Cases & Points Blog

Failure to Properly Use the Conditional Payment Administrative Appeal Process

In Mouradian v. United States Government, the United States District Court for the District of Massachusetts found that a Medicare beneficiary did not exhaust the conditional payment administrative appeal process. Because the administrative appeal process was not exhausted, the District Court could not make a decision regarding whether the Medicare Secondary Payer Act (MSP Act) and Debt Collection Improvement Act (DCIA) were unconstitutional.  2018 U.S. Dist. Lexis 163106.

Mouradian is a Medicare beneficiary. In 2015 he was in a car accident and Medicare made payments associated with the claim.  On 8/26/2016, Mouradian’s attorney for the liability claim sent an unsigned acknowledgment of settlement form to Medicare stating there was a settlement for $25,000.00. However, as discussed below, there was no settlement. On 9/1/2016, Medicare issued a final demand (initial determination) based upon settlement reporting in the amount of $25,000.00.

In lieu of appealing the initial determination and advising Medicare there was no settlement, the beneficiary first sought a hardship waiver from Medicare for all of the payments.  On 10/20/2016, Medicare agreed a partial waiver was appropriate and advised the beneficiary the initial determination was reduced $12,500.00.  On 12/12/2016, Mouradian first advised Medicare there was no settlement associated with the 2015 car accident. On 1/13/2017, Medicare requested additional information to support that the settlement proceeds were not dispersed.

Claimant did not formally appeal the 9/1/2016 initial determination. On 1/20/2017, instead of responding to Medicare’s 1/13/2017 letter, the beneficiary filed a pro se complaint in the United States District Court for the District of Massachusetts. In March and April of 2017, the Federal Government withheld some of Mouradian’s federal tax refund and began to garnish 15% of his Social Security retirement benefits.

After a scheduling conference for the case on 10/3/2017, the government refunded claimant’s money and stopped its collection process based upon the argument that there was no settlement at that time.  The government argued their actions should dismiss Mouradian’s complaint all together.

The Court agreed with the federal government that the reimbursement and halting of the collection process rendered part of the complaint moot. However, the Court disagreed the government actions also resolved the additional allegations and unconstitutionality of the MSP Act and DCIA. In analyzing the additional allegations, the court found that Mouradian did not present the arguments to CMS to determine whether their regulations and collection process was unconstitutional as applied to Mouradian. Because Mouradian did not follow the administrative appeal process outlined in 42 C.F.R. 405.900, et. seq., his arguments were being denied judicial review.

This case is an important reminder to all stakeholders in appealing conditional payments: (1) know, or obtain an expert who knows, the conditional payment administrative appeal process; and (2) If you want a federal district court judge to review your arguments to Medicare on conditional payments, you first have to follow the administrative appeal process outlined in 42 C.F.R. 405.900, et. seq.

Updates to follow as more case law develops.

Medicare Advantage Plan Class Action Certification Denied by Third Circuit Court of Appeals

As Medicare Advantage Plans (MAPs) continue to aggressively pursue recovery rights under the Private Cause of Action provisions of the Medicare Secondary Payer Act (MSP), 42 USC § 1395y(b)(3)(A), courts are being presented with more and more novel arguments by MAPs to establish these rights.  Such is the case in Ocean Harbor Cas. Ins. v. Claims, 2018 Fla. App. LEXIS 13569 (September 26, 2018), when the Florida Third Circuit Court of Appeals was asked to determine whether the mere existence of a no-fault insurance contract was enough for MAPs to establish primary plan liability under the MSP.

