[Federal Register Volume 80, Number 39 (Friday, February 27, 2015)]
[Rules and Regulations]
[Pages 10611-10618]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-04143]
[[Page 10611]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 405
[CMS-6055-F]
RIN 0938-AS03
Medicare Program; Right of Appeal for Medicare Secondary Payer
Determinations Relating to Liability Insurance (Including Self-
Insurance), No-Fault Insurance, and Workers' Compensation Laws and
Plans
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule implements provisions of the Strengthening
Medicare and Repaying Taxpayers Act of 2012 (SMART Act) which require
us to provide a right of appeal and an appeal process for liability
insurance (including self-insurance), no-fault insurance, and workers'
compensation laws or plans when Medicare pursues a Medicare Secondary
Payer (MSP) recovery claim directly from the liability insurance
(including self-insurance), no-fault insurance, or workers'
compensation law or plan.
DATES: Effective Date: These regulations are effective on April 28,
2015.
Applicability Date: Applicable plans are parties to initial
determinations issued on or after April 28, 2015 where CMS pursues
recovery directly from an applicable plan.
FOR FURTHER INFORMATION CONTACT: Barbara Wright, (410) 786-4292.
Cynthia Ginsburg, (410) 786-2579.
SUPPLEMENTARY INFORMATION:
I. General Overview and Background
A. General Overview
When the Medicare program was enacted in 1965, Medicare was the
primary payer for all medically necessary covered and otherwise
reimbursable items and services, with the exception of those items and
services covered and payable by workers' compensation. In 1980, the
Congress enacted the Medicare Secondary Payer (MSP) provisions of the
Social Security Act (the Act), which added section 1862(b) to the Act
and established Medicare as the secondary payer to certain primary
plans. Primary plan, as defined in section 1862(b)(2)(A) of the Act,
means a group health plan or large group health plan, workers'
compensation law or plan, automobile or liability insurance policy or
plan (including self-insured plan) or no-fault insurance.
Section 1862(b)(2) of the Act, in part, prohibits Medicare from
making payment where payment has been made or can reasonably be
expected to be made by a primary plan. If payment has not been made or
cannot reasonably be expected to be made by a primary plan, Medicare
may make conditional payments with the expectation that the payments
will be reimbursed to the appropriate Medicare Trust Fund. That is,
Medicare may pay for medical claims with the expectation that it will
be repaid if the beneficiary obtains a settlement, judgment, award, or
other payment. A primary plan and any entity that receives payment from
a primary plan shall reimburse the appropriate Medicare Trust Fund for
Medicare's payments for items and services if it is demonstrated that
such primary plan has or had responsibility to make payment with
respect to such items and services.
The responsibility for payment on the part of workers'
compensation, liability insurance (including self-insurance), and no-
fault insurance is generally demonstrated by a settlement, judgment,
award, or other payment (including, for example, assuming ongoing
responsibility for medicals (ORM)). When such occurs, the settlement,
judgment, award or other payment is subject to the Act's MSP provisions
because a ``payment has been made'' with respect to medical care of a
beneficiary related to that settlement, judgment, award or other
payment. Section 1862(b)(2)(B)(iv) of the Act provides the federal
government subrogation rights to any right under MSP of an individual
or any other entity to payment for items or services under a primary
plan, to the extent Medicare payments were made for such medical items
and services. Moreover, section 1862(b)(2)(B)(iii) of the Act provides
the federal government a direct right of action to recover conditional
payments made by Medicare. This direct right of action, which is
separate and independent from Medicare's statutory subrogation rights,
may be brought to recover conditional payments against any or all
entities that are or were responsible for making payment for the items
and services under a primary plan. Under the direct right of action,
the federal government may also recover from any entity that has
received payment from a primary plan or the proceeds of a primary
plan's payment to any entity.
Moreover, the MSP statute requires a ``demonstration of primary
payment responsibility;'' it does not require that CMS prove that the
alleged incident or injury caused particular medical care. A primary
plan's responsibility for payment may be demonstrated by a judgment, a
payment conditioned upon the recipient's compromise, waiver, or release
(whether or not there is a determination of liability) of payment or
otherwise. A settlement, judgment, award, or other payment (including,
for example, an assumption of ORM) is sufficient to demonstrate primary
payment responsibility for what has been claimed, released, or released
in effect.
B. Background
The Strengthening Medicare and Repaying Taxpayers Act of 2012 (the
SMART Act) was signed into law by President Obama on January 10, 2013,
and amends the Act's MSP provisions (found at 42 U.S.C. 1395y(b)).
Specifically, section 201 of the SMART Act added paragraph (viii) to
section 1862(b)(2)(B) of the Act. This new clause requires Medicare to
promulgate regulations establishing a right of appeal and an appeals
process, with respect to any determination for which the Secretary is
seeking to recover payments from an applicable plan (as defined in the
MSP provisions), under which the applicable plan involved, or an
attorney, agent, or third-party administrator on behalf of the
applicable plan, may appeal such a determination. Further, the
individual furnished such an item and/or service shall be notified of
the applicable plan's intent to appeal such a determination. For
purposes of this provision, the term applicable plan refers to
liability insurance (including self-insurance), no-fault insurance, or
a workers' compensation law or plan, as defined at section
1862(b)(8)(F) of the Act.
Currently, if an MSP recovery demand is issued to the beneficiary
as the identified debtor, the beneficiary has formal administrative
appeal rights and eventual judicial review as set forth in subpart I of
part 405. If the recovery demand is issued to the applicable plan as
the identified debtor, currently the applicable plan has no formal
administrative appeal rights or judicial review. CMS' recovery
contractor addresses any dispute raised by the applicable plan, but
there is no multilevel formal appeal process.
