RECENT MEDICARE DEVELOPMENTS: CONDITIONAL PAYMENTS AND MSAs

By Benjamin I. Jordan, Esq.

1) May 14, 2010 CMS Policy Update

On May 14, 2010 CMS issued a policy to clarify their position regarding off-label and unlabeled uses of prescriptions drugs in MSAs. CMS specifically stated that for claims which settle before June 1, 2010, if the MSA includes the cost of medications prescribed for off-label uses, the claimant may use those funds (from the MSA) to pay for those medications. However, for claims which settle on June 1, 2010 or thereafter which include (in the MSA) medications prescribed for off-label uses, CMS will consider re-pricing the MSA drug costs (eliminating the cost of drugs prescribed for off-label uses). Once the MSA is re-priced, claimants may not use their MSA funds to pay for medications prescribed for off-label uses. Additionally, for claims which settle on or after June 1, 2010 and in which the MSA does not include medications prescribed for off-label uses, claimants are prohibited from using MSA funds to pay for off-label uses.

The practical effect of this change may be that MSAs decrease. In workers' compensation claims, medications are often prescribed for off-label uses (e.g. uses which have not been approved by the FDA). The new CMS policy may have the effect of eliminating several medications frequently seen in MSAs (such as Oxycontin, Actiq, Lidoderm, etc.) which often cause the MSA to be inordinately expensive. Practitioners are hopeful this policy revision will have a positive impact on the ability of claimants and employers/insurers to settle workers’ compensation claims.

2) U.S. v. Stricker – CMS contends no Statute of Limitations on Recovery Actions

On December 1, 2009 the United States filed suit in the U.S. District Court for the Northern District of Alabama against parties to a class action lawsuit and their attorneys, alleging Medicare was not reimbursed from the $300 million class action settlement. Under the Medicare Secondary Payer Statute (MSP), the government specifically contends the parties and their attorneys knew, should have known, or did not ascertain whether the parties receiving settlement payments were Medicare beneficiaries. As a result, the suit alleges that the parties and their attorneys failed to comply with the MSP and are responsible for reimbursing Medicare for conditional payments made by CMS. The U.S. is also seeking damages against several parties.

In response to this lawsuit, the defendants asserted the suit is barred by the statute of limitations. In reply, CMS recently filed a brief arguing (among other things), there is no statute of limitations applicable to CMS recovery actions. While this is merely an argument advanced by CMS in the context of the lawsuit, the prospect of having no limitations as to when CMS can bring a recovery action raises significant concern. Parties to a settlement would have no certainty of avoiding a CMS recovery action unless the parties first obtain the conditional payment amount directly from Medicare. However, obtaining this information can take months and cause harmful delay to the settlement process.

As set forth below, there is a resolution in Congress designed to address this concern, as well as other aspects of the MSP which adversely affect litigants on both sides of workers’ compensation claims.

3) HR 4796 – A Solution?

A proposal in the U.S. House of Representatives, HR 4796 (“The Medicare Secondary Payer Enhancement Act”) is designed to bring more certainty and predictability to Medicare beneficiaries and others participating in resolving beneficiary claims. According to the bill’s proponents, HR 4796 would:

• Revise the information flow between parties and Medicare so that the amount owed to CMS can be determined, and paid, before a liability or workers’ compensation settlement;
• Create a right of appeal for conditional payments for any party who disagrees with the Medicare Secondary Payer (MSP) calculation;
• Establish a three year statute of limitations period from the date the government receives notice of settlement or other payment giving rise to the recovery of payment;
• Adopt a sensible MSP recovery threshold so that Medicare does not spend more taxpayer money pursuing a claim than the claim is actually worth;
• Remove the requirement that Medicare beneficiaries disclose sensitive personal identification numbers (Social Security and Medicare numbers);
• Protect Medicare recipients and facilitate quicker and more efficient payment of settlements to claimants.

For more information, please visit the Medicare Advocacy Recovery Coalition’s website at http://www.marccoalition.com/index.html

If you have questions or comments, please contact your David & Rosetti attorney at 404-446-4488 or by visiting our website at www.davidandrosetti.com. Nothing contained in this blog should be construed as legal advice or opinion on specific facts. For editorial comments or suggestions, please contact David W. Willis at (404) 446-4491 or by email at david.willis@davidandrosetti.com.