CMS's PAID Act implementation plans – what’s next and how we can help

June 11, 2021 / 11 min read

The Centers for Medicare and Medicaid Services (CMS) has released information on how it plans to implement the Provide Accurate Information Directly (PAID) Act as part of its recent updates contained in its Section 111 NGHP User Guide (Version 6.4, June 11, 2021). The new User Guide reflects that CMS’s PAID Act implementation plans, as discussed below, will not become effective until December 11, 2021.[1] This is a reminder that CMS is holding a PAID Act webinar on June 23^rd where the agency is expected to further discuss their PAID Act implementation plans.

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The following provides a general overview of the PAID Act, CMS’s implementation plans, and related considerations as follows:

What the PAID Act requires

The PAID Act, in general, requires CMS to expand the Section 111 Query Process to (i) identify whether a claimant subject to the query is, or during the preceding 3-year period has been, entitled to benefits under the Medicare program; and if so, (ii) CMS must provide the RRE with the plan name and address of any Medicare Advantage plan under Part C and any prescription drug plan under part D in which the claimant is enrolled or has been enrolled during such period.[2]

To put these changes into better perspective, currently, when an RRE submits the required Query Process data elements to CMS,[3] if the queried individual is identified as a Medicare beneficiary, the Query response only confirms he/she is enrolled in Medicare. It does not provide any information regarding which “part” of the Medicare program he/she is enrolled. The PAID Act will change this as CMS will now be required to provide Medicare Advantage and Part D enrollment information. With this information, RREs will now be able to better identify whether a claimant is (or was) a Medicare Advantage and/or Part D plan enrollee, and, if they elect, use this information to then contact the plan(s) to address any applicable recovery claims.

How CMS plans to implement the PAID Act – and what information will be provided

In Section 111 NGHP User Guide (Version 6.4, June 11, 2021) CMS advises that it will be making changes to the Query response file and HEW software to implement the PAID Act requirements. These changes, as outlined below, will not become effective until December 11, 2021.[4]

To help implement the PAID Act, CMS notes that it will be updating the Query Response file and HIPAA Eligibility Wrapper Software (HEW) software wrapper as follows:

Query Response File – The Query Response File will be updated to include: Contract Number, Contract Name, Plan Number, Coordination of Benefits (COB) Address, and Entitlement Dates for the last three years (up to 12 instances) of Part C and Part D coverage. The updates will also include the most recent Part A and Part B entitlement dates.

HEW wrapper software -- The HEW software will also be modified to extract the additional fields from the response file. Finally, process steps for installing and configuring the HEW software will be provided (see chapter V, HEW Query Response File Record and HEW Query Response File Record – Version 4.0.0 and Appendix K).[5] CMS plans to release Version 5.0.0 of the HEW Software on September 13, 2021 and RREs will be able to utilize the new version of the translator software for testing purposes between September 13, 2021 and December 10, 2021.[6]

Of note, in terms of file formatting, the data elements being returned within the pre-existing response file format will remain populated within the same data positions while the new data elements will simply be added on to the tail end of the record layout.[7]

It is also important to note that as part of this process CMS will actually be providing more information than is technically required under the PAID Act. Specifically, the PAID Act only requires that CMS provide “the plan name and address” of any identified Medicare Advantage or Part D plan. However, as noted, CMS also plans to provide the contract number, contract name, plan number, and the plan’s COB address. Having this additional information may prove helpful in terms of following up with the identified plan(s) to obtain and address any recovery claims.

In addition, CMS is planning to include the most recent Part A and Part B effective and termination dates. Historically, Part A and B coverage dates have never been provided for NGHP entities and their inclusion will provide even greater clarity in terms of overlapping coverage and aid further in terms of appropriate coordination of benefits.

Also, it appears that CMS will be limiting the number of distinct Part C and D coverage periods being returned to “12 instances.” While the PAID Act does not technically contain any limitations, CMS’s decision to place some limit on the information returned, is likely due, in part, to file size restrictions coupled with the unlikely occurrence of a Medicare beneficiary having more than 12 different coverage enrollment periods over a three-year time span.

