The Medicare Payment Advisory Commission (“MedPAC”) met in Washington, DC, on March 1-2, 2018. The purpose of this and other public meetings of MedPAC is for the commissioners to review the issues and challenges facing the Medicare program and then make policy recommendations to Congress. MedPAC issues these recommendations in two annual reports, one in March and another in June. MedPAC’s meetings can provide valuable insight into the state of Medicare, the direction of the program moving forward, and the content of MedPAC’s next report to Congress.

As thought leaders in health law, Epstein Becker Green monitors MedPAC developments to gauge the direction of the health care marketplace. Our five biggest takeaways from the March meeting are as follows:

  1. MedPAC gives an update on CMS’s financial alignment demonstration for dual-eligible beneficiaries

MedPAC provided an update to CMS’s demonstration for dual-eligible beneficiaries.  The purpose of the demonstration is to improve the quality of care in the dual-eligible program and reduce costs in both Medicare and Medicaid programs.  MedPAC briefly reported on the two demonstration models tested among 13 states: (1) Medicare-Medicaid Plans (“MMPs”) and (2) Managed Fee-for-Services (“FFS”).

For MMPs, the rates appeared to be adequate following a 2016 increase in the Part A/B rates (5-10%).  Enrollment has been lower than expected because many beneficiaries chose to either opt out before passive enrollment took effect or disenroll from their MMP.  Although overall participation rate was 29 percent of eligible participants, the total MMP enrollment has been stable since mid-2015.  Plan participation in MMPs has decreased.  Eighteen MMPs have left the demonstration largely because participation and enrollment were very low.  Regarding the effects of MMPs on service use, quality, and cost, CMS is still collecting reports and data.  However, MedPAC expects that the reports from the first and second year of the demonstration will provide little insight since implementing the demonstrations were challenging.  Some MMPs reported that it took 18 to 24 months before they could see changes in patterns of service use among their enrollees.

For Managed FFS, CMS estimated that there was a reduction in Medicare spending by $67 million during its first 2.5 years of operation in Washington state.  But MedPAC believed that the savings was inflated because the savings figure is based on an estimate of what Medicare would have otherwise spent on roughly 20,000 dual eligibles enrolled, while actual numbers of enrolled dual eligibles was closer to 3,000.  MedPAC recalculated the total savings to be approximately $9,000 per year.  In contrast, CMS found that Colorado state’s demonstration increased Medicare Part A/B spending.

Overall, MedPAC thought that the limited data showed that the demonstrations were going well despite the challenges at the start of the programs.

  1. MedPAC’s mandated report regarding the effects of the Hospital Readmissions Reduction Program

As part of the 21st Century Cures Act mandate, MedPAC provided a report on whether the Hospital Readmission Reduction Program (“HRRP”) had any effect on readmission rates.  MedPAC found that readmission rates declined faster after the program was enacted.  Although some critics of the program suggested that HRRP only shifted patients from readmission hospital stays to observation stays and emergency department (“ED”) visits.  However, MedPAC stated that its analysis showed rapid growth in use of observation and ED with and without an inpatient stay, suggesting that HRRP did not drive the increase.  Additionally, MedPAC also reported that overall, HRRP decreased mortality rates.  The one mortality that increased was heart failure, but MedPAC explained that the reason for the increased heart failure mortality was probably because of the decline in initial admissions (easier cases being treated on an outpatient basis), thereby increasing the raw readmission rates for more complicated conditions (e.g., heart failure).

  1. MedPAC discusses modifying Medicare rules to allow Discharge Planners to recommend higher-quality PAC providers

MedPAC discussed the possibility of modifying Medicare’s rules to permit discharge planners, under some circumstances, to recommend certain Post-Acute Care (“PAC”) providers. Beneficiaries served by low-quality providers are at an increased risk of re-hospitalization and more likely to experience negative clinical outcomes than beneficiaries served by higher quality providers. As such, it is central to both the integrity of the Medicare program and wellbeing of the beneficiaries that the value of the dollars spent on PAC is maximized.

Although the IMPACT Act required hospitals to use quality data during the discharge process and provide it to beneficiaries with the hopes that they would choose higher-quality PAC providers, preliminary reviews and data have shown that this method has failed to gain traction. MedPAC found that beneficiaries prefer to rely on information from trusted sources, such as their health care provider, families and friends over the reported quality data when it comes to choosing a PAC provider. This can be partially attributed to the fact that, as it stands, a discharge planner cannot recommend a specific PAC provider, but can only present the data to the beneficiary.

Thus, by modifying the rules to permit discharge planners to proactively recommend “higher-performing” PAC providers, discharge planners could assist beneficiaries in understanding the extent to which the quality of care varies among PAC providers within the beneficiary’s geographical area. Along with such a policy, the definition of “higher-quality” or “higher-performing” PAC would have to be established and quantified. MedPAC proposed both a “flexible” and “prescriptive” approach to defining a “higher-quality” PAC provider, and is awaiting Commissioner reaction to the different approaches or any other models that should be further considered.

  1. MedPAC discusses payment accuracy for sequential PAC stays

The Commission has long advocated for implementing a unified prospective payment system (“PPS”) for all four settings of post-acute care (“PAC”). Under such a system, each stay is considered an independent event, and payment is based on the average cost of stays. To reflect their much lower cost, the unified PPS would have a large adjustment for home health agencies. However, sequential stays, defined as a PAC stay within 7 days of a previous PAC stay, pose two challenges to payment accuracy. First, payments should track the cost of each stay in a sequence of care. Over the course of care, a beneficiary’s care needs are likely to fluctuate, with initial stays having different average costs than later stays. MedPAC found that the cost per stay for home health agencies are much lower for later stays in a sequence than the earlier stays. Thus, without some sort of an adjustment, profitability under a PAC PPS would be higher for later home health stays. If payments do not accurately reflect these fluctuations in care, providers may base their care on financial reasons rather than on the best course of care for the patient. Second, as regulations are aligned, some providers may opt to treat patients over a continuum of care, which makes it difficult to ensure that providers are accurately paid for each phase of care without improperly inducing volume of PAC admission. MedPAC discussed various strategies to counter the incentive to increase subsequent PAC stays, including redefining a “stay” as a long duration, requiring physician attestation of continued need of care, and implementing value-based purchasing that would include a resource use measure.

