Healthcare Subrogation

How well are States complying with Medicaid’s third-party liability requirements?

Posted on by Brendan Laffey

Medicaid is a joint federal-state program that provides health coverage to millions of low-income Americans. However, Medicaid is not supposed to pay for services that are covered by other sources, such as private insurance, Medicare, or workers’ compensation. This is known as the third-party liability (TPL) requirement, which ensures that Medicaid functions as the payer of last resort and avoids unnecessary spending.

The Office of Inspector General (OIG) recently conducted an audit of five States (Illinois, Indiana, Michigan, Ohio, and Wisconsin) to assess their compliance with TPL requirements. The OIG found that the States faced ongoing challenges in meeting TPL requirements, such as identifying and verifying other sources of health coverage, collecting and reporting accurate TPL data, and recovering payments from third parties.

The OIG also found that the Centers for Medicare & Medicaid Services (CMS) did not provide adequate guidance, oversight, and technical assistance to the States to help them address these challenges. The OIG recommended that CMS take several actions to improve the States’ TPL performance, such as issuing clarifying guidance, enhancing data quality checks, conducting regular reviews, and providing targeted training and support.

The OIG’s report highlights the importance of ensuring that Medicaid pays only for services that are not covered by other sources. This can help save taxpayer dollars and preserve the program’s fiscal sustainability. The OIG’s recommendations can help CMS and the States improve their TPL processes and outcomes.

How Other Party Liability, Inc. Can Help You Recover Medicaid Overpayments

Medicaid is a joint federal and state program that provides health coverage to millions of Americans who are eligible based on their income, disability, or other factors. However, sometimes Medicaid pays for services that are also covered by another payer, such as a private insurer, Medicare, or a workers’ compensation plan. This results in overpayments that Medicaid is entitled to recover from the other payer. This process is known as third party liability (TPL).

According to a recent report by the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services, the Ohio Department of Medicaid (ODM) did not always identify and recover Medicaid overpayments from other payers. The report found that ODM did not have adequate policies and procedures to ensure that TPL information was accurate and complete, and that overpayments were promptly identified and collected. As a result, ODM missed opportunities to recover an estimated $51.6 million in Medicaid overpayments from other payers in fiscal year 2015.

This is where Other Party Liability, Inc. comes in. We provide TPL services to help state Medicaid agencies identify and recover Medicaid overpayments from other payers. We have the expertise, technology, and resources to handle all aspects of TPL, including:

  • Data matching and verification: We use advanced data analytics and verification techniques to match Medicaid claims with other payer information, and to verify the accuracy and completeness of TPL data.
  • Overpayment identification and recovery: We use sophisticated algorithms and rules to identify potential overpayments, and to pursue recovery from other payers through various methods, such as billing, coordination of benefits, subrogation, and cost avoidance.
  • Reporting and monitoring: We provide comprehensive and timely reports and feedback to our clients on the status and outcomes of TPL activities, and we monitor and evaluate the performance and effectiveness of our TPL services.

By outsourcing TPL services to Other Party Liability, Inc., state Medicaid agencies can benefit from:

  • Increased savings and revenue: We can help state Medicaid agencies recover more Medicaid overpayments from other payers, and reduce the amount of future overpayments, resulting in significant savings and revenue for the state and federal governments.
  • Improved compliance and quality: We can help state Medicaid agencies comply with federal and state laws and regulations regarding TPL, and improve the quality and accuracy of TPL data and processes.
  • Reduced administrative burden and cost: We can help state Medicaid agencies reduce the administrative burden and cost of TPL activities, and free up their staff and resources for other core functions.

If you are interested in learning more about our TPL services, please contact us today. We would love to hear from you and discuss how we can help you recover Medicaid overpayments from other payers.

https://oig.hhs.gov/oas/reports/region5/52100013.pdf

WC Carriers allowed indirect Third Party Subrogation claim against third parties

Posted on by Michael Laffey

Pa highest court clarifies road map for Workers Comp  carriers to protect Subrogation claims.

 

The Honorable Judge Olson has clarified the “Magic words “ by which a  Workers Comp Carrier in Pennsylvania can assert a Subrogation claim against a Third Party pursuant to the much litigated Section 319 of the Pa Workers Comp Act.  In the Matter of Hartford Insurance Group on behalf of Chunli Chen v. Kamara et al. (2017 Pa. Super LEXIS 84) The Superior court clarified the  years old conundrum where Workers Comp Carriers were prohibited from asserting direct Third Party Subrogation claims to protect their interests.  This law has not changed, but the court clarified that Workers comp Carriers may assert Third Party Claims “ On behalf of “ their insureds. In an act of deliberate careful drafting Counsel for the Hartford was successful on appeal in having the court distinguish between a Workers Comp carriers attempt to bring an independent subrogation action which was recently again prohibited by  the Court in Domtar Paper ( see Liberty Mutual Insurance Co. v. Domtar Paper., 113 A.3d 1230 ( Pa. 2015).

The Hartford carefully drafted its complaint to file” On behalf of Chunli Chen, its insured and by doing so the Court allowed the Complaint to proceed.

 

Defendant  also argued that because the insurer was not actually at the accident scene, it should be prohibited from filing the state required  verification as to the facts and circumstances pursuant to which the claim was incurred.  The Court held that Pa R.C.P. 1024 which requires a verification to a complaint, was not violated by the signing of a verification by an employee of the Hartford, because “ Hartford is a party to this litigation and janes Young, as a representative of Hartford , properly verified the complaint. “

The court noted that the verification merely required verification “ to the best of my information and belief” this was sufficient to make the verification valid, even if the Hartford representative had no personal first hand knowledge of the facts.

