Earlier this year a federal appeals court held that Medicare Advantage (MA) Plans can assert the same right of recovery against primary plans (insurance carriers and self-insured companies) as Medicare itself when it comes to payments these Advantage plans make for medical care related to a workers’ compensation, liability or no-fault injury. In other words, the court allowed MA Plans to “step into the shoes” of Medicare. Consequently, this could create millions of dollars in additional medical expenses to be resolved as part of settlements. This article defines Medicare Advantage Plans, summarizes this significant decision, and provides practical implications and recommendations for the claims handler.
Medicare Advantage Plans Defined
Medicare Advantage Plans fall under Part C of the Medicare Act. Parts A and B of the Medicare Act are what are commonly called “Original Medicare.” Under Original Medicare a Medicare beneficiary has his or her medical treatment paid directly by the Medicare program. However, the Medicare beneficiary has the option of forgoing Original Medicare and choosing a “Part C” MA Plan. A MA Plan is offered by a private company that contracts with the Centers for Medicare and Medicaid Services (CMS) to provide the same benefits as Original Medicare, but also offers a prescription drug benefit as well as benefits not offered by Medicare such as, vision, hearing and dental services. These Medicare Advantage Plans are typically PPOs or HMOs, but are also available as medical savings accounts or other types of arrangements. According to CMS, 27% of Medicare beneficiaries are enrolled in a MA plan and this is predicted to grow in the coming years.
In the case of In re Avandia Marketing, Sales Practices and Products Liability Litigation No. 11-2664, 2012 WL 2433508 (3rd Cir. June 28, 2012), one of these MA plans operated by Humana Insurance Company filed suit against GlaxoSmithKline for reimbursement of medical expenses paid to treat Medicare beneficiaries for the alleged ill-effects of Avandia, a Glaxo product. As a result of the alleged ill-effects, Glaxo entered into multiple settlements which totaled more than $460 million by August 2011. Glaxo did set-aside funds to repay Medicare, but only for payments under Original Medicare, not payments made by MA plans.
It is important to take note that when an itemization of conditional payments is obtained from the Medicare Secondary PayerRecovery Contractor (MSPRC), these only represent payments for a person enrolled on Original Medicare, meaning Parts A and B. Ifa Medicare beneficiary is enrolled in a MA Plan or a Part D Prescription Drug Plan, which will be discussed later, these payments arenot included in information provided by MSPRC and are not considered part of the Final Demand that is repaid to Medicare post-settlement.
Humana asserted it has the same rights under the MSP Act as Medicare itself does to collect payments the Humana MA plan made related to the injury. Humana cited 42 U.S.C. 1395y (b)(3)(A) which provides for a private right of action to recover funds from a primary plan under the Medicare Secondary Payer Act. It also cited Medicare regulations which provide that a MA plan exercises the same rights to recover against the primary plan as Medicare itself. In response to these positions put forth by Humana, Glaxo responded that 42 U.S.C. 1395y (b)(3)(A) is limited to payments made by Medicare, not MA plans. The court rejected this argument and found that 42 U.S.C. 1395y (b)(3)(A) should be read broadly to allow a private plan such as Humana to have the same rights asMedicare in pursuing recovery against the primary plan. It added that there is a public policy interest as well in allowing MA plans the same reimbursement rights as Medicare as it protects the Medicare Trust Fund. Finally, the Appellate Court held that CMS’s interpretation of the Medicare Act as providing MA Plans this right of recovery is a reasonable interpretation and as such should be given deference by the courts.
Implications of Decision
This is the first federal appeals court to find that a MA plan has a private cause of action under the Medicare Secondary Payer Act. Prior federal district and appellate court decisions found no such right and had indicated these plans must pursue recovery outside of the Medicare Secondary Payer Act. Presently, this decision is only binding in the 3rd Circuit, which covers the states of Pennsylvania, New Jersey and Delaware. However, this decision will be instructive to any future federal district or appellate courts addressing this issue. Whether those courts choose to follow this remains to be seen.
Does this decision mean Medicare Advantage plan liens must be resolved as part of settlement?
If there is an actual lien asserted by one of these MA plans then it is recommended it be resolved as part of settlement. However, many of these Advantage plans are not yet asserting liens. Be cautious then about contacting one of these plans and creating a lien where one does not yet exist.
As a primary plan or a TPA for a primary plan how can we identify claimants who are on a Medicare Advantage plan and obtain an itemization of payments made?
CMS currently has no database accessible to primary plans that provides information on whether or not the claimant is on one of these plans. Consequently, there are two options available to the primary plan. Option one is a careful review of medical bills which may reveal aMA plan paying for medical. Option two would be to request the information from the claimant. The claimant would need to disclose the MAplans he or she has been on since the date of injury with the time periods during which he or she was on each plan (A Medicare beneficiary hasthe option of changing plans each year).
Once the MA plan is identified, how can the primary plan obtain an itemization of payments causally related to the claimed injury?
Again, CMS has no central database of payments made by MA plans. Consequently, a request by the claimant or their attorney would need to be made directly to the plan for information. The adjuster or defense attorney could make a request with a release from the claimant.
Does Section 111 Mandatory Insurer Reporting play any role with Medicare Advantage plans?
According to CMS, Section 111 data is being shared with these plans not only for purposes of denial of injury related medical care but also for recovery by those plans of payments made for injury related medical care. It can be anticipated then that these plans will be stepping up their reimbursement claims in the future. CMS itself is integrating its Medicare Secondary Payer recovery efforts over the coming year so it is expected that there will be stepped up efforts by CMS and its contractors at not only conditional payment recovery, but further developing methods for MA Plan recovery.
How are Medicare Advantage plan liens resolved?
Unlike Medicare conditional payment recovery under Parts A and B there is no formalized process for resolving payments under these plans. While this frustrates the process of identifying and obtaining information from these plans it also means that these plans are often open to accepting less than 100% recovery of their liens.
Does this decision apply to Part D Prescription Drug Plans?
Medicare Part D subsidizes the cost of prescription drugs for Medicare beneficiaries who are enrolled in Original Medicare (Most Medicare beneficiaries enrolled in a Medicare Advantage Plan have a prescription benefit included in the plan). Like a Medicare Advantage Plan, a PartD Prescription Drug Plan is operated by a private company through a contract with CMS. A Medicare beneficiary has the option of choosing from many plans. While the Avandia case solely addressed a claim for recovery from a MA plan, the court commented that its decision could apply equally to aPart D plan. Consequently, it is likely Part D plans will use this decision to reinforce their claims to recovery under the Medicare Secondary Payer Act.
The decision in the Avandia case is the first federal appeals court decision substantiating a right of recovery under the Medicare Secondary Payer Act for a Medicare Advantage plan. At this point it is unclear how future courts will rule on this issue. Nonetheless, CMS has certainly asserted these plans have this right on the basis of protecting the Medicare Trust Fund. Unfortunately, CMS has provided no method for primary plan to easily identify a claimant who is on one of these plans and to obtain an itemization of payments made by the plan that would be claimed to be related to the injury.
Accordingly, we recommend that a claimant or his attorney be requested to produce any of these liens prior to settlement. If a lien is produced then the Medicare Advantage plan should be contacted to determine how the lien can be resolved within the terms and amount of the settlement. If no lien is asserted by a Medicare Advantage Plan or a Part D Prescription Drug Plan for that matter, be very cautious about asking fora lien when the plan has yet to assert one. In this case you may to want consider protective language in the settlement terms/release rather than creating a lien where one does not exist. It is recommended you discuss these liens with your counsel to devise the best method for protecting your interests in any given case.