  1. MedPAC proposes two draft recommendations related to Emergency Department Use

MedPAC presented two draft recommendations related to improving efficiency and preserving access to emergency department (“ED”) care in both rural and urban areas. The primary objective has long been to preserve access to care in rural areas, by providing for higher inpatient rates to providers for rural PPS hospitals, and implementing a cost-based payment for critical access hospitals. However, these strategies have become increasingly inefficient and do not always preserve emergency access, as seen by declining admissions at critical access hospitals over the last 12 years. Thus, MedPAC proposed establishing a 24/7 ED in outpatient-only hospitals for isolated hospitals (those more than 35 miles from other hospitals). Such a program would be funded by outpatient PPS rates per service, as well as Medicare fixed subsidies to fund standby costs, emergency services, and physician recruitment. Such a policy would maintain emergency access in isolated areas and offset the cost of the additional ED payments with efficiency gains from consolidating inpatient services.

MedPAC’s second policy option addresses urban stand-alone EDs, where MedPAC is concerned that Medicare is encouraging overuse of ED services. MedPAC found that urban stand-alone EDs appear to have lower patient severity and lower standby costs than on-campus EDs (“OCEDs”) even though they are paid on the same basis as OCEDs. Thus, MedPAC recommended that policymakers consider either of two options for urban OCEDs in close proximity to on-campus hospital EDs (within six miles).  One option would be to have Medicare pay OCEDs a reduced Type A payment rate by using a fixed percentage across each of the five levels of ED service. The second option would be to pay these facilities Type B rates, which would lower ED payments, on average, by 28% across all five ED levels. For urban OCEDs that are more isolated from on-campus hospital EDs, MedPAC suggested permitting them to receive the higher-paying Type A rates as they currently do. The rationale for these policies would be to better align payments with the cost of care, to reduce incentives to build new EDs near existing sources of emergency care, and to preserve access to ED services where they are truly needed.

On February 20th the Department of the Treasury, Department of Labor, and Department of Health and Human Services (together the “tri-agencies”) released a proposed rule which would alter how long short-term, limited-duration insurance (“STLDI”) plans could be offered. Under current rules the maximum duration that a STLDI plan can be offered is less than 3 months, if the proposed rule is enacted that period would be extended to less than 12 months.  The tri-agencies are accepting comments on the proposed rule until April 23rd.

What are short-term, limited-duration health insurance plans?

STLDI plans were designed to provide temporary coverage for consumers who otherwise could not access longer-term health insurance products (such as a consumer transitioning between jobs). Coverage offered by STLDI plans is not considered Minimum Essential Coverage and because STLDI plans do not meet the definition of “individual health insurance coverage” established by the Public Health Service Act they are exempted from many of the Affordable Care Act (“ACA”) requirements. Due to the fact that STLDI plans don’t have to comply with ACA requirements they commonly feature preexisting condition exclusions, annual and life time limits, feature higher cost-sharing requirements, and are medically underwritten they tend to be less expensive and attract younger, healthier enrollees.

Why are the regulations changing?

The proposed rule was issued in response to President Trump’s October 12, 2017 executive order which, among other things, instructed the tri-agencies to reconsider the Obama era rule which limited the time period STLDI plan could be offered to less than 3 months. The presumed intent of proposed rule is to foster more and less expensive health insurance options for individuals in the individual market.  However, the Obama administration initially issued the regulations limiting STLDI plans after observing that the plans were adversely impacting the marketplace risk pools, and the political motivation to adversely impact those risk pools and through them “Obamacare” can’t be fully discounted.

What is the likely impact?

The consensus among policy makers is that extending the duration of the coverage period that STLDI can be offered is likely to increase the number of consumers who elect to enroll in these plans over health insurance that constitutes Minimum Essential Coverage. The number of people enrolling in STLDI plans is likely to increase further in 2019 when consumers will no longer face a tax penalty for failing to maintain minimum essential coverage. One estimate suggests that if the proposed rule is enacted in 2019, 4.2 million consumers will enroll in the STLDI plans and 2.9 million fewer people will maintain Minimum Essential Coverage. While we don’t know the scope this would have on the risk pools in the individual market, it warrants monitoring by plans and providers moving forward.

Our colleague  at Epstein Becker Green has a post on the Technology Employment Law blog that will be of interest to our readers: “The GDPR Soon Will Go Into Effect, and U.S. Companies Have to Prepare.”

Following is an excerpt:

The European Union’s (“EU’s”) General Data Protection Regulations (“GDPR”) go into effect on May 25, 2018, and they clearly apply to U.S. companies doing business in Europe or offering goods and services online that EU residents can purchase. Given that many U.S. companies, particularly in the health care space, increasingly are establishing operations and commercial relationships outside the United States generally, and in Europe particularly, many may be asking questions akin to the following recent inquiries that I have fielded concerning the reach of the GDPR:

What does the GDPR do? The GDPR unifies European data and privacy protection laws as to companies that collect or process the personally identifiable information (“PII” or, as the GDPR calls it, “personal data”) of European residents (not just citizens). …

Read the full post here.

This is the 7th and final installment in the Medicare Secondary Payer Compliance series. All titles in this series can be viewed below. Subscribe to our blog to receive these future updates. Prior installments of this series can be accessed using the links provided.

