Introduction & Background
Medicare compliance is a major undertaking, requiring experience, expertise and resources. It should begin at the front end of a claim notice by identifying every claim that has a Medicare-eligible claimant. It does not officially end until a Claim Closure Letter has been obtained from Medicare. The entire process is complicated because the regulations frequently change, the rebuttal process is time consuming and the response time from Medicare can be lengthy. But when compliance with Medicare regulations is not addressed, or is not done properly, the aggregate exposure for a P&C insurer can easily and rapidly exceed several million dollars.
Managing Medicare claims internally is generally not cost efficient for most insurers given 1) the dedicated resources required, 2) the importance of experience and expertise, 3) the ever-changing and continuously expanding regulations and 4) the small percentage (10-15%) of personal injury claims involving Medicare claimants. On the other hand the consequences of non-compliance, usually through misunderstanding, negligence or ignorance, can be disproportionately serious and costly. Claim adjusters often spend countless hours struggling to achieve compliance, while the opportunity cost to close multiple non-Medicare claims during that same amount of time soars. Frequently they simply pay the Conditional Payment lien in full to avoid the hassles of dealing with Medicare and to be able to move forward with settling and/or closing the claim. But even then, Medicare claims are frequently closed without securing Final Demand and claim closure documents, leaving the insurer exposed to future Medicare liens for that claim.
Medicare beneficiaries currently account for approximately 15% of the U.S. population, with an estimated 10,000 “baby boomers” becoming Medicare eligible every day. It is projected that Medicare beneficiaries will account for approximately 25% of the population within 15 years.
Medicare personal injury claims are becoming a significant factor in the insurance industry. As Medicare legislation becomes more expansive and the compliance regulations continue to change, simply keeping up with the changes can be a full-time effort. Ensuring that front-line claim adjusters who manage Medicare claims are current on the latest changes in the regulations is generally an unreasonable expectation for most insurers.
Medicare compliance is the exclusive focus for Flagship Services Group. Our Medical, Legal and Claims professionals vigilantly monitor Medicare legislation, compliance regulations and court rulings. Flagship guarantees its clients 100% compliance, at zero net cost, eliminating the extensive and expensive time, resources and personnel required for internal processing. Flagship’s Medicare compliance experts develop a compliance plan around three main objectives:
- Mitigate Medicare non-compliance risks, which include significant financial penalties, potential negative publicity and time consuming hassles with Medicare;
- Protect the financial resources of P&C insurers by reducing Conditional Payment reimbursements to the lowest amount legally owed;
- Simplify the responsibilities and reduce the time demands on claim adjusters, to enable more focus and greater efficiency in managing non-Medicare claims, by clearing their desk of Medicare compliance tasks.
The case study that follows is the summary of one insurance company’s commitment to achieve 100% compliance with federal Medicare regulations, significantly reduce their Medicare reimbursement costs, eliminate the demands of Medicare compliance on claim adjusters and do so on a timely basis, with no internal disruptions and at net zero cost to our client.
100% compliance plus substantial savings
- 90-year-old nationally recognized Property Casualty insurance carrier, A. M. Best “A” (Excellent) rating
- Multi-billion dollar total annual premiums
- Publicly traded company; multiple acquisitions in recent years
- 25,000 personal injury claims annually
Medicare Compliance Issues
Insufficient info being collected on Medicare beneficiaries
- Identifying beneficiaries by birth date only
- Missing 15-20% of Medicare beneficiaries under age 65
Inadequate Section 111 Reporting system
- ORMs reported at front end but inconsistent reporting at closure/exhaustion
- TPOCs inconsistent reporting
- No systems support that automatically alerts adjuster to facilitate compliance
Not routinely securing or rebutting Medicare’s Conditional Payment reimbursement demands
- Most liens paid in full
- Translates to overpayments to Medicare that exceed 100%, on average paid liens
Exposure—substantial; potentially and likely several million dollars
- “Reporting” penalties—up to $1000/day per claim for beneficiaries not identified and therefore not Reported under Section 111 of the MMSEA
- “Recovery” penalties—double amount owed, plus accrued interest for:
- Medicare beneficiaries not identified where Conditional Payment liens exist
- Beneficiaries files not officially closed where Conditional Payment liens exist
- Overpayment of Conditional Payment liens, on average by more than 100%, given absence of medical, legal, claims reviews by Medicare compliance professionals, with rebuttals where appropriate
- At least three years Medicare “look back” with penalties
How Flagship delivers results
The first step in Flagship’s Medicare compliance process was a Medicare Risk Review (MRR). This analysis allowed Flagship to identify the strengths in the insurer’s existing compliance efforts and assess current processing procedures, potential Conditional Payment rebuttal savings, plus any non-compliance issues and/or penalty exposure. Additionally, Flagship identified training needs, including performance measures and best practices for accelerating settlements, minimizing litigation and avoiding penalties. Flagship is keenly aware of the most common, as well as the infrequent, non-compliance issues. The MRR eliminated client’s unknowns and uncertainties surrounding Medicare compliance, and created a valid audit trail. Components of the MRR consisted of the following on-site data collection:
- Claims File Analysis Reviewed: cross-section of Medicare claims including high dollar, no-fault, litigated, settled and open claims
- Claims Staff Interviews Interviewed: vertical slice of Claims Department, from managers and supervisors, to front-line adjusters
- Medicare Essentials Training: Identified knowledge and processing gaps amongst adjusters and managers; provided brief but comprehensive training to address gaps/needs; provided perspective on, and increased sensitivity to, the importance of accurate and timely Medicare claims processing
At conclusion of MRR, Flagship provided client with “Report of Findings and Recommendations.”
Implementation of mutually agreed upon action steps from MRR report, which included the following:
Visit each regional office to:
- Introduce Flagship services
- Review MRR findings and action steps
- Claims transmission training
Develop customized management reports
- Frequency: monthly, quarterly, annually
- Format: claim adjuster, regional office, total U.S.
Six month business review
- Quantify gap between average number of voluntary monthly referrals and value to client of 100% Medicare claim referrals to Flagship
- Implemented companywide mandatory referrals to Flagship of all Medicare beneficiary personal injury claims
- Bulk invoicing implemented
Twelve month business review
- New procedures implemented to capture key claim data at front end, enabling earlier query of Medicare files
- Paperless system working well and accelerating entire process
- Update on results of mandatory referral of Medicare beneficiaries
- Monthly file referrals increased significantly to reach level of 100% compliance
Instantly download the case study by clicking the download button below or Contact us today to learn more about how Flagship Services Group can help with your Medicare needs.