Medicare Advantage Plans Lack Standing to Recover Conditional Payments in Federal District Court (Humana v. Reale)

Medicare Set-Aside Blog on February 2, 2011
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In yet another compelling demonstration of just how badly the MSP statute is written, the United States District Court for the Southern District of Florida dismissed a recovery action on January 31, 2011 brought by Humana Medical Plan, administrator of a Medicare Advantage plan, stating that the court lacked subject matter jurisdiction because Humana did not have standing under the MSP. Humana had sought reimbursement from a Medicare Advantage plan participant for $19,155.41 for treatment resulting from a slip and fall injury that she later settled in an insurance claim against the responsible condo association for an amount in excess of that demand. Humana filed suit in the federal district court, citing the MSP as its authority for reimbursement for the full $19,155.41. Sounds reasonable, right?

Pursuant to 42 C.F.R. 422.108, “[t]he MA organization will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations in subparts B through D of part 411 of this chapter.” Note that I was the one who added the emphasis on the word Secretary. A careful read of 42 U.S.C. 1395y(b)(2)(B) will confirm that Humana, standing in the place of the Secretary of Health and Human Services as an authorized Medicare Advantage plan provider, has the right to make conditional payments, charge interest, and waive recovery rights; however it is only the United States that may bring an action, subrogate or seek recovery of conditional payments within three years of the date of service (another joke that remains in the statute). So while there is no doubt that Medicare is entitled to reimbursement because it did, albeit through Humana, make conditional payments for which it is entitled to reimbursement pursuant to the MSP, Humana apparently may not pursue that recovery on behalf of Medicare even though it was authorized to make the conditional payment.

Just so we are straight, the Code of Federal Regulations requires that a Medicare Advantage plan must identify primary payers, identify amounts payable by them, and are authorized to bill, or authorize the provider to bill directly, the primary payer or Medicare enrollee to the extent that he or she was paid by a primary payer; however apparently their rights stop there. Do we really think it was Congress’ intent to bring the collections responsibilities of a for-profit, private sector organization back to the federal government?  Pains me to think about it…

HUMANA MEDICAL PLAN, INC., Plaintiff vs. MARY REALE, et al., Defendants.
Case No.: 10-21493-Civ-COOKE/BANDSTRA
2011 U.S. Dist. LEXIS 8909
January 31, 2011, Decided