March Issue of CLM Magazine: Article Featuring Cliff Connor and Heather Sanderson
HELP IS ON THE WAY
With PAID Act, Primary Plans to Learn of Medicare Advantage and Part D MSP Liabilities Pre-Settlement
By: Cliff Connor and Heather Sanderson
Originally published in CLM Magazine
The Provide Accurate Information Directly (PAID) Act (H.R. 1375, Section 1301 of H.R. 8900) was passed into law on December 11, 2020. PAID Act requires that effective December 11, 2021, the Centers for Medicare & Medicaid Services (CMS) will be required to provide any Responsible Reporting Entity (“RRE”, which is typically the workers’ compensation, liability, or no-fault insurer/self-insured entity), in response to a Section 111 “query,” with the name, address and plan number of each Medicare Advantage (MAO) and Medicare Prescription Drug (Part D) Plan into which a Medicare beneficiary was enrolled for the three (3) years prior to the date of the query. The idea behind PAID is that it will allow those RREs who wish to do to resolve any outstanding conditional payment recovery claims that such MAO or Part D Plans might assert for payments related to an accident or injury subject to a settlement, judgment or award paid by the RRE.
The passage of PAID Act was a strongly desired legislative initiative for the last few years by the P&C industry as MAOs and Medicare Part D insurance plans have been ramping up recoveries of conditional payments (Medicare liens) from primary workers’ compensation, liability, and no-fault insurance plans/self-insured entities (primary plans). Over the last decade, in addition to seeking direct recoveries (often many years post-settlement) directly from the primary plans, various Medicare MAOs have been filing lawsuits nationwide pursuant to the Medicare Secondary Payer (MSP) private cause of action pursuant to 42 U.S.C. § 1395y(b)(2) for alleged failure on the part of the primary plan to reimburse the MAO. Further, some MAOs have been allowing legal assignors, such as MSP Recovery LLC, to file these actions on the MAOs behalf. To understand the depth of the number of lawsuits, displayed on MSP Recovery’s website are over 100 class actions filed nationwide against some of the nation’s largest insurers and self-insured entities.
The unfortunate part of the current MAO recovery process is that in most of the recovery scenarios where a demand is issued by an MAO against a primary plan, or where the primary plan is sued for double damages under the MSP, the primary plan never had any knowledge that the injured party was enrolled in an MAO, or further, that the MAO had a claim for a conditional payment recovery.
The reason for the information gap is that currently within the Section 111 query process, in which CMS historically has returned only traditional Medicare Part A and B enrollment information to the primary plan. Thus, unless the injured party provides all their historical Medicare plan enrollment during the life of the claim, the primary plan is typically unaware of the injured party’s non-Traditional Medicare enrollment. This is increasingly becoming more of an issue as the enrollment in MAOs is increasing, and recent statistics show as much as nearly 40% of the Medicare population is enrolled in an MAO.
The PAID Act will vastly improve this information process once implemented by CMS. Primary plans, should they choose, will be able to receive MAO and Part D enrollment for their injured parties, thus being able to resolve and get in front of these post-settlement conditional payment recoveries as well as lawsuits by MAOs and their assignors such as MSP Recovery LLC.
PAID Act will be helpful for primary plans once implemented, but although the Effective Date is December 11, 2021, it is highly likely that implementation may not occur until sometime in 2022 due to Covid-19 and other pressing healthcare initiatives at CMS. Therefore, in the interim until PAID is implemented, best practices should be implemented to get in front of potential MAO and Part D recoveries and lawsuits.
All stakeholders to a workers’ compensation, general liability, or no-fault settlement with Medicare beneficiaries will need to remain diligent to avoid double damages penalty stemming from the MSP. In two circuits, the 3rd and 11th, which encompasses the states of Pennsylvania, New Jersey, Delaware, Alabama, Georgia and Florida, there is clear established case law allowing for the MAO to bring an MSP private cause of action for double damages against primary plans. See In Re: Avandia Marketing Sales Practices & Products Liability Litigation, and Humana v. Western Heritage Insurance Company.
Accordingly, for the six (6) states that currently have legal standing as having these rights, settlement stakeholders may want to take additional protective steps in identification of a MAO or Part D plans. Proactive steps would include inquiring with the injured party and/or their attorney to determine any enrollment in an MAO or Part D plan during the life of the claim. Such inquiry should be initiated at the outset of the claim, and if the injured party is represented, the attorney should cooperate with such requests as representative attorneys can be personally held liable under the MSP for a private cause of action for double damages. See Humana v. Paris Blank.
While the six states are riskier due to the established case law allowing for MAOs to bring a private cause of action, ideally, these steps should be undertaken in all claim jurisdictions, while MAOs and their assignors such as MSP Recovery LLC seek to establish precedent in the rest of the country as to their right to obtain double damages under the MSP private cause of action against primary plans that fail to reimburse. In summary, PAID Act will be of tremendous benefit once implemented, but until then, partnering with an MSP expert that can assist in carving out best practices is recommended.
Cliff Connor is Vice President of Medicare Compliance of Gallagher Bassett. He can be reached at cliff_connor@gbtpa.com. Heather Sanderson is President of Sanderson Firm PLLC. She can be reached at heather@sandersoncomp.com.
