Medicare Advantage Plans – A New Layer in the Conditional Payment Process?
Posted on November 8, 2012 by Rita Wilson
Over the past few years, much has been written about the mandatory reporting requirements associated with MMSEA Section 111 and the increased interest in ensuring that Medicare is reimbursed for any conditional payments made for a workers’ compensation injury. Unfortunately, under this same backdrop of focused attention on recovery, very little, (i.e. no) attention has been given to the unique issues raised when settling a case with a Medicare beneficiary who receives Medicare Part D benefits, or is enrolled in a Medicare Advantage (MA) plan. This changed overnight when, On June 28, 2012 in the case of In re Avandia Marketing, Sales Practices and Products Liability Litigation, 2012 WL 2433508, the Third Circuit Court of Appeals became the first Circuit Court to recognize that a Medicare Advantage Plan has a private cause of action under the Medicare Secondary Payer Act (“MSP”). So what are the recovery rights of MAP’s and how do we make certain the interests of both the payer and Medicare are appropriately considered when settling a case with a Medicare beneficiary who is enrolled in such a plan?
In 1980, Congress enacted the Medicare Secondary Payer (MSP) statute in an effort to reign in the burgeoning costs of the Medicare program. Under the MSP statute, Medicare makes “conditional” payments, and Medicare has a right of reimbursement if it determines that a third-party primary payer bore responsibility for those payments. 42 U.S.C. § 1395y(b)(2)(B) (2006). The MSP also created a private cause of action to enforce the right to recover payments made by Medicare that are the responsibility of a primary plan. 42 U.S.C. § 1395y(b)(3)(A).
In 1997, Congress created Part C of the Medicare law, now known as the Medicare Advantage program, as an alternative to the traditional Medicare program under Parts A (hospital insurance) and B (medical insurance). MAP’s are offered by private companies and provide all coverage provided by Medicare Part A and Part B and typically offer additional coverage, such as vision, hearing, dental, etc. MAP’s are essentially Medicare HMOs operated by private insurers. The statute creating these plans contains an independent secondary payer provision, which references but does not fully adopt or incorporate the MSP statute. 42 U.S.C. § 1395w-22(a)(4).
Enacted in 2007, the Medicare, Medicaid, and State Child Health Insurance Program (SCHIP) Extension Act (MMSEA) expanded the ability of the federal government to recover sums owed under the MSP statute by imposing strict reporting requirements and penalties for noncompliance. 42 U.S.C. § 1395y(b)(7), (b)(8). Under MMSEA section 111, all insurers as well as self-insurers, collectively referred to as “responsible reporting entities” (RREs), must report information regarding payments made to Medicare beneficiaries and other data to ensure proper coordination of benefits with the Medicare program. 42 U.S.C. § 1395y(b)(7)(A); 42 U.S.C. § 1395y(b)(8)(A). This reporting requirement applies irrespective of whether the beneficiary is enrolled in traditional Medicare or in a MA plan.
What Are the Recovery Rights of MAP’s
Medicare conditional payments are a potential cost that must be considered in any claim involving a Medicare beneficiary. Medicare has the right to be reimbursed, and the power to enforce that right, under the Medicare Secondary Payer Act (MSPA) to the extent that Medicare has already paid for injury related medical treatment. What some do not appreciate, however, is that the conditional payments referenced in the standard Conditional Payment Letter from the Medicare Secondary Payer Recovery Contractor (MSPRC) are only those that have been made under Medicare Part A (inpatient and some outpatient care) and Part B (physician’s fees, therapy, durable medical equipment, etc.), sometimes referred to collectively as “traditional Medicare”. MSPRC presently does not track, and does not attempt to recover, those payments that have been made under Part C (Medicare supplemental plans) or Part D (drug coverage) and very often these other payments are quite substantial.
Part D payments are made by private insurers, and third party pharmacy suppliers, approved by, and under contact with, Medicare and Part C payments are made by private insurers who have been approved by Medicare to write policies that cover items that are either not covered by Medicare under Parts A and B (this is Medicare supplementary coverage) or which replace traditional Medicare completely and which provide additional medical benefits as well. These Part C comprehensive plans are known as Medicare Advantage Plans (MAP’s) and the insurers or sponsors are referred to as Medicare Advantage Organizations (MAO’s). It should be noted that some, but not all, MAP policies also replace Part D coverage.
