CIGA v. Price – Medicare’s Multiple Diagnosis Code Problem

In January, a California District Court attacked Medicare’s system of lumping related and unrelated diagnosis codes into payments. The problem lays in Medicare’s inflexible recovery system that essentially claims, if one code is related to the sued-for injuries, the entire payment must be repaid to Medicare. We blogged about it in January and noted that the Medicare lien should follow the underlying claim.

That same Court – in fact, that same Judge, Otis D. Wright, II – has issued a new Order in that case. This time he has decided what relief the plaintiff is entitled to related to CMS’s Medicare Lien recovery attempts. CIGA had asked for two items in relief:

1. An order vacating and setting aside the three reimbursement demands at issue in this lawsuit; and,
2. A judicial declaration that CMS’s interpretation of the Medicare Secondary Payer statute (“MSP”) with respect to reimbursement of conditional payments is unlawful

Judge Wright agreed to Order the first only and has essentially invalidated Medicare’s liens on three cases.

The Judicial Declaration Regarding Medicare’s Multiple Diagnosis Codes

Judge Wright’s words are simple and clear – he wrote:

“The Court shall issue a judicial declaration that:

1. One “item or service,” as used in the Medicare Secondary Payer statute, 42 U.S.C. §1395y(b)(2)(B)(ii), does not as a matter of law equate to any medical items, devices, supplies, or services that appear under in a single line-item charge on a payment summary form issued by CMS. Rather, a statutory “item or service” simply refers to one indivisible medical item, device, medical supply, or service, regardless of how it is billed;
2. Whether a particular line-item charge on a payment summary form contains more than one indivisible item, device, medical supply, or service is a factual question that must be resolved on a case-by-case basis;
3. If a single line-item charge on a payment summary form contains multiple diagnosis codes—some of which relate to a medical condition covered by the insurance policy administered by CIGA and some of which do not—the presence of one covered code does not ipso facto make CIGA responsible for reimbursing the full amount of the charge; and
4. In the event that a single line-item charge on a payment summary form contains one indivisible item, device, medical supply, or service that is covered by the workers’ compensation policy CIGA is administering, and one indivisible item, device, medical supply, or service that is not so covered, CIGA does not have a responsibility to make payment for the uncovered item, device, medical supply, or service just because it was billed under the same single line-item charge as the covered item, device, medical supply, or service.

Click here for the entire Order.

What Does Judge Wright’s Holding Mean?

Unfortunately, Judge Wright’s holding only officially applies to these three cases where CIGA asked for relief. In the long term, it should have some consequences for Medicare liens and CMS’s recovery system. For starters, CMS knows this holding is out there. It knows other Courts will at least look at the decision. CMS will have to reconsider its recovery system to avoid more litigation (keeping in mind, any change would take months or years).

For Medicare lien resolution purposes, this is another point to argue lien reductions. It’s not perfect. It might not even work at the BCRC level. But I already have a few ideas on when we might cite it for Medicare lien reduction purposes. CMS has to be more careful and more flexible, or, it risks more judges like Judge Wright invalidating the entire lien.

If you need help reducing Medicare liens consider utilizing an expert service. For help with Medicare Liens, Medicaid Liens and any other Health Insurance Lien , please contact us at (844) MED LIEN or (844) 633-5436.