduction:
Medicare Advantage plans have emerged as a popular option for individuals seeking comprehensive healthcare coverage beyond what traditional Medicare (Part A/B) offers. These plans, also known as Medicare Part C, provide a unique alternative to traditional fee-for-service Medicare by combining various medical services into a single, all-inclusive package. In this article, we will provide a high-level overview of Medicare Advantage plans, helping you understand the key aspects and benefits they offer.
What is a Medicare Advantage Plan?
Medicare Advantage plans are private health insurance options offered by Medicare-approved insurance companies. They work by bundling together the benefits of Medicare Part A (hospital insurance) and Part B (medical insurance) into a single plan. In addition, most Medicare Advantage plans often include prescription drug coverage (Part D) as well. These plans are required to provide at least the same level of coverage as Original Medicare, but many go beyond by offering additional benefits such as dental, vision, hearing, and fitness programs.
Coverage and Benefits:
Medicare Advantage plans typically provide coverage through a network of healthcare providers, including doctors, hospitals, and specialists. There are different types of Medicare Advantage plans, including Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Special Needs Plans (SNPs). Each type has its own network rules and coverage options. Some plans may require you to get referrals from a primary care physician before seeing a specialist, while others offer more flexibility to see out-of-network providers at a higher cost.
Costs and Enrollment:
Enrolling in a Medicare Advantage plan requires individuals to be eligible for Medicare Part A and Part B. While Original Medicare has standardized premiums, Medicare Advantage plans often have their own premiums, deductibles, and cost-sharing arrangements. Some plans have low or even $0 premiums, but you still need to pay your Part B premium. It’s crucial to review and compare the costs and coverage details of different plans to find the best fit for your healthcare needs and budget.
Additional Considerations:
When considering a Medicare Advantage plan, it’s important to understand that these plans have certain limitations. For instance, they have specific enrollment periods and geographical limitations. Moreover, Medicare Advantage plans may require prior authorization for certain procedures or medications. It’s essential to carefully review the plan’s rules and restrictions before making a decision.
Personal Injuries & Medicare Advantage
Medicare Advantage plans enjoy the same rights as traditional Medicare does under the Medicare Secondary Payer Act (MSP) when a personal injury settlement occurs, and the Advantage plan makes payments for injury-related care. The Advantage plan will have a lien. Pursuant to the MSP, their repayment formulas are the same as Medicare under 411.37 (c) and (d) which only requires a procurement cost reduction. The key for personal injury victims is making sure you discover all Medicare claims since Medicare itself doesn’t alert you to an Advantage plan lien. Failing to reimburse a Medicare Advantage plan could expose the parties to a claim of double the lien amount. In addition, Medicare Set-Aside considerations may need to be addressed since it is always possible to switch back to traditional Medicare under Part A/B. Avoiding a denial of future injury-related care is always a prudent course of action by exploring the Medicare Set-Aside issue.
Conclusion:
Medicare Advantage plans offer an alternative approach to healthcare coverage by combining the benefits of Original Medicare with additional services and potentially lower out-of-pocket costs. By understanding the basics of these plans, you can make an informed decision about your healthcare needs. Remember to review the available plans, compare their coverage and costs, and consult with a licensed insurance professional or Medicare counselor to ensure the plan aligns with your specific requirements. It is also important that if you get injured while being covered by an Advantage plan that you understand the implications of a settlement in terms of reimbursement of the plan as well as future eligibility.
Contact Synergy to see how we can help your firm.
April 20, 2023
Rasa Fumagalli, JD, MSCC, CMSP-F
MSP Recovery Claims, Series LLC, and MSPA Claims 1, LLC have filed several cases on behalf of Medicare Advantage Organizations (MAOs) against insurers for failing to reimburse the MAOs for injury-related medical payments made on behalf of their enrollees. These cases often originate from a glitch in the coordination of benefits process during initial treatment. This article provides an overview of the Medicare Secondary Payer (MSP) billing policies and recent cases, including the consolidated MSP Recovery Claims, Series LLC v. United Automobile Insurance Company and MSPA Claims 1, LLC v. Covington Specialty Insurance Company cases (Nos. 21-12439, 21-12428) in the United States Court of Appeals, Eleventh Circuit.
The Medicare Secondary Payer Act and regulations provide a framework for Medicare to recover conditional payments from settlements involving Medicare beneficiaries and to avoid making improper payments. The Act prohibits Medicare from making payments for services “to the extent that payment has been made or can reasonably be expected to be made under any of the following: (i) workers’ compensation; (ii) liability insurance; (iii) no-fault insurance” (42 C.F.R. § 411.20; 42 U.S.C. § 1395y(b)(2)(A)). A primary payer’s obligation to reimburse Medicare for conditional payments may be shown by a judgment, payment conditioned upon release of liability, or other means. If Medicare makes a conditional payment, it has the right to recover payments from providers, suppliers, physicians, attorneys, state agencies, or private insurers that have received a primary payment (42 CFR Sections 411.24). Medicare Advantage Plans have the same recovery rights as traditional Medicare.
Chapter 3 of the Medicare Secondary Payer (MSP) Internet Only Manual (IOM) provides detailed instructions to providers to enable them to bill a primary plan before Medicare is billed. Providers are instructed to alert the MSP contractor, the entity responsible for coordination of benefits, whenever they receive a request from an attorney or insurance company for a copy of the billing or medical records of a Medicare beneficiary. Providers are also instructed to obtain information regarding possible MSP situations. This may be done by asking the Medicare patients if the requested services are for treatment of an injury resulting from an automobile accident or other incident for which liability or no-fault insurance may pay, or for which another party may be responsible. Section 20.2.1 provides model admission questions to ask Medicare beneficiaries to enable proper coordination of benefits.
