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Illinois Court Decisions Hints at Future of Medicare Advantage Reimbursement

March 2018

The Medicare Secondary Payer statute clearly states Medicare coverage is secondary to “primary” plans, which include workers’ compensation, liability, or no-fault insurance. If Medicare pays for medical services that should have been paid by a primary plan, Medicare can sue the plan for reimbursement of those payments.

Recent federal court decisions have expanded the term “Medicare” to include the private carriers who offer Medicare Advantage under Medicare Part C. The practical consequences are significant. If you have a claimant who is a Medicare beneficiary and you contact Medicare to conduct a search of conditional payments, Medicare may inform you there are none. But it may be unaware of benefits provided by Medicare Advantage. For such claims the reimbursement information can come only from the specific insurance carrier providing that claimant’s Medicare Advantage coverage. Making it even harder to get accurate information regarding Medicare Advantage, a claimant can change between Medicare Advantage insurers or switch back and forth from Advantage coverage to traditional Medicare. Adding to the confusion, many claimants’ attorneys have little or no clue how to assist with Medicare issues. An effective Medicare compliance program needs to consider and address Medicare Advantage, as well as traditional Medicare.The Medicare Secondary Payer statute clearly states Medicare coverage is secondary to “primary” plans, which include workers’ compensation, liability, or no-fault insurance. If Medicare pays for medical services that should have been paid by a primary plan, Medicare can sue the plan for reimbursement of those payments.

A federal court in Illinois has issued two opinions in cases where Medicare Advantage plans sued primary insurers for reimbursement. MAO-MSO Recovery II, LLC v. State Farm, 2018 U.S. Dist. LEXIS 3318 (C.D. Ill. January 9, 2018) and MAO-MSO Recovery II, LLC v. State Farm, 2018 U.S. Dist. LEXIS 3320 (C.D. Ill. January 9, 2018). At least one internet blogger has already claimed these cases add Illinois to the growing list of jurisdictions approving a private cause of action, including double damages, interest, and fees and costs where indemnity insurers fail to timely reimburse medical expenses paid by Medicare Advantage Organizations. However, that is not what these cases legally stand for. The confusion stems from generalized statements made by the trial judge, Joe Billy McDade. He noted other federal courts have recognized such a cause of action by Medicare Advantage plans against primary insurers. Judge McDade noted “the Court finds no reason to depart from the national trend.” While not legally binding, Judge McDade’s comments at least indicate that if the right to sue is challenged in his courtroom, he will likely decide in favor of the Medicare Advantage plan. It remains to be seen whether such an outcome would survive appeal to the United States Court of Appeals for the Seventh Circuit.

Given the apparent trend cited by Judge McDade in favor of a nationwide rule, casualty insurers are wise to update or obtain compliance programs to avoid or mitigate this potential additional exposure.

As always, BCM’s Medicare Compliance Department remains willing and able to assist with any conditional payments issues. We can review your existing program and provide guidance and recommendation. Our team of attorneys can handle the investigation of individual claimants to verify what type of Medicare or Medicare Advantage coverage apples, and then can utilize all available legal defense tools to advocate the best result for each case. Please contact any of our Medicare Compliance attorneys for further information:

  • Chicago Bar Association
  • Workers' Compensation Lawyers Association
  • IRTB
  • DRI - The Voice of the Defense Bar
  • The Illinois Association of Defense Trial Counsel
  • Illinois Self-Insurers' Association
  • Chicago Bar Association
  • Workers' Compensation Lawyers Association
  • IRTB
  • DRI - The Voice of the Defense Bar
  • The Illinois Association of Defense Trial Counsel
  • Illinois Self-Insurers' Association
10 South LaSalle Street, Suite 900
Chicago, IL 60603
Phone: 312-425-3131
211 Landmark Drive, Suite C2
Normal, IL 61761
Phone: 309-862-4914
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