The Official Medicare Set Aside Blog And Information Resource

Can I spend my MSA money?

Medicare Set Aside Services — Tue, 07 Feb 2012 14:38:01 GMT

I came across this link. Pay attention to the comment section.

This is what is really happening out there.
Bad decisions, bad advice, bad situation and likely a bad outcome.
On the plus side, the person offering advice has carved out a nice niche gaming the healthcare system.

Ryan

Medicare is a Defense to Bad Faith

Medicare Set Aside Services — Tue, 31 Jan 2012 21:18:35 GMT

At least one out of every 10 MSP cases seems to turn into a comedy of errors. Proper releases aren't obtained, things are sent to the wrong place, if at all, and the resolution you are seeking seems to take forever. Then to add insult to injury, the plaintiff blames the insurer for not being able to get timely straight answers out of the federal government and sues it for bad faith. Well take solace in the fact that the courts have pretty consistently held that given the harsh nature of the laws and regulations governing reimbursement of Medicare that the delays caused by an insurer trying to avoid paying the claim more than once are generally reasonable, at least to the extent that sanctions have not been granted.

Porter v. Farmers Insurance is just such an example of everything that could go wrong going wrong. There was some question about whether a claim was ever made by the incoherent plaintiff, UM coverage was extended only because Farmers couldn't really prove it wouldn't be imputed by statute, and the interactions with CMS took forever and responses so unclear that it was difficult to discern that it did not have a recovery claim. Even once it got a statement that Medicare would not be asserting any recovery, the parties were not satisfied because the date of accident listed on the letter did not match that of the claim. Had these parties had any real experience with CMS, they would have known that when a Medicare beneficiary becomes entitled after an accident, the date in that letter reflects the date of entitlement to Medicare. Had the parties known, they would not have continued to question the letter and completed the transaction rather than wait for reconfirmation from CMS. There also seemed to be other opportunities to concede that Medicare did not have a claim yet Farmers refused to move forward without written assurances of the same.

Point is that some Medicare delays are avoidable and many carriers continue to make overzealous demands in the interest of protecting themselves from Medicare when they really don't understand the rules of CMS' game well enough to do so. This is not the first case that has required a "lien release" by Medicare before a settlement check will be written, yet CMS cannot make a demand in a liability settlement until the insurance payment has been made. My other favorite is settlement agreements that require CMS approval of LMSAs which there is no way to guarantee CMS will provide. The only way to make this process less painful is to learn the rules and abide by them. Know what to ask from whom and when and how to do it, otherwise your requests may not even warrant a response that tells you that you did it wrong. But until the courts realize that there is a way to navigate this process more efficiently than what was demonstrated in this case, at least we don't have to worry about bad faith penalties - just yet….

MICHAEL PORTER, Plaintiff, v. FARMERS INSURANCE COMPANY, INC., Defendant.

Case No. 10-CV-116-GKF-PJC

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA

2012 U.S. Dist. LEXIS 9862

January 27, 2012

No Reimbursement Obligation by Medicare in Situations Where it is the Primary Payer

Medicare Set Aside Services — Wed, 25 Jan 2012 22:19:47 GMT

It is a fairly universal policy that no-fault carriers must make immediate payment for medical treatment and seek reimbursement later if found to be so entitled. Well what happens when the entity that should have made payment was Medicare and you can't sue the federal government? US Court of Federal Claims just released an option in which it dismissed a claim by the Auto Club Insurance Association for reimbursement of payments it made on behalf of a Medicare beneficiary injured in February 1980. Because the MSP did not take effect until December 1980, Medicare is the primary payer. The court dismissed the claim on the basis of jurisdiction. The MSP is not a money mandating statute and the plaintiff failed to allege a contract implied in fact or an illegal exaction, therefore there was nothing under the Tucker Act that provided jurisdiction in this court.

So if you can't bring a monetary claim and you can't overcome sovereign immunity, how exactly do you get Medicare to reimburse a claim it should have paid? Obviously you don't. The only interesting part of the opinion was that the court recognized that the MSP makes no mention, much less any promise, of reimbursement by Medicare for expenses a private insurer alleges are the primary obligation of the federal government. The opinion stated that "[t]he one-way focus of the MSPA in favor of the federal government may seem unfair, it may put Plaintiff on the horns of a dilemma given the mandate of Michigan no-fault statutes, and it may be fruitful ground for public policy debate, but the inquiry for this Court is whether the MSPA provides jurisdiction under the Tucker Act."

I know that I have been on a real public policy tear lately, but where does it stop? Why is Medicare the great intangible that everyone fears even though it doesn't have half the reach people believe it has, and it has no regard for anyone or anything, including state law. We pay into that system, employers & employees alike, and yet the minute Medicare finds an excuse, it dumps beneficiaries onto the private sector at will. While the MSP serves a good purpose, as Medicare deserves to be preserved for those who truly need it, there has to be a compromise that the private sector can reach with CMS because the current one-sided policies have achieved ludicrous status. 2012 is shaping up to be an interesting MSP year already…

AUTO CLUB INSURANCE ASSOCIATION, Plaintiff, v. THE UNITED STATES,Defendant.

No. 11-256 C

UNITED STATES COURT OF FEDERAL CLAIMS

2011 U.S. Claims LEXIS 2495

June 11, 2011, Filed

2012 Predictions

Medicare Set Aside Services — Mon, 16 Jan 2012 17:12:45 GMT

Now that Jen is done Monday morning quarterbacking 2011, it is time to ply my idiot savant like clairvoyance to events that will surely come to pass in 2012. (Nonbelievers, see my 100% accurate 2011 precognition on permanent display here). While it may seem my prognostications are a few days late, keep in mind I work off the Mayan calendar.

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#10 Liability MSAs – Maybe the doubters are right

LMSAs were a non-starter this year with very little overt compliance from Payers despite “the first LMSA memo” issued by CMS. I expect more of the same in 2012 for a one simple reason: despite the compelling arguments for or against LMSAs, the easiest thing to do is nothing. Expect those Payers that do acknowledge an obligation to Medicare to continue placing the burden for compliance on the plaintiffs and their attorneys.

Note to all those espousing the no-LMSA position, you haven’t won the battle by a long shot. But you have succeeded in convincing the P&C industry to kick the can down the road for another year. And I grudgingly respect the position absent any attempt by CMS at enforcement. We will revisit this again in 2013.

#9 Another MSA leader will hit the unemployment line

While I recognize you will be the scapegoat for the sins of prior leadership, someone has to take the blame. You have already purged your organizations of a number of underlings as a stopgap measure to divert the attention of your investors. But this year, the buck stops with you. Lose one more account or fail to meet growth expectations and there will be no one left to take the fall. You know who you are.

#8 The blockbuster case that will eventually bring CMS to its knees is upon us.

Although I am sworn to secrecy, there is a lawsuit brewing that will finally expose the WCMSA program for what it is, an enormous abuse of agency discretion that cannot withstand judicial scrutiny. Like a summer action movie starring Will Smith, this case has it all.

#7 There will be no legislative fix to the MSP

Contrary to what some may believe, I do support MARC in their quest for a legislative fix to the MSP and I recognize these things take time. It is hard to compete for legislative attention with high unemployment, huge budget deficits and the zealous desire of some to repeal Obamacare taking precedence. Congress doesn’t have an 11% approval rating for nothing.