Subpart I of part 405, provides for a multilevel process including
a redetermination by the contractor issuing the recovery demand, a
reconsideration by a Qualified Independent Contractor (QIC), an
Administrative Law Judge (ALJ) hearing,
[[Page 10612]]
a review by the Departmental Appeals Board's (DAB) Medicare Appeals
Council (MAC), and eventual judicial review, and sets forth details on
the process including standing to request an appeal, filing
requirements, amount in controversy requirements, and other
requirements. The December 27, 2013 proposed rule (78 FR 78802) would
add appeals for applicable plans where Medicare is pursuing recovery
directly from the applicable plan. The debts at issue involve recovery
of the same conditional payments that would be at issue if recovery
were directed at the beneficiary. Given this, we believe it is
appropriate to utilize the same multilevel appeals process for
applicable plans.
II. Provisions of the Proposed Regulations and Analysis of and
Responses to Public Comments
A. Introduction
In the December 27, 2013 Federal Register (78 FR 78802), we
published a proposed rule that would implement section 201 of the SMART
Act which required us to promulgate regulations establishing a right of
appeal and an appeals process with respect to any determination for
which the Secretary is seeking to recover payments from an applicable
plan. Our proposals would add appeal rights for applicable plans where
Medicare is pursuing recovery directly from the applicable plan
utilizing the existing appeals procedures in part 405 subpart I
applicable to appeals filed by beneficiaries when Medicare seeks
recovery of conditional payments directly from the beneficiary.
We received approximately 19 timely pieces of public correspondence
on the December 27, 2013 proposed rule. Commenters included insurance
industry associations and organizations, beneficiary and other advocacy
groups, entities offering MSP compliance services, and health insurance
plans. The commenters generally supported our proposals.
Because of the type of comments received, we are using the
following approach to structure this section of the final rule:
Presenting the proposed provision(s) based on topic
area(s) of the public comments.
Providing the proposed provisions for which we did not
received public comments.
Providing and responding to the public comments that do
not ``fit'' in the topic areas noted previously. The following is a
list of the regulatory provisions that would be revised or added in
accordance with the December 13, 2013 proposed rule:
Sec. 405.900 Basis and scope
Sec. 405.902 Definitions
Sec. 405.906 Parties to the initial determinations,
redeterminations, reconsiderations, hearings, and reviews
Sec. 405.910 Appointed representatives
Sec. 405.921 Notice of initial determination
Sec. 405.924 Actions that are initial determinations
Sec. 405.926 Actions that are not initial determinations
Proposed Sec. 405.947 Notice to the beneficiary of
applicable plan's request for a redetermination
B. Discussion of the Provisions of the Proposed Rule by Public Comment
Topic
In this section of the final rule we provide a general overview and
a response to the public comments received, grouped under the following
topics:
Definition of Applicable Plan
Issues Subject to Appeal/Not Subject to Appeal
Party Status/Who Can Appeal and When
Use of an Attorney or Other Representative; Assignment of
Appeal Rights
Notice
Appeal Processes/Determining the Identified Debtor
Interest and Penalties
Applicability of the Proposed Rule to Medicare Part C and/or
Medicare Part D
Other
1. Definition of Applicable Plan
We proposed adding the following definition for ``applicable plan''
in Sec. 405.902, Definitions: ``Applicable plan means liability
insurance (including self-insurance), no-fault insurance, or a workers'
compensation law or plan.'' This is the statutory definition of
``applicable plan'' in section 1862(b)(8)(F) of the Act.
Comment: A commenter requested that CMS revise the definition of
applicable plan in the proposed rule to read: Applicable plan means
liability insurance (including self-insurance), no-fault insurance, or
a workers' compensation law or plan where payment has been made or can
reasonably be expected to be made under a workmen's compensation law or
plan of the United States or a state or under an automobile or
liability insurance policy or plan (including a self-insured plan) or
under no-fault insurance.
Response: We disagree with the recommended revision. The definition
of the term ``applicable plan'' is the definition set forth in section
1862(b)(8) of the Act. The reference to ``. . . applicable plan under
[section 1862(b)(2)(A)(ii) of the Act]'' (pursuant to the SMART Act and
as codified now in section 1862(b)(2)(B)(viii) of the Act) is a
reference to when CMS would pursue recovery with respect to liability
insurance (including self-insurance), no-fault insurance, or workers'
compensation law or plan recoveries where primary payment
responsibility has been demonstrated, and is not a part of the
definition of the term ``applicable plan'' itself. The term
``applicable plan'' as referred to in the SMART Act has a pre-existing
definition in the same section of the Medicare statute (that is, in
section 1862(b) of the Act). Therefore, we are finalizing the
definition of the term ``applicable plan'' as proposed.
2. Issues Subject To Appeal/Not Subject To Appeal
In order for an action to be subject to the appeal process set
forth in subpart I of 42 CFR part 405, there must be an ``initial
determination.'' Section 405.924, Actions that are initial
determinations, addresses actions that are initial determinations (and
thus subject to appeal) for purposes of part 405 subpart I. We proposed
adding paragraph (b)(15) to this section to specifically provide that
where Medicare is pursuing recovery directly from an applicable plan,
there is an initial determination with respect to the amount and the
existence of the recovery claim. This addition would generally parallel
the existing provisions of Sec. 405.924(b)(14) addressing pursuing MSP
recovery claims from a beneficiary, provider, or supplier. In addition
to these changes, for consistency, we proposed a number of technical
and formatting changes.
