Personal Injury and Social Security Disability Blog

Overturning Health Care Act Will Freeze Medicare, White House Warns

The Affordable Care Act, frequently referred to as ObamaCare, is pending before the Supreme Court of the United States as to whether the law is constitutional.

The American people are closely divided when asked whether they approve of the law, but when asked about specific provisions of the law, such as the closing of the prescription coverage gap, called the doughnut hole, and no-charge preventive services, such as an annual wellness physical, a large majority supports the separate pieces of the law.

The Obama administration recently issued a warning about the adverse effects on Medicare if the entire law is overturned by the Supreme Court. This warning was detailed in an article recently in the Detroit Free Press. Here are excerpts:

Medicare's payment system, the unseen but vital network that handles 100 million monthly claims, could freeze if President Barack Obama's health care law is summarily overturned, the administration quietly informed the courts.

Although Obama's overhaul made significant cuts to providers and improved prescription and preventive benefits, Medicare was overlooked in Supreme Court arguments that focused on the law's controversial requirement that all individuals carry health insurance.

In papers filed with the Supreme Court, administration lawyers warned of "extraordinary disruption" if Medicare is forced to unwind countless transactions that are based on payment changes required by more than 20 separate sections of the Affordable Care Act.

Opponents say the whole law must go. The administration counters that even if the court strikes down the insurance mandate, it should preserve most of the rest of the legislation. That would leave in place the changes to Medicare and a major expansion of Medicaid coverage.

Last year, in a lower court filing, Justice Department lawyers said reversing Medicare payment changes "would impose staggering administrative burdens" on the government and "could cause major delays and errors" in claims payment.

The AARP says it's concerned. If doctors became embroiled in a legal battle over payments, then "a general concern would be that physicians would cease to take on new Medicare patients, as well as potentially have issues seeing their current patients," said Ariel Gonzalez, an AARP lobbyist.

Medicare payment policies are set through a time-consuming process that begins with legislation passed by Congress. Even if the law were completely overturned, the government would have authority under previous legislation to pay hospitals, doctors, nursing homes and other providers.

It's not just reimbursement levels that would get scrambled, he said. The law's new philosophy of paying hospitals and doctors for quality results, rather than for sheer volume of procedures, has been incorporated into some payment policies.

"There is no doubt that striking down Medicare provisions would be enormously disruptive for patients, physicians, hospitals and countless other providers and suppliers," said Rep. Sander Levin of Royal Oak, ranking Democrat on the House Ways and Means Committee, which oversees the program.

Medicare's Billion-Dollar Headache, and a Possible Solution

It may be unlikely that any piece of legislation, no matter how popular, can pass both houses of Congress in an election year. But when the Chamber of Commerce and the trial lawyers associations both agree on a proposed law it's hard to think of an excuse not to pass it.

The law involved is the SMART Act — the Strengthening Medicare and Repaying Taxpayers Act. The purpose of the act is to address a situation that has developed over the past several years, in which Medicare's arcane processes are making it difficult to settle personal injury cases in a timely fashion. This situation is hard on accident victims, on insurance companies, and on corporate defendants. Plus, it take almost forever for Medicare to recover money that is owed to them. The lawyers are perfectly willing to pay Medicare, but we can't get a straight answer as to how much we owe them.

Politico ran an excellent article on the Medicare problem recently. Here are excerpts:

Basically, all concerned agree that when an insurer other than Medicare — think auto insurance or liability — is responsible for medical bills, they should pay them. But Medicare’s clumsy system for calculating and obtaining those payments is driving everyone nuts and often drags out attempts to reach settlements and avoid courtroom clashes.

“We hope that the bills get passed and that this is the year,” said David Farber, an attorney with Patton Boggs whose client, the Medicare Advocacy Recovery Coalition, has pushed for the overhaul. ”We have deep congressional interest in this issue.”

Medicare, in almost every instance, is the primary payer for medical services for people 65 and older and some of the disabled. But in some cases, such as auto accidents, on-the-job injuries or slip-and-fall accidents, Medicare becomes the secondary payer. It may be billed first and pay for the immediate care — but the medical costs are really somebody else’s primary responsibility. So Medicare has the right to recoup them from the responsible party.

