Reporting to CMS is required when the claimant is/was a
Medicare beneficiary, where the claim was resolved (or partially resolved)
through a settlement, judgment, award or other payment on or after July 1,
2009. The resolution can be a lump sum settlement, structured settlement,
annuity, or Ongoing Responsibility for Medical Payment ("ORM"). After the
report has been filed, the coordinator of benefits provides a written
opinion. Parties may rely on the opinion for allocating funds to protect
Medicare's interests and forestall CMS recoupment efforts.
Responsible Reporting Entities ("RREs") are the entities
funding or paying, wholly or partially, a settlement, judgment, award or
other payment to a Medicare beneficiary. These entities may include
liability insurers, no-fault insurers, workers' compensation insurers, and
self-insurers. Starting on July 1, 2009, RREs must track and report claims
to determine whether an injured claimant is a Medicare beneficiary. RREs
must register online with the coordinator of benefits from May 1, 2009
through September 30, 2009. The registration process must be completed by
the RRE, but the subsequent quarterly reporting may be completed by an
agent. The testing period will run from January 1, 2010 though March 30,
2010. Each RRE will be assigned a deadline between April – June, 2010 by
which all live production files must be submitted.
Complying with the Medicare as Secondary Payer (MSP)
requirement means protecting Medicare's interests by considering Medicare's
past payments and the future Medicare-covered expenses. Medicare's past
payments will always be considered "conditional," and Medicare will seek
reimbursement of past payments if it determines that those costs were the
responsibility of another. Another's responsibility for past payments can be
demonstrated by court judgments and settlements or payments conditioned upon
the recipient's compromise, waiver, or release of payment for items or
services included in a claim against the primary payer or the primary
payer's insured regardless of an admission of liability. Conditional
payments may further arise when a claim is denied or disputed by the
insurance; when prompt payment is not made by the primary payer; when
Medicare makes a payment without knowledge of the existence of a primary
payer; when the claimant fails to document the fact that a primary payer
exists; when the treating provider bills Medicare by mistake instead of the
primary payer; when the claimant fails to file a proper claim due to mental
or physical incapacity. See 42 C.F.R. 411.45(a)(2), .53(2).
Once primary payer responsibility is determined, parties
have sixty (60) days to reimburse Medicare for conditional payments. CMS has
the right to initiate recovery as soon as it learns of its secondary payer
status. See 42 C.F.R. 411.24(b). CMS also has a direct right of action to
recover from any entity responsible for making primary payment, such as
employer, insurance carrier, third party administrator ("TPA"), the
claimant, attorney providers, etc. See 42. C.F.R. 411,24(e), (g). If CMS
recovers the conditional payments without pursuing legal action, CMS may
recover the lesser of the Medicare Primary Payment or the full primary
payment that the primary payer is obligated to pay. 42 C.F.R. 411.24©(2). On
the other hand, if CMS must take legal action to recover from the primary
payer, CMS is entitled to recover twice the amount of the Medicare primary
payment. See 42 C.F. R. 411.24©(1)(ii).
Protecting Medicare's interest in Future
Medicare-Covered Expenses most often takes the form of a Medicare Set Aside
("MSA") or a Workers' Compensation Medicare Set Aside ("WCMSA"). A typical
WCMSA projects potential future Medicare-covered services based on the
plaintiff's past injury-related treatment. After settlement, the WCMSA is
funded with the projected dollar amount and becomes the primary payer
responsible for the beneficiary's future medical expenses and future
prescription drug costs related to the injury or illness. So long as the
WCMSA is pre-approved by CMS, appropriately administered, and adequately
takes Medicare's interests into account, Medicare will become the payer on
the injury in the event the WCMSA fund is exhausted.
CMS will review WCMSA proposals in cases meeting CMS
workload review thresholds. An approval guarantees that Medicare will be
available as a payer in the event the WCMSA is exhausted. However, one
should note that failure to meet CMS's review thresholds does not
necessarily mean the MSA is not required.
A WCMSA should be submitted to CMS for review under two
possible scenarios. First, submit a WCMSA to CMS for approval if the
claimant is currently a Medicare beneficiary and the "total settlement
amount" is greater than $25,000. Computing the "total settlement amount"
includes claimant's wages, attorneys' fees, all future medical expenses
(including prescription drugs), and repayment of any Medicare conditional
payment. In the second scenario, the claimant has a "reasonable expectation"
of Medicare enrollment within thirty (30) months of the settlement date and
the anticipated "total settlement amount" for future medical expenses and
disability/lost wages over the life or duration of the settlement agreement
is expected to be greater than $250,000.