Paragraph (a) of Sec. 405.926, Actions that are not initial
determinations, addresses actions that are not initial determinations
(and thus not subject to appeal) for purposes of part 405 subpart I
because such determinations are the sole responsibility of CMS.
Generally under Sec. 405.926(k) initial determinations with respect to
primary payers are not initial determinations. In conjunction with the
proposed addition of Sec. 405.924(b)(15), we proposed adding an
exception to Sec. 405.926(k) for initial determinations set forth in
Sec. 405.924(b)(15). Additionally, we proposed to add a new paragraph
Sec. 405.926(a)(3) to clarify that a determination of the debtor for a
particular MSP recovery claim is not an
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initial determination for purposes of part 405 subpart I. Because
Medicare has the right to recover conditional payments from the
beneficiary, the primary payer, or any other entity that has received
the proceeds from payment by the primary plan, Medicare's decision
regarding who or what entity it is pursuing recovery from is not
subject to appeal. We also proposed to add the word ``facilitates'' to
the existing ``sponsors or contributes to'' language in Sec.
405.926(k) in recognition of our longstanding position that the concept
of employer sponsorship or contribution has always included
facilitation efforts. Finally, for consistency, we proposed making
several technical changes.
Comment: A number of commenters believe that the issue of who or
which entity CMS pursues an MSP recovery from should be subject to
appeal. Some commenters requested that CMS always pursue recovery from
the beneficiary first. Others believe that if the applicable plan has
paid the beneficiary, recovery should be limited to the beneficiary. A
commenter stated that the parties to a settlement, judgment, award, or
other payment should be allowed to designate who CMS pursues or, at
least who CMS pursues first.
Response: We decline these requests. Pursuant to section
1862(b)(2)(B)(ii) of the Act and 42 CFR 411.24 of the regulations, we
have the right to pursue recovery from the beneficiary, the primary
payer or any other entity receiving proceeds from the payment by the
primary plan. We may recover from the applicable plan even if the
applicable plan has already reimbursed the beneficiary or other party.
Under our existing regulations under part 405 subpart I, beneficiaries
have formal appeal rights; applicable plans do not have such rights.
The SMART Act's provisions codified in section 1862(b)(2)(B)(viii) of
the Act require us to provide formal appeal rights and a formal appeal
process for applicable plans, but these provisions do not change
Medicare's underlying recovery rights.
Comment: Some commenters would like to be able to appeal who is the
identified debtor in a situation where there are multiple entities
which are primary payers to Medicare (a beneficiary with multiple types
of coverage or multiple settlements, or both). That is, they would like
to be able to appeal whether CMS recovers from ``applicable plan #1''
rather than ``applicable plan #2'' in a situation where both applicable
plans are primary to Medicare.
Response: We disagree. In accordance with section 1862(b)(2)(B)(ii)
of the Act and 42 CFR 411.24 of the regulations, we have the right to
pursue recovery from the beneficiary, the primary payer or any other
entity receiving proceeds from the payment by the primary plan. Section
411.24(e) states that we have a direct right of action to recover from
any primary payer.
Comment: A commenter requested that CMS remove any restrictions on
the applicable plan, including the right to seek recovery from the
beneficiary, service provider or other entity. Another commenter stated
that the proposed rule did not address whether the applicable plan may
seek recovery from another entity.
Response: We decline this request. The commenter is requesting that
we provide a statement of the applicable plan's rights against Medicare
beneficiaries, providers/suppliers, or other entities which is outside
the scope of this rule.
After review and consideration of comments related to Sec. 405.924
and Sec. 405.926, we are finalizing the changes to these sections with
modifications. In order to address the addition of a new paragraph
(b)(15) to Sec. 405.924 via the CY 2015 Physician Fee Schedule final
rule with comment period (79 FR 68001), we will need to add proposed
paragraph (b)(15) as paragraph (b)(16) and make conforming cross-
references changes in Sec. 405.906 and Sec. 405.926(k).
3. Party Status/Who Can Appeal and When
We proposed to add paragraph (a)(4) to Sec. 405.906, Parties to
the initial determinations, redeterminations, reconsiderations,
hearings, and reviews, to specify that an applicable plan is a party to
an initial determination under proposed Sec. 405.924(b)(15) where
Medicare is pursuing recovery directly from the applicable plan. The
applicable plan is the sole party to an initial determination when an
applicable plan is a party. By ``pursuing recovery directly from the
applicable plan,'' we mean that the applicable plan would be the
identified debtor, with a recovery demand letter issued to the
applicable plan (or its agent or representative) requiring repayment.
If or when an applicable plan receives a courtesy copy of a recovery
demand letter issued to a beneficiary, this does not qualify as
``pursuing recovery directly from the applicable plan'' and does not
confer party status on the applicable plan. Making the applicable plan
the sole party to the initial determination means that the applicable
plan would also be the sole party to a redetermination or subsequent
level of appeal with respect to that initial determination. We are also
making a technical change in the section heading for Sec. 405.906
(adding a comma before the phrase ``and reviews'').
Comment: Several commenters requested that (1) either the
applicable plan, or the beneficiary, or both be allowed to participate
in any appeal where the identified debtor is either the applicable plan
or the beneficiary; (2) any appeal consolidate the appeal process and
appeal rights of the applicable plan and the beneficiary; (3) either
the applicable plan or the beneficiary has the right to appeal at any
point prior to resolution of the appeals process or full payment
(whichever occurs first); or (4) appeal rights be given to any entity
potentially liable for repayment.