For instance, if a senior is injured in a car accident, the hospital bills Medicare. But if there’s a settlement, or if the case goes to court and a person is awarded damages, Medicare has a right to recoup at least some of what it paid. The settlement also must take into account future Medicare costs that could arise from the condition or injury.

And it’s at this point, Farber and others say, that the process breaks down, leaving attorneys, Medicare beneficiaries and businesses in the lurch. Legal settlements stall.

And the disconnect costs Medicare money — always a good way of stirring congressional interest. The Congressional Budget Office estimates that Medicare loses around $1.1 billion every decade largely because of the lax or complicated reporting procedures. Not a huge item within Medicare, but still a billion is a billion. And some who track this issue believe the real number is even higher.

One core problem is that Medicare is woefully unprepared to track down or manage such claims, Farber said. Until 2007, the outside parties didn’t even have to tell Medicare whether a claim had been settled. So the model for the Center for Medicare & Medicaid Services was “pay and chase.” But it was more commonly “pay and don’t chase,” because the chasing process was just too cumbersome.

The situation began to change when Congress approved new mandatory reporting requirements for some health plans in 2007. But implementation was delayed, so the provisions only recently took hold. And according to the groups behind the SMART bill, the 2007 fixes didn’t, well, fix it. The whole process is still very slow.

“Everybody is frozen in place,” Farber said. “The CMS model is wrong on this. The CMS has to figure out how much it owes, and then it has to notify the parties.” And it needs to do so within a reasonable time period — which he said hasn’t been happening.

 

AAJ President Praises New Guidance on Medicare Secondary Payer Program

Everyone involved with personal injury claims knows that dealing with Medicare has become a nightmare over the past several years. Without going into detail, following the convoluted process required by Medicare in order to get a verified amount owed (or a statement that nothing is owed) takes months after a settlement is made with the insurance company. That means the claimants have to wait all that time before they can get their settlement money. This frequently works an undue hardship on the claimants.

 

That's why this story is potentially very good news for claimants, plaintiff lawyers, insurance companies, and insurance company lawyers. We all need relief.

 

Inside Health Policy reports that trial lawyers and other stakeholders are hailing recent guidance from the Centers for Medicare and Medicaid Services on a program for repaying Medicare for medical services following a third-party settlement, saying that it will help streamline the process. The Medicare Secondary Payer (MSP) program "will now allow beneficiaries with claims under $25,000 to self-calculate the amount owed, after which Medicare would send a final demand letter within 60 days that would be considered accurate for 60 days, according to the trial lawyers association, which supports the new guidance." American Association for Justice President Gary Paul called the new CMS guidance "a 'win, win' for seniors, businesses, insurance companies and taxpayers," adding that the "current system is riddled with inefficiency, costing taxpayers and businesses millions of dollars each year. Assuming CMS expands the program above the $25,000 threshold, this guidance will go a long way towards addressing these concerns." Noting that further information is expected to be released by January 15, the account adds that CMS "has also said that it intends to extend the claims threshold beyond $25,000, which the American Association of Justice also strongly supports." Lawyers USA also quotes the AAJ president in reporting the story.

 

From the American Association for Justice press release.

Medicare Penalties for Readmissions May Impact Hospitals Serving Low-Income Patients

The Washington Post /Kaiser Health News reported, "Medicare is preparing to penalize hospitals with frequent potentially avoidable readmissions," with the aim of prodding them "to make sure patients get the care they need after discharge. But this new policy is likely to disproportionately affect hospitals that treat the most low-income patients, according to a Kaiser Health News analysis of data from the Centers for Medicare & Medicaid Services." In fact, "hospitals that served the most poor Medicare patients were nearly three times as likely as others to have substantially high readmission rates for heart failure, the analysis found." Because these hospitals already run on tight budgets, many are afraid the penalties will make it even more difficult for them to care for poor patients properly.

