AMERICAN BAR ASSOCIATION ADOPTED BY THE HOUSE OF DELEGATES FEBRUARY 14, 2011 RESOLUTION

Transcription

1 AMERICAN BAR ASSOCIATION ADOPTED BY THE HOUSE OF DELEGATES FEBRUARY 14, 2011 RESOLUTION RESOLVED, That the American Bar Association urges Congress to acknowledge that there is no regulatory or statutory basis for Medical Set Asides for third party liability settlements, judgments or awards under the Medicare Secondary Payer Act and provide clear, predictable, and consistent procedures for the submission, uniform determination, and timely approval of any third party medical set aside settlement proposals (MSASP) voluntarily submitted to the Centers for Medicare & Medicaid Services (CMS) in response to the non-binding recommendations of CMS. FURTHER RESOLVED, that legislation to accomplish these goals should incorporate the following principles: 1. Acknowledge that there are no statutory and regulatory requirements for determining Medical Set Aside payments and the process for approving claims subject to the Medicare Secondary Payer Act for third party liability claims. 2. Exempt from review by CMS all settlements in which there are no legal obligations to pay medical benefits. 3. Establish an appeals process that must be completed by CMS within 90 days of request by the claimant, insurer, or their representative. 4. Prohibit CMS from seeking additional moneys from the settlement proceeds after review and/or appeals processes have been concluded. 5. Prohibit recovery thresholds for MSASP that are linked to predetermined economic indices. 6. Establish a statute of limitations for MSP claims. 7. Establish a 30 day deadline by which CMS must respond in writing of its acceptance of the proposed MSASP. 8. Require CMS to timely ( timely means within 60 days the information must be delivered to the patient and patient s lawyers) and reasonably provide a detailed list of any payments it made and/or may make a claim for set aside for, and if it does not, cannot collect or require a set aside for that patient. 9. Prohibit the certification or claim of specialization by any private individual or person or government entity of a process, practice or individual in the determination of MSASP. 10. Prohibit the use of Social Security numbers and Health Card Numbers in the MSASP reporting process.

2 REPORT 108A History Prior to 1980, Medicare generally paid for medical services whether or not the recipient was also covered by another health plan or was entitled to payments from another source. However, beginning in 1980, Congress passed a series of cost-cutting amendments to the Medicare program collectively known as the Medicare Secondary Payer ("MSP") statutes. 42 U.S.C. Sec. 1395y(b). In order to control the increasing costs of health care, the MSP statute required Medicare beneficiaries to avail themselves of, and to exhaust, all other insurance coverage and all other sources of payment before they were able to obtain Medicare's coverage. When a Medicare recipient is covered by both private insurance and Medicare, the MSP Act assigns primary responsibility for the medical bills of Medicare recipients to the private health plan. Accordingly, these plans are considered "primary" under the MSP and Medicare acts as the "secondary" payer. Under these circumstances, Medicare is responsible only for paying the amounts not covered by the primary plan. Medicare payments are barred when the payment has been made or can reasonably be expected to be made promptly by a primary plan. 42 U.S.C. Sec. 1395y(b)(2)(A). As defined under the MSP Act, a "primary plan" includes private health insurance, a Worker's Compensation law, an automobile or liability insurance policy or plan (including a self-insured plan), or no-fault insurance. 42 U.S.C. Sec. 1395y(b)(2)(A). When Medicare makes a payment for which any primary plan was responsible, the payment is considered to be conditional and Medicare is entitled to reimbursement. 42 U.S.C. Sec. 1395y(b)(2)(B). Where the government receives notice that a third-party payment has been or could be made with respect to the same item or service, Medicare payments are subject to reimbursement. If MSP reimbursement is not made, the MSP Act authorizes the government to bring an action against "any entity which is required or responsible to make payment under a primary plan" and against "any other entity (including a physician or provider) that has received payment from the entity." 42 U.S.C. Sec. 1395y(b)(2)(B)(ii). (See U.S. v. Stricker, filed December 1, 2009, in the U.S. District Court for the Northern District of Alabama, Eastern Division, CV-090PT-2423-E). Under the MSP Act, CMS is entitled by statute to obtain reimbursement from the claimant, employer, insurance carrier or third-party administrator, or the attorneys representing the parties in the other claim for any medical expenses which have been paid by Medicare. 42 U.S.C. Sec. 1395y(b)(2)(B)(ii). Beneficiaries who have failed to obtain approval by CMS of the beneficiaries settlement of claims and the set aside of future Medicare eligible medical benefits provided for in the settlement, may have -1-