Response: We decline these requests. This final rule makes appeal
rights available to the identified debtor, not potential identified
debtors. An identified debtor and a potential identified debtor do not
always have the same interests or present the same issues on appeal.
For example, where a demand is issued, the identified debtor may elect
to make payment in full and not appeal, in which case furnishing appeal
rights to a potential debtor is unnecessary.
If we issue a demand to an identified debtor and later determine
that it is appropriate to pursue recovery of some or all of the
conditional payments at issue from a different identified debtor, a new
separate demand will be issued, with appeal rights appropriate to the
identified debtor in the new recovery demand.
Comment: A commenter requested that the provision making the
applicable plan the sole party to a recovery pursued directly from the
applicable plan be modified to state that the applicable plan is the
sole party unless the applicable plan has previously made payment, in
which circumstance any individual or entity which accepted payment
would be a party to the initial determination and subsequent actions.
Response: We decline this request. In accordance with section
1862(b)(2)(B)(ii) of the Act and 42 CFR 411.24 of the regulations, we
have the right to pursue recovery from the beneficiary, the primary
payer or any other entity receiving proceeds from the payment by the
primary plan. We may recover from the applicable plan even if the
applicable plan has already reimbursed the beneficiary or other party.
Comment: Some commenters requested that CMS always pursue recovery
from the individual or entity to whom/which the applicable plan has
made payment (or, at minimum, pursue
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recovery from that individual or entity before pursuing recovery from
the applicable plan). A commenter suggested that CMS should have to
inform an applicable plan regarding whether recovery had been sought
from the beneficiary first.
Response: We decline these requests. The determination of who to
pursue is our sole responsibility and, consequently, is not subject to
appeal (see Sec. 405.926(a)). We have the right to pursue recovery
from the primary payer, the beneficiary, or any other entity receiving
proceeds from the payment by the primary plan, and we may recover from
the applicable plan even if the applicable plan has already reimbursed
the beneficiary or other party.
After review and consideration of all comments related to Sec.
405.906, we are finalizing the changes to this section with the
modifications to the cross-references to Sec. 405.924(b)(15) noted in
section II.B.2. of this final rule.
4. Use of an Attorney or Other Representative; Assignment of Appeal
Rights
We proposed adding paragraph (e)(4) to Sec. 405.910, Appointed
representatives, in order to provide applicable plans with the benefit
of the existing rule for MSP regarding the duration of appointment for
an appointed representative. We also proposed revising Sec.
405.910(i)(4) to ensure that the special provision that beneficiaries
as well as their representatives must receive notices or requests in an
MSP case continues to apply only to beneficiaries. For all other
parties, including an applicable plan, we continue to follow the
regulatory provisions in Sec. 405.910(i)(1) through (3). We did not
propose any changes to Sec. 405.912 which addresses the assignment of
appeal rights.
Comment: Commenters requested that applicable plans be able to
appoint third parties/agents as representatives in the appeal process.
Response: Applicable plans have this ability under the existing
provisions in Sec. 405.910. Section 405.910 does not limit who a party
may appoint as a representative other than to state that ``[a] party
may not name as an appointed representative, an individual who is
disqualified, suspended or otherwise prohibited by law from acting as a
representative in any proceedings before DHHS, or in entitlement
appeals, before SSA.''
Furthermore, we are specifying when a party appointing a
representative must include the beneficiary's Medicare health insurance
claim number (HICN) on the appointment of representation. We believe
that it is not necessary for non-beneficiary parties to include the
HICN as part of a valid appointment because an applicable plan or other
non-beneficiary party seeking to appoint a representative under Sec.
405.910 is not a beneficiary, and would thus not have a beneficiary
HICN to provide on an appointment of representation. Accordingly, we
are amending the existing Sec. 405.910(c)(5) to state that an
appointment of representation must identify the beneficiary's HICN when
the beneficiary (or someone, such as an authorized representative or
representative payee, acting on behalf of a beneficiary) is the party
appointing a representative.
Comment: Some commenters requested that beneficiaries be able to
assign their appeal rights to the applicable plan; other commenters
requested that applicable plans be able to assign their appeal rights
to the beneficiary.
Response: We decline these requests. Both beneficiaries and
applicable plans have the option of an agreement for representation
when it is mutually agreed to. However, the assignment of appeal rights
is controlled by section 1869(b)(1)(C) of the Act which limits the
assignment of appeal rights to assignment by a beneficiary to a
provider/supplier with respect to an item or service furnished by the
provider/supplier in question.
After review and consideration of comments related to Sec.
405.910, we are finalizing the changes to this section as proposed and
with the specification to paragraph (c)(5) explained previously.
5. Notice
We proposed adding a new paragraph (c) to Sec. 405.921, Notice of
initial determination, to provide specific language regarding
requirements for notice to an applicable plan. Proposed Sec.
405.921(c)(iv) states that in addition to other stated requirements in
Sec. 405.921(c), the requisite notice must contain ``any other
requirements specified by CMS.'' We also proposed to add Sec. 405.947,
Notice to the beneficiary of applicable plan's request for a
redetermination, to add language satisfying the requirement at section
1862(b)(2)(B)(viii) of the Act that the beneficiary receive notice of
the applicable plan's intent to appeal where Medicare is pursuing
recovery from the applicable plan. As the beneficiary would not be a
party to the appeal at the redetermination level or subsequent levels
of appeal, we believe that a single notice at the redetermination level
satisfies the intent of this provision. We also proposed that the
required notice be issued by a CMS contractor in order to ensure
clarity and consistency in the wording of the notice. In addition to
these changes, for consistency we proposed a number of technical and
formatting changes.
