The Medicare Secondary Payer Act ensures that Medicare doesn't pay claims it isn't responsible for. Implementation of the new reporting requirements has left some insurers scrambling to get ready. Here's what you need to know to protect your business.
A new reporting process that includes workers' compensation and self insurance could be costly for those who are not in compliance. The new requirements are meant to help Medicare identify claimants who have coverage under other forms of insurance and to prevent Medicare payment for treatments covered by these insurers. The reporting process should be implemented this summer, and those unaware face steep fines.
Beneficiaries of Medicare who have health coverage through a group health plan or require medical treatment that is covered by liability insurance (including self insurance), no-fault insurance, or workers' compensation insurance are required to exhaust these forms of coverage before using Medicare. Medicare refers to these types of insurers as Medicare Secondary Payers (MSPs.)
The Medicare Secondary Payer Act will implement new reporting requirements to assure that these MSPs pay their fair share. The Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA), Section 111 adds electronic reporting requirements for MSPs. These entities are now responsible for reporting the identity of a Medicare beneficiary whose illness, injury, incident, or accident was at issue to determine an appropriate coordination of benefits as well as any applicable recovery claim.
To this end, Medicare will begin collecting information on claims filed through other forms of insurance by Medicare beneficiaries. The information will be used to prevent Medicare from paying for services where it is not the primary carrier. Medicare will also make conditional payment demands on insurers responsible for expenses paid by Medicare. Reporting requirements exclude claims that were closed on or before January 1, 2009, and claims that were settled on or before July 1, 2009.
These new reporting requirements can be confused with Medicare Set-Aside Arrangements, which allocate a portion of a workers' compensation settlement for future medical expenses. Set-Asides must be submitted to CMS for approval to ensure that Medicare's interests are protected when workers' compensation claims are being settled. The Set-Aside requirements are a means of collecting funds for future Medicare claims.
Getting ready for the new reporting requirements has been no simple task for carriers, as directions for implementation came from CMS on a tight deadline, and the reporting process was not fully established until recently. Insurers must register with coordination of benefits contractors (COBC), who will work with insurers to cull submitted data for the information necessary to determine appropriate payment of Medicare benefits. To meet the new reporting requirements, insurers are working with these COBCs to enhance their systems and electronically capture required data. This reporting process specifically includes self-insured entities that may not have the ability to implement the reporting processes. This may require some self-insured entities to switch to carrier coverage to ensure they have a reporting process in place.
The penalty for noncompliance—not reporting a claimant's information in a correct and timely manner—is $1,000 per day, per claim. The Responsible Reporting Entity (RRE) is subject to the fine. If the policyholder is insured and the claim is being handled or paid by the carrier, then the carrier is the RRE and is subject to the fine. However, if an employer is self-insured or handles and pays its own claims, it can find itself subject to this fine. Members of self-insured funds and other self-insureds that utilize a third-party administrator should also check to make certain the new reporting requirements are followed.
When there is an incident at work that doesn't require medical treatment, or only requires first aid, employers should put their insurance carriers on notice with an RPO in case the injury requires treatment at a later date. The sooner this information is made available, the better the insurance carrier will use information such as name, date of birth, and Social Security number to query the CMS coordination of benefits contractor for the claimant's Medicare eligibility. Simply reporting an RPO can determine if further information should be gathered from the claimant. "If we find that someone is Medicare eligible, we need to handle the claim because we have the necessary data feed to do the reporting,” says Breard. "If we don't know about the claim, then we can't query it to find out if they are Medicare-eligible and we can't report it properly.”
New reporting requirements aside, allowing the insurance carrier to handle all claims has definite benefits. The claims process is focused on positive outcomes for everyone involved. Using the claims process allows the injured worker to receive expedited medical treatment as soon and as quickly as possible.
