As of January 1, 2010, new reporting requirements took effect involving the payment of a settlement or judgment to a Medicare beneficiary.  The following is a brief summary of the new reporting requirements.

Background

    In 1980, the Medicare Secondary Pay Act (“MSP”) was enacted to amend the 1965 Social Security Act. The MSP prohibited Medicare from reimbursing medical benefits where payment has been made or can reasonably be expected to be made “under a workers’ compensation law, or other private insurance plans.”  Thus, Medicare was no longer a primary payer for a Medicare beneficiary’s medical costs.
 

    The primary aim of the MSP is to assure that primary payers, and not Medicare, assume responsibility for medical treatment for accident related injuries. The MSP is designed to prevent a responsible third party from shifting the burden of an individual’s medical care to the Medicare program. Under the MSP, a “primary plan” includes “an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance. . . . An entity that engages in a business, trade or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part.”

    Pursuant to the MSP, primary payers are obligated to reimburse Medicare for conditional payments when it is demonstrated that a primary plan “has or had a responsibility” to make payment. A primary plan’s responsibility may be demonstrated by a judgment or a settlement —regardless of whether there was an admission of liability. Medicare is afforded broad enforcement rights and has a direct right against all primary payers responsible for making payment, and any entity that received a primary payment, including a beneficiary, provider, supplier, physician, attorney, state agency, or private insurer. Medicare also has a subrogation right, as well as rights of joinder and intervention. If it is necessary for Centers for Medicare and Medicaid Services (“CMS”) to take legal action to recover its conditional payment, Medicare may recover twice the amount of the payment.

Section 111

    Section 111 of the Medicare, Medicaid & SCHIP Extension Act of 2007 (“MMSEA”) was enacted to strengthen primary payer compliance under the MSP by implementing more stringent notice and reporting requirements, including adding further reporting requirements for non-group health plans, such as including liability insurance, workers’ compensation, and no-fault insurance plans.  See 42 U.S.C. 1395y(b)(7) & (8).  The new reporting requirements support Medicare’s ability to avoid making initial payments, seek repayment of conditional payments already made, and require set-asides for the payment of a claimant’s future medical expenses. 

    In general, Section 111 places an affirmative obligation on “applicable plans” to (i) determine if a claimant is entitled to Medicare and (ii) notify Medicare of said entitlement as specifically required. An “applicable plan” includes liability insurance (including self-insurance), no fault insurance, and workers’ compensation plans.

    Entities responsible for submitting the new information are referred to as “Responsible Reporting Entities” (“RRE”) and include any “entity serving as an insurer or third party administrator for a group health plan . . . and, in the case of a group health plan that is self-insured and self-administered, a plan administrator or fiduciary.”   Where an insured is subject to a policy deductible, and the settlement or judgment does not exceed the deductible, the deductible is considered self-insurance for MSP purposes and the insured is the RRE.  Similarly, if an insured settles a claim without using insurance funds (even if they are available) it is considered self-insurance.  If the settlement or judgment exceeds the deductible amount, and the excess is covered by insurance, the insurer is the RRE.

    Pursuant to Section 111, RREs are required to report, on a quarterly basis, claim information for claims involving a Medicare beneficiary claimant where (i) an ongoing responsibility for medical payment existed as of July 1, 2009, and (ii) the settlement, judgment, or award was entered after January 1, 2010.  A failure to comply with the reporting requirements can result in a civil penalty of $1,000 per day, per claimant.

Threshold / Limitations

    Settlements and judgments under a specified dollar threshold do not have to be reported under Section 111.  The threshold for the period ending on December 31, 2011 is $5,000.  The threshold is reduced to $2,000 for the period between January 1, 2012 and December 31, 2012.  It is further reduced to $600 for the period between January 1, 2013 and December 31, 2013.  These thresholds, however, only apply for purposes of Section 111; they do not limit other obligations under the MSP.

