Medicare and Medicaid Reporting / Reimbursement in 2014: What You Need to Know



2014 looks to be a year of change in the Medicare and Medicaid reporting and reimbursement realm. Federal law[i] mandates that Medicare be reimbursed for the cost of healthcare treatment it funds, if a beneficiary later receives a settlement or judgment related to the injury which prompted that treatment. Likewise, state Medicaid agencies are also required to similarly recoup costs.[ii] Now, the Centers for Medicare & Medicaid Services (CMS) are accepting comments on two proposed rules affecting the Medicare reporting and reimbursement process, while President Obama recently signed a measure that appears to broaden states’ rights to Medicaid reimbursement.


Since the Strengthening Medicare and Repaying Taxpayers (SMART) Act[iii] became law last year, CMS officials have been working to enact ways to simplify the Medicare reimbursement process, and clarify penalties for failure to report settlements or third party payments made to Medicare beneficiaries. Currently, two proposed rules to implement the SMART Act’s mandate are in the public comment phase.

Penalties for Failure to Report:

The first rule pertains to proposed civil penalties for failure to report payments made to Medicare beneficiaries, under Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA).[iv] The SMART Act mandated that CMS develop a process to determine when and how civil monetary penalties may be imposed for failure to comply with MMSEA Section 111 reporting requirements for certain group health and non-group health plan arrangements. Under the Social Security Act[v] CMS has the authority to sanction non-group health plans who fail to report, at a level the SMART Act capped at up to $1,000 per day of noncompliance, per claim.[vi] Now, CMS is seeking feedback on the parameters for imposing those penalties, including standards for both non-compliance and for “good faith effort(s)” to identify a Medicare beneficiary for reporting purposes. The public can view the notice or submit comments on this issue until 5:00 p.m. EST on February 10, 2014, by clicking here.

The potential impact of this rule is substantial, as it stands to outline the parameters for the levying of civil monetary sanctions. The Garretson Resolution Group (GRG) believes that the best result would involve a tiered system of sanctions, in which a demonstrable good faith effort at compliance would not result in a significant penalty. On the contrary, evidence indicating blatant disregard of the regulation should warrant more severe sanctions. To that end, the GRG team will submit its comments to CMS; however, we would appreciate your input on how and when penalties should be assessed. To submit your feedback to GRG, please email Marlene Wilson, Director of MMSEA Compliance, at

Right of Appeal:

Additionally, CMS is accepting comments until 5:00 p.m. EST on February 25, 2014, for a proposed rule providing liability, no fault, workers’ compensation, and self-insured plans with a right to appeal when CMS pursues a Medicare Secondary Payer recovery claim directly against them. Per the Social Security Act,[vii] CMS has authority to pursue parties directly when conditional payments have not been reimbursed. Currently, if CMS pursues the beneficiary for that debt, the beneficiary has formal administrative remedies, or appeal rights, to challenge that recovery. But, until the SMART Act mandated it, primary plans or payers were not afforded the same remedies.

Now, CMS is proposing a layered appeal process for these insurers involving a redetermination by the CMS recovery contactor issuing the demand, reconsideration by a Qualified Independent Contractor, a hearing before an Administrative Law Judge, a subsequent Medicare Appeals Council[viii] review, and then a U.S. District Court.

Although applicable plans will be afforded an option to appeal, GRG believes it is still more efficient for CMS to work with the beneficiaries – rather than plans – to recover conditional payments. Beneficiaries have direct access to the information CMS contractors need to determine their recovery demand. Additionally, CMS affords beneficiaries who are represented by counsel a reduction in their Medicare repayments to allow for procurement costs.

To view the rule or submit comments directly to CMS, click here. The GRG team will also be submitting comments to CMS and welcomes your feedback on the government’s proposal. To provide comments to us, please email John Cattie,, with the subject line Proposed Rule – Appeal Rights.


Changes in Medicaid reimbursement are also set to take effect later this year under the Bipartisan Budget Act of 2013 President Obama signed in December. According to a CMS memo[ix], the measure gives State Medicaid agencies the ability to recover costs from a beneficiary’s entire liability settlement, rather than only those settlement proceeds designated as compensation for medical expenses. This provision (Section 202 of the budget bill) seems to overturn U.S. Supreme Court precedent in Ark. Dep't of Human Servs. v. Ahlborn, 547 U.S. 268 (2006) and Wos v. E.M.A., 133 S.Ct. 1391 (2013) which limited State Medicaid agencies’ recovery to the the medical expenses component of a beneficiary’s settlement. The changes are set to take effect October 1, 2014, although several advocacy groups have pledged to block the measure’s implementation.

This provision, if it takes effect as currently worded, appears to substantially broaden states’ rights to Medicaid reimbursement and could have a major impact on the resolution of cases involving Medicaid beneficiaries. The language revises the reach of State Medicaid agencies to recoup costs from a third party for “health care items or services” to “any payments.”[x] Consequently, it seems that third-party settlement funds meant to compensate beneficiaries for pain and suffering, lost wages, or any damages other than medical expenses could be subject to the reach of State Medicaid agencies’ seeking recovery.


GRG will continue to monitor the changes in the Medicare and Medicaid compliance world, and will keep you updated on all relevant developments. If you need more information, please contact us at (704) 559-4300.

[i] 42 U.S.C. § 1395y(b); 42 C.F.R. § 422.108.

[ii] The Federal Medicaid statute requires states to have a Secondary Payer program. 42 U.S.C. 1396k(a)(1), 1396a(a)(25).

[iii] Strengthening Medicare and Repaying Taxpayers Act of 2012, Pub. L. 112-242, 126 Stat. 2380.

[iv] Medicare, Medicaid, and SCHIP Extension Act of 2007 §111, Pub. L. 110-173.

[v] Section 1862(b)(8) of the Social Security Act (42 U.S.C. §1395y(b)(8)).

[vi] §203, Pub. L. 112-242, 126 Stat. 2380.

[vii] Section 1862(b)(2) of the Social Security Act (42 U.S.C. §1395y(b)(2)).

[viii] The Medicare Appeals Council is part of the U.S. Health & Human Services’ Departmental Appeals Board.

[x] §202, Pub. L. 113-67, 127 Stat 1165 (December 26, 2013)(amending 42 U.S.C. 1396a(a)(25).

Leave a Comment