By now, everyone involved with auto, liability, no-fault, and workers compensation claims is aware that the Medicare Secondary Payer Act (42 U.S.C. 1395y) was passed by Congress and signed into law by President Jimmy Carter in December 1980. However, the current Medicare Secondary Payer (MSP) compliance program we are all familiar with today didn’t really get started until the mid 1990’s, traced back to HIPPA’s Medicare Integrity Program.
Who would have ever thought that a tiny provision of that law allowing CMS to contract with private vendors and subcontractors to carry out specific tasks and program activities that were being performed by other intermediaries and carriers would change the course and direction of the MSP law?
Back then, those of us involved in MSP compliance work, which was limited primarily to reimbursement of conditional payments and assisting parties with contractual language used in settlement agreements and general releases to make certain parties protected Medicare’s future interests, dealt with Medicare directly, oftentimes speaking with regional office representatives to figure out a solution to whatever problem or issue arose. No vendors, no contractors, no centers; just one agency and its regional offices.
But that all changed after the Medicare Integrity Program was passed by Congress and signed into law by President Bill Clinton in 1996. Over the last 20 years, although the agency itself has grown tremendously, and the regional offices have also grown significantly, the explosive growth has been in the number of vendors, contractors, and centers CMS has brought on to manage, work, administer, study, and report on MSP compliance.
Despite every administration’s promise to decrease the size of government, CMS has continued to bring on more of these private vendors to work on different components of the MSP compliance puzzle. So, how many of these contractors are now handling MSP compliance components? What exactly do these private vendors do? How do these centers fit into the larger MSP compliance program? And, are there any plans to bring more of them in? The following is a verbatim rendition of information provided by CMS in its December 2016 and February 2017 Statements of Work for the Medicare Secondary Payer Integration Contractor and Workers Compensation Review Contractor.
“Medicare is a nationwide federal health insurance program administered by the Centers for Medicare & Medicaid Services (CMS). Congress passed and President Lyndon Johnson enacted Medicare in 1965 as Title XVIII of the Social Security Act (the Act) (42 U.S.C. § 301 et seq.) for persons 65 years of age or older, certain younger disabled persons, and persons with end-stage renal disease (ESRD). The Medicare program serves well over 56 million beneficiaries and processes over one billion claims per year. “Traditional” Medicare consists of two primary parts: Hospital Insurance (HI) otherwise known as Part A, and Supplemental Medical Insurance (SMI) also known as Part B. A third part of Medicare, known as “Medicare Part C” or the “Medicare Advantage (MA) program,” was established by the Balanced Budget Act of 1997. It allows beneficiaries the option of receiving their Medicare benefits through private managed care plans and related kinds of organizations. Finally, the “Medicare Prescription Drug (PD) program,” also known as “Medicare Part D,” was enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).”
Medicare Part A Hospital Coverage
“Medicare Part A covers some of the costs of providing medically necessary inpatient hospital care, skilled nursing facility care following hospital care, home health agency, and hospice care. Individuals entitled to Social Security or Railroad Retirement benefits become automatically entitled to receive premium-free Part A benefits beginning with the first day of the month in which those individuals attain the age of 65; those not automatically entitled to such benefits may enroll and purchase Part A once they attain age 65. Other persons who are also automatically entitled to Part A include: 1) people younger than age 65 who receive Social Security disability benefits (after a 24 month waiting period) and meet certain qualifications; 2) persons with ESRD who met certain criteria; and 3) individuals who worked in particular Medicare-qualified Federal, state, or local government positions, provided certain conditions were met.”
Medicare Part B Physician Coverage
“Medicare Part B helps pay for certain physician services (in hospital and non-hospital settings), outpatient hospital services, certain home health services, diagnostic and laboratory tests when medically necessary, and other medical services, equipment and supplies not covered under Part A. Part B benefits are available to almost anyone age 65 or older regardless of entitlement to Part A and to all beneficiaries entitled to premium-free Part A. Part B carries a premium and is an optional benefit program under Medicare, meaning that eligible individuals may enroll to become entitled to Medicare Part B or may decline enrollment based upon various factors, including continued active employment.”
