Federal Court Rules that Hospital Settlement Does Not Relieve Medicare of its Payment Obligations – On May 21, 2012, the U.S. District Court for the Eastern District of Louisiana ruled that a malpractice settlement paid to the family of a deceased Medicare beneficiary did not constitute a “primary plan” for purposes of the Medicare Secondary Payor (MSP) statute. Sorrell v. Lakeview Regional Medical Center, et al., Civ. Action No. 11-2084 (E.D. La. (May 21, 2012). As a result, the Medicare Program was not permitted to recover conditional primary payment amounts that it had made on the beneficiary’s behalf.
Under the MSP statute, the Medicare program is not ultimately responsible for paying for services rendered to a beneficiary when payment is made under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance. 42 U.S.C. § 1395y(b)(2). In other words, Medicare is “secondary” to primary plans/payors. In the Sorrell case, Medicare made conditional payment for services rendered to the beneficiary prior to her death. The beneficiary’s family had sued the hospital, alleging that the hospital had acted negligently, and settled the case for $15,000. CMS then sought recovery from the beneficiary’s family of roughly $10,000 in payments it had made for services rendered to the beneficiary prior to her death. CMS argued that the settlement amount constituted payment from a primary “self-insured plan” under the MSP statute, and that CMS was therefore entitled to recoup the conditional payment it had made.
The court denied CMS’s motion for summary judgment, ruling that “CMS fails to establish that Lakeview Regional Medical Center’s $15,000 settlement satisfies the definition of a primary plan.” In issuing this ruling, the court relied on a 2003 Fifth Circuit case, Thompson v. Goetzmann, 337 F.3d 489, in which the court held that the MSP statute “plainly does not apply automatically to alleged tortfeasors…who settle with plaintiffs.”
The court’s ruling in Sorrell is arguably inconsistent with the operation of the reporting obligations imposed by section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA), which require that settlements like the one reached in the Sorrell case be reported to CMS.
A copy of the Sorrell decision is available here.
Reporter, Krista Barnes, Houston, +1 713 751 3273, kbarnes@kslaw.com.
CMS to Release a National Provider Comparative Billing Report – On June 4, 2012, CMS is expected to release a national provider Comparative Billing Report (CBR) prepared by SafeGuard Services, which is under contract with CMS, to address Evaluation and Management (E&M) Services. A CBR, which is only available to the providers that receive them, analyzes a provider's billing pattern for various procedures or services and compares that billing to that of the provider's peers. CMS authorized SafeGuard to produce nationwide CBRs beginning in 2010, and since that time, SafeGuard has developed topics for study, including E&M.
Once a study has been completed using Medicare data, the CBR is submitted to providers studied under a particular topic, with no more than 5,000 providers selected per topic. Providers are given contact information for SafeGuard for any questions that arise as a result of the CBRs, which are intended to help providers identify errors in billing practices. In this particular CBR for E&M, the study will include all Medicare Part B final claims data with dates of service spanning January 1, 2011 through December 31, 2011 that were retrieved from the Integrated Data Repository (IDR) on April 13, 2012 and meet certain criteria. For additional information on this study, including how a provider's peers are selected for comparative purposes, providers can visit the SafeGuard website, available here.
Reporter, Christina A. Gonzalez, Houston, +1 713 276 7340, cagonzalez@kslaw.com.
CMS Publishes Final Rule on Reconsideration Process for Disallowances of Claims for FFP Under Medicaid and CHIP – On May 29, 2012, CMS issued a final rule implementing a new reconsideration process for administrative review of disallowances of Federal Financial Participation (FFP) under title XIX of the Social Security Act (Medicaid) and extending the period states have to credit the federal government for identified but uncollected Medicaid overpayments. 77 Fed. Reg. 31499 (May 29, 2012). The rule implements changes as set forth in section 204 of the Medicare Improvement for Patients and Providers Act of 2008 and section 6506 of the Affordable Care Act.
The rule, among other changes:
- Provides a new reconsideration process at 42 C.F.R. § 430.42 for states for administrative determinations to disallow claims to receive FFP under Medicaid. Under the new process, a state may request a reconsideration of a Medicaid disallowance from the Secretary of HHS during the 60-day period following receipt of notice of the disallowance or a formal adjudication by the HHS Board. Interest charges will accrue during the new administrative reconsideration process if a state decides to retain the disallowance during such process. The new procedures are applicable to CHIP to the same extent as they are applicable to Medicaid.
- Revises 42 C.F.R. § 433.300 through § 433.322 and extends the time from 60 days to 1 year for which a state may collect a Medicaid overpayment from a provider before having to credit the federal government with the funds. The rule provides that interest is due for amounts not timely credited within such time period; however, a state is allowed additional time for debts due to fraud when a final judgment is pending.
- Enables a state to continue to effectively operate its Medicaid program while repaying the federal share of unallowable expenditures by allowing for installment repayments and provides more flexibility for a state to manage its budget during periods of economic downturn.
- Corrects certain technical errors in accordance with section 6 of Executive Order 13563 of January 18, 2011. The rule corrects, among other things, a technical error at Section 447.299(c)(15) relating to the reporting requirements for Disproportionate Share Hospital Payments. CMS clarifies that the reference to Medicaid eligible individuals in the narrative description of uninsured uncompensated costs in the first sentence of Section 447.299(c)(15) “erroneously contradicts” its longstanding policy and that the second sentence of this provision accurately captures the calculation of “total uninsured IP/OP uncompensated care costs,” which excludes Medicaid eligible individuals.
The final rule is effective on June 28, 2012 and is available here. The proposed rule published on August 3, 2011 (76 Fed. Reg. 46685) sets forth the background of the final rule and is available here.
Reporter, Juliet M. McBride, Houston, +1 713 276 7448, jmcbride@kslaw.com.
This bulletin provides a general summary of recent legal developments. It is not intended to be and should not be relied upon as legal advice.
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