Hindsight is 20/20: Retrospective of 5 Important Areas of Development in Medicare Compliance


As insurers, self-insureds, attorneys, practitioners and stakeholders look to see what 2020 will bring for Medicare Secondary Payer (MSP) compliance, reviewing 2019 developments may provide the industry a glimpse of what’s to come in 2020.

1) Regulatory

Rulemaking for Liability Medicare Set Asides

Ever since Workers’ Compensation Medicare Set Asides (WCMSA) were formalized with the 2001 “Patel Memo,” there’s been varying interpretation regarding the applicability of post-settlement MSP considerations in liability claims. The Centers for Medicare and Medicaid Services (CMS) have taken the general position, for over a decade now, that Medicare’s interest should be considered when resolving a liability claim. This position has been established through the years, via:

  • Town hall calls;
  • Memoranda such as the May 25, 2011 “Stalcup” and September 29, 2011 memos;
  • Rulemaking process initiated in 2012 and subsequently discontinued in 2014;
  • Solicitation and statement of work for the Workers’ Compensation Review Contractor (WCRC) from 2016 and 2017 indicating the contractor’s ability to review Liability Medicare Set Asides (LMSAs).

At the close of 2018, CMS issued a notice of an anticipated rulemaking for future medicals, which has been widely speculated to address LMSAs. Subsequently, in 2019, the dates for issuing the proposed rule were extended – most recently to February 2020. Industry stakeholders will be keeping a close eye on when and whether CMS decides to institute the rulemaking process.  

Rulemaking for Sec. 111 Reporting Penalties

The Strengthening Medicare and Repaying Taxpayers Act of 2012 (SMART Act) provided for various amendments to the MSP statute, including addressing civil money penalties in Sec. 111 Mandatory Insurer Reporting. The SMART Act revised the statutory language, which previously mandated the imposition of a penalty in the event of non-compliance. It essentially altered the applicable provision from “shall be subject to…” to “may be subject to….” The SMART Act also required CMS to provide clarification around instances when penalties may be imposed for non-compliance.

CMS initiated the rulemaking process in 2013 by requesting pubic comment, but took no further action until the fall of 2018 when it released a formalized notice of rulemaking with a date of release initially slated for September, 2019. Subsequently, an updated notice was issued with a slated release of December, 2019 for public comment. With the arrival of 2020, absent the release of a proposed rule or updated notice, it’s unclear what CMS’s plans are or what the timing will be. .

2) Legislative


Currently, primary payers are unable to determine Medicare Advantage Plan (Part C) or Medicare Prescription Drug Program (Part D) information through the Sec. 111 query process. The inability to do so causes MSP issues – most notably, primary payers have great difficulty identifying, addressing and resolving Part C and Part D recovery situations.  

The Provide Accurate Information Directly (PAID) Act (HR 1375 / SB 1989) would solve for this by requiring CMS to return certain information on Part C and D beneficiaries to the primary payer through the Sec. 111 query process. The SMART Act did not pass in the last session of Congress; however, given bipartisan support and potential savings, this is legislation to keep an eye on during this Congressional session. If it passes, the practical impact would be significant to beneficiaries as well as the payer, Part C and Part D stakeholder communities.

WCMSA Legislation

Similar iterations of proposed legislation related to WCMSAs have been re-introduced now for years. The most recent version of the proposed law (HR 4161), was introduced in Congress in the summer of 2019. Some of the more noteworthy provisions in the legislation:

  • Allows for an optional proportional adjustment to MSAs in denied/disputed cases by “applying a percentage reduction to the [MSA] amount for the total settlement amount that could have been payable.” This percentage reduction would need to be equal to the denied, disputed, or contested percentage of the total settlement;
  • Provides for an optional / voluntary MSA approval process requiring Medicare to give notice within 60 days. There are no dollar amount thresholds indicated;
  • Allows for parties, within 60 days of an initial decision/determination, to challenge this through administrative appeals by a request for reconsideration, an ALJ hearing and followed by judicial review;
  • Has an option for direct deposit of the MSA to Medicare upon written consent;
  • Allows for election of either beneficiary or professional administration;
  • Increased deference with respect to the treatment of workers’ compensation law.

As in past years, this variant didn’t make it far in the legislative process. Though, given its return nearly every year, it is an item to track for potential alterations or additions to the proposed law.

3) Policy

CMS was active in the area of MSP policy in 2019, and there’s no reason to believe the agency will slow down in 2020. Last year, most notably, CMS added to or adjusted policy in the following compliance areas.


Two versions of the WCMSA Reference Guide were issued in 2019, with version 2.9 released in January and version 3.0 published in October. Highlights included:

  • Documenting rationale for inclusion of Lyrics (Pregabalin) (sec.;  
  • Altering policy for lead implantation of Spinal Cord Stimulators (sec. 9.4.5);
  • Time-period for submission of Amended Review requests extended from 4 to 6 years (sec. 16.2);
  • Change to the Consent to Release (CTR) requirements to include language, as of April 1, 2020, indicating the claimant reviewed the submission package and understands the WCMSA intent, submission process, and associated administration (sec. 10.2 and appendix 6:10);
  • The “Death of a Claimant” information was updated and aligned with the Self-Administration Toolkit for WCMSAs (sec. 19.2).

