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The PAID Act is now live – 5 things you need to know (and how we can help!)

The Provide Accurate Information Directly (PAID) Act became effective on December 11, 2021 and is now live!  Signed into law in December 2020,[1] the PAID Act requires the Centers for Medicare and Medicaid Services (CMS) to provide Non-Group Health Plan (NGHP) Responsible Reporting Entities (RREs)[2] with information regarding a claimant’s Medicare Part C (Medicare Advantage) and Medicare Part D (Prescription Drugs) enrollment status.   Under the PAID Act, CMS was required to implement the PAID Act’s provisions by December 11, 2021 and over the past year CMS took several steps to meet this statutory deadline.[3]

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

With the PAID Act now live, the following provides an update to a previous article we released and outlines key aspects related to the PAID Act, as well as how we can help you take advantage of the information that CMS will now be providing to proactively address potential Medicare Advantage and Part D recovery claims.

Toward this goal, here are five key points to know about the PAID Act and how we can help:     

1. As part of the PAID Act, CMS will be providing Non-Group Health Plan (NGHP) Responsible Reporting Entities (RREs) with information regarding a claimant’s Medicare Advantage and Part D enrollment status, as well as Part A and Part B entitlement dates, through the Section 111 Query Process.[4]

 CMS will now provide RREs with the following information through the Section 111 Query Response File:

  • 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 (Medicare Advantage) and Part D coverage; and
  • The most recent Part A and Part B entitlement dates.[5]

 It is interesting to note that CMS will actually be providing RREs with more information than is technically required under the PAID Act.  In general, the PAID Act only requires CMS to provide the names and addresses of any identified Part C or Part D plan.  However, as noted above, CMS will be providing RREs with several other important data points related to a claimant’s Part C and/or Part D enrollment in addition to the plan names and addresses.[6]

2. The PAID Act does not require RREs to report any additional or new information to CMS. 

The PAID Act requires CMS to provide RREs with information through the Section 111 Query Process as outlined in #1 above.  The PAID Act does not require RREs to provide CMS with any additional or new information or data.

3. The PAID Act will not provide RREs with Medicare recovery claim information

In reviewing the information CMS will be providing (see point #1 above), it is important to note that the PAID Act does not require CMS to provide, and CMS will not be providing, any information regarding actual Medicare Advantage or Part D recovery claims. However, insurers can take the information CMS will be providing to contact the identified Medicare Advantage and Part D plans to obtain this information and address any appliable recovery claims, if they so elect (see discussion points #4 and #5 below).

4. Insurers can use the information CMS will be providing to proactively address Medicare Advantage and Part D recovery claims to help avoid potential “double damages” lawsuits.

Technically, the PAID Act does not require insurers to do anything with the information CMS will be providing. However, from a practical standpoint, insurers may wish to consider using this information to address potential Medicare Advantage and Part D recovery claims. 

In this regard, 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[7] and the insurer’s inability to proactively identify claimants who are Medicare Advantage or Part D enrollees.   On this point, over the past several years, the United States Circuit Courts of Appeals for the 3rd and 11th Circuits,[8] as well as several United States District Courts[9] 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.[10] While Part D plans 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.[11]

Given this backdrop, insurers can use the information CMS will be providing to proactively address Medicare Advantage and Part D recovery claims to avoid potential “double damages” lawsuits. 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. 

5. We can help you take control of Medicare Advantage and Part D recovery claims through our “CP Link PAID Act add-on” feature and other services.

We can help you take advantage of the PAID Act by contacting the identified Medicare Advantage and Part D plans to determine if they are asserting a recovery claim, and if so, help dispute and remove any inappropriate or unrelated claims.

A key service to consider here is our CP Link program.  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, we are now offering an optional CP Link PAID Act add-on feature to automate Medicare Advantage and Part D recovery claim identification and resolution. CP Link can significantly reduce the burden on claims handlers and help ensure that Medicare Advantage and Part D recovery claims are handled programmatically.  We can also help you address Medicare Advantage recovery claims on a case-by-case basis through our Medicare Advantage Resolution service and any Part D recovery claims you may receive.