We can put many of the points discussed in the previous blogs into a practical context by examining two recent cases that highlight some of the struggles faced by payers in administering and processing MSP payments. These cases show that even sophisticated payers from different industries can still overlook this long-existent law, which can result in major costs to those payers. It also goes to show that a well-designed  compliance program can lead to decreased risks and potential regulatory costs.

Kane ex rel. United States v. Healthfirst, Inc. et al.[1]

In this case, the United States and the State of New York filed complaints-in-intervention  alleging that the defendant, Healthfirst, a private, non-profit insurance program with contracts with New York hospitals, issued electronic remittances to certain providers relating to Medicaid patients.  Though the remittances should have stated that Medicaid could not be billed as a secondary payer for certain covered services, due to an alleged computer software glitch, they failed to include that information; this resulted in improper payment by Medicaid for claims that  triggered MSP and FCA liability.[2]

The relator alleged that Healthfirst violated the 60 day window mandate by reimbursing Medicaid more than 60 days from the time the relator compiled the list of possible overpayments.  Healthfirst moved to dismiss the complaint, but the district court denied the motion.  It concluded that the 60 day window for reimbursement commenced when the provider was put on notice of a potential overpayment, noting that allowing an individual or entity to commence repayment only after definitively identifying an overpayment would be incompatible with the legislative history and intent of the FCA.  Subsequently, this case settled for $2.95 million.[3]

Negron ex rel. United States v. Progressive Cas. Ins. Co. et al.[4]

This FCA case based on an alleged violation of the MSP law has a twist: it involves the intersection of MSP law with New Jersey state automobile insurance law.  In Negron, the relator purchased an auto insurance policy from Progressive, which gave her the choice of selecting a “health first” policy or a “Personal Injury Protection (PIP)” policy as her primary insurer.  Under a health first policy, the enrollee’s private health insurer is the primary payer for medical bills resulting from an automobile accident.  The relator’s primary insurance was Medicare; however, Medicare and Medicaid recipients are not eligible for this type of insurance coverage because Medicare and Medicaid are treated as secondary payers in such situations.[5]

A few months later, after the relator was involved in a car accident. Medicare conditionally paid for a claim that should have been reimbursed by the auto insurance policy.  The relator brought a FCA action against Progressive and its New Jersey subsidiary, stating that the insurer had failed “to make reasonable and prudent inquiries to ensure compliance with the MSP Act” and that Medicare had improperly paid her bills as the primary payer.[6]  In response, the insurer moved to dismiss the complaint.  In denying the motion to dismiss, the court found that the practice of allowing Medicare and Medicaid beneficiaries to select the “health first” policy was a violation of the MSP, as it allows Progressive to remain willfully ignorant of a beneficiary’s primary plan coverage, and chided the auto insurance company for its lack of controls.  Specifically, the court looked at the underwriting process, which should have involved some investigation into the beneficiary’s eligibility for Medicare and Medicaid.  It also noted that the claims adjustment process should have involved an identical investigation to determine the appropriateness of a “health first” or “PIP” policy for each beneficiary.[7]

The court stated that Medicare should not pay conditionally for the services rendered to the relator just because the auto insurance company eventually paid Medicare back, and found that this manipulation of the “conditional payment” provision of the MSP ignores the requirement that a conditional payment is only to be made if prompt payment is not made by a primary payer.  Ignoring this requirement allows the defendants to “receiv[e] an interest free loan from the government on claims they are obligated to pay and were always obligated to pay.”[8]  As a result, the court found that there was a “sufficient allegation [in the complaint] demonstrating economic loss to plead that the claims were false or fraudulent.”  After the U.S. Department of Justice and the State of New Jersey intervened, the defendants settled the case for $2 million.[9]

Although Negron involves New Jersey state auto insurance laws, the key part of the court’s ruling for health care providers is that the MSP law places the burden of investigating a patient’s health insurance coverage squarely on the shoulders of the provider, and simply  allowing a patient to elect certain coverage without more inquiry may not be a sufficient defense against FCA liability based upon MSP violationspayer.

It is likely that we will see more of the MSP-based FCA cases in the coming months and years. Due to the nature of FCA cases, investigations can remain under seal for years at a time before their filing becomes public. As such, the newest trend of enforcement that has been seen may be only the tip of the iceberg of FCA actions brought against payers and providers of all types in the current health care marketplace.

Andrew Kuder, a Law Clerk (not admitted to the practice of law) in the firm’s Newark office, contributed significantly to the preparation of this post.

[1] Kane ex rel. United States v. Healthfirst, Inc. et al., 120 F. Supp. 3d 370 (S.D.N.Y. 2015).

[2] Id. at 375-77.

[3] Manhattan U.S. Attorney Announces $2.95 Million Settlement With Hospital Group For Improperly Delaying Repayment Of Medicaid Funds, The United States Department of Justice (Aug. 24, 2016),

[4] Negron ex rel. United States v. Progressive Cas. Ins. Co. et al, No. 14-577(NLH/KMW), 2016 U.S. Dist. LEXIS 24994 (D.N.J. Mar. 1, 2016).

[5] Id. at *5-*9.

[6] Id. at *27.

[7] Id. at *7.

[8] Id. at *8.

[9]  Two Insurance Companies Agree To Pay More Than $2 Million To Resolve False Claims Act Allegations, The United States Department of Justice (Nov. 14, 2017),

This is part 6 of 7 in the Medicare Secondary Payer Compliance series. All titles in this series can be viewed below. Subscribe to our blog to receive these future updates. Prior installments of this series can be accessed using the links provided.

