The Official Medicare Set Aside Blog And Information Resource

Factual Existence of a Primary Plan Required

Medicare Set Aside Services — Thu, 24 May 2012 12:30:00 GMT

All too often CMS makes a decision that an entity is a primary plan under the MSP and makes demand for full reimbursement without any consideration of the underlying facts of the claim. And too often, courts support that primary right to one hundred percent recover from dollar one because the MSP is ambiguously written the way it is. Therefore it is refreshing to see a court make a thoughtful determination. This week Judge Sarah Vance of the US District Court for the Eastern District of Louisiana denied a motion for partial summary judgment by the United States regarding the amount of money damages it believed it was entitled from a medical malpractice settlement.

In 2000, plaintiff's mother died of cardiac arrest allegedly due to negligent treatment while a patient at the defendant medical center. Ten years later, the parties enter into a settlement agreement for $15,000. Unfortunately CMS asserted a claim to $10,757.44 of it in addition to claims by BCMC, Hematology and Oncology, LLC, and the Louisiana Patient's Compensation Fund. Defendant filed a concursus proceeding in state court to adjudicate the competing claims which CMS removed to federal court and then moved for summary judgment.

In support of Medicare's recovery rights, CMS submitted a declaration by Sally Stalcup of the Dallas regional office asserting that the mother was a Medicare beneficiary at the time in question and that Medicare made $10,757.44 in related conditional payments for Part A medical services which she asserted were "the responsibility of liability insurance, including self-insurance, as a primary plan under the Medicare Secondary Payer provisions." CMS asserts that the medical center's settlement payment satisfies the requirement of a self-insured plan but plaintiffs opposed the motion as premature.

The Court found that CMS failed to establish that the $15,000 settlement satisfied the definition of a primary plan. Citing Thompson, the Court recognized that settling does not automatically apply the MSP to alleged tortfeasors and CMS failed to establish the factual existence of a primary plan here. Given that CMS had the burden of proof on the motion, the Court found it must be denied at this time.

Now sadly the MSP does convey a priority right of recovery to CMS and any application of it in its current form, supported by all the similar case law, will likely still get CMS paid first and in full. What made this case refreshing was that Judge Vance is making the federal government work for it. Marching about making absolute demands with no evidence of such a right and having it unquestionably supported by the courts is probably more costly and frustrating than the time it takes them to respond to CPL requests, but again that is not something that is being fixed by any pending MSP legislation.

KRISTEN B. SORRELL, ET AL. versus LAKEVIEW REGIONAL MEDICAL CENTER, ET AL.
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF LOUISIANA
2012 U.S. Dist. LEXIS 70519
May 21, 2012, Decided

H.R. 5730 - Legislation that Might Actually Help Prepare More Consistent MSAs

Medicare Set Aside Services — Wed, 23 May 2012 18:22:19 GMT

As I continue to take heat for my criticisms of the Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2012, I did mange to find some Medicare legislation that I do think would be helpful in actually preparing MSAs. H.R. 5284 really doesn't address the biggest problems in MSAs and that is how the allocation amounts are calculated and CMS' inconsistent appellation of whatever policies are truly in play. The CMS approval process is primarily subjective and we can't solve that with an appeal to the same agency granted automatic deference that its opinions are the correct application of the MSP. But due to lack of regulation, an MSA may also vary by preparer when there should only truly be one outcome. Because CMS refuses to disclose the unredacted operating guidelines given to WCRC for how it is to evaluate a submission, WCMSAs in general will continue to suffer by some variable in favor of CMS as those that go the other way will be countered higher.

One high dollar variable is the surgical calculation. Although CMS requires a surgical worksheet be submitted along with WCMSA proposals, its contractor continues in its independent review to use fixed numbers for certain surgeries no matter what jurisdiction the claims lies. Many who have caught on to that practice play CMS' game and regularly submit proposals for approval using those generic numbers with the knowledge that CMS agrees to pick up anything in excess of its approved amount. But not everyone gets the benefit of the government's short comings. Cases that are under threshold or intentionally elect to forego CMS approval need to justify their allocations for surgeries and reasonably be able to believe that a claimant could secure surgery at that price. Hence why I think H.R. 5730 will help level the playing field a little.

Medicare Payment Rate Disclosure Act of 2012 will amend title XVIII of the Social Security Act to make publicly available on the official Medicare Internet site medicare payment rates for frequently reimbursed hospital inpatient procedures, hospital outpatient procedures, and physicians’ services. Medicare reimbursement rates for at least the 100 most frequently paid hospital inpatient and outpatient procedures and physician services will be publicly available and accessible by zip code. If we all have access to the same pricing that is actually representative of Medicare's exposure for those services, insures will fund more realistic figures and claimants may receive a little more equal treatment.Of course how likely is it that CMS would actually let us use those published rates???

Click here for the text of the legislation.

Evidence that the Threshold for Establishing a WC Back Injury Might be Little Low

Medicare Set Aside Services — Wed, 23 May 2012 13:47:04 GMT

I've been accused of being a cynic more often than I can count, but with claimant fraud like this, I don't see how I can be blamed.

Postal employee on workers’ comp caught running Boston Marathon

[before you leave that page, be sure to click on the link below about the guy who wants a break on child support for the 30 kids he's fathered in the last 15 years with 11 women]

Responsibility for Opioid Problem Still not Being Placed on Physicians

Medicare Set Aside Services — Fri, 18 May 2012 15:34:44 GMT

I was reading in workcompcentral this morning that Congress is investigating big pharma and medical groups for improperly convincing physicians to prescribe more opioids. You know, that's big business and, while unscrupulous, not a surprising practice. They're in it to make money, and apparently, they expect people to take personal responsibility for misusing their products. But isn't the fundamental issue that physicians still wrote the scripts? Prescribing high doses of narcotics does not solve anything, yet they do so very freely. Even if their trade organization tells them it is ok, they should know better just from all their medical training and witnessing what it does to their patients. The underlying source of pain is still there and, if it can't be fixed, then learning to cope with pain would certainly be far more productive than masking it and causing all of the subsequent problems such as sleeplessness, hypersomnia, constipation, depression, tooth decay, addiction and occasionally overdose. We need to control the writing of the scripts, not the marketing of the drugs because sanctioning big pharma for its marketing indiscretions doesn't solve anything. In 2008, Cephalon was fined $425 million for promoting the off-label use of Actiq for generalized pain, yet four years later I am still finding it in MSAs at the now off patent price of about $40 per lollipop and average use of three per day. Actiq is FDA approved to treat end-stage cancer pain, yet when my aunt was dying of cancer, not only did she not get Actiq but she had trouble getting her doctor to increase her Oxycontin prescription from 5mg to 10mg. If only she had been on comp…

Senators Grassley and Baucus are known champions of the Medicare program and through their efforts have unveiled millions of dollars worth of Medicare fraud. From a home health fraud to discovering a physician who performed nearly 600 unnecessary cardiac stent procedures, their efforts have improved public safety and the fiscal integrity of Medicare. But the focus here seems misplaced. No matter who told them to do perform the surgeries or prescribe the drugs, the physicians remain at the crux of this epidemic. Much like the pain itself, let's try to fix the source and the rest just might work itself out.

Click here for more information on the Senate Finance Committee investigation.

　

Dissatisfied CMS customer

Medicare Set Aside Services — Thu, 17 May 2012 14:24:20 GMT

Although the "Ask" in "Ask Jen" implies that a question of a non-rhetorical nature should normally be posed, this statement of fact deserves unedited publication for its cogent analysis and literary flourish.

My Life Plan was formulated by Messrs. Gould and Lamb in September, 2011, and submitted to CMS for MSA review. On November 21, 2011, I received from CMS their acknowledgement of the Case along with a request to wait 45-days before contact. So now I am in my sixth month and was told today that it is quite probable that my Case has not yet even been "looked at." Why? "We have a backlog…we are just looking at cases we received in September 2011." There are several words I could use to describe this disgraceful situation, each day I see Medicare litigating cases to retrieve money from those who have used Medicare to get treatment. Proposed Bills that protect Medicare and not its’ recipients. Enormous amounts of money and resources are being used that should go towards staffing The Centers for Medicare and Medicaid Services Regional Office (aka The Circumlocution Office), an establishment that appears to have no accountability to anyone they serve. Today, all the "supervisors" were "in a meeting." I have not spoken with one person with any intellect who can (or will) describe the "Review" process in the many months I have been status calling.

In the meantime who suffers? Not the insurance company who refuse to settle without MSA CMS approval; certainly not the corporation whose premises were so unsafe that they ended my [long and prosperous] career 12 years ago; NO, not at all, it is I who suffer because CMS cannot do a simple job of reviewing a document with attachments. I am a Medicare beneficiary, but it wouldn’t take a genius to see that I have never used Medicare, so add up the numbers provided and process the MSA. This is a blatant, incompetent bureaucracy and with a "NINE MONTH" backlog, they ought to be ashamed of themselves.

And so the money-spinning top whirs and whirs around: Life Plans, Work Comp Judges, Applicant and Defense attorneys, CMS, MSA Administrators, etc., etc., and who is at the bottom being spun into the ground? The Injured Worker, who plays dumb-bunny through the entire process as weakness and chronic pain take over and one day they get a call or a bold-headed CMS communication and as they slowly lift up their head, they alone hear: Oh, is it my turn now?

Who cares?

Comment: Admit it. You had to look up the word "circumlocution" too.

Ryan

At What Point Does a Preauthorized Medicare Covered Surgery Stop Being Medicare's Payment Responsibility? - Salveson v. Sebelius

Medicare Set Aside Services — Mon, 14 May 2012 17:16:47 GMT

I think too frequently our problems with Medicare are brought on by our own irrational acts. Recall that the 2003 Medicare Act amends were innacted in the first place to provide Medicare recovery rights without any admission of liability because for decades parties would allocate damages to everything but medicals to avoid a repayment obligation. But following the power shift, it is now Medicare acting irrationally believing itself entitled to 100% reimbursement from dollar $1 regardless of any relevant circumstances. Sadly the law in its current form supports that right and we are at the mercy of the Secretary of Health and Human Services to accept anything less. Accordingly the only shot we have at such a waiver is to articulate reasonable requests supported by valid legal arguments and anything less than that will cause CMS to stand its ground and all hope will be lost.

Take for example a case recently reported out of South Dakota in which Medicare is seeking $110,864 reimbursement out of a $621,000 med mal settlement. On December 20, 2004, plaintiff underwent hernia repair during which her bowel was nicked, resulting in fecal material leaking into her abdominal cavity and eventually causing infection and sepsis. A re-anastomosis was performed 10 days later following which the condition worsened and extensive further care and convalescence followed resulting in total Medicare expenses of $194,543.63. CMS adjusted for procurement costs and to remove some unrelated services, but plaintiff felt Medicare was not entitled to recover at all and submitted a written request to Medicare requesting a complete waiver.

