Since MARC’s inception in September of 2008, the Coalition continues to be the leading voice in communicating with Congress, the Executive Branch, and the White House on “Section 111” reporting issues. In just a few short years the Coalition has achieved numerous reforms in the implementation and operation of the Medicare Secondary Payer (MSP) laws across the legislative, regulatory and legal arenas.
MARC has met and educated hundreds of Congressional Leaders in both the House and Senate, as well as met with officials in the White House, the Department of Health and Human Services, and the Centers for Medicare and Medicaid Services, on the complex issues surrounding MSP operation and policy.
MARC also has been successful in building collaborative partnerships with a broad base of national stakeholder organizations. Through these partnerships MARC has created strong support for its legislative priorities for MSP reform and improvement in both the House and Senate.
Medicare Secondary Payer “Part D” Reform – SPARC Act Introduction
Introduction of Secondary Payer Advancement, Rationalization, and Clarification (SPARC) Act – H.R. 6120: On September 22, 2016, Congressman Tim Murphy (R-PA) and Congressman Ron Kind (D-WI), introduced bipartisan legislation to improve the MSP statuette and clarify how the law applies to the Medicare Prescription Drug (Part D) program. H.R. 6120, the SPARC Act, when enacted and signed into law will replace ambiguous and uncertain Part D MSP requirements with clear and sensible riles to allow Part D prescription drug plans to recover greater amounts of prescription drug costs from primary payers faster.
Conditional Payment Appeals
In response to SMART Act requirements, CMS creates a formal appeal process for insurers and self-insureds to dispute conditional payment amounts.
Medicaid and Medicare Secondary Payer Reform
In response to MARC advocacy, Congress in April postpones implementation until October 2017 of changes to the Medicaid secondary payer recovery statute originally adopted in December 2013 and eliminates section 1395y(b)(5) from the Medicare Secondary Payer statute as duplicate and confusion.
Social Security Number Elimination
The SMART Act required CMS, by July 10, 2014, to eliminate full SSNs from the Section 111 reporting process. Shortly after the statutory deadline passed, both the House and the Senate sent letters to CMS reminding the Agency of its deadline, and insisting that the Agency implement the statute as Congress required. On September 10, 2014, CMS announced that it will no longer require the use of a full SSN for MSP Reporting and Repayment. Instead, the Agency will now permit the use of the last five digits only. This change is expected to have a major positive impact in the field, particularly for retailers and adjusters who settle claims with beneficiaries on a regular basis.
Strengthening Medicare and Repaying Taxpayers (SMART) Act Signed Into Law
January 10, 2013
President Obama signed into law the Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012. Title II of the law contains the SMART Act provisions advocated by the Medicare Advocacy Recovery Coalition (MARC), which have substantially and materially improved the MSP law for all stakeholders.
“Threshold” Implementation: CMS Announces $1,000 “Threshold” in Response to SMART Act Requirement
Following the June 2011 House Oversight hearing, CMS in August 2011 announced implementation of a $300 “threshold” for settlements, below which the MSP laws would not apply. More specifically, CMS recognized that there were a large number of small dollar settlements for which its costs of collection exceeded the potential recovery. Thus, CMS announced that settlements of $300 or below would be exempt from MSP reporting and recovery. MARC members advocated on Capitol Hill and with agency representatives aggressively on the implementation of a threshold, and a threshold requirement was included in the SMART Act. In response to the law, CMS increased the threshold to $1,000.
Senate and House Passage of the SMART Act
December 19, 2012
The SMART Act passed in the House on December 19, 2012 and then was passed in the Senate on the Suspension calendar on December 21, 2012.
U.S. House of Representatives Committee on Energy and Commerce, Subcommittee on Oversight and Investigation Hearing
June 21, 2011
On June, 2, 2011 the U.S. House of Representatives Committee on Energy and Commerce, Subcommittee on Oversight and Investigation, held a hearing entitled “Protecting Medicare with Improvements to the Secondary Payer Regime.” The standing-room-only hearing focused on the problems created by the current MSP system and the Section 111 reporting process, the impact these problems are having on Medicare beneficiaries, stakeholders, and the Medicare Trust Fund, and potential solutions and improvements that should be implemented. MARC played an instrumental role in the hearing with member representatives testifying in support of the SMART Act.
