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In the 1980’s, Congress amended the Social Security Act to include the Medicare Secondary Payer Act (MSP), which effectively enacted Medicare liens. In 2003, the Government clarified its position that self-insured entities were also included in the MSP in passing the Medicare Act of 2003. Prior to the Act, Medicare did not have an efficient mechanism to identify or evaluate instances where Medicare’s liability should have been secondary. In 2003, the government took no steps to actively pursue settling Medicare eligible plaintiffs. Medicare lacked efficient mechanisms to pursue cases where its liability should have been second to the responsible party.
On December 29, 2007, the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) was signed into law. MMSEA amended the MSP to impose new reporting duties on liability insurance plans, private self-insured entities, Group Health Plans, no fault insurance plans and Workers’ Compensation plans.
Beginning January 1, 2011, Section 111 of the MMSEA requires certain entities to directly report potentially eligible claimants to the Centers for Medicare and Medicaid Services (CMS). The new reporting requirements are imposed directly on self-insured entities and insurance carriers. Under the new Medicare legislation, insurance carriers and self-insured entities will be fined $1,000 day, per claim for failure to comply. Medicare hopes to increase its ability to identify individuals who received Medicare payments and to recoup an estimated $1.7 billion of inappropriately paid benefits per year.
Mechanics of Compliance
Under MMSEA, Responsible Reporting Entities (RRE), including workers’ compensation plans, no fault insurance plans and self-insureds, will be required to directly report potentially eligible claimants to the CMS. An RRE must register electronically with CMS, and can register through this link: www.section111.cms.hhs.gov.
This website allows you to:
- Register as RRE
- Set up Account Mgr
- Set up Account Designees (if desired)
- Submit Files
- Review Status of File Submissions
- Attain Response Files
- Review Statistics related to File Submissions
In complying with MMSEA, it is important for the RRE not to assume that all claimants aged 65 and older are Medicare beneficiaries, or that those aged 65 and under are not. For example, in 2003 AARP reported 16% of Medicare beneficiaries were under the age of 65.
Under MMSEA, all insurers, including self-insured entities, must determine the Medicare entitlement of all claimants and report specific information about the claims to CMS. To determine the Medicare entitlement status of a claimant, the RRE may ask the claimant directly whether he/she is eligible. However, because the RRE may not rely on the validity of the claimant’s response, the RRE must obtain the claimant’s SSN for submission to CMS for verification.
Verification may be completed through the submission of electronic queries by RRE’s. To complete the query, the RRE must submit the SSN, name, DOB and gender of the injured party, for each request. Following submission of the query, Medicare will determine the beneficiary’s status within 14 days. RRE’s will be required to retain their records regarding MSP related information for ten years, and CMS has the authority to audit an RRE at any point.
If a determination is made by CMS that the claimant is entitled to Medicare benefits, the RRE must report information about the claim and claimant once the claim is either fully or partially concluded. If the RRE is the party responsible for the payout they have 60 days to reimburse Medicare and failure to do so may result in CMS charging interest on the total outstanding amount. If CMS is required to take legal action to secure recovery, CMS is entitled to recover “double damages” – twice the amount of the payments made.
Following entry of an award or an order approving settlement, the RRE must complete CMS’s extensive report. More than 100 categories of information may be sought by CMS, depending on the action pursued by the claimant.
Impact for Companies that “Self-Fund” Small Dollar Claims
One of the more significant issues is how this program is going to impact future costs on claims. Medicare knows that medical payments for work comp claims have been transferred to Medicare when the injured worker qualifies for Medicare. When they find them, Medicare will send a bill to the carrier or self insured employer. Starting in 2011, Medicare started asking for reimbursement on these claims.
When companies continue to self-fund small dollar Workers Compensation and General Liability claims (not reporting them to the insurance company), they will be responsible for registering as and RRE, maintaining a database of self-insured claims, and complying with required reporting. If they elect to file all claims, large and small, to the insurance carrier, the carrier will comply with the required reporting. In instances where a company has elected to purchase a deductible policy, they will ultimately be responsible for reimbursement of payments up to the deductible or aggregate limit.
John Keller, CRM ARM CIC AAI is the Vice President of Commercial Sales at Gulfshore Insurance. John works with a wide range of business clients to deliver strategic risk analysis and guidance. Comments and questions are welcome at firstname.lastname@example.org
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