Using the PAID Act to your advantage – avoiding “double damages” liability

From a practical claims perspective, the PAID Act will help insurers more easily determine whether the claimant is (or was) a Medicare Advantage and Part D enrollee and provide key information regarding the identified Medicare Advantage and Part D plan(s). Technically, the PAID Act does not require insurers to do anything with this information. However, it is important to keep in mind that the PAID Act was prompted in large part by the wave of recent lawsuits filed by Medicare Advantage Plans (or suits filed on their behalf by assignee entities) asserting recovery rights, including claims for “double damages” under Medicare’s private cause of action provision[8] and the insurer’s inability to proactively identify claimants who were Medicare Advantage or Part D enrollees.

In this regard, over the past several years, the United States Circuit Courts of Appeals for the 3^rd and 11^th Circuits,[9] as well as several United States District Courts[10] have ruled, in part, that Medicare Advantage Plans can sue insurers for “double damages” under the MSP in relation to their recovery claims – with the courts in two of these cases levying double damages against the insurer in those cases.[11] While Part D plans (also referred to as “Part D sponsors”) have not been as active as Medicare Advantage Plans in asserting recovery claims, certain federal statutes and regulations note, in part, that Part D plans have the same recovery rights as Medicare Advantage Plans.[12]

Given this backdrop, insurers can use the information the PAID Act will provide to address potential Medicare Advantage and/or Part D recovery claims. Through the Section 111 Query, insurers will now have the key data points needed to help proactively address Medicare Advantage and/or Part D recovery claims to avoid potential “double damages” lawsuits, or worse, actual “double damages” awards. In short, insurers will now have access to the information they have long been missing to help get ahead of the curve, reduce costs, and minimize liability regarding Medicare Advantage and Part D recovery claims.

How ISO Claims Partners can help

With PAID Act implementation around the corner, keep in mind that ISO Claims Partners can help you manage, dispute, and resolve Medicare conditional payment claims, Medicare Advantage recovery actions, and Treasury claims. In addition, we can help you address any Part D recovery claims you may receive.

A key service to consider for your compliance program is our CP Link service. CP Link is our programmatic solution that automates Medicare conditional payment identification, dispute, and resolution directly from Section 111 data for holistic compliance. In an exciting development, as a result of the PAID Act, our CP Link service will offer an optional add-on feature to automate Medicare Advantage lien identification and resolution. CP Link can significantly reduce the burden on claims handlers and help ensure that Medicare Advantage recovery claims are handled programmatically.

In terms of results, we have consistently delivered significant cost savings for our clients. In 2020, we saved our clients approximately $51 million in conditional payment disputes and reduced 70% of conditional payment dispute submissions to zero dollars. Our CP Link solution saved our clients over $14 million in 2020 and approximately $6 million so far in 2021. Finally, we can also help you build practical claims protocols to address each of the Medicare compliance areas noted above and provide training for management and adjuster.

Questions?

Please do not hesitate to contact the author if you have any questions or would like to learn more about how we can help you!

[1] CMS’s Section 111 NGHP User Guide, Chapter IV (Version 6.4, June 11, 2021), Chapter 1, p. 1-1.

[2] In pertinent part, the text of the PAID Act reads as follows:

(ii) SPECIFIED INFORMATION.— In responding to any query made on or after the date that is 1 year after the date of the enactment of this clause from an applicable plan related to a determination described in subparagraph (A)(i), the Secretary, notwithstanding any other provision of law, shall provide to such applicable plan—

(I) whether a claimant subject to the query is, or during the preceding 3-year period has been, entitled to benefits under the program under this title on any basis; and

(II) to the extent applicable, the plan name and address of any Medicare Advantage plan under part C and any prescription drug plan under part D in which the claimant is enrolled or has been enrolled during such period.”

H.R. 8900, Further Continuing Appropriations Act, 2021, and Other Extensions Act, Title III, Offsets, Sec. 1301, (ii), Transparency of Medicare Secondary Payer Reporting Information.

[3] In general, as part of CMS’s Section 111 Query Process, the data elements that Responsible Reporting Entities are required to submit include a Medicare ID or SSN or last 5 digits of the SSN; first initial of the first name; the first six characters of the last name; date of birth; and gender (M/F). See CMS’s NGHP User Guide, Chapter IV, Technical Information, Chapter 8- Query Files, (Version 6.4, June 11, 2021).

[4] CMS’s Section 111 NGHP User Guide, Chapter IV (Version 6.4, June 11, 2021), Chapter 1, p. 1-1.