MSPRC denied indicating that plaintiff provided no new information or documentation upon which to grant her requested waiver of disputed charges and restated that all charges were related to the December 20, 2004 accident. It also advised her of her appeal rights and provided a form to request waiver for financial hardship which she did not apply because by her own admission she didn't believe she would have qualified for. She instead filed a Request for Reconsideration which was denied and appealed to an ALJ who affirmed all previous decisions. Plaintiff appealed to the Medicare Appeals Council which affirmed the ALJ, resulting in the action at hand seeking judicial review of the Secretary's final decision.

The ALJ noted that plaintiff's request for a waiver of reimbursement was based on her assertion that "there is not sufficient basis for Medicare to assert a claim against [her] settlement proceeds for all its conditional payments during the dates of services from January 4, 2005 through January 26, 2007." In later pleadings she argued that at the very least, "none of the medical charges incurred between her first surgery on December 20, 2004 and her second surgery on December 30, 2004 should be recoverable by Medicare, because (she claims) the record contains 'not a scintilla of competent expert medical testimony' that any malpractice occurred before the second surgery. Is she implying that the infection and sepsis would have occurred without the fecal material leaking into her abdomen? Did I mention the 6 figure settlement which obviously includes medical damages? The best plaintiff could have hoped for was that Medicare own up to the cost of the hernia repair it preauthorized and discounted by that. Medicare is plaintiff's primary form of insurance and an entitlement earned upon a lifetime of payroll contributions after all . But instead plaintiff made an irrational request and put CMS on the defensive and got nothing.

Then to make matters worse, the court places the emphasis of its analysis on the financial hardship aspect, which plaintiff by her own admission did not believe existed. But because she did not incur any, nor did she file the proper form to evaluate it, the court found that the ALJ denying her request on that basis was proper. The court then brought Hadden into the discussion, citing it as persuasive given them factually similar in that they were both settlements of a tort claim with disagreement over Medicare's right to full reimbursement. But Haddden's reduction was requested due to defendant's liability/responsibility in a comparative negligence state and not similar at all to the case at hand. The only reason that Medicare should not have received full reimbursement in this case was because it was "responsible" for the original surgery and hospital stay as plaintiff's primary insurer. But because this case was not plead rationally or reasonably, we have yet another bad piece of case law to add to the ever growing heap. The court never had an opportunity to analyze whether Medicare should have paid for the hernia surgery because it was never brought up outside the context of plaintiff adjuring that all care through the second surgery was its responsibility.

We reap what we sow, but enough is enough. There is a balance that desperately needs to be achieved between parties to an insurance claim and Medicare and it is one that is not going to be gained through the SMART Act or any other pending MSP legislation in Congress today. When fighting your battles with Medicare, first accept the fact that the MSP in its current form does appear to provide Medicare to a priority right of 100% recovery from any insurance payment and plead your case from there. There are very real reasons why Medicare should not recover what it attempts to in many cases but unless you present well articulated and supported legal arguments all along the way, there is very little a court can do in a judicial review of the underlying determination. It is my hope that the reason we only ever see the bad cases reported is because all the good ones were resolved during the administrative appeal process.

BETTY J. SALVESON, Plaintiff, -vs- KATHLEEN SEBELIUS, Defendant.
CIV. 104045
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH DAKOTA
2012 U.S. Dist. LEXIS 66293
May 11, 2012

LMSAs and a Meeting of the Minds – Bruton v. Carnival

Medicare Set Aside Services — Wed, 09 May 2012 20:40:57 GMT

An MSA is not mandated by any law or regulation. The only obligation created by the MSP is that Medicare not make payments in secondary payer situations unless it does so conditionally and seeks reimbursement. There are no duties placed upon any entity outside the federal government in the MSP statute itself. Because parties to an insurance settlement are susceptible to MSP recovery actions related to an insurance settlement, we create MSAs to provide funding for future treatment to prevent Medicare from making those payments conditionally and later seeking reimbursement. This is a risk management activity, not one of MSP compliance. So when settling your claims where Medicare has an identified future interest, what you do to hedge against that exposure to future Medicare recovery actions are contractual terms of your agreement alone and not directly supported by any express statutory or regulatory MSP provisions. So terms like "inclusive of all Medicare provisions" to "will meet all MSP regulations" will ultimately not survive when challenged in court unless the actually details of what was agreed upon are evident to a judge.

Let's take a recent case in point where an LMSA was contemplated but not exactly agreed upon. A slip and fall injury on a cruise ship was settled at mediation and the mediation settlement agreement required that plaintiff execute a "general release with approved confidentiality provisions and Medicare provisions." Defendant drafted an agreement requiring the creation of a Medicare set-aside trust account and delivered it to Plaintiff. Plaintiff took that paragraph out and amended it to state that she has reached MMI and that no part of the settlement was intended for future medical expenses yet she would take express measures to ensure that conditional payments were resolved. Plaintiff executed the release and sent it back to Defendant who refused to tender payment due to the deletion of the LMSA provision. Plaintiff filed a motion to compel settlement arguing that the settlement agreement that she executed contained "sufficient … and reasonably acceptable Medicare language." Because the agreement did not require an LMSA nor is one required by law, the court found that the mediation agreement governed and enforced the mediation agreement.

Of course you know I have issues with this decision (don't I always?). I think it is simply wrong because it is inconsistent with ALL similar case law to date given that there is no meeting of the minds. Defense included LMSA language and Plaintiff took it out – there is no agreement on the issue. The mediation agreement called for "approved" Medicare provisions and one party deleting the other's Medicare provisions is not approval. Therefore the court should have determined that it was unable to enforce the agreement. Instead it enforced the agreement and forced the defendant to accept the Medicare provisions as written by Plaintiff. This exposed the defendant to the possibility of future Medicare reimbursement actions that the defendant would have otherwise protected itself from in the settlement. If settlement value was derived by including future Medicare covered medicals which we can be certain were part of the demand, then Plaintiff just received a windfall because it can be assumed that she will not be using it for future medical treatment. The new provision says that she is at MMI which only means that she will not improve any further, not necessarily that she does not require any further treatment. Will she need treatment and be excluded by Medicare anyway and not have the funds set-aside and available to make payment? The right thing for the court to do would have been to send the parties back to start because clearly they were not in agreement.

LMSAs are not mandated by law, but neither are WCMSAs.The fundamental issue in all types of insurance settlements is that Medicare may be excluded from payment so what are you going to do to make sure that the plaintiff receives treatment and/or that the defendant isn't being pursued for additional reimbursements. A contractual component of the settlement agreement should not disregard by a court because it is not expressly called for by law, particularly a law that infers its existence. But it is really up to the parties to execute a well drafted settlement agreement. Memorialize what you did in the interest of MSP compliance so that if and when the time comes to defend or support those acts, the evidence is in black and white. Treat the "Medicare provisions" as an annoying afterthought and risk getting burned. Unfortunately more bad precedent like this burns us all. Fortunately CMS has got something up its sleeve that may just be the game changer we've been waiting for so keep an eye out for that. More information on that just as soon as the Executive Order 12866 Regulatory Review is concluded.

BERNEVA BRUTON, Plaintiff, vs. CARNIVAL CORPORATION, Defendant.
Case No. 11-21697-CIV-UNGARO/TORRES
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA
2012 U.S. Dist. LEXIS 64416
May 02, 2012, Decided
　

Legislative Analysis on 2011 CMS WCMSA Submission Data

Medicare Set Aside Services — Wed, 09 May 2012 15:42:12 GMT

Over the past few days, I have been repeatedly asked to explain my opinion of H.R. 5284, primarily my criticism of the fixed percentage MSA option for claims under $250,000. While it is a great solution for carriers, the bill leaves Medicare exposed and, given that the goal of the MSP is to protect the Medicare trust fund, has little chance of becoming law. Forget for a moment the potential for abuse in settling claims within the safe harbors and look only at the impact of the legislation on real claim data. I randomly pulled settlement data from 400 claims that MEDVAL submitted to CMS in 2011 and looked for some trends. Here's what I found:

Of the 400 claims, 82 of them settled for more than $250,000 and would not be eligible to use the fixed 15% option. In those cases, MSAs ranged from $11,500 (4% of total settlement) to $570,000 (91% of total settlement) with an average MSA at 47% of total settlement. Claims that are merely ineligible due to random dollar amount establishment will pay on average 32% more in future medical projections than cases that happen to be under threshold.

Of the 318 eligible claims, the average indemnity payout was $56,300, and of the 82 ineligible cases, most paid out less than $100,000 in indemnity.

Of the 318 eligible claims, 92 of them were worse off by taking the fixed 15% option. On average, the 15% contribution was 235% more than the MSA as would have been projected under CMS standards and submitted.

Of the remaining 226 that were eligible for the fixed 15% option, the traditional MSAs would have funded nearly $10 million, whereas under the new option, only $6.5 million would have been set aside; therefore, Medicare's exposure to providing related benefits again increases particularly because nearly half of the cases included MSAs that made up more than half of the total settlement amount.

Although these losses in reduced set-asides would likely not be a part of the scoring since it is not a realized expense yet, the additional contractor costs that would be needed to increase its production to get cases out in 60 days, funding for the appeal process and the losses in collection of past conditional payments and future exposure in cases settling for less than $25,000 will show enough negative financial impact to kill this bill, again.

Now for arguments sake, to evaluate the impact of the bill, we must assume that CMS' methods are even the proper estimation of Medicare's future exposure, which I strongly dispute. Based upon the changes from the previous bill, it is obvious that H.R. 5284 is attempting to codify CMS policies and that is part of the problem with the broken system they are trying to legislatively fix. I have never supported the use of AWP, but understand that CMS needed to pick something that could be implemented consistently across all jurisdictions for the ease of tasking its contractor (try not to get stuck on the fact that they haven't been terribly consistent in its application). Forget the spinal cord stimulators and intrathecal pumps we've unnecessarily funded over the years just because CMS told us to despite claimants' absolute refusal to undergo such surgeries. The bill does nothing to take the subjective and overreaching problems out of the process that are the main drivers of the true MSA spend. Even if the CMS calculation method suddenly became reasonable, the fact that neither the fixed percentage option nor the approval program are available to all claims renders it unfair and constitutional implications come into play. The only way a fixed percentage would work is if it were mandatorily applied to all claims, but that would force claims with little to no medical exposure to pay as well. But in the aggregate if applied to all claims, the contribution & contractor savings would likely be sufficient to provide treatment, particularly considering that much of it would have been Medicare's responsibility anyway. Much of the MSA treatment projected is an exacerbation of a preexisting condition and/or natural aging. Seldom are joint replacements, absent a crush injury, solely the result of a work injury as opposed to a lifetime of obesity or degenerative predisposition. Seldom do chronic back pain cases not have a history of prior back problems evident in the record. But if the individual happens to reach the need for treatment during work, then Medicare is forever spared the expense and given that Medicare is an entitlement gained from years of mandatory payroll contributions on both the employer and employee, doesn't it seem wrong to deny the employee the benefit he paid for and to make the employee pay for the same coverage twice? Why is no attention ever paid to the free ride that Medicare gets in cases like these where it is shifting the burden of medical care onto the private sector?

