Medicare expands resolution options to include a new Medicare repayment program for small settlements or judgments. This program will be available starting in February 2012 and applies to cases settling for $25,000 or less.  Under this program, Medicare will provide final conditional payment amounts before settlement under certain circumstances.  This program has the potential to revolutionize the settlement process for many Medicare beneficiaries, their counsel, and settling parties.  The foundation of that process is to start the verification process early.  

Recently, the Centers for Medicare and Medicaid Services (“Medicare”) released guidance (the “Alert”) relevant to conditional payment reimbursement under the Medicare Secondary Payer (“MSP”) Act (42 U.S.C. §1395y(b)(2)).  This guidance permits certain Medicare beneficiaries to receive a final conditional payment amount from Medicare prior to date of settlement.  Historically, Medicare’s conditional payment reimbursement process has not allowed a Medicare beneficiary or settling parties from obtaining such information from Medicare or its recovery contractors.
 
Under this small settlement option, for a Medicare beneficiary to obtain a final conditional payment amount prior to settlement, the fact pattern must meet all of the following criteria:

1. The liability insurance (including self-insurance) settlement will be for a physical trauma based injury (the settlement does not relate to ingestion, exposure, or medical implant);
2. The total liability settlement, judgment, award, or other payment will be $25,000 or less;
3. The Date of Incident occurred at least six months before the beneficiary or representative submits the proposed conditional payment amount to Medicare; and
4. The beneficiary demonstrates that treatment has been completed and no further treatment is expected either through a written physician attestation or by certifying in writing that no medical treatment related to the case has occurred for at least 90 days prior to submitting the proposed conditional payment amount to Medicare.

If the case meets all of these qualifying criteria, then Medicare, through its recovery contractor, the Medicare Secondary Payer Recovery Contractor (“MSPRC”), will provide a final conditional payment amount prior to settlement.  This final conditional payment amount provided by the MSPRC will only be valid if the Medicare beneficiary settles a claim within sixty (60) days of the date of Medicare’s response.  According to MSPRC, this option will be available to Medicare beneficiaries starting in February 2012, and will effectively allow Medicare’s related claims to be identified pre-settlement.  While the process has not been fully defined, it is likely that once settlement is finalized, the process of requesting a final demand amount from Medicare (by providing gross settlement amount, fees, costs and expenses) will remain the same, regardless of whether this small settlement resolution program has been utilized.

Starting the Medicare repayment process early provides the best opportunity to comply with all Medicare Secondary Payer obligations while expediting the case.  Medicare’s 2012 small settlement resolution program reinforces the need to START EARLY!  To take advantage of this program in a $25,000 or less case means needing to know if an individual is Medicare enrolled, and if so, how much in medical expenses has Medicare paid conditionally.  Having a formalized settlement process that integrates these core concepts will achieve efficiencies and enhance the effectiveness in settlement proceedings.  Such a formalized settlement process should include an analysis of the applicability of this small settlement resolution program.  Thus, screening a case/claim up front to verify entitlement, establishing a tort recovery record with Medicare early in the process and obtaining the first conditional payment letter from Medicare (all as part of a formalized settlement process) and resolution path is the proper path to take advantage of this small settlement resolution program.  Although Medicare currently does not intend to include exposure, ingestion or implantation cases in this program, the Alert identifies that this will be a work in progress.  As a result, if this program creates the intended results that benefit the settling parties, taxpayers and the Medicare program, an extension of this program in 2013 may not be out of the question. 

Medicare intends to issue additional guidance on how to participate in this program in January 2012.  The DRI MSP Task Force will provide further program details once they have been released.  Until then, we continue to stress the importance of verifying Medicare enrollment as early in the settlement process as possible, as that information will better define the scope of the settlement continuum; from reimbursement to reporting to potential future cost of care issues.

CMS Announcements on Fixed Percentage Option for Settlements of $5,000 or less, $300 Threshold Limit for Reimbursement, and Identification of Contractor for Medicare Secondary Payer Recovery

The Centers for Medicare and Medicaid Services (“CMS”) posted an alert (the “Alert”) that confirms that there has been an extension, in certain cases, of the reporting trigger date for Mandatory Insurer Reporting (“MIR”) under Section 111 of the MMSEA.  The Alert provides the new trigger dates based on gross settlement/judgment/other payment (“TPOC”)  values for claims as follows:

On September 23, 2011 the MSPRC announced that it would be adding a Self Service Information Feature to its current Customer Service Line that will provide automated conditional payment information over the telephone. It is scheduled to go live on September 30, 2011. The announcement suggests the advantages of the new telephone feature would be:

We find that it raises more questions than it answers. For example:

More information was promised although none has been received to date. We will keep you up to date as we receive the information.

The long awaited revision to the Non-Group Health Plan User Guide is finally available.  CMS Issued Version 3.2 of the NGHP User Guide on August 17, 2011.  It can be found on the CMS website. To find it, scroll down to the Downloads section.