3 future Medicare coverage suspended or terminated; be required to demonstrate to CMS that 100% of the entire settlement received was spent solely for medical expenses for any Medicare reimbursements provided; and/or be required to satisfy the MSP claim on a dollar for dollar basis, including interest, or lose Social Security disability benefits. Note: The approval of the set aside of medical expenses in settlements by CMS is not required by either statute or regulation. As a method to facilitate reporting and to enforce the requirements of payment and/or reimbursement by "primary plans", CMS has initiated reporting procedures which require "an applicable plan" to register with and to report to CMS those settlements which may involve beneficiaries who are entitled to Medicare benefits. (See Recommendation 101 adopted by the HOD, August 2010.) With respect to liability insurance, for the purposes of reporting requirements to CMS, a liability insurer (except for self insurance) or a no-fault insurer is defined as an entity that in return for the receipt of the premium, has the obligation to pay claims described in the insurance contract and assumes the financial risk associated with such payments. 42 U.S.C. Sec. 1395y(b)(8). For purposes of the reporting requirements, any "claimant" includes: a) an individual filing the claim directly against the applicable plan; b) an individual filing a claim against an individual or entity insured or covered by the applicable plan; or c) an individual whose illness, injury, incident, or accident is was at issue in a) or b) 42 U.S.C. Sec. 1395y(b)(8). A private right of action against insurance carriers with a doubling of the damages was also established by the MSP Act in the event a carrier fails to provide primary payment or reimbursement 42 U.S.C. Sec. 1395y(b)(3(A). A recent example of Medicare s enforcement of MSP is U.S. v. Stricker. (supra) In U.S. v. Stricker the United States sued 18 defendants including corporations, insurers, plaintiffs, and plaintiffs counsel to obtain recovery for conditional payments made by Medicare. The case is the first one known to request reimbursement from all of the parties to a settlement. None of the 907 Medicare beneficiary plaintiffs who settled their liability case against the defendant corporations as part of a mass tort settlement for approximately $300 million, reimbursed Medicare, as they were legally obliged to do, according to the U.S. nor, as alleged, did the plaintiffs attorneys, the defendant corporations or their insurers research Medicare s potential claims, notify Medicare of the settlement, or reimburse Medicare for its conditionally paid claims. The U.S. is seeking double damages. 2

4 Accordingly, all of the stakeholders, beneficiaries, attorneys representing beneficiaries or any parties, and insurance companies involved in settlement procedures with respect to liability matters face considerable monetary and professional consequences for failure to provide primary payment according to the MSP Act. Current Procedures Although the Centers for Medicare and Medicaid Services (CMS) has established specific reporting procedures for plans and representatives of beneficiaries with respect to settlements and repayments to Medicare of medical benefits, there are no formal requirements applicable to the submission and review of proposed Medical Set Asides in matters involving third party liability claims. CMS MMSEA111 Teleconference March 16, 2010, p.41. Current ABA Policy Recommendation 109B was adopted in February It only addressed Workers Compensation claims. (See Appendix A). Our Governmental Affairs Office is participating in the efforts of a coalition of stakeholders to pass reform legislation. (See Efforts to pass reform legislation has been stalled by the unwillingness or inability of CMS to provide the Congressional Budget Office with the information needed by CBO to score the bill (determine if it was revenue neutral). Need for Regulations Because of the uncertainty and lack of regulatory specification with respect to the determination of Medical Set Asides, there continues to be considerable delays in the settlement process, no rules governing the process (other than what Medicare chooses to put in its internal manuals or as answers to frequently asked questions on its website) and justified significant concern on the part of parties, insurers and their legal representatives. The lack of predictable, well-reasoned, and efficient regulations to determine the rights and responsibilities of the respective parties and the potential for denial of benefits in the future, as well as additional penalties, will affect the present and future economic and medical well-being of beneficiaries, the economic interests of taxpayers, and the efficient and fair administration of those governmental agencies responsible for the implementation of the applicable mandates of law and social policies. Accordingly, the Tort Trial and Insurance Practice Section urges the American Bar Association to support the enactment of federal legislation to amend the MSP Act to address the problems preventing the efficient and just application of the MSP Act in furtherance of the purposes of Medicare and its related legislation. These are problems that disrupt and delay the claims settlement process, to the detriment of all of the stakeholders and the courts. Respectfully submitted, Jennifer Busby, Chair Tort Trial and Insurance Practice Section February