Even though their multitude of House and Senate bills amount to little more than a band-aid being applied to a gushing femoral artery, anything is better than nothing. I also support the Baltimore Orioles winning the World Series. Both have an equal chance of success in 2012.

#6 More Payers will abandon the CMS approval process

I see a growing awareness that the supposed assurance of CMS approval is not worth the cost to obtain. With a multitude of new products and solutions hitting the market in 2012, Payers have viable options for protecting Medicare without seeking the blessing of CMS. After dropping north of a billion dollars funding MSAs in 2011, the industry is finally realizing that they can’t continue to operate on the old paradigm of 125% loss ratios nor can they raise premiums in a soft market to make up the shortfall.

#5 The conditional payment process will get better but still will not be good enough

I can’t see how the process can get much worse than what we saw in 2011. Thankfully, CMS has jettisoned the Chickasaw Nation and put certain CP efficiencies into place for diminimus claims. Turnaround times should continue to improve and positive outcomes will become the norm. Anyone still paying a percentage of savings to their vendor needs to rethink their CP strategy.

Expect Mandatory Insurer Reporting to streamline the discovery and repayment process. But also expect claimants to continue to be denied treatment for unrelated conditions erroneously lumped with their WC injuries.

#4 Mandatory Insurer Reporting (MIR) will not generate a single dollar of penalties in 2012. (for those that make a good faith effort to comply)

Another of the great marketing scams of 2011 and years prior was tying MIR reporting to MSA services. MSA execs dreamed of exploding revenues now that their salespeople were armed with a list of all open claims involving Medicare beneficiaries. It would be like shooting fish in a barrel. Unfortunately for them (see #9), these revenues have failed to materialize.

Problem is that the heavy lifting of gathering the claims data fell on the Payers and, once that was obtained, submitting the EDI data to CMS was a simple process by comparison. All the gloom and doom preached by those that stood to make a buck just hasn’t occurred. No $1,000 per day penalties, no draconian CMS audits, nothing. Imagine that.

#3 The volume of WCMSAs will continue to decline industry wide in 2012

Why? Because Payers are smarter and are not over utilizing MSAs as in years past. They have moved past the fear, have become better educated, and have largely banned the cookie and donut field rep model from their claims operations. Most forward thinking organizations have put a single person in charge of MSP compliance and these people have put a stop to past sales abuses. They also tend to know far more about their true exposures than the people selling the product. The MSP business is now a zero sum game in WC. One company’s gain is another lesser company’s loss.

This will drive more firms from the business and leave only the most capable left to compete for any substantial accounts. New business will be won by service and capability. Expect Dunkin Donuts to post a decline in year over year sales.

#2 Your MSP provider is now your claims solution provider

Expect the traditional MSA companies to try to capture revenue from other product lines. Whether it is through structured settlements, a PBM partnership with a whiz bang DUR product, or a post settlement administration alliance, the big boys are not going to sail quietly off into the night. Expect the same from structured settlement companies trying to do MSAs or PBMs trying to capture the spend on post settlement administration cases. I don’t necessarily think that is a bad thing at all, provided these companies have the capability and expertise to execute. But I see little value in strategic partnerships that exist to share revenue. That just drives up the cost and drives down the quality for the end user.

As for me, I am going to continue to do all of those things in-house just like we have been doing for nearly a decade. I look forward to the competition as others try to catch up.

#1 The world is going to end

I think that the debate is finally settled that December 2012 is all she wrote for the human species. Nostradamus, the Mayans and Harold Camping all agree that the day of reckoning is upon us. So I suggest you buy as many guns as your state will allow, stockpile food and ammunition and head for high ground. Be sure to bring along a copy of The Complete Guide to Medicare Secondary Payer Compliance for those quiet nights around the campfire. It chronicles the folly of government inefficiency, bureaucratic ineptitude, judicial procrastination, legislative sluggishness and the confiscation of private wealth like no other tome in existence.

Ryan

Top 10 MSP-Related Events of 2011 - A Recap

Medicare Set Aside Services — Mon, 16 Jan 2012 15:19:41 GMT

As we approached the end of the year, I was asked to contribute to a number of different articles recapping the year and making predictions for 2012. Most requests focused on workers’ compensation and none really captured just how active the MSP arena was in 2011. For those of us who remember the early days, a new CMS memo may have proved for an exciting shake up in the MSP world. Now we have to monitor published court opinions, proposed legislation, and CMS email subscription notifications for new MSA memos and MMSEA reporting alerts, as well as all the industry news tracking the latest outlandish thing CMS did to screw up yet another good insurance settlement. So while still floating around my cluttered mind, here is what I perceived as the MSP Top 10 of 2011.

#10 - May 11, 2011 WCMSA Memo

While by far the most useless memo published to date, it committed the facts to writing once and for all, which I did appreciate. After an entire decade of explaining to people that CMS approval is totally voluntary, not mandated by any law or regulation, and the dollar thresholds totally arbitrary and there only to limit the number of cases that CMS does allow for review, I now only have to forward a link to the newest memo to make my point. The reason it was published, by my understanding, is because CMS receives a great number of cases for review that are not eligible, but still require the resources of their various contractors to determine that eligibility and to send notifications to the parties that they will not be reviewing it, thus contributing significantly to the incredible delays and the growing back-log. Since my word isn’t sufficient, I thank CMS for this memo.

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#9 - WCMSA Web Portal

CMS is finally taking CMS submissions electronically and the overwhelming response is “it’s about time.” While CMS does receive some paper submissions, MSA vendors send the majority of files electronically and have done so for many years now; however, the files all went to a post office box in Detroit where a contractor existed for the sole purpose of receiving MSP-related mail - so someone still had to copy the files from CD-ROM to the CMS servers. Well, no more. With web submissions, we cut out that contractor and, hopefully, cut the review program down by a few days. The COBC’s job at the next step, doubling checking for completeness, should be greatly reduced as well, meaning that cases should get into the hands of the WCRC faster where the review actually takes place. Over the past year, several MSA companies participated in a trial of the portal, which prioritized these cases and turned around approvals in less than a week. Some industries players began using this as a marketing tool to lure new clients. Knowing CMS as we do, we were highly suspicious that this would not last for long and, true to form, when the portal opened to all comers, the review times extended back to the multi-month turnaround. At least we can hope this will speed things up somewhat and that CMS will continue to look for ways to get the MSAs reviewed in a more timely manner.