Medicare Part C Advantage Plans
“MA plans are an alternative to traditional Medicare whereby individuals entitled to Part A and enrolled in Part B, except for those who are entitled based upon ESRD, may elect to receive Medicare benefits by enrolling in a private Medicare managed care plan. The CMS contracts directly with qualified plans and those plans must offer a full range of Medicare benefits, and pay a fixed monthly amount for each enrolled beneficiary. MA plans often, but are not required to, offer Part D prescription drug benefits, as discussed below.”
Medicare Part D Prescription Plans
“The PD program works similarly to the MA program in that benefits are offered through private plans. To be eligible to enroll in Part D, a Medicare beneficiary must be either entitled to Part A or enrolled in Part B (whether he or she receives benefits through Medicare or through the MA program). A beneficiary with Medicare may enroll in a Prescription Drug Plan (PDP) for stand-alone Part D benefits. A beneficiary in the MA program must receive all Medicare benefits through the same MA plan; those MA entities that provide Part D benefits are identified as MA-PD plans or MAPDPs.”
Medicare’s Day to Day Administration
“The Medicare program’s authorizing statutes charge the Secretary of the Department of Health and Human Services (HHS) with administrative responsibility for the Medicare program. In turn, the Secretary has delegated the program authority for Medicare to the Administrator of CMS.”
“The CMS administers the Medicare program through activities such as: 1) program policy and guidance formulation and promulgation; 2) contract execution, operation and management; 3) utilization record maintenance and review; and 4) general Medicare financing. The CMS performs such administration through a complex set of relationships involving the private insurance industry, state and local governments, and thousands of independent hospitals, physicians, providers, and suppliers. Sections 1816(a) and 1842(a) of the Act provide that public or private entities and agencies may participate in the administration of the Medicare program under contracts or agreements entered into with CMS.”
“These contractors were known as Fiscal Intermediaries (FIs) and Carriers. With certain exceptions, FIs performed bill processing and benefit payment functions for Part A of the program; Carriers performed similar functions for Part B. However, the MMA requires that CMS phase out these contractors under Medicare Contracting Reform. Section 911 of the MMA requires CMS to replace all FIs and Carriers with competitively-procured Medicare Administrative Contractors (MACs) that will operate under Federal Acquisition Regulation (FAR) contracting authority and standards. As a result, CMS has transitioned all of its FI and Carriers to MACs.”
The Medicare Integrity Program (MIP)
“The Health Insurance Portability and Accountability Act of 1996 (HIPAA), added § 1893 to the Social Security Act, establishing the Medicare Integrity Program (MIP) (42 U.S.C. § 1395ddd). This program is funded from Medicare’s Federal Health Insurance Trust Fund for activities related to both Medicare Parts A and B. Specifically, § 1893 enables CMS to contract with an expanded pool of eligible entities to carry out certain Medicare integrity program activities that were being performed under contracts with FIs and Carriers. Although on March 20, 1998, CMS published a notice of proposed rulemaking in the Federal Register (63 FR 13590), which was never finalized or made into a final rule, § 1893 authorizes CMS to enter into MIP contracts without publication of a final rule.”
“The MIP activities identified in § 1893 include: 1) conducting medical reviews of claims to determine whether the services rendered were medically necessary and met an appropriate level of care; 2) detecting and deterring Medicare fraud, waste and abuse; 3) auditing provider cost reports; 4) developing/updating the list of durable medical equipment subject to prior authorization; and 5) ensuring that Medicare pays appropriately when a beneficiary has other insurance. This last activity is known as “Medicare Secondary Payer” (MSP) and involves those situations in which Medicare does not have primary legal responsibility for paying a beneficiary’s health care expenses because such responsibility belongs to a primary payer such an auto, liability, no-fault, or workers compensation insurer, self-insured, or third party administrator.”