But the one thing this analysis really made me think about is if we are not going to get an MSA evaluation because we can send 15% of our total settlement directly to Medicare and be done with it, how does one arrive at total settlement amount as defined in subsection (p)(2) as it includes "all future medical expenses"? If an MSA evaluation was already obtained to determine total settlement amount and it ends up being less than $250,000 when added to the indemnity (which is likely less than $100,000 based upon the data above), how do you then send 15% for a maximum contribution of $37,500 when you now actually know that the MSA was more? Would that still be "an intentional shifting of the burden to Medicare" if mandated by statute?

My position remains the same that it has always been – we don't need a legislative fix to a voluntary program. We, as an industry, need to find and agree upon alternative solutions that don't involve the federal government and, believe it or not, that would make the federal government happy too because it could stop funding contractors to manage these unnecessary programs. If we, as an industry, take measures to ensure that Medicare never makes payments related to an insured injury, then Medicare has no exposure and is protected. Over the last decade, we have proven that we're not afraid to write large checks in furtherance of that cause but unfortunately those funds were put into the hands of claimants leaving no one, including Medicare, protected should the funds not be utilized properly. The risk of future reimbursement demands by Medicare is one that can be managed and as an industry full of professionals who allegedly do just that, why are we pursuing unnecessary solutions from the federal government?

Legit workers' compensation claim

Medicare Set Aside Services — Wed, 09 May 2012 04:36:00 GMT

Here is a work comp story you don't want to miss coming out of the always bizarre state of New Jersey.

"Man jumps into vat of acid to save co-worker"

The best part of the article comes from another co-worker who is quoted as saying "its not that kind of acid. It's diluted. He's going to be fine".

That is exactly the kind of can do, get back to work mentality I like to see. Of course he isn't the one that fell into the vat of acid or even the brave if not somewhat impulsive soul that heroically jumped in to save his co-worker. The article describes him simply "as co-worker that returned to the factory to collect the injured worker's things". I think we can all reasonably conclude that he must be the insured's in-house risk manager.

And the comment from Yahoo user "The Rational Party" is priceless - "Follow-up article: Work Comp carrier denies coverage for man who saved co-worker. Work Comp excludes voluntary personal injury".

Ryan

H.R. 5284 - ‘‘Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2012’’ - Continued

Medicare Set Aside Services — Mon, 07 May 2012 14:30:03 GMT

The new Medicare Secondary Payer bill became available over the weekend and, as expected, is almost identical to H.R. 2641 as it died in the 111th Congress. Other than some sections being reordered, the majority of the changes are adoptions of CMS protocols from the voluntary review program that the previous bill attempted to improve in ways that made more sense to the settling parties. This new version panders to CMS and gives the appearance that CMS' policies are reasonable or even consistent with the MSP. The major changes are as follows:

1. Total settlement amount is now calculated exactly as CMS does in determining if WCMSAs are eligible for review.

2. All provisions about procurement cost reductions have been eliminated.

3. The section about authority to modify or terminate an MSA was removed in its entirety.

4. The safe harbor provision for settlements under $250,000 was changed from 10% to 15% excluding any conditional payment reimbursement and previously settled claims and that are mandatorily paid into the Medicare Trust fund whereas previously it was worded as an election by the parties.

5. The provision in the previous bill that all WCMSAs submitted would be presumed approved unless the Secretary disapproved within 60 days was altered to require notice of approval or disapproval within 60 days.

6. In an appeal, if the Secretary does not respond by a designated date, it is presumed approved whereas the previous version only allowed the parties to request an ALJ hearing.

7. Limitation on Liability section deleted the severability clause and added if the parties met their MSP obligations on the effective date of settlement then there would be no greater liability except in the case of fraud.

So is this bill better than the last three? I personally don't think so. It still doesn't address the fundamental flaw of the CMS review program and the subjective and overreaching nature of the review itself. Beyond the time it takes to obtain the approval, the amounts of the MSAs are the real issue. They are generally way in excess of Medicare's exposure in the future treatment of these individuals and more than likely more than work comp would have paid out over the lifetime had medicals been left open. The industry is still being held hostage to unrealistic medical cost projections in exchange for the ability to close claims and take down reserves with some degree of finality. So long as the review program itself remains voluntary and unregulated, we will continue to pay too much for the vast majority of settlements to hedge against an unknown and potentially unrealized liability. But if the bill passes, we will at least be able to write those large checks sooner than before, if that is to be considered a victory.

It is the safe harbor that has the most potential for disaster for Medicare. The claims that Medicare needs protection from most will likely start settling magically for $249,999 or less because a maximum $37,500 MSA will statutorily protect its interest in cases that would otherwise have had six digit MSAs in excess of the now total settlement amount. While it is a great improvement to place those funds mandatorily into the Medicare trust fund as opposed to the claimants' pockets, since at least that guarantees the funds will be spent appropriately on only Medicare covered related medical treatment, the cases that prevail themselves of that option will likely only be the ones where Medicare's exposure greatly exceeds the contribution. If Congress is amenable to such a flat rate, it could just assess a tax on all settlements, not just work comp, meeting the CMS review criteria and dispense with the whole MSP program. Between the assessment and the $106,845,845.00 they would have saved last year in contractor costs, Medicare could just provide medical benefits to beneficiaries are otherwise entitled to Medicare through that lifetime mandatory payroll contributions and the issue would be moot. Of course I'd be unemployed with the exception of the years of MSP litigation we have to look forward to stemming from the past decade of bad MSA decisions.

So is the fourth time a charm? The bill was introduced with bipartisan support and Congressman Reichert is a member of the Trade and Health Subcommittee of Ways and Means. But it is already May of an election year. The bills in all previous versions, all introduced interestingly around this same time of year, have never obtained more than 22 sponsors, so the idea that the bill could get the necessary support prior to the election is a stretch of the imagination and we really can't expect any progress until the 113th Congress starts in 2013. And let us not forget that many of the sponsors of the previous bills did not survive re-election so any progress made this summer could prove futile again anyway. Then there is the contents of the bill to consider. Even though it has improved significantly over the four versions, it will still have issues scoring. It carves out any MSP obligations for settlements under $25,000 and creates the costly safe harbor discussed above while still necessitating the contractors to administer the MSP programs on behalf of CMS; therefore, there is no way it could show no negative financial impact. And let us not forget that the bill is limited in scope to workers' compensation, so what about under threshold claims and all the liability settlements where the parties have the most uncertainty and Medicare's interests go ignored more often than not due to the uncertainty? Amendment of the SMART Act to statutorily define MSAs in such a manner that the CMS review program becomes unnecessary would be a far easier solution to the problems addressed in this bill and, with over 100 cosponsors already, has a far better chance of passing this term. Unfortunately, no one wants to make that bill "more complicated" so that it does stand a chance of passing this term, leaving those of us with MSA issues out in the cold.

Of course we could always take control of the issue privately and leave the government out of the process entirely and not need any legislation. If Medicare never makes a payment for which it is statutorily entitled to reimbursement, then we've met our obligations under the MSP and nothing in the voluntary CMS review program changes that. View the issue like the risk management issue that it is and maybe we can stop dreaming that the government is ever going to help us with it.

Full text of the new bill is available here.

Medicare Predicted Exhaustion Unchanged for 2012

Medicare Set Aside Services — Tue, 01 May 2012 17:37:55 GMT

On April 23, 2012, the Medicare Board of Trustees released the 2012 Annual Report noting that the Health Insurance (HI) trust fund's estimated exhaustion date remains at 2024. The 2% reduction in HI outlays proposed under the Budget Control Act of 2011 are expected to offset growth in other areas and allow the prediction to stand. Because the trustees project that the HI tax income and other dedicated revenues will fall short of expenditures in all future years under the current law, it can be expected that changing the law will be their likely desired solution. Unfortunately that will only assist covering current expenditures and not address the long term viability for the benefit of those who will be paying the increased contributions. Given that Medicare spent $549 billion in 2011, it would also be apparent that more MSP enforcement would be an effective means to stretch trust fund dollars further.

The annual report is available here.

Maryland House Bill 114 - A Great Reason to Annuitize or Professionally Administer MSAs in Maryland

Medicare Set Aside Services — Mon, 30 Apr 2012 19:56:21 GMT

On April 14, 2012, Maryland Governor Martin O'Malley signed into law a bill that amends Sections 9-806 and 9-1007 of the Maryland Labor & Employment code governing mandatory assessments on certain workers' compensation awards and settlements on behalf of the state's Subsequent Injury (SIF) and Uninsured Employers' Funds (UIF). SIF receives 6.5% and UEF another 1% of any award for PT or death, including awards for disfigurement and mutilation, or settlements approved by the Commission. In 2011, three cases were appealed on the issue of these assessments on Medicare Set-asides (MSAs) with two different results. The one case were the insurer was not required to pay the assessments turned on the fact that the claimant never received the funds. The MSA in that case was established as professionally administered with a reversion upon death back to the carrier. The new legislative exemption draws from that case.

H.B. 114 creates an exemption for a "formal set-aside allocation" [for definition, see COMAR 12.09.01.01(B)(3)] is the medical benefit is in excess of $50,000 and paid out with an annuity or in any amount that is professionally administered by a 3rd party vendor with no reversion to the claimant's estate.

While obviously a savings to insurers, this is a greater victory for injured workers. Self-administration as established by CMS is an incredible burden on the injured worker with serious risk of further loss of medical benefits if done improperly. Claimant's are expected to maintain MSAs in interest bearing accounts separate from their personal finances and used only for medical treatment related to the settlement and otherwise a service that Medicare would have otherwise covered, paid at the rate used to calculate the MSA even if the state WC fee schedule that a private pay patient will have no statutory support for obtaining from a physician any longer, a full accounting maintained so that it can be demonstrated to CMS that the allocation was fully exhausted to possibly resume benefits some day if needed and to annually attest to CMS each year that this was all done. Furthermore, lump sum funding of MSAs that are self-administers provides an incredible temptation to an individual who's inability to work will clearly have already caused a financial strain in his life yet is reported by CMS to occur in over 90% of the MSAs it has approved over the last decade. This legislation will encourage more insurers to do the right thing and if not pay for the professional administration at the time of settlement to ensure that all parties to settlements, including Medicare, are better protected, to at least utilize annuity funding to prevent one improper act from rendering an injured worker without access to necessary lifetime medical care.

The bill can be accessed here.

