Medicare Advocacy and Recovery Coalition

Final Section 111 Penalty Rule

On October 11, 2023, CMS published the Final Section 111 Penalty Rule, ending a multi-year effort by MARC to eliminate the strict liability $1,000 per day per claim late reporting penalty originally created in 2007 by Section 111 of the MMSEA.  Through amending the statute in 2012 by drafting and working to enact the SMART Act, commenting on the 2014 Advanced Notice of Proposed Rulemaking, commenting on the February 2020 Proposed Rule, as well as aggressively advocating before both CMS and the White House, MARC was able to educate the numerous government stakeholders about the legal and practical implications of the potential penalties.  As a result of MARC’s work, the Final Penalty Rule represented a significant advance from previous proposals, and a win for the Coalition and all stakeholders.

RAMP Act Introduced in U.S. Senate & House of Representatives

On May 17, 2023, the Repair Abuses of MSP Payments Act (RAMP Act, S.1607/H.R.3388) was introduced in the U.S. Senate by Senators Tim Scott (R-SC) and Maggie Hasson (D-NH) and in the U.S. House of Representatives by Representatives Brad Schneider (D-IL) and Gus Bilirakis (R-FL). This bipartisan and bicameral legislation advocates for significant changes to the Medicare Secondary Payer (MSP) system by modernizing the outdated and broken MSP “private cause of action” provision.

While the initial MSP laws were created to ensure Medicare doesn’t pay when another entity is responsible for paying a beneficiary’s claim, the private cause of action never achieved that purpose and has been rendered obsolete by more recent law changes. Since 2007, the MSP statute ensures that every judgment, settlement, and award is reported to Medicare, Medicare Advantage and Part D plans. As such, the private cause of action is no longer necessary. Reforming the private cause of action will allow beneficiaries and others to timely resolve claims, streamlining the claims resolution process and ensuring that all stakeholders are appropriately protected.

RAMP Act Introduced in the House

On June 14, 2022, the Repair Abuses of MSP Payments Act (RAMP Act, H.R. 8063) was introduced in the U.S. House of Representatives by Reps. Brad Schneider (D-IL) and Gus Bilirakis (R-FL). The bipartisan legislation advocates for significant changes to the Medicare Secondary Payer (MSP) system by reforming the outdated and unnecessary MSP “private cause of action” provision.

The current MSP “private cause of action” is both ambiguous and outdated. As a result, Medicare beneficiaries and the parties with whom they are settling claims may face potential additional liability years after an accident, causing all parties to back away from settlements and leaving the Trust Fund and other parties primary. Reforming the private cause of action will allow beneficiaries and others to timely resolve claims, streamlining the claims resolution process and ensuring that all stakeholders are appropriately protected.

CMS Reforms “Ongoing Responsibility for Medical” (“ORM”) Reporting Requirements

Following years of MARC advocacy, in June 2021 CMS reformed its burdensome “Ongoing Responsibility for Medical” (“ORM”) reporting requirements, and for the first time allowed Responsible Reporting Entities (RREs) to terminate ORM reporting for certain claims. Although MARC’s work on the ORM issue is not done, the Agency’s reform of its longstanding ORM policy was a significant improvement in this difficult arena.

MARC also worked closely with CMS on the PAID Act, identifying and addressing potential roadblocks to successfully implementing the law and to facilitate repayment of appropriate secondary payer claims.

The current MSP “private cause of action” is both ambiguous and outdated. As a result, Medicare beneficiaries and the parties with whom they are settling claims may face potential additional liability years after an accident, causing all parties to back away from settlements and leaving the Trust Fund and other parties primary. Reforming the private cause of action will allow beneficiaries and others to timely resolve claims, streamlining the claims resolution process and ensuring that all stakeholders are appropriately protected.

THE PAID ACT PASSED INTO LAW

The PAID Act passed into law (H.R. 1375, Section 1301 of H.R. 8900) on December 11, 2020. The bill was brought to the House Floor and passed by voice vote on December 8, 2020. Following House approval, the PAID Act was included as Section 1301 of H.R. 8900, which passed the House on December 9, passed the Senate on December 11, and was signed into law by the President that evening.

