Author: Michelle Allan, Esq.
A recent change to a Medicare Secondary Payer Manual brings Medicare Set-Asides into play for doctors and other medical service providers, who as of March 24 are obligated to direct bill those trusts. Just a year after Medicare’s Workers’ Compensation Medicare Set-Aside Reference Guide update strenuously emphasized the utility of MSAs in protecting Beneficiary entitlements post settlement, the Centers for Medicare and Medicaid Services now put MSA policy in motion with this recent directive. This change is consistent with Medicare’s WCMSA policy and previous guidance that allocations of future medical expenses should be properly funded and spent down in order to protect entitlements. Previous versions of this Manual illustrated primary insurance as opposed to secondary insurance, but made no specific reference to Medicare Set-Asides.
Paramount to this change is the obligation to identify which Beneficiaries should have a Medicare Set-Aside, which can be accomplished through a series of direct inquiries to the patient as well as a review of the Common Working File for an indicator of a WCMSA’s existence. Medicare added Section 30.2.2.1 to chapter 3 of the Medicare Secondary Payer Manual, which includes the following:
The MSP Manual can be accessed in its entirety at: R11874MSP | CMS
PRIOR EFFORTS EDUCATIONAL IN NATURE
Although the updates to the MSP Manual introduce Medicare Set-Asides for the first time, providers may have seen this term before. For years, Medicare notified providers of the existence of Medicare Set-Asides via Medicare Learning Network alerts. These newsletters, stating in their letterhead “knowledge, resources, training” are educational resources. Comparatively, the MSP Manual is an operative document for medical providers used to identify instances in which a primary payer exists and how and when to bill primary insurance, and eventually Medicare, if necessary. Legal and regulatory references are laced through processes, providing depth and context, specifically the inclusion of 42 CFR §411.24 which corresponds with Medicare Secondary Payer obligations. Interestingly, Medicare Learning Network alerts notified providers that Medicare Beneficiaries could have Medicare Set-Asides established for liability, auto and no-fault claims, not just workers’ compensation. These additional insurance lines are not alluded to in the MSP Manual, possibly given that no process for MSA review exists for GL or NF. Rulemaking believed to promulgate formality to Liability and No-Fault Medicare Set-Asides was withdrawn from the Office of Information and Regulatory Affairs by CMS as of October 13, 2022, despite several years of discussion and contemplation over what MSAs would mean, particularly to general liability settlements. Currently, CMS has provided no guidance to settling parties about how and when to submit an LMSA or NFMSA to Medicare for review.
Throughout the years, various stakeholders in the Non-Group Health Plan insurance industry have expressed concerns with formalization of a Medicare Set-Aside review process for liability and no-fault claims. The question of liability for future medical expenses is generally murkier in this arena than workers’ compensation, which has historically been the line of insurance Medicare has focused its efforts toward in terms of a formalized Medicare Set-Aside review program.
For more information or questions on this topic, please contact info@allankoba.com.
Author: Michelle Allan, Esq.
In yet another push into the future, the Office of Information and Regulatory Affairs (OIRA) Dashboard today indicates that any possible Notice of Proposed Rulemaking regarding Medicare Secondary Payer and Future Medicals (CMS-6047) will not occur until October of 2021, at least.
This proposed rule, believed to set possible parameters for Liability and No-Fault Medicare Set-Asides, has been in progress for a number of years. Prior to today’s update, the rule had been scheduled for March of 2021. It had been previously scheduled for release in August of 2020 and then February of 2020 before that.
Additional timeframes for this rulemaking include October of 2019, September of 2019. CMS approached such policymaking in 2012, redacting it in 2014 only to revisit it again in 2016. The industry remains in a holding pattern, which will continue through the end of 2021, if not longer.
The Office of Information and Regulatory Affairs’ (OIRA) Office of Management and Budget (OMB) page shows no changes to the language describing the proposed rule.
The Abstract states:
This proposed rule would clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items services related to liability insurance (including self-insurance), no fault insurance, and workers’ compensation settlements, judgments, awards, or other payments. Specifically, this rule would clarify that an individual or Medicare beneficiary must satisfy Medicare’s interest with respect to future medical items and services related to such settlements, judgments, awards or other payments. This proposed rule would also remove obsolete regulations.
Previous incarnations of this proposed rule abstract have included language such as:
“Currently, Medicare does not provide its beneficiaries with guidance to help them make choices regarding their future medical care expenses when they receive automobile and liability insurance (including self-insurance), no fault insurance, and workers’ compensation settlements, judgments, awards, or payments, and need to satisfy their Medicare Secondary Payer (MSP) obligations,” and “This proposed rule would ensure that beneficiaries are making the best healthcare choices possible by providing them and their representatives with the opportunity to select an option for meeting future medical obligations that fits their individual circumstances, while also protecting the Medicare Trust Fund.”
Essentially, Medicare is no longer indicating that the Beneficiaries do not have guidance about future medical. This could possibly correlate to the prior Medicare Learning Network publications the Agency had disseminated to medical providers, suppliers and facilities. These publications suggested that Medicare Beneficiaries could be billed directly for services if Section 111 reporting was filed, demonstrating a primary payment plan’s availability, with Medicare as a Secondary Payer. The removal of language that there has been no guidance by Medicare could indicate positioning for greater accountability about Medicare Set-Aside usage. This is consistent with a prior change in the Workers’ Compensation Medicare Set-Aside Reference Guide (WCMSA) Version 3.0, which now requires a Beneficiary’s acknowledgement of MSA content, intent, submission processes and associated administration within the Consent Form, as of April 1, 2020.
