Medicare Compliance 2010: Mandatory Insurer Reporting where Medicare is a Secondary Payer

By Matthew Garretson and Sylvius Von Saucken

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Medicare Compliance 2010:
Mandatory Insurer Reporting where Medicare is a Secondary Payer
The Medicare, Medicaid and SCHIP Extension Act of 2007, and its current implications

Abstract:  A current Medicare law could make it more difficult for parties to settle single event and mass tort personal injury claims on or after October 1, 2010 .  Now more than ever, practitioners must embrace new procedures on the front end of cases in order to minimize disruption on the back end.

On December 29, 2007, President Bush signed into law the “Medicare, Medicaid and SCHIP Extension Act of 2007 ” (the “MMSEA”), adding yet more teeth to the Medicare Secondary Payer (the “MSP”) Statute.   Section 111 of the MMSEA requires the providers of liability insurance (including self-insurance), no fault insurance and workers’ compensation insurance (hereinafter “insurers”) to determine the Medicare-enrollment status of all claimants and report certain information about those claims to the Secretary of Health and Human Services (the “Secretary”).   With the objective of assisting the Secretary to coordinate benefits and uncover potential reimbursement claims, this important legislation reinforces that the federal government is intent on ensuring Medicare always is treated as the payer of last resort.  The penalty for non-compliance has teeth indeed - $1,000 per day per beneficiary for each day the insurer is out of compliance.  This penalty is in addition to the often-feared, rarely-levied “Double Damages Plus Interest” penalty that defendants (as primary payers) can be fined if Medicare’s reimbursement claim is ignored in any settlement.   The new rules will apply to settlements on or after October 1, 2010.

The Centers for Medicare & Medicaid Services (“CMS”) is responsible for collecting various data elements from applicable reporting entities to implement the mandatory MSP reporting requirements of Section 111 of the MMSEA.  This information will assist CMS in its “post-payment” debt recovery activities arising from medical expenses paid by Medicare on a conditional basis.  Because Medicare is a secondary payer to liability insurance (including self-insurance), no-fault insurance and workers’ compensation, the MSP rules are intended to identify those situations in which Medicare does not have primary responsibility for paying for the medical expenses of a Medicare beneficiary.

The MMSEA signifies the next turbulent adjustment in the long continuum of change since President Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act (”MMA”) in December 2003.   The MMA further defined Medicare’s recovery rights, clarified its enforcement powers,  and erased all doubt regarding the need for attorneys who represent Medicare beneficiaries in personal injury settlements or judgments to adopt a formalized process to verify, resolve and satisfy conditional Medicare payments made from the date of injury through the date of settlement.   Whereas the teeth added to the MSP framework by the MMA in 2003 were targeted to clarify obligations of the Medicare beneficiary community, those added by the MMSEA are directed at insurers or other primary plans.   In this regard, the ongoing transformation of Medicare reimbursement policy and practice creates continual challenges for lawyers and their clients in personal injury and workers’ compensation cases.  Simply put, the days of either treating Medicare as the proverbial sleeping dog or punting the issue until the end of the case are long gone.

Who Will Have To Report?
Business entities responsible for complying with the reporting requirements of Section 111 of the MMSEA are referred to by CMS as “Responsible Reporting Entities” (“RREs”).  For liability and workers’ compensation settlements, the applicable plans, including the fiduciary or administrator of such law, plans or arrangements, and / or the insurers will have to comply with specific reporting requirements.  For purposes of MMSEA compliance, this group of reporting entities is considered non-Group Health Plans, or “non-GHPs”.

To better understand these reporting concepts, it helps to be able to distinguish who reports for non-GHP purposes and who does not.  Under the MSP, the term ”Group Health Plans'' means a plan (including a self-insured plan) of, or contributed to by, an employer (including a self-employed person) or employee organization to provide health care (directly or otherwise) to the employees, former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families.   For example, any employer-sponsored plan which provides health insurance coverage, such as Blue Cross/Blue Shield, or a self-insured plan such as Wal-Mart Associate’s Health & Welfare Plan, would have a reporting obligation that started January 1, 2009.  Non-GHPs, then, are everyone else who has an obligation or assumes the responsibility for medical payments for Medicare entitled beneficiaries.  For the non-GHPs the reporting timelines are being pushed back to account for the coordination necessary for CMS to receive a crush of electronic data starting in 2011.

The applicable statutory language,  the definitions provided by the MMSEA’s Paperwork Reduction Act Supporting Statement and the Alert for Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation: Who Must Report, published May 26, clarifies which business entities need to report.  