5 GENERAL INFORMATION FORM Submitting entity: Tort Trial & Insurance Practice Section Submitted By: Jennifer Busby, Chair, Tort Trial and Insurance Practice Section 1. Summary of Resolution(s) The American Bar Association urges Congress to amend the Medicare Secondary Payer Act to provide uniform requirements for the Medicare set aside process concerning the approval of third party medical set aside settlement proposals (MSASP) submitted to the Centers for Medicare & Medicaid Services (CMS) as part of the settlement of third-party liability matters and to establish appropriate levels of certainty, predictability, and efficiency in the Medicare set-aside process. 2. Approval by submitting entity Approved by the Council of the Tort Trial and Insurance Practice Section on October 15, Has this or a similar resolution been submitted to the House/Board previously? Recommendation 109B was submitted by the Tort Trial and Insurance Practice Section and adopted by the House of Delegates in February, Recommendation 109B was limited to the set aside process for medical benefits provided in settlements of Workers Compensation benefits claims. Recommendation 101, submitted by the Young Lawyers Division, Senior Lawyers Division, and Tort Trial and Insurance Practice Section, was adopted by the House of Delegates in August, It urged Congress to amend the Medicare, Medicaid and SCHIP Extension Act of 2007 to create a safe harbor provision precluding an assessment of civil penalties against responsible reporting entities that follow a process reasonably designed to obtain information from or that rely upon information verified by claimants regarding entitlement to or receipt of Medicare benefits. That Recommendation did not address the treatment of medical benefits in settlements and the need to obtain Medicare s approvals of the set aside of those funds to pay future Medicare eligible expenses related to the settled claim. 4. What existing association policies relevant to this resolution would be affected its adoption? It would expand the scope of Recommendation 109B adopted February 2005 that concerned workers compensation settlements. 4

6 5. What urgency exists which requires action at this meeting of the House? The process currently used by CMS in the Medicare set-aside process continues to subject the parties and their respective attorneys and employers and insurance carriers to determinations which lack consistency, certainty, efficiency, and predictability with respect to the settlements reached by the parties in the resolution of claims which include reimbursement to CMS of certain medical payments to Medicare beneficiaries which may be subject to reimbursement to Medicare and the set aside of portions of settlements to fund future Medicare eligible medical expenses related to the claims settled. The process continues to subject all stakeholders to lengthy delays without recourse. 6. Status of Legislation On November 17, 2010, there was pending in the United States House of Representatives the Medicare Secondary Payer Enhancement Act of 2010 (H.R. 4796), which sought to address secondary payer issues that have arisen as a result of CMS implementation of MMSEA Section 111. Legislation was also pending to address set aside issues in workers compensation settlements (H.R. 2549). It is expected that both bills will be refiled in Cost to the Association (both direct and indirect costs) None. 8. Disclosure of interest (if applicable) The Tort Trial and Insurance Practice Section may have members whose clients have or will have liability settlements pending which may be presented to CMS for review. Members of TIPS represent all of the stakeholders in the MSP claims settlement processes as counsel for plaintiffs or defendants, staff counsel and general counsel of employers, insurance companies and associations, among others. 9. Referrals Referral is being made to all Sections and Divisions. 10. Contact Persons (Prior to the meeting) Hervey P. Levin 6918 Blue Mesa Drive, Suite 115 Dallas, Texas (972) (972) (Fax) (972) (Cell) hervey@airmail.net -5-

7 Janice F. Mulligan MULLIGAN & BANHAM th Avenue, Suite 100 San Diego, CA (Cell) (Fax) Timothy W. Bouch Leath Bouch & Seekings LLP 92 Broad Street Charleston, South Carolina (Fax) (Cell) 11. Contact Person (Who will present the report to the House) Hervey P. Levin 6918 Blue Mesa Drive, Suite 115 Dallas, Texas (972) (972) (Fax) (972) (Cell) 6

8 EXECUTIVE SUMMARY 1. Summary of the Resolution The American Bar Association urges Congress to amend the Medicare Secondary Payer Act to provide uniform requirements for the Medicare set aside process concerning settlements of thirdparty liability matters and to establish appropriate levels of certainty, predictability, and efficiency in the Medicare set-aside process. 2. Summary of the Issue that the Resolution Addresses The process currently used by CMS in the Medicare set-aside process continues to subject the parties and their respective attorneys and employers and insurance carriers to determinations which lack consistency, certainty, efficiency, and predictability with respect to the settlements reached by the parties in the resolution of claims which include reimbursement to CMS of certain medical payments to Medicare beneficiaries which may be subject to reimbursement to Medicare and the set aside of portions of settlements to fund future Medicare eligible medical expenses related to the claims settled. The process continues to subject all stakeholders to lengthy delays without recourse. 3. Please Explain How the Proposed Policy Position will address the Issue Would expand the existing policy for Workers Compensation cases adopted in 2005 to include liability claims. 4. Summary of Minority Views No minority views have been identified. For more than five years, all stakeholders have supported legislation in Congress addressing the set aside problem in workers compensation cases. -7-