The issue of whether Medicare Advantage [MA] plans enjoy an enforceable right of subrogation (like Medicare Part A and B plans) was raised yet again in an August 2011 class action suit brought in New York state court. Rebecca Meek-Horton, an MA Health plan beneficiary, settled a personal injury suit involving medical bills paid by the plan.  The plan, which thereafter sought to recover $149,307.69 in injury related medical and hospital expenses. Ms. Meek-Horton took umbrage and brought suit against the plan, Healthfirst, Inc., its agent, Trover Solutions, and 40 other defendants as well as other unnamed Medicare Advantage Health Insurance Companies, claiming that such subrogation efforts violate New York State Genl. Obl. Law §5-335 which in essence prohibits subrogation. Meek-Horton v. Trover, et al, State of New York, Supreme Court, Case NO. 11108804-2011. This suit follows on the heels of a New York trial court decision which held, without extensive discussion, that the Medicare Act does not create a statutory right of reimbursement for Medicare Advantage plans but merely permits them to include subrogation rights in its contracts with beneficiaries. Trezza v. Trezza, 21 Misc. 3d 1209(A), 2011 WL 2640794 (N.Y.Sup.), 2011 N.Y. Slip Op. 51237(U) (June 23, 2011).

This issue is far from decided and we urge defense practitioners to exercise caution in settling claims involving MA payments. 

It is true that recent federal district court decisions have opined that the Medicare scheme fails to create a federal private cause of action. In re Avandia, MDL No. 1871, 2011 WL 2413488 (E.D.Pa., June 13, 2011);  Para v. PacificaCare, No10-1008, 2011 WL 1119736 (D.Ariz., March 28, 2011) and Humana v. Reale, No. 10-21493, 2011 WL 335341 (S.D.Fla., Jan. 31,2011). While recognizing the right of an MA to make itself a secondary payor these decisions have carefully avoided addressing the question of whether state anti-subrogation statutes are preempted by 42 CFR 422.108(f). This regulation provides that “the rules established under this section supersede any State Laws that would otherwise apply to MA plans. A State cannot take away an MA organizations’ right under Federal law and the MSP regulations to bill …for services for which Medicare is not the primary payer.” The Courts in the In Re Avandia and Pacifica decisions expressly stated that a state cause of action exists and the latter further noted that states are as capable as the federal courts to address preemption questions such as that presented by the regulation. Earlier decisions reaching a similar conclusion on the lack of a federal private cause of action, Care Choices v. Engstrom, 330 F.3d. 786 (6th Cir. 2003) and Nott v. Aetna US Healthcare, 303 F. Supp. 2d 565 (E.D.Pa.2004), were decided before the implementation of 42 CFR 411.108(f) in 2005.  

Until the preemption issue has been resolved we urge practitioners to utilize the same defensive strategies applied in settling regular Medicare cases, i.e.  hold harmless agreements and escrow provisions, to name a few. We also take this opportunity to remind the practitioner that these should be agreed upon as part of, not after, the settlement discussion.

During the past two months, FICO quietly rolled out a program to score individuals on the probability that they will take their prescription medications in the manner prescribed. As the privacy implications begin to materialize, let me restate the gist of the program: The company that compiles data to assign a credit score to virtually every citizen in America is now compiling data to assign the population with a score that attempts to predict whether you will be a “good” patient - whether you will take your medications as directed.

The New York Times previewed the program on June 20, 2011, noting that “nearly three in four Americans do not follow doctor’s orders for taking prescription drugs... [while] others forget to pick up their drugs from the pharmacy, skip doses, take their pills at the wrong time or take too much or too little.” In an alleged effort to combat the 125,000 annual deaths associated with the phenomenon, FICO is now selling a service that attempts to predict who will take their medications as prescribed. According to FICO, “insurance companies and other health care groups will use the score to identify those patients who could benefit the most from follow-up phone calls, letters and e-mails to encourage proper use of medication.” Within the next 12 months, FICO expects to score approximately 10 million patients.

While the privacy implications of this service are obvious, they become even more troubling when you consider the mounting pitfalls associated with continually expanding efforts associated with data mining. On Tuesday, the MIT publication Technology Review summarized the issue by noting that “a complex picture of your personal life can now be pieced together using a variety of public data sources, and increasingly sophisticated data-mining techniques.” Unfortunately, the public’s privacy rights are rarely considered and the resulting “picture” is often inaccurate. Technology Review reported that last week at the Black Hat security conference in Las Vegas, researchers were able to show how a photograph of a person “can be used to find his or her date of birth, social security number, and other information by using facial recognition technology.” The researchers, including Carnegie Mellon professor Alessandro Acquisti, acknowledged that the information is being used to “prejudge a person on many levels – as a prospective date, borrower, employee, tenant” and, in the case of FICO’s new program, as a prospective patient.