H.R. 5284 – Medicare Secondary Payer and Workers' Compensation Settlement Agreements Act of 2012

Medicare Set Aside Services — Mon, 30 Apr 2012 15:56:25 GMT

On Friday April 27, 2012, Congressmen David Reichert (R-WA) and Mike Thompson (D-CA) introduced new MSP legislation currently titled:

"To amend section 1862 of the Social Security Act with respect to the application of Medicare secondary payer rules to workers' compensation settlement agreements and Medicare set-asides under such agreements."

We will soon come to know it under the same name as given in the 109th, 100th and 111th congresses: the Medicare Secondary Payer and Workers' Compensation Settlement Agreements Act of 2012. While the text of the bill itself continues to remain a mystery (bills are not sent to the Library of Congress from the Government Printing Office for a day or two after they are introduced to the floor of the house so we should have access to it later this week), I don't anticipate that it will deviate too far from its previous three permutations, all of which died in committee. For a quick review for those who haven't been following over the years:

109th Congress - H.R. 5309 proposed 5/4/06 by Congressman Shaw (R-FL – not reelected that year), 12 cosponsors
110th Congress – H.R. 2549 proposed 5/24/07 by Congressman Tanner (D-TN – not reelected in 2010), 22 cosponsors
111th Congress – H.R. 2641 proposed 5/21/09 again by Congressman Tanner, 5 cosponsors

Besides the total lack of support, the bills' fundamental flaw was that they repeatedly attempted to legislatively fix an activity not governed by any statute or regulation. In fact, a Medicare Set-Aside Arrangement (MSA) is not even defined in any statute or regulation therefore it would be impossible to amend its problems with legislation. Another issue was that the bills would have had an incredibly difficult time scoring given that they looked to exempt from any type of MSP enforcement settlements of $250,000 or less. Regardless, no action was ever taken on any of them until Congressman Pete Stark (Ways & Means - Subcommittee on Heath) requested a GAO study in August 2010 that referenced H.R. 2641 prior to the bill dying in committee which was finally completed last month. I assume that is the spur for the renewed interest in reproposing the bill at this time.

American Insurance Association (AIA), National Council of Self Insurers (NCSI), Property Casualty Insurers Association of America (PCI), UWC - Strategic Services on Unemployment & Workers’ Compensation (UWC), Washington Self-Insurers Association (WSIA), American Association for Justice (AAJ), American Bar Association (ABA), Workers Injury Law and Advocacy Group (WILG) have all already voiced support for the new bill, all expressing disgust over the delays, the lack of appropriate or consistent standards and lack of appeal rights in the CMS WCMSA approval process. But much like Congress overlooking the fact that MSAs are not legislative in nature and cannot be fixed with legislation, these organizations are all overlooking the fact that the CMS system they want fixed legislatively is voluntary and they can easily fix their situation by not availing themselves of these voluntary determinations by CMS. Given the size and membership consistency of these organizations, the community could easily come together to form protocols to serve as MSP compliance standards and redefine CMS' erroneous or overreaching interpretations of the MSP through the courts, but due to a continued lack of true understanding of the MSP and fear of future enforcements that may never occur whether CMS is involved in the settlement process or not, the industry continues to write large checks and complain about something that they do not need to avail themselves of. The use of an MSA is a risk management issue and needs to be treated as such. Other than to exclude benefits for payment of Medicare covered services related to an insurance settlement, judgment or other award, the federal government has no rights with regard to medical treatment that has not and may never occur in the future.

The current status is that the bill has been referred to Ways & Means and Energy and Commerce and lets hope that is not where the trail ends this time around. There is nothing more to say until the text of the bill becomes available to the public and can be analyzed. If anyone wants to review the last version so they have a point of comparison, it can be found at: http://www.govtrack.us/congress/bills/111/hr2641/text

MSP Litigation and Other Natural Disasters

Medicare Set Aside Services — Wed, 11 Apr 2012 21:28:20 GMT

As a general proposition, MSP cases have resulted in some of the worst case law I have ever seen. But some cases should not even be allowed to be filed. If you can't name the right party when you are trying to demand that it do something that it is statutorily prohibited from doing, then you should not be allowed to waste judicial resources and should probably be sanctioned. Yet another MSP gem was recently brought to my attention.

In a case dismissed on September 7, 2011, plaintiff had filed suit against the MSPRC and a Nebraska hospital demanding that Medicare pay the hospital's bill stemming his 2008 auto accident with an underinsured motorist. The accident resulted in over $200,000 in medial bills and the underinsured motorist's policy limit was $100,000, which was offered in settlement. The hospital filed a $50,000 lien, meaning that it opted to waive Medicare payment and roll the dice on plaintiff's tort recovery. By doing this, the hospital waives any ability to obtain payment from Medicare, so should the case not settle or reach judgment, it might not get paid but is also not limited to Medicare fee schedule. MSPRC reported that Medicare had also made $36,779.38 in other related conditional payments. And I'm guessing that the plaintiff's attorney wants his third, so while quite a dilemma, what is it doing in federal court? I believe the phase failure to state a claim upon which relief can be granted would be appropriate here.

Plaintiff sued the hospital where he received treatment? Not for any wrong doing and not for holding a legitimate lien permissible by Medicare policies. In fact he requested no relief against the hospital so it was dismissed immediately. Plaintiff sued MSPRC? No, not the Secretary of Health and Human Services who is the real party in interest in any litigation involving the administration of the Medicare program pursuant to 42 CFR 421.5(b). And he sued MSPRC to force it to pay his hospital bill that Medicare is statutorily prohibited from making payment for pursuant to 42 USC 1395(y)(b)(2) so long as his claim against the underinsured driver exists. But why would the "recovery contractor" ever be the proper entity to pursue to make a benefit payment? And after we get over all of the silliness, let us never forget sovereign immunity and the administrative exhaustion requirement of 42 USC 405(g).

Needless to say, the case was dismissed for subject-matter jurisdiction, but the take away here is to stop taking these case to federal court to begin with. There are 76 million baby-boomers reaching Medicare entitlement age and with that, the likelihood of more and more tort and comp cases having MSP issues. You cannot avoid learning about Medicare and its processes and policies any longer. The only issue here was equitable apportionment of the policy limits settlement offer and unfortunately for plaintiff, he has more guests at his party which demonstrates another issue that doesn't get much consideration. Because the hospital is permitted to opt out of accepting Medicare in this situation, the Medicare beneficiary is penalized by the lien being more than the Medicare rate, particularly from a limited recovery source. This is a different inequity than we are used to complaining about, just penalizes Medicare beneficiaries for enrolling in the program they worked their entire lives to become entitled to. Compounded by Medicare's belief that it is entitled to be made whole, there will be very little left for plaintiff should he elect to settle this claim. Yet what is the alternative? Going to trial will not produce more funds from an underinsured motorist. Policy limits dictate here and if we don't get some resolution on the equitable apportionment issue from the Supreme Court, we will continue to be faced with impossible settlement situations just like this for years to come.

　
DONALD E. WRIGHT, Plaintiff, v. KATHLEEN SEBELIUS, SECRETARY OF
THE UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES,
and SAINT ELIZABETH REGIONAL MEDICAL CENTER, INC., Defendants.
4:11CV3055
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEBRASKA
818 F. Supp. 2d 1153; 2011 U.S. Dist. LEXIS 100987
September 7, 2011, Decided

RIMS 2012 SUPPORTS CRADLES TO CRAYONS

Medicare Set Aside Services — Wed, 11 Apr 2012 13:26:02 GMT

As many of us prepare to attend the RIMS annual conference in Philadelphia next week, I'd like to take the opportunity to bring something to your attention. Every year RIMS holds a community service day to support a local charity in the town where the conference is held. This year's charity is Cradles to Crayons whose mission is to provide Philadelphia's disadvantaged children with some of the most important basics of life. The organization collects everyday essentials, such as school supplies, toys, clothing and shoes, and creates "KidPacks" containing a week’s worth of everyday essentials. The KidPacks are then distributed by more than 350 social service agencies to low-income and homeless children living in the Philadelphia region.

Now while RIMS and Zurich (this year's sponsor) have already collected donation items in advance that will be assembled at Sunday's event, collection receptacles will also be placed throughout the convention center during the conference so you still have an opportunity to support the cause. Even if you are traveling a great distance to attend, gift cards are extremely portable and I am sure any donation is welcome and appreciated.

For more information about RIMS 2012 Community Service Day and RIMS 2012 Annual Conference & Exhibition, visit www.RIMS.org/RIMS12.

Gould and Lamb acquires Express MSA?

Medicare Set Aside Services — Mon, 09 Apr 2012 16:29:43 GMT

I heard today that Gould and Lamb has acquired the MSA arm of Express Scripts. Express Scripts got into the MSA game a few years back when they acquired MSC and inherited Speedy MSA as part of the deal. Speedy/Express Scripts main claim to fame was pioneering the two day turnaround on MSA files, which in my opinion was not a good thing. Incentivizing speed must come at the expense of quality, and what you end up, to use a pertinent analogy from the technology/hair care business, is Bill Gates' haircut. But apparently some clients liked it or their wouldn't be much for G&L to acquire.

Express Scripts like so many PBM's before them took a shot at the MSA business by banking that they could leverage their PBM relationships and sales/marketing prowess into MSA referrals. Many of our clients use Express Scripts as their PBM (which I consider to be among the best in the business). But annoyingly, every time one of our clients would request an Rx payment history to complete an MSA, the request was filled with a reminder that Express MSA could complete the Rx history and the MSA themselves. They haven't been doing that for awhile, at least not on our cases.

I have not seen a website update, blog post or press release from either Gould and Lamb and/or Express Scripts announcing this acquistion. I received no phone or email confirmation from either company regarding this rumor mainly because I didn't ask for one. However, I am sure if I got this wrong I will hear about it in short order and will be happy to add any details these companies wish to share to the original post.

In the new GAO report, the top 10 submitters of MSAs have a 80% market share. Looks like another also ran has thrown in the towel and G&L is adding to their market share. I suspect any acquisition or strategic partnership would include cooperation and some sales support from Express Scripts for a period of time. I wonder if their recent relationship with MyMatrixx to perform DURs will or has been affected by this alleged deal.

Ryan

**********

Update: Looks like I was a little late to the party on this story. I guess that's what I get for skipping the Spring NAMSAP conference and going to Disney World for Spring Break instead of attending to my MSP journalist duties. Story is confirmed at http://www.express-scripts.com/services/workerscompensation/msa/. This deal closed the second week of March and it looks like I was the last to know. Medicare Set-Aside Blog FAIL.

The Medicare Secondary Payer Recovery Portal

Medicare Set Aside Services — Thu, 05 Apr 2012 17:36:11 GMT

A new online Self-Service Tool to assist in and accelerate the resolution of Medicare conditional payments. The MSPRP will give attorneys, insurers, beneficiaries, and others the ability to access and update certain case specific information online, alleviated the need for written communication or telephone calls.

