Developing a compliance program to adhere to Medicare Secondary Payer (MSP) provisions is key to avoiding exposure to lawsuits and damages related to recovery demands, according to Shawn Deane, vice president of Product Development at ISO Claims Partners.
During an interview with Claims Journal, he explained the differences between Medicare part A, B, C and D and offered best practices insurers can use to address Medicare Advantage recovery claims.
Deane provided a background on the differences in Medicare Part A, B, C and D.
Medicare Part A & B, passed back in 1965 is a national social insurance program, or single payor fee for service, that’s administered at the federal level. Part A applies to hospital charges and Part B applies to outpatient charges. There are an estimated 57 million beneficiaries, he said. Eligibility is based on age – 65 years or older – and on factors like whether an individual is on social security disability, has end stage renal disease or ALS, or is on dialysis.
In 1997, Medicare Advantage – Part C – was introduced. It allows a Part A or B enrollee to pay an additional premium to a private healthcare company to have healthcare benefits administered by that plan, he explained. About 19 million individuals have signed up for Part C, which is paid for by the federal government at a monthly capitated rate. According to Deane, Part C provides additional benefits for the additional premium not otherwise covered by Part A or B. In 2003, the Medicare Prescription Drug, Improvement, and Modernization Act, was enacted, that offers a benefit for prescription medication. It is administered through private companies. Sometimes Part C will have Part D coverage embedded in it, Deane explained.
There are extensive exposures for insurers under Medicare Secondary Payer rules, Deane said.
Federal provisions that govern Medicare Part A & B address coordination of benefits. The main reason for these provisions is because the Medicare trust fund is being depleted, he said, adding that it’s expected to exhaust by 2029.
“If you break it down…it’s just federal provisions that govern Part A and Part B. Basically, they are in place to prevent Medicare Part A/Part B from making a payment when there’s an insurance carrier that’s otherwise responsible for treatment that’s associated with a bodily injury claim,” said Deane.
In recent years, private insurance companies providing coverage under Part C have been able to leverage aspects of the MSP provisions covering federal Medicare (Parts A & B) to seek recovery against insurance carriers and self-insureds.
Medicare can make what’s known as conditional payments if an insurer can’t make a payment promptly to ensure beneficiaries get treatment and providers get paid, he explained.
“It’s a really critical concept to understand that Medicare has a right to recover and recoup the conditional payments that they make,” Deane said.
There are MSP requirements that insurers must follow, like Section 111 mandatory insurer reporting.
According to Deane, Medicare has a unique right of recovery.
“They can bring a federal court lawsuit for double damages to recover those conditional payments they’ve made,” Deane said. “There’s also this provision in the MSP statute that allows for a third party to bring a lawsuit, it’s called a private cause of action, sometimes referred to as a PCA. This allows a party to bring a civil lawsuit in an instance where an insurance carrier fails to provide a primary payment. So, attached to this private cause of action is this potential for an award of double damages.”
Medicare Advantage plans weren’t successful in recovering reimbursement of payments until a 2012 court decision, In Re: Avandia, where the court found that any private plaintiff could bring a private cause of action, Deane explained. Four years later, in Humana Medical Plan, Inc. v. Western Heritage, the court found that double damages could be mandated in those instances.
There are some jurisdictional differences based on these court decisions, said Deane.
“Certainly, in states that encompass the third circuit; so, New Jersey, Delaware, Pennsylvania, U.S Virgin Islands and then for the Western Heritage decision, which is the eleventh circuit, that’s Alabama, Florida and Georgia; the precedent for In Re: Avandia and Western Heritage is going to apply and be binding in those jurisdictions,” he said.
Deane is careful to note that though a claim may not be in one of those jurisdictions, that doesn’t mean a private cause of action suit can’t be brought. He explained that cases brought in other states, such as Louisiana, Texas and Virginia have had similar holdings.
There are some best practices that insurers can implement to ensure compliance, cost-mitigation and claims resolution said Deane.
First, he recommended insurers develop a compliance program that addresses four factors:
- Identification – Identify if the claimant is a Medicare Advantage Plan beneficiary. Determine what the plan is, the plan id number, the date of enrollment, and whether the date of enrollment overlap with the loss date. Obtain lien charges.
- Analysis – Determine whether the lien charges are causally related to the underlying loss. Determine if there is any legal basis to dispute the losses.
- Mitigation – Negotiate if charges are disputed.
- Resolution – Ensure any documentation received from a Medicare Advantage plan is kept, including any decision to partially waive or negotiate of a lien. If payment is required, obtain explicit payment instructions.
Deane noted that Medicare Advantage plans allow for negotiation, where traditional Medicare plans allow for dollar for dollar recovery.
“You’re dealing with a private entity when you’re dealing with a Medicare Advantage plan, so you can wheel and deal sometimes cents on the dollar versus having to pay dollar for dollar,” he said.
A big challenge for property/casualty insurers remains accessing Medicare Advantage plan information.
“So, Medicare Advantage plans really have a leg up on identifying instances where they can seek recovery or potentially bring a lawsuit; however, insurers do not,” said Deane. “I think a change to allow primary payors to programmatically obtain Medicare Advantage Plan enrollment information, such as the plan name, id, and dates of enrollment – since it already exists in that Section 111 ecosystem – is going to allow primary payors to then proactively engage the applicable Part C plans.”