    Workers’ compensation claims which provide for ongoing responsibility for medical payments (“ORM”) are excluded from reporting through December 31, 2011, if: (i) the claim is for medical only; (ii) lost time is no more than seven (7) calendar days; (iii) all payments have been made to the provider; and (iv) the total payments do not exceed $750.

Reporting Frequency 

    A lawsuit does not have to be brought in order to trigger the reporting obligations.  Rather, under Section 111, a “claimant” includes (i) an individual filing a claim directly against the applicable plan, (ii) an individual filing a claim against an individual or entity insured or covered by the applicable plan, or (iii) an individual whose illness, injury, incident, or accident is or was at issue under (i) or (ii).

    Section 111 established separate reporting requirements for Group Health Plans (“GHP”) and liability insurance (including self-insurance), no-fault insurance, and workers’ compensation (“non-GHP”).  GHP data must be submitted by the RRE on an ongoing basis.  Non-GHP data must be reported on an ongoing basis for no-fault insurance and workers’ compensation for non-contested claims, and on a one time basis for contested cases where there is a single settlement, judgment, or award.

Information required to be Reported

    Under 42 U.S.C. § 1395y(b)(8)(B), the information to be reported includes the “identity of the claimant” and “such other information as the Secretary shall specify in order to enable the Secretary to make an appropriate determination concerning coordination of benefits, including any applicable recovery claim.” 42 U.S.C. § 1395y(b)(8)(B).

    CMS has announced various data requirements for GHPs and non-GHPs to make an appropriate determination concerning coordination of benefits and that RREs will need to report under Section 111.  For GHP, the required data include :

(i)    claimant’s first initial and last name, date of birth, and gender;
(ii)    claimant’s social security number or health identification number issued by Medicare;
(iii)     insurance policy information, including type of insurance, effective date of coverage, termination date of current coverage, employee coverage election, and group and individual policy numbers;
(iv)    policy holder information, including policy holders’ first and last name and social security number;
(v)    employer size, EIN, and business address, and whether a small employer MSP exception applies;
(vi)    insurer EIN and business address; and
(vii)    employee status and relationship to policy holder.
    The CMS has also announced various “mandatory” and “situational” data fields that it deems necessary for a non-GHP RREs to report.  The CMS has also provided for “optional” data fields which RREs are not required to, but may, disclose.

    “Mandatory” information which must be disclosed includes:

(i)    claimant’s name, date of birth, gender, and address;
(ii)    claimant’s social security number or health identification number issued by Medicare;
(iii)     insurance information, including type of insurance and policy and claim numbers;
(iv)    policy holder information (and whether it is self-insured);
(v)    claim information, including the date of the injury, venue of claim, and whether the claim involved a product liability allegation; and
(vi)    claim resolution information.

 

Examples of “situational” information include the claimant’s attorney’s name and address where the claimant is represented by an attorney.  Where a contested claim has been resolved, the date of the settlement and the amount are also required. If the claim involved a product liability allegation, the name and manufacturer of the product is required.  Where the claimant is different than the injured party, the RRE is required to disclose the relationship of the beneficiary to the injured party and the beneficiary’s name, address, and social security number. For claims involving workers’ compensation, the nature and cause of the injury must also be disclosed.

 “Optional” information includes the claimant’s middle initial, telephone number, and email address.  It also includes his or her attorney’s telephone number, email address, and bar number.   

Conclusion

Undeniably, the MMSEA places an additional burden on parties and insurers. The new reporting requirements necessitate that plaintiffs, defendants, and insurers cooperate to ensure that all relevant information is timely reported to CMS.  It is essential to begin the process of obtaining the necessary information early in litigation. A proactive approach yields a better result and allows you to settle cases with confidence that Medicare’s interests are being properly addressed and penalties will not accrue. 

Should you have any questions on the ramifications of the Medicare, Medicaid & SCHIP Extension Act of 2007, or the process by which all relevant information is timely reported, please contact us.