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					                  Mandatory Reporting for Self-Insured Hospitals and
                  Captive Insurers Under Medicare Secondary Payer
                  Rules
                  Joan F. Polacheck                                James W. Kim
                  McDermott Will & Emery LLP                       McDermott Will & Emery LLP
                  227 W. Monroe Street                             227 W. Monroe Street
                  Chicago, IL 60606                                Chicago, IL 60606
                  312.984.7556                                     312.984.5808
                  jpolacheck@mwe.com                               jakim@mwe.com


                                      12:00 pm – 1:30 pm EDT, April 23, 2009


                                                       The information contained in this presentation is for
                                                        educational purposes only and does not constitute
                                                                                              legal advice.




Overview
▪   Summary:
    – New Medicare Secondary Payer (MSP) provisions require self-
        insured hospitals or their captive insurers to report certain data to
        CMS regarding liability settlements, judgments, awards, or other
        payments to Medicare beneficiaries that relate to medical care
▪   Agenda:
    1. Background of Reporting Statute and MSP
    2. Reporting Requirements for Hospitals & Captive Insurers
    3. Claim Resolution Strategies
▪   Note:
    – This presentation is specifically targeted at hospitals and captive
        insurers, and primarily deals with reporting requirements applicable to
        liability insurance (including self-insurance)
    – This presentation does not address Group Health Plan reporting
        requirements




                                                                                                          2




                                                                                                               1
I. Background of the Reporting Statute and MSP




                                                                                       3




What is Medicare Secondary Payer?
▪   Medicare Secondary Payer (MSP) =         ▪   Example: A 70-year old patient
    Coordination of Benefits with Medicare       who is a Medicare beneficiary has
     – In 1980 Congress prohibited               an adverse result from surgery at
       Medicare from paying for health           Hospital A and files a negligence
       services that are also covered by         claim against Hospital A and his
       other insurers through codification       physician. Hospital A settles for a
       of the Medicare Secondary Payer           lump sum amount of $500,000,
       Act at 42 USC § 1395y(b)(2)               which is within Hospital A's self
     – MSP is the term used by
                                                 insured retention. The settlement
       Medicare when Medicare is not
                                                 recites that payment of the
                                                 settlement amount releases
       responsible for paying first for a
                                                 Hospital A from any further claims
       claim for services and/or goods
                                                 relating to the surgery. Any
     – A liability claim judgment or             related medical care that was or
       settlement that includes a release        will be provided for the claimant
       of medical expenses for a                 that is covered by Medicare must
       Medicare beneficiary is impacted          first be paid from the settlement
       by MSP                                    amount, since Medicare pays
                                                 secondary to the liability
                                                 coverage.



                                                                                       4




                                                                                           2
History of MSP
▪   MSP was enacted as Section 953 of the Consolidated Omnibus
    Reconciliation Act of 1980, codified as amended at 42 U.S.C. § 1395y(b)(2)
     – Initially, there was a debate whether certain self-insured entities were
         included in MSP (Mason v. American Tobacco Co., 346 F.3d 36 (2nd
         Cir. 2003) (held that tobacco companies were not self-insured plans
         subject to MSP))
▪   36 days following the decision in Mason, President Bush signed the
    Medicare Act of 2003, which revised the scope of MSP to explicitly include
    self-insured entities
     – A self-insured entity is now defined for purposes of MSP as “[a]n entity
         that engages in a business, trade or profession . . . [that] carries its own
         risk (whether by a failure to obtain insurance, or otherwise) in whole or
         in part.” 42 U.S.C. § 1395y(b)(2).
▪   Hospitals and other entities that maintain a self insured retention (SIR) or
    deductible in their liability coverage where the hospital makes payment to
    the claimant are considered self-insured for purposes of MSP




                                                                                        5




Who is Subject to MSP?
▪ The Medicare Secondary Payer Act requires “primary plans” to pay
  primary to Medicare
▪ “Primary Plans” include:
    – Group health plans;
    – Workers’ compensation;
    – Automobile insurance policies or plans;
    – Liability insurance (including self-insurance) policies or plans;
      and
    – No fault insurance
▪ Self-insured hospitals are subject to MSP both in their role as
  liability self-insurer (must pay primary to Medicare) as well as
  provider (must determine whether Medicare patient’s care is
  covered primarily by liability insurance/self-insurance, with Medicare
  secondary)



