MSPA Claims 1 LLC choosing new path for recovery under the Private Cause of Action

An interesting opinion was recently issued by the US District Court for the Southern District of Florida in the Claims v. Bayfront Hma Med. Ctr case.(2018 W.S.Dist.LEXIS 44913). The underlying facts of the claim involve a Medicare Advantage Plan enrollee, D. W., who was involved in a  motor vehicle accident on February 1, 2014. The Medicare Advantage Plan was administered by Florida Healthcare Plus ( “FHCP). D.W received medical treatment from a facility operated by the Defendant, Bayfront.  At the time the treatment was provided, D.W. was covered by a no-fault plan, First Acceptance Insurance Company,  and by the FHCP administered Medicare Advantage Plan. Bayfront billed the no-fault plan for $6,255.96 in charges on April 14, 2014. Partial payment was made in the amount of $3,753.58. Bayfront then billed FCHP the same amount, $6,255.96. A separate partial payment of $691.64 was made by FCHP. MSPA Claims, as an assignee of FCHP,  brought this claim on behalf of itself and a similarly situated class of Florida Medicare Part C plans against the provider, Bayfront. Recovery was being sought under the following theories: 1. MSP private cause of action  42 U.S.C. Section 1395 y(b)(3)(A), 2. Florida Deceptive and Unfair Trade Practices Act ( “FDUTPA”) and 3. an unjust enrichment claim.  Defendant moved to dismiss the action arguing that the MSP claim was barred by the statute of limitations and cannot be brought against a provider. The Plaintiff’s standing to bring suit under the remaining two claims was also challenged.

The Court dismissed the claims brought under the  Florida Deceptive and Unfair Trade Practices Act ( “FDUTPA”) and the unjust enrichment theory finding that the Plaintiff’s assignment from FCHP did not include these types of actions. The private cause of action claim, however, was allowed to stand. In reaching this conclusion, the Court found that the plain language of the private cause of action provision was ambiguous. It could be viewed as both allowing a private cause of action against a primary plan as well as a private cause of action against “any entity” who failed to provide “appropriate reimbursement” to the Government or the Medicare Advantage Plan. The Court also gave deference to CMS’ regulations that give Medicare Advantage Plans the same rights to recover from a primary plan, entity or individual that the Government exercises under the MSP regulations. The Court’s assessment of the multiple statutory provisions also supported their conclusion that the Plaintiff may bring a private cause of action for double damages against the provider Bayfront. The Plaintiff, however, will still be required to prove that the payment made to Bayfront was actually a conditional payment under the Medicare Secondary Payor Act. In considering the statute of limitations argument raised by the defense, the Court found that Section 1395y(b)(2)(B)(vi) language does not require that a suit be filed within three years of the date on which the item or service was furnished. This provision instead pertains to the amount of time the Government has to seek reimbursement.

This action represents a departure from the typical claims filed by MSPA Claims against primary insurers, such as automobile or commercial liability insurers,  for reimbursement of conditional payments made to Medicare Part C enrollees by the Part C plans. As the volume and scope of litigation spreads, parties should be proactive in developing a protocol to address claims involving payments by Medicare Advantage Plans.



Bipartisan Budget Act of 2018: Medicaid Reimbursement Limited

On 2/9/2018, President Donald Trump signed into law the Bipartisan Budget Act of 2018. As a part of the 2018 Act, Section 53102 repeals section 202(b) of the Bipartisan Budget Act of 2013. Section 202(b) was the legislative response to the United States Supreme Court Decision in Arkansas Dept. of Health and Human Services, et. al. v. Ahlborn, 547 U.S. 268 (2006).

Practically speaking, the Supreme Court in Ahlborn ruled that where there is a settlement or judgment of a third party liability claim, federal law limited Medicaid’s recovery to the amount designated as payment of medical expenses. The Bipartisan Budget Act of 2013 altered the federal law the Supreme Court relied on in deciding Ahlborn. By altering the law, Congress provided direction to the Supreme Court and the public that Medicaid could recover up to the amount of settlement or judgment associated with a third party liability claims. The effective date of this change initially was 10/1/2014, but ultimately the change in recovery became effective on 10/1/2017.

