Client Alert: CMS Issues Policy Alert Regarding 12/5/80 Reimbursement and Reporting Obligations

On August 19, 2014, the Centers for Medicare and Medicaid Services (“CMS”) released a policy alert regarding its December 5, 1980 policy exception to reimbursement and reporting obligations under the Medicare Secondary Payer (“MSP”) statute. According to the September 30, 2011 Alert, Medicare will not assert a recovery claim against liability insurance (including self-insurance) settlement, judgment, award, or other payment, or enforce mandatory reporting rules, when the Date of Incident (“DOI”) occurred before December 5, 1980 and all three parts of the policy exception criteria as outlined in the September 30, 2011 Alert are met.

CMS announces two new changes in the August 19, 2014 Alert. First, CMS will now accept the most recently amended operative complaint when determining a claimant’s reimbursement obligations under the MSP statute, and reporting obligations under Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (“MMSEA”). Prior to this Alert, CMS had stated that injuries that were claimed, pledged, alleged, or released in any version of the complaint were to be considered in determining whether a claimant should be exempt or non-exempt from reimbursement and MMSEA Section 111 reporting. With this new change, CMS will now accept the most recent amended operative complaint (or comparative supplemental pleading), disregarding all previous versions, when the following two criteria are met:

  1. The amended complaint does not shift the burden to Medicare by removing any claim for medical damages, care, items and/or services; and
  2. The amended complaint does not contradict governing MSP policy, law, or regulations.

In the case of a court-ordered amended complaint, CMS will defer to the court order, even if it limits Medicare’s recovery claim, as long as the criteria described in the August 19, 2014 Alert are met, and the court order does not contradict the governing MSP laws, regulations, or policies. In sum, the CMS Alert confirms that where a complaint (or comparable supplemental pleading) contains broad language concerning exposure, but evidence exists that the last date of exposure occurred before December 5, 1980, where the complaint is amended to reflect the facts – and done so prior to settlement – the case will be non-reportable and will not trigger any reimbursement obligations for the settling parties.

The Alert’s second change requires that if there are multiple defendants, then all defendants’ cases must meet the December 5, 1980 MSP exemption criteria for any and all defendants to be exempt from their MMSEA reporting obligations.

Prior to the August 19, 2014 Alert, in a multiple defendant scenario, as long as a claimant met the exemption criteria for a single defendant, the RRE for that defendant was not required to report. In a three defendant scenario (Defendants A, B, and C), if a claimant met the MSP exemption criteria for Defendant A, but did not meet the criteria for Defendants B and C, Defendant A would be exempt and Defendant B and C would still be required to report the claimant to Medicare. If the defendants had joint and several liability for the settlement, judgment, award, or other payment, all defendants (A, B, and C) would be required to report.

As a result of the August 19, 2014 Alert, in a multiple defendant scenario, a claimant must meet the December 5, 1980 MSP exemption criteria for all defendants in order for all defendants to be exempt from MMSEA reporting. For example, in a three defendant scenario (Defendants D, E, and F), if a claimant meets the MSP exemption criteria for Defendant D, but does not meet the criteria for Defendants E and F, all defendants will be required to report the claimant to Medicare. The only way for Defendants D, E, and F to be exempt from reporting to Medicare is if a claimant meets the criteria for MSP exemption for all three defendants.

The Garretson Resolution Group continues to provide industry insight to CMS, as well as monitor for developments at CMS, and will report future developments to the settlement community. For more information about this announcement and other MSP compliance services (including conditional payment reimbursement, MSA services and MMSEA Section 111 reporting), please visit www.garretsongroup.com.

To view the Alert as posted by CMS, please click here.

 


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