Congratulations to MARC on an Improved Second Effort

Medicare Set-Aside Blog on March 17, 2011
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On March 14, 2011, Congressman Murphy of Pennsylvania introduced H.R. 1063 to Congress, titled “Strengthening Medicare and Repaying Taxpayers Act of 2011.” Despite the pandering title that forms a such a clever acronym, the new bill appears to have removed most of the blatantly self-serving provisions for its promoters that would have prevented H.R. 4796 from ever scoring. In essence, H.R. 1063 calls for adjustments to the MSP that would ease burdens on both CMS and the insurance industry.

The bill begins with a much needed timeline for conditional payments. Within 120 days of an expected settlement, judgment or award, parties may request the conditional payment letter and CMS has 65 days to respond. If CMS fails to respond in time, the parties would serve notice of the failure and if the reimbursement amount is not provided within 30 days of that notice, then the Secretary loses her recovery right against all parties susceptible to recovery from that claim. If the case doesn’t settle, the Secretary is entitled to notice within the original 120 window. And finally, an appeal is provided which appears to be the same as the current Medicare appeal process where one would dispute claims anyway. The bill remains silent as to impact of the appeal on payment, implying that payment will still have to be made on demand and the appeal used to seek reimbursement.

Next the bill carves out a certain subset of claims, triggered by a dollar amount determined on a variable basis annually by the Chief Actuary of CMS, where the MSP simply wouldn’t apply – no reporting, no reimbursement. The previous bill set the amount at $5,000 and was likely one of the key problems with scoring. By setting a variable threshold, it is up to the Chief Actuary to find the sweet spot where the amount that they are letting go equals the cost of the recovery (I would hate to be that poor guy). Personally I feel like the cost of recovery should be minimal since the millions invested in electronic infrastructure since the MMSEA amendment was enacted should automate the process, and therefore no exclusion would apply. The cases that are costly to recover are more than likely those with high value and in dispute, and CMS would certainly be better served by establishing criteria for compromise where Medicare’s recovery right exceeds the available insurance rather than waiving the easy ones. If the amount demanded was reasonable in light of all else and known at the time of settlement, CMS would find that insurers would be far more forthcoming with payment.

The bill then carves out some safe harbors from the MMSEA penalty, currently expressed as a mandatory $1,000 assessment for each day of noncompliance regardless. The bill changes the word “shall” to “may,” making the imposition discretionary rather than mandatory. Additionally it seeks to establish criteria for when the penalty would not apply at all. This is a much needed solution to some mass tort situations where the insurance payment will be made into a fund that will payout claims to claimants unknown at the time of settlement. The uncertainty of not knowing if CMS would impose a fine for failure to report those unknown individuals has stalled some agreed settlements, leaving claimants angry that payments are not being made.

Now Section 5 is a mystery to me. It proposes to make disclosure of social security or health identification claim numbers in the reporting essentially voluntary. How exactly is the reported data to be correlated to the proper individual otherwise? The problem the bill is looking to overcome is the fact that there is no legal obligation to disclose that information in the underlying state law giving rise to the claim, nor in the MSP, and the burden of trying to extract that information from noncooperative parties is great. Despite already having a protocol for demonstrating good faith efforts at compliance in those situations, the new legislation could easily obligate an individual contractually bound to Medicare to disclose such information to a third party insurer for coordination of benefits purposes. Frankly making the change in the next User Guide would accomplish the same thing without Congress’ help.

Finally, Section 6 adds a much needed statute of limitations to the time the US may bring claims for recovery or assess penalties. The intent was to limit repayment to 3 years from the date of demand and penalties to 3 years from the date the reporting should have taken place. However what we got was a 3 year limit to when the United States can file an action. Recall the lesson learned from the Humana case in that the wording and placement in the statute will be strictly construed. That leaves Medicare’s subrogation right in (2)(B)(iv) and the private cause of action in (3)(A) open to interpretation. And let us not forget that this fails to address the original conflicting limitation of 3 years from the date of service found in (2)(B)(vi) gifted to us by the 105th Congress in the Balanced Budget Act of 1997 conveniently ignored in all MSP litigation to date

All in all, the new bill reflects an improved effort but it could still use some work. The manner in which the bill attempts revenue neutrality is intriguing and those supporting the bill will ultimately benefit from how many $600 light bulbs illuminate the desks of those government workers involved in the recovery effort.

See full text of the bill at: