Heather Schwartz Sanderson Esq., MSCC, CHPE, CLMP, CMSP Chief Legal Officer Franco Signor LLC Medicare Secondary Payer Compliance 1 Virginia Johnson Vice President of Business Development Franco Signor LLC Prepared For:

2 Medicare Secondary Payer Update: Introduction and Agenda  Brief MSP Overview  SMART Act Update  Transition of Conditional Payment Workload to the Commercial Repayment Center (CRC)  Case Law Update francosignor.com

3 MSP Overview  Three “Buckets” of MSP Compliance o Conditional Payment Reimbursement o MMSEA Section 111 Mandatory Insurer Reporting (MIR) o Medicare Set-Asides francosignor.com

4 The SMART Act: The Only Self-Enabling Provision- Statute of Limitations on MSP Recovery  For cases settling after July 10, 2013, if CMS is provided with notice of the settlement, CMS has 3 years to issue a demand for payment or the claim is barred.  Discussion: o Older demands may be barred by the SOL. Check to ensure that the SOL has not passed. While this provision technically becomes most helpful after July 2016, older demands may be barred as well. o Ensure that notice is given by timely reporting claims via Section 111 o Could this SOL apply to MSAs as well? francosignor.com

5 The SMART Act: Threshold for Exemption from Conditional Payment Reimbursement and Reporting  In February 2014, CMS established a threshold of $1000 for physical trauma-based liability insurance (including self-insurance) settlements  Discussion: o CMS is supposed to review and publish no later than November 15 th every year a threshold. CMS did not re-review or re-publish a threshold in November, Will CMS re-review the amount this coming November 2015? o Is CMS required to establish a threshold for workers comp and no-fault cases? francosignor.com

6 The SMART Act: Conditional Payment Appeals Process for Applicable Plans  New process for “applicable plans” to pursue conditional payment appeals enacted April 28,  Applicable plans are liability insurance (including self-insurance), no-fault insurance or a workers’ compensation law or plan.  Four-level appeals process that mimics the prior appeals process that existed for beneficiaries  Discussion: o Will the appeals process take too long? o Will applicable plans only utilize this process where the amount contested is a large amount? francosignor.com

7 The SMART Act: Fines and Safe Harbors from Noncompliance with MIR  CMS issued a Notice of Proposed Rulemaking in December 2013 and collected comments from the industry; however, CMS has not responded with a rulemaking.  Discussion: o What safe harbors will CMS consider? What will constitute “good faith efforts?” o Will safe harbors have to be addressed prior to penalties being issued? francosignor.com

8 The SMART Act: Reporting of Partial SSNs  CMS has implemented this process as of January 5, NGHP RREs can submit partial SSNs where the full SSN cannot be obtained.  Recent issue with partial SSNs: In June 2015, CMS alerted the industry that it was aware that it was erroneously returning false positives on beneficiaries where a partial SSN was reported. CMS changed the partial SSN reporting criteria to be: 1) first initial of the first name; 2) first 6 characters of the last name; 3) Date of Birth (DOB); and 4) Gender. francosignor.com

9 Transition of Conditional Payment Workload to the CRC  CRC Role prior to October 5 th, 2015: – The CRC is responsible for all the functions and workloads related to GHP MSP recovery with the exception of provider, physician, or other supplier recovery. The CRC is responsible for identifying and recovering Medicare mistaken payments where a GHP has primary payment responsibility. Some of these responsibilities include: issuing a Primary Payment Notice (PPN) to verify MSP information, issuing recovery demand letters when mistaken primary payments are identified, receiving payments, resolving outstanding debts, and referring delinquent debt to the Department of Treasury for further collection actions, including the Treasury Offset Program, as appropriate francosignor.com

10 Transition of Conditional Payment Workload to the CRC – cont.  CRC Role after October 5 th, 2015: – Beginning October 5 th, 2015 will identify and recover conditional payments where the identified debtor was workers’ compensation, liability or no-fault insurance and the case was reported via Section 111. Identify and validate recoverable conditional payments Issue Conditional Payment Letters (CPL’s) Conditional Payment Notices (CPN’s) and Demand Letters. Respond to disputes and appeals. Receive payments and resolve outstanding debts. Refer delinquent debt to the Department of Treasury for further collection actions. In other words, where the identified debtor is the applicable plan, CRC will be handling the recovery. The CRC will issue a CPN when notified of an ORM report through MMSEA Section 111 Will begin issuing new letters starting October 25 th, 2015 Attorneys fees update: Where the applicable plan is the identified debtor, the applicable plan cannot take a pro rata reduction of attorneys’ fees and costs from the overall demand as a beneficiary can. francosignor.com