The Medicare Secondary Payer (MSP) Program
“MSP involves those functions performed to identify when another payer has payment responsibility before Medicare and steps taken in order to make sure primary payers pay claims in the proper order and reimburse Medicare for primary payments made when another payer has primary responsibility. Under the MSP Act (42 U.S.C. § 1395y(b)(2)) and the implementing regulations (42 CFR Part 411), Medicare is precluded from making primary payment where the beneficiary is:
- Age 65 or older and covered under an employer’s Group Health Plan (GHP) based on the current employment status of the individual or of his/her spouse (of any age), and the employer has at least (20) employees, or the GHP is part of a multi-employer plan where at least one employer has at least (20) employees and the GHP has not requested a formal small employer exception under 42 CFR 411.172(b) for any employee age 65 or older employed at a company with less than (20) employees; or
- Under age 65, entitled to Medicare on the basis of disability, and covered under an employer’s Large Group Health Plan (LGHP) based on his/her own current employment status or the current employment status of a family member. A LGHP is a plan where the employer has 100+ employees, or the GHP is part of a multi- employer plan where at least one employer has 100+ employees; or
- Within the first 30 months of eligibility/entitlement to Medicare based on having End-Stage Renal Disease (ESRD) and is covered under any GHP (regardless of size or employment status) that covers individuals who have ESRD.
- Where payment has been made, or can reasonably be expected to be made, under a workers’ compensation (WC) law or plan, under no-fault insurance, or under liability insurance (including self- insurance). An entity that engages in a business, trade, or profession is deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance or otherwise) in whole or in part. A primary plan’s responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means.”
The Coordination of Benefits & Recovery (COB&R) Program
“Although at one point Coordination of Benefits (COB) and Medicare Secondary Payer Recovery (MSPR) were separate entities handling different components of MSP compliance, today, CMS has established a centralized COB and MSPR operation by consolidating these activities under a single program, the COB&R (Coordination of Benefits & Recovery). The COB&R includes all of activities that support the collection, management, and reporting of other insurance coverage of Medicare beneficiaries and the collection of conditional payments or mistaken primary payments. These activities have previously been performed under two separate contracts. CMS has now established a centralized COB and MSPRC operation that provides a single source to Medicare providers, suppliers, beneficiaries, insurers and other stakeholders by streamlining the MSP data and debt collection processes, while ensuring the integrity of the Medicare Trust Funds.”
“Consolidation of these two programs with an award to a single prime contractor has created a substantially large program and continues to impose restrictions on CMS related to its ability to monitor and react to a contractor’s performance. To avoid this situation, CMS has established a matrix organization of independent contracts to manage the major functions of MSP compliance. Under the matrix organization, the combined COB&R activities are performed by the:
- Benefits Coordination & Recovery Center (BCRC);
- Medicare Secondary Payer Integration Contractor (MSPIC);
- Medicare Secondary Payer Systems Contractor (MSPSC);
- Commercial Repayment Center (CRC); and
- Workers’ Compensation Review Contractor (WCRC).
These components work in concert to encompass all of the activities necessary to ensure that the primary payer – whether it is Medicare, employer’s group health insurance, auto, liability, no-fault, or work comp insurer, self-insured, or administrator – pays first, then identifies claims that were paid conditionally or mistakenly paid by Medicare as primary, and pursues recovery in the most cost effective and efficient manner.”
The following sections provide a high level overview of the functions to be performed by the matrix contractors of the COB&R:
1. The Benefits Coordination & Recovery Center (BCRC)
“The role of the BCRC is to perform those activities related to the operational components of COB&R. The BCRC activities consist of the following high-level functions:
- Call Center
- Mail Room/Imaging
- MSP Assessment and Debt Determination
- Waivers and Appeals
- Finance Administration
- Debt Collections
- Coordination of Benefits Agreement (COBA)
- Electronic Data Interchange (EDI) Support
- Special Projects”
2. The Medicare Secondary Payer Integration Contractor (MSPIC)
“The role of the Integration Contractor is to make certain that all components supporting the COB&R contract function in concert. The MSP Integration Contractor makes certain all new and ongoing activities are properly communicated, handled, and managed by all COB&R supporting matrix contractors. The MSP Integration Contractor is not held responsible for the various CMS program wide deliverables submitted from the other COB&R matrix contractors. However, the MSPIC is expected to make sure all COB&R contractors are aware of the program deliverables. The following is a synopsis of the activities that are performed by the integration contractor:
- Program Release Management
- Business Analysis
- Program-wide Document Management
- Security Oversight
- Quality Assurance Oversight
- Outreach and Education”
3. The Medicare Secondary Payer Systems Contractor (MSPSC)
“The MSPSC provides development and support for all information systems for the COB&R contract. The MSPSC is allocated 90,000 hours annually to perform these functions. Two-thirds of these allocated hours are used for development activities, while the remaining hours are used to for ongoing support of the information systems. This support includes all systems operations and software support.
