medicare: primary payer compliance

MEDICARE: PRIMARY PAYER COMPLIANCE

Prepared By:

Carrie T. Taylor, J.D.

Medicare Entitlement

• Medicare is a health insurance program for: People 65 or older; People under 65 with certain disabilities; and People of all ages with end-stage renal

disease (permanent kidney failure requiring dialysis or kidney transplant)

Medicare

• Part A: Hospital Insurance

• Part B: Medical Insurance

• Part C: Advantage Plan Coverage (like HMOs and PPOs)

• Part D: Drug Coverage

• Exclusions: Coverage and payment rules to determine whether an item or service is covered

Medicare Secondary Payer (MSP) Statute

• Allows the Centers for Medicare & Medicaid Services (CMS) to pursue damages against any entity that attempts to shift the burden of medical costs to Medicare.

• CMS has the right to seek reimbursement of medical expenses paid by Medicare that an insurance carrier or self-insured should have paid.

• The MSP statute provides for a private cause of action for double damages for failure to provide primary payment or appropriate reimbursement.

Who is a primary payer?

• Liability insurance

• No-fault insurance

• Workers’ compensation

Compliance

• Medicare Set Aside (MSA) Future consideration

• Conditional Payment Reimbursement Past Consideration

• Notice/Reporting Section 111 MMSEA

Future Consideration

I. Medicare Set Aside

I. Medicare Set Aside (MSA)

• Workers’ Compensation Medicare Set-Aside (WCMSA) A Fund of money set-aside at the time of settlement that

must be exhausted before a claimant can use Medicare to pay for injury related treatment.

CMS publicized the WCMSA as a compliance tool through a series of policy memoranda beginning in 2001.

An MSA is designed to protect Medicare’s future interests.

Is an MSA necessary when settling a non-WC claim?

• No, but Medicare’s interests must be considered and protected if the settlement involves waiver of future medical expenses Some Regional Offices will approve/review

MSAs for liability settlements depending upon workload factors

Medicare Set Aside Allocations may be a helpful tool with significant settlements (perhaps $1 million or higher)

Past Consideration

II. Conditional Payment Reimbursement

MEDICARE AS SECONDARY PAYER

• Medicare will not make payment if payment has been made or can reasonably be made under WC, auto or liability or no-fault insurance. 42 U.S.C. 1395 y(b)(2)(A)(ii).

Medicare As Secondary Payer

• Exception: Medicare may make a “conditional payment”

for medical treatment if a primary plan” has not made or cannot reasonably be expected to make payment…promptly.” These payments are conditioned on reimbursement to the appropriate Trust Fund…” 42 U.S.C. 1395y(b)(2)(B)(i).

Historical Obligations

• Primary payers have been obligated to place Medicare on notice of claims and reimburse Medicare for conditional payments since 1965 for WC and since December 5, 1980 for GL.

Learns vs. Demonstrated

• Effective 3/24/08 If it is demonstrated that

CMS has made a Medicare primary payment for which the primary payer has made or should have made payment, it must provide notice.

Primary plan’s responsibility is demonstrated by judgment, payment conditioned upon the recipient’s compromise, waiver or release (whether or not there is a determination of liability).

• 1990 to 3/24/08 If primary payer learns

that CMS has made a Medicare primary payment for which the primary payer has made or should have made, it must give notice.

Learns = is, or should be aware.

Medicare’s Dilemma? How to determine compliance…

MMSEA Section 111

III. Notice/Reporting

Civil Money Penalties

• Failure to comply with Section 111 could result in penalties of $1000 per day, per claim.