                                                                                        6




                                                                                            3
MSP Claims Processing
▪ MSP claims were once investigated at the Regional Offices (now
  the Financial Management and Fee for Service Operations
  Consortia) – since January 8, 2001, all initial investigations are now
  handled by the COB Contractor, Group Health Incorporated (GHI),
  based in NYC.
▪ MSP claims are commonly seen in the Workers’ Compensation
  area:
   – These claims are resolved through cooperation between CMS
      and state WC boards
   – CMS recovers for conditional payments made for past medical
      care the beneficiary received that should have been paid
      through the settlement or other award
   – CMS requires the imposition of a Workers’ Compensation
      Medicare Set Aside (WCMSA) to address future medical costs
        ▪ Settlements less than $10,000 are exempted from reporting
          (used to be $250,000 + no anticipated Medicare eligibility in
          30 months)


                                                                                                        7




NGHP MSP Recovery Process
▪   See http://www.msprc.info for
    more information about the MSP
    Recovery Contractor and the
    recovery process
▪   Once an MSP claim is identified,
    the MSPRC pursues recovery
    through a demand letter to the
    debtor, which can be the
    insurance plan or self-insured
    entity
▪   MSP Manual, Chapter 2, Section
    40.1 states that “Medicare has a
    statutory direct right of recovery
    from the liability insurance as well
    as any entity that has received
    payment directly or indirectly from
    the proceeds of a liability
    insurance payment”
                                           Source: Medicare Secondary Payer Recovery Contractor, Non-
                                           Group Health Plan Process,
                                           http://www.msprc.info/processes/nghp%20flowchart.pdf.




                                                                                                        8




                                                                                                            4
MMSEA Section 111
▪   On December 29, 2007, Congress enacted the Medicare, Medicaid and
    SCHIP Extension Act of 2007 (MMSEA)
▪   Section 111 of MMSEA (codified at 42 U.S.C. § 1395y(b)(8)) requires:
     – Certain “applicable plans,” including liability, self-insurance, no fault,
        and workers’ compensation plans
     – To report to Medicare
     – Payment and/or ongoing responsibility
     – For claims brought by Medicare beneficiaries against the plan or party
        insured by the plan
▪   CMS has designated two categories of entities that are subject to Section
    111 reporting requirements:
     1. Group health plans (GHP)
     2. Non-group health plans (NGHP), including liability insurance (including
        self-insurance), no-fault insurance, and workers’ compensation




                                                                                    9




MMSEA Section 111
▪   MMSEA Section 111 Reporting is required for hospitals in their role as
    Insurer, rather than Provider

▪   GHP reporting requirements were effective January 1, 2009, and NGHP
    Reporting requirements are effective July 1, 2009

▪   Failure to report can result in civil penalties of up to $1,000 per day per
    claim being imposed upon the RRE

▪   CMS initially estimated only 400 NGHP entities (liability/self-insurance, no
    fault and WC plans) will be required to report information to CMS
     – CMS estimated that there are approximately 2.9 million non-GHP
         claims made annually by Medicare beneficiaries that would be subject
         to reporting requirements




                                                                                    10




                                                                                         5
Why Section 111 Reporting?
▪   Section 111 reporting will help CMS to identify amounts paid to Medicare
    beneficiaries as a result of claims brought against insurers or insured
    entities where a portion of the payment covers medical care that has been,
    or will be covered by Medicare in the future
▪   Reporting will aid CMS in reducing overall costs to the federal government
▪   Nevertheless, it is important to remember that this is not a substantive
    expansion of MSP, but merely a requirement to affirmatively submit
    information with regard to potential MSP issues to Medicare
      – Some modifications will likely occur in the future as this reporting
         process is implemented




                                                                                 11




II. Reporting Requirements for Hospitals and Captive
Insurers




                                                                                 12




                                                                                      6
Key Steps to Section 111 Compliance

1. Identify:        Identify the Responsible Reporting Entity (RRE) – the RRE is
                    legally obligated to report certain claims information to CMS
                    and is the party that is subject to fines for non-compliance

2. Register:        The RRE must process a registration with CMS (between
                    May 1, 2009 and June 30, 2009);

3. Test:            Once registered, the RRE must also successfully undergo
                    file submission testing (file submission testing for claims files
                    is permitted from July 1, 2009 – December 31, 2009)

