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.

Join Us on November 7th – Highlights of WCMSA Reference Guide Updates Webinar with Rasa Fumagalli, JD, MSCC

Join us on November 7th, 2017 at 1:00 CST Register here for a webinar that discusses the changes that were made to the updated WCMSA Reference Guide (Version 2.6, July 10, 2017). We will look at the new Amended Review process as well as the expanded state-specific Statute section. CMS’ implementation of the updated Guide will also be discussed.

Rasa Fumagalli, JD, MSCC, NuQuest’s Director of Compliance, holds a law degree from IIT’s Chicago Kent College of Law with an undergraduate business degree from the University of Illinois. Prior to joining NuQuest, she spent over twenty years specializing in workers’ compensation defense work in the Chicago area. Rasa utilizes her extensive experience in handling workers’ compensation cases when consulting with clients about Medicare Secondary Payer (MSP) compliance issues. She is admitted to practice law in the State of Illinois and is an active member of the National Alliance for Medicare Set- Aside Professionals (NAMSAP) organization, serving on the Evidence-Based Medicine, Communications and Liability Committees.