Readmission rates at 3,119 hospitals scrutinized. In a related story, the Washington Post /Kaiser Health News detailed the methodology behind the Kaiser Health News (KHN) analysis of 3,119 facilities. For the analysis, "KHN looked at congestive heart failure, which is the most common cause of rehospitalization for Medicare patients. Readmission rates came from Medicare's Hospital Compare Web site, which publishes risk-adjusted rates for heart failure and two other conditions (pneumonia and heart attacks)." Specifically, "the data cover patients who were readmitted within 30 days of discharge between July 2007 and June 2010." Finally, "to gauge the socioeconomic status of each hospital's patient population, KHN relied on an index that the Centers for Medicare & Medicaid Services (CMS) uses to decide whether a hospital deserves 'Disproportionate Share Hospital' (DSH) payments because it treats an excess of poor patients."

Post-discharge clinics are new strategy to prevent readmissions. In "Insuring Your Health," Kaiser Health News reported, "According to a study released this month by the Center for Studying Health System Change, a Washington-based research group, a third of adult patients discharged from a hospital don't see a physician within 30 days -- and experts say this is a key reason so many of them are readmitted." Now, "some hospitals are trying a new strategy to interrupt this predictable and pricey pattern: post-discharge clinics. These hospitals are identifying patients who are more likely to have trouble after discharge, either because of their medical conditions or because they lack health insurance or a primary-care provider, and funneling them to the clinic where they receive one-on-one assistance." Still, some experts question if such clinics are really the best solution. What's more, experience has shown that up to half of the patients fail to keep post-discharge appointments.

 

 

From the news release of the American Association for Justice.

Plaintiff and Defense Lawyers Agree — Medicare Claims Procedures Need Improvement

In continuing coverage, Business Insurance reported insurers groups and "trial attorneys represented by the American Assn. for Justice" are supporting the Strengthening Medicare and Repaying Taxpayers Act, which "would require Medicare to respond within 65 days of a party's request for information on Medicare's final payment demand." The Medicare Secondary Payer System requires parties to "notify the Centers for Medicare and Medicaid Services of all workers comp and other liability settlements or payments that involve Medicare recipients." But according to attorney David Farber, "insurers and employers often are stymied from reaching settlements with workers comp claimants or parties to a liability claim because Medicare can take months to notify insurers and employers of its final demand." The AAJ said "plaintiff attorneys are siding with defense attorneys as well as organizations representing their common foes, since the situation adversely affects plaintiffs."

From the American Association for Justice news release.

 

Odd Allies in Medicare Fight — Plaintiff Lawyers and U.S. Chamber of Commerce

New federal rules regarding Medicare have made life miserable for personal injury claimants and the lawyers who represent them. The crux of the matter is that money must be withheld from the settlement or verdict amount in order to repay Medicare any money it may have paid for the plaintiff's medical expenses. But getting a straight answer from Medicare is enormously burdensome, and often delays settlements for months.

To combat this broken system, the plaintiff bar has joined forces with a natural opponent, the U.S. Chamber of Commerce. This strange alliance, and the reasons behind it were discussed in a recent article at Law.com. Here are excerpts:

An imposing new obstacle is getting in the way of the nation's personal-injury lawsuits. It has nothing to do with the merits of the cases, or how the courts are operating. The obstacle is Medicare, the federal health insurer for the elderly. Lawyers say the program is disrupting a countless number of their settlements.

Court papers in Connecticut describe one example: After a minor is hurt in a traffic accident, his family agreed to a settlement of $7,500 with the other party's insurer, but the settlement broke down when the insurer, United Services Automobile Association, said it needed to run the minor's case by Medicare. Minors aren't eligible for Medicare, but the insurer said it had no choice under federal law.

The disruptions are happening because, under a 2007 law, Medicare is making a new effort to collect money it's owed. The effort is targeting auto insurers, worker's compensation insurers and other third parties that are liable for injuries, like a grocery store in a slip-and-fall case. Under federal law, third parties are supposed to reimburse Medicare if the federal program has paid an injured person's medical costs.

