Passage of the Provide Accurate Information Directly (PAID) Act (H.R. 1375, Section 1301 of H.R. 8900) in December 2020 was strongly desired by the property and casualty industry, but, until it is implemented, primary plans will still need to stay out in front of potential Medicare Advantage (MAO) and Medicare Prescription Drug (Part D) Plan recoveries and lawsuits.
The PAID Act, effective Dec. 11, 2021, states that the Centers for Medicare & Medicaid Services (CMS), in response to a Section 111 query, will be required to provide any Responsible Reporting Entity (RRE, which is typically the workers’ compensation, liability, or no-fault insurer/self-insured entity) with the name, address, and plan number of each MAO and Part D Plan into which a Medicare beneficiary was enrolled for the three years prior to the date of the query.
The idea behind PAID is that it will allow those RREs to resolve any outstanding conditional payment-recovery claims that MAO or Part D Plans might assert for payments related to an accident or injury subject to a settlement, judgment, or award paid by the RRE.
The P&C industry favored the PAID Act because MAOs and Medicare Part D insurance plans have been ramping up recoveries of conditional payments (Medicare liens) from primary workers’ compensation, liability, and no-fault insurance plans/self-insured entities. Over the last decade, in addition to seeking direct recoveries (often many years post-settlement) directly from the primary plans, various Medicare MAOs have been filing lawsuits nationwide under the Medicare Secondary Payer (MSP) private cause of action pursuant to 42 U.S.C. § 1395y(b)(2) for alleged failure on the part of the primary plan to reimburse the MAO. Further, some MAOs have been allowing legal assignors, such as MSP Recovery LLC, to file these actions on the MAOs behalf. To understand the depth of the number of lawsuits, displayed on MSP Recovery’s website are over 100 class actions filed nationwide against some of the nation’s largest insurers and self-insured entities.
Unfortunately, in most of the recovery scenarios where a demand is issued by an MAO against a primary plan, or where the primary plan is sued for double damages under the MSP, the primary plan never had any knowledge that the injured party was enrolled in an MAO, or that the MAO had a claim for a conditional-payment recovery. The reason for this information gap is that, within the Section 111 query process, CMS historically has returned only traditional Medicare Part A and B enrollment information to the primary plan.
Thus, unless the injured party provides all of its historical Medicare plan enrollment during the life of the claim, the primary plan is typically unaware of the injured party’s non-traditional Medicare enrollment. This is increasingly becoming a larger issue as enrollment in MAOs is increasing, and recent statistics show as much as nearly 40 percent of the Medicare population is enrolled in an MAO.
The PAID Act will vastly improve this information process once implemented by CMS. Primary plans, should they choose, will be able to receive MAO and Part D enrollment information for their injured parties, thus being able to resolve, and get in front of, these post-settlement conditional payment recoveries, as well as lawsuits by MAOs and their assignors such as MSP Recovery LLC.
In the Meantime
The PAID Act will be helpful for primary plans, once implemented, but although the effective date is Dec. 11, 2021, it is highly likely that implementation may not occur until sometime in 2022 due to COVID-19 and other pressing health care initiatives at CMS. Therefore, in the interim, until PAID is implemented, best practices should be: get in front of potential MAO and Part D recoveries and lawsuits.
All stakeholders to a workers’ compensation, general liability, or no-fault settlement with Medicare beneficiaries will need to remain diligent to avoid the double-damages penalty stemming from the MSP. In two circuits, the 3rd and 11th, that encompass the states of Pennsylvania, New Jersey, Delaware, Alabama, Georgia, and Florida, there is clear established case law allowing for the MAO to bring an MSP private cause of action for double damages against primary plans. (See In Re: Avandia Marketing Sales Practices & Products Liability Litigation, and Humana v. Western Heritage Insurance Company).
Accordingly, for these six states that currently have legal standing for these rights, settlement stakeholders may want to take additional protective steps in identifying MAO or Part D plans. Proactive steps would include inquiring with injured parties and/or their attorney to determine any enrollment in an MAO or Part D plan during the life of the claim. Such inquiries should be initiated at the outset of the claim, and, if the injured party is represented, the attorney should cooperate with such requests as representative attorneys can be personally held liable under the MSP for a private cause of action for double damages. (See Humana v. Paris Blank.)
While these six states are riskier due to the established case law allowing for MAOs to bring a private cause of action, ideally these steps should be taken in all claims jurisdictions while MAOs and their assignors, such as MSP Recovery LLC, seek to establish precedent in the rest of the country regarding their right to obtain double damages under the MSP private cause of action against primary plans that fail to reimburse. Ultimately, the PAID Act will be of tremendous benefit, once implemented, but, until then, partnering with an MSP expert that can assist in carving out best practices is recommended.