The MSPRP users will be able to electronically submit Proof of Representation or Consent to Release documentation, request conditional payment information or a copy of a current conditional payment letter, dispute claims included in a conditional payment letter, and submit case settlementinformation all through the portal.

The MSPRP is scheduled to go live in July 2012. Those interested should monitor the MSPRC website for more details as they become available.

www.mrprc.info

GAO Released MSP NGHP Report

Medicare Set Aside Services — Thu, 05 Apr 2012 15:23:11 GMT

Well the long awaited GAO study requested by Congressman Stark in August 2010 was finally release this week and I am not certain whether my reaction is underwhelmed or disappointed. What was hoped to shed light on the MSP problems endured by the insurance industry for Congress, this report does little more than acknowledge and support CMS' recent "efforts" to alleviate some of the problems. Yes they carved out some cases where they will not pursue recovery (how many cases have you settled this year for less than $300?). And yes, they did not renew the MSPCR contract (which was granted under suspicious circumstances to begin with and likely should have been terminated for performance issues years ago – average call wait time of 38 minutes noted on page 21 is laughable). But instead CMS intends to create a whole new hierarchy of contractors which they have started putting out to bid, which will ultimately bring in a whole new crew of people even more unfamiliar with the MSP applications and underlying legal issues than those that were are at least used to dealing with. By the time they award this contract and we endure another series of GAO bid protests, it could be another 2 years before we see this new combined contractor operational.

But the two biggest issues that needed Congressional attention were apportionment and subjectiveness of the contractors and this report will not bring the needed attention to them. Both issues were glossed over in passing as if insignificant. On page 28, the section titled "Demand Amounts in Liability Settlements" addresses what they call "proportionality." GAO lets the issue rest on CMS' assertion that the concept is "in conflict with MSP provisions granting CMS a priority right of recovery, which entitles Medicare to full recovery for the expenses it paid up to the settlement amount." Problem is that is CMS' interpretation of the MSP, and Chevron deference aside, that concept is not stated in the MSP itself. Case law dictates that Medicare is entitled to recover only from medical damages, and the total settlement amount represents other legal claims for damages, such as lost wages and pain and suffering. To give Medicare unfettered access to unrelated property would be akin to allowing your mortgage company to repossess your car for failing to make mortgage payments. Yet that is a topic currently being presented to the Supreme Court so I won't fault GAO for avoiding it. However I do take offense at the justification of CMS' position by accepting its' assurances that the ROs can be contacted to request pre-demand compromises in the event that the total settlement would eat up the entire settlement [yeah, how often does that happen]. This doesn't change the due process implications in that CMS routinely take more than its share from the vast majority of its recovery actions; this merely adds equal protection issues in that some beneficiaries can be treated differently than others.

As to the WCRC, yes we send more cases than anticipated, yes we send cases that are not reviewable and yes, we want assurances that no MSA was appropriate – because CMS has everyone scared to death that they have infinite perpetual recovery rights and stakeholders will pay any amount to believe that their obligations to the federal government have been met. When I refer to paying any amount, I mean the ridiculous numbers occasionally churned out by the WCRC with little to no support from the underlying legal claims, however once made, maintains the full support of CMS. MY hope from a financial standpoint was that the GAO would have recognized that the efforts of the WCRC are redundant in that the private sector already pays 3rd party vendors to perform that function and that the WCRC is meant to review those proposals for adequacy. Instead it reviews all of the supporting evidence independently, essentially rendering the proposal superfluous. With a little transparency in the review criteria, CMS could tell stakeholders how to calculate a WCMSA in the manner in which it prefers, right or wrong, and allow the WCRC to audit submissions to ensure compliance and in turn, be able to move many more cases through the system and likely less cost. Instead we are going to rely on automation of the web portal and blame submitters for delays in hopes that they will stop sending non-reviewable cases. Well I guess that's progress. I was also humored that a lot of hope rests upon the study CMS' contracted due to be complete by June [no pressure there to those involved :) ] and that we are expecting an MSA User Guide [no comment].

With regard to the GAO's recommendations, there were 5, all of which CMS agreed to consider because none placed any undue burden upon it:

review recovery thresholds periodically for appropriateness to ensure that the agency’s recovery efforts are being conducted in the most cost-effective manner possible, and not require NGHPs to report on cases for which the agency will not seek any recovery [People will settle cases for one cent less to avoid reporting and Medicare will again be placed in a position of ignorance in direct contradiction of the purpose of the statute. Just because no reimbursement obligation existed at the time of settlement doesn't mean that CMS does need to know to exclude related future benefits as well].
consider making the submission of ICD-9 codes an optional component of reporting for liability NGHPs. [It's better to rely on CMS to determine what is related an not when making future benefit exclusions?]
develop a centralized MSP program website, to include links to information about the various parts of the MSP process; [about time – good luck if you don't know where to find them]
develop guidance regarding liability and no-fault set-aside arrangements; [again, about time]
review and revise the correspondence with beneficiaries to ensure that beneficiary rights and responsibilities are more clearly communicated. [isn't that what they should have done following the Haro injunction?]

Now we wait and see if the Ways and Means committee takes any action on the basis of the report before the session runs out. Given we are in an election year, action needs to take place this summer if we are to hope that anything happens at all. If no action is take, H.R. 1063 and S.B. 1718 will die and MSP related legislation will have to be reproposed in the 113th Congress, which is not necessarily a bad thing. MSAs were not addressed in those bills and this would be an opportunity to propose a more comprehensive solution. But regardless, we shall continue to suffer in the interim.

For the full report, click here.

Oregon Plaintiff Liability Fund Not an RRE

Medicare Set Aside Services — Mon, 02 Apr 2012 21:04:14 GMT

The last five years have been full of debates over who qualifies as an RRE, often with the most ridiculous results. A theme park giving out gift certificates as a "sorry you fell on our property" consolation prize constitutes an RRE making a reportable insurance payment pursuant to the policy created by CMS on behalf of Secretary Sibelius as sanctioned by Congress. By no means do I believe there is any Congressional intent behind the monster that CMS created. However, all these years later we have just come to expect that pretty much any form of compensation tied to a personal injury will need to be reported. Well, no more.

On March 29, 2012, the US District Court for the District of Oregon ruled in favor of the state bar association, stating that it is not required to report payments made from its Plaintiff Liability Fund (PLF). The PLF is a non-profit corporation that provides legal malpractice insurance for all active members of the Oregon State Bar, covering an attorney's errors and omissions that occur while providing legal services. Arguing that although a liability insurance without a doubt, the PLF states it pays claims against lawyers who cause economic damages related to the provision of legal services and does not cover claims of tortious conduct that result in bodily injury. DHHS argued that a malpractice claim involving a personal injury cause should involve medical expenses paid conditionally by Medicare. While the court accepted that as true, it could not get over the fact that the PLF does not have "primary" responsibility no matter what label you attached to it; therefore, determined that there was no way that Congress contemplated it having a reimbursement responsibility to Medicare, thus could not be an applicable plan for purposes of the MMSEA.

While it is great that someone finally got excluded from the reporting requirement, sadly I believe this ruling to be in error. But for the legal malpractice, the Medicare beneficiaries would have recovered from whatever other form of insurance was available. Due to the malpractice, the PLF serves as a replacement source of compensation so theoretically does contemplate medical damages when the malpractice occurred in cases involving personal injury. Because the "primary" plan was lost due to the malpractice, the PLF does in fact end up being the primary plan as there is no one standing in line in front of it. Remember that the primary plan label attaches upon settlement, judgment, award or other insurance payment; therefore, the court's analysis of Congress needing to contemplate its existence is completely off the mark. The whole point of MMSEA reporting is for the government to capture data about sources of reimbursement, so if the PLF pays to compensate for lost medical damages, that is a source of reimbursement for which Congress intended Medicare to know about.

OREGON STATE BAR PROFESSIONAL LIABILITY FUND, Plaintiff, v.
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES and
KATHLEEN SEBELIUS, in her official capacity as Secretary of the Department of
Health and Human Services, Defendant.
No. 03:10-CV-1392-HZ
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON,
PORTLAND DIVISION
2012 U.S. Dist. LEXIS 43790
March 29, 2012, Decided

Hadden v. U.S. Petition for Writ of Certiorari Filed

Medicare Set Aside Services — Fri, 30 Mar 2012 21:04:53 GMT

MEDVAL would like to congratulate the MARC Coalition for seeing the Hadden v. U.S. case through its appeal. The petition for certiorari has been filed and it is now up to the Supreme Court to decide if our MSP problems are worthy of its time. The Supreme Court generally picks its cases one the basis of on of three possible categories: conflict among the circuits, important federal questions or public policy. While this case clearly has all three, many are questioning the circuit conflict. Bradley upholds a probate court apportionment of a wrongful death settlement whereas Hadden is a straight up judicial review of the CMS reimbursement process, but the issue underlying both is apportionment plain and simple. If a plaintiff receives less than full value in compensation for its injuries for valid legal reasons that limited recovery, then it is difficult to believe that that has no impact on Medicare. If CMS were to subrogate to obtain reimbursement, it too would be subject to those some legal issues. But the fact is that Congress gave Medicare 2 different avenues for recovery and the US is not subrogating, so does the MSP really give it a greater right to full reimbursement regardless? Guess we're about to find out…

Medicare is Officially not a Collateral Source in New Jersey

Medicare Set Aside Services — Wed, 28 Mar 2012 18:41:34 GMT

It is frequently argued by attorneys that Medicare is not entitled to reimbursement in states with collateral source rules because plaintiffs are unable to recover those damages under state law. In an opinion out of the United States District Court for the District of New Jersey on March 23, 2012, the court concluded that is not the case under the New Jersey statute §2A:15-97. New Jersey courts determined as early as 1994 that reimbursable claims such as payments made by Medicaid are not considered a collateral source for purposes of the statute [see Lusby v. Hitchner, 273 N.J. Super. 578 (App. Div. 1994)]. Well nothing is different when it comes to Medicare. Because Medicare has a "nearly unqualified right to reimbursement," the outcome is the same as when Medicaid has rendered benefits. The collateral source rule does permit personal injury settlements to include recovery of medical expenses paid for by Medicare because Medicare is statutorily entitled to reimbursement for those same expenses.

JOSEPH B. MASON, Individually and on behalf of all persons similarly situated, Plaintiff, v. KATHLEEN SEBELIUS, et al., Defendants.

