PAID Act Part 2: Navigating 2024 Trends in Medicare Advantage Plan Recoveries
Written by: Kayla Pigeon, Esq.,
This informative article is the second installment in our PAID Act anniversary two-part series. Part One of the series provided Sanderson Firm’s observations and experiences in 2023 utilizing the PAID Act data to identify and resolve Medicare Advantage Organization (MAO) and Part D Prescription Drug Plan conditional payment recoveries and is available here. In this second installment, we will unveil the emerging issues regarding the PAID Act implementation we expect to encounter in 2024.
Emerging PAID Act Implementation Issues Sanderson Firm Identified from 2023 Which will Likely Continue to Occur in 2024
Some MAOs or their subrogation companies are not honoring traditional Medicare conditional payment recovery processes.
While many MAOs have embraced the idea that they have the same recovery rights as Medicare, many plans or their subrogation companies are not adhering to the rules of Medicare recovery as outlined in the Federal Rules or guidance issued by the Centers for Medicare & Medicaid Services (CMS). These issues do not extend to all MAOs; however, we have witnessed lack of conformance by the MAOs with the following established Medicare conditional payment recovery practices typically followed by Medicare’s contractors which handle the resolution of traditional Medicare conditional payment liens.
1. MAOs improperly attempt to conduct conditional payment recovery on claims which settled under CMS threshold of $750.
Per the most recent update in CMS reporting and recovery guidance, settlements of physical trauma claims for $750 or less are not required to be reported to Medicare nor are conditional payments owed. We have begun to see MAOs assert liens in these scenarios and be resistant to agreeing to close their case due to the low dollar settlement. It is unclear where the MAO or subrogation companies are receiving notification of settlement in these instances, potentially from the plaintiff’s attorney or plaintiff.
Success Story: Sanderson Firm was recently presented with a case where an MAO’s subrogation company was asserting a $4k+ lien against a claim which had settled under threshold. The client came to us unsure if they were required to pay the amount after unsuccessfully attempting to dispute the lien themselves. Our dedicated team crafted a legal opinion letter to dispute the lien and ultimately were successful. While we are seeing MAOs push the boundaries of their recovery rights, we feel passionately about the need to fight to limit those rights to the established rules and procedures of traditional Medicare.
2. MAOs are improperly attempting to recover conditional payment amounts which exceed the total settlement amount.
As outlined in the Federal Rules pertaining to Medicare’s ability to recover conditional payments, Medicare cannot seek recovery beyond the settlement amount in its final demand process. Some MAOs have set forth arguments that they should also be held to this standard, pushing back on appeals that request they apply the settlement cap, especially in scenarios involving multiple MAOs. At Sanderson Firm we have not given in to any requests for payment that exceed the settlement amount. We will always tirelessly pursue the reduction of the lien in accordance with the rules established for Medicare.
3. MAOs are improperly neglecting to reduce conditional payment final demands for attorney fees and reasonable procurement costs.
As a general rule, Medicare reduces its recovery to take into account the cost of procuring the judgment or settlement, if the procurement costs are incurred because the claim is disputed, and those costs are borne by the party against which CMS seeks to recover. We have seen MAOs refuse to apply attorney fee reductions to their recovery actions. Sanderson Firm is actively pursuing attorney fee applications to MAO liens with several disputes currently under review.
4. MAOs are often leaving claims open for recovery of reimbursements that postdate the final demand.
When a reportable claim settles, the process with traditional Medicare is limited to one final sweep of claims at the time of settlement. Once the final demand is resolved, no further recovery actions are created. When this process is replicated with the MAOs, many of them include language in their case closures that their recovery action will reopen if they discover other related dates of service that occurred prior to the settlement, even if they were reimbursed after the final demand was issued. This practice leaves a lack of finality for all parties to the settlement and goes against the public interest.
Success Story: Sanderson Firm did experience a reopening of a case for a $7k+ lien after a final demand was issued as described above. We were able to successfully dispute the lien based on the previous closure of the claim in response to the settlement. We expect to continue to see these cases reopen but rest assured we will continue to dispute the validity of these recovery actions.
5. Payments that were issued directly to the provider are not removed from the lien by the MAO or subrogation company.
When payments have been issued directly to the provider by the primary payer as well as Medicare resulting in a duplicate payment, Medicare will remove the dates of service from the recovery action following an appeal by the primary payer with appropriate documentation and pursue recovery against the provider as outlined in the Federal Rules. We have found that many MAOs are choosing to leave these charges in their recovery action unless or until payment is received from the provider.
This is largely due to the general practice of MAOs and their subrogation companies whereby they create only one recovery action or “event number” per date of injury. This practice can create confusion and is also unsettling for primary payers who wish to close their files with confirmation that no future liens will be pursued against them. While we have not yet seen an MAO return to collect following an attempt to be reimbursed by the provider, we stand ready to take action should that scenario occur.
Part D Prescription Drug Plan Recovery is likely to increase in 2024.
While Part D Prescription Drug plans have not historically been involved in the litigation that has given MAOs their widely recognized priority rights of recovery, they are still included in the PAID Act data, and lien searches have occurred nationwide with the assumption that Part D plans have the same priority right of recovery.
However, it has become clear during the lien search process that Part D plans are not receiving all of the Section 111 data whether through technology deficiencies in their ability to capture the data or through the continued implementation of PAID Act data transfers by CMS. These plans often do not have a record of primary payers or their claims related to the plan’s beneficiaries. We will likely see improvements in this area in 2024 and an increase in recovery by these plans.
MAO Conditional Payment Lien Priority is likely to become an issue in 2024.
When courts began to grant MAOs the priority right of recovery under the Medicare statute and/or when Congress passed the PAID Act, the issue of lien priority was not considered. What happens when a settlement occurs and there are liens with multiple MAOs as well as Medicare? Medicare would likely default to first priority, but what happens with the rest of the plans? Will it be first in time to issue the lien, or first in time pertaining to enrollment in the plan? Maybe even a pro rata distribution to all plans with an existing lien.
This gray area and the order of priority among the MAOs and Medicare is likely to become an issue in 2024, especially as we are already experiencing pushback regarding capping recovery at the settlement amount and applying procurement cost reductions. Given this trend, competing liens among multiple MAOs are likely to increase as PAID Act implementation continues to spread nationwide.
Sanderson Firm Commentary
This next year will likely include many challenges and improvements to MAO recovery. As data processing improves across all involved parties, we also begin to experience unforeseen challenges and unanticipated scenarios in how these recovery actions are handled and resolved.
Here at Sanderson Firm, our team of attorneys and experienced recovery professionals continue to steadfastly fight to ensure that these recovery processes mirror the rules and guidance outlined by traditional Medicare and that they are in line with the priority right of recovery granted to the MAOs.
Sanderson Firm provides a variety of recovery services including comprehensive handling of Medicare Advantage Part C and Prescription Drug coverage Part D plans as well as other healthcare liens.
To learn more about our services, please contact us.