The Bipartisan Budget Act of 2018 does away with Section 202(b) of the 2013 Act retroactively as of 9/30/2017 (before the 10/1/2017 effective date). This puts the Supreme Court’s interpretation of the federal law in Ahlborn back in play and may limit Medicaid’s recovery to the amount the settlement or judgment has designated as payment of medical expenses.

As more develops over Medicaid’s reimbursement rights, we will keep you posted.

NCCI Release of Medicare Set-Asides and Workers Compensation 2018 Update

NCCI Release of Medicare Set-Asides and Workers Compensation 2018 Update

The National Council on Compensation Insurance (NCCI) released its updated Research Brief on Medicare Set-Asides (MSAs) and Workers Compensation earlier this month.  The initial study had been released in 2014 and considered data on CMS submissions that had occurred between September of 2009 and November of 2013. The recently updated report includes information from 2014 and 2015 submissions.

It comes as no surprise that the updated study concluded that CMS’ processing time had improved from the earlier study.  Based on this data sample, CMS’ average processing time was 60 days for submissions involving MSAs that were under $25,000.00, with a median processing time of approximately 18 days for MSAs that were under $200,000. In addition, approximately 30% of CMS submissions for MSAs under $100,000.00 were required to provide additional claim documentation. (Exhibit 4, page 7)

The study also looked at the differences between the submitted MSA proposals and the approved MSA proposals. Although approximately 90% of the submitted MSA during December 2012 and May 2014 were approved as submitted, this was attributed to a reduced degree of scrutiny given CMS’ need to clear out the claims backlog.  Excluding this period, the study concluded that CMS   requested an average 51% increase when the submitted MSA was under $25,000.00, and an average 6% increase when the submitted MSA was greater than $200,000.00. Prescription drugs accounted for about 50% of the larger MSA amounts.  CMS’ publications of review guidelines were credited with the improved 1:16 ratio of average approved to submitted MSAs in 2015.

 When it came to administering the CMS approved MSA funds, most of the MSAs were self-administered.  Given CMS’ recommendation in its updated Workers’ Compensation Medicare Set-Aside Arrangement Reference Guide ( Version 2.6) that funds be professionally administered, it is reasonable to assume that  MSA accounts were not being administered correctly. Without proper administration of the MSA funds, there is no “safe harbor” that comes from funding an excessive  CMS determination.

CMS processing times for MSA reviews have improved since the initial NCCI study came out in 2014. The study, however, confirms the need to build additional time into the settlement process if CMS’ voluntary review is sought.  Furthermore, the study confirms CMS’ tendency to over -project. The arbitrary nature of CMS’ review process is also evidenced in the 90% approval of MSAs as submitted during CMS’ attempts to clear their backlog.

Since the CMS review process is voluntary, parties to a settlement should consider alternative methods for Medicare Secondary Payer compliance. The NuShield certified MSA projects future injury-related Medicare-covered treatment that is reasonably likely to occur in a claim. It is based on the treating physicians’ recommendations and Evidence-Based Medicine Guidelines.  The hold harmless and indemnification agreement, coupled with the assistance in the administration of the certified MSA funds provide parties with additional assurance that the NuShield certified MSA is appropriately funded.  There is no delay in settlement or overfunding of care with the NuShield certified MSA. Although the NCCI study references the  “safe harbor” that CMS review may provide, why take the unnecessary journey for a false promise?  More information regarding the NuShield certified MSA program is available upon request by contacting Kip Daniels or Barbara Fairchild at or

New Commercial Repayment Center (CRC) Contractor: 1/9/2018

Medicare awarded Performant Financial Corporation the contract to operate the CRC beginning 1/9/2018. The CRC works on behalf of Medicare where Ongoing Responsibility for Medical (ORM) has been reported. A carrier or self-insured may be required under the federal law to report to Medicare that it has accepted and/or terminated responsibility for certain diagnosis associated with a workers’ compensation or liability claim, called ORM reporting. The CRC may seek recovery for payments made by Medicare against the carrier or self-insured using this information.