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#8 - WCRC Contract Delays

It’s only fitting that the WCRC contract delays make the next spot on the list. To compound all of the already existing inefficiencies baked into the WCMSA review process, 2011 was riddled with contractor drama. As you may be aware, the WCRC contract was involved in a re-compete and awarded to Provider Resources, Inc. in June 2011. The award was immediately followed by a bid protest that was dismissed by the GAO in August, yet there was no evidence of the $1.5M transmission starting. The original WCRC contractor has been, and continues to be, operating under contract extensions with no real incentive to excel as they were rumored to not be eligible for the re-compete anyway. On September 27th, the original bidders were notified that a FAR 52.233-3 “Protest After Award” was filed with the GAO, a stay of contract was issued, all proposals would be re-reviewed, and corrective action would be completed no later than November 10, 2011. So here we are with no evidence that the new contract is underway, the turnaround time and back log of cases are steadily increasing, and generally there seems to be no promising outlook for 2012. Even if the contract is issued tomorrow, it will take the new contractor time to get up to speed and become effective. Not to mention, the new contract does not address the existing back log which is assumed to remain with the outgoing contractor until completed. Numbers 9 and 10 show the only hope of improvement for 2012, as fewer submissions and more efficient processing are the best shot at having cases approved faster. Now if only I can convince more of you to forego the process all together…

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#7 - Chickasaw Nation Industries Loss of MSPRC Contract

While we’re talking about contractors, the sudden dismissal of the MSPRC contractor was an interesting development. It was assumed that, in CMS tradition, the Chickasaw nation would continue indefinitely in contract extensions. Yet after an embarrassing display before the Energy and Commerce Subcommittee on Health in July, CMS elected to save face and allow the contract to simply end on its terms. For those who didn’t see it, it is posted on the committee’s web page and makes for entertaining reading. The CFO of CMS was grilled extensively on the financial data from its operations that she was unable to provide - items like the cost of recovery compared to what is recovered and what was lost, with the best question focusing on the cost of issuing the $1.57 demand letter. And this was just was example of what the committee was provided on the ridiculous practices going on at CMS. She tried to shift the blame to the MSPRC which only prompted the committee to question the competitive nature of the original contract award, which was apparently nonexistent. There’s nothing I’ve enjoyed more over the last 10 years than the federal government fulfilling their 8(a) contracting requirements with MSP-related activities. Note that the new contract has no such requirements.

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#6 - Haro v. Sebelius Injunction

In April, the United States District Court for Arizona certified a class of Medicare beneficiaries and enjoined CMS from putting recovery claims into collections while pending a waiver or compromise request. Makes sense, but in the past, CMS would routinely make such egregious threats in demand letters, all but requiring that you surrender your first born in satisfaction of frequently unsubstantiated debts to the federal government. While the overall outcome of the case was disappointing as it did little more than cause CMS to cease collection operations for maybe a month while it revised its demand letters, it did at least demonstrate that there is a limit to CMS’ reach and that despite the deference given its interpretation of the MSP in developing its policies, the acts themselves are not without limits. If more people took the time to bring such administrative claims against CMS, we could bring about needed change as opposed to continue to hope that Congress will help any time soon.

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#5 - New Conditional Payment Reimbursement Policies

Much like the dismissal of the Chickasaw Nation, CMS took additional subsequent remedial measures to deal with the embarrassment before Congress last summer. Following the questioning regarding the cost of pursuing nominal recoveries, CMS suddenly issued several new policies for conditional payment recoveries in liability insurance settlements. In September, CMS announced that it would no longer pursue recovery in claims that settled for less than $300. Not sure how many of those cases you see, but it was a start. Then, in November, CMS announced that in cases settling for less than $5,000, it would accept a fixed percentage in satisfaction of unknown conditional payment obligations. An incredible costly alternative to actually requesting the information and resolving the debt cost effectively, but again progress on CMS’ part nonetheless. Then finally, in December, it announced a self-calculated final conditional payment amount option that will become available in February for cases that settle for less than $25,000. Again, with all of the electronic data available to the federal government, it is about time that such an option was contemplated but the dollar limit will exclude the vast majority of cases with a reimbursement obligation, so it is unlikely to affect those most in need of MSP reform. Regardless, these are promising signs that CMS is headed in the right direction and willing to ease some of the burdens stemming from the MSP. Hopefully, it will continue in this direction in 2012.

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#4 - MSP Compliance Insurance Hits the Market

Given that we are working within the risk management industry, it has been incredibly surprising that we have not seen more insurance solutions enter the MSP marketplace over the years. As big a disaster as the Coventry guaranteed MSA program turned out to be, the concept was headed in the right direction. Although all the issues not very well thought out, or that marketing and sales took precedence over legal, the core of the idea was still to insure the approval so that claims could be closed faster, thus ending the associated expenses of waiting for CMS. The problem there was in the unknown: the subjective and fluid nature of CMS’ idea of what it takes to protect Medicare’s interests. The review not being regulated made that proposition much riskier than the premiums inferred and hence the failure of the program. While there is one other plan that insured against the $1,000 per claim per day penalty for reporting noncompliance, a new policy that became available on 2011 is offering coverage for more of a comprehensive MSP compliance plan. Premiums are derived by the overall compliance plan and the number of reportable claims. Those with comprehensive and reliable reporting, conditional payment and MSA controls in place will pay significantly less in total premium, much like an employer’s premium is affected by its experience rating. The policy covers not just the reporting penalty but things like medical benefits for the claimant while MSP triggered disputes are resolved with CMS. I would anticipate this offering to become more popular in 2012 as people become more aware of the benefits of foregoing CMS approval and taking more control over of their MSP exposures.

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#3 - MSP Captured Congressional Attention

Although there have been MSP-related bills presented to Congress in years gone by, H.R. 4796 was the first to really capture its attention, despite having little chance of scoring. Whether due to the lobbying efforts of the MARC Coalition or it was just time for Congress to see what all the fuss was about, Congressman Pete Stark set into motion what turned into a very interesting 2011 for the MSP within the federal government. The GAO initiated a study at the beginning of 2011, requested by Stark on behalf of the Ways and Means’ Subcommittee on Health, to investigate the financial implications of H.R. 4796 and H.R. 2641 (a now defunct bill that, at the time, was in its third manifestation presented to three consecutive Congresses with no progress). In March, H.R. 4796 was replaced by H.R. 1063 which amended the safe harbor provision to be adjusted annually by the CMS chief actuary to track the cost of recovery, which may permit the bill to score better. Then about midyear, Energy and Commerce developed an interest in the matter and held a hearing in July in which the CFO of CMS was left looking like a buffoon in her inability to answer questions about the financial implications of its recovery efforts. Finally last fall, the Senate introduced a companion bill, S.B. 1718, which gives the issue bipartisan support in both houses of Congress.

So where does that leave us? The GAO report has not been release to Congress and until it is, it is unlikely that Congress will take any further action given that it cannot possibly understand the total dollars in play here. Energy & Commerce gave CMS clear directions to obtain specific information for which it will be called upon to report, indicating another hearing. Given that it is an election year, by the time the needed data becomes available, the existing bills may not see any action in this Congress, but that could be a good thing. The bills as they exist take very small steps in what needs to be a much greater total reform of the MSP efforts of the Medicare program in general. A new comprehensive bill proposed in the 113th Congress could not only make needed changes to conditional payment and reporting problems, but address resolution of MSA issues, apportionment (particularly in mass tort) and Medicare Advantage oversights not dealt with in the pending legislation. As with everything else, this is a great start and 2012 remains promising.

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#2 - 6th Circuit Decision in Hadden v. US Appeal

After only a little over 400 days of deliberation, the 6th Circuit Court of Appeals finally rendered a decision in the appeal of U.S. v. Hadden on November 21, 2011, upholding Medicare’s right to recovery in full from Mr. Hadden’s insurance settlement. For those unfamiliar, Mr. Hadden was a pedestrian struck by a public utility vehicle that swerved to avoid a negligent driver. The accident occurred in Kentucky, a pure comparative negligence state, and the insurer of the not-at-fault driver settled claims against it for about 10% of Mr. Hadden damages. Medicare asserted a claim for over half of the settlement proceeds and denied all requests for waiver or compromise of that amount. Mr. Hadden appealed that decision through the four steps of the Medicare appeal process, through district court review of that determination, to finally have the 6th Circuit Court of Appeals affirm Medicare’s rights to the amount of its demand.