Comment: Several commenter stated that the requisite notice must
contain ``any other requirements specified by CMS'' in proposed Sec.
405.921(c)(iv) is too broad and/or gives CMS too much authority.
Response: We are finalizing Sec. 405.921(c) as proposed. The
proposed language in Sec. 405.921(c) is designed to set forth the
minimum requirements for notice of an initial determination. Proposed
Sec. 405.921(c)(iv) simply provides flexibility for CMS to include
additional information appropriate for the efficient operation of the
appeals process; it does not eliminate any obligations set forth in
proposed Sec. 405.921(c). Additionally, we note that the same language
is a longstanding provision in Sec. 405.921(a) and (b) as well as
certain other sections within part 405 subpart I regarding ``notice.''
Comment: Commenters presented a range of concerns regarding
whether--(1) the applicable plan should be copied on a recovery demand
with the beneficiary as the identified debtor; and (2) all potential
debtors should be copied on all actions (that is, recovery demands,
appeal requests, all notices or decisions).
Response: Given that the proposed rule provides that the applicable
plan will be the sole party to an initial determination if CMS pursues
recovery directly from the applicable plan, we have determined that any
notice beyond the notice we have proposed in Sec. 405.947 is
unnecessary, would cause an increase in administrative costs and would
cause confusion in many instances, particularly where beneficiaries
would receive copies of demands issued to applicable plans.
Comment: A commenter stated that the Notice of Initial
Determination sent to an applicable plan must include specific
statutory authority for determinations and notification of appeal
rights.
Response: It is our routine practice to include the basis for our
recovery rights as well as information on applicable appeal rights in
the recovery demand letter. Moreover, we believe that the commenter's
concerns are adequately addressed by proposed Sec. 405.921(c)(i) and
(iii) (which require the reason for the determination as well as
information on appeal rights).
Comment: A commenter requested that we apply the ``mailbox rule''
(also known as the ``postal rule'' or
[[Page 10615]]
``deposited acceptance rule'') regarding receipt of a document.
Response: We decline this request. The appeals process set forth in
part 405 subpart I already has rules regarding receipt of documents for
the purpose of determining the timeliness of an appeal request. See,
for example, Sec. 405.942(a)(1) (date of receipt for an initial
determination), Sec. 405.962(a)(1) (date of receipt for a
redetermination), and Sec. 405.1002(a)(3) (date of receipt for a
reconsideration).
Comment: A commenter requested that language be added to
beneficiary correspondence requiring beneficiaries to cooperate with
the applicable plan and CMS' contractor.
Response: Because we are not involved in the interactions between a
beneficiary and an applicable plan, we are not adding the requested
language.
Comment: A commenter was concerned that an applicable plan might
lose its opportunity to appeal if the recovery demand to the applicable
plan was addressed incorrectly.
Response: Section 405.942, Sec. 405.962, Sec. 405.1014, and Sec.
405.1102 all contain provisions for extending the time for filing for a
particular level of appeal upon establishing good cause. An applicable
plan, as a party, is entitled to request an extension of the filing
timeframe consistent with the previously referenced sections should
there be good cause to extend such timeframes.
Comment: A commenter requested that notice to the beneficiary of
the applicable plan's appeal explicitly state in plain language that
the applicable plan's appeal does not affect the beneficiary (that is,
that the applicable plan is the sole party to the appeal).
Response: We agree, however, the content of model notices is more
appropriately included in our operational instructions for contractors.
We will address this issue when we draft language for the notice CMS'
contractor will issue in accordance with Sec. 405.947.
Comment: A commenter requested clarification regarding ``notice''
for purposes of the statute of limitations provision set forth in
section 205 of the SMART Act.
Response: This comment is outside the scope of this rule.
After review and consideration of all comments regarding Sec.
405.921 and Sec. 405.947, we are finalizing these provisions as
proposed with one modification. We are revising Sec. 405.947(a) to
read: ``A CMS contractor must send notice of the applicable plan's
appeal to the beneficiary.'' We are eliminating the reference to ``the
contractor adjudicating the redetermination request'' issuing the
notice in order to allow for operational efficiencies, where
applicable. Section 405.947(b) will continue to read: ``(b) Issuance
and content of the notice must comply with CMS instructions.''
6. Appeal Processes/Determining the Identified Debtor
Comment: Commenters requested we clarify that initial
determinations (recovery demands) involving liability insurance
(including self-insurance), no-fault insurance, or workers'
compensation benefits are made only after there is a settlement with a
beneficiary.
Response: Recovery demands are appropriate once primary payment
responsibility has been demonstrated. Primary payment responsibility
can be demonstrated based upon a settlement, judgment, award, or other
payment. See section 1862(b)(2)(B)(ii) of the Act and 42 CFR 411.22 of
the regulations.
Comment: A commenter indicated an understanding that issues of
medical necessity, beneficiary eligibility, and payment would be
decided simultaneously with issues of MSP recovery under the proposed
rule.
Response: The commenter's understanding is incorrect because these
issues arise at different points in time. Medicare has rules in place
to permit conditional payment when a beneficiary has a pending
liability insurance (including self-insurance), no-fault insurance, or
workers' compensation claim. Our claims processing contractors utilize
normal claims processing considerations (including medical necessity
rules) in processing such claims. MSP recovery claims come into play
once we have information that primary payment responsibility has been
demonstrated, which often occurs after items or services have been
reimbursed by Medicare.
