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Navigating Medicare Reporting Requirements

By: Lisa Cauley, Esquire

On December 29, 2007, President George Bush signed into law the Medicare Medicaid, and SCHIP Extension Act of 2007 (MMSEA). This new legislation amended the Medicare Secondary Payer Act (MSPA) by establishing new reporting guidelines. For various reasons, Medicare had not been able to identify primary payers consistently since the passage of the MSPA in 1980.

Consequently, the original goal of the law, to reduce federal health costs, remained unmet. In an effort to remedy this, Section 111 of the MMSEA was passed. Under the new rules, group health plans, liability insurers, no-fault insurers, workers' compensation insurers and self-insurers are required to determine whether any individual who files a claim against the insurer or any entity insured or covered by the insurer is entitled to Medicare benefits, and to report to the Centers for Medicare and Medicaid Services (CMS), the federal administrative agency responsible for administering Medicare and Medicaid, when those claims are resolved.

Since the enactment of this legislation, insurers have been attempting to interpret the law and meet the new requirements imposed upon an alleged tortfeasor's insurance carrier, or the tortfeasor if self-insured, to determine whether the plaintiff is on Medicare, and to report to CMS in the event resolution of the tort claim is being sought. Whether liability is determined or admitted does not impact the reporting requirement, and failure to comply with the Act's notification requirements can result in a civil penalty of $1,000 per day per claimant. Electronic reporting is required for all Responsible Reporting Entities (RREs), i.e. those responsible for complying with Section 111. The RRE is determined by who actually pays the loss, rather than who funds the loss.

The reporting requirements are designed to enable Medicare to examine settlements, judgments and awards to ensure that conditional payments, i.e. liens, are identified and reimbursed, and also to determine whether an allocation for related medical expenses is provided. If the settlement does not contain an allocation, Medicare has a statutory right to recover up to the entire amount of the settlement, judgment or award. The Act does not change current practices regarding Medicare set-aside agreements (MSAs), but rather emphasizes positive enforcement of protection and recovery measures for Medicare with respect to all classes of casualty claims.

Implementing procedures in the claims review process will help RREs determine whether an injured party is a Medicare beneficiary. To determine whether a claimant is a Medicare beneficiary, the RRE may submit an inquiry to by submitting the claimant's Medicare health insurance claim number or Social Security number, name, date of birth, and gender for a determination of whether the claimant is (1) currently receiving Medicare benefits; (2) currently receiving Social Security Disability or has applied for or is currently appealing his/her denial of Social Security Disability; or (3) has a reasonable expectation of receiving Medicare benefits within the next thirty (30) months.

For claims involving settlements, awards, judgments, or other payments to claimants entitled to Medicare benefits, Section 111 requires RREs to report the identity of the claimant, along with "such other information as the Secretary shall specify to enable the Secretary to make an appropriate determination concerning coordination of benefits, including any applicable recovery claim." 42 U.S.C. §1395(b)(8). Such information may include the nature and extent of injury or illness, the facts of the incident giving rise to the injury or illness, information sufficient to assess the value of reimbursement, and information sufficient to assess the value of future medical expenses. To help ensure compliance with new MSP requirements, RREs should also determine whether there have been past payments for medical expenses for which Medicare should be reimbursed and assess whether any future Medicare-covered medical expenses may be incurred. The reporting process is electronic and must be completed quarterly through the secure website: www.section111.cms.hhs.gov.

In summary, those entities fitting the description of "RRE" should implement procedures to ensure proper reporting of all payment obligations to Medicare beneficiaries. At the beginning of any litigation or claim, RREs should assess whether the claimant is a Medicare beneficiary or if he/she anticipates receiving Medicare benefits in the future. By following internal procedures, as well as drafting settlement documents demonstrating that Medicare's interests have been protected, insurers and other RREs can manage risk and maximize compliance with the MSPA.