The outcome was not surprising as it follows all case law to date, with the exception of one case, but that is what makes its occurrence significant. In September 2010, the 11th Circuit Court of Appeals rendered a landmark decision in the Bradley v. Sibelius appeal in which it upheld a probate court decision to apportion a policy limits settlement over all claims, Medicare’s being weighed against the ten demands for loss of parental companionship by the surviving children. While not a perfect decision in that the probate court did not question the worth of the children’s claims but simply assessed the apportionment at the amounts demanded, the value in the opinion is the resulting public policy discussion.

Public policy favors settlement: our courts cannot handle adjudicating every insurance claim involving a Medicare beneficiary, let alone all those with a reasonable anticipation of becoming one, to determine Medicare’s stake, particularly when Medicare routinely refuses to participate. There is an art to settling insurance claims that involves a lot of tried and true practices based upon financial and legal implications, resulting in the best possible compromise of all parties. Parading that evidence through a court of law does not change the facts as to why the parties elected not to see a case through to trial. Yet CMS refuses to compromise its claim absent a ruling on the merits of the claim. This represents an enormous waste of government resources, both judicial and federal, given that the private sector already paid for the analysis that led up to the value of the settlement. Nevertheless, insurers routinely pay these demands because “it’s not enough money to fight over” or “there’s no winning against CMS’ track record,” thus the agency grows stronger and makes more wild demands and creates new overreaching policies and the problem continues. But I digress.

Returning to Mr. Hadden, we can only hope that he continues to pursue his appeal because every chink we can put in CMS’ armor, like the Haro injunction and the Stricker dismissal, helps rein in its reach little by little.

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#1 - CMS’ First Official LMSA Policy Published

While of little significance to someone like myself who always read the express terms of the MSP to include “workers’ compensation, liability, auto, no-fault and self-insurance,” CMS has finally acknowledged the existence of Liability Medicare Set-Asides in writing. The acceptance of the need for MSAs in liability settlements has been fought since the inception of WCMSAs. Whether the lack of CMS policy memorandum specific to liability settlements or the lack of regulations similar to 42 CFR 411.46 and 411.47 that specifically address a Medicare exclusion in the event of an insurance payment for future medical expenses, organizations such as the AAJ and most recently the ABA TIPS section at the 2011 annual meeting have taken the position that LMSAs are not “required” by the MSP.

With regard to the reasons against, it is important to understand a few basic facts about the MSP to understand why reliance upon CMS memos was shaky at best. First, the CMS policy memoranda are merely agency interpretations of the governing statutes and regulations and do not carry the force or effect of law. While generally granted deference by the courts, CMS policy is not infallible nor is it the only means by which to comply with the underlying legal obligations. It is simply the agency’s recommendation in light of what it believes it can do to pursue recovery under the MSP. The WCMSA review program is not governed specifically by any law or regulations and is voluntary, a fact finally openly admitted by CMS itself in its May 2011 memo. Those who have followed the issue since the beginning will recall CMS’ liberal use of the word “must” in the early memos, and the idea that an MSA must be approved by CMS when the settlement meets the established thresholds continues to erroneously linger today. The reason we have not had any detailed memos for liability is that tort law is not as uniform as workers’ compensation, thus it would be impossible to render unilateral policies across all jurisdictions as was possible for workers’ compensation which is fundamentally the same throughout the country. I am not saying that all states are exactly the same, only that the differences are more the exception, whereas in liability, the only common thread is generally the common law elements of negligence. Pretty much everything after that will be determined on a case by case basis due to a unique limiting feature specific to state law or governed by an insurance contract. To even expect such policies to be issued by CMS is unreasonable in and of itself, but to rely upon the absence as a means to avoid a statutory obligation borders upon negligence.

With regard to the Code of Federal Regulations, note that there is a valid issue. If, in fact, the courts want to infer Congressional intent where there is obviously none as they have been prone to do in 2011, this argument could have merit. Unfortunately, for those hoping to use it, think through the issue before you do. The MSP statute in essence forbids Medicare from making payments where other insurance is available to pay first. The sections of the CFR in question merely state that if an allocation is made from a workers’ compensation settlement specifically to compensate for future medical expenses, then Medicare will exclude payments only until it has been demonstrated that the allocation was exhausted on related medical expenses, upon which Medicare would resume coverage. So, absent this limiting factor to the exclusion, aren’t liability settlements subject to the exclusion in perpetuity because the statute prohibits Medicare from making payments? However, there is no point in debating the issue as both arguments have their merits and resolution will only come from Congress or the Supreme Court, whichever gets there first, which brings me to my final significant 2011 moment.

On September 30, 2011, CMS issued its first official policy regarding MSAs in liability settlements. In it, CMS outlined a situation in which an LMSA would not be necessary, that being when written certification by the treating physician stating that no further treatment was anticipated could be obtained. It didn’t say that one has an obligation to do an LMSA, but the question remains, what if no written certification stating that no further treatment is needed exists? What if there is foreseeable future anticipated related medical care? I think it was a brilliant move on CMS’ part to not have to publish LMSA policy, yet leave the inference that absent such a statement, then what? Clearly CMS believes that the MSP allows for secondary payer exclusions and reimbursement rights in liability situations. Whether you elect to read into the omission or continue to ignore any possible obligation, 2012 may finally provide resolution to this debate once and for all. CMS has finally started to capture liability settlement data and it must have a plan for what to do with it.

Top 10 MSP-Related Events of 2011 – Number 1

Medicare Set Aside Services — Fri, 13 Jan 2012 15:30:08 GMT

CMS’ First Official LMSA Policy Published

Top 10 MSP-Related Events of 2011 – Number 2

Medicare Set Aside Services — Thu, 12 Jan 2012 15:35:23 GMT

6th Circuit Decision in Hadden v. US Appeal

Top 10 MSP-Related Events of 2011 – Number 3

Medicare Set Aside Services — Wed, 11 Jan 2012 20:47:39 GMT

MSP Captured Congressional Attention

Top 10 MSP-Related Events of 2011 – Number 4

Medicare Set Aside Services — Tue, 10 Jan 2012 14:28:03 GMT

MSP Compliance Insurance Hits the Market

Top 10 MSP-Related Events of 2011 – Number 5

Medicare Set Aside Services — Mon, 09 Jan 2012 20:00:06 GMT

New Conditional Payment Reimbursement Policies

Top 10 MSP-Related Events of 2011 – Number 6

Medicare Set Aside Services — Sun, 08 Jan 2012 11:00:00 GMT

Haro v. Sebelius Injunction

Top 10 MSP-Related Events of 2011 – Number 7

Medicare Set Aside Services — Sat, 07 Jan 2012 12:00:00 GMT

Chickasaw Nation Industries Loss of MSPRC Contract

Cases that make you go huh? - Palsgraf Revisited

Medicare Set Aside Services — Fri, 06 Jan 2012 17:41:00 GMT

I get a lot of notices every day of court opinions that were published throughout the country, most of which I dismiss when they don't have an interesting MSP angle. This morning however, I can't help but share, probably because the whole time I read it, I kept shaking my head wondering what CMS would do with this one. Even more surprising that the suit being filed at all against the decedent's estate rather than Amtrak was the fact that the appellate court over turned the lower court and ruled in plaintiff's favor, finding that the accident was foreseeable and that the decedent did in fact owe her a duty of care. Now here's where you go huh: the injury is shoulder strain and leg and wrist fractures sustained as a result of being struck from behind by the remnants of man unintentionally struck 100 feet away by an Amtrak train traveling 73mph [wonder if there's a new ICD-10 code for that?]. Do you think the duty was to not be struck by the oncoming train or to have a plan for containing one's body parts just in case struck by an oncoming train? I'm guessing the Illinois appellate court doesn't remember first year torts…

Like I said, not what you usually come to our blog for, but kind of like a train wreck, sometimes you just can't help but look: http://www.state.il.us/court/OPINIONS/AppellateCourt/2011/1stDistrict/December/1102672.pdf

Top 10 MSP-Related Events of 2011 – Number 8

Medicare Set Aside Services — Fri, 06 Jan 2012 14:50:25 GMT

WCRC Contract Delays

It’s only fitting that the WCRC contract delays make the next spot on the list. To compound all of the already existing inefficiencies baked into the WCMSA review process, 2011 was riddled with contractor drama. As you may be aware, the WCRC contract was involved in a re-compete and awarded to Provider Resources, Inc. in June 2011. The award was immediately followed by a bid protest that was dismissed by the GAO in August, yet there was no evidence of the $1.5M transmission starting. The original WCRC contractor has been, and continues to be, operating under contract extensions with no real incentive to excel as they were rumored to not be eligible for the re-compete anyway. On September 27^th, the original bidders were notified that a FAR 52.233-3 “Protest After Award” was filed with the GAO, a stay of contract was issued, all proposals would be re-reviewed, and corrective action would be completed no later than November 10, 2011. So here we are with no evidence that the new contract is underway, the turnaround time and back log of cases are steadily increasing, and generally there seems to be no promising outlook for 2012. Even if the contract is issued tomorrow, it will take the new contractor time to get up to speed and become effective. Not to mention, the new contract does not address the existing back log which is assumed to remain with the outgoing contractor until completed. Numbers 9 and 10 show the only hope of improvement for 2012, as fewer submissions and more efficient processing are the best shot at having cases approved faster. Now if only I can convince more of you to forego the process all together…

2012 Outlook by Peter Rousmaniere at Risk & Insurance: Medicare Settlements and Opioid Use

Medicare Set Aside Services — Thu, 05 Jan 2012 17:45:00 GMT

See Peter's thoughts on 2011 developments that are going to continue to be significant cost drivers in 2012.

I think his article delivers a critical message in that with workers' compensation insurers incurring losses and other expenses of about $1.20 per every dollar of premium, 2012 apparently needs to be year to take action to control costs. But instead of tackling the cost drivers, we're already noticing that cost cutting has been initiated in many claims operations. With Medicare settlements and opioid use being identified as two of the most significant developments in 2011, reducing staff is not the way to resolve those problems. Historically when this happens, we see that experienced staff is lost and those that remain end up with significantly increased case loads, not leaving them the time to address issues in their claims such as run amuck treatment and excessive opioid use. If those expenses are not addressed and controlled during the life of the claim, when it comes time to attempt to settle it, you end up financing outrageous MSAs. People rarely understand that CMS bases MSAs purely on historical data so excessive MSAs are a direct reflection in many cases of poor claim management. But given that physicians are more to blame for this problem that overworked claims administrators, hopefully 2012 will also bring us new trends in the treatment of pain that does not involve merely drugging the mind into temporarily ignoring the problem.

Top 10 MSP-Related Events of 2011 – Number 9

Medicare Set Aside Services — Thu, 05 Jan 2012 16:39:13 GMT

WCMSA Web Portal

Top 10 MSP-Related Events of 2011

Medicare Set Aside Services — Wed, 04 Jan 2012 14:39:10 GMT

10. May 11, 2011 WCMSA Memo

[Sorry, but you are going to have to come back daily to get all ten.]

10 Myths and Facts About Workers’ Compensation

Medicare Set Aside Services — Tue, 03 Jan 2012 16:29:16 GMT

To kick off 2012, Larson's Workers’ Compensation Law Community in conjunction with Work Comp Roundup has published an article clarifying 10 WC myths. Industry leaders from throughout the WC community contributed to this article, so there is a little something for everyone. In the interest of new starts for the new year, we encourage our readers to visit this link to see if dispelling at least one myth cannot improve your organization this year. As always, we thank LEXIS/NEXIS for including MEDVAL in such endeavors, Robin Kobayashi and Rebecca Shafer for their coordination and all of our fellow contributors as it is an honor working alongside each of you. Happy New Year to all!

Version 3.3 of the NGHP User Guide Dated December 16, 2011 Now Available

Medicare Set Aside Services — Thu, 29 Dec 2011 22:56:59 GMT

Just in case you didn't get your email notifying you of a change to the MMSEA Section 111 web site, probably because none were sent, we just wanted to bring to your attention that an update to the user guide has been posted. It is hard to determine exactly when it was posted considering that the title to the link to the document is dated November 9, 2011, the document bears a December 16, 2011 date and the web site shows that the page was last updated on December 19, 2011. None the less, the update is not earth-shattering as it lists only 8 sections where changes were made (2 to merely correct a typo) which basically incorporate the various alerts since the last update in August. So the question remains, why all the secrecy???

Ametros Financial names “new” CEO

Medicare Set Aside Services — Fri, 16 Dec 2011 19:45:45 GMT

Ametros Financial, the upstart professional administrator, has named Tom Ash its new CEO. See press release here.

Comment: This company entered the market last year promising lower fees than previously seen in the professional administration market. They claim these lower fees (which range from $1,000-$1,500 initial set-up and less than $500 per year ongoing) are possible due to a new technology platform that automates many of the functions currently performed by more expensive human administrators. I assume their goal is to convert more self-administered claims into professional administration cases thereby turning a billion dollar self-admin market into a pot of gold for their owners, Clarion Capital – former private equity backers of Crowe Paradis.

While they have achieved some measure of success, according to industry observers, this change indicates to me that the growth rate and margins have not matched Clarion Capital expectations. I am not surprised for a variety of reasons.

First, regardless of any improved computer technology, of which I am skeptical, the market is not nearly big enough to support a firm with such a singular focus and high fixed expenses. For example, between Tom Ash, Sandra O’Sullivan and Hany Abdelsayd (former PMSI and Rising pitchman) command executive salaries. And given that we see them at every workers compensation conference, large and small, travel and entertainment expenses have to subtract another 100k to 200k from the bottom line (unless of course the three of them are tripling up at the Motel 6 and eating the free food at the conferences). And that is before anyone, other than HAL2000 back in the office, administers a single claim.

By my math, they would need more than 700 cases per year simply to breakeven. Looking back at the last year, I doubt the entire professional administration market was more than 500 cases split between six or seven competitors.

Second, new competitors, such as the MSPCF, are offering their services for free or at least at equal cost to Ametros, further eroding their possible market share.

Third, they boisterously claim that they are not taking rebates from DME/PBM provider Progressive Medical (which of course is both unethical and illegal) nor are they pooling the funds for investment purposes (which is expensive from a SEC regulatory standpoint). With only $450 per year to administer claims over lifespans that can be 30 years or more, I just don’t see how the business model works.

Abrupt CEO changes usually mean things are not going as planned, despite the ringing endorsement of the change by current leader Sandra O’Sullivan in the press release.

