MMSEA Section 111 Alert Regarding Risk Management Write-Offs by Health Care Providers

Posted on June 16, 2010 by Adil Daudi

On May 26, 2010, CMS officials finally clarified one of the outstanding issues for insured health care providers relative to the mandatory reporting requirements contained in Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007. Section 111 imposes an affirmative duty on certain “reporting entities” to make reports to the Centers for Medicare & Medicaid Services (CMS) of personal injury claims settled with Medicare beneficiaries.

For some time now, insured health care providers have been in a holding pattern as they wait for promised guidance from CMS as to whether a common practice by some health care providers to offer something of value to a patient as a risk management tool triggers a Section 111 reporting obligation. Typically, in these instances, a Medicare beneficiary does not retain legal counsel, does not come in making a demand for anything per se, but will have a complaint. And occasionally a provider will attempt to resolve the complaint with the Medicare beneficiary by, for instance, giving him/her a gift certificate for the hospital cafeteria.

CMS had previously indicated that it considers at least some write-offs of charges and other offers of items of value to Medicare beneficiaries to be a form of “self-insurance” that may trigger Section 111 reporting obligations. CMS' recent Alert, which addresses risk management write-offs, clarifies that reductions in the amount due on a medical bill and other efforts at offering something of value, constitutes self-insurance for the purpose of the Medicare Secondary Payer provisions. CMS notes, however, that the specific factual scenario will determine whether reporting under Section 111 is required. According to the Alert:

• No Report Required. In instances where the entity is a physician, provider or supplier and has reduced its charges or written-off a portion of the charge to a Medicare beneficiary as a risk management tool, the provider, physician or other supplier is expected to submit a claim to CMS reflecting the unreduced permissible (e.g., limiting charge) charges and showing the amount of the reduction provided or write-off as a payment from liability insurance (including self-insurance). CMS indicates that its interests are protected through this billing procedure and no Section 111 reporting is required.

• Reporting Required. In instances where a provider, physician, or other supplier has provided property of value to a Medicare beneficiary as a risk management tool when there is evidence, or a reasonable expectation, that the individual has sought or may seek medical treatment as a consequence of the underlying incident giving rise to the risk, the entity shall report the write-off or value of the property provided as a TPOC from liability insurance (including self-insurance). Significantly, CMS states in the Alert that if the value of the property provided is less than the TPOC reporting threshold, it need not be reported under Section 111.

With respect to the first instance, providers, physicians and other suppliers should assess internal practices to determine whether claims submitted to CMS reflect the unreduced permissible charge and also show the amount of the reduction provided or write-off. Per CMS’ Alert, deductions or discounted services must be reflected in the provider's original billing and are therefore not subject to reporting.

In instances where a provider, physician or other supplier provides property of value to a beneficiary, the critical inquiry in evaluating whether a report will be required concerns whether there is a “reasonable expectation the individual has sought or may seek medical treatment as a consequence of the underlying incident giving rise to the risk.” Providers should take to care to develop plans to internally document the basis for this conclusion.

Finally, CMS officials also disclosed that they plan to issue an updated Version 4.0 of the User Guide in July 2010.

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New Compliance Rules Stemming from the Medicare, Medicaid, SCHIP Extension Act Delayed, But Compliance Efforts Continue...

Posted on March 10, 2010 by Adil Daudi

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:

  1. any claim that is addressed or resolved, fully or partially, through a settlement, judgment, award or other payment;
  2. on or after October 1, 2010;
  3. 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);
  4. where medicals are claimed or paid;
  5. 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.
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MMSEA Section 111 - Medicare Secondary Payer Mandatory Reporting

Posted on May 27, 2009 by Veronica Marsich

I have read Section 111 and all of the guidance put out by the Centers for Medicare and Medicaid Services ("CMS"), listened to most of the the teleconferences sponsored by CMS on the subject and had the opportunity to talk to different clients and stakeholders about the new requirements and what they are hearing from various consultants and legal advisers about the new reporting requirements.  And, what I have concluded from all of this reading, listening and talking is the following:

  • There are lots of attorneys and consultants out there scaring and confusing hospitals and hospital insurers about Section 111 and what CMS is going to do with this new reporting system;
  • The Medicare Secondary Payer system and these new reporting requirements are a much greater burden for workers' comp and no fault carriers than other NGHP liability insurers (and I never appreciated that until recently);
  • CMS keeps saying that this new reporting system is, for them, at least for now ... about collecting data and NOT about trying to find liability insurers who they can make "pay twice" for a Medicare beneficiary's medical expenses;
  • As it relates to what goes on in health care, with respect to patient complaints and disputes and the settlement of those disputes, there is A LOT that CMS is still trying to understand and figure out so, there is A LOT we don't know yet about what does and does not have to be reported;
  • If you are a self-insured hospital ... if you are "first dollar" self-insured ... unless your excess carrier is telling you that they will act as your reporting agent, it is probably a good idea to register with CMS some time over the next month or two and test your system so that you can report if you have to;
  • CMS has said on numerous occasions that you don't have to register if you don't think you will have anything to report so, for now, if you are an insured hospital that doesn't expect to "settle" a dispute with a Medicare beneficiary outside of your insurance policy, for more than $5,000, you can relax a bit ... let's wait and see what CMS does;
  • If you are an insured hospital and you have a "deductible" your insurer can and probably will work with you to establish a system so that you don't have to report anything ... talk to them and if they say there is nothing they can do ... might be time to shop for insurance; 
  • CMS is still learning and thinking about health care providers and the little patient related settlements you enter into from time to time with your patients when they are unhappy ... they understand that they don't need to know about all of those, despite the way the current guidance reads and there will likely be better guidance in the future to carve some of that out of the reporting requirements; and
  • CMS is not, in this particular instance, looking for the "gotcha" moments ... i.e. this is not about CMS looking for opportunities to slap $1,000 per day fines on insurers and self-insured providers.  If you make a good faith effort to understand what you have to report and if you try to report correctly, you will get a chance to learn how to do it right.

Bottom line, if you are a liability insurer or a TPA for a self-insured health care provider, you have to register and you should get working on that right away ... developing the appropriate procedures and working through the IT issues will take time so don't delay.  If you are a self-insured hospital or other health care provider, you have two options: (1) register and set up the internal systems to begin reporting, or (2) hire a Section 111 reporting agent (a new cottage industry ... part of the federal stimulus plan!!!).  If you are an insured health care provider, take a breath and sit tight, there is more to come on what if anything you might have to report and since the registration deadline has been extended to September 1 and you don't have to report any settlements that occur before January 1, 2010, lets just wait and see what CMS does.   CMS may clarify some of the confusion over the next few months and things might not be so bad after all.

 

 

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