MSP Suits by Providers Thankfully Not Without Limits

Medicare Set-Aside Blog on March 11, 2013
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In an exciting move by the US District Court for the Northern District of Georgia in Atlanta, we now know that Medicare does in fact have to actually make a payment before a private cause of action under 42 USC 1395y(b)(3)(A) may be brought against an insurer by a medical provider. Unfortunately the provider still does not have to first prove liability for such a payment under the Michigan Spine opinion released earlier this month, but this is progress, right?  I guess if attorneys want to live up to their reputation and make desperate grabs for statutory double damages, it is nice to know that the courts aren’t going to make it too easy.

This case involves dialysis patient covered by the City of Atlanta Employee Health Plan administered by Blue Cross. Blue Cross determined that the plan covered only $40,000, minus a $1,416.21 co-pay, of the $571,625 billed by the plaintiff dialysis center. There is no allegation that Medicare paid anything to Plaintiff, nor is there any mention if billing was ever even submitted to Medicare. Plaintiff filed suit on the basis that “Defendant violated the MSP by impermissibly taking into account that the Patient’s eligibility for ESRD-based Medicare benefits in paying out health benefits under the Plan and by impermissibly differentiating in the benefits provided to individuals with ESRD and those without.” 

Now I do not know what the employee benefits package looked like here, but I do know a little about when Medicare covers ESRD and no matter what the health benefits were, the MSP plays no role in this lawsuit from a recovery standpoint. While an individual can become entitled to Medicare on the basis of ESRD, it is not immediate. If qualifying because dialysis has begun, Medicare coverage does not begin until the fourth month of dialysis. Then there is still a 30 month coordination period, beginning only once Medicare entitlement starts in month four, in which any personal coverage remains primary. Medicare will not start making payments until the coordination period has ended which is 33 months after dialysis was initiated. Plaintiff provided dialysis from 11/2/10 through 7/31/11 – 9 months. Without knowing how long the patient suffered from ERSD or if there was a previous provider of dialysis to determine what point in the coordination period the patient may have been, I can only assume that Medicare was not billed because it was not yet primary. The terms of the employee benefit package are the only thing in play here and I am going to have to assume that there is a contractual cap on dialysis, the extent of which I cannot determine from the opinion since the patient only received treatment for nine months. While the provider may have a state law claim for the payment made, it clearly does not have an MSP claim regardless of Medicare never actually making payment. And even if somehow the City of Atlanta or Blue Cross and Blue Shield were impermissibly dumping insured on Medicare once entitlement set in, the dialysis center would not have standing to bring that claim under the MSP as it is not a qui tam statute. Other federal statutes yes, but not the MSP.

So the lesson here that so many people still need to accept is that the MSP exists to protect Medicare and Medicare alone. Yes the Medicare statute says that you may not deny coverage on the basis of becoming Medicare eligible, however that is only to give Medicare the ability to deny payment or seek reimbursement. It is not so beneficiaries can force others to provide primary payment responsibility that they were not otherwise already providing. A plan is free to cover and not cover whatever is so choses, so long as it does uniformly and does not cut you off solely on the basis that you could now otherwise get Medicare to pay for it. That is actually fraud and subject to a whole host of other federal laws that we can save discussion of for another day. 


CIVIL ACTION No. 1:12-cv-0055-SCJ


2013 U.S. Dist. LEXIS 31688

March 4, 2013, Decided