I think this is going to end up being a failed endeavor which leaves the claimants and the payers stuck looking for another solution - especially if the administration was ordered by the court. But only if I am right.

And if I am wrong? Clarion Capital makes another bundle of money in the workers’ compensation industry and Ken Paradis goes down as the greatest Chairman of the Board in modern MSP compliance history.

MSPRC announcement regarding "Self-Calculated Final Conditional Payment Amount" Option

Medicare Set Aside Services — Fri, 16 Dec 2011 18:47:30 GMT

Beginning in February 2012, for settlements of $25,000 or less involving physical trauma based injuries where treatment has been completed, the beneficiary or their representative may be able to obtain a final conditional payment amount prior to settlement. The beneficiary/representative may calculate the final conditional payment amount utilizing information obtained from the MSPRC, the MyMedicare website or other claims information to calculate a proposed final conditional payment amount. The proposed conditional payment amount is then submitted to the MSPRC who will review the amount and if determined to be accurate, will provide the beneficiary/representative with a final conditional payment amount within 60 days. The case must then settle within 60 days of Medicare’s response.

The following criteria must be met in order to elect this option:

The liability insurance (including self-insurance) settlement is for a physical trauma based injury. (This means that it does not relate to ingestion, exposure, or medical implant), and
The total liability settlement, judgment, award, or other payment is $25,000 or less, and
The date of incident occurred at least six months before the beneficiary/representative submitted the proposed conditional payment amount to the MSRPC.
The beneficiary demonstrates that treatment has been completed and no further treatment is expected through a written physician attestation or by certifying in writing that no medical treatment related to the case has occurred for at least ninety days prior to submission of the proposed conditional payment amount to the MSPRC.

The complete explanation, with instructions on how and when to elect this option, are expected to be posted on the website by January 15, 2012.

Of note, the announcement indicates that this is an initial step in providing Medicare’s final conditional payment amount prior to settlement and CMS plans to expand this option as it gains experience with the process.

Medicare spends $250MM on....

Medicare Set Aside Services — Wed, 07 Dec 2011 21:38:53 GMT

Who knew? See article here

WARNING: Not suitable for people who get upset at government waste or children under the age of 12.

FDA Approves Generic Equivalents of Kadian®

Medicare Set Aside Services — Wed, 07 Dec 2011 14:38:41 GMT

In November 2011, the FDA approved generic equivalents of the brand name product Kadian®, which is an extended-release morphine product manufactured by Actavis Elizabeth LLC. While the commercial introduction of a new generic formulation is perhaps always noteworthy, the approval of a therapeutic equivalent to Kadian® is particularly noteworthy because it is one of the most costly long-acting narcotic products on the market. A schedule II controlled substance indicated for moderate to severe pain when a continuous, around-the-clock opioid analgesic is needed for an extended period of time, Kadian® is available in a wide range of capsule strengths ranging from 10mg to 200mg. The AWPs for Kadian® range from $5.26 to $42.24 per capsule. To highlight the potential cost savings associated with a conversion to the generic equivalent for Kadian®, consider the following scenario for a workers’ compensation claimant prescribed Kadian ® 300mg per day with a life expectancy of 30 years.

Scenario #1: Brand Name Kadian® 300mg per day

100mg capsule (manufactured by Actavis, NDC 46987-0324-11) with AWP of $21.1193 per capsule

Annual cost of regimen = $22,808.84

Cost of regimen over claimant’s life expectancy = $684,265.20

Scenario #2: Conversion to Generic Morphine Sulfate Extended-Release 300mg per day

100mg capsule (manufactured by Watson Pharma, NDC 00591-3453-01) with AWP of $18.2471 per capsule

Annual cost of regimen = $19,706.87

Cost of regimen over claimant’s life expectancy = $591,206.10

Cost Savings due to conversion = $93,059.10

In addition to the scenario depicted above, there two additional points to keep in mind. First, long-acting opioid therapy is generally lifelong in nature and patients generally develop tolerance to the analgesic effects of opioids. Very often, this translates into a potentially endless series of dose increases for drugs like Kadian®. Therefore, the potential cost savings for any workers’ compensation claimant is much greater than the cost savings associated with the scenario above, when taking the potential for future dose increases into consideration. Secondly, at the present time there are only two manufacturers of generic versions of Kadian®. As more generic manufacturers enter the market, competition will force AWPs downward. It is difficult to quantify the potential impact of future price decreases for these products, but it is almost certainly greater than the example above.

Conrad Murray Might not be in Jail if He Only Treated Workers' Compensation Patients

Medicare Set Aside Services — Tue, 06 Dec 2011 20:16:13 GMT

I was just reading that a Pennsylvania court recently upheld a workers' compensation appeals board decision that an injured workers' opiod overdose was a compensible death claim. I get that maybe but for the work related back injury, claimant would not have been receiving the pain mediation that ultimately killed him, and that perhaps drug addiction is a disease and again but for the work comp incident he wouldn't have been put in that position of unintentionally kill himself, but at what point are the treating physicians going to be held responsible for their actions? One doctor was prescribing fentanyl, oxycodone, Fentora (and not dying of cancer), Lyrica (doubtfully suffering from fibromyalgia or shingles), docusate (a given with all those narcotics) and Sonata (not sure how it is even possible that he was having trouble falling asleep, staying awake maybe), and then apparently that doctor's sister was prescribing some identical prescriptions. I can see where a claimant goes to a different state or across town to get multiple prescriptions and the respective docs don't have a clue, but treating with brother and sister, both of whom were prescribing drugs that were found in a utilization review to be neither reasonable nor necessary??? With the thousands of medical records that MEDVAL sees day in and day out, this is sadly a very common trend and and even sadder commentary on medical treatment in the United States, which by the way consumes like 80% of the world supply of all opiods produced. Rather than hold the physician's accountable, it seems unreasonable to force insurance companies to carry the burden, especially in states where they are provided with no control over who the claimants treat with. Yet this is another part of the problem that CMS refuses to see in WCMSA proposals. It is neither reasonable nor necessary to fund these drugs for a lifetime, as had we submitted this prior to claimant's death I am certain CMS would have required funding of all of them despite the utilization review, because as you can see here, that level of use will eventually kill a person. Perhaps we should be arguing for a higher diminished life expectancy???

Court opinion can be read in its entirety here.

Changes to Maryland Workers’ Compensation Regulations Finalized

Medicare Set Aside Services — Wed, 30 Nov 2011 16:56:57 GMT

You may recall a September 2011 blog article that discussed proposed amendments to COMAR 14.09.01 and COMAR 14.09.19 adding specific requirements for workers’ compensation settlements involving Medicare beneficiaries. These amendments were finalized November 28, 2011 and officially adopted into Maryland Workers’ compensation law. The most noteworthy aspect of the new regulations is that the parties are permitted to forego CMS approval of a proposed settlement that meets CMS review thresholds provided that the settlement documents contain three elements: (1) an acknowledgement that the settlement is within the CMS review thresholds, (2) a statement that the parties voluntarily have elected not to submit the settlement and formal set-aside proposal to CMS for review and approval and (3) a statement that the parties are aware that CMS may refuse to pay for services related to the injury and may assert a recovery claim against any entity, including a claimant, provider, supplier, physician, attorney or private insurer. The previous version attempted to use state law as a means to mandate participation in CMS’ voluntary WCMSA review program, a move that was opposed by both claimant and defense attorneys equally.

