1. UPDATE ON MEDICARE’S REPORTING REQUIREMENTS SC Self-Insurers Association, Inc. General Membership Meeting November 4, 2010 Daniel W. Hayes, Esquire

2. Updates since April 21-23, 2010 Members Only Forum:  Various Alerts issued by CMS  www.cms.gov/MandatoryInsRep/ www.cms.gov/MandatoryInsRep/  U.S. v. Stricker decision (filed September 30, 2010)

3. Mediation 09.14.2010 Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007  Section 111 of the MMSEA  What is the SCHIP?  “ State Children’s Health Insurance Program”  Purpose?  Safeguard against shifting burden for ongoing medical care from primary payer to Medicare  Section 111 is in addition to other MSP provisions (MSA allocation, etc.)  We’re interested in how it impacts Non-Group Health Plans (NGHPs)

4. What is reportable?  Settlements, judgments, and awards to Medicare recipients:  Because Medicare recipient, likelihood of:  conditional (past) medical payments and  Obligation for future medical payments (must consider MSA allocation, but reviewable by CMS only if amount of settlement > $25,000)  Applies if TPOC (Total Payment Obligation to Claimant) exists on or after 10/01/10  In general, TPOC = date settlement is signed, award/judgment filed  Also applies if ORM (Ongoing Responsibility for Medicals) exists on or after 01/01/10  What about mass torts, class actions settlements? (See U.S. v. Stricker)

5. Refresher: CMS Memo: March 29, 2010  “Revised Implementation Timeline”  Two categories:  (1) Group Health Plan (GHP)  (2) Non-GHP, or NGHP  Liability Insurance (including Self-Insurance), No-Fault Insurance, and Workers’ Compensation

6. CMS Memo: March 29, 2010 (cont’d)  “Revised Implementation Timeline”  “Claim Input File” testing 01/01/10 – 12/31/10  System will go “live” 01/01/11  All initial claims must be submitted 01/01/11 to 03/31/11 according to assigned timeframes for RRE’s (Responsible Reporting Entities)

7. CMS Memo: April 6, 2010  Collection of HICNs, SSNs, and EINs  HICN: Medicare Health Insurance Claim Number  SSN: Social Security Number  EIN: Tax Identification Number (actually Employer Identification Number)  Collection of this information is proper for purposes of compliance with reporting requirements under Section 111

8. Mediation 09.14.2010 New MMSEA 111 Alerts since the Members Only Forum  May 27, 2010  June 14, 2010

9. MMSEA 111 Alert: 05/27/10  Alert for RRE’s of Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation  RRE does not report regularly scheduled periodic payments, pursuant to statute, for obligation other than medical expenses  (Ex) weekly TTD; weekly payment of permanency award  But must separately report ORM (Ongoing Responsibility for Medicals)  Periodic “indemnity only” payments raises inference of ORM  Periodic payments not reported as TPOC (Total Payment Obligation to Claimant)

10. MMSEA 111 Alert: 06/14/10  RRE ID Accountability and Other Registration Material  What to do if RRD creates ID’s unintentionally  Each RRE ID requires full compliance  Use of agent by RRE  Changing information for RRE with COBC (Coordination of Benefits Contractor)

11. Mediation 09.14.2010 New NGHP (Non-Group Health Plan) Alerts since Members Only Forum  May 25, 2010  May 26, 2010 (x 3)  September 16, 2010

12. NGHP Alert: 05/25/10  New Direct Data Entry (DDE) Option for NGHP  Available for “Small Reporters”  RRE who expects to have only an occasional claim report to make  May only submit 500 or less claim reports per calendar year  If injured party’s information does not match a Medicare beneficiary, counts toward the 500 claims limit (essentially like a “51” disposition code)  DDE reporting may begin 01/03/11  No testing will be required

13. NGHP Alert: 05/26/10 (#1)  Revision to 02/24/10 Alert  Includes that entities with insurance plan with deductible are no longer required to report  Reported by entities’ insurer  Self-insured entities must continue to report  Whether TPA is considered RRE  Generally, NO  But see, state’s Assigned Claims Fund  Different under GHP arrangements, where TPA is the RRE

14. NGHP Alert: 05/26/10 (#2)  Risk Management Write-Offs for NGHPs  “reduction in the amount due as a risk management tool” constitutes liability self-insurance for purposes of Medicare Secondary Payer provisions  Intended by risk management to lessen probability of liability claim against it or facilitate/enhance good will  Provider reduces or W/O portion of charge to Medicare  Provide property of value to Medicare beneficiary where reasonable to expect will seek medical care

