Medicare Secondary Payer Statute

1. Medicare Compliance Updates for Workers’ Compensation CasesMelisa Zwilling, Esq.Carr Allison Medicare Compliance Groupwww.carrallisonmsa.comwww.carrallisonmsa.blogspot.com

3. Medicare Secondary Payer Statute • Medicare (CMS) may not make payments for a beneficiary if “primary plan” is responsible. • If Medicare does make a payment, it is “conditioned” upon reimbursement

4. Conditional Payment Claims (CPCs) • Research and resolve CPCs when any case with a Medicare beneficiary settles or judgment is entered, etc.

5. SMART Act • Beginning in January, 2014, CMS must establish minimum thresholds in certain liability casesabove which CMS may seek reimbursement. • Cost of collection cannot be greater than amount to be reimbursed. • Does not apply to workers’ compensation initially, however, it may in future

6. Researching CPCs • Research CPCs prior to settlement • Report all injuries being settled, including disputed ones • How is research conducted?

7. Current Process: MSP Recovery Portal • Available July 2012 • Access and update information online

8. Current Time Frame for CPC Research • 2 ½-3 months • Allow adequate time to obtain CPL prior to settlement.

9. SMART Act • Provisions regarding: • Notice to Medicare • Establishment of Website • Resolution of Discrepancies • Right of Appeal

10. Notice to Medicare • To determine amount owed to CMS, a claimant, liability insurer, self insurer, no-fault insurer, or WC plan (or TPA) MAY, beginning 120 days before the reasonably expected date of a settlement, judgment, award, or other payment, notify CMS of the same

11. Establishment of Website • CMS must establish a website for conditional payment claim purposes. • Web portal was established in 2012, so this concept is not entirely new

12. Website Availability • Must be available to • Beneficiaries (family & representatives) • An applicable plan which has obtained the consent of a beneficiary • Liability insurance (including self-ins.); • No fault insurance; • WC laws or plans; and • TPAs

13. SMART Act: Website Benefits • Information must be updated within 15 days from the date Medicare makes a payment. • With current web portal, CMS takes much longer.

14. Final Claim Amount • If the website is used, final conditional payment claim amount may be determined without additional communication from Medicare during a “protected period.”

15. Protected Period • Provide notice to Medicare 120 days before settlement • CMS has 65 days to respond as to amount owed • Additional 30 days if exceptional circumstances exist, but must be less than one percent of the time • If statement is downloaded within three business days before settlement, it will be considered the final amount due

16. Website Use • Optional • Current method will likely remain the same.

17. SMART Act: Resolving Discrepancies • CMS must provide a timely process to resolve discrepancies concerning the amount due when such amount is obtained through the website.

18. Website Dispute Resolution Process • The beneficiary or representative must provide: • documentation explaining the discrepancy and • a proposal to resolve the same

19. Dispute Resolution Process (cont.) • Within 11 business days, CMS shall determine if there is a reasonable basis to include or remove disputed claims • CMS may accept or reject the proposal • If no determination made within 11 days, the proposal to resolve discrepancies shall be accepted

20. Important! • Discrepancy process under website option is not an “appeals process” nor does a right of appeal exist for a statement obtained through website! • If potential issues exist, traditional process may be better option

21. CMS must promulgate regulations to establish website, notice, response and resolution sections by September 10, 2013.

22. SMART Act: Right of Appeal • Gives primary plans a right to appeal conditional payment claims! • Consent of beneficiary is not required • Must only provide beneficiary with notice of intent to appeal

23. Timing • Questions remain concerning when CMS must promulgate regulations to establish the right of appeal.

24. Risk Mitigation Strategies - CPCs • Maintain accurate, current information about injuries • Carefully report injuries • Do not pay bills for unrelated treatment • Start early enough

25. CMS Recovery of CPCs • Reimbursement is due to CMS within 60 days of notice. • After that, interest may be charged. • United States may bring an action against primary payers/responsible entities and may collect double damages.

26. SMART Act: Statute of Limitations • 3 years after receipt of notice of a settlement, judgment, award or other payment under Section 111. • Applies to WC and liability cases • Applies to actions brought and penalties sought on or after July 10, 2013 (six months after enactment)

27. Medicare Advantage Plans (Part C) • MA Plans have right to reimbursement under MSPA • Courts disagree about whether MSPA provides MA plans with federal private right of action.

28. 3rd Circuit allows MA plans to seek reimbursement in federal court (Avandia). • Covers Delaware, New Jersey, Pennsylvania, Virgin Islands • Outside 3rd Circuit, MA plans must seek reimbursement through contract actions in state court.

