Heather Sanderson: The PAID Act: Workers’ Comp Payers: Plan to Act on Injured Workers’ Medicare Plan Enrollment Data Pre-Settlement This Year
As published on WorkCompWire's Leaders Speak today, January 17, 2023. The article can be accessed directly here.
As of August 2022, there are nearly 65 million Medicare beneficiaries nationwide. About 30 million of those (roughly 50%) are enrolled in a Medicare Advantage (Medicare Part C) Plan, and about 90% are enrolled in a Medicare Prescription Drug (Part D) Plan. Medicare statistics demonstrate that Part C and D enrollment is increasing on an annual basis. Thus, the odds that an injured worker is enrolled in a Part C or D Plan is quite high.
The Provide Accurate Information Directly (PAID) Act (H.R. 1375, Section 1301 of H.R. 8900) was passed into law on December 11, 2020 and became effective on December 11, 2021. The PAID Act required that effective December 11, 2021, the Centers for Medicare & Medicaid Services (CMS) would 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 Part C Plan and Medicare Part D Plan into which a Medicare beneficiary was enrolled for the three (3) years prior to the date of the query. The intent behind PAID Act is to allow primary insurance plan RREs to more easily resolve any outstanding conditional payment recovery claims that may be asserted by Medicare Part C or Part D Plans for conditional 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 by the insurance industry because Medicare Part C 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 Part C plans have been filing lawsuits nationwide pursuant to the Medicare Secondary Payer (MSP) private cause of action, codified as 42 U.S.C. § 1395y(b)(2), for alleged failure on the part of the primary plan to reimburse the Medicare Part C Plan. Further, some Part C plans have been allowing legal assignors, such as MSP Recovery LLC, to file these MSP double damages actions on the MAOs behalf.
The unfortunate part of the Part C & D recovery process prior to the PAID Act being enacted was that in most of the recovery scenarios where a demand was issued by a Part C plan against a workers’ compensation insurer/payer/employer, or where the workers’ compensation payer is sued for double damages under the MSP, the workers’ compensation payer never had any knowledge that the injured party was enrolled in a Part C plan, or further, that the Medicare Advantage Plan had a claim for a conditional payment recovery.
The reason for the information gap prior to the PAID Act was that previously, within the MMSEA Section 111 reporting/query process, CMS returned only traditional Medicare Part A and B enrollment information to the workers’ compensation payer. Thus, unless the injured worker provided all their historical Medicare plan enrollment during the life of the claim, the workers’ compensation payer was typically unaware of the injured worker’s non-Traditional Medicare enrollment.
The PAID Act vastly improved this information process. Effective December 11, 2021, workers’ compensation payers, should they choose, are able to receive Part C and Part D enrollment information for their injured workers, thus being able to resolve and get in front of these post-settlement conditional payment recoveries as well as lawsuits by Part C plans and their assignors such as MSP Recovery LLC.
While CMS remained steadfast in their communication that they were providing information only, we know based on many court decisions over the last 10 years that Medicare Advantage Organizations (MAOs) have effectively “won” their seat at the MSP recovery table and won double damages. See In re Avandia Mktg., Sales Pracs. & Prod. Liab. Litig., 685 F.3d 353 (3d Cir. 2012); Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229 (11th Cir. 2016); Aetna Life Ins. Co. v. Big Y, 2022 U.S. App. LEXIS 29797 (2nd Cir. 2022); MSP Recovery Claims, Series LLC v. Nationwide Mut. Ins. Co., LEXIS 55717 (S.D. Ohio Mar. 28, 2022).
The involvement of Part C plans in conditional payment obligations is not new, but we most certainly can expect this to grow exponentially over the next few years. It has become apparent that since the PAID Act has been passed, that there is either a lack of knowledge of Part C & D enrollment information coming through to workers’ compensation payers (or some Third Party Administrators are not passing along this enrollment data to the primary workers’ compensation plan), or if the payer is receiving this enrollment data, the payer might not know what to do with this enrollment data. It can be confusing because Part C and D conditional payments are resolved through the Part C/D plan or their recovery agent themselves, rather than through CMS. CMS handles traditional Medicare Part A & B conditional payment recoveries only. Thus, by not inquiring with the Part C or D plan and resolving any conditional payments owed, the workers’ compensation payer remains exposed to MSP double damages private cause of action litigation by the Part C plan. Accordingly, a proactive approach to managing Part C and D conditional payment exposure is highly recommended in 2023.
About Heather Sanderson
Heather Schwartz Sanderson holds the distinction as one of the foremost nationally recognized legal experts on Medicare Secondary Payer (MSP) Compliance. An awarded blogger and sought-after national speaker, Heather is known for her cutting-edge legal expertise, practical analysis of complex topics, expert technical guidance, and passionate industry advocacy.
Heather previously was Chief Legal Officer of Franco Signor LLC for 6 years, and upon its sale to ISO Claims Partners/Verisk, she founded Sanderson Firm PLLC, a law firm committed to providing expert MSP compliance solutions and first-in-class service commensurate with the skills, principles, and values that Heather has spent her career cultivating. You can learn more about Heather’s background by visiting her LinkedIn profile.
About Sanderson Firm PLLC
Sanderson Firm is a boutique law firm specializing in Medicare Secondary Payer (MSP) services and is proud to be a woman owned business. Our team of legal and clinical professionals have more than four decades of combined experience in the MSP industry, and we are proud to serve as trusted counsel and MSP compliance services vendor to some of the nation’s most well-recognized insurance carriers, self-insured companies, and third-party administrators, as well as smaller, regional insurance carriers and governmental entities. Sanderson Firm, unlike traditional big-box vendors in the MSP industry, provides actionable, legal compliance advice in all areas of MSP, and our clients enjoy the benefits of confidential, attorney-client privilege for all compliance concerns. Whether your organization needs Medicare conditional payment, Medicare Set-Aside, or Medicare Section 111 reporting support, Sanderson Firm is THE compliance authority on MSP.
