Medicare Advantage Plan Loses Another Round
Roy Franco
March 11, 2014

The Medicare Advantage Plan’s (MAP) struggle to establish reimbursement rights on par with traditional Medicare can be compared to a championship boxing match. It’s the middle of Round 4 and the MAP has been knocked down for the second time.   Parties responsible for MSP compliance want a knockout and final victory proclaimed. However, no one can believe the fight is over and fully expects the fighter to rise off of the canvas to continue the fight.  We all know, with the recent Magistrate’s recommendation out of Eastern District of Texas, that this fight is not over and will continue. More than likely a decision will be required of the U.S. Supreme Court to break the split in the Circuits.

As of today, the Third Circuit, because of the Court of Appeals decision in the In re Avandia Marketing case, can require Applicable Plans (Non-Group Health Plans (NGHP): Workers’ Compensation Laws or Plans, No-Fault Insurance, Liability Insurance, including self insurance) to reimburse MAPs and their close cousin, the Part D Pharmacy Plan. This exists because the Court held that under the MSP private cause of action, MAPs can file lawsuits against Applicable Plan’s for double damages.   Thus, in Pennsylvania, New Jersey and Delaware, Applicable Plan’s beware.
The Sixth Circuit has gone in the opposite direction.  Initially, it was believed this Circuit would follow the Third, at first reading of the Court of Appeals decision in Bio-Medicals case. However, several subsequent opinions have used Bio-Medicals to limit support for the MSP cause of action and only apply it against Group Health Plans.  Applicable Plans are not liable.  Hence, in the states of Kentucky, Michigan, Ohio and Tennessee is  down and out.
The Ninth Circuit, the largest in the Country, has taken a sucker punch to the MAP’s right of MSP reimbursement. In Parra v Pacificare, it sidestepped the claim against the Applicable Plan and advised the MAP that their fight was with the beneficiary as the settlement was paid into the Court. Unless another comes along, it appears the Ninth will sit it out and so there is uncertainty over MAP rights in California, Washington, Oregon, Hawaii, Nevada, Arizona, Alaska and Idaho at present.
Then there is this case we blog about today. The Magistrate’s recommendation to the Eastern District of Texas is a bit hard to follow, but the conclusion is clear: MAPs lose should the Court adopt the Magistrate’s recommendation.  Humana has a lot to lose from this ruling and no doubt will pick itself off of the mat and resume the fight. It is a long road to the Supreme Court, but the money involved is substantial and ultimately beneficial to Medicare in terms of reducing costs it pays to these Plans.
An important part of all of this is CMS and its support for MAPs reimbursement rights. This was made abundantly clear when CMS issued a policy memo in December of 2012. This is the wild card that could prove important in a scoring by the U.S. Supreme Court as deference to the Agency is weighed heavily in these decisions.
Humana made a big swing when it filed 4 separate lawsuits against Farmers last year. For reasons only Humana can explain it chose to withdraw three of them and fight in one venue. Perhaps the strategy will soon play in their favor. In the interim, there are no clear winners only losers and the Beneficiary is caught in the middle of it all.