An Overview of our 4/2 breakfast program and speaker- by Lea B. Kerrison
The April breakfast speaker- Thomas Thornton III, from Birmingham, Alabama, reported on changes respecting reimbursement for Medicare bills paid by the Centers for Medicare and Medicaid Services (“CMS”). The information below combines from notes I took from the seminar and preliminary review of the Guide referenced below. This is a complicated issue, and the information below does not begin to scratch the surface of the potential issues which may arise.
In December, 2007, Congress passed the Medicare, Medicaid and SCHIP Extension Act of 2007 (“MMSEA”). Section 111 of the MMSEA affirms Medicare as the secondary payer for health claims of its beneficiaries when there is an available primary payer, including group health plans (“GHP”), liability insurers, self-insurers, no-fault insurers and workers’ compensation insurers. CMS charged with implementing Medicare, refers to the primary payers as responsible reporting entities (“RREs”).
Beginning July 1, 2009, MMSEA requires RREs (other than GHPs, whose requirements apparently began January 1, 2009) to determine from CMS whether individual claimants are entitled to Medicare benefits and report to CMS such information as CMS deems appropriate to determine and protect CMS’s right to reimbursement out of claims paid by the RREs on or after July 1, 2009. Settlements made prior to July 1, 2009 which include payment obligations occurring after July 1, 2009 must also be reported. CMS may use the information received to determine that it will not make payments to providers due to the existence of a primary payer. The information required appears substantial. Failure to comply will subject an RRE to penalties of $1,000 per day of non-compliance per claimant plus double damages. Having obtained an affidavit from the claimant stating he or she is not a Medicare beneficiary will not be deemed an acceptable defense if it turns out the claimant lied. Medicare beneficiaries are not limited to people aged 65 plus, rather there are certain disabilities which make people eligible.
On March 16, 2009, CMS issued version 1.0 of the “MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation USER GUIDE”. The Guide represents CMS’s effort to implement the legislative mandate and will likely be modified several times before and after implementation.
Currently, the Guide envisions that all RREs will register on-line between May 1, 2009 and June 30, 2009, and they will be issued a RRE ID. RREs shall submit to CMS the SSN, DOB, gender, first name and last name of an individual for which they will or may be paying a claim. If the claimant is a Medicare beneficiary, the RRE is required to submit various information regarding the claim within a 7 day window each quarter. It appears there may be an affirmative obligation to follow up before paying a claim to ensure the claimant did not become a beneficiary between the initial determination and the settlement.
If an RRE agrees to make a payment to a claimant (ie. settlement or judgment or other award), the payment amount must be reported, regardless of whether there is an admission or determination of liability or an agreement that the payment is not made or allocated for medicals. If CMS has made conditional payments of some or all of the beneficiary’s medical bills, the RRE will be responsible to reimburse CMS for amounts paid by CMS up to the amount of settlement or judgment for which the RRE is responsible. There are also obligations in the event the RRE undertakes responsibility for or designates payment amounts for future medical expenses. If the RRE disburses all of the agreed upon settlement funds to the claimant or the claimant’s attorney, then the claimant and the claimant’s attorney are also liable to reimburse CMS.
Several issues will likely arise due to the requirements, and I expect you will hear a great deal about it over the coming months. Here are some considerations for settlements and judgments occurring after July 1st:
The RRE will disburse funds to the plaintiff’s attorney at its own risk if: (1) the RRE does not have assurance from CMS that the plaintiff is not a Medicare beneficiary, or (2) the RRE has not received from CMS a calculation of the payment amounts CMS expects to receive as reimbursement. The reimbursement amount is calculated as of the date of settlement or judgment, so the actual payment likely cannot be made with confidence for an extended time following a judgment or agreement to settle. The parties’ inability to know at the time of settlement exactly how much reimbursement CMS will require will make settlement that much more difficult. Lack of confidence may well lead to clogging of the dockets. Trials may require extensive consideration of MMSEA regarding jury charges, jury verdict forms and designation of amounts for future medical expenses.
As another wrinkle, CMS will not be ready to implement the full system by July 1st, so it has agreed to delay reporting requirements to January 1, 2010; however, CMS currently plans to require retroactive reporting, as the July 1st date is a statutory requirement which CMS does not have authority to waive. In other words, if a claim is settled between July 1, 2009 and January 1, 2010, the RRE will need to ensure that money from that settlement will be available to reimburse CMS in the event the claimant is a Medicare beneficiary on whose behalf CMS made conditional payments. The problem will be that the RRE will not know for certain whether there were conditional payments, and CMS will not deem lack of knowledge a reasonable excuse.
This issue will affect many RRE’s and their service providers, and I urge each of you involved with personal injury claims to follow developments.
The link to the CMS guide is: http://www.cms.hhs.gov/MandatoryInsRep/Downloads/NGHPUserGuide031609.pdf.
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