In our first blog post on this topic, we outlined the new and emerging risks and complications presented by Medicare Advantage Plans (MAPs). As previously indicated, the 11th Circuit Court of Appeals published a groundbreaking decision in a matter of first impression, finding that the Medicare Secondary Payer (MSP) Act private cause of action permits a Medicare Advantage Organization (MAO) to sue a primary payer for reimbursement of a secondary payment made by the MAO. The Court’s decision, which grants summary judgment to the plaintiff in Humana Medical Plan Inc. v. Western Heritage Insurance Co. (released on August 8, 2016), went a step further than any other jurisdiction has to date, finding that not only may the MAO sue for reimbursement but also determining that the MSP statute mandates double damages in a private cause of action. Additional background and analysis of this case may be found in our earlier blog post.
Workers' compensation, liability, and no-fault insurers in Florida, Alabama, and Georgia—the states that make up the 11th Circuit and are directly subject to this court’s decision—will need to examine their current Medicare compliance programs and make necessary changes to ensure that they have protocols in place to address settlements with Medicare beneficiaries. There’s another risk in the making that will further complicate matters for liability and no-fault claims: the Liability Medicare Set-Aside. While the courts are expanding Medicare’s reach involving “past” payments through MAPs, Medicare is looking to increase its own powers of recovery for “future” payments by proposing liability and no-fault claims be subject to the same MSA review process that governs workers' compensation claims.
CMS’s Previous Attempts at Addressing Liability Medicare Set-Asides
The Centers for Medicare and Medicaid Services (CMS) has indicated an interest in broadening its policies around Liability MSAs (LMSAs) in recent months. Those in the workers' compensation arena have operated within the parameters imposed by CMS policy memorandums for years, and most have internal protocols already in place. But other no-fault lines have not been exposed to MSAs to the same extent.
CMS first indicated an interest in extending its reach into the field of LMSAs in June 2012, when it issued an Advanced Notice of Proposed Rulemaking (ANPRM), soliciting comments on an array of options under which liability, no-fault, and workers' compensation can meet their obligations to protect Medicare’s interest with respect to MSP requirements. This initiative fizzled rather quickly, likely due to industry feedback. Subsequent to the ANPRM, CMS released an announcement in August 2013 that it would issue a Notice of Proposed Rulemaking (NPRM). CMS did not provide any public detail to the NPRM and ultimately withdrew it in October 2014. The subject around Liability MSAs remained static for almost two years until a recent indication from CMS that it intends to resuscitate its efforts to expand future medical set-asides beyond workers' compensation.
In late May 2016, CMS published a solicitation for an 8(a) company, typically a small disadvantaged company, to expand the existing statement of work (SOW) and demonstrate the ability to provide services related to the review of WCMSAs and “Other Non-Group Health Care Plan Medicare Set Aside Arrangements.” In this announcement, it appears CMS may abridge its previous attempts to garner industry feedback and proceed straight to supplying policy memorandums, leaving the general liability field to learn, comprehend, and create internal policies based on risk appetite—just as the workers' compensation industry has already endured. Then in June 2016, CMS posted an alert stating it was considering expanding the MSA review process to liability and no-fault insurance and that it plans to work with the industry to “identify how best to implement this potential expansion.” While healthcare costs remain in the national spotlight, it’s not surprising that government agencies and courts are erring on the side of protecting Medicare dollars.
Potential Reach of the Humana Decision and LMSA Considerations
Undoubtedly, the 11th Circuit Court decision in Humana has obvious financial consequences to insurers in the states affected. Specifically, requirements around obtaining Medicare Part C information for any beneficiary of a settlement, judgment, or award will now need to be realized and incorporated into processes before approaching a settlement. This information is not easily obtained and will require the cooperation of the plaintiff in all claims. In addition to discovery protocol changes, insurers will now need to consider further effects of Medicare compliance in liability settlements. Are LMSAs the next thing? If so, what are the internal protocols for complying with the policy that CMS deems appropriate? As Medicare’s reach continues to evolve, insurers should be aware and prepared to respond to their legal obligations. ISO Claims Partners has unparalleled experience in the industry and stands ready to help you as you navigate emerging compliance requirements.