Allan Koba Compliance Solutions will continue to monitor this matter as it develops. Please contact us at info@allankoba.com to learn more.
Author: Melanie Schafer, Compliance Manager
Double the Damages, Double the Motion, Double the Denial: MSP Double Damages action to continue despite SoL and settlement release arguments
The United States District Court for the District of New Jersey in Osterbye v. United States, 2020 U.S. Dist. LEXIS 116591 (June 30, 2020) recently denied a carrier’s Motion to Dismiss claims arising under the MSP for double damages. The Motion was brought on two grounds: a statute of limitations argument and an argument based on release of claims in settlement. The Court dismissed both arguments, finding factual discrepancies sufficient to surmount a 12(b)(6) Motion to Dismiss.
Both the facts of the Complaint and the facts of the Motion denial merit further unspooling. The facts giving rise to the suit originate in a 2009 liability claim involving Anna May Osterbye and a plumbing contractor. Subsequent to suit but prior to settlement, Anna May Osterbye died, and settlement was effectuated on April 29, 2013, by her estate. A $13,562.90 Medicare conditional payment was known at the time of settlement, incorporated in the settlement, and paid post-settlement by the Plaintiffs, the Administrator of and the Estate of Anna May Osterbye.
Subsequent to settlement, CMS asserted a demand under a separate case control number for $118,071.28 which becomes the subject of the double damages claim. When apprised of the $118,071.28 demand, Plaintiffs appealed and lost on all lower levels. Of note, Plaintiffs had apprised CMS of decedent’s death on December 3, 2013, and provided a new Proof of Representation and an Executor Short Certificate that date. Despite the fact that settlement was effectuated by the estate and CMS was apprised of decedent’s death and provided the requisite documentation regarding same, an appeal to MAC on October 26, 2015, was denied on June 26, 2019, for lack of standing because of the death of the decedent. The available legal filings do not include any response of the agency prior to June 26, 2019, regarding standing issues based on the death of the beneficiary, despite Notice being tendered to the agency at the latest in December of 2013.
Having exhausted all administrative remedies, Plaintiffs in the instant case then brought suit against the United States and the carrier under the MSP’s private cause of action provision. The complaint relies on six claims:
The Plaintiffs and federal defendants stipulated to a dismissal of claims with prejudice, leaving the carrier the sole defendant in the case. Yet again, constitutional questions have been raised regarding the MSP and yet again have not been brought before a finder of fact to adjudicate.
Thereafter, the carrier brought a Motion to Dismiss before the district court on two grounds: that the MSP claim is time-barred because Medicare sent its final conditional payment letter on June 5, 2013, and Plaintiffs failed to sue the carrier within six years, and that the settlement language insulates the carrier from suit by the Plaintiffs.
The Court was unpersuaded by the carrier’s argument. On the first grounds—the statute of limitations—Plaintiff rejoined that the MSP does not contain a statute of limitations, and even if it did, it was equitably tolled because the Plaintiffs were first required to exhaust all administrative remedies through Medicare before filing in federal court. The carrier argued there is no exhaustion requirement. The Court was therefore presented with two questions: whether a Plaintiff must exhaust administrative remedies with Medicare prior to initiating suit under the private cause of action provision of the MSA; and what statute of limitations is applicable to the MSP’s private cause of action provision.
The Court found that where a claim is “rooted in, and derived from, the Medicare Act,” that “claim arises under the MSP and Plaintiffs are required to exhaust administrative remedies before seeking judicial review.” Osterbye, 5. The Court found that the standing and subjective basis for the claim in the instant case was “rooted in and derived from” the MSP such that they were required to exhaust administrative remedies before suing the carrier. Because Plaintiffs did not exhaust administrative remedies until June 26, 2019, and filed suit shortly thereafter, they were not time-barred from suing the carrier. The court declined to adopt a bright-line rule involving the MSP statute of limitations more generally; because the Plaintiffs were required to exhaust all administrative remedies and sued shortly thereafter, the question of a statute of limitations was not taken up by the Court.
For the second ground for its Motion to Dismiss, the carrier relied on the April 29, 2013, Release, pursuant to which Plaintiffs “release[d] and g[a]ve up any and all claims and rights which [Plaintiffs] may have against [the plumbing contractor.]” Osterbye, quoting the Release, unavailable for review. Plaintiffs also “agree[d] that [they] will not seek anything further, including any other payment.” Id. The carrier argued that such language insulated it from suit under the MSP’s private cause of action. Plaintiffs responded that the original Release was predicated on the $13,562.90 conditional payment, not the additional lien amount, and that the Release was therefore based on a “critical mistake of fact.” Osterbye, 10, quoting Plaintiff’s Opposition Brief, 9. The Court relied on the doctrine of mutual mistake, which is a question of fact for a finder of fact and which spoils any motion for summary judgment. The court therefore denied the Motion to Dismiss.
Given the legal standards which apply to 12(b)(6) Motions to Dismiss, it is important not to extend the findings of the Court too broadly: the Court did not rule that an allegation that the settlement was based on known damages nullifies the Release language per se. The Court instead found that the allegation of mutual mistake sufficiently spoiled a Motion to Dismiss, which by its nature requires the defendant to show that no claim has been presented. It will be for the trial court, should the case proceed to trial, to determine whether or not the instant Release language may sufficiently insulate the carrier from suit under the MSP’s private cause of action. Until that time, Release language indemnifying and holding a carrier harmless may not be sufficient grounds for claim dismissal, as such language may present a question of fact best left for a finder of fact to decide.