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The PAID Act: Opportunities & Challenges Ahead for Claims Payers

Background on PAID Act & Overview of Sec. 111 Query Process

The Medicare Secondary Payer (MSP) statute was amended in December of 2020 with the passage of the Provide Accurate Information Directly (PAID) Act. See 42 USC 1395y(b)(8)(G). The PAID Act's provisions, once fully implemented, will require the Centers for Medicare & Medicaid Services (CMS) to provide, if applicable, insurance carriers and self-insureds specified Medicare Part C & D information through the Sec. 111 query process.

Sec. 111 Mandatory Insurer Reporting mandates that insurance carriers and self-insureds, known as Responsible Reporting Entities (RREs), report certain claim events and settlements involving Medicare beneficiaries. As a prerequisite to reporting, an RRE must “determine whether a claimant (including an individual whose claim is unresolved) is entitled…[to Medicare benefits].” See 42 USC 1395y(b)(8)(A)(i). “CMS allows RREs…to submit a query…to determine the Medicare status of the injured party prior to submitting claim information for Section 111 reporting.” See Sec. 111 User Guide, Chapter I, v6.2, at Chapter 6. Current state, after an RRE submits the requisite data elements via the query process, CMS “will provide information on whether the individual has been identified as a Medicare beneficiary based upon the information submitted and if so, provide the Medicare ID… [However], [t]he reason for Medicare entitlement, and the dates of Medicare entitlement and enrollment (coverage under Medicare), are not returned on the query file response.” Id. The PAID Act changes this.

The PAID Act requires CMS to return additional information in the query response. Specifically, it provides that relative to any query made on or after December 11, 2021:

  • CMS will indicate whether a claimant is or has been entitled to Medicare Part C and/or D benefits during the preceding 3 years; and
  • Provide the name(s) and address(es) of those Part C and/or D plans.

See 42 USC 1395y(b)(8)(G)(ii)(I) & (II).

PAID Act's Purpose

The impetus behind the PAID Act was to provide an avenue for primary payers (insurance carriers and self-insureds) to receive Part C and D information so the parties could then identify and resolve a potential recovery interest short of litigation.

In re Avandia (3d Cir. 2012) 685 F.3d 353 was the first decision to recognize a Medicare Part C (and potentially Part D) plan's right to double-damages in an action to recovery payments it made on behalf of a claimant-beneficiary – much like the right CMS possesses vis-à-vis Part A/B conditional payment recovery. This unique right afforded to Part C plans is referred to as a Private Cause of Action (PCA), which is a remedy found within the MSP Act. See 42 USC 1395y(b)(3)(A).

Since In Re Avandia, there has been a rash of decisions recognizing a Part C plan's right to recover under the PCA. Notably, MSP Recovery, LLC, who is an assignee of certain Part C plan recovery rights, has asserted numerous lawsuits against primary payers based upon the PCA theory.

With this backdrop and the current inability for a primary payer to identify Part C / D plan enrollment, the PAID Act brings with it the potential for parties to address these unique recovery issues. However, there still may be challenges claims payers face once the provisions are fully implemented.

Opportunities

Potential for Proactive Identification

A primary payer's receipt of applicable Part C / D information allows them the opporunity to immediately engage the plan and determine if a potential recovery interest exists. Following this, the contended charges can be reviewed, disputed, and resolved during the pendency of the underlying bodily injury claim. Moreover, a collateral benefit to this engagement may improve coordination of benefits between the primary payer and Part C / D plan for the duration of the claim – and potentially post-settlement (if future medicals are implicated). In other words, the Part C / D plan could forego making payment for healthcare expenses which are the primary payer's responsibility (or those which should be paid for from a future medical fund, i.e., a Medicare Set Aside) and halt continued charges which might be subject to additional recovery – or litigation.

Curbing Litigation

A byproduct of proactive engagement is the expectation that pre-settlement resolution of potential Part C / D recovery interest will curb subsequent litigation. The general sentiment is that the PAID Act will provide primary payers with the information they need to allow for the identification and resolution of Part C / D recovery claims to prevent a lawsuit under the PCA. If proactive steps are immediately taken to resolve Part C / D recovery interests following the receipt of applicable data returned on the query response, in theory, this should stem potential litigation.

Avoiding “Surprise” Recovery Post-Settlement

One of the hallmark elements to a settlement is finality. Whether via a letter requesting repayment from the plan or federal PCA complaint, the parties to a workers' compensation or liability settlement want to avoid surprise Part C / D recovery after the settlement. Much like the benefit of curbing litigation, the hope behind the PAID Act provisions is to prevent recovery issues arising following the settlement. Successfully leveraging Part C / D data to address potential recovery claims prior to the settlement will go a long way to ensure there are no surprises post-settlement.

Challenges

Capabilities of Plans

Although not without complexity, relatively speaking, addressing Part A / B conditional payments is a known quantity with CMS. There are two established CMS recovery contractors, standardized authorization forms, established processes and procedures, a codified appeals process, etc. Most notably, CMS as a single entity, oversees and administers Medicare Part A / B benefits along with recovery (albeit through two separate contractors – the Benefits Coordination & Recovery Center [BCRC] and Commercial Repayment Center [CRC], respectively).

On the other hand, Medicare Part C and D plans are administered by private companies. Certain plans have sophisticated in-house recovery departments, others outsource to subrogation vendors, while many may have minimal experience in the realm of workers' compensation, liability, or no-fault recovery. Processes and procedures will likely vary widely from plan to plan. These inconsistencies may prove difficult for claims payers attempting to identify, address, and resolve potential recovery interests.

Vast Number of Part C/D Plans

Unlike a single-source governmental entity administering and recovering for Medicare Parts A / B, there are thousands of commercial companies with respect to Part C / D. “In total, 3,550 Medicare Advantage plans are available nationwide for individual enrollment in 2021” Another way to look at it is that, “[f]or 2021, the average Medicare beneficiary has access to 33 Medicare Advantage plans, the largest number of options available in the last decade…”

The sheer number of plans coupled with the possibility of a beneficiary switching during applicable open enrollment periods adds complexity to identifying and engaging potential Part C / D entities which may hold a recovery interest.

Potential for Continued Litigation

It is yet to be seen whether the implementation of the PAID Act will slow litigation under the PCA theory – either by plans or assignees of recovery rights. The PAID Act alone likely will not eliminate every suit attempting to recover Part C / D payments but will hopefully stop much of the needless litigation. The PAID Act does not bar an individual or entity who might avail themselves to the PCA and bring suit for double damages. The courts have not seemed to veer from the In Re Avandia holding and perhaps the issue is best resolved by way of additional legislation tailoring the PCA provision or by eliminating it outright.

Implementation of the PAID Act's provisions are still months away, but there will assuredly be opportunities and challenges ahead for claims payers as this dynamic area of the law continues to evolve.

 

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