4. Report:          The RRE must identify claimants that are Medicare
                    beneficiaries and submit a report where a beneficiary’s claim
                    is fully or partially resolved through settlement, judgment,
                    award or other payment – reporting required within a seven-
                    day quarterly window beginning January 1, 2010 (but may
                    begin as soon as October 1, 2009 if so desired)



                                                                                          13




Step 1: Identify the Responsible Reporting Entity
▪   “Responsible Reporting Entity” (RRE) is the term CMS uses to describe the
    entity responsible for reporting Section 111 claims. An RRE is defined as:
     – the entity who: (1) pays a settlement, award, judgment, or other
         payment, or (2) has responsibility for ongoing medical payments
     – on or after July 1, 2009
     – to a claimant who is a Medicare beneficiary
▪   Determining who is the RRE comes down to who pays the claimant -- an
    entity that is self-insured or one that makes deductible payments to the
    claimant directly is an RRE
     – A hospital will typically have multiple lines of insurance (i.e., general
         liability, professional liability, director and officer, automobile, heliport,
         etc.) – determining whether the hospital is responsible for reporting as
         an RRE depends on whether the hospital has a SIR or deductible
         where it pays the claimant, or if the hospital’s captive pays/indemnifies
         the hospital, and the hospital pays the claimant
     – Third Party Administrators (TPAs) may not be the RRE for NGHPs



                                                                                          14




                                                                                               7
Captive/Excess Insurance – Who Reports?

▪ Captive Insurance
   – In most cases, hospital-owned offshore captive insurers
     reimburse the insured/owner for losses, making the insured
     hospital the RRE (i.e., the coverage is self-insurance as
     between the claimant and hospital)
   – For most offshore captives, the captive must indemnify the
     insured hospital and cannot pay the claimant for tax and
     insurance regulatory reasons
▪ Excess insurer over hospital SIR
   – An excess insurer is unlikely to modify its policy language to
     make payments for all claims to claimants (with the SIR and/or
     deductible reimbursed by the self-insured entity to the excess
     insurer), in order to permit the insured to avoid RRE status



                                                                      15




Step 2: Register on COBC Secure Website

▪ Each RRE must register on the COBC Secure Website between
  May 1, 2009 – June 30, 2009 (www.section111.cms.hhs.gov)
▪ RREs will be assigned an RRE ID for submission of claims data
   – An entity may have a single RRE ID for all subsidiaries in a
     system or separate RRE IDs
   – Use of single or multiple RRE IDs is permitted by CMS and may
     be determined by the RRE, depending on the circumstances of
     each RRE
   – RRE remains liable for any civil penalties
▪ RREs must designate which of three format types will be used for
  submission of claims files: HTTPS, SFTP or Connect:Direct




                                                                      16




                                                                           8
Step 2: Register on COBC Secure Website

▪ RREs must assign:
   – one Authorized Representative, who is an individual who has the
     legal authority to bind the RRE entity to a contract
   – one Account Manager, who is an individual who controls the
     administration of an RRE’s account and manages the overall
     reporting process
▪ RREs may assign:
   – one Agent per RRE ID, who is empowered to submit Section
     111 reports to CMS under the associated RRE ID on behalf of
     the RRE
   – any number Account Designees, who assist the Account
     Manager with the reporting process




                                                                            17




Step 3: Test Claims File Submission

▪ RREs must pass a testing process for each file submission type
  prior to sending production files for Section 111
▪ Testing is permitted between July 1, 2009 – December 31, 2009
▪ A series of test files will be submitted to the COBC in order to verify
  that the RRE can transmit files successfully in the correct format,
  accept and process response files, and properly submit add,
  update, and delete records
▪ If the RRE is using an agent to test, the agent must submit and pass
  the testing process on behalf of the RRE. Testing must be
  completed for each RRE ID registered.
▪ Once claims file testing is completed, submission of production
  claims files is permitted
▪ Testing of the query function is permitted as well, but not required
  for Section 111 reporting


                                                                            18




                                                                                 9
Timing of Registration and Testing

▪ No penalties exist for failure to register
▪ Penalties can only be imposed for failure to promptly report, which
  can be substantial
▪ However, CMS has stated that it may take a “significant amount of
  time” to process a registration with CMS using the COB secure web
  site
    – RREs that anticipating having reportable claims in the first year
       of quarterly reporting should register by June 30, 2009 to
       prevent any delay in reporting




