New Compliance Rules Stemming from the Medicare, Medicaid, SCHIP Extension Act Delayed, But Compliance Efforts Continue...
For over a year now, the health care team at Smith Haughey Rice & Roegge has been busy assisting insurers and third-party administrators as they develop plans and procedures to comply with Section 111 of the Medicare, Medicaid, SCHIP Extension Act (MMSEA). On February 25, 2010 CMS posted new information on its Web site informing liability insurers, workers’ compensation insurers and self-insured entities (defined as “NGHPs”) that reporting of live claim input files is moved from the original deadline of April 1, 2010 to January 1, 2011. The immediate impact of this change is that entities subject to the reporting requirements now have additional time to register and test their processes for reporting claims to CMS. Additionally, CMS indicates that in February they will publish the next version of the “NGHP Section 111 User Guide” and alerts related to particular policy issues.
By way of background, Section 111 of the MMSEA amended the Medicare Secondary Payer Statute to impose mandatory data reporting requirements on liability insurers, no-fault insurers and workers’ compensation insurers. MMSEA Section 111 now places an affirmative obligation on insurers to: (a) determine if a claimant is entitled to Medicare; and (b) notify CMS of said entitlement and report specific information regarding the claim directly to CMS.
MMSEA builds off of a separate federal statute called the Medicare Secondary Payer (MSP) Statute. Under the MSP Statute, Medicare is designated as the secondary payer for Medicare beneficiaries who also have group health plan (GHP) coverage, as well as for Medicare beneficiaries who receive settlements, judgments, awards or other payment from liability insurance (including self-insurance), no-fault insurance, or workers’ compensation (non-group health plans or NGHPs). The purpose of the Section 111 mandatory reporting requirement is to notify CMS of instances when Medicare beneficiaries receive payments that relieve CMS of its obligation to cover medical costs.
Notwithstanding the recent delay in the reporting schedule, we have begun to see the first stages of action by some responsible reporting entities (RREs), which is the term used under Section 111 to identify those GHP and NGHPs that will be making reports. These entities are beginning to gather the information necessary to generate the necessary reports. Specifically, a NGHP RRE is now required to report to CMS:
- any claim that is addressed or resolved, fully or partially, through a settlement, judgment, award or other payment;
- on or after October 1, 2010;
- with a Medicare beneficiary (broadly defined to include all persons age 65 years of age or older or certain people under 65 years of age with qualifying disabilities);
- where medicals are claimed or paid;
- regardless of whether there is a determination or admission of liability.
The registration period for NGHPs on the Coordination of Benefits Secure Web site (COBSW) began on May 1, 2009 and by now most RRE’s are registered and ready to begin the Claim File Testing process. Significantly, in light of CMS’ recent delay in the reporting schedule, the targeted claims subject to reporting are claims made on or after October 1, 2010. CMS has indicated that RREs may choose, from a process perspective, to report claims prior to October 1, 2010. However, pursuant to the new information, the only claims subject to reporting are those occurring after October 1, 2010.
Additionally, some lingering questions remain in the insurance industry about whether the Section 111 rules have now added a requirement that Medicare Set Aside (MSA) arrangements be implemented in liability settlements involving a Medicare beneficiary. From the start of the Section 111 “rule-making” process, CMS has made it clear that MMSEA Section 111 does not change or alter any legal obligation/requirements under the Medicare Secondary payer statute. Therefore, insurers are still responsible for protecting Medicare’s interest and Medicare still needs to be considered for both past (conditional payments/liens) and future payments. Satisfying Medicare’s interest for future injury-related care in liability settlements has a host of issues that do not exist in the workers’ compensation context, were MSAs are regularly employed.
As a general principle, the standard relative to evaluating whether an MSA should be considered in a liability settlement is based on the concept of whether the parties have “properly considered Medicare’s interest” in negotiating the liability settlement. Some factors to consider in this regard include: (1) whether the parties have addressed Medicare’s past “conditional payments” (e.g. issuing third-party checks listing Medicare as payee) and (2) whether future injury related care is expected (if not, is there physician written certification of this fact). All this being said, in some cases, the sheer size of some liability settlements, for instance in catastrophic injury cases, may suggest that there will necessarily be some future costs of care that Medicare will likely be paying for. These instances should be evaluated on a case-by-case basis to determine whether a MSA Arrangement may be appropriate.
Importantly, on February 25, 2010, CMS also published an Alert outlining information for RREs regarding how to remain in compliance with the reporting requirements. According to CMS, RREs seeking to test their compliance with the Section 111 requirements should consider three factors: (1) has the RRE completed the registration process; (2) has the RRE engaged in file data sharing testing; (3) has the RRE begun and continued to engage in ordinary live data exchanges. Moreover, on its most recent conference, CMS stressed, once again, that the goal of the program is to generate quality data and RREs demonstrating a good faith effort to report accurate information to CMS will not likely be subject to penalties.
CMS is continuing to hold policy and technical related conference calls to resolve some still outstanding issues in this area. Additionally, an interesting future concern relates to how CMS plans on using the information generated in reports to initiate recovery action against, for instance, insurers.
Smith Haughey Rice & Roegge will continue to monitor developments in this area and distribute updated information as it becomes available.
