Proposed Legislation Introduced in U.S. House of Representatives Seeks to Eliminate the Medicare Secondary Payer (MSP) Double Damages Private Cause of Action Provision

On June 14, 2022, the Repair Abuse in MSP Payments (RAMP) Act was introduced in the U.S. House of Representatives as H.R. 8063. The Bill can be found here. Congressman Brad Schneider, a Democrat from Illinois, and Senator Gus Bilirakis, a Republican from Florida, have co-sponsored and introduced the Bill. The Bill is primarily supported and promulgated by the Medicare Advocacy Recovery Coalition (MARC), which is a national Coalition advocating for the improvement of the Medicare and Medicaid Secondary Payer (MSP) programs.

The Bill is succinct and to the point, and simply states that the RAMP Act would repeal Section 1862(b)(3)(A) of the Social Security Act (42 U.S.C. 1395y(b)(3)(A)):

SEC. 2. REPEAL OF PRIVATE CAUSE OF ACTION FOR  DAMAGES IN THE CASE OF A PRIMARY PLAN WHICH FAILS TO PROVIDE FOR PRIMARY PAYMENT OR APPROPRIATE REIMBURSEMENT.

Section 1862(b)(3)(A) of the Social Security Act (42 U.S.C. 1395y(b)(3)(A)) is repealed.

As readers are likely already aware, Section 1862(b)(3)(A) contains the MSP private cause of action for double damages “in the case of a primary plan which fails to provide for primary payment or appropriate reimbursement.”  

The double damages private cause of action contained within the MSP was enacted in 1986 with the intent of incentivizing primary payers (workers’ compensation, general liability, and no-fault insurers/plans) to avoid being sued under the double damages private cause of action by reimbursing Medicare where it has paid for treatment conditionally and/or notifying Medicare of the existence of the claim/primary payer status of the carrier/plan to enable Medicare to avoid paying conditionally.

However, as the MARC Coalition contends, the MSP private cause of action was rendered moot when “Congress changed the MSP statute in 2007 (in Section 111 of the MMSEA) by specifically requiring that any entity paying a settlement, judgement, or award to report the payment to Medicare which then shares this information with Medicare Advantage and Part D plans. As a result, there are no longer cases where only private parties, and not the government, are aware of primary plan non-payment, and there is no purpose to empower private collection efforts.”

Further, MARC contends that the MSP Private Cause of Action has negatively impacted the following classes: “Medicare beneficiaries who may be denied the payment/coverage they’re entitled to, future Medicare beneficiaries who may face a less tenable Medicare Trust Fund, and businesses and employers who may face private party lawsuits for double damages after they resolve claims with the government.”

Sanderson Firm Commentary: The MSP Private Cause of Action for double damages has been a frequently utilized Cause of Action in much of recent MSP case law over the last decade. Plaintiffs that are most frequently litigating under the private cause of action are Medicare Advantage (Part C) Plans and/or their assignors, such as MSP Recovery LLC, suing primary workers’ compensation, general liability, and no-fault plans for alleged failure to reimburse the Medicare Advantage Plan conditional payments.

There is established case law, both in the 3rd and 11th Circuits (See In Re Avandia Mktg. and Humana v. Western Heritage), as well as many District Courts, establishing that Medicare Advantage Plans have the right to bring a double damages MSP private cause of action against primary plans who fail to reimburse the plan.  Thus, it is curious how the repeal of the MSP Private Cause of Action would impact already established case law. Further, it would seem that Medicare Advantage Plans would likely not support the RAMP Act, as it eliminates the threat of double damages enforcement.

While MMSEA Section 111 Reporting was established as law in 2007 and implemented in 2010 to allow Medicare visibility into settlements occurring with Medicare beneficiaries, the MSP private cause of action arguably was not completely rendered moot. The reporting system is far from perfect, and not all workers’ compensation, general liability, and no-fault plans have been perfectly compliant with reporting all claims to Medicare.

In fact, the Centers for Medicare & Medicaid Services (CMS) just recently sent the text of a Final legislative Rule to the White House OIRA which would impose Civil Monetary Penalties (CMPs) of up to $1000 per day/per claim against primary plans which fail to comply with MMSEA Section 111 requirements, and the Final Rule is expected to be published this summer. If CMS was of the position that all primary plans were compliant with MMSEA Section 111 reporting and receiving all the information it needed, arguably the Agency would not be moving forward with CMPs.

Further, the recently enacted Provide Accurate Information Directly (PAID) Act now provides visibility for primary plans into Medicare Advantage and Prescription Drug Part D plan enrollment. However, the PAID Act does not require primary plans to utilize this enrollment information and/or to reach out to the Medicare Advantage and Part D plans to resolve conditional payments.

It will be interesting to watch and monitor the RAMP Act to see if it will garner enough support to move forward. In the interim, best practices for primary payers to avoid the MSP private cause of action include accurate and timely MMSEA Section 111 reporting, and resolving any known traditional Medicare, Medicare Advantage, and Part D plan conditional payments.

For questions on the RAMP Act and/or MSP compliance best practices, please contact me. 

To learn more about the RAMP Act and Medicare/Medicare Advantage conditional payments best practices, join us for our free upcoming webinar on July 20, 2022 at 1:30 PM EST! 

REGISTER:  https://us06web.zoom.us/webinar/register/WN_Cz4VDpQbTL2Zg-TBt92R5Q