5-24-2011; Several items of importance to report with regard to Medicare and the swirl of new information…or is it all that new?

Within the last two weeks, Medicare has had their conditional payment process battered by a Federal District Court and a new memo has been released which doesn’t appear to have significant changes and appears to serve more as a refresher to their previously known review guidelines.

Initially, on May 9th a Federal District Court in Arizona struck down two elements of Medicare’s conditional payment recovery process, ruling the procedures do not conform to the requirements of the Medicare Secondary Payer (“MSP”) statute. The case, Haro v. Sebelius (CV 09-134 TUC DCB Fed. D. Az.), was pursued by the Center for Medicare Advocacy to certify a class action and seek declaratory and injunctive relief curbing Medicare’s recovery processes. The Federal Court granted summary judgment to the plaintiffs.


This will have some  impact on two critical elements of current CMS practice:


1)     The decision enjoined Medicare from requiring payment of a conditional payment demand pending a Medicare beneficiary’s request for appeal or waiver of a conditional payment as it was found that the current procedure (collecting interest pre-resolution) exceeds CMS’ authority under the MSP statute.

2)     And probably more significant, the Court enjoined Medicare from seeking direct recovery for conditional payment funds from Plaintiff attorneys and indicated “There is no statutory authority, expressed or implied, to support a direct action against attorneys, except to the extent that they are end-point recipients of settlement proceeds.”


The ultimate impact of the Haro decision pends a likely appeal but for now appears to counter established case law on the MSP statute with the Court’s decision to effectively bar enforcement against attorneys (expect insofar as they hold settlement proceeds) which is in direct conflict of other federal case law. It also appears to have a significant effect on Petitioners and the companies (insurance and employers) as well as TPAs in that any burden to discover and remedy any conditional payment concern falls to them.


In other Medicare news, CMS has released a new policy memorandum dated May 11, 2011 regarding workers’ compensation (WC-MSAs).  CMS doesn’t appear to have made any substantive changes or issue any new policy guidelines but simply appears to reiterate and clarify points related to its WC-MSA process including highlighting that the review thresholds are only work load guidelines and not safe harbors.  This new Memo should be read in conjunction with prior memos to confirm the entire scope of determining and developing MSAs. A copy of the May 11, 2011 memo can be obtained online at  http://www.nqbp.com/docs/uploads/cmsmemomay112011.pdf.


The value of strong and knowledgeable defense counsel is highlighted even more with this ruling and the ongoing release of CMS memos. Please feel free to contact Shawn R. Biery, J.D., M.S.S.C. at sbiery@keefe-law.com with any questions regarding Medicare Set-Aside issues.