At the 2019 SAWCA Annual Convention a panel discussed challenges around Medicare Secondary Payer compliance. The panel was:
- Diana Leahy – ISO (moderator)
- Rafael Gonzalez – President Settlement Solutions, United Health Group/Optum
- C. Wade McGuffey, Jr – Partner, Goodman McGuffey LLP
- Elizabeth Costner – Attorney
The landscape for Medical Secondary Payer compliance has been constantly changing. Part of this change has been very positive. Approval times for Medicare Set Aside (MSA) agreements have decreased dramatically. What used to take several months to a year now takes just a few weeks.
Another area of change that has been seen is the issue of whether to submit or not submit a MSA for approval. The Statute does not require approval but for many years companies did this as a matter of routine to ensure they would be in compliance with the laws. Now you see more companies choosing not to submit their MSA for approval because of the time required and the frequency of counter-back proposals received from CMS. It used to be around 70% of MSAs were submitted for review and now that number is about half that. CMS has noticed this drop in approval submissions and they are considering passing regulations making approval mandatory. Many question whether CMS has the legislative authority to do this given that the legislation makes no mention of an approval requirement to protect Medicare’s interest. Some time later this fall, expect an announcement from CMS that may put forth their recommendations around this issue.
A third area of change being seen is increasing use of professional administration for the MSA funds. Professional administration used to be rare, but due to the complexity of administration and the desire of payers to ensure the funds are being used appropriately, the use is becoming more commonplace. At this point, there are no rumblings of CMS requiring professional administration.
There is an “urban legend” that if Medicare’s interest’s are not adequately protected they will impose triple damages on all parties involved. While this threat has been there since the inception of these laws, there has never been a case where this has actually happened. All the compliance in this area thus far has been completely voluntarily with no enforcement actions pertaining to the use of MSAs.
Liens from Medicare are a different issue. CMS recovery rights for funds paid is clear under the Statutes, and there have been numerous court decisions enforcing these recovery rights including judgements against carriers, claimants, and plaintiff attorneys on workers’ compensation, general liability, and auto claims.
There has been litigation with CMS regarding caps on medical treatment under state workers’ compensation statutes. For the most part, CMS requires that the matter be “adjudicated” in order to enforce the caps.
In late 2018 they saw the US Department of Justice for the first time pursue recovery under MSP statutes on smaller cases. Prior to this, they only focused on the large settlements where ignoring CMS liens was egregious. What they are seeing now is DOJ target plaintiff law firms saying they failed to protect CMS interests on a book of claims.
Section 111 reporting on workers’ compensation claims has been mandatory since 2010 and on general liability/auto claims since 2011. These laws require payers to notify CMS of any claim where the claimant is, or may become shortly, a Medicare beneficiary. There is a data layout for the information required and Medicare uses this information to filter any payments they are making to ensure nothing flags as having a secondary payer. Medicare’s flagging system is not accurate and the speakers reported that 93% of the payments that CMS requested from their clients were NOT related to the claim. Essentially Medicare tends to flag all treatment after an accident date. It is essential that payers keep updating the record for the Section 111 reporting to make sure that the diagnosis and treatments are clear in the record to try and prevent the CMS flags.