[5] CMS’s Section 111 NGHP User Guide, Chapter IV (Version 6.4, June 11, 2021), Chapter 1, p. 1-1.

[6] CMS’s Section 111 NGHP User Guide, Chapter V (Version 6.4, June 11, 2021), Chapter V, Appendix K, p. K-1.

[7] See, CMS’s Section 111 NGHP User Guide, Chapter V (Version 6.4, June 11, 2021), Chapter V, Appendix E, pages E-6 to E-30.

[8]

The MSP’s private cause of action section, codified at 42 U.S.C. § 1395y(b)(3)(A), states as follows: “There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).”

[9] In re Avandia, 685 F.3d 353 (3rd Cir. 2012) and Humana v. Western Heritage Insurance Co., 832 F.3d 1229 (11th Cir. 2016). The 3^rd Circuit has jurisdiction over federal cases originating in Delaware, New Jersey, Pennsylvania, and the U.S. Virgin Islands; while the 11^th Judicial Circuit has jurisdiction over federal cases originating in Alabama, Florida, and Georgia.

[10] The following United States District courts have ruled (or strongly indicated) that MAPs can sue claims payers for double damages: MAO-MSO Recovery II, LLC v. Mercury Insurance, 2018 WL 3357493 (C.D. Calif. May 23, 2018); MAO-MSO Recovery II, LLC v. Farmers Insurance Exchange, 2018 WL 2106467 (C.D. Calif. May 7, 2018); Aetna v. Guerrera, 300 F.Supp.3d 367 (D. Conn. March 13,2018); MAO-MSO Recovery II, LLC v. State Farm, 2018 WL 340021 (C.D. Ill. January 9, 2018); Collins v. Wellcare Healthcare Plans, Inc., 73 F.Supp.3d 653 (E.D. La. 2014); MSP Recovery Claims Series LLC v. Plymouth Rock Assurance Corporation, 2019 WL 3239277 (D. Massachusetts, July 18, 2019); MSP Recovery Claims, Series LLC v. Phoenix Insurance Company, 2019 WL 6770981 (N.D. Ohio, December 12, 2019); MSP Recovery Claims, Series LLC v. Grange Insurance Company, 2019 WL 6770729 (N.D. Ohio, December 12, 2019); MSP Recovery Claims, Series LLC v. Progressive Corporation, 2019 WL 5448356 (N.D. Ohio, September 17, 2019); Humana Ins. Co. v. Bi-Lo, LLC, 2019 WL 4643582 (D. South Carolina, September 24, 2019); Cariten Health Plan, Inc. v. Mid-Century Ins. Co., No.: 2015 WL 5449221(E.D. Tenn. 2015); Humana Ins. Co. v. Farmers Tex. Cnty. Mut. Ins. Co., 95 F.Supp.3d 983 (W.D. Tex. 2014); Humana v. Shrader, 584 B.R. 658 (S.D. Tex. March 16, 2018); Humana Ins. Co. v. Paris Blank LLP, 187 F. Supp.3d 676 (E.D. Va. 2016).

[11] See, Humana v. Western Heritage Insurance Co., 832 F.3d 1229 (11th Cir. 2016) and Aetna v. Guerrera, 2020 WL 4505570 (D. Conn. August 5, 2020).

[12] For example, 42 U.S.C. § 1395w-102(4) states that the recovery rights afforded to Medicare Advantage Plans “apply in the same manner” to Part D. Likewise, 42 C.F.R. § 423.462 provides that the same “Medicare secondary payer procedures” that apply to Medicare Advantage Plans under § 422.108 also apply to Part D plans. Under § 422.108, Medicare Advantage Plans may seek reimbursement from insurers and other parties in workers’ compensation, liability, and no-fault cases. This regulation further gives Medicare Advantage Plans the same recovery rights as traditional Medicare under the MSP. Similarly, in 2011, CMS released a policy memo taking the position that Part D plans “have the same MSP rights and responsibilities” as Medicare Advantage Plans. See, CMS memo, Medicare Secondary Payment Subrogation Rights, Medicare Advantage Organizations and Prescription Drug Plan Sponsors (December 5, 2011). For additional resource on Part D, see our article, CMS updates its Medicare prescription drug benefit manual – New changes encourage Part D collection and recovery