Comment: A commenter stated that there should be a clear statement
regarding the availability of judicial review for applicable plans and
requested that such a statement be added in 42 CFR 405.904.
Response: We believe that this clarification is unnecessary.
Section 405.904(b) already addresses nonbeneficiary appellants.
Additionally, Sec. 405.1136 explains that judicial review is available
as authorized by statute. (See sections 1869, 1876, and 1879(d) of the
Act.)
Comment: Several commenters requested that CMS consider an appeals
process other than the process in part 405 subpart I. Requests ranged
from suggesting fewer levels of appeal, using a separate team of
experts, to a separate docket and group of ALJs for MSP appeals.
Multiple comments noted concern with the current backlog of claims-
based appeals at the ALJ level of appeal.
Response: We decline this request. The existing appeals process in
42 CFR part 405 subpart I addresses claims-based Part A and Part B MSP
and non-MSP appeals for beneficiaries, providers and suppliers,
including appeals of pre-pay denials as well as overpayments. The
proposed rule would give party status to a new party (the applicable
plan) with respect to specific initial determinations. As the existing
process at 42 CFR part 405 subpart I, is currently used for Part A and
Part B MSP appeals by beneficiaries, we believe it is an appropriate
process for resolving similar disputes with applicable plans.
Comment: A commenter requested that CMS clarify how it determines
who/which entity is the identified debtor and whether the identified
debtor will generally be the beneficiary.
Response: This question is outside the scope of this rule. (See,
section 1862(b)(2)(B)(ii) and (iii) of the Act as well as 42 CFR 411.24
of the regulations regarding who we may pursue for recovery.)
Comment: Several commenters questioned whether: (1) CMS could
pursue concurrent claims against the beneficiary and the applicable
plan; (2) a claim against a beneficiary rendered a claim against the
applicable plan moot (and vice versa); and (3) a demand to the
beneficiary (or to the applicable plan) rendered a subsequent claim
with respect to the same matter moot against the beneficiary (or the
applicable plan, as appropriate).
Response: These comments are outside the scope of this rule as they
do not relate to the proposed appeal process. Please note that we will
not recover twice for the same item or service. Appeal rights will be
given to the beneficiary or applicable plan receiving the demand.
Comment: Commenters stated that applicable plans should have access
to beneficiary medical records, including an ability to unmask data on
CMS' web portal.
Response: These comments are outside the scope of this rule as they
are not related to the proposed appeal process. If we pursue recovery
directly from the applicable plan, the applicable plan will be provided
with all information related to the demand.
7. Interest and Penalties
Comment: Several commenters requested that penalties (such as civil
[[Page 10616]]
monetary penalties (CMPs)) and interest be tolled entirely during an
appeal, during a good faith appeal, or for some set period of time
during an appeal.
Response: The statutory and regulatory provisions for interest and
CMPs are outside the scope of this rule. However, we note that a debtor
may eliminate the possibility of interest by submitting repayment
within the timeframe specified in the demand letter. Such repayment
does not eliminate existing appeal rights.
8. Applicability of the Proposed Rule to Medicare Part C and Medicare
Part D
Comment: Some commenters requested that the proposed rule be
revised to include appeal rights for applicable plans when a Medicare
Part C organization or Part D plan pursues an MSP based recovery from
the applicable plan.
Response: This request is outside of the scope of this rule. The
SMART Act provision for applicable plan appeals amended only the MSP
provisions for Medicare Part A and Part B (section 1862(b) of the Act).
C. Other Proposals
In this section of the final rule, we note the proposed rule
included a provision for which we did not receive any public comment.
We proposed to amend Sec. 405.900, Basis and scope, by revising
paragraph (a) to add section 1862(b)(2)(B)(viii) of the Act as part of
the statutory basis or Subpart I. Section 1862(b)(2)(B)(viii) requires
an appeals process for applicable plans when Medicare pursues recovery
directly from the applicable plan. We received no comments on this
proposal; and therefore, are finalizing this provision without
modification.
D. General and Other Comments
This section of the final rule responds to public comments that are
not specific to topics described in section II.B. of this final rule.
Comment: A commenter stated that the amount in controversy
requirement should be consistent with the dollar threshold provided for
by the SMART Act in section 1862(b)(9) of the Act.
Response: We do not accept this recommendation as the amount in
controversy jurisdictional threshold for the appeals process is
unrelated to the threshold set in section 1862(b)(9) of the Act. The
section 1862(b)(9) of the Act threshold is a dollar threshold regarding
the size of the settlement, where, in certain situations, MSP reporting
and repayment is not required. The jurisdictional amount in controversy
requirements for the appeals process are already set forth in Sec.
405.1006 for ALJ hearings and judicial review. We see no basis for
changing the existing thresholds at various levels of appeal based upon
the addition of an applicable plan as the party for certain appeals.
Comment: A commenter stated that the proposed rule was inconsistent
with the SMART Act requirement for an 11-day web portal response
timeframe for ``redeterminations and discrepancy resolution.''
Response: The SMART Act provisions concerning a web portal are
outside the scope of this rule. Moreover, the provisions concerning the
web portal discrepancy resolution process (section
1862(b)(2)(B)(vii)(IV) of the Act) specifically state that: (1) The
provisions do not establish a right of appeal or set forth an appeal
process; and (2) there shall be no administrative or judicial review of
the Secretary's determination under section 1862(b)(2)(B)(vii)(IV) of
the Act.
