Recent court rulings have given Medicare Advantage insurers increased authority to seek reimbursement for medical payments they've made on behalf of Medicare beneficiaries.

The decisions have resulted in Medicare Advantage plans stepping up their efforts to subrogate for workers compensation and liability settlements in the past several months, according to experts in Medicare Secondary Payer Act compliance.

“You could probably call any carrier and they'll tell you they've been getting letters,” said Jennifer Jordan, general counsel of Medicare compliance company Medval L.L.C. in Columbia, Md. “They look like collection agency letters.”

While the cases have heightened awareness about reimbursing Medicare Advantage plans, it can be difficult to figure out which Medicare Advantage provider covers a claimant and how much is owed on that person's behalf, said Michael Merlino, vice president of Medicare compliance for Sedgwick Claims Management Services Inc. in Atlanta.

“Although this may promote more aggressive recovery efforts on behalf of the Advantage plans, there is no real efficient way for Sedgwick to be able to reach out to the Medicare Advantage providers to try to resolve these issues,” Mr. Merlino said.

The federal Medicare Secondary Payer Act requires insurers and self-insured employers to repay the Centers for Medicare and Medicaid for a Medicare beneficiary's medical treatment related to workers compensation or liability cases. However, recent lawsuits considered whether private Medicare Advantage insurers had the same right to reimbursement as CMS under the act.

In a Dec. 26 decision, the U.S. District Court in White Plains, N.Y., ruled unanimously that Medicare Advantage plans have the right to subrogate settlements received by Medicare beneficiaries in personal injury or wrongful death cases.

%%BREAK%%

Plaintiffs in Rebecca Meek-Horton et al. v. Trover Solutions Inc. et al. had argued that Medicare Advantage plans should not be able to seek reimbursement under New York law, alleging that such insurers don't have a statutory right to reimbursement. However, the district court found that Medicare Advantage plans have a right to recovery under the federal Medicare Act, which pre-empts New York law.

That case comes after a June 2012 decision by the 3rd District U.S. Court of Appeals in Philadelphia, which said Medicare Advantage plans have a right to seek reimbursement for medical payments under Medicare Secondary Payer regulations.

In that case, Humana Medical Plan Inc. and Humana Insurance Co. sued GlaxoSmithKline L.L.C., contending that Glaxo was required to reimburse Humana for injuries that some of its members suffered by taking Avandia, a drug used to control type 2 diabetes.

The drug has been linked to increased risk of heart attack and stroke, and Glaxo has settled injury claims from “thousands” of Avandia patients, according to court records.

The appeals court sided with Humana, saying that Medicare Advantage organizations have the same subrogation rights as CMS because the secondary payer “statute itself equates the United States' right to recover with a private party's right to recover.”

The Humana decision was significant because lower state courts have previously held that Medicare Advantage plans did not have a right to sue for reimbursement, said Russell Whittle, senior staff counsel and vice president of Medicare secondary payer compliance for consultant Gould & Lamb L.L.C. in Bradenton, Fla.

%%BREAK%%

While Medicare Advantage plans sought reimbursement from insurers and self-insured employers in the past, many of their recent collection letters have cited the Humana decision as the legal basis for their request, Mr. Whittle said.

“I think that they have a little bit more weight in terms of what they're claiming for purposes of reimbursement than they used to,” Mr. Whittle said.

Sources say they routinely have worked with clients to reimburse Medicare Advantage plans for medical costs related to claimants' liability and workers comp cases. They note that the recent court decisions have made clients more cautious to seek whether a Medicare Advantage plan is owed money before settling a case in order to avoid the prospect of a lawsuit.

Clients are “very used to the idea that traditional Medicare seeks reimbursement to preserve the fiscal integrity of the program, and I think that they understand that,” said Michelle Allan, an attorney with law firm Burns White L.L.C. in Pittsburgh. “But applying it to Medicare Advantage programs is something very new for them.”

Experts say the process of reimbursing Medicare Advantage plans can be easier than reimbursing CMS in some ways, because the private insurers can move swifter than government offices and often are willing to negotiate how much they are seeking from a claimant's settlement.

“You can get (reimbursement) done with one or two phone calls as opposed to waiting for correspondence back and forth from a central body,” Mr. Whittle said. “They're faster, and we have good results with them because they're motivated to get it done.”

%%BREAK%%

However, experts note that, unlike traditional Medicare, Medicare Advantage plans do not have a central clearing house to determine how much is owed on a beneficiary's behalf. That has left settlement parties searching for which Medicare Advantage plans to reimburse when a claimant can't or won't provide information about their coverage, said Sedgwick's Mr. Merlino.

While the Humana case is the highest court decision in regard to Medicare Advantage reimbursement, it's difficult to determine how the Humana decision will play out nationwide, sources say. The 3rd district appeals court has jurisdiction over courts in Delaware, New Jersey, Pennsylvania and the Virgin Islands.

The issue of Medicare Advantage reimbursement eventually could reach the Supreme Court, Mr. Merlino said, because courts around the country disagree on how the issue should be handled.

“We've got enough cases now in enough jurisdictions that I think one case eventually is going to make its way up there,” he said. “But who knows how long that's going to be?”