The federal government’s most powerful and popular enforcement tool for Medicare and Medicaid reimbursement matters is the False Claims Act, 31 U.S.C. §§ 3729 et seq.. The FCA is a federal law that imposes fines and penalties on individuals and entities that submit false or fraudulent claims to the federal government, cause a false or fraudulent claim to be submitted, or submit a false certification of compliance with a law in order to have a claim paid by the government. A violation of the FCA can lead to the payment of triple damages, attorney’s fees, and fines for each false or fraudulent claim. False certifications may be expressly stated, such as when a contractor affirmatively states that it has complied with specific legal requirements, or may be implied, based on the theory that each claim or invoice would not be paid by the government unless all of the legal prerequisites have been met even if they are not expressly stated in the claim itself.  The “implied false certification” theory of wrongdoing under the FCA was endorsed recently by the Supreme Court’s decision in Universal Health Services, Inc. v. United States ex rel. Escobar, which expands the potential for Medicare Secondary Payer (MSP) enforcement.[1]  The Supreme Court ruled that an implied false certification action can survive if the defendant made a misrepresentation “about compliance with a statutory, regulatory, or contractual requirement [that is] material to the Government’s payment decision.”  Through the implied false certification theory of liability both relators and the government have a potentially powerful tool to regulate noncompliance with several regulations and statutes, including the MSP.  One recent decision helps explain how the Escobar analysis is applied by trial courts. United States ex rel. Jersey Strong Pediatrics, LLC v. Wanaque Convalescent Center et al.[2]

In this case, a qui tam whistleblower (or relator) alleges that Wanaque Convalescent Center billed only Medicare/Medicaid for services rendered to patients admitted to its skilled nursing facility and failed to bill any third party, which resulted in overpayments triggering MSP and FCA liability.  In its amended complaint, the whistleblower detailed eight instances of allegedly incorrect billing where the patient’s medical record listed Medicare or Medicaid as payers even though the patient had multiple forms of insurance.[3]

The defendants filed a motion to dismiss the amended complaint, arguing that false claims were not submitted as private insurance plans did not cover the services rendered, and that this resulted in Medicare or Medicaid becoming the primary payer for the specific services.  The defendants further contended that the relator’s allegations lacked the heightened materiality standard set forth in Escobar, claiming that the relator merely cited to federal regulations that the relator deemed “material” to the government’s decision to reimburse, rather than providing specific facts that any claim for payment has been rejected as being noncompliant with the MSP or any other regulation.[4]  The relator responded that noncompliance with the MSP satisfies the “materiality” standard set by Escobar.

The court denied the motion to dismiss, noting that the government has a great interest in ensuring strict compliance with the MSP, and therefore compliance with the MSP is “material” to the government’s decision to render payment.  The court found that the amended complaint alleged sufficient detail to put the defendants on notice, sufficiently pled knowledge, and found that the relator sufficiently pled that “MSP laws are material to the government’s decision to pay Medicare/Medicaid claims in this context.”[5]

As this moves forward from the initial pleadings, the key issue is whether the defendant may be liable under the FCA for violations of the MSP for submitting allegedly improper claims to Medicare or Medicaid as the primary payer and impliedly certifying those claims as compliant with all federal laws and regulations.[6]

Small and mid-sized providers in particular should be alert to the application of this law, particularly if their payment and billing system is not as sophisticated as may be seen in a larger hospital system or medical group. Although there were Medicare and Medicaid beneficiaries who were disabled, the MSP law applies equally for those that are injured and may receive recovery, such as someone in a car accident. As part of a compliant screening process for patients, providers may want to inquire before or during the treatment of a patient whether the injuries of the patient were the result of an accident involving a third party. If so, providers should  be aware of potential billing issues that may arise if a third party is responsible  for the primary payment of a patient’s medical costs.

Andrew Kuder, a Law Clerk (not admitted to the practice of law) in the firm’s Newark office, contributed significantly to the preparation of this post.

[1] 136 S. Ct. 1989, 1996 (2016).

[2] United States ex rel. Jersey Strong Pediatrics v. Wanaque Convalescent Ctr., No. 14-6651-SDW-SCM, 2017 U.S. Dist. LEXIS 150566 (D.N.J. Sept. 18, 2017).

[3] Am. Compl. ¶¶ 76-127.

[4] Defs. Mot. to Dismiss the First Am. Compl., 5-7 (Aug. 29, 2017).

[5] Wanaque Convalescent Ctr., 2017 U.S. Dist. LEXIS 150566 at *7-9.

[6] Id. at *7-8.

This is part 5 of 7 in the Medicare Secondary Payer Compliance series. All titles in this series can be viewed below. Subscribe to our blog to receive these future updates. Prior installments of this series can be accessed using the links provided.

Health care providers also have important responsibilities under the MSP law.  Small and mid-sized providers should be on special alert, as they may lack the same level of centralized data processing and availability of in-house counsel to keep them informed of Medicare enforcement trends and regulatory requirements. Healthcare providers have MSP responsibilities, although they are less onerous than those placed upon GHPs and NGHPs.  Generally, providers must implement certain procedures to determine each patient’s Medicare eligibility status and submit claims to the proper insurer for reimbursement.  These procedures include asking the patient his or her Medicare eligibility status, checking the Common Working File, and creating and maintaining an internal database that stores information on each patient’s insurance coverage.  When inquiring about a patient’s insurance coverage, providers are encouraged to use a CMS Questionnaire found on the CMS website.[1]  Providers must also submit an Explanation of Benefits (EOB) form with each claim to Medicare to ensure proper billing.[2]  Providers should inquire as to whether the reason the patient is being seen for treatment is prompted by an injury that would be covered by an NGHP provider, such as an automobile accident, fall, or injury in the workplace.