Two panels of public and private sector witnesses focused on the current MSP system and the “Section 111” process for reporting MSP claims to the government. The first panel consisted of Ms. Deborah Taylor, the Director of Financial Management at the Centers for Medicare and Medicaid Services (CMS) and Mr. James Cosgrove, Director of Health Care in the Government Accountability Office (GAO). The second panel was made up of stakeholders affected by the MSP system, including Marc Salm, Vice President of Risk Management with Publix Super Markets, Inc., Scott Gilliam, Vice President with the Cincinnati Insurance Company, Jason Matzus, a partner with Raizman Frischman & Matzus, P.C., and Ilene Stein, Federal Policy Director with the Medicare Rights Center. Mr. Salm and Mr. Gilliam also represent their companies on the MARC Coalition.
Participating Members of the Subcommittee included Chairman Stearns, Ranking Member DeGette, Representative Tim Murphy (R-PA), Chairman Emeritus John Dingell (D-MI), Representative Michael Burgess (R-TX), Representative Phil Gingrey (R-GA), Representative Gene Green (D-TX),Representative Morgan Griffith (R-VA), Representative Jan Schakowsky (D-IL), and Representative Henry Waxman (D-CA). Members expressed bipartisan concern that the current MSP system is not run efficiently, may be placing unnecessary burdens on beneficiaries and stakeholders, and may ultimately be slowing or even reducing MSP reimbursements to the Trust Fund. In light of the large number of concerns that were raised, several Members requested that a follow-up hearing be held to allow Congress to continue to monitor the MSP program and ensure that progress is made in improving the system.
Marc Salm testified about the difficult and unintended consequences of the MSP system as it works today, noting the multiple difficulties that retailers and consumers have in settling and resolving claims due to CMS’s inability to provide a final reimbursement figure to the parties so that they can timely close the claim and reimburse the Medicare Trust Fund. Mr. Salm also shared with the Committee some of the waste in the system, such as a reimbursement claim for $1.59 that cost Medicare more to pursue than it would ever recover. Mr. Salm noted for the Committee that his example was one of many that he had seen.
On behalf of MARC and Cincinnati Insurance, Scott Gilliam testified about some of the difficulties of the “Section 111” reporting system. He shared with the Congress the distortions being created by the severe penalties imposed for inadvertent failures to report settlements, and the difficulties in collecting and reporting beneficiary Social Security numbers. He showed the Committee the latest version of the reporting manual, noting that it should not take a manual the size of a phone book to advise the Agency of a settlement or payment. The Committee asked that the Manual be entered into the hearing record to demonstrate how difficult it was to navigate the process.
“The MSP system is a perfect example of a situation where Congressional oversight is needed to ensure that government programs are working efficiently and are not causing unintended negative consequences that ultimately harm taxpayers,” noted Roy Franco, co-chair of the Coalition. “We are grateful to the Subcommittee for its attention to this important issue that impacts stakeholders and beneficiaries nationwide.” Dean Pappas, MARC co-chair, also commented: “as the Congress noted, improving the MSP system would allow more money to return the Trust Fund faster, reduce burdens on industry, and ensure justice for injured beneficiaries – a true win, win, win.”
- Hearing Transcript: Protecting Medicare with Improvements to the Secondary Payer Regime, June 22, 2013
Media Coverage Related to the House Oversight and Investigations Hearing
- Dingell: We Can Protect Medicare By Improving Secondary Payer Regimes June 22, 2011
- CMS Official Grilled on Medicare Secondary Payer Program Kaiser Health News, June 23, 2011
- Horror Stories Abound on Medicare’s Mismanagement of Claims Injury Board BlogNetwork, June 23, 2011
- House Subcommittee Hears Testimony on Medicare SPS Health Leaders Media, June 23, 2011
CMS Announces $300 “Threshold” In Response to Congressional Oversight
In response to the June 2011 House Oversight hearing, CMS in August 2011 announced implementation of a $300 “threshold” for settlements, below which the MSP laws would not apply. More specifically, CMS recognized that there were a large number of small dollar settlements for which its costs of collection exceeded the potential recovery. Thus, CMS announced that settlements of $300 or below would be exempt from MSP reporting and recovery. The threshold has recently been increased to $1000 as a result of the SMART Act.
