The Different Paths to Protect the Medicare Trust Fund
Medicare for all, continued privatization of Medicare, and growth of MSP enforcement are all on the table
Efficiency and expansion of health care coverage in the United States is of paramount concern in the 2020 presidential election. The Medicare program has particularly been in the spotlight, as Medicare accounts for a significant portion of federal spending.
In fiscal year 2018, the Medicare program cost $582 billion—about 14 percent of the federal government’s total spending. After Social Security, Medicare was the second-largest program in the federal budget.
Lately, “Medicare for All” has been a major highlight of discussion among presidential candidates. While there are different models for Medicare for All, it could generally be described as a single, national health insurance program that would provide universal care. Other models include coverage for hospital and physician services, while prescription medication and other costs would be borne by either private pay or private insurance.
Single-payer coverage, embraced in the concept for Medicare for All, would likely be more generous, with respect to benefits, than traditional Medicare, potentially covering dental and vision and possibly long-term care. This is a noteworthy point because, generally, these additional broader benefits are currently offered through Medicare Advantage Plans (MAPs). But, while there may be coverage similarities, there is a stark difference between the concept of Medicare for All and continued privatization of the Medicare program through MAPs.
Medicare For All, depending on which concept is adopted, would be available to persons not currently eligible for Medicare. Most proposals provide for phased buy-in, beginning with people in their 50s. Today, to be eligible for Medicare, a person must be 65 years of age or older, or be enrolled in Social Security Disability Insurance (SSDI) for 24 consecutive months, or have end-stage renal disease. Therefore, while it would contain some limitations, Medicare for All would conceptually be available to persons not currently eligible for Medicare enrollment.
Traditional Medicare offers Medicare Part A and B. MAPs are known as Part C, which is an option for Medicare-eligible persons rather than enrolling in Medicare Part A and B. The MAP would provide the same or broader benefits to a Medicare-eligible person compared to traditional Medicare Part A and B. Regardless of whether a person enrolls in traditional Medicare Part A and B, or chooses to enroll in a MAP, to obtain prescription drug coverage, that person must enroll in a Medicare Part D plan. Both Medicare Part C/MAPs and Medicare Part D plans are offered through private insurance plans (for example, UnitedHealth, Humana, or Cigna are large providers of MAPs). Traditional Medicare does not cover prescription drugs, except in limited circumstances under Part B.
Expanding the MAP
Enrollment in MAPs is growing, and fast. Part of the growth is due to the increased publicity of the notion of the broader, more efficient coverage offered under privatized Medicare Part C/MAPs versus enrolling in traditional Medicare.
The other part of the growth is arguably due to political pressure. Recently, there has been a push by the Trump administration to encourage Medicare enrollees to move away from the traditional Medicare system and enroll in MAPs instead. In 2018, President Donald Trump issued an executive order encouraging enrollment in MAPs. Between 2018 and 2019, total Medicare Advantage enrollment grew by about 1.6 million beneficiaries. The Congressional Budget Office projects that the share of beneficiaries enrolled in MAPs will rise to about 47 percent by 2029.
Additionally, as the country’s debt mounts, the federal government continues to look for paths to reduce costs to the Medicare Trust Fund, and privatization of Medicare via increased enrollment in MAPs may be one of the potential answers. A recent report by UnitedHealth Group found that MAPs cost 40 percent less than traditional Medicare. Therefore, it is no mystery why the current administration has been making a public push for Medicare-eligible persons to enroll in MAPs rather than traditional Medicare.
Medicare for All and greater privatization of Medicare via increased enrollment in MAPs are not the only strategies at play by the federal government to reduce costs and drive preservation of the Medicare Trust Fund. Lately, there has been greater enforcement of the Medicare Secondary Payer (MSP) Act.
The MSP Act generally provides that Medicare shall pay secondary where a primary payer is available to pay—i.e., in the case of a workers compensation, no-fault, or liability insurance claim or settlement, Medicare is a secondary payer. If Medicare pays first and a primary payer was available at the time of payment, then Medicare may recover that “conditional payment” from the primary payer. Medicare may also recover double damages if litigation is necessary to recoup the conditional payments.
Just recently, in the past two years, three plaintiff law firms have settled with their local U.S. Attorney’s offices over allegations that they did not appropriately reimburse conditional payments made on behalf of the firm’s clients. Medicare made conditional payments to a client of the firms, yet did not receive repayment of these payments.
As a result, these law firms were required to pay the federal government a settlement as well as: designate a person at the firm responsible for paying Medicare secondary-payer debts; train the designated employee to ensure that the firm pays these debts on a timely basis; and review any outstanding debts with the designated employee at least every six months to ensure compliance.
Angino and CMS’ Aggressive Enforcement
Additionally, in a recent case, U.S. v. Angino, the United States filed suit to recover conditional payments from the plaintiff’s attorney, Medicare beneficiary, and “primary plan.” The lawsuit reignited the debate over whether the parties may take advantage of reducing the conditional payment by attorney’s fees, since the U.S. had to file litigation to recover its conditional payments.
In Angino, the Medicare beneficiary became ill after being dispensed an incorrect prescription, which was called in by his medical center. The incorrect medicine caused the Medicare beneficiary to be hospitalized for 66 days, and Medicare paid $84,353 in related bills. The beneficiary filed a lawsuit against the pharmacy and medical-care center, and he was represented by his attorney, Richard Angino, of Angino Law Firm P.C.
During settlement negotiations, the Angino defendants inquired about the conditional-payment obligation owed from the Centers for Medicare & Medicaid (CMS) recovery contractors. Though CMS paid over $84,000 in medical bills, its initial response was that it paid $725. Later, CMS increased the amount to $1,212. The parties were aware Medicare paid over $84,000 in medical bills, but the conditional-payment amount identified by the recovery contractors remained at $1,212, and, relying on that amount, they reached a settlment.
After being notified of the settlement, Medicare reviewed its records following and determined that the $84,353 in medical charges were related. CMS demanded only $53,295 after reducing that amount for attorney’s fees and procurement costs.
The approximately $53,000 conditional-payment amount was then administratively appealed by the beneficiary’s Estate and the representative law firm. That appeal failed, and Medicare immediately filed a lawsuit to assert recovery for the entire amount (no deduction of attorney’s fees and procurement costs) pursuant to 42 C.F.R. § 411.37(e). The case is currently scheduled for trial for a final decision, unless the parties settle out of court. Clearly, the U.S. Attorney actions and the Angino lawsuit are indicative of the drive to more aggressively enforce the MSP Act.
MAPs themselves have also been quite aggressive in their recoveries of conditional payments against primary plans and plaintiff’s attorneys. Actually, MAPs arguably have become more litigious on MSP conditional-payment recoveries than traditional Medicare in recent years. Nationwide, MAPs and/or their recovery agents have been filing litigation seeking to establish MAPs’ rights to recover double damages under the MSP Private Cause of Action located at 42 USC §1395y(b)(2)(3)(A) against primary plans and/or other parties to the settlement in various jurisdictions. Therefore, MAPs are certainly making their voices heard in MSP enforcement as enrollment numbers increase.
What do we need to know about Medicare in 2020? The Medicare landscape is ever-changing. Political pressure upon CMS and government leaders to sustain the Medicare Trust Fund long-term will eventually drive innovation and change with Medicare plan models, and lead to increased enforcement of laws such as the MSP, which help preserve the Trust Fund. Stay informed and make your voice heard on Medicare in 2020.