Reps Murphy and Kind Introduce HR 6120: The Secondary Payer Advancement, Rationalization, and Clarification (SPARC) Act

Posted by Rafael Gonzalez on Oct 10, 2016 9:57:51 AM

Reps Murphy and Kind Introduce HR 6120Without much fanfare or a lot of attention, on September 20, 2016, Congressman Tim Murphy (R-PA) and Congressman Ron Kind (D-WI), the same members of Congress who were responsible for passage of the SMART Act and its troubled aftermath, introduced HR 6120 to amend title XVIII of the Social Security Act with the intended purpose of “providing for clarification and rationalization of Medicare prescription drug plan recovery rules for certain claims.” Several provisions of the proposed bill would help workers compensation, auto, no-fault, and liability primary payers diminish their responsibility for Medicare Part D prescriptions under the Medicare Secondary Payer Act (MSP).

Primary Payer Ceases to be Responsible After ORM Termed or Settlement

The bill proposes to make “prescription drug plans (PDP) a secondary payer to any valid and collectible payment from a primary drug plan until the primary drug plan pays a final settlement, judgment, or award to an individual enrolled under the PDP with regard to an injury or illness involved or otherwise terminates its ongoing responsibility for medical payments with respect to the individual.” This proposal would essentially hold primary payers responsible for PDP payments related to the claim until ORM is terminated or a settlement, judgment, award takes place, thereby doing away with having to allocate out of such settlement funds any portion of same for future prescription needs.

Limiting HHS from Seeking Reimbursement of Future Part D Prescriptions

The bill proposes to do away with “the Secretary of Health and Human Services’ ability to assert any claim on behalf or against a prescription drug plan, other than through the recovery from such a plan of amounts paid related to a covered part D drug event that has been repaid to the plan through a subrogation action.” In other words, this proposal would do away with government’s ability to seek reimbursement of any post settlement prescription payments made by a PDP.

Prescription Drug Plans May Only Seek Reimbursement for Past Payments

The bill proposes that a PDP is “subrogated to any right of an individual or any other entity to payment, before the date the plan received notice to any right of an individual or any other entity to payment, with respect to such covered part D drug, under a primary drug plan.” In other words, PDPs may only seek reimbursement for past Part D prescription payments, but not future Part D prescription payments.

Three-Year Statute of Limitations and Procurement Costs Reduction

The bill further proposes that “a subrogation claim may not be asserted by a PDP with respect to a payment for a covered part D drug after the date that is 3 years after the date such plan receives notice of a payment.” The bill also indicates “any such subrogation claim shall be the exclusive legal remedy of the PDP sponsor of the plan and shall be reduced to take into account the cost of procuring the judgment or settlement with respect to such claim if an individual’s liability, workers’ compensation, or no-fault claim is disputed.”

Waiver of Reimbursement by Prescription Drug Plan

The bill proposes “a PDP may waive (in whole or in part) reimbursement in the case of an individual claim if the plan determines that the waiver is in the best interests of the program.”

Requirement to Timely Share Mandatory Insurer Information

The bill proposes that ‘‘not later than 15 days after the date HHS receives information under the mandatory insurer reporting program, relating to an individual enrolled in a prescription drug plan during an applicable time, HHS shall provide such information to the PDP in a format convenient and accessible to such plans.” Considering the fact that this information is oftentimes missing, and when reported, very late and therefore of no real use to the PDP, this is a necessary aspect of timely information every PDP needs in order to timely request reimbursement.

Authorization for Part D Charges Related to Injury Until ORM is Terminated

The bill proposes that a “PDP shall, where a primary drug plan has reported ongoing responsibility for medical costs pursuant under mandatory insurer reporting (MIR), authorize the provider of such covered part D drug to charge, related to or arising out of the treatment accident or injury, for the period in which the enrollee remains enrolled in such plan through the date such PDP has terminated ongoing responsibility for medical payments.”

Providing Notice to the Prescription Drug Plan and the Plan’s Response

The bill proposes that ‘‘not later than 10 days after the date CMS receives notice that the individual is enrolled in a PDP, HHS shall provide such notice to the plan.” The bill further provides that “not later than 20 days after the date a plan receives notice, the plan may provide HHS with a statement of any covered part D drug for which the plan seeks reimbursement, including the amount of such reimbursement.” This proposal will go a long way towards making sure all parties involved are timely aware of Part D payments and the amount of such reimbursement.

