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Medicare Mandatory Insurer Reporting:
Delayed and Confused


By Gregg Chapman, Esq.

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Gregg Chapman, Esq. specializes in structured settlements of workers’ compensation cases. In the last issue he debunked myths about Medicare Set-Asides; in this article he makes it clear that the new Medicare reporting provision is totally unrelated to and has no impact on Medicare Set-Asides.

 
 
There has been much confusion regarding the new Medicare Mandatory Insurer reporting law. It is important to cut through the misinformation and understand what the obligations are for the Insurer as well as the responsibilities of the applicant attorney when it finally goes into effect (it was just delayed for the third time). Finally, we will make it clear that this new reporting provision is totally unrelated to and has no impact on Medicare Set-Asides.

 
This new reporting provision is totally unrelated to and has no impact on Medicare Set-Asides.
 
The new law, Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007, adds mandatory reporting requirements with respect to Medicare beneficiaries who have coverage under group health plan arrangements as well as for Medicare beneficiaries who receive settlements, judgments, awards or other payment from liability insurance (including self-insurance), no-fault insurance, or workers’ compensation. For the purpose of this article, we will focus primarily on workers’ compensation.

Section 111 is an amendment to the Medicare Secondary Payer [MSP] provisions (42 U.S.C. 1395y(b)(8)). Workers’ compensation is a primary payer to the Medicare program for Medicare beneficiaries’ work-related illnesses or injuries. If a Medicare beneficiary has workers’ compensation coverage, providers, physicians, and other suppliers must bill workers’ compensation first. If responsibility for the workers’ compensation claim is in dispute and workers’ compensation will not pay promptly, the provider, physician, or other supplier may bill Medicare as primary. If the item or service is otherwise reimbursable under Medicare rules, Medicare may pay conditionally, subject to later recovery if there is a subsequent settlement, judgment, award or other payment. Additionally, Medicare conditional payments occur when a provider incorrectly bills Medicare instead of the workers’ compensation carrier.

 
Section 111 is an amendment to the Medicare Secondary Payer (MSP) provisions (42 U.S.C. 1395y(b)(8)) which, inter alia, adds mandatory reporting requirements with respect to Medicare beneficiaries who receive workers’ compensation settlements.

See Medicare Secondary Payer Mandatory Reporting.

 
The primary purpose of the Section 111 reporting process is to make certain that all parties to a settlement fully comply with the MSP requirement that Medicare be reimbursed for conditional payments made. Section 111 requires Insurers (aka “Responsible Reporting Entities” [RREs]) to report information identifying which applicants are Medicare beneficiaries as well as claim information which includes date of injury, type of injury (including ICD-9 diagnostic codes), settlement information, etc. This information will allow CMS to check if any conditional payments were made and enhance recovery efforts.

 
The primary purpose of the Section 111 reporting process is to make certain that all parties to a settlement fully comply with the MSP requirement that Medicare be reimbursed for conditional payments made.
 
Prior to passage of Section 111, it was the responsibility of Medicare-entitled applicants, their attorneys, the insurer or the employer to verify and reimburse any conditional payment claims. CMS makes it clear that Section 111 does not alter or remove any current MSP rules, but adds to existing MSP requirements. As a result, applicants, their attorneys, Insurers and employers are still obligated to confirm and resolve Medicare’s conditional payments. The impetus of this new provision was obviously not workers’ compensation since the relative occurrence of conditional payments is low when compared to liability insurance claims since the workers’ compensation carriers typically cover the medical expenses.

 
Applicants and their attorneys are still obligated to confirm and resolve Medicare’s conditional payments.
 
 
It is clear upon reviewing the discussion in Congress that the main target of this provision was liability insurance. The belief was that plaintiffs were having Medicare pay for medical expenses while their lawsuits progressed. Upon settlement, none of the parties involved contacted Medicare and thus there was no conditional payment reimbursement. Thus, with the insolvency of Medicare looming, Congress decided to make it mandatory to report these settlements, with the onus on the insurer. To make sure this was finally taken seriously, the legislation includes a $1,000 per day penalty, to be paid by the Insurer, for failure to report. Even though liability insurance was the major perpetrator, all the other types of insurance (workers’ compensation, no fault and group health) were included.

 
To make sure this was finally taken seriously, the legislation includes a $1,000 per day penalty, to be paid by the Insurer, for failure to report.
 
 
Since the reporting requirements only apply to cases involving applicants enrolled in Medicare, the first and most important step in the process is to determine if the individual is a Medicare beneficiary. RREs have been granted access to a query function developed by CMS that can determine whether or not an individual is a Medicare beneficiary. It is quick, easy and paperless. The RRE electronically sends four pieces of information (applicant’s name, SSN, gender and date of birth) to CMS which they check in their database and then respond with a yes or no reply as to whether the individual is a Medicare beneficiary. If yes, then the RRE knows to proceed with the reporting by sending the additional data required to CMS on a quarterly basis.

 
Since the reporting requirements only apply to cases involving applicants enrolled in Medicare, the first and most important step in the process is to determine if the individual is a Medicare beneficiary.
 
 
Section 111 has no impact on Medicare Set-Asides [MSAs]. MSAs are not mentioned anywhere in the provision and CMS representatives involved in the dozens of Town Hall Teleconferences repeatedly explained that this provision has nothing to do with MSAs. As previously indicated, Section 111 was primarily designed for reimbursement of conditional payments. Medicare conditional payments deal with expenses paid up until settlement of the claim. MSAs on the other hand deal with future medical expenses that could exist after settlement of the claim. Much of the confusion was created by MSA vendors who originally portrayed this new reporting provision as requiring MSAs for liability claims. This is not the case.

 
Section 111 has no impact on Medicare Set-Asides (MSAs). Much of the confusion was created by MSA vendors who originally portrayed this new reporting provision as requiring MSAs for liability claims. This is not the case.
 
 
CMS recently delayed the official start of Section 111 for the third time. The new timeline has full implementation of the Mandatory Insurer Reporting pushed back from April 1, 2010 to January 1, 2011. In the meantime, RREs have the ability to test submission of files.

 
The new timeline has full implementation of the Mandatory Insurer Reporting pushed back from April 1, 2010 to January 1, 2011.
 
 
In conclusion, with the insolvency of Medicare on the horizon, Congress passed Section 111 to assist CMS in recouping Medicare conditional payments. This has placed an additional burden on insurers to determine which applicants are Medicare beneficiaries and submit data about these claims to the Coordination of Benefits Contractor. All settling parties including the applicant and their attorney still have the responsibility to determine if conditional payments exist and to make sure Medicare is repaid if appropriate. Thus, there should always be a provision in the Compromise and Release addressing conditional payments and indicating who is responsible for reimbursing Medicare. Medicare Set-Asides are a separate issue and are unrelated to Section 111.

 
All settling parties including the applicant and their attorney still have the responsibility to determine if conditional payments exist and to make sure Medicare is repaid if appropriate. Thus, there should always be a provision in the Compromise and Release addressing conditional payments and indicating who is responsible for reimbursing Medicare.
 
Gregg Chapman has been a member of the State Bar of California for twenty years. Over the last eight years, he has worked for two of the largest national MSA vendors in various positions including General Counsel, National Sales Manager and Director of MSA Education. He has provided hundreds of presentations on all topics regarding Medicare Set-Asides to the insurance industry and attorney associations across the country.

To contact Gregg Chapman:
Gregg Chapman, Esq,
National Settlement Consultants
12039 Jefferson Blvd.
Culver City, CA 90230
Phone: 800-845-2969
Fax: 310-450-3132
Email: greggchap@aol.com