Comment: A commenter stated that the proposed rule should address
appeals related to the determination of a proposed Workers'
Compensation Medicare Set-Aside Arrangement (WCMSA) amount for future
medicals.
Response: This issue is outside the scope of this rule. As stated
in the preamble to the proposed rule, this issue will be addressed
separately.
III. Provisions of the Final Regulations
This rule incorporates all of the provisions of the December 27,
2013 proposed rule with the following exceptions:
In Sec. 405.910(c)(5), we are revising the language to
specify when an HICN is needed.
In Sec. 405.924, finalizing the addition of proposed
paragraph (b)(15) as paragraph (b)(16). As a result of this change, we
are also making conforming changes to the cross-references to this
paragraph in Sec. Sec. 405.906(a)(4) and (c), 405.921(c)(1), and
405.926(k).
In Sec. 405.947(a), we are removing the reference to
``the contractor adjudicating the redetermination request'' issuing the
notice in order to allow for operational efficiencies, where
applicable. Therefore, paragraph (a) will read ``A CMS contractor must
send notice of the applicable plan's appeal to the beneficiary.''
In Sec. 405.980, we are making a grammatical change to
the section heading to match the grammatical change made to the section
heading of Sec. 405.906.
IV. Collection of Information Requirements
This document does not impose information collection requirements,
that is, reporting, recordkeeping or third-party disclosure
requirements. Consequently, there is no need for review by the Office
of Management and Budget under the authority of the Paperwork Reduction
Act of 1995 (44 U.S.C. 35).
V. Regulatory Impact Statement
We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(February 2, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4),
Executive Order 13132 on Federalism (August 4, 1999) and the
Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in any 1 year).
We have determined that the effect of this rule on the economy and the
Medicare program is not economically significant. The rule provides a
formal administrative appeal process for MSP recovery claims where the
applicable plan is the identified debtor, as opposed to the current
process which requires a CMS contractor to consider any defense
submitted by an applicable plan but does not provide formal
administrative appeal rights.
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
less than $7.5 million to $38.5 million in any 1 year. Individuals and
states are not included in the definition of a small entity. We have
determined and we certify that this rule would not have a significant
economic impact on
[[Page 10617]]
a substantial number of small entities because there is and will be no
change in the administration of the MSP provisions. The changes would
simply expand or formalize existing rights with respect to MSP recovery
claims pursued directly from an applicable plan. Therefore, we are not
preparing an analysis for the RFA.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis (RIA) if a rule may have a significant
impact on the operations of a substantial number of small rural
hospitals. This analysis must conform to the provisions of section 604
of the RFA. For purposes of section 1102(b) of the Act, we define a
small rural hospital as a hospital that is located outside of a
Metropolitan Statistical Area for Medicare payment regulations and has
fewer than 100 beds. We have determined that this rule would not have a
significant effect on the operations of a substantial number of small
rural hospitals because it would simply expand and/or formalize
existing rights with respect to MSP recovery claims pursued directly
from an applicable plan. Therefore, we are not preparing an analysis
for section 1102(b) of the Act.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2014, that
threshold is approximately $141 million. This rule has no consequential
effect on State, local, or tribal governments or on the private sector
because it would simply expand and/or formalize existing rights with
respect to MSP recovery claims pursued directly from an applicable
plan.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on State
or local governments, the requirements of Executive Order 13132 are not
applicable.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 405
Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medical devices, Medicare, Reporting and
recordkeeping requirements, Rural areas, X-rays.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR part 405 as set forth below:
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
0
1. The authority citation for part 405 continues to read as follows:
Authority: Secs. 205(a), 1102, 1861, 1862(a), 1869, 1871, 1874,
1881, 1886(k) of the Social Security Act (42 U.S.C. 405(a), 1302,
1395x, 1395y(a), 1395ff, 1395hh, 1395kk, 1395rr and 1395ww(k)), and
sec. 353 of the Public Health Service Act (42 U.S.C. 263a).
0
2. Amend Sec. 405.900 by revising paragraph (a) to read as follows:
Sec. 405.900 Basis and scope.
(a) Statutory basis. This subpart is based on the following
provisions of the Act:
(1) Section 1869(a) through (e) and (g) of the Act.
(2) Section 1862(b)(2)(B)(viii) of the Act.
* * * * *
0
3. Amend Sec. 405.902 by adding the definition ``Applicable plan'' in
alphabetical order to read as follows:
Sec. 405.902 Definitions.
* * * * *
Applicable plan means liability insurance (including self-
insurance), no-fault insurance, or a workers' compensation law or plan.
* * * * *
0
4. Amend Sec. 405.906 by:
0
A. Revising the section heading.
0
B. Adding new paragraph (a)(4).
0
C. Amending paragraph (c) by adding a sentence at the end of the
paragraph.
The additions and revision read as follows:
Sec. 405.906 Parties to the initial determinations, redeterminations,
reconsiderations, hearings, and reviews.
(a) * * *
(4) An applicable plan for an initial determination under Sec.
405.924(b)(16) where Medicare is pursuing recovery directly from the
applicable plan. The applicable plan is the sole party to an initial
determination under Sec. 405.924(b)(16) (that is, where Medicare is
pursuing recovery directly from the applicable plan).
* * * * *
(c) * * *. This paragraph (c) does not apply to an initial
determination with respect to an applicable plan under Sec.
405.924(b)(16).
0
4. Amend Sec. 405.910 by:
0
A. Revising paragraph (c)(5).
0
B. Adding paragraph (e)(4).
0
C. Revising paragraph (i)(4).
The revisions and addition read as follows:
Sec. 405.910 Appointed representatives.