15. NGHP Alert: 05/26/10 (#3)  Clinical Trials & NGHPs  If payments are made by sponsors of clinical trials for complications or injuries arising out of the trials, considered payment by liability insurance (including self-insurance)  Must be reported

16. NGHP Alert: 09/16/10  Further definition of “Small Reporter” for purpose of Direct Data Entry (DDE)  Registration overview for DDEs  Further considerations for DDEs

17. United States of America v. James J. Stricker, et al.  “Memorandum Opinion Granting Certain Defendants’ Motions to Dismiss”  Filed with U.S. District Court N.D. of Alabama, 09/30/10  FN 1: “Not all defendants filed motions to dismiss. The court does not presume to know why....”  “Accordingly, the decision set forth in this Memorandum Opinion and accompanying Order does not apply to those Defendants.”

18. U.S. v. Stricker  BACKGROUND  2003 underlying class action tort settlement  Monsanto Company and its predecessors produced PCB’s (Polychlorinated biphenyls) at a chemical manufacturing plant one mile west of downtown Anniston, AL  The EPA determined PCB exposure could cause health dangers including cancer, decreased fertility, still births, and birth defects  1000’s of toxic-tort actions filed in Alabama against Monsanto and predecessor companies

19. U.S. v. Stricker  All cases were consolidated in both Alabama state and federal courts  Global settlement reached on 08/20/03  $300 million  Involved combined total of more than 20,500 people  $275K placed in Court trust; remainder to be paid in annual installments through 2013  Conditions to release:  Funds released into attorney-maintained trust once 75% of adult plaintiffs signed releases  Could be disbursed to plaintiffs once court approved all minor settlements and 97% of releases signed

20. U.S. v. Stricker  Department of Justice filed suit 12/01/09 against plaintiff attorneys and defendant corporations/insurance carriers under Medicare Secondary Payer statute  Alleged 907 unnamed recipients also received Medicare payments for unidentified medical expenses related to PCB contamination  (Some) defendants filed Motion to Dismiss based upon statute of limitations

21. U.S. v. Stricker  Issues for Court:  (1) What SOL applies to each class of defendants (corporate defendants, plaintiff attorneys)?  (2) When did the government’s cause of action accrue for each class of defendants?

22. U.S. v. Stricker  MSPA does not include a SOL  Parties agreed SOL under the “Federal Claims Collection Act” would apply  3 years if founded upon tort;  6 years if founded upon contract

23. U.S. v. Stricker  Corporate Defendants:  No express contract between government and corporate defendants  Any reimbursement duties based solely on MSP statute  Liability, if any, arises out of defendants’ liability in tort settlement  “But for” the tort liability, no liability for reimbursement  So, 3 year statute of limitations applies under tort

24. U.S. v. Stricker  When did government’s cause of action accrue against corporate defendants?  Court focused on determining at what point did defendants’ responsibility to pay arise in relation to the underlying class-action settlement  For corporate defendants, accrued on date settlement agreement executed and approved by Court on 08/20/03  So even if 6 year SOL applied, government lawsuit filed 12/01/09 would have been barred

25. U.S. v. Stricker  Plaintiff Attorneys:  Conceded 6-year statute of limitations based upon contractual nature of attorney fees received from their clients  So, issue is when did government’s cause of action accrue against plaintiff attorneys?

26. U.S. v. Stricker  Government argued no responsibility to pay arose until 12/02/03, when all minor settlements were approved by court, 97% of plaintiffs had signed releases, and funds could be disbursed  DOJ lawsuit filed 12/01/09--- one day prior to 6 years later  Settlement was “conditional”  The Court did not agree  97% certification was “condition subsequent” to contract  Did not affect overall enforceability of settlement agreement

27. U.S. v. Stricker  Government’s right to intervene against plaintiff’s attorneys accrued no later than 10/29/03, when funds transferred from Court into attorneys’ escrow account  Lawsuit filed against plaintiff attorneys on 12/01/09 barred by 6-year SOL

28. Why is U.S. v. Stricker important?  Provides framework for calculating government’s statute of limitations for filing lawsuits to collect reimbursement  When applied in context of mandatory reporting requirements, may be able to calculate either 3-year or 6-year SOL’s based upon date of Total Payment Obligation of Claimant (TPOC), or when settlement agreement is signed (or award/judgment filed)  Likely 3-year SOL applicable to corporate defendants/carriers  Likely 6-year SOL applicable to plaintiff attorneys  Shows the government can be defeated on MSP lawsuits (but not over yet... )