The MSPSC Contractor is comprised of the following groups and/or functions:
- Data Center Operations
- Network Support
- Systems Security
- Communication Support
- Data Management
- Software Development and Support”
4. The Commercial Repayment Center (CRC)
“Fully operational since October 2015, the CRC functions include the identification and development of Group Health Plan (GHP) MSP Recovery, Non-GHP recovery cases where ongoing responsibility for medical care exists, and all associated recovery activities, which include, but are not limited to:
- Identifying and developing debts
- Responding to incoming inquiries
- Reviewing and responding to demand defenses and rebuttals
- Providing litigation and negotiation support
- Performing all related Debt Collection Improvement Act of 1996 (DCIA) activities
- Complying with all required financial activities”
5. The Workers’ Compensation Review Contractor (WCRC)
“Medicare beneficiaries, their attorneys, employers, insurers, self-insured agencies, and their attorneys have significant responsibilities under the MSP to protect Medicare’s future interests. Because Medicare does not pay for an individual’s WC-related medical services and/or prescription drugs when the individual receives a WC settlement that includes funds for future medical and/or prescription drug expenses, it is critical that all parties associated with such a settlement, judgment, award, or payment consider Medicare’s future interests at the time of settlement. For this reason, CMS recommends that parties to a WC settlement set aside funds, through a Workers’ Compensation Medicare Set- Aside Arrangement (WCMSA), for all future medical and/or prescription drug expenses related to the WC injury or illness/disease that would otherwise be reimbursable by Medicare.”
“The WCRC is responsible for the following activities pertaining to WCMSA:
- Reviews submitted WCMSA proposals to determine adequacy of proposed settlement funds in anticipating a beneficiary’s future ongoing course of medical treatment in association with his/her work-acquired illness, injury, or disease.
- Counters WCMSA proposals that have not anticipated future medical and/or prescription costs appropriately in light of standard medical care guidelines.
- As necessary, reconsiders additional information not previously provided in association with a previously submitted WCMSA proposal.”
“In addition to WCMSAs, the WCRC may also start reviewing Liability Medicare Set Aside Arrangements (LMSA) and No-Fault Medicare Set Aside Arrangements (NFMSA). In its latest February 2017 statement of work for the new WCRC contract, CMS announced that for staffing and other resource considerations, in addition to the 1,600 new WCMSA proposals normally received per month by the WCRC, in the event that CMS would choose, the WCRC shall be ready to implement a similar process to what exists currently under the WCMSA process to evaluate MSAs for other applicable NGHP insurances within 90 days of request. This shall include all supporting tasks. These other NGHP cases will be broken into two categories based on proposed settlement amounts. Full review cases will require a complete review as similarly outlined under the requirements for WCMSA submissions. These reviews could represent as much as 11,000 additional cases (based on all FY2015 NGHP demands), or as little as 800 additional cases annually, depending upon industry response.”
Who would have ever thought that a tiny provision of the HIPPA law allowing CMS to contract with private vendors and subcontractors to carry out specific tasks and program activities that were being performed by other intermediaries and carriers would change the course and direction of the MSP law? Over the last 20 years, although CMS and its regional offices have grown tremendously, the explosive growth has been in the number of vendors, contractors, and centers CMS has brought on to manage, work, administer, study, and report on MSP compliance.
