The Medicare Secondary Payer Statute (MSP) has demanded the attention of insurance carriers since 1980, when its provisions made Medicare “secondary” to liability, workers’ compensation, no-fault insurance, as well as to group health plans in most situations. Medicare’s “secondary” status means that Medicare is prohibited from paying for covered services if a “primary” payer exists. The prohibition extends as far as future medical costs in settlements and has changed the settlement of workers’ compensation claims in particular. Insurers must now revisit Secondary Payer compliance and once again re-tool their handling of claims. As many already know, the MSP was amended in 2007 to require mandatory reporting by group health, liability, workers’ compensation and no-fault insurers. The Mandatory Reporting requirement takes effect for all entities this year. (New statutory language is codified at 42 U.S.C.
1395y(b)(7) & (b)(8) and is often referred to as “MMSEA Section 111.”) Insurers are advised to review instructions and posted materials available on CMS’s website, www.cms.hhs.gov/MandatoryInsRep/, particularly the “User Guide” posted March 16, 2009. This article presents general highlights of the requirement.
Group Health Insurers have already begun reporting via the Coordination of Benefits Secure Web Site (COBSW). Beginning July 1, 2009, electronic reporting by workers’ compensation, liability and no-fault insurers will also be required. These entities must first register on the COBSW. Following registration, insurers will be assigned an Electronic Data Interchange Representative (EDI Rep) to assist with ongoing communication and data exchange, as well as a timeframe for testing and submittal. All entities will report on a quarterly basis.
Responsible Reporting Entities, or RRE (and in most cases, the insurer), will be required to report only on claims that involve Medicare beneficiaries. “Reportable Events” are: 1) the assumption of responsibility for medical costs and 2) the termination of the responsibility for medical costs. RREs must also report “ongoing responsibility for medicals” (ORM) assumed before July 1, 2009, for current Medicare beneficiaries. In response to carrier concerns, CMS recently issued thresholds eliminating the reporting requirement for some (though, unfortunately, not many) claims. CMS has defined these thresholds as follows:
• Workers' compensation ORM claims meeting all of the following criteria are excluded (through December 31, 2010):
• Medicals only”
• "Lost time" of no more than seven calendar days
• All payment(s) has/have been made directly to the medical provider
• Total payment does not exceed $600.
A second reporting threshold addresses settlements. For these, CMS coined a new term, Total Payment Obligation to the Claimant, or TPOC. TPOC refers to the dollar amount of a settlement, judgment, award or other payment in addition to/apart from “ongoing responsibility for medicals.”
• Initial liability and workers’ compensation TPOCs with dates of July 1, 2009, through December 31, 2010, and TPOC amounts of $0 – $5,000 are exempt from reporting. (Where multiple TPOCs are reported by the same RRE on the same record, the combined TPOC amounts must be considered in determining whether or not the reporting exception threshold is met.)
The threshold for TPOC amounts decreases yearly after December 31, 2010.
CMS labels both of these “interim” thresholds, underscoring that procedures for mandatory reporting are still evolving and subject to change. Insurers and other interested parties are encouraged to comment on the reporting requirement and its implementation through the CMS website listed above. Comments have already led to one welcome change. CMS will allow RREs to query monthly for their claimants’ Medicare entitlement status. Details on how to query can be found in the User Guide. Very briefly, the query function will involve submitting an “input file” containing claimant identifying information. Submitters will receive a “response file” from CMS providing a “yes” or “no” reply as to Medicare entitlement. CMS will not provide dates of entitlement or reasons for entitlement, just the “yes” or “no” reply.
Be aware that MMSEA Section 111 only adds a reporting requirement. There is no change to existing statutory provisions or regulations. This means that there is no change to the Centers For Medicare and Medicaid Services (CMS) existing policy on settlements that include funds for future medical costs. CMS reiterates that mandatory reporting is part of an effort to “coordinate benefits” in keeping with the Medicare Secondary Payer Act for Medicare beneficiaries. Keep in mind that this effort previously led to the widespread use of Workers’ Compensation Medicare Set-Aside Arrangements (WCMSAs) in workers’ compensation settlements. Mandatory reporting may soon lead to a more prominent role for CMS in the evaluation of other types of settlements.
Kaija Blalock, R.N., J.D., is the Medicare Set-Aside Coordinator for First Rehabilitation Resources, an Injury Management Company in Laurel, Maryland.