But lawyers say they often have difficulty getting a final number, or even a good estimate, for how much Medicare is to be paid. The number is vital to determining how much a settlement should be. Even in cases where the number will be zero, as with the minor in Connecticut, the parties want to be sure because they could face sanctions of $1,000 a day per claim if they shortchange Medicare, even by accident.

Medicare officials say their effort has the potential to save taxpayers billions of dollars, but they acknowledge the amount of paperwork is overwhelming and is causing delays. Between the fiscal years 2007 and 2010, the number of cases involved grew by 86%.

In Washington, an unusual set of organizations doesn't want to wait for Medicare to work through the bureaucracy. The American Association for Justice, which lobbies for plaintiffs' lawyers, and the U.S. Chamber of Commerce, the largest lobbying group for business, are on the same side. Joining them are major corporations such as the Walt Disney Co. and Wal-Mart Stores Inc., as well as defense-side law firms and their trade group, the Defense Research Institute.

"We're typically not on the same side of issues. The fact that we are shows how broken the system is," said Sarah Rooney, regulatory counsel for the American Association for Justice. Rooney said her organization's membership has become increasingly frustrated with the issue.

The groups are pushing legislation that would rein in Medicare. The bill would set a hard deadline for Medicare to notify the parties to a claim how much the program is owed, or else Medicare would lose its right to collect the money at all. It would create a "safe harbor" from the $1,000-a-day penalties based on willfulness and other factors. It would also require Medicare to resolve its claims to reimbursement within three years of a settlement — whereas now there is no statute of limitations. Reps. Tim Murphy (R-Pa.) and Ron Kind (D-Wis.) are the bill's lead sponsors.

Lawyers who interact with the system say it's already costing taxpayers money because it's so inefficient. In one example that has made the rounds on Capitol Hill, Medicare sent a demand letter in 2009 in a personal-injury case asking to be reimbursed for $1.59 out of a $4,500 settlement. A provision in the pending legislation would exempt from Medicare's collection efforts any cases below a certain threshold, to be determined later.

"It's truly ironic that trial lawyers can't get the government to take back money that belongs to the taxpayers," said Marianne LeBlanc, a partner at Sugarman and Sugarman. "The problem is that they won't tell us how much we owe them, so we can't pay them."

William Cremer, who represents insurance companies as a partner at Cremer, Spina, Shaughnessy, Jansen & Siegert in Chicago, said the Medicare rules affect every case his firm handles, even if they don't think Medicare paid any medical bills in a case. That's because the firm still has to ask and verify, so it doesn't get hit with a penalty. "That's why it has this paralyzing effect on getting these cases done," Cremer said.

Hospital Cost Shifting Adds to Auto Injury Claim Costs

According to a recent study from the Insurance Research Council, low reimbursements from public health insurance programs, such as Medicare and Medicaid, have prompted hospitals to shift costs to automobile insurance companies—raising auto injury claim costs and forcing auto insurers to more closely scrutinize and negotiate hospital bills prior to payment. The IRC estimates that for Bodily Injury (BI) liability claims in 38 tort and add-on states, cost shifting in 2007 resulted in $1.2 billion in excess hospital charges. The full impact of hospital cost shifting, including that occurring in other insurance coverages and in other states, is likely much greater.

"The conventional wisdom is that hospitals aggressively seek to shift costs from public insurance programs to private payers such as auto insurance companies," said Elizabeth Sprinkel, Senior Vice President of the IRC. "With this study, we now have information on the magnitude of cost shifting and a better understanding of the need for supportive state laws and effective tools that will enable auto insurers to pay hospitals appropriately and help control auto injury claim costs," said Sprinkel.

Medicaid Will No Longer Pay Hospitals for Preventable Illnesses or Injuries

The National Journal reports, "Medicaid will no longer pay hospitals or doctors for certain preventable illnesses and injuries, such as operating on the wrong body part, the Health and Human Services Department said Wednesday." In a statement, Donald Berwick, administrator of the Centers for Medicare and Medicaid Services, said, "These steps will encourage health professionals and hospitals to reduce preventable infections, and eliminate serious medical errors." The Journal points out that Medicare "already has such a policy -- one widely recommended by health care experts as a way to help prevent expensive and deadly errors."