If a provider submits an improper claim to Medicare but receives a conditional payment, the provider must reimburse Medicare within 60 days of receiving the payment and will not be penalized if the provider maintains an internal database that stores information on each patient’s insurance coverage and the provider can show that the claim was submitted as a result of false information provided by the beneficiary or someone acting on the beneficiary’s behalf.[3]  However, if a provider does not reimburse a conditional payment within the timeframe mandated in a Medicare demand letter, it can face civil monetary penalties, such as paying interest on any outstanding payment and being assessed double damages.[4]

These rules are summarized below:

Acting Party Responsibilities Liabilities for Non-Compliance
Providers ·         Investigate each patient’s Medicare eligibility by asking the beneficiary his/her Medicare status and by checking the Common Working File to verify each patient’s Medicare status

·         Maintain a database that includes each patient’s insurance coverage

·         Properly bill Medicare

·         Include all relevant MSP information or Explanation of Benefits with Medicare claims

·         Reimburse Medicare in 60 days if improperly billed

·         Must pay interest on reimbursement if paid 60 days after issuance of demand letter

·         Possible FCA liability if the claims to Medicare were false or fraudulent

Andrew Kuder, a Law Clerk (not admitted to the practice of law) in the firm’s Newark office, contributed significantly to the preparation of this post.


[2] Medicare Secondary Payer Manual, Ch. 3 § 30.5.B.

[3] 42 CFR § 489.20.

[4] 42 CFR § 489.24.

This is part 4 of 7 in the Medicare Secondary Payer Compliance series. All titles in this series can be viewed below. Subscribe to our blog to receive these future updates. Prior installments of this series can be accessed using the links provided.

Our next blog installment turns to Non-Group Health Plans (NGHPs). While the reporting requirements for Group Health Plans are largely uniform, the same cannot be said for NGHPs. If professionals are not aware of the requirements and the potential consequences, these distinctions can lead to confusion, or worse, to double damages and a minimum fine of $1000 per day per unreported beneficiary. The most recent NGHP policy guidance covers several forms of liability insurance (including self-insurance), no-fault insurance, and workers compensation in several states of existence and decay, such as NGHPs that are in bankruptcy, those that are acquired by larger entities, those that are in the liquidation process, and those that are general self-insurance pools.[1]  Although we cannot cover every conceivable variation here, we set forth below what NGHPs are and what generally they will be required to report, so that counsel and compliance professionals can identify whether their organization is affected.

Generally, NGHPs are liability insurance (including self-insurance), no-fault insurance, and workers’ compensation laws or plans.[2]  The intent behind the NGHP reporting requirements is that if a Medicare beneficiary is injured and another payer (such as a workers’ compensation plan) is responsible for paying for the medical treatment of the beneficiary, then the other party should be the primary payer.  Unlike GHPs, there is no blanket requirement that all NGHPs register with Medicare, but those that have reportable information must register at least a quarter before submitting a report.  NGHPs are required to submit a report when there is an Ongoing Responsibility for Medicals (ORM) or there is a Total Payment Obligation to the Claimant (TPOC).

An ORM must be reported when there is ongoing compensation to a party for medical care associated with a claim.  ORM reports do not include dollar amounts, but do report the start and end dates for payments made for ongoing medical expenses.  Additionally, an ORM report should include information about the cause of illness, injury, or incident associated with the claim so that Medicare can determine those claims for which the NGHP is the primary payer and those claims for which Medicare or another payer is designated as primary.  An ORM report is separate and distinct from a TPOC report.  TPOC reports are made when the sum of a total settlement, judgment, award, or other payment obligation is established.  Notably, the TPOC “date” is not when the funds are actually paid, but when the obligation is established.  There are various Mandatory Reporting Thresholds that are outlined by CMS in Chapter III of its NGHP User Guide, depending on the type of insurance and the date of payment.[3]  All dates listed in the User Guide have passed as of the date of this post and all thresholds have been reached (April 1, 2017 was the last listed date in the charts).  However, while a TPOC may have been technically established before a listed date, it may not have been paid or technically reported at the present time.  As an example of the reporting requirement, the User Guide provides that after January 1, 2017, where the total TPOC amount is over $750.00 for Liability Insurance (including self-insurance), Section 111 Reporting is or was required in the quarter beginning April 1, 2017.[4]

NGHPs should be aware of these reporting requirements, and the person or group responsible for overseeing compliance should be well versed in the intricacies of the payment structure and the CMS’s manual guidance, which is set out in six detailed reporting manuals issued on December 15, 2017.[5]

As discussed earlier, NGHPs are the primary payer in certain instances, and failure to uphold this responsibility can result in litigation.  GEICO, an NGHP, is currently involved in litigation for allegedly failing to reimburse a Medicare Advantage plan which made payments to beneficiaries.[6]  The plaintiffs filed two separate class action suits against GEICO—one involving injured beneficiaries covered by GEICO and another involving tortfeasors carrying GEICO insurance who later settled with the beneficiaries.  In both suits, the plaintiffs allege that Medicare Advantage plans made payments to beneficiaries that GEICO was statutorily required to pay in the first instance.  GEICO filed a motion to dismiss, arguing that the plaintiffs lacked standing because the plaintiffs did not suffer an injury.[7]  The plaintiffs responded that the Medicare Advantage plans assigned their rights of recovery to the plaintiffs, convincing the court that this assignment gives the plaintiffs standing.  GEICO also argued that the amended complaint lacks the necessary specificity to proceed.  The court noted that while the plaintiffs did not include a lot of detail in their amended complaint, the information included was sufficient to overcome a motion to dismiss, and that more specific information would need to be produced in discovery or the defendants would be entitled to file for summary judgment.[8]

The rules governing NGHPs are summarized in the following chart:

Acting Party Responsibilities Liabilities for Non-Compliance
Non-Group Health Plans

(NGHPs) (Liability Insurance, No-Fault Insurance, and Workers’ Compensation)

·         Reporting requirements differ among NGHPs and are fact specific

·         Must register with BCRC on the COBSW if NGHP has a reasonable expectation of having to report in the future

·         May register on behalf of itself or its direct subsidiary (may not register on behalf of its sibling or parent company)

·         May use agent for administrative duties, but RRE retains liability.