Performant Financial Corporation is already a Medicare Recovery Audit Contractor (RAC) and has sought collection of outstanding conditional payment debts on behalf of the U.S. Treasury.  In light of these circumstances, we are hopeful for a smoother transition from 2015 when CGI Federal began its operations of the CRC. However, we are anticipating an increase in the number of collection letters issued by the CRC for 2018 and are prepared for such a rise in collection efforts.

CRC should not be confused with the Benefits Coordination and Recovery Center (BCRC) who generally collects against claimants based upon reporting of Total Payment of Obligation to Claimant (TPOC).  TPOCs are usually settlements reported to Medicare. If BCRC seeks collection against the claimant based upon TPOC reporting and payment is not made within 60 days, the federal regulations allow BCRC to seek reimbursement from the carrier or self-insured making the TPOC payment.

We will keep you advised on the transition as more information is available.

The Quest for CMS Guidance on Liability MSAs Continues

The quest for CMS guidance on liability MSAs continues. It was most recently addressed in the Silva v Burwell, 2017 U S Dist LEXIS 195032 ( November 28, 2017) case that was considered by the US District Court for the District of New Mexico.

By way of background, this case arose from a December 2015 medical malpractice settlement agreement between Mr. Silva and the Hospital Defendants. The settlement was intended to compensate Mr. Silva for his traumatic brain injury that resulted from a 2011 medical malpractice incident. Since Medicare had made conditional payments prior to the settlement, the Hospital Defendants wanted Mr. Silva to create a Medicare Set-Aside to cover future medical expenses. They were concerned that CMS would come after the hospitals for future medical expenses that would have been paid by Medicare. Given this concern and Mr. Silva’s reluctance to establish an MSA, the Hospital Defendants wanted Mr. Silva to secure a federal court order finding that no federal law or CMS regulation required the creation of an MSA from the personal injury settlement before the settlement funds were released.

Although Mr. Silva asked CMS to state its position on this, CMS did not respond. The Plaintiff Silva then brought this action under the Declaratory Judgment Act against Defendants Burwell, the Secretary of the US Department of Health and Human Services, CMS and the US Department of Health and Human Services seeking to secure a declaration that no MSA is required. Defendants Burwell et al. filed a Motion to Dismiss arguing that the Court lacked subject matter jurisdiction. The Court agreed and granted the Motion to Dismiss.

In dismissing the declaratory judgment action, the Court reviewed the Medicare Secondary Payer Act and MSAs. It noted that although CMS promulgated regulations “requiring” the creation of MSA accounts in workers’ compensation cases and provided a process for review, Medicare had not established a similar process for liability cases. The Court then looked to see if Plaintiff Silva had standing to bring the action before it. In analyzing the Protocols, LLC v Leavitt, 549 F.3d 1294 (10th Cir.2008) criteria for standing, the Court found that Plaintiff Silva had failed to show that CMS had taken a position contrary to Plaintiff Silva’s interpretation of the MSP obligations. The Court noted that although the Hospital Defendants wanted reassurance and confirmation from CMS on the need to establish a liability MSA in this settlement, there is no federal law or regulation that requires CMS to provide this information. Furthermore, the Court noted that the Defendants Burwell et al. had not taken any action to indicate that they interpret the MSP as requiring MSAs in non-workers’ compensation claims. It also observed that the uncertainty created by CMS’ failure to clarify its position on this was detrimental to the settlement process. Since Plaintiff Silva did not have standing to bring this action, the case was dismissed for lack of subject matter jurisdiction.

The Court’s decision fails to appreciate that the MSA is merely a settlement tool intended to prevent a future conditional payment by Medicare. The establishment of an MSA is not “required” by the MSP or supporting Regulations and is a legal fiction. Medicare’s status under the MSP as a secondary payer when a primary payer is available however may make funding an MSA in connection with a settlement a prudent course of action. Since the MSP Act specifically identifies liability plans as a primary plan when “ payment has been made or can reasonably be expected to be made,” Medicare is a secondary payer in these cases as well.

The Court also erroneously noted that CMS had not taken any action to indicate that they are interpreting the MSP to apply to non-workers’ compensation claims. This fails to consider the statements and Alerts that have been issued by CMS on this topic. Section 111 reporting obligations for liability cases also suggest otherwise.

We will continue to keep you advised of further developments.