medicare: primary payer compliance

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Overview of Medicare compliance considerations for liability insurance, no-fault and workers\' compensation


  • 1. MEDICARE:PRIMARY PAYER COMPLIANCEPrepared By: Carrie T. Taylor, J.D.

2. 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)

3. 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

4. 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.

5. Who is a primary payer?

  • Liability insurance
  • No-fault insurance
  • Workers compensation

6. Compliance

  • Medicare Set Aside (MSA)
    • Future consideration
  • Conditional Payment Reimbursement
    • Past Consideration
  • Notice/Reporting
    • Section 111 MMSEA

7. Future Consideration I.Medicare Set Aside 8. 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 Medicares future interests.

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

  • No, but Medicares 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)

10. Past Consideration II.Conditional Payment Reimbursement 11. 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).

12. 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 paymentpromptly.These payments are conditioned on reimbursement to the appropriate Trust Fund42 U.S.C. 1395y(b)(2)(B)(i).

13. 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.

14. 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 plans responsibility is demonstrated by judgment, payment conditioned upon the recipients 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 primarypayer has made or should have made, it must give notice.
    • Learns = is, or should be aware.

15. Medicares Dilemma?How to determine compliance 16. MMSEA Section 111 III.Notice/Reporting 17. Civil Money Penalties

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

18. 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 workerscompensation, 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)

19. Section 111 SolvesMedicares 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

20. 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

21. 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

22. 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

23. RRE Registration:5 Steps

  • Step 3
  • New Registration
    • 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 ofthe User Agreement

24. 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

25. What will be reported to the COBC?

  • Ongoing Responsibility for Medicals (ORM)
  • Total Payment Obligation to Claimant (TPOC)

26. ORM Reporting Thresholds (Begin 7/1/2009)

  • No-Fault:No threshold, report all
  • Liability Insurance:No


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