                                                                                  19




Step 4: Identify and Report Section 111 Claimants
▪   Summary:
     – RRE must identify claims brought against the NGHP or the insured
       where a settlement, award, judgment, or other payment has occurred
     – For any such claims, the RRE must validate Medicare beneficiary
       status for the claimant
         ▪ RRE is permitted, but not required, to use the query function set up
            by CMS to verify claimant beneficiary status
     – For one-time payments (including annuities), the RRE must report the
       settlement, award, judgment or other payment to CMS
     – For claims involving ongoing responsibility for medicals (ORM), the
       RRE must:
         ▪ report payment to current Medicare beneficiaries;
         ▪ report terminations of ORM; and
         ▪ monitor non-Medicare beneficiaries that have ORM on a quarterly
            basis, and report if the claimant becomes a Medicare beneficiary




                                                                                  20




                                                                                       10
Verifying Medicare Status: The Query Function
▪   Program established by CMS for
    RREs to verify Medicare beneficiary
    status
      – similar to one already used by
         GHP
▪   RRE sends collected personal
    identifying information about the
    claimant (which must include either
    the SSN or HICN) to CMS and
    receives a response that identifies any
    Medicare beneficiaries based on
    submitted info
▪   Possible Concerns for Compliance:
      – Will RREs have access to
         claimant SSNs?
      – How does an RRE determine
         when a case is “closed’?
      – Safe harbor for good faith
         attempt?



                                                                         21




Querying: Don’t Assume Beneficiary Status

▪ Assuming all persons under 65 are not Medicare beneficiaries or
  that all persons over 65 are Medicare beneficiaries is improper
   – Medicare beneficiaries include disability and ESRD as well as
      age-based eligibility
   – in 2000, AARP reported that 16% of Medicare beneficiaries were
      under 65 and approximately 10% of Medicare’s payments were
      for beneficiaries under 65
   – Persons over 65 may elect not to enroll in Medicare for a variety
      of reasons and should not be assumed to be beneficiaries
▪ Infants/Children
   – Infants and children may become Medicare-eligible through
      disability/ESRD and should not be assumed to be non-
      beneficiaries



                                                                         22




                                                                              11
Queries: HIPAA/Privacy Concerns

HIPAA                                         State Laws
▪ CMS has stated that                         ▪ CMS has stated that state
   “[c]ollection of SSNs for the                 restrictions on SSN use and
   purposes of coordinating                      collection “do not preempt the
   benefits with Medicare is a                   MSP statutory or regulatory
   required, legitimate, and                     provisions or the ‘permitted
   necessary use of the SSN                      use’ provisions of the HIPAA
   under Federal Law.”                           privacy rule”




                                                                                          23




Timing of Reports
▪   When do you report?
    – Submissions must be made within assigned seven day file submission timeframe
      each quarter (each RRE ID receives its own submission window) following
      January 1, 2010
▪   What do you report?
    – The first event to occur, whether settlement, judgment, payment, or other award,
      triggers reporting
       ▪ No need to report actual payment (delivery of check) after
           settlement/judgment, if for the same amount
       ▪ No need to report pending settlements (reporting a pending settlement does
           not satisfy the RRE’s obligation to report once triggered)
       ▪ No need to track or report regarding one-time payment settlements that
           occurred prior to July 1, 2009
    – RREs must also report on claims where ongoing medical responsibility was
      assumed prior to July 1, 2009
       ▪ However, no reporting required for liability insurance, self-insurance, or no-
           fault where the date of incident was before December 5, 1980 (does not
           apply to WC)
       ▪ Can delay reporting of ongoing responsibility assumed prior to July 1, 2009
           until 3Q 2010




                                                                                          24




                                                                                               12
Multiple Reporting Cycles
                                           ▪   CMS permits RREs to request and
                                               receive multiple RRE IDs – CMS
                                               recommends a new RRE ID when
                                               helpful for organization purposes, such
                                               as for each line of insurance (WC, no-
                                               fault, liability)
                                                 – Each RRE ID will be assigned a
                                                    quarterly reporting cycle – thus,
                                                    up to 12 reports (4 quarters, 3
                                                    lines of insurance) will need to be
                                                    submitted each year
                                                 – CMS has stated that, when
                                                    possible, it would attempt to
                                                    coordinate reporting cycles, but
                                                    asked for RREs to notify the
                                                    COBC when registering of
                                                    multiple RRE IDs that require
                                                    coordination