A claimant satisfies the second scenario and has a
"reasonable expectation" of Medicare enrollment any of the following
situations can be established: claimant has applied for Social Security
Disability Benefits; claimant has been denied Social Security Disability
Benefits but anticipates appealing; claimant is in the process of appealing
and/or re-filing for Social Security Disability Benefits; claimant is
sixty-two (62) years and six (6) months old so that s/he will qualify within
thirty (30) months by turning sixty-five (65) years old; or, claimant has an
End Stage Renal Disease (ESRD) condition but does not yet qualify for
Medicare based upon ESRD.
Under those two scenarios, a WCMSA should be submitted to CMS for approval
in order to protect Medicare's interests. However, there are times when a
WCMSA is not necessary. For example, if the resolution of a workers'
compensation claim leaves the medical aspects of the claim open, a set-aside
is not necessary because the primary payer continues to have liability for
future medical expenses and Medicare's interests will remain protected as a
secondary payer. Also, if the claimant satisfies all of the following, s/he
need not submit a WCMSA to CMS for approval: the claimant is only being
compensated for medical expenses incurred prior to the date of settlement;
there is no evidence that the claimant is attempting to maximize the other
aspects of the settlement, including lost wages and other disability
payments, to Medicare's detriment; and, the claimant's treating physicians
conclude in writing that to a reasonable degree of medical certainty the
individual will no longer require any Medicare covered treatments related to
the workers compensation injury.
Complying with MSP requirements have proved problematic,
complicated, and tedious. The Act's new reporting requirements are intended
to better ensure that Medicare will be reimbursed or remain a secondary
payer when appropriate. The reporting requirements fall into two general
categories — Group Health Plan (GHP) reporting requirements and liability
insurance reporting requirements.
The GHP reporting requirements will affect entities
serving as insurers, TPAs for GHPs, self-insured plan administrators or
self-insured fiduciaries. These parties are now required to proactively seek
out the Medicare eligibility status of all beneficiaries and must report
where claimants are Medicare eligible or are Medicare beneficiaries. Failure
to report required information carries a penalty of $1000 per day, per
beneficiary.
Liability insurance reporting requirements exclusively
affect insurers, including liability insurers, self-insurers, no-fault, and
workers' compensation. These insurers should have a compliance plan in place
that will determine whether any claimant is Medicare eligible by September
30, 2009. If the claimant is determined to be Medicare eligible, then the
insurer must report the claimant's identification to CMS regardless of
whether liability has been determined. Failure to report carries a fine of
$1,000 per day.
There are two important distinctions to be made for
liability insurance reporting. First, there is a distinction between
complying with the reporting requirements and complying with the past
payments component of the MSP. Complying with reporting requirements does
not trigger a need to reimburse Medicare under the latter. A covered entity
is required to report a claim if the beneficiary was Medicare eligible at
the time of the claim regardless of whether Medicare made any conditional
payments.
The second distinction is that complying with reporting
requirements does not mean complying with the future-payments components.
The reporting requirements stand regardless of whether the insurer admits
liability at the time the case is resolved. These two distinctions mean a
covered entity must report even if reimbursing Medicare or setting aside
money is not an issue.
In summary, a RRE must report a liability claim when the
claimant is a Medicare beneficiary and there is an expectation of making
payment. When reporting is required, CMS will dictate when required
information must be submitted. When no money is paid until the time of
settlement, RREs will only be required to report on a claim at the time of
settlement, judgment, award or payment. However, in instances of ongoing
liability for medical payments, the CMS will require reporting immediately.
The RRE must report the start date of the obligation, monitor the claim
until medical payment obligation has ended, and then report the termination
of medical payments.
The RRE should supply CMS with the correct ICD-9 Codes
that characterize the claimant's injury related to the accident. The CMS
benefits coordinator contractor will use this information to create a
working file. That file is sent to the Medicare secondary payer recovery
contractor, who then assembles the data and issues an interim payment
statement to the Medicare beneficiary. A RRE may receive a copy of that
statement from the claimant or from the Medicare secondary payer recovery
contractor, with the consent of the beneficiary. This process is anticipated
to take up to six months.
The Medicare secondary payer recovery contractor will
not issue a demand for reimbursement until a case is settled. The Medicare
beneficiary must supply information about the settlement terms. Then CMS
will inform the beneficiary of subrogation rights as of that date. The RRE
should work with CMS and Medicare secondary payer recovery contractor to
resolve the personal injury claim.
The Act creates new issues with regard to handling
personal injury claims with Medicare beneficiaries. RREs must be aware that
failure to follow these new reporting requirements carries civil penalties
and fines for RREs. Moreover, a settlement with a Medicare beneficiary may
involve reimbursing CMS for past conditional payments and accounting for
Medicare's interest in payment of future medical costs.
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