In addition to the guidance in the Manual, the Medicare Learning Network (MLN) periodically releases memos for physicians and other providers about billing procedures in situations where Medicare is a Secondary Payer. The February 19, 2020 memo discusses the use of a Medicare Set-Aside Arrangement (MSA) to pay for injury-related services. The February 23, 2021 memo advises providers about the appeal process to follow when Medicare denies treatment due to an open or closed Liability, No-Fault, or Workers’ Compensation MSP record on the beneficiary’s Medicare file.
Despite the IOM and MLN guidance provided by CMS, providers may, at times, submit bills to Medicare or the MAO plans instead of the primary payer. This can result in cases settling without the primary payer reimbursing the MAO plan for their payments. As noted above, this fact pattern has been the subject of numerous cases brought by MSP Recovery on behalf of MAOs against various insurance companies.
The most recent consolidated cases, MSP Recovery Claims, Series LLC v. United Automobile Insurance Company and MSPA Claims 1, LLC v. Covington Specialty Insurance Company, Nos. 21-12439, 21-12428 before the United States Court of Appeals, Eleventh Circuit (February 22, 2023 These cases involve situations where United Automobile Insurance Company and Covington Specialty Insurance Company settled cases without reimbursing the MAO plans for their payments. Rather than seeking reimbursement from the injury victims and their attorneys, MSP Recovery Claims and MSPA Claims pursued the insurance plans for double damages.
MSPA Claims 1 LLC, as the assignee of the Florida Healthcare Plus Inc, a Medicare Advantage Organization, brought an exemplar claim against Covington in a putative class action. It involved a Medicare beneficiary, known as “P.M.” who injured her ankle and foot in February of 2014 when she fell down stairs at a property owned by 3550 Palm Beach Holdings, LLC. Although Covington insured the property under general liability and no-fault policies, P.M.’s medical providers billed the Florida Healthcare Plus plan and received payment for her medical expenses. Florida Healthcare Plus’s right to reimbursement as a secondary payer was assigned to MSPA.
MSPA advised Covington of its reimbursement rights in July of 2015. Covington declined to reimburse the Florida Healthcare Plus plan, arguing that the medical expenses were not reported to Covington within the policy’s one-year provision from the date of the accident. Covington settled the claim directly with P.M in 2016. MSPA argued that the claims filing deadline in the Covington Insurance policy was preempted by the Medicare Secondary Payer Act. The district court granted summary judgment in favor of Covington. MSPA Claims 1, LLC brought this appeal.
The US Court of Appeals, 11th Circuit, was not persuaded by MSPA’s argument that there is no time limit for an MAO seeking reimbursement from a primary plan. Although the Medicare Secondary Payer Act applied a three-year claim filing period to employer group health plans, there was no basis for the Court to infer that the provision preempts a claims-filing deadline in a no-fault or general liability policy. MSPA’s attempt to argue that Covington’s primary payer status could be established based on its settlement with P.M. was also barred since it was not pled in the complaint. Since MSPA’s initial argument focused on Covington’s status as a primary payer based on the terms of its insurance policy, Covington’s defense that was based on the one-year claims-filing deadline was valid. The Court affirmed the district court’s ruling that granted summary judgment.
The MSP Recovery Claims, Series LLC v. United Auto cases involved two exemplar Medicare beneficiaries, “W.T.” and “W.M.,” who sustained injuries in accidents covered under United Auto’s no-fault policies. United Auto sought summary judgment based on MSP Recovery’s failure to send United Auto a “pre-suit demand letter” as required by the Florida Motor Vehicle No-Fault Law. Although MSP Recovery argued that the Medicare Secondary Payer Act preempted Florida’s pre-suit demand requirements, the district court granted summary judgment to United Auto.
The US Court of Appeals agreed with the district court’s ruling. Although MSP Recovery argued that the Court’s prior decisions compelled the conclusion that the Medicare Secondary Payer Act preempted this provision of the Florida Motor Vehicle Act, the Court disagreed with MSP Recovery’s interpretation of their decisions. The Court also declined to hold as a matter of first impression that the Medicare Secondary Payer Act preempts the Florida Motor Vehicle Act’s requirement of a pre-suit demand letter. In reaching this decision, it considered the three classes of preemption. Preemption exists when a congressional legislative scheme is so pervasive that Congress left no room for the states to supplement it; when the text of a federal statute explicitly manifests Congress’ intent to displace state law, and when it is physically impossible to comply with both federal and state law. The Court found that the provisions of the Florida Motor Vehicle Code do not create an unconstitutional obstacle to the operation of the Medicare Secondary Payer Act.
Although MSP Recovery Claims, Series LLC, and MSPA Claims 1 did not prevail in these cases against the insureds, it would appear that they may have prevailed in their collection efforts against the injured party and/or their counsel. This path, however, is inconsistent with MSP Recovery’s business model that targets insurers. Considering the potential exposure that an injured party and their counsel may face, best practices dictate the need to proactively address payments made by any MAOs in connection with a settlement. Whenever insurance information is available, it should also be shared with the providers so that the correct plans may be billed before Medicare.
In conclusion, these cases highlight the importance of proper coordination of benefits in the Medicare Secondary Payer system. Providers must follow the guidance provided by the Medicare Secondary Payer Act and regulations, as well as the Medicare Learning Network, to ensure that they bill the primary payer before billing Medicare or an MAO. Insurers must also be aware of their obligations to reimburse MAOs for conditional payments made on behalf of their enrollees. Failure to comply with these requirements can result in costly litigation and potentially double damages for insurers.
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