While it is unclear whether the commissioners will still find CMS approval in the best interest of claimants and ultimately not approve cases invoking the 14.09.01.19(B)(5) exception, the difference from the previous emergency regs is that at least there exists the option. It will likely take not only the required statements, but a demonstration that the claimant will receive needed treatment post-settlement to get cases approved without CMS approval. However, in conjunction with recent discussions involving SIF assessments, professional administration of MSAs may soon become more common in the state and provide the commission more confidence in non-approved cases. When using other available tools, such as structured settlements and custodial administration, Medicare’s interests are actually better protected in general because the claimant’s discretionary access to MSA funds can be eliminated and therefore they can only be used to make payments in lieu of Medicare.

Despite the bumpy road getting here, the State of Maryland has achieved a reasonable policy for dealing with MSP issues in comp settlements. With the recent adoption of a pharmacy fee schedule likely to reduce some of the physician dispensing problems that lead to enormous future drug allocations, MSAs in the state may prove to be much less burdensome in 2012.

New regs can be found here.

WCMSA Web Portal Registration Now Available

Medicare Set Aside Services — Wed, 30 Nov 2011 14:54:17 GMT

At long last, WCMSA can be submitted to CMS electronically through the newly developed web portal, finally opened to the public on November 29, 2011. Anyone may register to access the service: attorneys, Medicare beneficiaries, claimants, insurance carriers and WCMSA vendors alike. The portal can be used to enter case information directly or track submitted cases without the need to contact the COBC or CMS. To get started, one must first register in a process very similar to Section 111 reporting. All contact information will be submitted in the first step, following which an account ID and PIN will be assigned. Once received, the registrant will use that ID and PIN to complete the account setup. The user manual is located under Reference Materials in the menu bar on the login page. CMS recommends that you read the entire manual before attempting to make a submission via the portal.

Of special note, CMS announced in the town hall call that there would be a two strike policy for attempting to submit cases that do not meet the threshold for review.* CMS blames much of the 8,000+ backlog that currently exists to the wasted resources involved in identifying submitted cases that they will not ultimately review. If you fail to verify eligibility for Medicare or the reasonable anticipation thereof prior to submission and those cases are determined to be non-threshold more than once, you will be blocked from access to the web-portal indefinitely.

The claimant is currently a Medicare beneficiary and the total settlement amount is greater than $25,000; OR
The claimant has a “reasonable expectation” of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.

Hadden v. US – Will the Supreme Court Take Cert?

Medicare Set Aside Services — Wed, 23 Nov 2011 16:28:01 GMT

So at long last, the 6th Circuit Court of Appeals finally rendered a decision in the appeal of Hadden v. US on November 21, 2011, only 404 days after oral arguments were presented, and big surprise, followed the status quo and ruled in favor of Medicare. The only real question is why did that take so long? In the five page opinion, the court says little more than strict interpretation of the MSP gives Medicare a fairly opened ended, unquestioned right to recovery without the burden of equity considerations, that this is the way that it has always been dating back to Zinman v. Shalala in 1995 (and since when is the 9th Circus so persuasive?) and that is not going to change today. The most fascinating fact is that there is not one reference to Bradley v. Sebelius found in the entire opinion. It is almost like it took the court a year to decide that they were not going to touch the idea of apportionment but only why it didn't need to be considered, and the other 45 days to figure out how to write an opinion that avoided all of the land mines.

In all of its deliberate attempts to skirt the issue, I think the court erred in trying to create a basis for its decision on the distinction between liability and responsibility. The MSP states:

A primary plan, and an entity that receives payment from a primary
plan, shall reimburse the appropriate Trust Fund for any payment made by
the Secretary under this subchapter with respect to an item or service if it is
demonstrated that such primary plan has or had a responsibility to make
payment with respect to such item or service. . . .

One can assume responsibility or be made responsible by order of a court, however anything short of that does not equate to "responsibility" in the truest sense of the word. An insurance settlement represents a financial transaction in which the injured party essentially sells the right to bring legal claims against the accused tortfeasor. The injured party receives compensation in exchange for a release from liability in an amount commiserate with the likelihood of prevailing at trial, and each right released carries a monetary value. Given that Kentucky is a pure comparative negligence state and Pennyrile only minimally at fault given that all its driver did was swerve to avoid a more significant catastrophe, Mr. Hadden received a fair settlement. Medicare should be satisfied taking only the portion of that compensation representative of medical expenses, otherwise use its much underutilized subrogation right and seek the remaining outstanding balance from Pennyrile itself. That is the greatest inequity at play here – the government's desire to have its cake and eat it too. Rather than assert its own claims against what it deems "responsible" primary payers, where it would actually have to prove its claims to reimbursement, the government elects to wait until others have exhausted time and resources obtaining compensation and then just swoop in like a vulture and take what it wants regardless of the underlying issues.

The court again tries to rely too heavily upon the wording of the MSP and cites the definition of responsibility that it is using as: "under § 1395y(b)(2)(B)(ii) as amended, if a beneficiary makes a 'claim against [a] primary plan[,]' and later receives a 'payment' from the plan in return for a 'release' as to that claim, then the plan is deemed 'responsib[le]' for payment of the 'items or services included in' the claim." Fine, pursuant to the MSP Pennyrile is responsible for purposes of this statute, but the statute does not expressly say responsible for payment in full, evidenced by Medicare's routine practice of being satisfied by less than full reimbursement. The court goes on to conclude that thought with "and thus a beneficiary cannot tell a third party that it is responsible for all of his medical expenses, on the one hand, and later tell Medicare that the same party was responsible for only 10% of them, on the other." And here is the fatal flaw in that logic: Mr. Hadden did not make a claim for only $165K – if I had to guess, it was probably more like a claim for $2 million. Since when do the damages alleged in a complaint equate to the reality of the value of the liability? And why would a court, well aware of that practice, try to spin that concept to make a point? Regardless of what items or services were "included in the claim," the fact of the matter is that Pennyrile only paid for 10% of them because that is all it felt under Kentucky tort law it might be "responsible" for. The court goes on to criticize Mr. Hadded for demanding that Pennyrile compensate him for all of his medical expenses, stating that "[t]hat choice has consequences." Seriously, pleading the kitchen sink is punishable under the MSP? I must have missed that day in law school.

Then finally when it gets around to public policy, the court discussed not the concept of driving all cases to judgment to definitively determine Medicare's share of any insurance claim, but it instead looked at inequality of treating Medicare and Medicaid beneficiaries differently. They are comparing apples to oranges. Medicaid, much like Medicare Advantage, possesses only a subrogation right and not the priority right of recovery Medicare has in addition to its subrogation right. The point I assume was to show that the Medicaid statute provides that a state can seek reimbursement to the extent the settlement payor has a legal liability, as opposed to the MSP's alleged careful use of responsibility in lieu of liability. I've carefully scoured the Congressional Record, and such a deliberate choice of words is not evident in any MSP amendment. Ok, so the trigger for MSP responsibility is the insurance payment, but as I pointed out above, the statute does not say payment in full. Medicare routinely accepts less than its total overpayment, so why is Mr. Hadden being punished for receiving an amount sufficient to reimburse Medicare in full? Guess that is a question for the Supreme Court to sort out. Let us hope they see their way clear to providing us some much needed clarity.

