SPARC Act Re-Introduced in Congress: Adjusters and Attorneys on Notice


3/2/2017

By Annie M. Davidson MSP Compliance Counsel for ExamWorks Clinical Solutions

On February 17, 2017, Congressman Tim Murphy (R-PA) re-introduced the Secondary Payer Advancement, Rationalization, and Clarification Act, or SPARC Act. The bill is styled as HR 1122 and is co-sponsored by Rep. Ron Kind (D-WI). The aim of the SPARC Act is to clarify the Medicare Secondary Payer (MSP) program when Medicare Part D is involved. For historical precedent, click here

 

What is the SPARC Act?

Here are the main components of the legislation:

  1. The SPARC Act specifically provides that subrogation is the exclusive avenue of recovery for Part D plans. Whereas Medicare Advantage Plans sought to broaden MSP recovery rights via the Private Cause of Action provision of the MSP, the SPARC Act effectively limits those activities on behalf of Part D plans. The SPARC Act requires Part D plans to act within three years or lose subrogation rights, and to account for procurement costs in the subrogation recovery process.
  2. A common complaint when dealing with both Medicare Advantage Plans and Part D plans is the lack of information sharing for the purposes of coordination of benefits and recovery. The SPARC Act requires Part D plans and the Centers for Medicare & Medicaid Services (CMS) to work in concert to ensure that information is shared with parties, including primary payers, in a timely manner.
  3. Finally, the SPARC Act seeks to change the law to allow CMS to recover directly on behalf of Part D plans, and then remit any recoveries back to the Part D plans directly. This is a major change from the current process, where any Part D recovery largely depends upon the willingness and ability of the Part D plan to effectively identify potential recoverable claims and obtain reimbursement.

What would the SPARC Act mean for adjusters and attorneys?

The last 18 months have seen and absolute explosion in conditional payment issues. While the Commercial Repayment Center (CRC) has received a lot of headlines, the 11th Circuit decision in Humana v. Western Heritage and other major Medicare Advantage Plan cases have changed the landscape of Medicare compliance. Part D plans have not been active in litigation, but they have benefited from the Medicare Advantage Plan MSP litigation, starting with In re Avandia

Given that Part D plans ride the coattails of Medicare Advantage Plans, and often an afterthought in the recovery process, the SPARC Act will put Part D plans at the top of the mind for insurance professionals. There are a number of logistical differences between prescription drug recovery and recovery for medical treatment. Medicare and its contractors are able to tie payment for medical treatment to a primary payer through medical codes which identify the claimant’s medical treatment as being related or unrelated to the underlying non-group health plan (NGHP) claim. While Medicare and its contractors often make mistakes in this area, and the dispute process can prove challenging for the uninitiated, generally inclusion or exclusion of specific medical treatment in a list of charges that can be identified simply by understanding the claimant’s injury.

Prescription drugs present an entirely separate issue. Part D plans typically resort to sending questionnaires to primary payers, inviting them to disclose what prescription drugs are the responsibility of the primary payer. As seasoned practitioners know, NGHP insurers are rarely responsible for a specific drug. Rather, they are responsible to pay for causally related medical treatment associated with an underlying accident on injury. Part D plans often approach recovery as if these claims were group health claims, rather than NGHP claims where a drug may be paid for one month but not the next, all within the context of an individual’s other prescription drug needs. In this regard, Part D recovery is often more complicated than standard conditional payment recovery or recovery by Medicare Advantage Plans.

What are the next steps?

The bill has been referred to the House Energy and Commerce Committee and the Committee on Ways and Means. As with the SMART Act, bills in Congress often do not pass in the same form in which they were introduced. ExamWorks Clinical Solutions will continue to watch this bill closely as it goes through the legislative process and will provide updates as warranted.

About the author

Annie M. Davidson is MSP Compliance Counsel for ExamWorks Clinical Solutions (ECS). In her role, Annie provides high-quality legal analysis to ensure the integrity and quality of ECS' Medicare Secondary Payer (MSP) compliance services and related products. Prior to joining ECS, Annie practiced as an insurance defense attorney in her native Minnesota where she litigated workers’ compensation and liability insurance cases, particularly those involving MSP issues. She is admitted to practice law in the State of Minnesota and the United States District Court for Minnesota, and is a  graduate of William Mitchell College of Law. Annie can be reached at annie.davidson@examworks-cs.com or at 651-262-9618.  

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