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The PAID Act is now law

In a major development on the Medicare Secondary Payer (MSP) compliance front, on December 11th, President Trump signed into law the Provide Accurate Information Directly (PAID) Act as part of H.R 8900,[1] which is a bill that, in part, extends the government’s fiscal deadlines to avoid a government shutdown. The PAID Act’s provisions are included as part of H.R. 8900 in Title III, Section 1301 entitled “Transparency of Medicare Secondary Payer Reporting Information.”

Before the president signed H.R. 8900 into law, the PAID Act initially passed the House on December 8th as a stand-alone bill (H.R. 1375) and as a provision within the BENES Act (H.R. 2477)[2]. It subsequently also passed the House on December 9th as part of the government extension bill, H.R. 8900. It ultimately passed in the Senate on December 11th as part of the financial extension provisions contained in H.R. 8900.   

Cms Updates Its Medicare Prescription Drug Benefit Manual – New Changes Encourage Part D Collection And Recovery

In general, the PAID Act, which amends 42 U.S.C.  § 1395y(b)(8)(G), requires that CMS expand its Section 111 Query Process to identify whether a claimant is currently entitled to, or during the preceding 3-year period has been entitled to, Medicare Part C (Medicare Advantage) and/or Medicare Part D (prescription drug) benefits. If so, CMS is then required to provide the names and addresses of any such Medicare plans through the Section 111 Query Process. CMS must now implement the PAID Act by December 11, 2021. The Congressional Budget Office estimates that the PAID Act will save $30 million.[3]

Join our PAID Act webinar on January 11, 2021, where we will break down the PAID Act, examine its claims impact, and explore what it means for you. 

In the interim, the following provides an overview of critical aspects of the PAID Act, next steps, along with what ISO Claims Partners is doing and how we can help:

What is the PAID Act?

The PAID Act was introduced in the U.S. House of Representatives and U.S. Senate on a bipartisan basis in 2019.[4]  The PAID Act was introduced into Congress through the efforts of the Medicare Advocacy Recovery Coalition (MARC). ISO Claims Partners is a member of MARC and its executive committee.

What does the PAID Act do?

In a nutshell, under the PAID Act, if the claimant is a Medicare Advantage and/or Part D beneficiary (or was one or during the preceding 3-year period), then CMS must provide the applicable plan[5] with the names and addresses of any such Medicare plans through the Section 111 Query.

More specifically, the text of the PAID Act states that CMS must provide the following information to the applicable plan through the Section 111 Query Process:

(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.[6]

To put this into perspective, currently, when an applicable plan submits the required Query Process data elements to CMS,[7] if the queried individual is identified as a Medicare beneficiary, the Query response only confirms that he/she is enrolled in Medicare. It does not provide any information as to the “type” of Medicare program in which he/she is enrolled.

The PAID Act will change this. Under the PAID Act, if the individual is identified as a Medicare beneficiary and is currently entitled to, or during the preceding three-year (3) period has been entitled to, Medicare Advantage and/or Part D benefits, CMS will now have to provide the applicable plan with the names and addresses of any such Medicare plan. Accordingly, applicable plans will now better identify whether a claimant is a Medicare Advantage and/or Part D plan enrollee.

What is the objective of the PAID Act?

The PAID Act was prompted in response to a wave of recent lawsuits filed by Medicare Advantage Plans (or suits filed on their behalf by assignee entities) asserting recovery rights against insurers, including claims for “double damages” under Medicare’s private cause of action provision.[8] In this regard, over the past several years, the United States Circuit Courts of Appeals for the 3rd and 11th 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, federal statutes and regulations note Part D plans have the same recovery rights as Medicare Advantage Plans.[12]

As such, a major objective of the PAID Act is to provide insurers with the ability, as referenced above, to identify whether a claimant is (or was) a Medicare Advantage and/or Medicare Part D (prescription drug) plan beneficiary and to obtain the names and addresses of any such Medicare plans. Proponents of the PAID Act assert, in part, that this legislation will now help insurers better identify and address potential Part C and/or Part D recovery claims by allowing them to obtain entitlement and plan information in a more programmatic manner using Section 111’s Query Process.[13] Currently, there is no such centralized process or system for insurers to obtain this information. The PAID Act changes this.   

When does the PAID Act go “live?”

The PAID Act does not go “live” immediately. Rather, the PAID Act contains a one-year implementation provision from the date of enactment.[14] As noted above, President Trump signed the PAID Act into law on December 11, 2020, which means CMS must implement the PAID Act by December 11, 2021.

What happens next?

With the PAID Act now law, the focus has shifted to how and when CMS will implement its PAID Act’s provisions. The industry will need to see exactly how CMS plans to address the technical aspects necessary to expand its Query Process and whatever related instructions and guidance it may issue regarding this change. It is unknown at this point whether CMS will release an implementation proposal to include a comment period, issue written policy directives, and/or hold informational webinars. 

What is ISO Claims Partners doing?

We continue to closely monitor all developments related to the PAID Act, including waiting for C.M.S.’s next move in terms of how they plan to implement the PAID Act from a technical and policy standpoint. Once CMS issues this information, we will provide additional updates. For our Section 111 reporting customers, please note we'll update our systems as necessary to accommodate any technical changes CMS requires during the PAID Act implementation. We'll keep you posted on all developments related to C.M.S.'s technical and policy updates.

How can ISO Claims Partners help?

