Published today in the Federal Register is the Proposed Rule for Non-Group Health Plan Appeal Rights required by the SMART Act that was signed into law by President Obama on January 10, 2013. As a result of the publication, the public has the right to comment on the rule before it takes effect. This comment period runs through 2/25/2013 and comments may be submitted in a number of ways as set forth in the attached article. We have found the simplest way to send in comments is electronically. To do so, go to http://www.regulations.gov and enter “RIN 0938-AS03” into the blue search box for Rules, Comments, Adjudications or Supporting Documents. Next click the light blue “Comment Now!” button and follow the steps to upload your document or free text in your comments. It’s that easy.
CMS Announces Proposed Rule for SMART Non Group Health Plan Appeal Right
December 27, 2013
The Proposed Rule does not address appeal rights for Workers’ Compensation Medicare Set Asides (WCMSA). This is specifically called out by CMS to be dealt with in a separate rule. Should the Agency not provide guidance on this issue and a potential appealable issue should arise. Parties may wish to consider what rights if any they may have to pursue a direct court action under Bowen v. Michigan Academy of Family Physicians 407 U.S. 667 (1986) in absence of such administrative appeal rights. We also note the proposed rule does not mention any appeal rights with regard to penalties that may be assessed under the Medicare and Medicaid SCHIP Extension Act of 2007 and we will include that absence in our submitted commentary.
This Proposed Rule is limited to situations where the Applicable Plan (Workers’ Compensation Law or Plan, Liability Insurance, including Self Insurance and No-Fault) is the identified debtor. No appeal rights would be granted, and presumably responsibility to pay for those conditional payments in which the applicable plan receives a “courtesy notice”, such a copy of the Conditional Payment Letter, Conditional Payment Notice or Demand Letter that is otherwise directed to the Beneficiary. I would suspect for this to work, such letters and or notices would be clearly marked in some fashion as a “Courtesy Copy” to avoid confusion in triggering unnecessary appeals.
For situations where the Applicable Plan is the identified debtor, CMS proposes amendment of existing appeal regulations to include such plans. Specifically, 42 C.F.R. §405.902 definitions would now include the definition of “Applicable Plan” as set forth in the Medicare Secondary Payer Statute (42 U.S.C. §1395y(b)(8)). 42 C.F.R. §405.906(a)(4) would also be added to include the “Applicable Plan” as a party for an initial determination. This again would only apply to those situations where CMS is pursuing a recovery directly from the Applicable Plan. CMS is also indicating a grammar change to add a comma in the heading section of 42 C.F.R. §405.906 and in developing our comments we will investigate the potential impact and offer comment if appropriate.
Other changes CMS intends to make is to remove other parties such as the Beneficiaries, associated suppliers and providers from the Applicable Plan’s appeal process. This is being done according to CMS to be consistent with the SMART Act, but may result in subsequent claims the Applicable Plan may have to deal with as to the Beneficiary and his or her Providers as it relates to the claim. We will review this issue when preparing our comments, as the appeal process should resolve all issues related to the MSP claim, not potentially create others.
The Applicable Plan would be provided with parallel rights to a beneficiary’s rights or a provider or supplier’s rights regarding the duration of an appointment or representation. We will investigate the impact of this change and comment, but it is helpful to see that CMS will amend 42 C.F.R. §405.910(i)(4) to add the Applicable Plan to any notices that the beneficiary, supplier or provider would receive.
What is most troubling about the Proposed Rule is CMS insistence that an “initial determination” be made by CMS against an “Applicable Plan” before such Plan has an appeal right. Only once such determination is made, then CMS proposes the Applicable Plan would have a right of appeal. Regrettably, the way CMS intends to structure the rule is inconsistent with the SMART Act and will never result in any appeal right given the practical manner in which CMS issues recoveries in practice. This subterfuge is easily seen in CMS proposal to amend 42 C.F.R. §405.926(k) not by striking it, but creating a minor exception for initial determinations made against applicable plans. This particular section emphasizes that a primary plan has no appeal rights for recoveries presented by CMS. The exception will have limited usefulness to Applicable Plans because the practical manner in which conditional payments are processed. Applicable Plans would only receive “courtesy notices” throughout the process. Once the claim is perfected against the Beneficiary and any appeal rights exhausted or otherwise terminated, then under this regulation CMS can pursue 100% recovery without any appeal right to the Plan. All because CMS take the position that “Medicare has the right to recover conditional payments from the beneficiary, the primary payer, or any other entity that has the proceeds from payment by the primary plan, [and] Medicare’s decision regarding who/what entity it is pursuing recovery from is not subject to appeal.” Of course this begs the question, why have an appeal process at all that is authorized by Congressional statute? This decision in this author’s opinion renders the appeal right useless and more than likely subject the regulation to Court action unless modified.
One last item CMS intends to add is the SMART requirement that an Applicable Plan provide notice to a beneficiary when an appeal is sought. This is accomplished by CMS adding a new regulation 42 C.F.R. §405.947 which describes that process. Since the Beneficiary will not be part of the appeal, CMS has determined a single notice would be appropriate and in our commentary we will note our agreement with that statement.
We are pleased that CMS is moving forward with these important and necessary regulations; but also disappointed that they are being limited inconsistent with the SMART provisions. We are hopeful that with enough comments CMS will consider modifications to the Proposed Rule to line it up with Congressional intentions. We ask that all of you consider sending in your comments and note your concerns. Such comments do not require any particular style, but rather clearly indicate the areas where you feel improvement is necessary to improve the outcome of the proposed regulation.