SMART Act Introduction
The MARC Coalition assisted Congressman Tim Murphy (R-PA) and Ron Kind (D-WI) with the introduction in March 2011 of the SMART Act (H.R. 1069, 112th Congress). Shortly thereafter, Senators Ron Wyden (D-OR) and Rob Portman (R-OH) with introduction of the SMART Act in the Senate (S.1718).
Introduction of the Medicare Secondary Payer Enhancement Act of 2010 (H.R. 4796)
The MARC Coalition assisted Congressman Patrick Murphy (D-PA) and Congressman Tim Murphy (R-PA) with the introduction of The Medicare Secondary Payer Enhancement Act of 2010 (H.R. 4796).
- MSPEA of 2010 Bill
- MSPEA House Co-Sponsors
- California Legislature Passes PacificComp Sponsored Resolution Supporting H.R. 4796 September 29, 2010
- Businesswise.com: CA Legislature Passes AJR 42 September 20, 2010
- MARC Coalition Supports Medicare Secondary Payer Enhancement Act (MSPEA)/H.R. 4796 March 10, 2010
- Organizations Endorsing Medicare Secondary Payer Enhancement Act (MSPEA)/H.R. 4796
SMART Act Introduced into Congress (H.R. 4796)
The SMART Act is introduced into Congress with the backing and support of the MARC Coalition. The Coalition throws its efforts behind trying to pass the bill and gathers dozens of House and Senate co-sponsors for the legislation.
Achieved Postponement of the Section 111 Reporting Process Until CMS Was Prepared to Receive Data:
MARC was one of the first organizations to identify and communicate with CMS the structural problems with “Section 111” implementation, and was the first to call for a delay in the reporting process. As a result of MARC’s efforts, CMS delayed reporting for workers’ compensation and no fault claims through January 1, 2011, and for liability claims until January 1, 2012.
MARC Coalition Litigation – United States v. Vernon Hadden
Beginning in 2009, MARC took the lead in representing a Medicare beneficiary, Vernon Hadden, before the United States Court of Appeals on a major test case with national implications involving the challenge to CMS MSP policy that harms the MSP program for beneficiaries, stakeholders and the Medicare Trust Fund.
Case Background: Vernon Hadden, a Kentucky resident, was injured in a 2004 auto accident when a Pennyrile Rural Electric Cooperative truck drove into him as the truck was swerving to avoid being hit by a car. Pennyrile was partially liable for Hadden’s damages, as witness reports showed that a separate motorist – who was never identified – ran a stop sign and caused Pennyrile’s vehicle to leave the roadway. The unidentified motorist would have likely been liable for the majority of Hadden’s damages.
As Mr. Hadden recovered from the accident, Medicare paid $82,036 of his medical bills. Mr. Hadden later brought a claim against Pennyrile for $1.2 million, who settled with Hadden for $120,000 on the grounds that Pennyrile was Pennyrile was only 10% liable for the accident. Although Hadden only received a 10% recovery, the U.S. Centers for Medicare and Medicaid Services (CMS) required reimbursement from the settlement, and ultimately prevailed at the U.S. 6th Circuit Court of Appeals , for 100% of its outlay. CMS had determined that after subtracting almost $20,000 for attorney fees, it was entitled to a total reimbursement of $62,338. United States v. Hadden, challenges CMS’s policy of taking 100% of MSP reimbursement from undifferentiated settlements where the beneficiary has compromised their claim for cents on the dollar.
Learn more: Key MSP Legal Cases