onsiderable enthusiasm and hope has been generated by the Medicare Secondary Payer Enhancement Act of 2010 (MSPEA) (H.R. 4796) which was introduced into the United States House of Representatives by Patrick Murphy (D-PA) and Tim Murphy (R-PA) in March of this year.

H.R. 4796 proposes major amendments to the Medicare Secondary Payer Statute (MSP) (42 U.S.C. § 1395y(b)(2) which would make current MSP processes and requirements more workable, efficient and equitable.

H.R. 4796 is largely credited to the efforts of the Medicare Advocacy Recovery Coalition (MARC) (www.marccoalition.com). MARC is a national industry group that has formed over the past two years to address various aspects of MSP compliance. The group is comprised of a broad range of interests and sectors in the claims industry.

At this point, H.R. 4796 is proposed legislation, and it remains unknown whether or not the new bill will eventually be enacted into law. However, in the short time since being released, H.R. 4796 has garnered broad based industry backing and support. In addition, the bill is generating considerable Congressional interest and support. To monitor H.R. 4796's progress, please see www.govtrack.us.

H.R. 4796's proposed amendments include the following:

• H.R. 4796 proposes two methods to calculate and pay conditional payment claims prior to settlement.
  
  A conditional payment is "a Medicare payment for services for which another payer is responsible" (42 C.F.R. § 411.21). Under the MSP, the parties are obligated to reimburse Medicare for conditional payments in workers' compensation, liability, no-fault and other types of injury related claims.
  
  Currently, during the course of a claim the parties can obtain an estimate of Medicare's claimed conditional payment amount from the Centers for Medicare and Medicaid Services (CMS). However, the parties are unable to obtain the "final" conditional payment amount until after the claim is settled. Thus, the parties essentially have to negotiate the settlement based on an interim estimate of the conditional payment amount.
  
  This uncertainty causes a host of problems in the claims context as there is always the potential for "bounce" in that the final conditional payment amount could end up being higher than the interim estimate. This can have a significant impact on settlement practices. For example, the parties may be reluctant to release the settlement funds until after the final number is obtained to ensure that sufficient funds are available to satisfy Medicare's claim. As it can take CMS several months to provide the final conditional payment amount, often times there is a considerable delay before a plaintiff receives his/her settlement funds. Furthermore, the MSP's double damages penalty provision and the fact that CMS has the right to pursue any and all of the parties to a settlement create additional liability concerns.
  
  To rectify this problem, H.R. 4796 proposes two alternative methods to address the conditional payment issue prior to a settlement, judgment, award, or other payment. These proposed methods are as follows:
  
  Final Demand Method
  
  H.R.4796 would allow the parties at any time beginning 120 days prior to the reasonably expected date of such settlement, judgment, award or other payment to submit a request for a recovery demand letter for reimbursement.
  
  Upon this request for a "final demand," CMS would then have 60 days to provide the requested amount. If CMS does not provide the final demand within 60 days, CMS would be considered to have essentially waived its claim.
  
  If, on the other hand, CMS issues a "final demand" within the 60 day timeline, then the parties not later than 60 days after receipt of such final demand would have two options: (a) reimburse Medicare in the amount identified in their final demand which shall satisfy any obligations of the claimant and the applicable plan" regarding the conditional payment claim; or (b) appeal the asserted conditional payment amount.
  
  Good Faith Method
  
  Alternatively, the parties could make a "good faith" estimate of the conditional payment amount and tender the amount directly to CMS, with the agency having a right to challenge same within a specific period of time.
  
  Specifically, H.R. 4796 proposes that during the 90 day period preceding the reasonably expected date of a settlement, judgment, award, or other payment, the claimant and applicable plan may:
  
  
  • Calculate "in good faith" the amount of the reimbursement based upon billing data for such items and services provided; and
  
  
  
  • Reimburse such amount in accordance with regulations as to be established by the Secretary of Health and Human Services.

  As proposed, the corresponding payment shall satisfy any obligation of the claimant and the applicable plan for conditional payments unless Medicare contests the adequacy of this payment during the 75 day period beginning on the date of such reimbursement is made by serving the claimant and applicable plan a final demand for the balance of the remaining amount so owed.
  
  If CMS challenges the adequacy of the submitted payment, the parties would then have two options: (a) reimburse Medicare for the balance of the conditional payments; or (b) appeal the balance amount through a formal appeals process with the claimant or applicable plan having the burden of proof to show that the reimbursement made was in fact correct.




• H.R. 4796 proposes an extended right of appeal for MSP matters.
  
  The proposed legislation would grant all parties the right to appeal CMS determinations through the administrative appeals process and into the Federal Court system. This provision may prove particularly helpful in the conditional payment context where currently CMS maintains that only the claimant has the right to appeal.



• H.R. 4796 proposes a revision to Section 111's penalty provision.
  
  As currently constructed, Section 111's penalty provision provides that that a party deemed non-compliant with Section 111 shall be subject to a civil money penalty of $1,000 for each day of non-compliance.
  
  Use of the word "shall" has caused concern as this word under strict legal interpretation is generally viewed to mean "must." Accordingly, a strict interpretation of this section would mean that CMS is required to impose the penalty as a matter of law, without consideration of legitimate mitigating factors, such as good faith, substantial compliance and diligence.
  
  H.R. 4796 would revise this language to read may be subject to a civil penalty of up to $1,000 for each day of non-compliance. This textual revision would inject a discretionary component to the penalty provision in terms of (a) the imposition of the penalty in the first instance (may be subject to), and (b) the potential penalty that could be levied (up to $1,000).

In addition, H.R. 4796 proposes the following:

• Establishment of Section 111 "safe harbor" provisions to be devised from CMS soliciting specific proposals from the industry.



• Establishment of a $5,000 MSP monetary threshold exemption.



• Imposing a three year statute of limitations for CMS to bring MSP related claims.



• Requiring CMS to develop a system for reporting under the MSP using identifying information other than a person's social security or health identification claim number.

To learn more about H.R. 4796, including how to get involved with the current legislative efforts in Congress, contact the MARC Coalition at www.marccoalition.com or at 703-830-9192.

For information on how NuQuest/Bridge Pointe can be of assistance in addressing Medicare conditional payments, or any other matter regarding Medicare Secondary Compliance, please contact the author or email info@nqbp.com. Please also feel free to review our website www.NQBP.com.