Looking further at the example of FICO’s program, the potential implications of inaccurate or improperly released information are profound. What is to keep an insurance company from overtly, if not surreptitiously, allowing the score to influence their healthcare coverage decisions? What if the information is inaccurate? What if a patient changes pharmacies or a divorced couple changes the way they obtain their child’s medications – will those changes be recorded in an accurate and timely manner in FICO’s score data, or will the patient appear as though they fail to comply with their doctor’s orders? Worse, there is no mechanism to “opt out” of such reporting and, to the extent that a patient ever learns their score to begin with, the mechanism for changing an error is, at best, unclear.

It is clear that data mining efforts are exploding in America. Unfortunately, it does not appear that safeguards are keeping up. Citizens have a right to know who is compiling data on them, what that data consists of and who it is being provided to. They also have a right to challenge publication and inaccuracies. However, until lawmakers provide a framework to make that possible, or at least realistic, individuals need to be mindful of the electronic trail their actions are leaving.

The International Agency for Research on Cancer (IARC), a division of the World Health Organization (WHO), recently reclassified cell phone radiation emissions as a “possible carcinogen”.  Forbes explored the decision, entered on May 31, 2011, in a recent article that looks at the potential for a spike in corresponding litigation.  Cell phone radiation, which is emitted as radiofrequency (RF) electromagnetic fields, was linked to an increase in the risk for glioma, a type of brain cancer.  More specifically, the IARC study showed that there was a 40 percent increased risk for glioma for people that used their cell phone for an average of 30 minutes per day over a 10-year period.  Critics point out that the study was flawed, in that it began with those who already had cancer and asked them to recall how often they used their cellphone during the last decade. 

Regardless of how IARC reached the “possible carcinogen” classification, many are predicting a sharp increase in litigation associated with cancer fears.  On October 25, 2010, the Third Circuit Court of Appeals affirmed a holding from the Eastern District of Pennsylvania that preempted a class action based on federal law.  The class action lawsuit claimed that several companies within the cell phone industry conspired to market cell phones without adequate warnings or headsets.  In affirming the dismissal of that suit, the Third Circuit found that Congress delegated the regulation of human RF exposure to Congress, and that “juries should not be permitted to create a patchwork of differing standards that would undermine the efficiency of the nationwide system.”  However, on the same day that IARC released its recent reclassification, the U.S. Supreme Court asked the U.S. Solicitor General to file a brief on whether the Supreme Court should review the dismissal.  Whether the Supreme Court reviews the case, and where the Court ultimately falls on the issue, will determine the future of RF exposure litigation. 

A very common issue in emergency room cases, especially code situations, is the timing of when key events occurred.  A major challenge for defense attorneys results from the fact that the times recorded by various doctors, nurses and electronic records almost never match up. The times for key events often vary by 2-5 minutes.  Plaintiffs’ attorneys either try to select the times that are most favorable to their theory of the case, or use the discrepancies in recorded times to attack the reliability of anything in the chart.

Defense counsel frequently must use witnesses to explain the reality that doctors and nurses often use their individual wrist watches or the clock on the wall to obtain the times they record.  Those timepieces commonly do not correspond with computerized times from other monitors attached to the patient.  The ability to persuasively explain the realities of the recording of events and their times can be crucial to convincing a jury that the health care provider met the standard of care.

This issue will be discussed in two separate presentations at the upcoming DRI Medical Liability Conference in March 10-11, 2011 at the Palace Hotel in San Francisco.  Bradley Freeman, M.D. will provide the medical perspective on charting while rendering life-saving care in a code situation.  Tara Trask (a very experienced jury consultant) will use video segments from actual mock jury deliberations to explain how jurors react to these types of issues in medical liability cases.

I recently was in Chicago for the Seventh Circuit Court of Appeals argument in a correctional health care case involving the death of a pretrial detainee.  The federal district court had granted summary judgment to all defendants after mediation at which Plaintiff’s counsel had been unwilling to reduce his demand below five million dollars.  The defendants hope the Court of Appeals will uphold the trial court’s well-reasoned 62-page opinion.

I was struck during the argument (which was divided three ways by defense counsel) by just how important it had been throughout the case that the numerous attorneys for all defendants cooperated so well with each other, as opposed to finger-pointing or trying to blame the unfortunate death on another defendant.  By maintaining the goal of simply proving the reasonableness of each defendant’s conduct, the defense team eventually succeeded in establishing for the trial court that the prisoner’s death was totally unforeseeable and unpreventable.

The benefits of cooperation among defense counsel and the pitfalls of finger-pointing is one of the topics that will be addressed at DRI’s Medical Liability and Health Care Seminar March 10 and 11 at the Palace Hotel in San Francisco.  Morris Jensby of CHG Healthcare Services, Inc. in Salt Lake City and Russ Schell, an eminent trial attorney from Schell Cooley in Dallas will explore this topic in depth from the perspective of both the corporate health care client and trial counsel.