                                                                                          25




Reportable Events: One Time Payment vs. ORM
1. One Time Payment Obligation: One Report
    – If an NGHP claim is resolved or partially resolved through settlement,
      judgment, award or other payment (including structured settlements
      and annuities) where there is payment for medical costs
    – However, where there is an award with no claim for nor a release of
      medical costs, no reporting is required (i.e., property-only claims)
         ▪ CMS is not bound by the language of the settlement determined by
           the parties, but will recognize an allocation of liability designated by
           a court of competent jurisdiction
2. Ongoing Responsibility for Medicals (ORM):
    – An RRE must report ORM with regard to a claimant who is a Medicare
      beneficiary
    – If an NGHP has ORM with regard to a claimant who is not currently a
      Medicare beneficiary, the RRE must monitor the claimant’s Medicare
      status on a quarterly basis and report if he or she becomes a
      beneficiary
    – If the RRE terminates its ongoing responsibility for medical costs, the
      RRE must report (if both obligation and termination occur in the same
      quarter, these can be reported together in a single report)


                                                                                          26




                                                                                               13
What Types of Payments are Reportable?
▪ Generally, all payments made to a Medicare beneficiary in
  resolution of a claim that involves a claim or release for medical
  costs are reportable, regardless of a determination or admission of
  liability, upon full or partial resolution of the claim
    – Claims for injuries that occur outside of the United States -- the
      geographic location of the incident, illness, injury is not
      determinative of the RRE’s reporting responsibility
▪ Non-Reportable Disbursements:
    – One time payment for defense evaluation - A payment made
      specifically for this purpose directly to the provider or other
      physician furnishing this service does not trigger the requirement
      to report
    – Where there is no settlement, judgment award or other payment,
      including no assumption of responsibility for ongoing medicals,
      there is no Section 111 report required. As indicated earlier, the
      fact that there is no admission or determination of liability does
      not exempt an RRE from reporting


                                                                           27




Reportable Payments?

▪ Are these payments reportable? Under what
  circumstances?
   – Copayment waivers
   – Provision of free services
   – Gift Cards




                                                                           28




                                                                                14
Claims Involving Appeals
▪ Claims involving One-Time Payment (TPOC) where the NGHP is
  appealing or further negotiating the judgment/award/other payment:
   – If payment is being made, pending results of the
      appeal/negotiation, the TPOC must be reported
   – If payment is not being made pending results of the
      appeals/negotiation, the TPOC is not reported until the
      appeal/negotiation is resolved
▪ Claims involving ORM where the NGHP is appealing this judgment
  or award
   – If payment is being made, pending results of the appeal, the
      ORM must be reported
   – If payment is not being made pending results of the appeals, the
      ORM is not reported until the appeal is resolved
▪ CMS has not yet addressed the effect of an appeal bond to this
  requirement


                                                                                     29




Interim Reporting Threshold Amounts
–       CMS has established Interim Reporting Threshold Amounts – if the
        total payment to a claimant from all RREs falls under a certain
        value, no report is required

1. One Time Payment:
    –      No-fault = no threshold
    –      Liability/Self-Insurance & WC (includes all payments by all RREs):
         ▪     7/1/09 – 12/31/10: TPOC ≤ $5,000
         ▪     1/1/11 – 12/31/11: TPOC ≤ $2,000
         ▪     1/1/12 – 12/31/12: TPOC ≤ $600
    –      For one-time payments involving a deductible, where the RRE is
           responsible for reporting both any deductible and any amount above
           the deductible, the threshold applies to the total of these two figures
    –      Note: Payments that do not meet the reporting thresholds are still
           subject to MSP and other Medicare requirements (e.g. copayment
           waiver issues)




                                                                                     30




                                                                                          15
Interim Reporting Threshold Amounts

2. Ongoing Responsibility for Medicals (ORM):
   – No-Fault = no threshold
   – Liability/Self-Insurance = no threshold
   – WC – claims that meet the following 4 requirements are
      excluded from reporting through December 31, 2010:
      ▪   “Medicals only”
      ▪   “Lost time” of no more than 7 calendar days
      ▪   All payments have been made directly to the medical
          provider
      ▪   Total payment does not exceed $600.00