The current MSP “private cause of action” is both ambiguous and outdated. As a result, Medicare beneficiaries and the parties with whom they are settling claims may face potential additional liability years after an accident, causing all parties to back away from settlements and leaving the Trust Fund and other parties primary. Reforming the private cause of action will allow beneficiaries and others to timely resolve claims, streamlining the claims resolution process and ensuring that all stakeholders are appropriately protected.

PAID ACT RE-INTRODUCED IN CONGRESS

In February, Representatives Gus Bilirakis (R-FL) and Ron Kind (D-WI) re-introduced the Provide Accurate Information Directly (PAID) Act (H.R. 1375) in the 116th Congress. Shortly thereafter, Senators Tim Scott (R-SC) and Ben Cardin (D-MD) introduced the PAID Act in the Senate (S. 1989).
The PAID Act would streamline the coordination of benefits involving Medicare Advantage Plans between settling parties by requiring CMS to disclose a beneficiary’s plan information through the Section 111 query process.

CMS PUBLISHES OPEN DEBT REPORTS

Through advocacy by the MARC Coalition, CMS agreed to publish open debt reports improving work for Responsible Reporting Entities.

INTRODUCTION OF THE PAID ACT

Recognizing the lack of coordination in MSP or TPL cases between settling parties and Medicare Advantage (MA) Plans, Part D Plans, or the Medicaid program, MARC is working with Congress to introduce new legislation that would bring additional efficiencies to the program. Pending legislation — known in its draft form as the PAID Act — would require CMS to provide the name and identity of the plan and the dates of coverage in response to a Section 111 query. Passage of the PAID Act will allow settling parties to repay MSP and TPL amounts, and allow for the coordination of benefits, by requiring CMS to share the needed information

ENGAGE WITH CMS ON NEW CONTRACTOR ISSUES

MARC has maintained engagement with CMS since they announced they would replace entities responsible for running the Workers’ Compensation Review Contractor (WCRC) and Commercial Repayment Center (CRC) in 2018. The transition of the contracts has created reporting, conditional payment, and Treasury referral problems which MARC is bringing to CMS’s attention for resolution.

BLOCKING CMS’ LMSA PROGRAM IMPLEMENTATION

In September 2017, CMS released a “MedLearn” article indicating their intention to launch a Liability MSA (LMSA) and No Fault MSA (NFMSA) program on October 1,2017. MARC, who had been engaging with CMS and stakeholders for several years, and which had built the coalition to oppose the LMSA process, immediately engaged with Senior CMS leadership and drew their attention to the fact that CMS, did not have the needed review process in place for LMSAs and NFMSAs.
Following extensive input from MARC including an in-person meetings with CMS leadership, CMS withdrew the LMSA initiatives and the MedLearn article pending further work and study of the LMSA program.
Since that time, MARC has convened a broad-based stakeholder group that has engaged with CMS to eliminate the proposed program.
The current MSP “private cause of action” is both ambiguous and outdated. As a result, Medicare beneficiaries and the parties with whom they are settling claims may face potential additional liability years after an accident, causing all parties to back away from settlements and leaving the Trust Fund and other parties primary.
Reforming the private cause of action will allow beneficiaries and others to timely resolve claims, streamlining the claims resolution process and ensuring that all stakeholders are appropriately protected.

ENACTING REPEAL OF MURRAY-RYAN

In 2013, Congress enacted Section 202(b) of the “Murray-Ryan” Bipartisan Budget Act of 2013 relating to Medicaid third party liability (TPL), which would have granted states the right to recover their entire lien from any settlement, notwithstanding two Supreme Court cases that limited states’ recoveries to a proportionate share of such settlements.
MARC immediately began a legislative effort to repeal this policy, which would support Medicaid beneficiaries and the Medicaid program at-large by removing barriers to beneficiaries reaching a settlement when another party is liable for their health care expenses.
Over the past five years, MARC succeeded in delaying implementation three times.
Most recently, in February 2018, MARC was able to have Congress enact Section 53102 of the Bipartisan Budget Act of 2018 which outright repealed the Murray Ryan provision and restored the ability of Medicaid beneficiaries and third parties to settle their claims.

MEDICARE SECONDARY PAYER “PART D” REFORM

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

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.

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 numerous 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

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.

HOUSE COMMITTEE ON ENERGY AND COMMERCE OVERSIGHT HEARING

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

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 countless 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 because 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).

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.

POSTPONEMENT OF THE SECTION 111 REPORTING PROCESS UNTIL CMS WAS PREPARED

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.