Civil No. 11-2370 (JBS/KMW)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

2012 U.S. Dist. LEXIS 40592

March 23, 2012, Decided

"They Usually Don't Come Back at All" – A Plaintiff's Theory on Why Medicare had no Interest to Protect

Medicare Set Aside Services — Tue, 27 Mar 2012 22:02:22 GMT

Interesting 3 Party Check case reported out of Georgia this week. The ruling itself is not interesting because we know that there is no statutory or regulatory requirement to include Medicare as a payee so absent agreement among the parties, the act will not be upheld by the courts. What made this opinion interesting was plaintiff's counsel's assertion that because Medicare had not asserted a lien against the suit, that it was not going to therefore there was no Medicare reimbursement obligation. See what you think of this story…

Minnie Hearn was injured November 2002 in a Dollar Rent A Car rental owned by DTG Operations whose claims are administered by the TPA, York. Ms. Hearn retained attorney Guy Michaud to file a complaint against DTG, York & Dollar, asserting from day one that despite evidence that Hearn was on disability and that Medicare had paid some of her accident related bill, that Medicare "did not have an enforceable lien." In October 2004, a York adjuster secured a $20,000 settlement and following various discussions about Medicare's interests, agreed that Medicare would not be made a payee on the check due to the representations that Medicare had no lien. Plaintiff did however agree to indemnify Defendants against Medicare actions. Regardless, a supervisor at York did not take the attorney at his word and insisted that the settlement check be issued with Medicare as a payee anyway, which of course he refused to accept. After a lot of whining, Plaintiff got herself a new attorney and ran back to court to file a complaint for breach of contract. The trial court was not terribly sympathetic and ruled for defendants every chance it got, in addition to awarding it attorneys fees. It concluded that any agreement not to include Medicare as a payee was unenforceable because York relied upon an erroneous assurance by Michaud that "Medicare had no enforceable claim of any kind." The trial court found that York was entitled to add Medicare as a payee on the check as a good business practice when it "subsequently realized that Michaud's statement was incorrect." Additionally, the trial court found that it would not assist the "Plaintiff to evade her duty to reimburse Medicare" because doing so "would clearly contravene the public policy in favor of reimbursement." On appeal, the court unfortunately found reversible error in the determination that plaintiff had no valid claim for breach of the settlement agreement and therefore much good was undone - the judgment affirmed in part, vacated in part and the case was remanded with direction.

But back to my favorite part. In every great MSP opinion, there's always an attorney who thinks he knows a thing or two about Medicare. In plaintiff attorney's testimony about his settlement negotiation with the York adjuster, the court wrote this:

Michaud testified that before he sent his November 17, 2004 letter, he discussed Medicare with the adjuster. Because neither of them had received any notice and were not aware that Medicare was asserting its right of reimbursement, they "agreed that the check - the settlement draft would not have Medicare on it." He explained that when parties receive written notice from Medicare that it plans to seek reimbursement, it is commonly referred to as a lien, and that he and the adjuster agreed that there was "no lien" in connection with Hearn's injury. He also testified that it was his belief that he had no duty to notify Medicare of the settlement if Medicare had not notified anyone of its intent to seek reimbursement. He would take steps to protect his client, however, by holding back a portion of the settlement in a trust account to satisfy any claim that might be made by Medicare after completion of the settlement. In his experience, if Medicare does not assert a claim within two years of an injury, "usually they don't come back at all."

Now there's a guy who is intimately familiar with the Medicare Secondary Payer Act. Medicare had not asserted a lien, as he calls it, because MSP liability had not attached yet. In a liability insurance situation, there is no Medicare overpayment for which reimbursement demand would be made until there is a settlement, judgment, award or other payment. The MSP manual describes that as the obligation "arising by operation of law" upon one of those events.

Second piece of entertainment was when Hearn's counsel learned that defense counsel, Frank Harris, contacted Medicare shortly after the lawsuit was filed and notified it of a claim in this case, he amended the complaint to assert a claim against Harris based upon the theory that Harris became an "active participant in the deeds of his clients," without of course seeking leave of the court to do so. Perhaps a quick read of 42 CFR 411.25 would have been in order had the claim survived. Because York was in fact on notice that Medicare had made related payments in this case, upon "settlement" of the claim, it became primary payer for purposes of the MSP and as such, had an obligation to notify Medicare of its reimbursement responsibility, a task that was performed by its representative attorney. To get sued over it personally – really?

The level of MSP ignorance that survives today remains astounding and I thank you all for continuing to drag your righteous indignation through the courts because these opinions are certainly better than the news with my coffee in the morning…

　
HEARN v. DOLLAR RENT A CAR, INC. et al.
A11A2355.
COURT OF APPEALS OF GEORGIA
2012 Ga. App. LEXIS 338
March 26, 2012, Decided

Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011

Medicare Set Aside Services — Mon, 19 Mar 2012 15:06:55 GMT

It is always amusing to watch the federal government contradict itself and this week, some legislation caught my eye. The House of Representatives is scheduled to debate the HEALTH Act (H.R. 5) this week. The Act intends to improve patient access to health care services and provide improved medical care by reducing the excessive burden the liability system places on the health care delivery system. What I found interesting about the Act is that it will contradict much of what we try to achieve in the way of protecting Medicare's interests in an insurance settlement, judgment or award because it proposes to cap non-economic damages. Thankfully every kid who eats lead paint chips will still be entitled to claim the economic losses of a dually degreed nuclear and aerospace engineer, however they had better not require too much medical treatment because the combined recovery for past and future non-economic damages will still only be $250,000. Particularly important to the concept of MSAs is the fact that the Act specifically provides that the future damages will be reduced first, meaning that if no funds remain after past liens are reconciled, guess that's just too bad for Medicare.

The other interesting aspect of the Act is that it introduces a collateral source rule. Looking into the future where Medicare is able to claim secondary payer status and simply not provide related benefits, plaintiffs would not have a collateral source, but what will happen to past medical expenses endured by Medicare if "[n]o provider of collateral source benefits shall recover any amount against the claimant or receive any lien or credit against the claimant's recovery or be equitably or legally subrogated to the right of the claimant in a health care lawsuit involving injury or wrongful death." Medicare does not have a right to deny payments until the MSP is triggered and until that happens, the benefits it provides a Medicare beneficiary are merely entitlement benefits under the program. In a liability insurance situation, the MSP rises by operation of law upon the settlement, judgment, award or other payment. Think any of this will make the debate this week?

Pertinent parts of the bill are copied below, but for the full text, click this link

SEC. 4. COMPENSATING PATIENT INJURY.

(a) Unlimited Amount of Damages for Actual Economic Losses in Health Care Lawsuits- In any health care lawsuit, nothing in this Act shall limit a claimant's recovery of the full amount of the available economic damages, notwithstanding the limitation in subsection (b).
(b) Additional Noneconomic Damages- In any health care lawsuit, the amount of noneconomic damages, if available, may be as much as $250,000, regardless of the number of parties against whom the action is brought or the number of separate claims or actions brought with respect to the same injury.
(c) No Discount of Award for Noneconomic Damages- For purposes of applying the limitation in subsection (b), future noneconomic damages shall not be discounted to present value. The jury shall not be informed about the maximum award for noneconomic damages. An award for noneconomic damages in excess of $250,000 shall be reduced either before the entry of judgment, or by amendment of the judgment after entry of judgment, and such reduction shall be made before accounting for any other reduction in damages required by law. If separate awards are rendered for past and future noneconomic damages and the combined awards exceed $250,000, the future noneconomic damages shall be reduced first.
(d) Fair Share Rule- In any health care lawsuit, each party shall be liable for that party's several share of any damages only and not for the share of any other person. Each party shall be liable only for the amount of damages allocated to such party in direct proportion to such party's percentage of responsibility. Whenever a judgment of liability is rendered as to any party, a separate judgment shall be rendered against each such party for the amount allocated to such party. For purposes of this section, the trier of fact shall determine the proportion of responsibility of each party for the claimant's harm.

SEC. 6. ADDITIONAL HEALTH BENEFITS.

In any health care lawsuit involving injury or wrongful death, any party may introduce evidence of collateral source benefits. If a party elects to introduce such evidence, any opposing party may introduce evidence of any amount paid or contributed or reasonably likely to be paid or contributed in the future by or on behalf of the opposing party to secure the right to such collateral source benefits. No provider of collateral source benefits shall recover any amount against the claimant or receive any lien or credit against the claimant's recovery or be equitably or legally subrogated to the right of the claimant in a health care lawsuit involving injury or wrongful death. This section shall apply to any health care lawsuit that is settled as well as a health care lawsuit that is resolved by a fact finder. This section shall not apply to section 1862(b) (42 U.S.C. 1395y(b)) or section 1902(a)(25) (42 U.S.C. 1396a(a)(25)) of the Social Security Act.

The MSA Double Standard – More Favorable MSA Determinations by Federal Courts

Medicare Set Aside Services — Thu, 15 Mar 2012 21:04:04 GMT

I never realized what an inherently risk adverse group of people lawyers really are. Beyond the "t" crossing and "I" dotting, they always seem to be seeking assurances from anyone willing to give it, otherwise want an or indemnity or hold harmless agreement as a contingency plan. But when it comes to MSAs, they will go to amazing lengths to obtain assurances that the amount allocated for future medicals will foreclose exposure to Medicare recoveries when no one, apparently not even CMS, can make that promise with any degree of certainty. Because CMS states that nothing will limit its recovery other than an adjudication by a court based upon a hearing on the merits of the claim, more and more lawyers are turning to the courts for MSA determinations when CMS approval is not available. Beyond the problem that this causes in burdening our already severely overburdened judicial system, judges are not familiar with CMS protocols, nor are they even consistent among themselves as a group, and therefore all Medicare beneficiaries are adversely affected because everyone is bearing a different level of Medicare protection.

In the case of Frank v. Gateway Insurance, decided this week by the US District Court for the Western District of Louisiana, claimant sustained a lumbar injury in June 2010 necessitating a fusion in July 2011. Parties were able to reach an agreement to settle the claim, with the exception of the MSA. A Motion for Determination of Need for, and Amount of Medicare Set Aside was filed and a hearing took place on January 24, 2012, absent representatives for the United States as it declined to participate. At the hearing, the Court received into evidence affidavits from claimant's various physicians outlining their opinion for continuing treatment of the lumbar injury. The pharmacist stated in his affidavit that claimant would need between $700 and $1,000 for five to six more months of drugs and the physician projected five to six more office visits at $92 to $186 plus five to six more sets of x-rays, totaling approximately $2,200. The Court found $3,200 to be a reasonable and reliable estimate of future medical costs and ordered an MSA funded in that amount from the insurance payment. For anyone who has ever prepared or seen an MSA approved by CMS, you know that all of those services would be projected over life expectancy so without even looking any further, there is apparent inequity that needs to be addressed here.

Right or wrong, reasonable and reliable or not, the problem with this MSA is that it is inconsistent with EVERYTHING that CMS purports to be necessary in its WCMSA approval program. And I am not saying that CMS' way is right, let alone reasonable, either. Whether you reach it through the equal protection or due process clause, the US Constitution guarantees all men to be treated equally and that should not vary due to the availability of a voluntary unregulated program administered by a federal agency or lack thereof. Nor should it vary upon the ability to unduly burden the courts and obtain a hearing before a judge who lacks a proper point of comparison against which to measure the evidence presented to him. If CMS is too busy to review all claims, it should at least publish a community standard to be followed equally by all those potentially adjudicating the issue on its behalf. What we shouldn't have are different outcomes for similar injuries with identical future medical needs based upon the available forum. Unless of course my outrage over this disparity is misplaced, then the only possible alternative here is that people who are injured at work never heal whereas those injured in tort situations apparently do.