Effective Date

The bill proposes “the amendments shall apply to drugs dispensed in years beginning more than 6 months after the date of the enactment of this Act.”

The proposed bill reads as follows:

114TH CONGRESS 2D SESSION

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled:

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Secondary Payer Advancement, Rationalization, and Clarification Act’’ or the ‘‘SPARC Act’’.

SECTION 2. CLARIFICATION AND RATIONALIZATION OF MEDICARE PRESCRIPTION DRUG SECONDARY CLAIMS RESPONSIBILITY.

(a) IN GENERAL.—Section 1860D–2(a)(4) of the Social Security Act (42 U.S.C. 1395w–102(a)(4)) is amended to read as follows:

‘‘(4) SECONDARY PAYOR AND RECOVERY RIGHTS.—

‘‘(A) IN GENERAL.—

‘‘(i) APPLICATION OF SECONDARY PAYOR.—A prescription drug plan shall be secondary payer to any valid and collectible payment from a primary drug plan (as defined in clause (iv)) until such time as such primary drug plan pays a final settlement, judgment, or award to an individual enrolled under the prescription drug plan with regard to an injury or illness involved or otherwise terminates its ongoing responsibility for medical payments with respect to the individual.

‘‘(ii) LIMITATION ON PARTIES MAKING PRESCRIPTION DRUG PLANS PRIMARY.—A primary drug plan (as defined in clause (iv), other than a group health plan or multiemployer or multiple employer plan of, or contributed to by, an employer that has 20 or fewer employees for each working day in each of 20 or more calendar weeks in the calendar year involved or the preceding calendar year), a self-insured plan, a service benefit plan, a managed care organization, a pharmacy benefit manager, or other party that, by statute, contract, or agreement, is legally responsible for payment of a claim for a covered outpatient drug, in enrolling an individual or in making any payments for benefits to the individual or on the individual’s behalf, may not take into account that the individual is enrolled under a prescription drug plan under this part or is eligible for or is provided coverage for covered part D drugs under this part.

‘‘(iii) LIMITATION ON SECRETARIAL CLAIMS THROUGH SUBROGATION.—The Secretary shall not assert any claim on behalf or against a prescription drug plan, other than through the recovery from such a plan of amounts paid related to a covered part D drug event that has been repaid to the plan through a subrogation action.

‘‘(iv) PRIMARY DRUG PLAN DEFINED.—In this paragraph, the term ‘primary drug plan’ means, with respect to benefits for covered part D drugs, a group health plan or large group health plan (other than a group health plan or multi-employer or multiple employer plan of, or contributed to by, and employer has 20 or fewer employees for each working in each of 20 or more calendar weeks in the calendar year involved or the preceding calendar year), a workers’ compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan) or no-fault insurance insofar as such a plan, law, policy, or insurance provides such benefits) insofar as, under the provisions of section 1862(b)(2), such coverage would be treated as a primary plan if benefits for covered part D drugs were treated as benefits under parts A and B. For purposes of this clause, an entity that engages in a business, trade, or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part.

‘‘(B) RECOVERY.—A prescription drug plan shall be subrogated (to the extent of payment made under this part by the plan for any covered part D drug before the date the plan received notice pursuant to subparagraph (D)) to any right of an individual or any other entity to payment, with respect to such covered part D drug, under a primary drug plan. A subrogation claim may not be asserted pursuant to this subparagraph by a prescription drug plan with respect to a payment for a covered part D drug after the date that is 3 years after the date such plan receives notice of a payment, with respect to such covered part D drug, pursuant to subparagraph (D). Any such subrogation claim shall be the exclusive legal remedy of the PDP sponsor of the plan and shall be reduced to take into account the cost of procuring the judgment or settlement with respect to such claim if an individual’s liability, workers’ compensation, or no-fault claim is disputed. Any costs or expense incurred by a prescription drug plan related to recoveries pursuant to this subparagraph shall not be considered an administrative cost or expense, as those terms are used in this part.

‘‘(C) WAIVER.—A prescription drug plan may waive (in whole or in part) the provisions of this paragraph in the case of an individual claim if the plan determines that the waiver is in the best interests of the program established under this part.