Administration / Professional Administration

CMS released new guidelines related to administration and professional administration in 2019, via the WCMSA Reference Guide (v3.0) and updated Self-Administration Toolkit (v1.3). 2019 was a big year for professional administration, most notably by adding new guidelines for professional administrators, outlining use cases for when CMS highly recommends professional administration, and providing for the ability to transmit attestation information electronically to CMS. Details include:

  • “CMS highly recommends professional administration where a claimant is taking controlled substances that CMS determines are ‘frequently abused drugs’ according to CMS’ Part D Drug Utilization Review (DUR) policy. That policy and supporting information are available here.” (see WCMSA Ref. Guide, sec. 17.1);

                -          For 2019, CMS identified opioids and benzodiazepines as frequently abused drugs. See page 2 of: A Prescriber’s Guide to the New Medicare Part D Opioid Overutilization Policies for 2019

  • “CMS expects that WCMSA funds be competently administered in accordance with all Medicare coverage guidelines, including but not limited to CMS’ Part D Drug Utilization Review (DUR) policy. All professional administration programs should institute Drug Management Programs (DMPs) (as described more fully here) for claimants at risk for abuse or misuse of “frequently abused drugs.” (see WCMSA Ref. Guide, sec. 17.3);
  • CMS released an updated Workers’ Compensation Medicare Set Aside Portal (WCMSAP) User Guide (v5.9) (currently on v.6.0), which outlines functionality for electronic submission of attestation information;
  • CMS held two webinars on electronic attestation submission for both self (Oct. 30th) and professional administrators (Nov. 6th).

Conditional Payments

  • On January 5, 2019, enhancements went into effect that allowed users to self-report cases via the Medicare Secondary Payer Recovery Portal (MSPRP);
  • On April 1, 2019, CMS began allowing authorized users to submit electronic payments through the MSPRP; 
  • On October 7, 2019, an updated MSPRP User Guide (v4.7) issued and outlined functionality for viewing an Open Debt Report;
  • On November 26, 2019, CMS announced that it would maintain the $750 threshold in to 2020 for non-group health plan settlements.

4) Caselaw

Arguably, one of the most interesting and impactful decision in 2019 relating to MSP was CIGA v. Azar (9th Cir., Oct. 10, 2019). In this case, the U.S. Court of Appeals for the 9th Circuit held that the California Insurance Guarantee Association (CIGA) was, “…not a primary plan under the Medicare Act’s secondary payer provisions, [and that] it has no obligation to reimburse CMS for conditional payments made on behalf of workers’ compensation insureds.” CIGA, like other guaranty associations, is a state-sanctioned organization that takes over claim responsibilities from insolvent insurers.

Questions remain following this decision, but the industry will likely be keeping an eye on the following in 2020:

  • Whether CMS will appeal this decision?
  • If guarantee associations, inside or outside the 9th Circuit, will approach MSP compliance differently (or at all) – including how or whether they address conditional payments, MSAs and Sec. 111 reporting?

5) Department of Justice Enforcement

Over the past couple of years, the Department of Justice, through the Offices of the U.S. Attorneys, has issued public notices of settlements with plaintiff’s law firms over claims of failing to reimburse Medicare conditional payments. In 2019, the U.S. Attorney for the District of Maryland announced two such settlements.

On March 18, 2019, they issued a notice announcing a Maryland law firm entered into a settlement agreement with the government to pay $250,000 to settle claims it failed to reimburse Medicare for conditional payments made on behalf of the firm’s client. The U.S. Attorney noted that “[t]his settlement reminds attorneys of their obligation to reimburse Medicare for conditional payments after receiving settlement or judgment proceeds for their clients. This settlement should also remind attorneys not to disburse settlement proceeds until receipt of a final demand from Medicare to pay the outstanding debt.” In addition to the monetary aspect of the settlement, the agreement with the government also required the firm to:

  • Designate a person at the firm responsible for paying Medicare secondary payer debts;
  • Train the designated employee to ensure that the firm pays these debts on a timely basis; and
  • Review any outstanding debts with the designated employee at least every six months to ensure compliance.

On November 4, 2019, an announcement issued relating to a settlement agreement with another Maryland plaintiff’s firm for $91,406.98 for failing to reimburse Medicare for conditional payments. This settlement involved joint representation, and to that end the U.S. Attorney emphasized that, “[p]laintiffs’ attorneys cannot refer a case to or enter into a joint representation agreement with co-counsel and simply wash their hands clean of their obligations to reimburse Medicare for its conditional payments.”

It doesn’t appear that the Department of Justice (DOJ) will discontinue its pursuit against plaintiff’s firms for failing to properly address conditional payments, as on January 8, 2020 the U.S. Attorneys Office for the Eastern District of Pennsylvania announced a settlement agreement with a plaintiff’s firm. The DOJ’s enforcement of Medicare reimbursement will be an area to watch and should impress upon parties to a liability settlement – especially plaintiff’s counsel – to properly address Medicare conditional payments.


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