To enjoy for yourself the extensive efforts put forth by this magistrate judge to ensure Medicare protected, please read:

WARREN FRANK versus GATEWAY INSURANCE COMPANY, ET AL

CIVIL NO. 6:11-0121

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF LOUISIANA

2012 U.S. Dist. LEXIS 33581

March 13, 2012, Decided

[By the way, interesting discussion of Bradley included therein which disappointingly went nowhere, however is one of the first reported instances of a citation to it so people are trying to get the opinion the recognition it deserves.]

Kentucky Pill Mill Legislation Approved by House

Medicare Set Aside Services — Fri, 09 Mar 2012 16:40:30 GMT

While not a huge fan of Kentucky's efforts to require CMS approval of WCMSAs when available (well actually the legislation still states "unless the settlement is approved by the federal Medicare Secondary Payer Act", whoever that is and why not just the allocation given it is the state's duty to approve the settlement, but I digress), I have to applaud the efforts they are making in controlling the pill mills in its state. The legislation requires electronic monitoring of pain medications by the state’s Attorney General through the state’s electronic controlled substance monitoring system known as KASPER. Licensed practitioners would be expected to check KASPER when they prescribe or dispense drugs and failure to submit data to KASPER within a timely fashion would carry penalties. The legislation would also require that pain management clinics be owned and licensed by a physician or nurse practitioner who is licensed to practice medicine and prescribe controlled substances in Kentucky and in-office dispensing would be limited to a two-day supply.

Sounds like a sensible plan that I hope other states may follow.

Caldera v. The Insurance Company of PA: Private Cause of Action by Beneficiary Harder than Ever to Win

Medicare Set Aside Services — Thu, 01 Mar 2012 22:27:37 GMT

There are not many MSP private cause of action cases made under 42 USC 1395y(b)(3)(A) reported, so when I find one I am generally intrigued. After Douglas Stalley was finally sanctioned last summer for his constant attempts to turn the MSP into a qui tam statute, claims by him & Erin Brockovich seem to have disappeared. However a recent decision out of the US District Court for the Southern District of Texas has left me disappointed. While not a fan of that particular part of the MSP because I find it's potential for abuse frightening, I hate to see the law applied badly and kill a claim that appears to fit the only real application of the statute.

Claimant was injured in 1995 for which the defendant paid some benefits under Texas WC law. Still suffering from his injury, Claimant applied for & received SSDI in 1998, meaning that by 2000 he was automatically entitled to Medicare. In 2002, the insurer filed to terminate his medicare benefits on the basis that the injury had resolved and any new treatment was not related. Claimant didn't appeal and let Medicare cover his care, inclusive of back surgeries in 2005 and 2006 totaling $42,637.41.

So here is where it gets interesting. On April 12, 2011, the parties entered into an Agreed Judgment in state court holding that the condition requiring back surgery was in fact related to the initial 1995 workers' compensation injury. The opinion then stated that this established the defendant's responsibility for medical expenses required to treat the injury, but did not liquidate any damages or require any payment. Defendant denies any liability for the Medicare payments because claimant did not comply with preauthorization requirements and did not file timely claims for those medical bills. Furthermore, Defendant also argues that Medicare did not make conditional payments subject to reimbursement because no payment had been made or could reasonably expect to be made under Texas workers' compensation law. Defendant finally stated that no payment could be expected until the conclusion of the workers' compensation administrative remedies, defendant's objections overruled and it was ordered to pay. The court granted the motion to dismiss and while I understand it found this a case of first impression, I don't think it got it right.

In Texas, pursuant to §408.005 of the TX WC Act, you cannot limit or terminate an employees right to medical benefits, meaning they have lifetime medicals. In the world of CMS, that means perpetual ORM. Upon notice in 2002 that the insurer determined that continued treatment of his back was not related, claimant understood that WC wasn't covering it so he turned to Medicare. Medicare made payments for benefits because claimant was told it was not related to the work comp claim, so Medicare was the assumed primary payer. But the minute the judge entered the 2011 agreed judgment establishing relatedness, Medicare became secondary payer for that previously determined not related condition and that should have been enough for Medicare to become entitled to reimbursement for any related treatment paid, and therefore because claimant is statutorily entitled to bring that claim on behalf of Medicare, for him to have prevailed. Without looking extensively into the Texas law, I get that there must be something that precludes an award of money damaged to the claimant under these circumstances, but that should have no bearing on the MSP claim. A state law cannot prevent Medicare from recovering in secondary payer situations.

With regard to the arguments that proper authorization and timely claims were not made, I cannot believe that discussion of 42 CFR 411.24(f)(1) never happened. The regs say specifically that CMS may recover without regard to any claims filing requirements that the insurance program or plan imposes on the beneficiary. While I disagree vehemently that this provision even exists because how can it be right to hold the insurer responsible for the claimant's disregard of the process and causing Medicare to make a wrongful payment, the fact is that the reg exists and should be properly implemented when the issue arises. As it turns out, the insurer made an error in not paying the claim to begin with because it has subsequently been deemed related, so why should it be entitled to a free pass on those expenses based upon a procedural technicality. Why would you seek preauthorization or timely reimbursement at the time it was relevant from an entity that already told you're not covered.

I think the proper way to have viewed this case would have been using the CMS explanation of liability settlements. In those cases, there are no Medicare overpayments prior to settlement, judgement or award because up until that point, no responsibility attaches to the defendant. Without the need to accept or establish liability, primary payer responsibility attaches upon an insurance payment exchanged for a release from the liability in question. CMS states that the obligation arises by operation of law and in the case at hand, that is exactly what happened. While the medical benefits had been terminated in 2002 under state law, primary payer status attached the moment that Agreed Judgement was approved by the court.

Well with all that being said, I concede that I am not a federal judge…

GUADALUPE CALDERA, Plaintiff, vs. THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA, Defendant.

CIVIL ACTION NO. C-11-321

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS, CORPUS CHRISTI DIVISION

2012 U.S. Dist. LEXIS 12888

February 2, 2012, Decided

ICD-10 Alert

Medicare Set Aside Services — Tue, 28 Feb 2012 19:51:00 GMT

Just in case anyone was concerned that CMS would elect to implement ICD-10 coding for purposes of MMSEA Section 111 reporting despite the fact that use for general Medicare purposes was postponed by Secretary Sibelius last week, rest assured that we now have an official Alert confirming the delay for reporting purposes until further notice. Phew, glad we got that covered…

http://www.cms.gov/MandatoryInsRep/Downloads/ICD10Alert.pdf

CBO Pushes Medicare Insolvency Back Another Year

Medicare Set Aside Services — Fri, 24 Feb 2012 18:26:40 GMT

The Congressional Budget Office recently issued its annual Budget and Economic Outlook report, noting a significant reduction in Medicare spending over the next decade. The report predicts Medicare spending will shrink by $69 billion over the decade compared to prior estimates, while the growth of Medicare spending per beneficiary is estimated to be only 1% more than the inflation rate. However, other financial uncertainties loom with the repeal of the SRG formula which froze rates at the 2011 level (this could cost the program an additional $316 billion over the next 10 years) as well as a 27% physician payment cut scheduled to start March 1st that is likely to be cancelled by a Congressional budget fix already in the works.

All in all, the Medicare HI Fund ended 2011 with a balance of $246 billion, brought in $219 billion in primarily the Medicare payroll tax and an additional $13 billion in interest income. Non-interest income is projected to increase from $230 billion in 2012 to $417 billion in 2022, in part due to the 2013 increase in the payroll tax on certain high wage earners from 2.9% to 3.8%. Annual expenditures are projected to grow from $268 billion in 2012 to $444 billion in 2022, so with expenditures expected to outstrip income by $24 to $30 billion annually throughout the decade, under the current law, the CBO projects the HI trust fund will be exhausted in 2022, which is a one year improvement over its report last year. Of course that is still two years sooner than the Trustees reported last May so who is to say for sure.

What we do know is that with the ongoing issue of insolvency looming, Medicare will continue to seek other ways of reducing its spending - enforcement of its MSP exclusion remains an easy means to accomplish that task.

To view the full report: http://www.cbo.gov/sites/default/files/cbofiles/attachments/01-31-2012_Outlook.pdf

Medicare Gets Another Free Pass Under Michigan No-Fault Auto Law

Medicare Set Aside Services — Tue, 21 Feb 2012 17:44:17 GMT

It is getting tough to be an MSP expert these days because, of late, it also requires that you be an expert in all things touched by the MSP, and those possibilities appear endless. My latest inquiry required me to understand Michigan no-fault auto insurance laws and I am sharing because I found this interesting. Here is yet another way that, despite paying into the Medicare system throughout your entire work-life, you can still be denied benefits.

The individual who wrote to me was called by her auto insurer and informed that because she is a Medicare beneficiary, she would need to pay an additional $250/month for PIP to cover any injuries that may be sustained in an auto accident. Given that her cars are fully covered through her bank financing and she is enrolled in Medicare Parts A, B & D and MediGap, she found it hard to believe that she is not already covered for an auto accident, and as it turns out, she is not.

Michigan law states:

500.3109a Offering deductibles and exclusions reasonably related to other health and accident coverage; rates; approval; applicability.

An insurer providing personal protection insurance benefits shall offer, at appropriately reduced premium rates, deductibles and exclusions reasonably related to other health and accident coverage on the insured. The deductibles and exclusions required to be offered by this section shall be subject to prior approval by the commissioner and shall apply only to benefits payable to the person named in the policy, the spouse of the insured and any relative of either domiciled in the same household.

Essentially, by law, Michigan no-fault insurers are permitted to ask about other coverage with medical benefits, exclude coverage because of it, and adjust rates accordingly. The intent was to eliminate duplicative recovery by an insured from both a health insurer and a no-fault insurer and to contain or reduce no-fault and health care insurance costs. Think of it like the collateral source rule but, rather than preventing someone else's auto insurer from benefiting because you have enough foresight to carry health insurance and because you carry your own coverage in a no-fault situation, you don't have to pay twice for different types of insurance to cover medical treatment for yourself. If you have health insurance, you get a discount on your auto since the statute permits an exclusion from providing duplicative coverage.

