GFRG Client Advisory Update

(To download a pdf of this advisory, click here.)

Following our prior advisories, Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (the “MMSEA”) imposes reporting obligations on insurers in settlements involving current Medicare beneficiaries. These reporting requirements are causing a lot of anxiety amongst the parties involved in settlements, from the plaintiff-Medicare beneficiaries and their counsel, to the insurance companies and their counsel. As a result, settling counsel should be well-versed in MMSEA developments as it may affect the time it takes to resolve personal injury cases.

The settlement community continues to reach out to GFRG soliciting practical application and interpretation of the new MMSEA requirements. In our continuing effort, this document captures many of the highlights in the recent 180 page CMS MMSEA non-GHP User Guide in addition to a recently published CMS alert concerning time line changes.

The Centers for Medicare and Medicaid Services (“CMS”) has published two documents in recent days which are important to anyone whose practice involves liability (including self-insurance), no-fault or workers’ compensation settlements. Both documents are related to the new reporting requirements under Section 111 of the MMSEA. The first document is the eagerly anticipated Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation User Guide for MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting (the “Guide”). Version 1.0 was published on March 16, 2009. The Guide provides the roadmap as to how reporting under Section 111 will occur. Among other things, it provides detailed explanations related to the following areas:

1. What entities are considered to be “Responsible Reporting Entities (“RREs”)”;
   • 42 U.S.C. §1395y(b)(8) provides that the “applicable plan” is the RRE and defines “applicable plan” to mean the following laws, plans, or other arrangements, including the fiduciary or administrator for such law, plan, or arrangement: i) liability insurance (including self-insurance); ii) no fault insurance; and iii) workers’ compensation laws or plans;
2. How an RRE may use an agent for compliant Section 111 reporting purposes;
   • Section 111 allows agents to submit live production files on behalf of an RRE; however, the RRE must register on its own and will be held responsible for the files submitted by the agent;o An agent may include, but are not limited to, data service companies, consulting companies or similar entities that can create and submit Section 111 files to the COBC on behalf of the RRE;
3. How an RRE registers and sets up an account with the COBC;
   • CMS identifies five steps to the registration process: i) Identify an Authorized Representative, Account Manager and other COBSW Users; ii) determine reporting structure; iii) RRE registration on the COBSW; iv) RRE account setup on the COBSW; and v) return signed RRE profile report;o RRE registration is begun by an Authorized Representative of the RRE and completed by the Account Manager;o While the Authorized Representative must be employed by the RRE, the Account Manager can be either employed by the RRE or an agent of the RRE;
4. What are the proper file format standards;
   • Claim Input Files and TIN Reference Files are to be transmitted in a flat, ASCII file format;o Query Files are to be transmitted using the ANSI X12 270/271 Entitlement Query transaction set (this software will be supplied to RRE by COBC upon request);
5. What the file submission timeline will be;
   • During registration, each RRE will be assigned a group numbered 1-12 within each calendar quarter. That group number coincides with a seven day window within which files should be submitted;
6. What data needs to be included in a claim input file; 
   • Each RRE will need to provide at least fifty (50) data elements within the following general areas: i) injured party/Medicare beneficiary information; ii) injury/incident/illness information; iii) self insurance information; iv) plan information; v) injured party’s attorney or other representative information; vi) settlement, judgment, award or other payment information; and vii) additional claimant information (if applicable);
7. When an RRE must submit files to maintain Medicare compliance;
   • An RRE must submit files four times per year on a quarterly basis during its designated file submission seven day window as assigned during registration;

The Guide, though not a final version, provides substantial guidance as to how an RRE must act to be compliant under Section 111. We know this is not the final version of the Guide because of the alert (“Alert”) published by CMS four days after the Guide was published.

The Alert, published on March 20, 2009, addressed several issues, two of which should be of immediate interest. First, CMS extended the permissible testing period through December 31, 2009. Now RREs are required to begin submitting live production files no later than its assigned timeframe in 1st Quarter 2010. RREs may still submit live production files in the 4th Quarter 2009 as soon as testing is complete. Essentially, CMS has given the industry three more months to prepare for compliant Section 111 reporting.

Second, the Alert provided interim reporting thresholds for RREs. These interim reporting thresholds are as follows:

• For no-fault insurance, there is no de minimus dollar threshold for reporting the assumption/establishment of ongoing responsibility for medicals (“ORM”) or for reporting the total payment obligation to the claimant (“TPOC”) (i.e., a lump-sum settlement amount);
• For liability insurance, there is no de minimus dollar threshold for reporting the assumption/establishment of ORM;
• For workers’ compensation ORM, claims meeting all of the following criteria are excluded from reporting for file submissions due through December 31, 2010:
  • “Medicals only”;o “Lost time” of no more than 7 calendar days;o All payment(s) has/have been made directly to the medical provider; o Total payment does not exceed $600.00;
• For liability insurance and workers’ compensation TPOCs, the following dollar thresholds apply:
  • For TPOCs, dates of July 1, 2009 through December 31, 2010, amounts of $0.00 – $5,000.00 are exempt from reporting except as specified below.* o For TPOCs, dates of January 1, 2011, through December 31, 2011, amounts of $0.00 – $2,000.00 are exempt from reporting except as specified below.* o For TPOCs, dates of January 1, 2012 through December 31, 2012, amounts of $0.00 – $600.00 are exempt from reporting except as specified below.
  • Where there are multiple TPOCs reported by the same RRE on the same record, the combined amounts must be considered in determining whether or not the reporting exception threshold is met. For TPOCs involving a deductible, where the RRE is responsible for reporting both any deductible and any amount above the deductible, the threshold applies to the total of these two figures.

The Alert also informs us that these thresholds are solely for purposes of Section 111 reporting, and have no applicability to any other obligations or responsibility with respect to the Medicare Secondary Payer (“MSP”) provisions. CMS representatives made this very clear during the “town hall” conference call on Tuesday, March 24, 2009. It was also stressed on the call that these are INTERIM thresholds and may be changed by CMS at any time.

Furthermore, CMS officials stressed that obligations under Section 111 do not, in any way, affect existing payment obligations under the MSP. Specifically, the question about the use of Medicare Set-aside Arrangements (“MSAs”) in a liability context arose again. CMS officials clearly stated that MSA obligations are independent of the Section 111 reporting rules, and that Section 111 does not impose new duties to establish MSAs nor does Section 111 provide new guidance leading us to believe that MSAs are now required in liability settlements.

The Guide and the Alert, both published in recent days, shows how fluid Section 111 compliance guidelines are currently. Some issues, such as the compliance timeline, changed in a matter of four days. Other issues, such as applicability of Section 111 reporting to mass tort settlements, has yet to be settled. The industry is moving rapidly toward Section 111 reporting. We will continue to stay on top of the latest MMSEA news and let you know how your practice may be affected.

Click here for the Guide and the Alert.