VERNON HADDEN, Plaintiff-Appellant, v. UNITED STATES OF AMERICA, Defendant-Appellee.
No. 09-6072
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
11a0293p.06; 2011 U.S. App. LEXIS 23289; 2011 FED App. 0293P (6th Cir.)
October 13, 2010, Argued
November 21, 2011, Decided

Brown v. US Steel: A Story of Retirement Benefits and MSP Triggers

Medicare Set Aside Services — Mon, 21 Nov 2011 19:56:29 GMT

Understanding the order of priority in determining who pays first when Medicare is involved can be extremely complex. As I reported earlier this year, where you are in the payer line up may very well be your defense to MSP claims brought against you as it cannot always just be assumed that everyone has to pay before Medicare even though that is what CMS likes us to believe. Just as with any other type of insurance, there will very frequently be overlapping coverage when Medicare beneficiaries are involved. Picture a 65 year old man, retired military and retired state police, married to a 60 year old woman currently employed by a company with more than 100 employees who was injured in a motor vehicle accident while volunteering as a driver for his local church receiving $50 per week for expenses. In order of description, you may have Medicare, Tricare, the state retirement health plan, a large group health plan's spouse coverage, a third party auto/GL policy, and potentially workers' compensation and/or another group health plan depending upon the size of the church because the MSP considers volunteers who receive remuneration to have current employment status for purposes of its application. It is safe to assume that Medicare should never have to pay in this example, however the exercise is not always easy.

As a general proposition, when you have served your time with an employer and become entitled to retirement benefits, it will likely provide for a lifetime medical benefit of some kind. Because you have also served your time and fully paid into the Medicare system, the retirement health plan does not replace Medicare but usually supplements it by paying for the things that Medicare doesn't. Perfectly acceptable practice as you don't need the overlapping coverage and again, have fully paid for your entitlement to Medicare. If you happen to continue working after entitlement sets in or have benefits through another source, you can elect to pick one over the other, however no employer can force you off of a large group health plan because you become eligible for Medicare. But apparently you can force an employee into retirement to get them off of comp, and then allege that they are not an active employees to keep from having an MSP claim brought against them. At least that appears to be what the most recent MSP case infers.

William Brown worked for US Steel from 1968 til he was injured in a work-related motor vehicle accident in 1981. US Steel provided work comp benefits through its self insured program pursuant to Pennsylvania law through 1986 when Brown applied for permanent incapacity retirement benefits from the Pension Fund. There was no mention as to the status of his work comp claim in the case reported. Brown applied for SSDI, received a retroactive award back to 1984 and was notified by Social Security in 1989 that he was entitled to Medicare as of July 1, 1984, for which the US Steel benefits office advised him to apply. After some difficulty, Brown was eventually enrolled and between 1992 and 2004, Medicare paid out over $750,000 in medical benefits on his behalf. In September 2005, SSA notified Brown that he improperly applied for Medicare Part B, refunded his premiums back to 1992 and stated that the MSPCR was investigating the outstanding conditional payments.

In June 2010, Brown filed a private cause of action under 42 USC 1395y(b)(3) for recovery of said conditional payments that he alleged should have been paid by US Steel. US Steel moved to dismiss, which the district court ordered be treated as a motion for summary judgment and then granted it. The district court basically determined that Brown lacked standing to bring the MSP claim because he was not an active employee. Among other procedural issues under appeal, the 3rd Circuit Court of Appeals found no reversible error on the part of the district court, inclusive of the idea that "Brown could not prevail on his MSP claim because he is a retiree, not an active employee, and MSP only applies to active employees." Boy do I love cases that come out of Pennsylvania…

Despite the lack of details important to a better understanding of what really transpired with the underlying WC claim, it can be assumed that MSPRC is looking to exclude benefits on the basis of that rather than the group health plan status. If purely an issue of Brown being a retiree, the outcome is likely fine. As I stated above, in a pure retirement situation, Medicare is generally primary. Sadly, the bigger issue in this case is the intentional shifting of the burden of Brown's work-related care to Medicare by retiring him and forcing him to apply for Medicare, complete with help from the benefits office, to the tune of three quarters of a million dollars in medical benefits paid out over 12 years. Medicare is statutorily barred from making payments because US Steel is the primary payer and even if an allocation was made to future medical if the WC claim was even properly closed in conjunction with the retirement, the limiting language of 42 CFR 411.46 that would exclude benefits only to the extent of that allocation if made did not go into effect until 3 years after the retirement so I question if would even apply. Why Brown would not be entitled to Medicare is questionable since he was clearly deemed disabled within the statutory definition; chances are that that was most likely a misapplication of the secondary payer exclusion by MSPRC (typical that they would be so quick to refund premium before they really sorted out the problem).

So to conclude, Brown very likely does have standing to bring a private cause of action for exclusions arising due to his work injury so it will be interesting to see how this case plays out. If the facts of the underlying WC claim play out to his advantage, I can see a motion of reconsideration on the basis of the employment status not being the controlling fact for standing here. Unfortunately, the statute of limitations argument (whichever one that may be) should make a showing as well as these overpayments are a little long in the tooth. Alternatively, if MSPCR is truly investigating the matter, I can see the DOJ unearthing a gold mine if they can prove this was a predatory practice of US Steel. Pursuant to the False Claims Act, US Steel caused significant overpayments to be made by Medicare and would be subject not just to repayment, but to civil penalties as well. Guess we shall wait and see.

WILLIAM E. BROWN, Appellant v. UNITED STATES STEEL CORPORATION;
UNITED STATES STEEL AND CARNEGIE PENSION FUND
No. 10-4475
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
2011 U.S. App. LEXIS 23026
October 25, 2011, Submitted Pursuant to Third Circuit LAR 34.1(a)
November 17, 2011, Filed

WCMSA Portal Introductory Town Hall Call Scheduled for 11/29/11

Medicare Set Aside Services — Mon, 21 Nov 2011 17:58:00 GMT

CMS has completed its pilot testing of the Workers' Compensation Medicare Set-aside Portal (WCMSAP) and will be opening it up to public use soon. A Town Hall conference call will be held on November 29, 2011 from 1:00 to 3:00 pm (EST), to introduce this initiative to submitters and to answer questions regarding the WCMSAP. After the call, CMS will post the links of the WCMSAP application, and the WCMSAP Computer Base Training (CBT) Modules, on the Workers' Compensation Medicare Set-aside Portal (WCMSAP) section page "Related Links Outside CMS."

Call In Line: 1-(800) 603-1774
Conference ID: 29840615 [Participants must use the Conference ID number to be allowed into the call]

http://www.cms.gov/WorkersCompAgencyServices/01_overview.asp

Workers’ Compensation Medicare Set-Aside Portal (WCMSAP) Initiative Moving Forward To Open Production Phase

Medicare Set Aside Services — Wed, 16 Nov 2011 20:24:53 GMT

During the weekly meeting of the Workers’ Compensation Medicare Set-Aside Portal (WCMSAP) “pilot testers”, it was announced that the WCMSAP initiative will be moving forward to open production phase very shortly.

The WCMSAP is a web based application that allows submitters to directly enter case information, upload medical records and other necessary documentation, and check on the status and progress of a case. CMS has indicated that they anticipate this initiative will significantly improve the submission and review process for WCMSAs. Once open production phase officially begins, CMS will post registration instructions on its website allowing all submitters to register and begin to utilize the WCMSAP.