‘‘(D) COORDINATION OF BENEFITS INFORMATION.—Not later than 15 days after the date the Secretary receives information under paragraph (7) or (8) of section 1862(b) relating to an individual enrolled in a prescription drug plan during an applicable time, the Secretary shall provide such information to such prescription drug plan in a format convenient and accessible to such plans. The Secretary shall waive any requirements under this part that a prescription drug plan establish procedures for determining whether costs for part D eligible individuals are being reimbursed through insurance or otherwise or identify payers that are primary to the program under subparagraph (A)(ii) other than as required under this paragraph.

‘‘(E) COORDINATION OF BENEFITS.—A prescription drug plan shall, in the case of receipt of a notice pursuant to subparagraph (D) related to an enrollee for whom a primary drug plan has reported on ongoing responsibility for medical costs pursuant to paragraph (7) or (8) of section 1862(b), authorize the provider of such covered part D drug to charge, in accordance with the charges allowed under the prescription drug plan, such primary drug plan for such covered part D drug related to or arising out of the treatment accident or injury subject to such notice (other than payments subject to a claim under subparagraph (B) or (F)) for the period in which the enrollee remains enrolled in such plan through the date upon which such primary drug plan has terminated such ongoing responsibility for medical payments.

‘‘(F) USE OF WEBSITE TO DETERMINE FINAL REIMBURSEMENT AMOUNT.—

‘‘(i) NOTIFICATION OF PLANS.—Not later than 10 days after the date the Secretary receives a notice under section 1862(b)(2)(B)(vii)(I) relating to an individual during the period the individual is enrolled in a prescription drug plan, the Secretary shall provide such notice to the plan.

‘‘(ii) STATEMENT BY PLAN.—

‘‘(I) IN GENERAL.—Not later than 20 days after the date a plan receives a notice under clause (i), the plan may provide the Secretary with a statement of any covered part D drug for which the plan seeks reimbursement, including the amount of such reimbursement.

‘‘(II) FAILURE TO PROVIDE STATEMENT.—The prescription drug plan shall be deemed to have waived its rights under subparagraph (B)—

‘‘(aa) in the case that the prescription drug plan does not provide such statement by such date, with respect to any covered part D drug provided to such individual with respect to such no- tice; and

 ‘‘(bb) in the case that the prescription drug plan provides such statement by such date, with respect to any covered part D drug provided to such individual which was not identified in the notice.

‘‘(iii) INCLUSION OF INFORMATION ON WEBSITE.—The Secretary shall include any covered part D drug identified by a prescription drug plan pursuant to clause (ii) within the Secretary’s statement of reimbursement amount on the website as described in section 1862(b)(2)(B)(vii).

‘‘(iv) COLLECTION.—The Secretary may collect (on behalf of a prescription drug plan) the reimbursement amount for covered part D drugs, as identified pursuant to clause (ii), from the individual involved or the primary drug plan pursuant to the procedures set forth under section 1862(b)(2)(B)(vii). Any such amounts collected by the Secretary for covered part D drugs shall be remitted directly by the Secretary to the appropriate prescription drug plan that enrolled the individual related to the notice during the applicable time period for which such individual was enrolled.’’.

(b) CLARIFICATION.—Section 1860D–2(b)(4)(D) of the Social Security Act (42 U.S.C. 1395w–102(b)(4)(D)), is amended by striking ‘‘THIRD-PARTY REIMBURSEMENT.—’’ and inserting ‘‘THIRD-PARTY REIMBURSEMENT.—Solely for the purpose of applying the requirements of subparagraph (C)(ii):’’.

(c) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to drugs dispensed in years beginning more than 6 months after the date of the enactment of this Act.

About Rafael Gonzalez

Rafael Gonzalez, Esq. is Executive Vice President and Chief Legal Counsel at Flagship Services Group, the only national Medicare Secondary Payer services provider focusing on and offering comprehensive mandatory reporting, conditional payments, and set aside allocation compliance services to the property and casualty insurance industry. He has been a part of the insurance, medical, and disability industries since 1983. He has served as a thought leader on all aspects of liability, workers compensation, social security, Medicare, and Medicaid compliance since 1990. He speaks and writes on mandatory insurer reporting, conditional payment resolution, set aside allocations, CMS approval, and MSA and SNT professional administration, as well as the interplay and effect of these processes and systems and the Affordable Care Act throughout the country. Rafael blogs on these topics at Medicare Compliance for P&C Insurers at http://www.flagshipservicesgroup.com/blog. He can be reached at rgonzalez@flagshipsgi.com or 813.967.7598.

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Topics: medicare compliance, Medicare Law