While we wait for CMS’s next steps, 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. We can also help you address any Part D recovery claims you may receive.

We offer several cost-effective and proven compliance solutions to help you stay compliant and reduce your conditional payment exposure, including our programmatic CP Link. 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. This can significantly reduce the burden on claims handlers and help ensure that Medicare Advantage recovery claims are handled programmatically.

In 2019, we saved our clients $110 million in conditional payment disputes and reduced 65% of conditional payment dispute submissions to zero dollars. Our CP Link solution saved our clients over $14 million in 2019 and $11 million so far in 2020. Finally, we can also help you build practical claims protocols to address each of the Medicare compliance areas noted above.

Questions?

Please do not hesitate to contact the authors if you have any questions regarding the PAID Act or any item referenced above.


[1] H.R. 8900 is entitled the Further Continuing Appropriations Act, 2021, and Other Extensions Act.

[2]  See our prior article for an overview of the PAID Act’s passage in the United States House of Representatives, which also contains links to H.R. 1375 and the BENES Act for those interested. As referenced in that prior article, the Beneficiary Enrollment Notification and Eligibility Simplification (BENES) Act of 2019 (H.R. 2477) was a larger bill containing amendments aimed at providing certain information to individuals who are approaching Medicare eligibility. The preamble of the BENES Act notes that the purpose of this bill is “to establish a system to notify individuals approaching Medicare eligibility, to simplify and modernize the eligibility enrollment process, and for other purposes.” The PAID Act provisions were contained in Section 4 of the BENES Act in a section entitled “Transparency of Medicare Secondary Payer Reporting Information.”

[3] https://www.cbo.gov/publication/56894

[4] The PAID Act was introduced in the U.S. House of Representatives on February 26, 2019, as H.R. 1375 by Representatives Ron Kind (D-WI) and Gus Bilirakis (R-FL). On June 26, 2019, an identical version of the bill was introduced in the Senate as Senate Bill 1989 by Senators Tim Scott (R-SC) and Benjamin Cardin (D-MD).

At the time of its enactment into law, the PAID Act had seventeen House co-sponsors and six Senate co-sponsors. The Democratic House co-sponsors included: Reps. Joyce Beatty (D-OH); Anthony Brindisi (D-NY); Jared Golden (D-ME); Ron Kind (D-WI); Chellie Pingree (D-ME); Bradley Scott Schneider (D-IL); and Peter Welch (D-VT- At Large). The Republican House co-sponsors included: Reps. Gus Bilirakis (R-FL); Ron Estes (R-KS); Greg Gianforte (R-MT- At Large); Bob Gibbs (R-OH); Glenn Grothman (R-WI); George Holding (R-NC); Bill Johnson (R-OH); Blaine Luetkemeyer (R-MO); David McKinley(R-WV);Adrian Smith (R-NE); and Bryan Steil (R-WI). The Democratic Senate co-sponsors included: Sens. Benjamin Cardin (D-MD) and Thomas Carper (D-DE). The Republican Senate co-sponsors included: Sens. Bill Cassidy (R-LA); Rob Portman (R-OH); Rick Scott (R-FL); Tim Scott (R-SC); and Roger Wicker (R-MS). 

[5] The Medicare Secondary Payer provisions related to Section 111 reporting uses the term “applicable plan” as does the PAID Act whose provisions are being added to existing Section 111 provisions as 42 U.S.C.  § 1395y(b)(8)(G). The term “applicable plan” is defined in 42 U.S.C.  § 1395y(b)(8)(F) as follows: “the term ‘applicable plan’ means the following laws, plans, or other arrangements, including the fiduciary or administrator for such law, plan, or arrangement: (i) Liability insurance (including self-insurance). (ii) No fault insurance. (iii) Workers’ compensation laws or plans.” Outside of the Section 111 context, “insurer” or “primary payer” or “primary plan” are the commonly used terms. In this article, the authors generally use “applicable plan” in relation to those parts of the PAID Act and discussion related to Section 111 reporting; and use the more general term “insurer” outside of this context, such as when discussing Medicare Advantage recovery actions.

[6] 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.        

[7] 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; first initial of the first name; the first six characters of the last name; a date of birth; and gender (M/F). See, CMS’s NGHP User Guide, Chapter IV, Technical Information, Chapter 8- Query Files, (Version 6.1, November 10, 2020).

[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 3rd Circuit has jurisdiction over federal cases originating in Delaware, New Jersey, Pennsylvania, and the U.S. Virgin Islands; while the 11th 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

[13]  See e.g., MARC’s Fixing the Medicare Secondary Payer Policy, How the Bipartisan, Commonsense PAID Act (H.R. 1375)(S. 1989) Benefits Everyonehttp://www.marccoalition.com/paid-act.html

[14] On this point, the PAID Act states that “[i]n 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” the provisions of the PAID Act must be implemented.  H.R. 8900, Further Continuing Appropriations Act, 2021, and Other Extensions Act, Title III, Offsets, Sec. 1301 Transparency of Medicare Secondary Payer Reporting Information.        


Mark Popolizio

Mark Popolizio, J.D., is vice president of MSP compliance at ISO Claims Partners, a Verisk business. You can contact Mark at mpopolizio@verisk.com.

Kate Riordan

Kate Riordan, J.D., is director of Medicare Secondary Payer initiatives at ISO Claims Partners, a Verisk business. You can contact Kate at kriordan@verisk.com.


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