It ain’t what you don’t know that gets you in trouble.  It’s what you know for sure that just ain’t so.

-          Mark Twain (or at least @TheMarkTwain)

Breaking down the recently released GAO study of Medicare Secondary Payer issues (http://www.gao.gov/products/GAO-12-333), there are a lot of eyebrow-raising statistics, comments and conclusions.  While the report – upon which we will blog ad nauseum – touches on a lot of issues, the report misses the mark on a very fundamental complaint.    The MSP industry focuses so much time and energy on the future interests – the Medicare set-aside that the role of conditional payments often gets lost in the shuffle.  This is somewhat understandable in cases involving high dollar future medicals but down in the ditch, the conditional payment process plagues the small, fairly generic settlements that make the settlement economy go and keep attorneys in business.

So where does the GAO study go sideways on this issue? 

Page 28.   The report identifies the CMS contention that proportionality (READ: common sense and compromise) is in conflict with MSP provisions granting CMS a priority right of recovery entitling it to full recovery.   Never mind that this may run afoul of state constitutions promising full legal redress.   So CMS plugs up the information stream creating delay and then cripples the settlement process with vacuous legal analysis that belies both pragmatic reality and legal precedent.   CMS had the opportunity to support this legal embellishment in the Protocols litigation but chose to backpedal to legal uncertainty instead.

The report goes on to point out that Medicare beneficiaries may request a pre-demand compromise – a process the report points out elsewhere was conspicuously absent from demand letters. 

Enter Mark Twain:  “CMS officials told us that they do not, however, advertise the availability of this option and do not keep data on how often compromises are requested or granted.”…….What?  How is this information not tracked? 

Instead of tightening the screws down, the GAO audit failed:  “Limited MSPRC data on those compromise requests of which the MSPRC is aware suggest that two out of every three compromise requests are approved by the reviewing CMS regional office.”

Let’s make one thing clear – asking CMS to remove conditional payment demands for unrelated procedures and treatment and succeeding in that endeavor is not a compromise.  The question rather is how many legitimate conditional payments – that is payments related to the claimed injury – has CMS actually compromised or waived.   According to the website, MedicareAdvocacy.org, the answer is not many.  The Center for Medicare Advocacy, Inc. reported that in 2009 there were only 1561 true compromise or waiver cases considered.  Of those, complete waiver was granted in only 9 while partial waiver (compromise) was granted in 528 cases.  This leaves 1024 cases which were complete shutouts by CMS.  (http://www.medicareadvocacy.org/2011/05/12/medicare-secondary-payer-practices-that-harm-medicare-beneficiaries/ ).

Still, the GAO feels that the limited data available from an organization that indicates it doesn’t track such matters, was sufficient to conclude 2 out of 3 beneficiaries get free passes when it would seem the inverse is actually the case.

Lies. Damn lies. And Statistics.

MSP Education/Compliance will begin its 2012 educational events by appearing at the Arizona Association for Justice (AAJ/AzTLA) Annual Liens Seminar in Phoenix, Arizona on January 27^th.  This is the second consecutive year that MSP Education/Compliance has presented an abbreviated version of Pirates at the Settlement Conference at this event.

In March, we are scheduled to appear March 30^th in Great Falls, Montana at the State Bar of Montana’s CLE Institute Annual Liens Seminar.

MSP Education/Compliance produces two separate seminars – Pirates at the Settlement Conference: Settling Cases & Complying with the Medicare Secondary Payer Act; and The Medicare Set-Aside Toolbox Training.

Pirates is a 5 hour course designed for attorneys and adjusters to help think through basic policy decisions and settlement scenarios.  The program has been held in various formats more than 20 times in 11 states to positive reviews.  This year, Pirates is scheduled to be conducted in Indianapolis, Detroit, Milwaukee, Charlotte, Jacksonville and Atlanta.

The Toolbox training was introduced in the Fall of 2011 with the inaugural event being held in Phoenix, Arizona.  Toolbox is a 30 hour course (15 hours of seminar/15 hours of practicum) and is designed for individuals who desire to obtain the Medicare Set-Aside Consultant Certified (MSCC) designation.  Approved by the ICHCC, Toolbox is scheduled to take place in three times in 2012 – San Diego, Chicago and St. Louis.

Registration at www.shop.mspeducation.com is currently available for the San Diego Toolbox event and will soon be available for all events.

MSP Education/Compliance’s full event calendar:

2012 EVENT CALENDAR

In an interesting opinion (Bio-Medical Applications of Tenn. v. Central States Southeast,  Cases Nos. 09-6121/6169) dec. Sept. 2, 2011, 6^th Cir.), the Sixth Circuit ruled decisively against a group health plan (GHP) who terminated coverage of dialysis treatment based upon the patient’s eligibility for Medicare.

Bio-Medical Applications is a dialysis provider who was billing Central States for treatment being provided to a patient with end-stage renal disease.   The policy language of the Central States plan provided that “coverage under this Plan shall terminate on the earliest of the following dates:….(b) the date [the insured] first becomes entitled to Medicare benefits...” 

Central States paid approximately $25,600 in benefits during the period which they later contended that no coverage existed.  Central States then recovered all but $4,000 by offsetting benefit payments made to Bio-Medical for other policyholders.  Bio-Medical continued the treatment and billing which totaled $210,000 – a portion of which was subsequently paid by Medicare in the form of conditional payments.

After exhausting administrative remedies, Bio-Medical filed an action asserting two claims – one pursuant to ERISA provisions and the second for double damages under the Medicare Secondary Payer Act, 42 U.S.C. §1395y(b)(3)(A).

The decision identified three issues raised by the appeal:

(1)   Can a GHP immediately deny coverage to one of its insureds simply because that person became eligible for Medicare after being diagnosed with ESRD?

(2)   When a GHP violates the Medicare Secondary Payer Act (MSPA), what is the remedy for the injured healthcare provider?

(3)   What is the proper amount of damages under the MSPA’s private cause of action?

The framing of the issues foreshadows the analysis and conclusion.  The Court came down hard on Central States’ policy language indicating that it clearly violated the MSPA.   The second issue provoked significant analysis of the Act, its legislative history and subsequent amendments to distinguish when and how a potential private party must “demonstrate responsibility” on the part of a defendant in order to pursue the MSPA’s private cause of action.   The third issue was remanded to the lower court for a determination as to the measuring point for double damages – the amount that the primary plan should have paid – or the amount Medicare paid.

In reaching its decision, the Court rejected in part and distinguished in part, the often cited reasoning from the Eleventh Circuit in Glover v. Liggett Group, Inc. 459 F.3d 1304 (11^th Cir. 2006).  In doing so, this decision provided a simpler and arguably, more plausible, interpretation of the MSPA as it relates to private causes of action.  It’s conclusion that the “demonstrated responsibility” provision applies to only lawsuits brought by Medicare for reimbursement means that providers need not sue first and win in order to sue under the private cause of action provided for in the MSPA.