·         Ongoing Responsibility for Medicals (ORM) Reporting: Must report existence of ongoing payments associated with medicals to beneficiaries

·         Total Payment Obligation to the Claimant (TPOC) Reporting: Must report the sum of a total settlement, judgment, etc. in accordance with price and date schedules found in NGHP User Guide Chapter III: Policy Guidance

·         Must report all claims where injured party is or was a Medicare Beneficiary

·         Failure to report results in a minimum fine of $1,000 a day per unreported beneficiary, with CMS reserving the right to collect double damages

Andrew Kuder, a Law Clerk (not admitted to the practice of law) in the firm’s Newark office, contributed significantly to the preparation of this post.

[1] CMS, MMSEA Section 111 MSP Mandatory Reporting: NGHP User Guide 6-1—6-7 (v5.3 2017).

[2] 42 USC § 1395y(b)(8).

[3] CMS, MMSEA Section 111 MSP Mandatory Reporting: NGHP User Guide Ch. III (v5.3 2017).

[4] CMS, MMSEA Section 111 MSP Mandatory Reporting: NGHP User Guide 6-17 (v5.3 2017).


[6] Recovery v. Gov’t Emples. Ins. Co., No. PWG-17-711 (D. Md. Feb. 21, 2018).

[7] Id. at *10.

[8] Id. at *24, *45.



Recent settlement agreements between the United States Department of Justice (the “DOJ”) and two urologist business partners suggests that the government may be focusing increased enforcement efforts on the Stark Law’s “group practice” requirements and the Stark exception for “in-office ancillary services.”  The urologists agreed to pay over $1 million to resolve the allegations.

In early January 2018, the DOJ entered into settlement agreements with Dr. Aytac Apaydin and Stephen Worsham to resolve allegations that the physicians submitted improper claims to Medicare for image-guided radiation therapy (“IGRT”) services provided between 2008 and 2014.  IGRT uses imaging to improve the accuracy of radiation therapy during cancer treatment. IGRT is reimbursable by Medicare and is considered a “designated health service” under the Stark Law.

Drs. Apaydin and Worsham jointly owned two businesses: Salinas Valley Urology Associates (“SVUA”), a California medical practice, and Advanced Radiation Oncology Center (“AROC”), a facility where IGRT services were performed.  The settlement agreements highlight two types of problematic arrangements involving these entities:

  1. SVUA, the private medical practice, billed Medicare for IGRT services performed at AROC. However, the government contends that the financial relationship between SVUA and AROC failed to comply with an applicable Stark Law exception.
  2. AROC entered into “lease arrangements” with other local urologists and urology practices (the “Lessee Urologists”) pursuant to which the Lessee Urologists billed Medicare for IGRT services performed at AROC on patients that were referred by the Lessee Urologists’ own practice.  The government contends that providing the IGRT services at AROC did not meet the Stark Law “location requirements” applicable to the Lessee Urologists’ practices, and also contends that the lease arrangements violated the Anti-Kickback Statute.

The settlement agreements provide only brief descriptions of the allegedly improper arrangements and do not specifically describe or explain the government’s theory as to why the arrangements violated the Stark Law and AKS.  However, the reference to the Stark Law “location requirements” provides a clue.

As a general matter, the Stark Law permits a physician to profit from the physician’s referral of a designated health service if the service is performed within the referring physician’s “group practice” and in a building that is used by the group practice for providing physician services or other centralized designated health services.  These services are referred to as “in-office ancillary services” and are the subject of a statutory exception to the Stark Law, as well as a more detailed exception under the Stark Law regulations.   By stating that AROC did not meet the “location requirements,” the government appears to be alleging that that the urology practices could not satisfy the requirements of the Stark “in-office ancillary services” exception, which was likely the only exception available to protect the arrangement from Stark Law liability.

Stark’s “in-office ancillary services” requires compliance with the following three requirements (codified at 42 U.S.C. § 1395nn(b)(2)):

  1. Performance. The services must be performed personally by:
    • The referring physician;
    • A physician who is a member of the same group practice as the referring physician; or
    • Individuals who are directly supervised by the referring physician or by another physician in the group practice.
  2. Location. The services must be furnished in one of the following locations:
    • In a building in which the referring physician (or another physician who is a member of the same group practice) furnishes physicians’ services unrelated to the furnishing of the designated health services; or
    • In the case of a referring physician who is a member of a group practice, in another building which is used by the group practice: (a) for the provision of some or all of the group’s clinical laboratory services, or (b) for the centralized provision of the group’s designated health services.
  3. Billing. The services must be billed by:
    • The physician performing or supervising the services;
    • A group practice of which such physician is a member under a billing number assigned to the group practice; or
    • An entity that is wholly owned by such physician or such group practice.

Before a practice can take advantage of the “in-office ancillary services” exception, it must be structured to comply with Stark’s comprehensive definition of a “group practice.” The Stark regulations at 42 C.F.R. § 411.352 set forth detailed requirements related to how the practice is owned and operated, covering topics such as:

  • Corporate structure;
  • The range of care provided by physicians within the group, as well as the amount of time such physicians spend providing services through the group;
  • Distribution of the group’s expenses and income;
  • Centralized decision-making;
  • Consolidated billing, accounting and financial reporting; and
  • Physician compensation.

