Medicare compliance for P&C insurers can be placed in three big compliance “buckets”:
- Identify all claimants who are Medicare beneficiaries
- Take care of Conditional Payment issues for each Medicare beneficiary identified
- Report each Medicare beneficiary claim to Medicare per Section 111
This is, of course, an oversimplification, but it is the essence of Medicare compliance for P&C insurers. The three-step process is crucial for any P&C insurers seeking 100% compliance because compliance MUST begin with identifying beneficiaries. If insurers do not identify all Medicare beneficiaries, all Conditional Payments will NOT be appropriately processed, all claims will NOT be reported per Section 111 requirements, you will NOT be in compliance with Medicare compliance requirements, and you will be subject to non-compliance penalties.
In other words, every unidentified Medicare beneficiary represents a non-compliant claim, and a source of financial exposure for the insurer.
Our findings from observing how P&C insurers address each of these “buckets” is as follows:
- Identification: Most simply accept that the number of claims their systems or adjusters have identified is accurate, without confirming whether the number is factually correct.
- Conditional Payments: Most insurers are aware of their Medicare compliance obligations, but the actual compliance is terribly inconsistent from one insurer to the next, and frequently results in one extreme or the other: 1) significantly overpaying Medicare, or 2) failure to reimburse medicare.
- Section 111 Reporting: Most insurers do fairly well with this requirement, for the Medicare beneficiaries they have identified, but a high percentage of carriers fail to identify all of their Medicare beneficiaries.
Here is a rule of thumb for P&C insurers to determine how they are doing in identifying their Medicare beneficiary claimants: Approximately 15% - 20% of all personal injury claimants will be Medicare beneficiaries, and if that percentage is significantly less it should trigger an internal investigation that includes an update on who qualifies as a Medicare beneficiary.
How do we know that “15% - 20%” number? Two ways:
- Medicare beneficiaries currently make up 18%% of the U.S. population. Noteworthy, is that almost 20% of total Medicare beneficiaries are under age 65, meaning that an insurer cannot rely only on a claimant’s age to identify them as a Medicare beneficiary. Even though the claimant demographics of each insurer will vary, most insurers’ Medicare match percentage lands fairly close to the percentage of Medicare claimants in the general population.
- Consistently in our client pool, once all Medicare beneficiaries have been identified theyaverage 15% of total claimants .
Many P&C insurers believe their claimant demographics are “unique” and the percentage of their claimants that are Medicare beneficiaries is unusually low. In nearly every instance where Flagship has challenged this claim, upon further investigation the insurer has discovered that their numbers are far closer to the 15%-20% national averages than originally thought.
If you are not currently seeing 15% - 20% of your total P&C claims being identified as Medicare beneficiaries, we recommend a free Medicare Risk Assessment sooner rather than later.