* * * * *
(c) * * *
(5) Identify the beneficiary's Medicare health insurance claim
number when the beneficiary is the party appointing a representative;
* * * * *
(e) * * *
(4) For an initial determination of a Medicare Secondary Payer
recovery claim, an appointment signed by an applicable plan which has
party status in accordance with Sec. 405.906(a)(1)(iv) is valid from
the date that appointment is signed for the duration of any subsequent
appeal, unless the appointment is specifically revoked.
* * * * *
(i) * * *
(4) For initial determinations and appeals involving Medicare
Secondary Payer recovery claims where the beneficiary is a party, the
adjudicator sends notices and requests to both the beneficiary and the
beneficiary's representative, if the beneficiary has a representative.
* * * * *
0
5. Amend Sec. 405.921 by:
0
A. In paragraph (a)(1), removing ``;'' and adding in its place ``.''
0
B. In paragraph (a)(2) introductory text, removing the phrase ``must
contain--'' and adding in its place the phrase ``must contain all of
the following:''
0
C. In paragraphs (a)(2)(i) and (a)(2)(ii), removing ``;'' and adding in
its place ''.''
0
D. In paragraph (a)(2)(iii), removing ``; and'' and adding in its place
''.''
0
E. Redesignating the second and third sentences of paragraph (b)(1) as
paragraphs (b)(1)(i) and (ii), respectively.
0
F. In paragraph (b)(2) introductory text, removing the phrase ``must
contain:'' and adding in its place the phrase ``must contain all of the
following:''
0
G. In paragraphs (b)(2)(i) through (b)(2)(iv), removing ``;'' and add
in its place ``.''
0
H. In paragraph (b)(2)(v), removing ``; and'' and add in its place
``.''
0
I. Adding paragraph (c) to read as follows:
Sec. 405.921 Notice of initial determination.
* * * * *
(c) Notice of initial determination sent to an applicable plan--(1)
Content of
[[Page 10618]]
the notice. The notice of initial determination under Sec.
405.924(b)(16) must contain all of the following:
(i) The reasons for the determination.
(ii) The procedures for obtaining additional information concerning
the contractor's determination, such as a specific provision of the
policy, manual, law or regulation used in making the determination.
(iii) Information on the right to a redetermination if the
liability insurance (including self-insurance), no-fault insurance, or
workers' compensation law or plan is dissatisfied with the outcome of
the initial determination and instructions on how to request a
redetermination.
(iv) Any other requirements specified by CMS.
(2) [Reserved]
0
6. Amend Sec. 405.924 by:
0
A. In paragraph (b) introductory text, removing the phrase ``with
respect to:'' and add in its place the phrase ``with respect to any of
the following:''
0
B. In paragraph (b)(1) through (b)(11) removing ``;'' and adding in its
place ``.''
0
D. In paragraph (b)(12) introductory text, removing the ``:'' and
adding in its place ``--''.
0
C. Adding paragraph (b)(16).
The addition reads as follows:
Sec. 405.924 Actions that are initial determinations.
* * * * *
(b) * * *
(16) Under the Medicare Secondary Payer provisions of section
1862(b) of the Act that Medicare has a recovery claim if Medicare is
pursuing recovery directly from an applicable plan. That is, there is
an initial determination with respect to the amount and existence of
the recovery claim.
* * * * *
0
7. Amend Sec. 405.926 by:
0
A. In the introductory text, removing the phrase ``not limited to -''
and adding in its place the phrase ``not limited to the following:''
0
B. In the introductory text of paragraph (a), removing the phrase ``for
example -'' and adding in its place the phrase ``for example one of the
following:''
0
C. In paragraphs (a)(1) and (a)(2), removing ``;'' and adding in its
place ``.''
0
D. Adding paragraph (a)(3).
0
E. In paragraphs (b) through (j), removing ``;'' and adding in its
place ``.''
0
F. Revising paragraph (k).
0
G. In paragraphs (l) through (q), removing ``;'' and adding in its
place ``.''
0
H. In paragraph (r), removing ``; and'' and adding in its place ``.''
The addition and revision read as follows:
Sec. 405.926 Actions that are not initial determinations.
* * * * *
(a) * * *
(3) Determination under the Medicare Secondary Payer provisions of
section 1862(b) of the Act of the debtor for a particular recovery
claim.
* * * * *
(k) Except as specified in Sec. 405.924(b)(16), determinations
under the Medicare Secondary Payer provisions of section 1862(b) of the
Act that Medicare has a recovery against an entity that was or is
required or responsible (directly, as an insurer or self-insurer; as a
third party administrator; as an employer that sponsors, contributes to
or facilitates a group health plan or a large group health plan; or
otherwise) to make payment for services or items that were already
reimbursed by the Medicare program.
* * * * *
0
8. Add a new Sec. 405.947 to read as follows:
Sec. 405.947 Notice to the beneficiary of applicable plan's request
for a redetermination.
(a) A CMS contractor must send notice of the applicable plan's
appeal to the beneficiary.
(b) Issuance and content of the notice must comply with CMS
instructions.
0
9. Amend Sec. 405.980 by revising the section heading to read as
follows:
Sec. 405.980 Reopening of initial determinations, redeterminations,
reconsiderations, hearings, and reviews.
* * * * *
Dated: November 20, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Approved: January 15, 2015.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2015-04143 Filed 2-26-15; 8:45 am]
BILLING CODE 4120-01-P