MSPA Claims 1, LLC (MSPA), as an assignee of a defunct Medicare Advantage Organization (MAO) seeking to represent 37 other MAOs, sought to bring a class action suit to recoup double damages under the MSP against no-fault automobile insurer Ocean Harbor Casualty Insurance Company.  MSPA asserted that Ocean Harbor’s liability as a primary payer under the MSP was established not through a settlement or judgement, but by showing that the MAOs made payment for a Medicare beneficiaries’ medical expenses; the beneficiaries had no-fault insurance coverage through Ocean Harbor; and Ocean Harbor failed to reimburse the payment.  Citing to Humana Med. Plan, Inc. v W. Heritage Ins. Co., 832 F3.D 1229 (11th Cir. 2016) and In re Avandia Mktg., Sales Practices & Prod. Liab. Litig., 685 F.3d 353 (3d Cir. 2012), MSPA argued that its reimbursement rights and the rights of similarly situated MAOs was essentially automatic.

Although the trial court agreed with MSPA’s arguments and granted the class certification, the Florida Third Circuit Court reversed on appeal finding that class certification was not appropriate and each MAP recovery right would need to be assessed on a case-by-case basis.  The Court determined that the MSP was never intended, nor did it supersede, state insurance law.  The Court noted that for MSPA to assert a recovery action, it must not only demonstrate that it made a proper conditional payment, but that Ocean Harbor was also required to make a payment under Florida no-fault law.

The Court also rejected MSPA’s argument that Ocean Harbor was required to, and failed to, exhaust its administrative remedies to appeal the MSPA’s organizational determination regarding the conditional lien pursuant to 42 C.F.R. § 422.566, et seq., Significantly, the Court determined that there was nothing in this regulation or subsequent legislation that required a primary plan to appeal an organizational  determination and administrative appeals were only applicable to traditional Medicare liens.

This case illustrates not only the due process requirements for MAP recovery rights, but also the application of these recovery rights in the context of state law and the MSP.  It also illustrates the difficulty primary payers may have in challenging these rights when a formal appeal process is not applicable to these plan as is required under traditional Medicare lien recovery.  As more and more recovery actions are brought by MAPs, it is important for primary payers to not only properly identify MAP liens, but to understand how and when to satisfy these liens to prevent future liability.

Medicare’s Failure to Send Initial Determination to Carrier/Self-Insured – Collection by U.S. Treasury and Their Agencies

NuQuest has recently observed an increase in calls and letters from collection agencies that are seeking reimbursement for alleged outstanding conditional payments made by Medicare. In discussing the increase with one of the collection agencies, NuQuest was advised that companies using a vendor to report their Section 111 information may not have been properly sent a copy of Medicare’s initial determination and a copy was only provided to the Section 111 vendor.

This means if a carrier or TPA receives a call or notice from a collection agency for outstanding conditional payments and did not receive the initial determination, the letter may have only been sent to the Section 111 vendor.  In these circumstances, it is recommended the carrier of self-insured contact its Section 111 vendor to determine if they received a collection letter from Medicare regarding the underlying claim and obtain a copy.

Collection calls and letters for a particular claim should stop when either arrangement of payment has been made or the collection agency is on notice of a pending appeal. Do not send payment to a collection agency without first receiving confirmation in writing of the collecting agency’s legitimacy and the legitimacy of the underlying debt. If the carrier or TPA is arranging payment, the carrier or TPA should contact the collection agency directly to do so. Payment is not an waiver of appeal of conditional payments.  If a favorable decision is obtained after payment, Medicare usually issues a refund within 30-60 days.

If there is a pending appeal on file with Medicare over the debt, a copy of the pending appeal letter should be sent to the collection agency. In this circumstance, if NuQuest is handling the conditional payment negotiation and is notified of the collection agency’s involvement, NuQuest will automatically send a copy of pending appeal letter directly to the collection agency.  This should put a stop to any collection calls or letters until a decision is issued.

If there is not an appeal on file, NuQuest may still be able to obtain a favorable outcome through its conditional payment negotiation services.  This is because a direct appeal, a request for extension or request for a revised initial determination may be a viable option. Once NuQuest receives the initial determination or intent to refer correspondence, and an appeal is filed with BCRC/CRC, a copy will be also be faxed to the collection agency.  This should also put a stop to the collection calls.