Medicare, Medicaid and SCHIP Extension Act

• MMSEA Section 111 Enacted December 2007 by President Bush Start date: July 1, 2009 Requires all insurers with respect to liability, no-

fault and workers’ compensation, as well as self-insurers to determine whether a claimant is entitled to Medicare benefits and, if so, report any settlement, award, judgment or other payment to the Centers for Medicare & Medicaid Services (CMS)

Section 111 Solves Medicare’s Dilemma

• Supply data to Medicare to establish coordination of benefits

• Achieve recovery of funds and prevent funds from being issued when there is primary coverage

Who Must Report?Responsible Reporting Entity (RRE)

RRE

• 42 USC 1395y(b)(8) provides that the “applicable plan” is the RRE

Applicable Plan

• Means the following laws, plans or other arrangements, including: Liability insurance

(including self-insurance) No fault insurance Workers’ compensation

law or plans

RRE Problem Areas

• Corporate structure

• Deductable issues

• Fronting policies

• Re-insurance, stop loss, excess, umbrella

• Multiple defendants

• Liquidation/bankruptcy

• Foreign nations/tribes

Self Insurance Pool

• If all three are met, the Self-Insurance Pool is the RRE: The self-insurance pool is a

separate legal entity The self-insurance pool has

full responsibility to resolve and pay claims using pool funds

The self-insurance pool resolves and pays claims without involvement of the participating self-insured entity

RRE Registration: 5 Steps

Step 1

• Identify an Authorized Representative (AR), Account Manager (AM) and other Account Designees (AD) AR – legally binds the

organization to comply with Section 111, cannot be an agent

AM – controls the overall reporting process

AD – assist with reporting process

Step 2

• Determine reporting structure Influenced by corporate

structure, claims systems, data processing systems and agents

RRE Registration: 5 Steps

Step 3• New Registration

www.Section111.cms.hhs.gov

Registration for the RRE, it provides CMS with the RRE information

Must be performed for each RRE ID needed for Section 111 reporting

• TIN

• Company name/address

• AR contact info

• NAIC company codes

• NGHP & Subsidiary info

Step 4

• RRE Account Setup Performed by AM Enter RRE ID and PIN Provide contact info for AM Provide estimate of annual

claims that will be reported Identify agent, if any Select file transmission

method (reporting is done electronically)

Obtain login ID and agree to terms of the User Agreement

RRE Registration: 5 Steps

• Step 5 Return Signed RRE Profile Report which

contains:• Summary of information provided during

registration & account set up• Information needed for data file transmission• RRE ID• Quarterly file submission timeframe for claim input

file• Contact information for COBC EDI Representative

What will be reported to the COBC?

• Ongoing Responsibility for Medicals (ORM)

• Total Payment Obligation to Claimant (TPOC)

ORM Reporting Thresholds (Begin 7/1/2009)

• No-Fault: No threshold, report all

• Liability Insurance: No threshold, report all

• Workers Comp: Excluded from reporting through 12/31/2011 if Claim for medical only Time loss less than 7 calendar days All payments made direct to provider Total payment for medicals does not exceed $750

TPOC Reporting Thresholds (Begin 1/1/2010)

• No-Fault Insurance: No threshold

• Workers’ Comp & Liability thresholds: 1/1/2010 – 12/31/2011 > $5000 1/1/2012 – 12/31/2012 > $2000 1/1/2013 – 12/31/2013 > $600 1/1/2014 No threshold applies

Section 111 Reporting

Timeline

• 1/1/09 – 6/30/09 Systems development

period

• 5/1/09 – 9/30/09 Registration

• 7/1/09 – 12/31/09 Test/Production Query

Files

• 1/1/2010 – 3/31/2010 Test Claim Input Files

• 4/1/2010 – 6/30/2010 Submit Claim Input File

Use of Agents

• An RRE may not shift its Section 111 reporting responsibility to an agent, by contract or otherwise.

• The RRE remains solely responsible and accountable for complying with Section 111 and the accuracy of data submitted.

Best Practices

Top Ten Best Practices

• 1. Obtain SSN or HICN at the outset of the claim.

• 2. Maintain a current/signed CMS and Social Security release.

• 3. Determine Medicare eligibility early.

• 4. If ORM or TPOC is expected with Medicare eligible claimant, notify COBC immediately.

• 5. Obtain conditional payment information early.

• 6. Make sure conditional payment demand does not

contain duplicates, is for the same body part/diagnosis code and payable under WC fee schedule.

• 7. Have a backup plan to determine Medicare entitlement if there is a “no match” under query access.

• 8. Carefully monitor agents.

• 9. Educate adjusters regarding reporting triggers/thresholds.

• 10. Only utilize Medicare knowledgeable legal counsel.

Thank You