However, because Medicare is statutorily excluded from providing coverage in a no-fault situation under the MSP, entitlement to Medicare doesn't have the same effect on rates as say a BC&BS private policy or your employer's group health plan, despite your having paid payroll taxes throughout your entire work life to acquire this entitlement. Since its inception in 1965, Medicare is meant to be a primary form of insurance for the elderly at a time when they anticipate a fixed income, so it seems counterintuitive that the entitlement would cause elderly drivers to pay more for auto insurance when they become Medicare beneficiaries. But before I climbed up on my constitutional soapbox to scream for equal protection, I did verify that the statute was deemed constitutional by the Supreme Court of Michigan in 1979 in O'Donnell v. State Farm, 404 Mich. 524 (1979), and because it predated the MSP enactment, I dug up cases like LeBlanc v. State Farm, 410 Mich. 173 (1981) that specifically found that "other health and accident coverage" included Medicare. So Mary, your beef is not with Medicare but your state legislature; however, given that you have obviously been experiencing lower auto premiums than the rest of us in non-no-fault states for most of your adult life, I am not sure you are going to find much sympathy.

In response to your question of whether the $250 PIP election is a must for seniors in Michigan, I am not going to tell you what you should and shouldn't do. I will, however, tell you that if you don't have PIP coverage and Medicare does make payments for any accident related treatment, then it will be entitled to reimbursement for those payments. If you are the target of its recovery efforts, understand that through the various laws that cover debt collection by the federal government, one method it uses is off-setting money it owes you, so things like Social Security and tax return checks are susceptible. Therefore, just as with any other insurance decision in your life, only you can decide what your risks are and how to best protect yourself from them.

For more information about Michigan No-Fault Laws:
http://www.michigan.gov/documents/cis_ofis_noflt_gd_25094_7.pdf

For more information as to who pays first:
http://www.medicare.gov/Publications/Pubs/pdf/02179.pdf

Self-Calculate Final Conditional Payment Amount Prior to Settlement

Medicare Set Aside Services — Tue, 21 Feb 2012 14:28:00 GMT

Beginning February 21, 2011, CMS implemented an optionpermitting certain Medicare beneficiaries the ability to self-calculate Medicare’s conditional payment amount prior to settlement. As with other recent policies, the option is available only to liability insurance (including self-insurance) settlements and not workers’ compensation or no-fault claims and only when involving a physical trauma based injury and not ingestion, implantation or exposure. The dollar threshold was established at $25,000 or less and the date of incident must have occurred at least six months prior to the submission of the self-calculated amount to Medicare for review. The beneficiary must demonstrate that treatment has been completed and that no further treatment is expected through written physician attestation or a written certification by the beneficiary that there was no treatment for at least the 90 days prior to submission and that there is no further care expected.Election of this option bars beneficiary from appealing the amount or existence of this debt, but the right to pursue waiver of recovery will remain.

Within 60 days MSPRC will send notice of its determination. If it agrees, the beneficiary will receive a letter stating that the amount is considered final as long as settlement occurs with 60 days from the date of the letter and that the settlement is less than $25,000. If it disagrees yet the beneficiary was eligible for the process, it will counter with the amount it determines appropriate. Upon settlement the beneficiary is expected to send the first and last page of the settlement agreement showing the total amount of the settlement and the date it was signed, proof of the procurement costs and the MSPRC’s letter. Upon receipt, MSPRC will adjust for procurement costs and issue a demand for payment within 20 days.

While a nice gesture on CMS’ part, this process does not appear to alleviate much of the time involved in resolving the conditional payment obligations. Prior to evoking this option, the CPL must already have been requested and and that represents the most significant part of the delay. The you still have to go back and forth with MSPRC to dispute unrelated items on the CPL, so it is unclear what advantage this process brings given that the beneficiary must give up the ability to appeal to utilize it.

For more information, visit the MSPRC website at:
http://msprc.info/forms/SelfCalculatedFinalCP.pdf

ICD-10: MMSEA Reporting Crisis Averted [at least for now]

Medicare Set Aside Services — Thu, 16 Feb 2012 19:53:06 GMT

Every year it feels like October 1 will be dooms day for one reason or another when it comes to our dealings with CMS. For the past several, it has been TPOC reporting and due to several implementation delays, we've been enjoying that one over and over again. Next year was going to be fun as it was slated to the implementation date for ICD-10 medical billing codes. You may recall in a previous post last September, we reported that the ICD-10 includes 140,000 codes compared to the 18,000 under ICD-9. With MMSEA reporting just finally coming on line in some liability scenarios, it seemed almost unfair to change the rules of the game so soon. Well obviously Secretary Sebelius feels our pain as she announced today that HHS will initiate a process to postpone the ICD-10 implementation date. The date has not been determined but hopefully it will provide adequate time for RRE's to make the necessary adjustments to their reporting systems and send their ARs out for medical billing certification because it looks like they just may need it.

Haro Up On Appeal Too

Medicare Set Aside Services — Tue, 14 Feb 2012 20:11:30 GMT

Again I find myself turning to WorkCompCentral for my MSP related news, so kudos to Dave DePaolo and his crew for staying on top of the issue for us. Last May, I pondered why we had not seen an appeal by the federal government in Haro v. Sebelius considering what a crushing blow the injunction must have been to the CMS ego. As it turns out, I just wasn't looking hard enough. DHHS filed an appeal on June 30, 2011, the parties just finished briefing the case on January 10, 2012 and the attorneys are now just waiting for the U.S. Court of Appeals for the 9th Circuit to schedule oral arguments, expected to be in late spring or summer. The issue at hand: the injunction ordered by the Arizona district court prohibiting CMS from sending Medicare beneficiaries to collections while an appeal or waiver request was being processed and from making certain threats in its recovery demand letters. MSPRC halted operations for about 60 days following the decision, during which time it did little more than make much needed changes to its recovery related templates and update chapter 7 of the MSP Manual, which as of yet remains unreleased. Interest continues to accrue, pursuant to the statute, starting on day 61 on regardless of whether the claim is placed in collections or not. All in all, less than exciting impact in an area so ripe for improvement. The only significance of the district court decision was the symbolic nature of the court limiting, to any extent, the unbridled reach of CMS' recovery program. This is why most assumed an appeal was not forthcoming.

The article goes on to sound warning bells that primary payers may become an easy target if the Haro decision is upheld and pursuit of Medicare beneficiaries for reimbursement becomes too hard, but I just don't see it. Insurance companies are still United States citizens with due process rights, and legal redress is already available, although perhaps cost prohibitive, to fight unwarranted demands for reimbursement. That certainly does not make for an easy target when CMS has to prove the carriers’ legal obligation to make payment in the underlying state law claim. Given that carriers are prone to making payment because it is easier than fighting, one wonders why carriers are not pursued more often under the current regime. We already know that the creation of ORM RACs is on CMS' agenda, so it already has carriers in its sights, but if ORM is reported, that money was likely already owed. And going after the carriers might force CMS to consider the subrogation option and we know it doesn't like to subject itself to state law. So, as a general proposition, the easiest recovery method will be to utilize the priority right of recovery from anyone in possession of an insurance payment and the Medicare beneficiary will always be the easiest target because the federal government has so many options against them. They have contractual obligations to Medicare to help obtain or make repayment, the Federal Claims Collection Act permits the government to offset any other funds owed, such as SSDI, SSI or tax returns, for the reimbursement claim, and the False Claims Act permits a claim against the beneficiary for causing the overpayment to be made even absent fraud due to the FERA amendment. Nevertheless, while CMS has the greatest recovery rights against them, they are typically the least likely to have funds to make reimbursement with so really what is the point. From an easy target standpoint, I would have picked attorneys’ fees.

Considering the 9th circus aspect, this appeal really could go either way. The district court decided solely upon public policy, which frankly was the right thing to do. CMS' treatment of United States citizens, those who have financially supported this entitlement program throughout their entire work lives, has been historically atrocious. Besides taking forever, being uncommunicative, unresponsive and completely devoid of compassion, more often than not CMS is wrong, yet makes it demands anyway and drags all parties involved along for the ride because frequently it will get paid simply to go away. When it comes to waivers and compromises, the fact that we get more sympathy from the IRS speaks volumes to just how ridiculously this agency is behaving. I personally believe the injunction will stand because frankly it is not inhibiting the government's collection efforts. While it may delay recovery in some instances, due process is an issue and it is not unreasonable to want to know what your actual debt is before you pay it.

We shall continue to monitor the case (or wait for WorkCompCentral to report on it) and keep you up to date on the progress.

Hadden: Will My Supreme Court Predictions Finally be Validated?

Medicare Set Aside Services — Mon, 13 Feb 2012 18:43:20 GMT

For the better part of the past 18 months, I have been sitting around hoping for any federal appellate decision involving MSP apportionment for the sole purpose of putting us on the path to the Supreme Court. Well Workcompcentral has reported that Patton Boggs is petitioning for cert in Hadden v. US [Hadden to Challenge Medicare Decision at U.S. Supreme Court: Top [2012-02-07]]. On behalf of all of us in the MSP industry that are tired of fighting this pointless and questionably constitutional fight, may I just say thank you to the MARC Coalition for raising the necessary funds to make that happen. In a recent article in Business Insurance where I was quoted as hopeful that this course of action would be pursued, Mike Merlino of Sedgwick disagreed that the issue of apportionment would reach the Supreme Court due to the state law distinctions in Bradley. But what I think the article failed to recognize was that his statement is the crux of the problem – that the determination under state law should be the important distinction. While first year law school taught me that federal law trumps state law, the point I think is lost on CMS is that absent the underlying state law issues, there is no recovery for Medicare. Bradley is the right outcome, perhaps not in dollar amount so much as in principle given that the probate court accepted the dollar claims of the 10 surviving children without question which severely diminished Medicare's tangible claims. The probate court was the appropriate venue to make a determination as to who got what under the state wrongful death laws and rather than participate in those proceedings and challenge the valuation of the various intangible claims, CMS played the MSP card. Medicare should not have rights to recover anything more than what is available under state law and whether that be affected by contract governing policy limits, comparative law or statutory caps limiting recovery, or because a state agency had proper jurisdiction to make such a determination, CMS should only be able to access its equitable share. Only badly written law, cobbled together over 30+ years, supports the fact that Medicare has a right under federal law to be fully reimbursed up to the full amount of the settlement after procurement cost reductions regardless of the underlying legal issues. The issues on cert are equity and public policy, plain and simple, and I remain optimistic that the Supreme Court will recognize the significance of their decision on this petition.

[PS: To Dave Farber in response to your invitation at the end of the article, I am absolutely willing to help with amicus briefs in any way that I can. - Jen Jordan]

New MMSEA Section 111 Town Hall Calls Scheduled

Medicare Set Aside Services — Mon, 13 Feb 2012 18:23:53 GMT

In case anyone missed it because again the automatic email notice we are supposed to get when something has been posted to their web site was not sent, CMS has announced some MMSEA Section 111 Town Hall calls for 2012. Dates for the next several calls are:

February 23 (Thursday), 2012

March 22 (Thursday), 2012

April 24 (Tuesday), 2012

May 24, (Thursday), 2012

June 19 (Tuesday), 2012

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