In addition to Medicare Advantage and Part D claims, keep in mind that we have several services to help you address traditional Medicare conditional payment claims, including CP Link , as well as our standard Medicare conditional payment and Treasury Claims services.

In terms of results, our various Medicare recovery services have consistently delivered significant cost savings for our clients. For example, 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.

Going Forward

With the PAID Act now live, focus shifts to how smoothly the data exchange between CMS and RREs will go and the accuracy of the information CMS provides.  In addition, it will be interesting to see if, and to what extent, RREs will use the data points CMS provides to proactively address potential Medicare Advantage and Part D recovery claims to avoid potential “double damages” claims.  We will continue to monitor events related to the PAID Act and provide updates as warranted.

Questions?

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


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

(i) 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—

(ii) 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

(iii) 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),

[2]Responsible Reporting Entities (RREs) are the parties who are obligated to report under Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) (P.L. 110-173).  While Section 111 applies to both group health plans (GHP) and non-group health plans (NGHP) (i.e. workers’ compensation, liability, self-insurance, and no-fault insurance), references to Section 111 in this article relate to Section 111 reporting in the NGHP context as codified at 42 § U.S.C. 1395y(b)(8). In general, RREs are insurers and self-insurers, but could involve other entities such as self-insurance pools or assigned claims funds depending on the facts. (See generally, CMS’s Section 111 NGHPUser Guide, Chapter III (Version 6.5, October 4, 2021), Chapter 6.  Expanding on this concept further, 42 U.S.C.  § 1395y(b)(8) provides that the “applicable plan” is the RRE and defines the term “applicable plan” to include liability insurance (including self-insurance), no-fault insurance, and workers’ compensation laws or plans.)  However, claimants and their lawyers are not RREs and do not have reporting responsibilities under Section 111. Id 

[3]  For a historical review of CMS’s implementation of the PAID Act, see our prior summaries including CMS’s June Town Hall call, CMS’s September webinar, recent User Guide updates, and recent NGHP 270/271 Companion Guide updates.   

[4] To help RREs determine a claimant’s Medicare status, CMS has established what it refers to as the Section 111 “Query Process.” Only the RRE can use the Query Process, and as part of this system RREs must submit the following data points to CMS:  the claimant’s Medicare beneficiary identifier number (MBI) or social security number (SSN); along with the claimant’s first and last name, date of birth, and gender.  Currently, if there is a data match, CMS will return a response record with a positive “disposition code” indicating that the claimant is a Medicare beneficiary. CMS’s Section 111 NGHP User Guide, Chapter IV (Version 6.5, October 4, 2021), Chapter 8, section 8.1.  While the Query Process is helpful in identifying whether the claimant is a Medicare beneficiary, up until the PAID Act, it did not return the Medicare “part” in which the claimant is enrolled (i.e. Parts A and B - traditional Medicare; Part C- Medicare Advantage, or Part D – prescription drugs), the actual dates of Medicare entitlement and enrollment, or the reason for entitlement.  Id.  However, per the PAID Act, this has now changed as outlined in point #1 above.

[5] CMS’s Section 111 NGHPUser Guide, Chapter IV (Version 6.5, October 4, 2021), Chapter 1, p. 1-1. 

[6] On this point, 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) 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. H.R. 8900, Further Continuing Appropriations Act, 2021, and Other Extensions Act, (ii).  However, while the PAID Act only requires that CMS provide “the plan name and address” of any identified Medicare Advantage or Part D plan, CMS will also be providing RREs, as noted above, with the contract number, contract name, plan number, and the plan’s COB address.  In addition, CMS will be providing the most recent Part A and Part B effective and termination dates.  CMS’s Section 111 NGHPUser Guide, Chapter IV (Version 6.5, October 4, 2021), Chapter 1, p. 1-1.

[7] 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).”

[8] 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.

[9] 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).

[10]  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).

[11]  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


Mark Popolizio, J.D.

Mark Popolizio, J.D., is vice president of MSP compliance, Casualty Solutions at Verisk. You can contact Mark at mpopolizio@verisk.com.


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