In these tough economic times, all types of businesses and governments are trying to reduce costs and save money. The Centers for Medicare and Medicaid Services ("CMS") is no exception. Although initiatives to save taxpayer dollars always have been a part of the Medicare program, this new round of regulations may prove to be among the most cumbersome yet. These new regulations will impact virtually all businesses that carry some form of liability insurance (including self-insurance), no-fault insurance, and workers' compensation. Entities that provide one of these three forms of insurance will be responsible for reporting any settlements, judgments, awards or other payments for medical expenses paid on or after July 1, 2009 on behalf of a Medicare beneficiary. The overall goal of CMS is to guarantee that Medicare is subordinate to any other eligible payer for a Medicare beneficiary's medical care. CMS has long had the right to be the payer of last resort for the medical expenses of a Medicare beneficiary. These new regulations now provide CMS with a new source of data to pursue this statutory right.
Since its inception, Medicare always has been a secondary payer to workers' compensation benefit payments. Then in 1980, as part of the Omnibus Reconciliation Act, Congress passed the Medicare Secondary Payer Statute ("MSP"), codified at 42 U.S.C. § 1395y. The MSP legislation was an effort to guarantee that Medicare was secondary to any primary payer for the health care costs of a Medicare beneficiary. In 2007, as part of the continued commitment by CMS to control Medicare costs, Congress passed new legislation to add teeth to the existing MSP law. Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 ("MMSEA") included mandatory reporting requirements for the purpose of ensuring Medicare's status as a secondary payer. The 2007 legislation imposes new reporting requirements on all Group Health Plans ("GHPs") and Non-Group Health Plans ("NGHPs") that take effect in 2009. The penalty for non-compliance is $1,000 per day per claim.
Who Must Report?
Section 111 of the MMSEA mandates that Responsible Reporting Entities ("RREs") report specific information to CMS beginning in 2009. The RRE is the party who pays any claim on behalf of a Medicare eligible individual, regardless of whether the RRE ultimately is reimbursed by a third party. The RRE may contract with an agent for reporting purposes, but CMS clearly has indicated that the agent is not the RRE. Therefore, the liability and, hence, the penalties for noncompliance remain with the RRE and not the agent.
The reporting requirements for GHPs began on January 1, 2009. The RREs for NGHPs include liability insurance (including self-insurance), no fault insurance 1, and workers' compensation plans. For the NGHPs, the implementation date is July 1, 2009. Prior to July 1, 2009, all NGHP RREs must register with CMS. The registration period begins on May 1, 2009 and ends June 30, 2009. During the initial registration process the RRE must complete the registration to obtain an identification number (the "RRE ID"); thereafter the agent may complete the data entry.
What Must be Reported?
Pursuant to the MMSEA, the Secretary of the U.S. Department of Health and Human Services has been given wide latitude to determine what information RREs are required to report. The CMS website states that an RRE must report "the identity of a Medicare beneficiary, whose illness, injury, incident or accident was at issue as well as such other information specified by the Secretary to enable an appropriate determination concerning coordination of benefits, including any applicable recovery claim." In December 2008, CMS provided an interim layout, which describes over 109 data fields that must be reported to CMS pursuant to the new regulations. In addition to name, address, and date of birth, the data elements include social security number, date of injury, ICD-9 and injury codes, as well as plan information, settlement amounts, and legal representation information. Pursuant to the Paperwork Reduction Act, all Section 111 MMSEA reporting must be electronic. Moreover, the data must be included in a specific form and format and must be reported quarterly.
These new regulations undoubtedly will impose a great burden on businesses and other organizations that are deemed NGHPs by virtue of their insurance coverage. Given the existing laws and regulations with respect to the collection, transfer, and maintenance of confidential information, these new regulations may well present a significant burden for businesses, large and small. If and when multiple sources of coverage are available, the MSP law mandates that Medicare will not have the primary responsibility to pay for the medical expenses of a Medicare beneficiary. Therefore, the overall goal of CMS is to guarantee that Medicare is subordinate to any other eligible payer for the medical care of Medicare beneficiaries. The new Section 111 MMSEA reporting requirements are simply providing CMS the opportunity to guarantee their rights by mandating that businesses inform CMS of any Medicare beneficiaries who may have alternative sources of coverage. Although the original regulations have been around for decades, this latest iteration suggests that CMS is planning to aggressively enforce compliance; with a $1,000 per day per claim penalty, CMS now will have a powerful tool at its disposal to ensure such compliance.
As of this publication, CMS has not yet finalized all of its guidance with respect to the Section 111 MMSEA reporting requirements. CMS is in the process of finalizing the NGHP User Guide and has indicated that the publication will be forthcoming. The NGHP User Guide will provide additional clarification with respect to the implementation and the approaching deadlines for all NGHPs. CMS has a dedicated website concerning these regulations, available at: https://www.cms.hhs.gov/MandatoryInsRep/. We will continue to provide you with additional updates regarding these requirements.
What Should I Be Doing Now?
CMS has estimated that it will take each RRE approximately 375 hours to develop the administrative processes to comply with these new reporting requirements. In order to assist our clients in complying with the Section 111 reporting requirements in a more cost effective way, Smith Moore Leatherwood is finalizing the development of an easy to use database for the purpose of collecting, storing, and automating the creation of the six different required reports. If you would like to assess the appropriateness of our database for your organization, please contact Lisa Shortt in our Greensboro office at 336-378-5535 or by email at email@example.com.
1 Only twelve states have no fault insurance systems. Many states provide personal injury protection ("PIP") or some variation thereof, which pays for a driver's medical bills regardless of the individual's fault in causing the accident. Therefore, even in states that utilize a tort liability system, an insurer that provides medical payments to a Medicare beneficiary through a PIP or other similar coverage plan - regardless of whether the operator of a vehicle is at fault or not - will be required to report to CMS under these new regulations.