Whose Advantage Is It?

As the industry prepares for Medicare Advantage (Part C) and prescription drug (Part D) plan information to be presented through Section 111 (Mandatory Insurer Reporting), which requires companies to adapt to another 200-plus data points through the Medicare Query process, speculation abounds concerning what to do once you receive a file with the last three years’ worth of Part C or Part D plan information. On a mid-September conference call, predictably, Medicare’s contractors could not provide any answers.

Given the aggression of certain Medicare Part C recovery companies (where Part C plans assign rights of recovery to third parties), clearly something more than documenting the file needs to be done. That is because federal case law, starting with the Third Circuit Court of Appeals’ In Re Avandia decision in 2012, has made it clear that Medicare Part C plans have the right to recover for medical expenses paid where companies settling bodily injury, workers’ compensation, or other claims accepted responsibility through settlement, judgment, or other payment per terms of the Medicare Secondary Payer (MSP) Act. More recent decisions confirm that Medicare Part C plans may pursue recovery directly from a Medicare beneficiary’s attorney, and double damages, against an insurer if the Part C plan is not properly reimbursed for its conditional payments.

The number of Medicare-eligible individuals who elect to enroll in a Medicare Part C plan (as an alternative to traditional Medicare Parts A and B) is rapidly increasing. In 2021, 42% of Medicare beneficiaries—which equates to roughly 26.4 million people—are enrolled in Medicare Advantage plans. This share has steadily increased over time since the early 2000s. Between 2020 and 2021, total Medicare Advantage enrollment grew by about 2.4 million beneficiaries, nearly the same growth rate as the prior year. The Congressional Budget Office projects that the share of all Medicare beneficiaries enrolled in Medicare Advantage plans will rise to about 51% by 2030. These statistics, combined with the fact that these plans are becoming increasingly aggressive in pursuing recovery rights, mean that checking the “other” Medicare box as part of your claims checklist is more important than ever.

Generally, addressing Medicare Part C recovery rights works the same as Medicare Parts A and B, where you need to know which plan paid for the medical bills that relate to the underlying incident. As a process, “verify, resolve, and satisfy” still works for Medicare Part C plans, and the Provide Accurate Information Directly (PAID) Act’s implementation will be a step in the right direction for all settling parties. At the very least, once the file is received through Section 111 query, you should submit any information about Medicare Parts C or D coverage to claimant’s counsel (if not pro se) to ensure that MSP laws are followed.

Prior to the PAID Act, the major concern settling parties had with respect to Medicare Part C plans was how to find them because, in many cases, when parties settled their disputes but could not identify applicable Medicare Part C coverage, the risk remained that a reimbursement claim would arise post-settlement. The PAID Act provides the industry with some much-needed relief, but what happens if a Medicare Part C plan is not identified through the Medicare query report and still seeks recovery? Is there an applicable statute of limitations, and, if so, where does it originate?

There have been questions over the years as to whether the MSP Act applies to Medicare Part C and D plans. For example, while the Strengthening Medicare and Repaying Taxpayers (SMART) Act provided that the statute of limitations for MSP recoveries is three years, arguably this statute of limitations applies directly only to recoveries by the federal government.

The legislative intent, however, would seemingly point to the fact that this statute of limitations should also apply to Medicare Part C and D plans. As Part C and D plans have now gained the rights to a double damages private cause of action under the MSP Act in several jurisdictions across the country, it would seem that if Part C and D plans want the same benefits of having recovery rights as traditional Medicare (double damages), then they should also have the burdens (a three-year limitation on recovery of conditional payments).

Courts have continued to grapple with the applicable statute of limitations involving Part C plans, particularly with the False Claims Act. In a March 2021 federal court case, MSPA Claims 1, LLC v. Tower Hill Prime Ins. Co., MSPA, an assignee of a now-defunct Medicare Advantage organization, sued Tower Hill for double damages under the MSP Act for unpaid conditional payments. In ruling on this case, the federal court in the Northern District of Florida acknowledged that the federal government’s cause of action under the MSP Act has a three-year statute of limitations, but no clear limitations period exists for the private cause of action.

Tower Hill argued that a four-year statute of limitations applied—pursuant to Fla. Stat. § 95.11(3), which governs actions “founded on a statutory liability”—whereas MSPA argued that a six-year statute of limitations applied, pursuant to the False Claims Act. Ultimately, the court concluded that the four-year statute of limitations applied because Florida’s limitations period was more analogous to the MSP Act’s limitation period than it was to the False Claims Act’s. This case represents a significant marker, given the absence of case law regarding the applicable statute of limitations period under the MSP Act.

As the PAID Act starts to answer the questions of whether Medicare Part C or D plans provided coverage for injured claimants, settling parties will need to identify any injury-related charges to ensure that contingent liabilities no longer remain post-settlement.

For those Medicare Part C or D plans that are not found, questions will remain regarding how long after settlement those plans can continue to pay and chase. It is clear that further legislation is needed to align the three-year statute of limitations that currently exists for the federal government with those private health insurers that contracted with the federal government to manage care for Medicare beneficiaries. If Tower Hill is not just an aberration, anything less would result in state law disconnects for these federal health insurance plans, and add to the already complex rules surrounding settlements with Medicare enrolled beneficiaries.