CIGA Entitled to Judicial Declaration of Unlawful CMS Interpretation of the MSP

CMS, Medicare Set-Aside Blog, MSP Litigation on May 4, 2017 | Posted by Jennifer Jordan, JD, MSCC

On May 3, 2017, the U.S. District Court for the Central District of California issued its order with regard to CIGA’s entitlement to relief following the court’s award of partial summary judgment in January.  Based upon briefing submitted following that ruling, the Court concluded that CIGA is entitled to:

  1.  an order vacating and setting aside the three reimbursement demands at issue in this lawsuit; and
  2.  a judicial declaration that CMS’ interpretation of the Medicare Secondary Payer Act (MSP) with respect to reimbursement of conditional payments is unlawful.

The Court declined to enjoin CMS from continuing its billing and reimbursement practices, at least at this time. Because CIGA was not awarded all the relief it sought, it requested that the matter be set for trial. Given that the court’s decision to not grant injunctive relief was made in part due to an insufficient record, the Court felt it was appropriate to conduct a bench trial to more fully develop those issues. Accordingly, look for further developments in this case in the fall.

An interesting fact to pay collateral attention to is the government’s objection to having orders issued limiting its recovery rights. The government withdrew its demands for reimbursement in order to claim CIGA’s issues were moot and avoid an order awarding CIGA relief; however the court saw through the ruse. Not only would dropping its reimbursement right in these three claims not stop CMS’ practice of making over inclusive demands in the future, but it would not even stop CMS from making additional demands in these same three claims.  But more importantly, past case law demonstrates that the government avoids binding precedent at all costs. This case now stands for the notion that CMS’ reimbursement practices regarding comingled billing are unlawful and will be cited in future cases by all primary payers to resolve this same issue. CMS has no right to require full reimbursement when some portion of the bill is not covered by the primary payer’s legal obligation to make payment simply because it is difficult to parse out each party’s share.

Unfortunately, the opinion makes it clear that neither of the parties were able to articulate the problems with the billing sufficiently enough for the court to order injunctive relief. While it is easy to identify items or services that are not wholly related to an insured event though IDC and CPT coding, the only way to truly determine what portion of such billing belongs to which party is to go back to the associated medical report to determine what transpired. Typically, this type of comingled billing occurs when a Medicare beneficiary complains to his treating physician about all that ails him during a single office visit. For instance, if a patient sees his treating physician for a routine check-up, but during the visit also complains about back pain following a car accident. In turn, the physician writes prescriptions for blood pressure and pain medications. The office has always billed Medicare for this patient, the office visit was no longer than usual, and the office probably did not think to ask about auto insurance. While the auto insurer is obligated to pay for treatment related to the pain, Medicare is also obligated to pay for the office visit for the heart condition. The only logical solution would be to split the bill, but we all know that is not how CMS rolls. Well, maybe this case will change that practice once and for all.

While not over yet, CIGA should be thanked for its continued pursuit of this litigation.  It has been traditionally easier to write checks one case at a time, but nothing will ever change at CMS unless someone fights back. The sooner CMS learns that but for the underlying legal obligation to pay, that there is no MSP exclusion, the sooner many of our MSP issues may be resolved.