30. Section 111 Reporting Requirements • Electronic transmission of data to CMS related to certain settlements, judgments, awards and other payments • Assist CMS with recovery of CPCs and keep CMS from paying when primary payer exists. • Duty to “notify” CMS has existed since 1980. Section 111 imposes a penalty of $1,000 per day per claim for failing to do so.

31. SMART Act: Section 111 • By July 2014, CMS must modify Section 111 to provide that RREs may but are not required to report Social Security or health identification claim numbers. • However, apparently indefinite extensions granted to CMS to do this

32. SMART Act: Enforcement of Reporting Requirements • Mandatory $1,000.00 per day, per claimant penalty will become optional • By March 10, 2013, CMS must solicit proposals concerning specific practices for which sanctions will and will not be imposed.

33. SMART Act: Section 111 Reporting Thresholds • Threshold for reporting certain liability claims beginning in 2014 • Cost of collection must not exceed amount to be collected • CMS must establish a threshold each year by November 15th and report calculation methodology to Congress.

34. Workers’ Comp Threshold? • WC cases are not initially covered by the SMART Act Reporting threshold but may be at some point

35. Are Thresholds New News? • Not really. They are good, but reporting thresholds are already in place.

37. Medicare Set-asides (MSAs) • Money for future medical expenses Medicare would otherwise pay

38. Are MSAs Required? • MSAs are not required by law • However, the burden of paying future medical expenses may not be shifted from a primary payer to Medicare

39. Why Utilize MSAs? • CMS recommends them in certain cases • Best way to evidence that Medicare’s interests were adequately considered and protected at the time of settlement

40. CMS Review Thresholds in WC Cases • CLASS I • Medicare beneficiary AND • total settlement exceeds $25,000 • CLASS II • Total settlement exceeds $250,000 AND • claimant has “reasonable expectation” of becoming Medicare beneficiary w/in 30 months

41. Reasonable Expectation of Entitlement • If the claimant: • Is currently receiving SSD benefits • Has applied for SSD benefits • Is appealing a denial of SSD benefits • Is 62.5 years old or older • Has End Stage Renal Disease

42. CMS Submission Process • Allocation reports should be less than six months old • CMS guidelines change frequently • Review allocation report carefully before submission to make sure that all appropriate treatment, but nothing more, was included • Web portal for submissions as of 2012

43. Below Review Threshold Cases • To determine if need MSA: • Consider amount of settlement • Likelihood of future treatment • May obtain allocation report OR • If future medicals easy to ascertain, agree between the parties on amount for future medicals

44. Time Frame for CMS Review • On July 2, 2012, new Workers’ Compensation Review Contractor. • Turnaround time on most proposals submitted after July - 60 days or less

45. When to Obtain CMS Approval • Best to start early and obtain CMS approval first, if possible • Goal is to submit lowest defensible amount to CMS for approval • May exclude some treatments or medications from submission if chance CMS may approve lower amount • Must provide CMS with documentation that account was funded as CMS approved, to finalize process

46. When CMS Wants More • Claimant fund • Carrier fund • Best to address potential issues first

47. Risk Mitigation Strategies for MSAs • Consider physician involvement: • To clarify future treatment needs • CMS may require money for treatment/procedure noted in records, even if not official recommendation • Be careful! Best to know what physician will say. Vague records are better than harmful ones. • When records are unclear on medications • Current prescribed medications must be clearly indicated, including dosage and frequency

48. Risk Mitigation Strategies (cont.) • To state that generics are acceptable/prescribed if brand only was prescribed initially • Otherwise, pricing for brand will be required • To clarify condition for which medication is prescribed • If off-label use, may exclude from MSA • When current treatment or medication not appropriate for lifetime • Otherwise, CMS will assume lifetime care/medication needed

49. Risk Mitigation Strategies (cont.) • Consider involving claimant’s attorney: • if physician’s recommendations are unreasonable • CMS will not accept letter from claimant stating that he/she will not undergo recommended treatment

50. Changes in Medicare’s Coverage Guidelines • Transcutaneous Electrical Nerve Stimulation (TENS) unit no longer covered by Medicare for treatment of chronic low back pain • Benzodiazepines will be covered by Medicare beginning January 1, 2013. • Such as: Alprazolam, Clonazepam, Lorazepam, etc. • Medicare will also begin covering barbiturates, but only when prescribed to treat epilepsy, cancer, or a chronic mental disorder.