Can Agents Report on Behalf of RREs?
Yes, agents may register with CMS on behalf of RREs during the initial data file set up process.  CMS recognizes that business entities use third party administrators and other agents to handle the large volume of claims and administration processes.  Agents are not, however, RREs for purposes of Section 111 of the MMSEA.  RREs may contract with agents to handle reporting, however, the RREs remain solely responsible and accountable for complying with CMS instructions for implementing Section 111 and for the accuracy of data submitted.

What Triggers a Reporting Obligation for Non-GHPs?
Reporting for non-GHPs is event-specific (as opposed to ongoing coverage provided by GHPs).  The triggering events are the dates when a business entity accepts responsibility for medical payments or when an entity settles or concludes a dispute such that there is an award, judgment, settlement or other payment involving an injured person currently entitled to Medicare.  Pending settlements should not be reported and attempting to report such pending settlements does not constitute compliance with respect to Section 111 reporting obligations.

RREs are to report to CMS only with respect to Medicare beneficiaries (including a deceased individual who was a Medicare beneficiary at the time of settlement, award, judgment or other payment).  If a reported individual is not a Medicare beneficiary or CMS is unable to validate a particular Social Security Number (“SSN”) or Health Care Identification Number (“HICN”) based on the submitted information, CMS will reject the record for that individual.  This does not mean, necessarily, that the reported individual is not a Medicare beneficiary, but rather that CMS was unable to identify the individual based on the information provided.  The RRE would need to further investigate the identification numbers for the next quarterly submission.  Equally important is an RRE’s monitoring responsibilities.  If, for example, an individual was not a Medicare beneficiary at the time an RRE assumed responsibility for ongoing medical payments, the RRE must continue to monitor the entitlement status of that individual and report to CMS when that individual does become so entitled (to Medicare coverage), unless the responsibility for ongoing medicals ends before the individual qualifies for Medicare.

Understanding triggering events is simplified when taken in context of the MSP.  The sole purpose of Section 111 of the MMSEA is to ensure that settling parties fully comply with the MSP requirement – that is, conditional payments must be verified and resolved in all liability, workers compensation and no-fault settlements.  In this regard, if the Medicare beneficiary’s attorneys are already verifying and resolving Medicare’s reimbursement claim in all their settlements, these new reporting rules should result in business as usual for those attorneys and their clients.  And, according to the Supporting Statement of the MMSEA,  for most non-GHPs, gathering the data required may not create a huge burden for those entities that have traditionally coordinated proper claim payments with Medicare to ensure proper order of payment.  Non-GHP entities not currently reporting to CMS, on the other hand, will need to adopt the CMS reporting methodology set forth in the User Guide. 

The history of the MSP statute provides further insight into the true meaning of Section 111 of the MMSEA.  On December 5, 1980, the MSP statute as we know it today was modified to include Medicare’s conditional payment recovery rights.  It was not until twenty-three years later, under Section 301 of the MMA, when additional enforcement provisions were added to the MSP statute, focusing compliance on reimbursement obligations for settling parties, including attorneys and their Medicare-enrolled clients.  Now, Congress has closed the loop with Section 111 of the MMSEA by placing a reporting obligation on self-insured defendants and/or insurance carriers.  The User Guide emphasizes the fact that Section 111 of the MMSEA did not change or remove any existing MSP rules regarding recovery, but adds a reporting obligation to existing MSP requirements.  As a result, for claimants and their attorneys, the obligation is still to “verify and resolve” Medicare’s conditional payments, but for defendants, the sole obligation (through the MMSEA) is to verify Medicare entitlement and report to CMS when appropriate. 

What are the Reporting Rules?
For all triggering events occurring on or after October 1, 2010, RREs must engage in a two-step process:
Step 1: Determine whether a claimant (including an individual whose claim is unresolved) is entitled to Medicare benefits.
Step 2: If the claimant is determined to be entitled, electronically submit data about the claimant, the injury, and other, more specific information concerning th e settlement to the Secretary of Health and Human Services through the Coordinati on of Benefits Secure Website (“COBSW”).

While seemingly straightforward, when the MMSEA first became law, practitioners needed clarification regarding the intended scope of the words entitled and information.  Since then, practitioners have been given guidance in the form of multiple “town hall” teleconferences with CMS representatives to ensure this process is understood and compliance is effective as of the beginning dates.  On February 22, 2010, CMS published Version 3.0 of the User Guide, which provides copious information about Section 111 compliant reporting.

