Analysis of the CMS 60-day rule in light of Healthfirst Case and Self Disclos...
MSP Elearn December 2014 (3)
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Medicare Secondary Payer III
Medicaid, Medicare Advantage, MSP
Update and Frequently-Asked
Questions
SPEAKERS:
W. Randall Bassett
Lynn Kerr McKay
David J. Farber
Wednesday, December 3, 2014
12:30 PM to 1:30 PM EDT
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Medicaid Secondary Payer – The Issue
• States’ interest in MSP recoveries increasing
• What is the issue?
― States must require beneficiaries "to assign the State any rights ... to support
(specified as support for the purpose of medical care by a court or
administrative order) and to payment for medical care from any third party."
42 U.S.C. § 1396k(a)(1)(A).
― States receiving Medicaid funds must also "ha[ve] in effect laws under which,
to the extent that payment has been made under the State plan for medical
assistance for health care items or services furnished to an individual, the State
is considered to have acquired the rights of such individual to payment by any
other party for such health care items or services." 42 U.S.C. §
1396a(a)(25)(H).
― But, "[n]o lien may be imposed against the property of any individual prior to
his death on account of medical assistance paid or to be paid on his behalf
under the State plan." 42 U.S.C. § 1396p(a)(1)
• Are states allowed to recover “off the top” of settlements?
4. The Supreme Court Decisions
• Ahlborn – 126 S.Ct. 1752 (2006) -- Arkansas Medicaid
― Question in the case: can a state presume that 100% of
the settlement funds were for medical expenses in light
of the Medicaid “anti-lien” provision?
― Supreme Court – no, there must be some sort of
allocation (but what the allocation looks like was not
determined)
• Wos – 133 S.Ct. 1391 (2013) -- North Carolina Medicaid
― Question – is a state presumption that 1/3 of the
settlement was allocable for medicals legal?
― Supreme Court: no, there must be a case by case
determination
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5. Congress Responds to Wos
• Ahlborn and Wos overturned by Section 202(b) of
the Murray-Ryan Budget Deal (December 2013)
― Removes key language of statute relied upon by
the Supreme Court, to permit recoveries “off the
top”
― Was to be effective October 2014
• The regulated community responds to Murray-
Ryan (PAMA legislation March 2014)
― Postponed implementation until October 2016
― Will further advocacy reverse the impending
change?
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6. The Looming Issue – Medicaid “Reporting”
• The States are aware of “Section 111” reporting, and some are
interested in adopting similar regimes
• Rhode Island in 2012 adapted the state “Intercept” child support
system to Medicaid -- R.I.G.L. Chapter 27-57.1 (2012)
― Success of model is uncertain
• West Virginia in 2013 adopted reporting legislation – Ins. Code 9-5-
11(d)
― Obligation to report the claim (+20k) on beneficiary/claimant,
unless self-represented in which case obligation on defendant;
settlement reporting obligation as well
• National Council of Insurance Legislators (NCOIL) is consider
model legislation
― Requires reporting above threshold, no penalty for failure to
report
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7. Medicare Advantage – An Update
• Humana v. Farmers (W.D. Texas)
― The District Court recently rejected the
Magistrate’s recommendation to dismiss the case
― The District Court relied upon the Third Circuit
GSK Decision in a short and terse opinion
― Farmers’ request for interlocutory appeal
rejected
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8. SMART Act Implementation -- Update
• We are still waiting for CMS to issue next round of
rulemaking on SMART Act Implementation
― Finalize Portal Rule
― Propose Penalty Safe Harbor Rule
― Finalize Appeal Rule
• CMS Has Eliminated Full SSNs from Section 111
• CMS Has Increased “Threshold” to $1,000
• There is more to come
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9. LMSA Update
• Majority agree that LMSAs are not required in
liability settlement that releases future medicals
― Tye v. Upper Valley Medical Center, 2014 Ohio App.
LEXIS 2755 (Ohio App., Jun 27, 2014)
― Cole-Hoover v. State of New York Dept. of
Correctional Svcs., 2013 U.S. Dist. LEXIS 148989
(W.D.N.Y., Oct. 16, 2013)
― Bruton v. Carnival Corp., 2012 U.S. Dist. LEXIS
64416 (S.D. Fla. 2012)
― But see Early v. Carnival Corp., 2013 U.S. Dist.