                                                                                    31




Amending/Adding/Deleting Reports
▪   “Deletion/Addition” is required for   ▪   “Update” of an existing report is
    certain “Key Field” changes to an         required for certain other changes:
    existing report:                           – ICD-9 Diagnosis Codes 1-19
     – Injured Party SSN or HICN               – Description of Illness/Injury
        (wrong person sent as injured             (Field 57)
        party); CMS Date of Incident           – TIN (Field 72)
        (Field 12); Plan Insurance
        Type (Liability, No-Fault,             – TPOC Date (Field 100)
        Workers’ Compensation in               – TPOC Amount (Field 101)
        Field 71); ORM Indicator               – Claimant 1 Information (Fields
        (Field 98)                                104 - 115)
     – Record submitted in error               – Additional settlement,
                                                  judgment, award or other
                                                  payment reached with regard
                                                  to the same Section 111 claim
                                                  record


                                                                                    32




                                                                                         16
Reporting/Updating/Deleting Multiple Payments

▪ RREs had raised with CMS through the Town Hall process the
  issue of reporting and updating claim files where multiple one-time
  payments are made to a single beneficiary for the same claim
▪ CMS published an Alert on April 7, 2009, that details changes to the
  file layout and processing requirements
▪ This change involved the removal of one action type value and the
  addition of 4 TPOC Amount and corresponding TPOC Date fields to
  the end of the Claim Input File Auxiliary Record layout and a
  corresponding “Funding Delayed Beyond TPOC Start Date” field




                                                                                                                                                                  33




Flowchart of Section 111 Reporting
                                                              Claim filed against Insured or Plan
                                                                 with Settlement, Judgment,
                                                              Payment, or other Award (SJPA)




                                                                    What Type of SJPA?




                    One-Time Payment (TPOC)                                                                               ORM




                        Query Medicare Status                                                                     Query Medicare Status




                                                                                                                                       If No, repeat Query next
  If Yes, Report TPOC                           If No, No Report                             If Yes, Report ORM
                                                                                                                                                quarter *




                                                                                            Has ORM Terminated?




                                                                                                           If No, check if ORM has terminated
                                                              If Yes, Report Termination of ORM
                                                                                                                       next quarter




                                                                                                                                                                  34




                                                                                                                                                                       17
III. Impact on Claim Resolution Strategies




                                                                           35




Claim Resolution Strategies

▪ Section 111 Reporting requirements do not substantively expand
  MSP requirements, but rather provide CMS the means to more
  aggressively seek recovery for reportable claims
▪ CMS assumes that NGHPs already have the data required for
  submission and has underestimated the expected costs of
  compliance
▪ CMS has stated that the intent of this reporting requirement is not to
  punitively target past reportable events, but rather to focus on
  compliance going forward




                                                                           36




                                                                                18
Claim Resolution Strategies (continued)
▪   42 C.F.R. § 411.24(i) provides CMS the right to seek recovery “against any entity . . .
    including a beneficiary, provider, supplier, physician . . . or private insurer that has
    received any portion of a third party payment”
      – Hospitals must be aware that, in their role as provider they are subject to
         potential recovery for MSP recovery not paid by the beneficiary
      – United States of America v. Paul J. Harris, United States District Court, Northern
         District of West Virginia, Civil Action No. 5:08CV102
           ▪ Medicare made conditional payments for medical treatment in the amount of
              $22,549.67. CMS agreed to accept $10,253.59 to settle its claim. When the
              amount was not paid, this lawsuit was filed against the claimant’s attorney.
           ▪ The court denied defendant’s Motion to Dismiss on February 26, 2009
▪   This risk of exposure to what is essentially a “double payment” – payment for medical
    costs in settlement as well as potential exposure to liability for the claimant’s failure to
    make MSP payment – favors a conservative approach to claim resolution
      – Seeking guarantees of MSP compliance from the claimant up front will help to
         minimize this “double payment” exposure
      – Note: There is no process to obtain confirmation from Medicare that Medicare
         agrees with the medical expense allocation in a settlement and/or that the RRE
         has no further exposure