This settlement is significant because there have been very few enforcement actions or settlement agreements alleging violations of the Stark Law based on a group practice’s failure to comply with the “in-office ancillary services” exception.  If you are a physician or physician group that relies on the “in-office ancillary services” exception to share profits from ancillary services that you may refer, this settlement should be a wake-up call —  make it a priority to review and confirm that: (i) your group meets the Stark definition of a “group practice” and all of its detailed requirements, and (ii) all ancillary services are provided in locations that meet the requirements of the Stark “in-office ancillary services” exception.

This is part 3 of 7 in the Medicare Secondary Payer Compliance series. All titles in this series can be viewed below. Subscribe to our blog to receive these future updates. Prior installments of this series can be accessed using the links provided.

In our previous posts, we mentioned that the Medicare Secondary Payer (MSP) law imposes obligations upon Group Health Plans (GHPs).   This post will explain those obligations, both provided for in the regulations and in the CMS guidance, in more detail, and highlight the potential compliance pitfalls for GHPs. Given recent enforcement trends, and the risk of raising damages for non-compliance from double to treble, including a minimum fine of $1000 per day per unreported beneficiary, GHPs may want to review and audit their compliance with MSP requirements.

Generally, a GHP is sponsored by an employer to provide healthcare to employees and their families.[1]  These include self-insured plans that may be administered through a third party administrator (TPA) and plans arranged by employers through a health insurer.  The MSP requires that GHPs with 20 or more employees report certain information to CMS to avoid payment conflicts (although smaller companies have certain limited reporting obligations).  CMS refers to these plans as Responsible Reporting Entities (RREs), and they must report all Active Covered Individuals to Medicare.  An Active Covered Individual is defined as:

  • Those between 45 and 64 years of age covered through the GHP based on their own or a family member’s current employment status;
  • Those 65 and older covered based on their own or their spouse’s current employment status;
  • All individuals covered under a GHP who have been receiving kidney dialysis or have received a kidney transplant (ESRD); and
  • All individuals covered under a GHP who are under 45, are known to be entitled to Medicare, and have coverage in the plan based on their own or a family member’s current employment status.[2]

There are exceptions to this definition for (i) employers with less than 20 employees, who need not report unless a covered individual has ESRD, in which case the ESRD covered individuals must be reported, and (ii) employers with less than 20 employees who must report if they are part of a multi-employer/multiple employer GHP.[3]

CMS recognizes that this will constitute a large class of individuals for many GHPs, and also recognizes that many people who are currently not eligible for Medicare will have their information reported as a part of this process.[4]  Retirees and their spouses who are covered under a GHP do not count as Active Covered Individuals, but are termed Inactive Covered Individuals and do not need to be reported in the same manner as Active Covered Individuals.  The reason for this is that in most cases Inactive Covered Individuals (retirees) have Medicare as a primary payer.

GHP RREs have multiple reporting options, but the basic option requires a GHP RRE to submit an MSP Input File containing information about each Active Covered Individual, as outlined in the CMS manual.  The GHP RRE submits reports to a CMS website known as the Coordination of Benefits Secure Website (COBSW).[5]  The GHP may submit a Query Only Input File to the website, which helps the GHP assess if potential employees are covered by Medicare.

There are many situations that create potential pitfalls for GHPs.  For example, if an employer hires several new employees and adds them to its health plan, a GHP administrator may fail to ask the essential questions necessary to determine if any employee is an Active Covered Individual.  While it is clear that those over the age of 45 need to be reported, if the plan does not inquire about the current health coverage for an employee’s family, the plan might fall out of compliance with MSP reporting requirements if it did not know that a family member receives health care coverage due to a disability or has ESRD. In addition, while a GHP with less than 20 employees generally does not have to submit a report, the small GHP may forget to inquire about the coverage status of a new employee’s family.

The basic rules are summarized in the following chart:

Acting Party Responsibilities Liabilities for Non-Compliance
Group Health Plans (GHPs) (Generally Employer-Sponsored Plans)



·         20+ GHPs[6] must generally be the primary payer for all Active Covered Individuals except for ESRD patients

·         100+ GHPs[7] must generally be the primary payer for all Active Covered Individuals

·         20+ GHPs must report quarterly all Active Covered Individuals (includes all covered individuals over 45, including employees or spouses/partners, and those with ESRD regardless of age, and those under 45 who are known to be entitled to Medicare.)

·         Failure to report results in a minimum fine of $1000 a day per unreported beneficiary, with CMS reserving the right to collect double damages


Andrew Kuder, a Law Clerk (not admitted to the practice of law) in the firm’s Newark office, contributed significantly to the preparation of this post.

[1] 26 USC § 5000(b)(1).

[2] CMS, MMSEA Section 111 MSP Mandatory Reporting: GHP User Guide 7-2—7-3 (v5.0 2017).

[3] CMS, MMSEA Section 111 MSP Mandatory Reporting: GHP User Guide 7-3 (v5.0 2017).

[4] CMS, MMSEA Section 111 MSP Mandatory Reporting: GHP User Guide 7-2 (v5.0 2017).


[6] 20+” means GHPs with 20 or more employees

[7] 100+” means GHPs with 100 or more employees

On February 9, 2018, President Trump signed into law the Bipartisan Budget Act of 2018 (“BBA”). Among the most notable changes that will occur with the enactment of the BBA is the inclusion of certain provisions taken from the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (“CHRONIC”) Care Act of 2017 bill (S.870) which the Senate passed in September 2017. Among other things, the CHRONIC Care provisions will have the effect of redefining new criteria for special-needs plans (“SNPs”), in particular the special-needs Medicare Advantage (“MA”) plans for chronically ill enrollees. The CHRONIC Care provisions also will expand the integration and coverage under Medicare for certain telehealth-based chronic care services.