"Now this concept will be extended to Medicaid," CQ reports. "Under the healthcare law (PL 111-148, PL 111-152), the curb on payments for preventable conditions must also apply to Medicaid." In other words, "states won't be allowed to pay providers including hospitals, doctors and other health care organizations if patients develop conditions that are deemed reasonably preventable."

Kaiser Health News reported, "Currently, about 21 states have such a nonpayment policy," but "the 2010 federal health law, in effect, expands the ban nationwide. The rule published [yesterday] gives states until July 2012 to implement it." However, some medical groups have reservations about this policy. Kaiser Health News quoted written comments made by Michael Maves, MD, CEO of the American Medical Association, to the CMS three months ago. Maves wrote, "Simply not paying for complications or conditions, that, while extremely regrettable, are not entirely preventable, is a blunt approach that is not effective or wise for patients or the Medicare or Medicaid program."

Writing in the Forbes "Health Dollars" blog, David Whelan focused on possible unintended consequences of the new rule proposed by the CMS that "would modify the Inpatient Prospective Payment System." Whelan pointed out that "the new payment plan assumes that changing a whole industry is as simple as turning a few knobs and pushing a few buttons on the Medicare dashboard. Implementing such a scheme will be extremely difficult, possibly unfair and will most definitely increase the cost of health care rather than save money." Whelan contended that Medicare currently does not have the necessary experience to make clinical judgments affecting patients. He also voiced concern that hospital systems would have to merge as a result of the proposed rule, thereby setting up "powerful health care oligarchies."

From the American Association for Justice news release.

Medicare Offers Financial Incentives to Hospitals for Improved Care, Error Reduction

The Los Angeles Times reported that the "Obama administration issued a final regulation to reward hospitals that provide high-quality care, the first in a series of steps that are designed to fundamentally transform the way that the federal government pays for healthcare." Indeed, the practice is "commonplace in many industries," but "setting quality benchmarks and tying them to compensation will be new for many of the nation's hospitals. It is a strategy that Medicare has never used before on a systematic basis."

Yet, says CMS Administrator Donald Berwick, "it is the most important answer to the healthcare sustainability issue, achieving lower costs through high quality is the right way to do it," Reutersreports. According to CMS data, nearly $4.4 billion was spent caring for patients who were harmed while hospitalized in 2009.

Readmissions to the "hospital cost Medicare another $26 billion," CQ "Healthbeat" reported. But the new program "will save up to $35 billion in health costs over the next three years, including $10 billion in Medicare," CMS estimates. "Starting Oct. 1, 2012, hospitals will get paid more if they ensure patients get care within 90 minutes of possibly having a heart attack," as will "those that provide care within a 24-hour window to surgery patients to prevent blood clots; communicate detailed instructions to heart failure patients on follow-up care once they leave the hospital; and ensure their facilities are clean and well-maintained."

The agency "will take into account how well patients rank the quality of the care they received during their hospital stay," MedPage Today reports. "Adherence to the quality care measures will be weighted at 70% and patient satisfaction scores will be weighted at 30% in determining payments, CMS officials said." In short, the "release of the Hospital Value-Based Purchasing Program rule brings the Obama administration one step closer to something it has long proposed: paying hospitals for improvements in patient health, rather than for the number of services received during a hospital stay."

According to the Hill "Healthwatch" blog, "some 3,500 hospitals will be eligible for $850 million in performance incentives for fiscal 2013." And "Berwick said the new regulations would acknowledge both achievements and improvements, so that cash-strapped hospitals that serve poor areas aren't at a disadvantage." He added, "We need all boats to rise on the rising tide of quality."

From the American Association for Justice news release.

Who Represents Me in Washington and in Austin?

We are in the midst of some very bad legislative proposals, both in Washington and in Austin. Whether you're concerned about the loss of Medicare (Washington) or passage of a corporate immunity bill (Austin), you should contact your representatives and make your concerns known.

There is a handy site for Texas who want to know who represents them, and how to contact that person. Just visit http://www.fyi.legis.state.tx.us.