11 What the Benefits Coordination and Recovery Center (BCRC) Will Continue to Do  BCRC Role after October 5 th, 2015: – Will continue to handle all recovery cases initiated prior to October 5 th, 2015 – Will continue to maintain responsibility for data collection related to MMSEA Section 111 Reporting – For new recovery cases post October 5 th, 2015, BCRC will only identify and recover conditional payments where the identified debtor is the beneficiary – General liability claims, not brought to Medicare’s attention via MMSEA Section 111 Reporting will still be handled at the BCRC – Generally, the recovery process for liability claims will remain the same as before and will remain with the BCRC. francosignor.com

12 Important New Conditional Payment Terminology  Conditional Payment Letter (CPL) - CPLs will be issued by the BCRC when a beneficiary self-reports that a liability, workers’ compensation, or no-fault insurance has primary responsibility and Medicare has made a conditional payment. CPLs will be issued only when the MSP instance was not otherwise reported through MMSEA Section 111 Reporting.  Conditional Payment Notice (CPN) - CPNs will be issued by the CRC when an applicable plan has notified Medicare via MMSEA Section 111 Reporting that it has ongoing responsibility for medicals (ORM) and otherwise reports that it has primary payment responsibility.  Statement of Reimbursement (SOR) - This is similar to the BCRC’s payment summary form and will be provided as an enclosure with CPLs, CPNs, demand letters, and redetermination decision. francosignor.com

13 Important New Conditional Payment Terminology – cont.  Disputes - Upon receipt of a CPN, the applicable plan has 30 days to dispute the CPN and may do so only once. If not responded to within 30 days, the CRC will issue a demand letter. To dispute medical claims on a CPN, the applicable plan must submit required documentation within 30 days of the CPN date plus five days for mailing. CPLs have no time limit to respond. o Disputes submitted to the CRC through the Medicare Secondary Payer Recovery Portal (MSPRP) may only be done so on the basis of relatedness and in response to a CPN. All other dispute types must be submitted in writing outside of the MSPRP. If the debtor has more than one dispute for the same case (i.e., relatedness and claims paid to provider), the entire dispute package should be submitted through the mail and not the portal.  Demand Letter - When a demand letter has been issued, it will reflect a “response due date for payment” on the letter. Demand letters issued will have appeal instructions along with the deadline to appeal. Once the demand letter is issued, interest will begin to accrue but will not be assessed unless the demand is not paid within 60 days. francosignor.com

14 Recent Important MSP Case Law: Private Cause of Action Estate of McDonald v. Indemnity Insurance, 46 F. Supp. 3d 712 (W. Dist. Ky. 2014) Holmes v. Farm Bureau Gen. Ins. Co., 2015 Mich. App. LEXIS 1031 (Mich. Ct. App. 2015) francosignor.com

15 MSP Case Law Continued: Medicare Advantage Plans MSP Recovery, LLC v. Progressive Select Ins. Co., 2015 U.S. Dist. LEXIS (S. Dist. Fla. 2015) Humana v. Western Heritage Ins. Co., 2015 U.S. Dist. LEXIS (S. Dist. Fla. 2015) francosignor.com

16 MSP Case Law Continued: MSP False Claims Act United States of America ex. rel. Dr. Kent Takemoto v. ACE et al., 1:11-cv-00613, USDC WD NY United States, ex. rel. J. Michael Hayes v. Allstate Insurance Company, et al., 1:12-cv-01015, USDC WD NY francosignor.com

17 QuestionsQuestions Heather Schwartz Sanderson Esq., MSCC, CHPE, CLMP, CMSP Chief Legal Officer Franco Signor LLC 3647 Cortez Road West, Suite 100 Bradenton, FL x 142 (Office) (Cell) (Fax) Virginia Johnson Vice President of Business Development Franco Signor LLC 3647 Cortez Road West, Suite 100 Bradenton, FL x160 (Office) (Cell) (Fax)