The ACA and No-fault Insurance

What will the Affordable Care Act mean for Medicare secondary payer status and for reimbursement claims by Medicare, Medicaid, or health insurers against no-fault carriers and liability insurers?

Somewhat surprisingly, the answer is that there will not be much change, either in the relationships between primary and secondary payers or in the manner that repayments and reimbursements are to be made. The ACA extends and modifies current structures, rather than putting new ones in place.

The ACA was designed to work around the Medicare program, but to leave that program alone for the most part. There are some exceptions, one of which does relate to reimbursement issues.

• As is the case with health insurance, Medicare will cover some preventive services without requiring a co-pay or deductible.
• Centers for Medicare and Medicaid Services (“CMS”) will be reducing payments to hospitals, other providers, and Medicare Advantage plans over the next ten years. This has been reported to be reductions in expected increases, not actual decreases.
• The ACA did add a new provision, codified at 42 USC 1320a-7k(d), that requires that providers (and others as defined) self-report any “overpayment” that they learn about, including any situation in which CMS has made a payment that should have been made by a primary payer. This is a new obligation imposed on providers and other defined “persons,” not on primary payers.

For those who are covered under Medicare, then, the current Medicare Secondary Payer system, with all of its blemishes and wrinkles, will continue. No-fault insurers will continue to have the obligation to pay expenses related to a covered motor vehicle accident as primary, all insurers will need to have systems in place to respond to reimbursement requests, and all insurers will continue to report payments to CMS under the Medicare, Medicaid, and SCHIP Extension Act of 2007 (“MMSEA”) reporting program.

The ACA attempts to accomplish its goal of extending insurance coverage to most Americans by two distinct mechanisms: a significant extension of eligibility under Medicaid, to bring more low-income people into the program, and mandating the purchase of health insurance coverage by those who can afford to do so.

There will still be a large group “in the middle” who will not be eligible for Medicaid, who will not be covered by employer-provided coverage, who will not be financially able to purchase health insurance on their own, and who will either (1) be exempted from the new penalties for failure to buy their own coverage, or (2) determine that it is more cost-effective to pay the penalty and continue without health care coverage.

Medicaid – Without getting into the details, it is sufficient to note that the original provisions of the statute mandating that states expand Medicaid coverage were declared unconstitutional by the Supreme Court’s June 2012 decision in National Federation of Independent Business v. Sebelius. Michigan has elected to opt in to the expansion, and the most recent estimate is that over 320,000 Michigan residents will be added to the Medicaid rolls.

For those citizens, the interplay between Medicaid and other coverage, including no-fault insurance, will continue as it has in the past:

1. The payments will be made and managed by the state, with Federal funds assisting.
2. The reimbursement system will be as provided under state law, not under Federal law.
3. The state will likely continue to use contractors to manage its reimbursement claims.
4. There will be reasonable options for compromise with the state agency or its outside contractor.
5. There will be a requirement, imposed by two decisions of the United States Supreme Court, that reimbursement claims be limited based on equitable considerations.

Private coverage – For those who will be covered under private insurance, either from current commercial carriers or from newly-created insurers under the exchanges, the system that is in place now will likewise continue:

1. Michigan law allows and in fact encourages, health insurers to adopt language to provide for secondary status and for reimbursement from other available coverage. See MCL 600.6303.
2. Those provisions are and will continue to be included in just about all policies.
3. For insurance that is provided by employers, the special rules under ERISA governing reimbursement claims will continue to apply.
4. For insurance that is purchased by individuals, reimbursement claims will be governed under state law.

The ACA did not adopt any new provisions governing primary vs. secondary status, or reimbursement by primary payers. Those issues are and will likely remain a matter of contract between the insurer and the insured.

It is certainly possible that Congress could act, at some time in the future, to import something similar to the Medicare Secondary Payer (“MSP”) program into the ACA. For political reasons, however, to avoid charges that the Federal government is “taking over the health care system,” the ACA is designed to keep the states involved in the system. From a political perspective, it is very unlikely that anything similar to the MSP program will be adopted by Congress for the health care system as a whole any time soon.

We can expect that an issue will be raised as to whether health insurance purchased by an individual or by an employer is subject to the setoff under section 3109 of the No-fault Act, on the basis that such insurance is now “required to be provided under the laws of. . . the federal government.”

(This article was adapted from a May 2013 posting at GLM Medicare News. Visit http://medicarenews.us for regular updates on the Medicare Secondary Payer laws.)

Note on the MSP Guide – We expect that a new version of our MSP Guide for No-fault Insurers will be published and made available once CMS has issued its long-awaited new rules on accounting for future medical expenses in liability and no-fault settlements. CMS has had a lot of issues distracting its attention, so we continue to await the issuance of the rules.