                                                                                                   37




Conditional Payments

▪ Be more aggressive in getting information about existing Medicare
  liens from claimants prior to entering into a settlement
    – You can request an Interim Conditional Payment Letter from the
      MSPRC to determine the value of conditional payment made for
      already-incurred expenses
    – The value of these conditional payments can be addressed
      using a Multiparty Check




                                                                                                   38




                                                                                                        19
Multiparty Checks

▪ Multiparty checks can be used to ensure CMS recovery for MSP
  after a settlement, judgment, award, or other payment for prior
  Medicare-covered services – the multiparty check must include both
  the claimant and CMS as payees
▪ The multiparty check must first be endorsed by all payees other
  than CMS before CMS will endorse and deposit
▪ Use of a multiparty check (beneficiary/claimant &
  CMS (or its contractor) as payees) for payment of
  a settlement or other award may be useful as a
  trigger for MSP compliance
▪ May be useful as a tool to help prevent potential
  RRE liability due to beneficiary non-payment,
  but is only effective now for past expenditures
  garnered from an Interim Conditional Payment Letter


                                                                         39




Designations in Settlements

▪ RREs are only obligated to report where there is responsibility for
  medical costs – can an RRE designate no coverage of medicals in
  the settlement agreement to circumvent reporting?
   – No, CMS has stated that it will not be bound by the terms of the
      settlement agreement with regard to no inclusion of medical
      expenses
       ▪ “Liability payments are considered to have been made ‘with
          respect to’ medical services related to the injury even when
          the settlement does not expressly include an amount for
          medical expenses.”
▪ However, CMS will respect a designation by a court or other
  adjudicator of the merits




                                                                         40




                                                                              20
Set Aside Trusts

▪ Set-Aside trusts are used in the Workers’ Compensation area to
  address MSP for future costs – used as a method to set aside
  payments in a trust account for future medical care subject to MSP
▪ Currently, CMS has not addressed set-aside trusts in the NGHP
  forum (except for Workers’ Compensation), and has not expressed
  any timetable for this issue
   – Nevertheless, it seems logical that this would be a natural
      expansion of WCMSA to address the uncertainty of future
      medical costs




                                                                          41




Indemnification Provisions
▪ RRE may request, as a requirement for a liability settlement or other
  award, that the claimant and/or the claimant’s attorney be
  contractually obligated to make appropriate arrangements with CMS
  to resolve any potential MSP liability
    – RRE could condition retention of payment upon a commitment to
      make such payment
    – RRE could maintain a contractual right to indemnification from
      the claimant and/or the claimant’s attorney for any failure to
      make payments to CMS in case of any recovery action against
      the RRE
▪ If an Agent is used to report on behalf of an RRE, the RRE should
  require the Agent to indemnify the RRE for violations that were
  caused by fault of the Agent




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Other Issues
▪   Mass Torts
     – CMS has expressed that it may be developing a Safe Harbor for mass
       tort reporting, but has not given a timeline on when this will be prepared
     – Currently mass torts will have to be reported individually, which may be
       burdensome on RREs
▪   ICD-9 Codes
     – According to the User Guide published March 16, 2009, CMS is
       reviewing the codes to determine if there are certain codes which
       Responsible Reporting Entities (RREs) will be prohibited from
       submitting.




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Resources
▪   CMS Section 111 website: www.cms.hhs.gov/mandatoryinsrep
     – The User Guide was updated on March 16, 2009 and provides details on
        compliance with reporting requirements, including specific technical details on
        claims submission format
▪   Upcoming NGHP Open Door forums:
     – June 9, 2009                         - October 22, 2009
     – July 14, 2009                        - November 17, 2009
     – August 18, 2009                      - December 15, 2009
     – September 30, 2009
▪   CMS is also considering holding a separate Open Door forum for Registration
    purposes
▪   Computer Based Training (CBT):
     – If you are an RRE for liability insurance (including self-insurance), no-fault
        insurance, or workers' compensation, you may register for the NGHP CBT
        courses by contacting the COBC's EDI Department, at 646-458-6740. An EDI
        representative will take your company name, company type (e.g. liability insurer
        [including self-insured entities], workers' compensation, etc.) and the name,
        phone number and e-mail address for the individual(s) you would like to register.




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                                                                                                 22
    Any Questions?




                           45




Thank you for Listening!




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