Today, there is a matrix of organizations performing the various tasks associated with MSP compliance, including the Benefits Coordination & Recovery Center, the Medicare Secondary Payer Integration Contractor, the Medicare Secondary Payer Systems Contractor, the Commercial Repayment Center, and the Workers’ Compensation Review Contractor. These contractors work in concert to encompass all of the activities necessary to ensure that the primary payer – whether it is Medicare, employer’s group health insurance, auto, liability, no-fault, or work comp insurer, self-insured, or administrator – pays first, then identifies claims that were paid conditionally or mistakenly paid by Medicare as primary, and pursues recovery in the most cost effective and efficient manner.
So what is next? Can you see a specific vendor managing mandatory insurer reporting? How about a separate entity handling review of liability and no-fault Medicare set aside arrangements? I can also see a single contractor handling administration of MSA funds. 20 years ago I could not envision this was going to be the way the federal government would have chosen to administer the MSP program. 10 years ago, with only two contractors at hand, considering the low cost and high return of hiring such contractors, I could only guess about such possibilities and its potential. Today, we all know with certainty it is reality, it is business, it is the way the MSP program will continue to be managed and tracked for years to come.
About Medicare Conditional Payments
42 CFR Section 411.21 indicates that Medicare conditional payments are payments made by Medicare for medical treatment where a primary payer (insurer or self-insurer) has or may have an obligation to make such payment. Primary payers must reimburse Medicare for conditional payments it has made. 42 USC Section 1395y indicates that primary payers include group health providers, workers’ compensation, liability and no-fault insurers and self-insured entities, as well as physicians, attorneys, hospitals, or clinics that receive payment from a primary payer must make reimbursement.
42 USC Section 1395y also indicates responsibility as a primary payer arises even if liability for the medical expense is contested. Such a responsibility can be demonstrated by entry of a judgment or by payment conditioned on a release or waiver of payment, even if liability is denied. 42 CFR Section 411.24 indicates Medicare has a direct right of action against all primary payers responsible for making payment. And, Medicare has a direct right of action against any person or entity that received a primary payment, including the Medicare beneficiary, medical provider, physician, attorney, state agency or private insurer.
About Medicaid Liens
42 USC Section 1396a mandates that all reasonable measures to ascertain legal liability for Medicaid payments and reimbursement of same be taken. The state or agency administering a Medicaid plan must take all reasonable measures to ascertain the legal liability of third parties to pay for care and services paid by Medicaid. Federal law also provides that in any case where such a legal liability is found to exist after medical assistance has been made available on behalf of the individual, the state or local agency must seek reimbursement for such assistance to the extent of such legal liability. 42 U.S.C. Section 1396a(a)(25).
The 2013 Strengthening Medicaid Third Party Liability Act, effective October 1, 2017, allows state Medicaid agencies or the insurers/managed care organizations contracted with to provide such benefits to seek reimbursement from any responsible third party of all payments made from the entirety of settlement, judgment, award funds, not just a portion thereof.
About Flagship Services Group
Flagship Services Group is the premier Medicare compliance services provider to the property & casualty insurance industry. Our focus and expertise has been the Medicare compliance needs of P&C self-insureds, insurance companies, and third party administrators. We specialize in P&C mandatory reporting, conditional payment resolution, and set aside allocations. Whether auto, liability, no-fault, or work comp claims, we have assembled the expertise, experience and resources to deliver unparalleled MSP compliance and cost savings results to the P&C industry. To find out more about Flagship, our folks, and our customized solutions, please visit us at www.flagshipservicesgroup.com. To speak with us about any of our P&C MSP compliance products and services, you may also contact us at 888.444.4125 or email@example.com.
About Rafael Gonzalez
Rafael Gonzalez, Esq. is President of Flagship Services Group, the only national Medicare Secondary Payer services provider focusing on and offering comprehensive mandatory reporting, conditional payments, and set aside allocation compliance services to the property and casualty insurance industry. He speaks and writes on mandatory insurer reporting, conditional payment resolution, set aside allocations, CMS approval, and MSA and SNT professional administration, as well as the interplay and effect of these processes and systems and the Affordable Care Act throughout the country. Rafael blogs on these topics at Medicare Compliance for P&C Insurers at www.flagshipservicesgroup.com/blog. He is very active on LinkedIn, Twitter, Instagram, and Facebook. He can be reached at firstname.lastname@example.org or 813.967.7598.