Since 1980 Property & Casualty insurers have had a legal obligation to reimburse Medicare for health care payments made conditionally (Conditional Payments) by Medicare for treatment of a personal injury to a Medicare beneficiary caused by an accident for which a P&C insurer had “Primary Payer” obligations.
Although the primary incentive for this legislation was to preserve the viability of Medicare, for decades after passage of the 1980 Medicare Secondary Payer Act (MSP Act), these obligations were purely hypothetical. Insurance carriers uniformly ignored their reimbursement obligations, and Medicare did not enforce its rights under the law. Nonetheless, despite the non-compliance and non-enforcement, the law, with its associated rules and requirements, remains in effect.
In 2007, the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) became law, which introduced a new obligation for P&C insurers – the obligation to report to Medicare all general liability and no-fault claims involving a Medicare beneficiary. This became known as Section 111 Reporting, and it created a means whereby Responsible Reporting Entities (RREs), such as P&C insurance carriers and self-insured entities, were required to report all personal injury claims involving a Medicare beneficiary to Medicare. This enabled Medicare to identify a Primary Payer, when one existed, helping to ensure Medicare is reimbursed for Conditional Payments. In contrast to the 1980 MSP Act, this time Medicare quickly communicated its intent to ensure that P&C insurers comply with the MMSEA law, and established a penalty of up to $1,000 per day per claim for failure to report.
In summary, there are two key points a P&C claims professional needs to understand:
- The 2007 MMSEA law (Section 111 Reporting) was passed primarily for the purpose of enforcing the 1980 MSP Act (Conditional Payment Recovery). Medicare wants to collect what is owed them under the MSP law, because that is where the largest pool of money is that they are legally entitled to be reimbursed for.
- There has now been two distinctly different laws enacted to ensure Medicare is reimbursed for Conditional Payments when a Primary Payer exists. Both laws are now in effect, and Medicare intends to enforce both. However, each law has its own separate set of requirements that a P&C insurer must understand and comply with.
Section 111 Reporting Requirements
- Who Must Report
o All RREs, which includes entities that provide liability insurance, no-fault insurance and Workers’ Compensation insurance (P&C insurance carriers, and self-insurers).
- When Reporting Became Mandatory
o Workers’ Comp & No-Fault claims open or reopened on or after January 1, 2010.
o General Liability claims settled on or after October 1, 2011.
- What Must Be Reported
o No-Fault claims:
- Includes MedPay, PIP and other no-fault claims
- Medicare uses term “Ongoing Responsibility for Medicals (ORM)
- First, upon acceptance of ORM; again, upon claim closure, policy exhaustion or other commutation of liability
- Obligation begins at first penny paid
o Liability claims
- Medicare uses term “Total Payment Obligation to Claimant” (TPOC)
- Settlement information – who, when, how much, what for, etc.
- For total settlements over $2,000
- How Report Must Be Filed
o Large numbers of claims
- Rule of Thumb – insurers with 100 or more Medicare beneficiary claims annually
- Requires special software provided by various vendors (NO phone, fax, email, USPS)
o Small numbers of claims
- Rule of Thumb – insurers with fewer than 100 Medicare beneficiary claims annually
- Medicare Direct Data Entry website
- Timing For Reports
o Assigned 7-day filing window – Quarterly (1st quarter after settlement)
o Direct Data Entry – anytime
- Non-compliance Penalties
o Up to $1,000 per day per unreported claim
- Who Must Reimburse Medicare
o Any entity that offers liability, no-fault, Workers’ Compensation insurance (including self-insurers)
o Any claim where Medicare beneficiary has suffered personal injury and money has traded hands
- When Reimbursement Became Mandatory
o 1980 (MSP Act)
o Input from Kendell on wording here
- What Must be Reimbursed
o Conditional Payment liens* on liability claim settlements over $1,000
o Conditional Payment liens* on no-fault claims beginning at first penny
*Liens often include unrelated charges that can be rebutted
- How Reimburse Medicare
o Flagship has identified more than 60 discrete steps in the Reimbursement process
- Timing For Reimbursement
- What Are Key Audit Points For Determining Compliance (do we know this?)
o Did you identify all Medicare beneficiaries
o Did you discover and pay all Medicare liens
o Did you obtain Case Closure Letter For All Medicare Beneficiary Claims
- Non-compliance Penalties
o Double damages, plus accrued interest