This clarification will now allow Workers Compensation carriers to bring subrogation suits  not only their own interests but on behalf of their insureds.   And since Section 319 of the Pa Workers Comp act provides the Workers Comp carrier with an absolute lien as to its interests, WC carriers will be pleased to pursue viable cases where the member previously failed to bring an action for whatever reason.

New York Court of Appeals Upholds No-Fault Rule Denying Health Insurer Reimbursement and Equitable Subrogation Rights

Posted on by Michael Laffey

New York Court of Appeals Upholds No-Fault Rule Denying Health Insurer Reimbursement and Equitable Subrogation Rights

Members Left in the Middle

 

In a well-reasoned yet anti-consumer opinion, the NY Court of Appeals in the matter of Aetna v. Hanover has reconfirmed a position taken by the NYS Insurance Department since 2008 that health insurers do not have legal standing to assert a direct claim of subrogation or reimbursement under the NY automobile no-fault system. The Court went on to further dismiss the possibility that a health insurer could take an assignment of its members claim against the auto insurer notwithstanding  health insurance contract language that may assign rights against third parties to the health insurer.  Finally, the Court, without regard to over 200 years of equitable subrogation case precedent, summarily dismissed the health insurer’s equitable right to subrogation. The result is that health insurers will be required to deny all auto related claims until a final decision can be made under the NYS no- fault system.  This could leave claims unpaid for years and members in the middle.

In the Hanover case, Luz Herrera was injured while operating a vehicle insured by Hanover Insurance Company. At the time of the accident Herrera also had health insurance through plaintiff Aetna Health Plan. Aetna alleged that the bills should have been paid by Hanover and sought reimbursement from Hanover without response. In 2010 Herrera submitted copies of $19,649.10 in bills paid by Aetna to Hanover. Hanover did not respond to Herrera’s demands either. Herrera then demanded arbitration under the NYS no fault statute. The arbitrator denied Herrera’s claim citing that the copies of medical bills paid by Aetna were not “bills” within the no-fault act.  Aetna continued to pay an additional $23,525.73 in bills submitted directly by providers. Aetna then commenced an action against Hanover seeking reimbursement. Aetna argued that Hanover breached its contract of insurance with Herrera and that Aetna was the assignee of that right. The NY Supreme Court ruled that Aetna has no standing under NY CCR 65-3.11(a) stating that “there was no authority permitting a health insurer to bring a subrogation action against a no-fault insurer for sums the health insurer was contractually obligated to pay its insured”   see http://law.justia.com/cases/new-york/court-of-appeals/2016/97.html

Health insurers, who are obligated to pay promptly upon receipt of a claim, are surely disappointed by the Appeals Court decision. Coverage under NYS no-fault is universally excluded under all health plan contracts. This is in keeping with the universal insurance maxim that specific loss policies (e.g. those that cover a specific type of injury including auto, workers’ compensation, premises liability, black lung) are primary to general accident and health type policies which provide general coverage for all injuries unless otherwise excluded or specifically covered under another primary policy covering the same risk (auto).

Health Insurers would prefer to pay claims when received and then either subrogate or coordinate coverage with other insurers leaving members with the assurance that their medical claims will be covered and treatment uninterrupted. By not allowing insurers to make a claim under 11NYCRR 65-3.11(a), the NYS Court of Appeals has failed to correct the policy of the NYS Insurance Department that leaves members in the middle. The Court confirmed the right of appeal only applies to providers not insurers. The Court also further confused the assignment of claims issue.  Members traditionally assign their rights to payment by the auto carrier to the provider upon treatment (so that the provider may bill and be paid directly by the no fault carrier).  The Court reasoned that if the member has already assigned the claim to the provider then the member cannot reassign its claim to the health insurer, consequently the health insurer has no standing.

NYS laws and the Court have failed to account for the reality of today’s modern electronic health payment system. Health insurers pay providers and process claims within days of the service using EDI payment processing. Members want treatment, not arguments between their auto and health insurers. Gone are the paper claim submissions and manual reviews still common with auto insurers and workers’ compensation insurers. Providers are very cash flow conscious and simply want paid without regard to which insurer is truly responsible.  In the real world, auto and workers’ comp appeals are cumbersome and time consuming. Providers and members have little incentive to file appeals of auto denials when there is now almost universal secondary health insurance available.

NYS health insurers are now left without any way to recoup payments which are the responsibility of an auto insurer. They will be wise to review their claims carefully using updated processing logic and data mining to identify suspect auto cases. The Court has clearly stated there is no way for the health insurer — under law or equity — to be repaid for a claim prematurely paid when payment should have been the responsibility of the auto insurer.

PA Proposes New Rule Safekeeping of Property to Help Subrogors

Posted on by Michael Laffey

A proposal to amend one of the comments to  Rule 1.15 regarding safeguarding property of third parties was published May 14, 2016, at 46 Pa.B. 2407. Under the current language, the comment states that a lawyer must hold third-party funds intact when “the third party claim is not frivolous under applicable law.” The revised comment would eliminate that language and require that a lawyer keep the funds whenever “a letter of protection has been issued by an attorney or a lien on the funds exists under applicable law.” The revised comment requires a greater degree of diligence in maintaining third-party funds until their ownership is determined.