While there is a general agreement that MAP’s have a contractual right to seek recovery of expenses paid to a Medicare beneficiary, the existence of a private right of action to enforce that claim in federal court under the MSP statute has been less straightforward. MAP’s contend that they have rights as a secondary payer under the MSP statute to seek recovery of paid expenses. Beneficiaries and primary payers, on the other hand, contend that the MSP statute does not confer a private cause of action on MAP’s. Prior to 2012, federal district court cases lend support to the position that MAP’s do not have a private right of action to enforce their reimbursement rights under the MSP statute; instead leaving MAP’s to enforce their rights as secondary payers under state contract law. However, the more recent Third Circuit of Appeals opinion In re: Avandia Marketing, Sales Practices and Products Liability Litigation, 2012 WL 2433508 (6th Cir. 6/28/12) marks a departure from earlier decisions and will no doubt create uncertainty and debate surrounding the reimbursement rights of MAP’s going forward.
Third Circuit Opinion–In re: Avandia Marketing, Sales Practices and Products Liability Litigation
In In re: Avandia Marketing, Sales Practices and Products Liability Litigation, No. 11-2664, 2012 WL 2433508 (3rd Cir. 6/28/12), the Third Circuit Court of Appeals held that a MAP has a private right of action under the MSP to recover payments it has made that are the responsibility of a primary plan. In doing so, the court reversed the district court, which had dismissed the claims of the involved MAP on the basis that the MSP does not grant a MAP a private right of action to enforce its rights as a secondary payer.
In sum, the Third Circuit found that MAP’s have the same recovery rights as traditional Medicare based on a plain reading of the MSP statute, given the legislative history and policy goals of the Medicare Advantage program, and considering due deference owed to Medicare’s interpretation of the MSP statute and related regulations.
Tower MSA Partners – Proactive in Pursuit of Resolution
Regardless of whether an injured worker / plaintiff received Medicare benefits through a MAP or traditional Medicare, compliance with MMSEA Section 111 MIR mandates that the responsible reporting entity report the settlement to CMS. This reporting obligation is separate and distinct from a MAP’s recovery rights under the MSP statute. In addition, Primary payers may not be aware that during a March 22, 2012 teleconference call, CMS stated that they are now sharing MMSEA Section 111 Data with MAP’s. Therefore, MAP’s are now armed with settlement information concerning Medicare beneficiaries in the same manner as traditional Medicare.
Today, about 13.3 Million People are enrolled in Medicare Advantage Plans. There are close to 50 million Medicare beneficiaries, so more than 1 in 4 is on a Medicare Advantage Plan compared to traditional Medicare. Furthermore, Medicare Advantage Plans are gaining members – almost 10% more enrollees over the last year. In terms of Part D Prescription Plans, the number of enrollees for 2012 is estimated it to be around 10.6 million. There are approximately 1,041 plans available from both traditional and Medicare Advantage Plans to choose from.
From a practical standpoint, the Avandia decision creates several challenges.
- How are Medicare’s interests protected in a Medicare Advantage case? Is the primary plan now exposed to repeat double damage claims any time the Part C or Part D plan makes payment that was part of a settlement? It would appear that an approved Liability Medicare Set Aside Arrangement (LMSA) would help, but rules are still yet to be developed by Medicare.
- Will the Medicare Advantage Plan negotiate or hold at 100% recovery rate? Now more than ever, we have an important reason to support Hadden v. U.S.
- How will Medicare contractor enhancements, such as the $300 exemption, Fixed Payment Option, or Self Calculate Option work in this arena? It is unknown, as MAP’s do not use Medicare contractors to pursue its recovery.
While these questions remain, Tower MSA Partners recognizes and will pursue conditional payments from MAP’s based on the following understanding:
- Tower MSA Partners will assist clients in recognizing a Medicare Advantage Plan and its demand letters.
- MAP demands are issued from the MAP directly, i.e., if the MAP is Humana, the demand will be issued on Humana letterhead. This is unlike traditional Medicare conditional payment demands which are issued directly from CMS and on MSPRC letterhead.
- Forward all demand letters from MSPRC, as well as from any MAP or Part D provider when presented.
- Tower MSA Partners will be proactive in determining whether a MAP demand exists.
- Request enrollment/benefit history from claimants/plaintiffs prior to settlement. As a Medicare beneficiary can move between traditional Medicare (Part A & B) and Medicare Advantage (Part C), the parties will need to clear both Medicare and Medicare Advantage, including Part D, for every case.
- Contact both MSPRC and MAP for conditional payment information.
- Follow the same protocols as are in place with traditional Medicare conditional payments to satisfy the interest of the MAP
Proactively addressing the claims of MAP’s in this manner will relieve much of the uncertainty surrounding their reimbursement rights. For questions regarding conditional payment lien negotiations, MAP’s and Medicare Part D recovery, please contact Tower MSA Partners @ firstname.lastname@example.org.
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