Through these open forums, interim record layouts and the User Guide, the following points can be gleaned:

• RREs must report where there has been a settlement, judgment, award, or other payment (when a case has not settled, but an initial payment for medical expenses has been made based on an RRE accepting such responsibility).
• One-time payments for settlements, judgments or awards are reportable.
• If an RRE has accepted an ongoing responsibility for medical payments (“ORM”) (e.g. workers’ compensation settlements), only two events must be reported:  (1) an initial record to reflect the acceptance of such responsibility; and (2) a second (and final) report reflecting the termination of that responsibility.  An example of such reporting would be the case where an insurer starts making medical payments based on an injury (initial date of payment obligation), and then stops when the case settles and that obligation ends (date of settlement).  The RRE need not report every occasion a payment is made.
• RREs must report settlements, judgments, awards or other payments regardless of an admission or denial of, or determination of liability.
• The RRE, for reporting purposes, only needs to report the total obligation, and does not have to allocate damages between indemnity and medical payments.
• There is no reporting requirement for “property damage only” claims.
• There is, however, a reporting requirement for settlements, awards or judgments or other payments in which medicals are claimed and/or released, regardless of allocation by the parties or a determination of “no medicals” by a court.  This does not affect an RRE’s reporting obligation, although it may impact whether or not CMS has a recovery claim with respect to that settlement, judgment, award or other payment.
• There is no age threshold for reporting purposes.
• If there is no settlement, judgment, award or other payment and the file is ready to be closed, there is no reporting obligation.
• However, if a file is closed due to a “return to work,” but a payment responsibility is subject to reopening or otherwise subject to an additional payment request, the RRE must add this claimant to the reporting list.
• For liability insurance cases (including self-insurance), each new payment obligation must be reported as a separate settlement, judgment, award or other payment.  But, where such payment is made through structured settlement, or annuity purchase, there is only a single report required with respect to the total amount of the obligation.
• CMS is considering appropriate modifications to reporting rules for mass tort or Multi-District Litigations. 

 

Importantly, CMS provided interim reporting thresholds in Version 3.0 of the User Guide published on February 22, 2010.  ; Those interim reporting thresholds are as follows:

• For no-fault insura n ce, there is no de minimus dollar threshold for reporting the assumption/establishm ent of 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, 2011:
 • “Medicals only”; and
 • “The associated “lost time” for the worker is no more than the number of days permitted by the applicable workers’ compensation law for a “medicals only” claim (or 7 calendar days if the applicable law has no such limit); and;
 • All payment(s) has/have been made directly to the medical provider; and
 • Total payment does not exceed $750.00;
• For liability insurance and workers’ compensation TPOCs, the following dollar thresholds apply:
 • For TPOCs, where the last (most recent) TPOC Date is prior to January 1, 2012 with TPOC amounts totaling,  $0.00 - $5,000.00 are exempt from reporting except as specified below.*
 • For TPOCs, dates of January 1, 2012, through December 31, 2012, amounts of $0.00 – $2,000.00 are exempt from reporting except as specified below.*
 • For TPOCs, dates of January 1, 2013 through December 31, 2013, amounts of $0.00 – $600.00 are exempt from reporting except as specified below.*
 • *Where there are multiple TPOCs associated with the same claim record, the combined, cumulative TPOC amounts must be considered in determining whether or not the reporting threshold is met; however, multiple TPOCs must be reported in separate TPOC fields. 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 User Guide 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 any other MSP provisions.  CMS representatives made this very clear during the “town hall” conference call on Tuesday, March 24, 2009.  CMS officials also stressed on the conference calls that these are INTERIM thresholds and may be changed by CMS at any time.

General Reporting Requirements.
The RRE will submit Section 111 information electronically through the COBSW.  Each RRE will be assigned a separate identification number (“RRE ID”) unique onto itself.  Files will be submitted on a quarterly basis, within an assigned seven day submission period during each quarter. 

Input Claim Files will contain at least forty nine data points, organized by: 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).  Further data point details are available at www.garretsongroup.com.

The RRE will also submit a Tax Identification Number (“TIN”) Reference File.  The TIN may also be known as the RRE’s federal employee identification number (“FEIN”).  For those wh o are self-insured, their TIN may be an Employer Identification Number (“EIN”) or SSN depending on their particular situation.  The TIN Reference File is submitted with the Claim Input File so that RRE name and addres s information associated with each TIN used does not have to be repeated on every Claim Input Record.

A Reporting Timeline.
Because CMS is still completing its Coordinator of Benefits Secure Website, RREs will have to adhere to a specific timeline.  While the original statutory interpretation of Section 111 of the MMSEA suggested to settling parties that reporting would have to occur starting on July 1, 2009, the practical application of this new Medicare law clarifies that registration should have been complete by September 30, 2009.  As a result, RREs should implement the following timeline (for non-GHP matters):

To learn how the Garretson Resolution Group, Inc. is taking proactive measures to implement MMSEA requirements into its lien resolution practice for settling parties, please contact the authors at (513) 794-0400.