LEXIS 16711 (S.D. Fla. 2013)
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10. LMSA Update
• Consensus that courts will review and approve LMSAs as
part of approving settlement
― Cribb v. Sulzer Metco (US) Inc., 2012 U.S. Dist. LEXIS 134900
(E.D.N.C. 2012)
― Bessard v. Superior Energy Svcs. et al, 2012 U.S. Dist. LEXIS
124690 (W.D.La. 2012)
― Big R Towing v. Beniot, 2011 U.S. Dist. LEXIS 1392 (W.D. La.
2011)
• Best practices include (1) evidentiary hearing with medical
providers, (2) allocation of settlement proceeds to future
medical expenses, and (3) notice to CMS
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11. LMSA Update
• LMSA must be an explicit, material term of the
settlement to be enforceable
― Tye v. Upper Valley Medical Center, 2014 Ohio App.
LEXIS 2755 (Ohio App., Jun 27, 2014)
― Cole-Hoover v. State of New York Dept. of
Correctional Svcs., 2013 U.S. Dist. LEXIS 148989
(W.D.N.Y., Oct. 16, 2013)
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12. LMSA Update
• Courts have not resolved whether settling
defendants must “protect Medicare’s interests”
with respect to future medicals
― Courts approving LMSAs use language suggesting
obligation to protect Medicare’ interests
― Courts rejecting requirement of LMSA do not
necessarily reject need to protect Medicare’s interests
― Welch v. American Home Assur. Co., 2013 U.S. Dist.
LEXIS 25948 (S.D. Miss. 2013) (court approved
MSA in settlement of claims involving both worker’s
comp and personal injury)
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13. LMSA Update
• CMS declares at every opportunity that the settling
defendant must “protect Medicare’s interests” with respect
to future medical expenses …BUT …
― CMS has no rule requiring LMSAs
― CMS is not authorized to make conditional payments
of medical expenses after a settlement
― CMS memorandums and agency guidelines do not
carry the force of law
• Sipler v. TransAm Trucking, Inc., 881 F. Supp. 2d 635
(D.N.J. 2012) (declaring LMSAs not required but
noting MSAs may be prudent in WC arena)
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14. MSP Changes – Update and FAQs
• August 2014 CMS Alert Regarding 12/5/80
Exposure, Ingestion and Implantation Cases
Reimbursement and Reporting Obligations
• Frequently-Asked Questions
― Medicare Advantage MSP recovery
― Global Lien Resolution
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15. Pre-December 5, 1980 exposure
August 19, 2014 CMS Alert
• Clarification regarding multiple defendants
• Consideration of all pleadings vs. most recent: Any
operative amended complaint (or comparable
supplemental pleading) must occur prior to the date
of settlement, judgment, award, or other payment
and must not have the effect of improperly shifting
the burden to Medicare by amending the prior
complaint(s) to remove any claim for medical
damages, care, items and/or services, etc.
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16. Pre-December 5, 1980 exposure (cont.)
• Where a complaint is amended by Court Order and
that Order limits Medicare’s recovery claim based
on criteria contained in this alert, CMS will defer to
the Order. CMS will not defer to Orders that
contradict governing MSP policy, law, or
regulation.
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17. Updates and FAQs
• Medicare Advantage providers recovery of
conditional payments
• Options for Global Lien Resolution and Reporting
― Clearly define claims to be included
― Review all information submitted to CMS
― Request CMS waiver of MSP and other claims
against settling defendants and extension of
Section 111 reporting deadlines, as needed
― Demand indemnity and other protections from
global resolution company
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18. Conclusion – Where Do We Go From Here
• 2015 will be a big year for the MSP community
― Several CMS Rulemakings to come
― A new “portal” in 2016
• MSP litigation continues to raise more question than it
answers
― Future medicals
― Qui tam cases
― Medicare Advantage issues
• Stakeholders need to remain vigilant, and be active, in
ensuring that recent changes are implemented and needed
changes are advanced
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