Impact on MA Special Needs and Other MA Plans

The BBA includes provisions taken from the CHRONIC Care Act that largely affect MA SNPs, though other types of MA plans may also be affected by the enacted changes.

The critical issue Congress finally settled through the enactment of the BBA is the long-term status of the MA SNP Program (the “Program”).  Congress created the Program through the Medicare Modernization Act of 2003 (enacted Dec. 8, 2004).  However, the Program was time limited, with a scheduled end date of December 2008.  The Program has since been extended a total of 7 times, with Congress generally pushing out the Program’s end date by a year or two but never giving stakeholders a clear signal of support for the Program, leaving many stakeholders hesitant in making large investments in a program that was scheduled to terminate.[1]

The amendments made by the BBA have provided not only a more secure future to encourage plan sponsors and other stakeholders to further invest in the Program, but have also made changes to strengthen these programs. With respect to those SNPs targeting the dual eligible population (“Dual SNPs”), statutory changes provide for:  increasing integration through use of mechanisms to better coordinate contact with and information dissemination to State partners; requiring the Secretary to develop a unified grievances and appeals process for Dual SNPs to implement by 2021; and imposing more stringent standards to demonstrate integration. With respect to those SNPs focused on serving the chronically ill (“Chronic SNPs”), the BBA broadens the definition of beneficiaries who qualify to enroll in a Chronic SNP, imposes more stringent care management standards, and authorizes Chronic SNPs to provide certain Supplemental Benefits. The BBA further amends the Social Security Act to authorize the Secretary to require quality reporting at the plan level for SNPs, and, subsequently, for all MA plan offerings.

Impact on Accountable Care Organizations

The BBA makes several statutory changes impacting Accountable Care Organizations (“ACOs”) and beneficiary participation in such entities. Specifically, under the terms of the Act, fee-for-service (“FFS”) beneficiaries will be able to prospectively and voluntarily select an ACO-participating professional as their primary care provider and for purposes of being assigned to that ACO. The BBA further authorizes ACOs to provide incentive payments to encourage fee-for-service beneficiaries to obtain medically necessary primary care services.

Expansion of Medicare FFS Telehealth Coverage for Chronic Care Services

Additionally, the BBA includes certain provisions taken from the CHRONIC Care Act that will provide a needed expansion of Medicare FFS coverage for certain telehealth-based chronic care services. The BBA preserves many of the telehealth-focused aspects of the original 2017 bill equivalent and, seemingly, reflects a commitment by the federal government to improving access to telehealth services for qualified Medicare beneficiaries and further integrating these services into the U.S. health care system. For example, with the enactment of the BBA, Medicare coverage of telehealth services will be expanded to include services provided at home for beneficiaries dealing with end-stage renal disease (“ESRD”) or those being treated by practitioners participating in Accountable Care Organizations (“ACOs”). Additionally, with the enactment of the BBA, some of the geographic requirements traditionally required by Medicare’s coverage rules for telehealth services (e.g., originating sites, rural health professional shortage areas, counties outside Metropolitan Statistical Areas) will be lifted if such telehealth services are rendered to beneficiaries with ESRD, or who are being treated by ACO practitioners, or who are being diagnosed, evaluated, or treated for symptoms of an acute stroke. There are some important caveats to these changes in the coverage rules. For example, for ESRD beneficiaries who utilize telehealth services from their homes, an in-person clinical assessment will be required for such beneficiaries every month for the first 3 months and then once every 3 months thereafter. Likewise, payments will not be made for any telehealth services rendered by ACO practitioners to beneficiaries in their homes if such services typically are furnished in inpatient settings (e.g., hospitals).

As part of increasing benefits offered to special needs MA plan enrollees (as discussed above), the enactment of the BBA also will allow MA plans to offer more telehealth services to its enrollees, including services provided through supplemental health care benefits, starting in the year 2020. However, this provision requires that the same types of items and services an MA plans offers to its enrollees via telehealth are also offered to enrollees in-person. CMS is required to solicit public comments regarding this particular provision by November 30, 2018.

*          *          *

With the BBA establishing a long-term MA SNP Program, we are more likely to see increased investment into the Program by stakeholders and plan sponsors, thus growing and strengthening the Program. But, as explained above, the BBA also introduces several amendments that will certainly affect Dual and Chronic SNP standards, benefits, and coordination of care.  Although CMS has not formally solicited public comments regarding implementation of the referenced changes to SNP requirements, stakeholders and plan sponsors may want to consider the impact these changes may have on them and their industry and submit comments and input to help CMS in developing its proposed regulations.

For telehealth advocates, the inclusion of so many meaningful provisions in the BBA signals a newly energized willingness on the part of policymakers to work to expand use of telehealth services for Medicare beneficiaries, even in an environment where there are financial incentives for providers and health plans to restrain costs. Although lawmakers have historically resisted expanding these types of services in a FFS context, the belief being that doing so would add to (and not replace) services already otherwise being delivered, the enactment of the BBA signals strong potential for change in this regard.  As telehealth integration into various Federal programs increases, the enactment of the BBA being a critical step in this process, stakeholders and plan sponsors may want to consider the various implementation strategies by which telehealth items and services will be offered since each program carries its own set of standards and requirements.

[1] Pub. L. 110–173, §[  ], substituted ‘‘2010’’ for ‘‘2009’’; Pub. L. 110–275, §164(a), substituted ‘‘2011’’ for ‘‘2010”; Pub. L. 111–148, § 3205(a), substituted “2014” for “2011”;  P.L. 112-240, §607, struck out “2014” and inserted “2015”; P.L. 113-67, §1107, struck out “2015” and inserted “2016”; P.L. 113-93, §107, struck out “2016” and inserted “2017”; P.L. 114-10, §206 struck “2017”, inserted “2019″.