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NAMSAP Featured Article: The PAID Act: Transparency in Medicare Part C and D Enrollment Would Impro

Friday, August 21, 2020   (0 Comments)
Posted by: Schuyler Green
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The PAID Act: Transparency in Medicare Part C and D Enrollment Would Improve Medicare Benefit Coordination


This NAMSAP Corporate Partner featured article is co-authored by Heather Sanderson, CLO, FS Claims Solutions and Jason Lazarus, CEO, Synergy Settlements.

Congress created the Medicare Secondary Payer (MSP) program in 1980 to protect the Medicare Trust Fund. Under the MSP program, Medicare is prohibited from being a primary payer in instances where a Group Health Plan or a Non-Group Health Plan (NGHP) – such as workers’ compensation, no-fault or liability insurance – is legally responsible for paying for medical treatment first on behalf of a Medicare beneficiary.
The MSP law further requires Medicare to recover “conditional payments” it already made for treatment that the primary payer was responsible for.  If Medicare is not reimbursed, it is authorized to take legal action and may recover double damages from plans that fail to repay it. Traditional Medicare (Parts A and B), as well as private Medicare, can make conditional payments.

Under Medicare Part C, also known as Medicare Advantage (MA), private insurance companies contract with Medicare to provide for what would typically be covered under a Medicare beneficiary’s Part A and Part B benefits. Beneficiaries can choose to enroll in an MA plan rather than in traditional Medicare. There also are Medicare prescription drug plans (Part D) that provide for a beneficiary’s outpatient prescription drugs. Similar to MA plans, Part D is also provided through private insurance plans.

MA plans and Part D plans have recovery rights for conditional payments under the MSP law. While case law across the country varies on what degree of recovery rights MA plans have for conditional payments, it is clear that, at the very least, they have rights to recover the conditional payments they have made, like any other medical lien. In some jurisdictions, they have the right to recover double damages for conditional payments under the MSP private cause of action.

Initially, courts ruled private Medicare plans did not have the same rights as original Medicare to make a demand for reimbursement or file lawsuits under Medicare Secondary Payer law, but that changed in 2014.  The In Re Avandia decision by the 3rd Circuit Court of Appeals decided differently and allowed a Medicare Advantage plan lawsuit seeking double damages to move forward.  Since then, the 11th Circuit has followed in Humana v. Western Heritage and District Court cases pending in other Circuits are following this line of precedent.

With more than 22 million Americans enrolled in a Medicare Advantage plan—about one-third of all Medicare beneficiaries—and another 43 million with a Part D prescription drug plan, MA and Part D beneficiaries are a significant portion of the Medicare population. And increased Medicare Advantage enrollment is a trend projected to continue to grow.  
However, a problem often arises in instances when a NGHP, such as a workers’ compensation or liability plan settles on a medical claim with a Medicare beneficiary who is enrolled in an MA or Part D plan. At the time of settlement, the specific MA or Part D plan name that the beneficiary is enrolled in may not be provided to the NGHP, leaving contingent liability or benefit coordination issues with the MA or Part D plan that may have a claim for reimbursement.

Additionally, prior to settlement, when the NGHP inquires with CMS about a beneficiary’s Medicare status via the Medicare and Medicaid SCHIP Extension Act of 2007 (MMSEA) reporting requirements, the query file that CMS returns to the NGHP only returns information indicating a beneficiary’s traditional Medicare Part A and B enrollment. No information is provided from CMS to settling parties regarding MA or Part D enrollment. In summary, there is no reliable method for settling parties to ascertain what MA or Part D plans the beneficiary may have been enrolled in. Therefore, the settling party does not know who it might need to reimburse for conditional payments. 

This is where the Provide Accurate Information Directly Act (PAID) comes in. The PAID Act is a bipartisan bill that has been introduced in both the House (H.R. 1375) and Senate (S. 1989).  The bill will bring needed transparency to the involvement of private Medicare plans in the Medicare Secondary Payer program.  If enacted, NGHPs will receive, as part of the already existing MMSEA data exchange with CMS, information about which MA and Part D plans a beneficiary is enrolled in.  This will allow NGHPs to inquire and request these plans provide lien information, before a claim closes. If the PAID Act were enacted, there would be transparency on all aspects of Medicare exposure, whether it be traditional Medicare or a private MA or Part D plan at the time of settlement.

Medicare beneficiaries would have peace of mind at settlement if the PAID Act were enacted. The beneficiary would avoid an MA or Part D plan’s conditional payment claim being lodged post-settlement. When that occurs, the beneficiary receives an unexpected conditional payment lien demand from the MA or Part D plan. The beneficiary often times does not have the funds to reimburse the conditional payments, as the lien was not contemplated in the settlement. If the conditional payment lien demand is not paid by the beneficiary, the MA or Part D plan can garnish the beneficiary’s social security or other benefits, or otherwise file an action in court to recoup the lien, plus double damages, from the beneficiary.  Additionally, the MA or Part D plan can coordinate benefits as it relates to the underlying injury which may result in benefits interruption for the beneficiary. 

Further, under the PAID Act, the beneficiary would avoid being pulled into double damages lawsuits by MA or Part D plans after settlement for conditional payment reimbursement. These lawsuits may include the beneficiary as a defendant to which double damages are owed reimbursement to the MA or Part D plan. 

The PAID Act’s mission in providing a beneficiary’s Medicare Advantage and Part D status to an inquiring NGHP would be an easy lift for CMS. CMS already has MA and Part D enrollment information on-hand, and CMS is already returning information MA and Part D status when a Group Health Plan inquires. The PAID Act would simply require CMS to share this same information with Non-Group Health Plans.

Medicare beneficiaries and primary plans deserve to know of a Medicare Advantage or Part D conditional payment recovery claim before any settlement, judgment or award. This will make it easier for the settling parties to contact those entities, identify any liens, and pay them at the time of settlement. Parties would settle with peace of mind, and Medicare beneficiaries can continue their Medicare Advantage or Part D plan benefits without interruption. NGHPs would also benefit, as they would not be exposed to the risk of double damages suits.  MA and Part D plans would be better off as well, as they could more seamlessly recover conditional payments. And the taxpayer would also win under the PAID Act since they ultimately foot the bill for Medicare and the recovery of conditional payments helps preserve and protect the Medicare Trust Fund.

Let Congress know you support the PAID law that will stop unnecessary lawsuits for double damages.  Click here to send a message to Congress.

1 685 F.3d 353 (3rd Cir. Pa., 2012), cert. denied, 133 S. Ct. 1800 (2013)
2 832 F.3d 1229 (11th Cir. 2016)

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