If the collection calls or letters do not stop and payment has been arranged or the agency is on notice of appeal, the collection efforts could be a violation of debt collection law. NuQuest is a Medicare Secondary Payer Compliance vendor and does not represent customers in fair debt collection practices act litigation. If there is an issue with ongoing collection calls, contacting a supervisor or attorney who practices law in this area is recommended.

If you have any questions or would like to set up a time to discuss conditional payment issues with our Director of Lien Resolution, Patrick Czuprynski, please contact him at pczuprynski@mynuquest.com

What’s New in the New WCMSA Reference Guide 2.8

On October 1, 2018, the Centers for Medicare and Medicaid Services (CMS) issued the latest version of the WCMSA Reference Guide, COBR-Q4-2018-v2.8.  The Guide includes updates regarding the discontinuation of Social Security numbers as  a Medicare identifier; a link to the applicable CDC Life Table; and further illustrations for determining the jurisdiction and pricing methods for a WCMSA.

As required by Section 501 of the Medicare Access and CHIP (Children’s Health Insurance Program) Reauthorization Act (MACRA) of 2015, CMS is required to discontinue utilizing Social Security Numbers (SSNs) as Medicare identifiers and must distribute new 11-byte Medicare Beneficiary Identifier (MBI) cards to each Medicare beneficiary.  Distribution of these MBI cards began in April 2018.  As noted in the new Reference Guide and prior CMS publications, the distribution must be completed by April 2019. In addition, fields that were formerly labeled as “HICN” have now been relabeled as “Medicare ID. ” CMS noted that it can now can accept either HICN numbers or the new MBI numbers for beneficiary identification.

In prior versions of WCMSA Reference Guide, CMS delineates how to determine the correct jurisdiction for the WCMSA.  The new Reference Guide does not change this analysis and, instead, includes additional illustrations to further clarify this process.  This illustration can be found in Table 9-1 of the Guide.  In addition, in Table 9-2, CMS delineates the appropriate pricing methodology to utilize once the jurisdiction has been determined.  Specifically, CMS notes that for cases filed with the U.S. Department of Labor Office of Workers’ Compensation Programs (OWCP), pricing is based upon the OWCP Fee Schedule; for Longshore Harbor Workers’ Compensation Act settlements, pricing is based upon the Office of Workers’ Compensation Programs fee schedule for the zip code of claimant’s residence, unless actual charges are specified; for jurisdictions with a workers’ compensation fee schedule, the most current version of the fee schedule will be used; and for jurisdictions that do not have fee schedules, pricing is based upon actual charges.

The new WCMSA Reference Guide can be found here at https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/Downloads/WCMSA-Reference-Guide-Version-2_8.pdf

CMS Data Entry Error Leads to Re-review

NuQuest staff works diligently to ensure that CMS approves proper MSA pricing. This was shown recently, when an initial CMS approval letter was higher than the MSA NuQuest submitted.

“Upon review of the CMS allocation, we noted that CMS priced the venipuncture and comprehensive metabolic panel (CMP) higher than it should be per the workers’ comp. fee schedule,” explains Nancy Heidrich, NuQuest’s Director of Clinical Services. “We also noted that the CMP was described as ‘comprehensive group’ by CMS on their allocation price of $140. This appeared to be a CMS data entry error, so we requested a re-review asking CMS to correct the pricing for the venipuncture and correct the description and pricing for what appears to be a CMP.”

Per CMS guidelines, since this re-review request was for a CMS error, no additional documentation is warranted. CMS responded to NuQuest’s request for re-review noting “no new evidence was submitted.” CMS made no changes. NuQuest pushed back for a second time. The CMS Regional Office was contacted about the situation. After more than a month NuQuest received the updated approval with CMS agreeing that the service allocated should be “comprehensive metabolic panel.” CMS repriced the venipuncture and CMP at the correct pricing. This saved the client $3,541.

Whether a substantial savings, or even just a little, NuQuest strives to ensure proper MSA pricing for our clients.