1. MEDICARE MANDATORY REPORTING: Keeping Your Company in Compliance with the Medicare, Medicaid and SCHIP Act Mandatory Reporting Requirements McAnany, Van Cleave & Phillips, P.A.

2. MEDICARE MANDATORY REPORTING MMSEA: CHANGES IN 2009 What is Medicare? What is CMS? What does Medicare Secondary Payer Mean? When is Medicare Secondary? What is Section 111 Mandatory MSP reporting? What is an MSA?

3. What is Medicare? Medicare is a federal program that pays for certain covered health care provided to enrolled individuals age 65 and older, certain disabled individuals, and individuals with permanent kidney failure.

4. What is CMS?  CMS – the Centers for Medicare & Medicaid Services – is an agency of the Federal government, part of the Department of Health and Human Services.  The CMS is responsible for the oversight of the Medicare program, including implementing the Section 111 MSP reporting provisions.

5. What is Medicare Secondary Payer? Medicare Secondary Payer ("MSP") refers to situations where another entity (such as a liability or a workers’ compensation insurance carrier) is required to pay for covered services before Medicare does, and must do so without regard to a patient’s Medicare entitlement.

6. What is Medicare Secondary Payer? Medicare has been a secondary payer to workers’ compensation benefit payments since the inception of the Medicare program in 1965. Additions to Medicare law and regulations referred to as the “MSP provisions” were enacted in the early 1980s and have been modified several times since then. These provisions were amended again by Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 – the MMSEA Section 111 mandatory reporting requirements. [See 42 U.S.C. 1395y(b) (Section 1862(b) of the Social Security Act) and 42 C.F.R. Part 411.]

7. When is Medicare the “Secondary Payer?” Medicare is a secondary payer to liability insurance (including self-insurance), no-fault insurance and workers’ compensation insurance. If one of these entities is responsible for payments of medical treatment to an injured person (primarily responsible), then Medicare is secondarily responsible for such payments.

8. When is Medicare the “Secondary Payer?” If Medicare were to make payments for an injured individual’s medical care when liability insurance (including self-insurance), no-fault insurance or a workers’ compensation insurance plan was primarily responsible for such payments, then Medicare has a cause of action against the primarily responsible party/carrier for recovery of the amounts Medicare paid (conditional payments).

9. Conditional Payments Any payment that the CMS has improperly paid on behalf of a Medicare beneficiary. Payment is made by Medicare “on the condition” that the CMS will be paid back the full amount of the payment at the time of settlement 42 C.F.R. 411.25: If a third party payer learns that CMS has made a Medicare primary payment for services for which the third party payer has made or should have made primary payment, it must give notice to Medicare. Notice is given by contacting the CMS Coordination of Benefits Contractor (COBC) to initiate the opening of an MSP potential recovery case (1-800-999-1118)

10. Conditional Payments - Medicare as the “Secondary Payer” – Right to Recovery  42 U.S.C. § 1395y(b)(2)(B)(iii): In order to recover payment made under this subchapter for an item or service, the United States may bring an action against any or all entities that are or were required or responsible to make payment with respect to the same item or service (or any portion thereof) under a primary plan (i.e. liability or work comp insurance carrier, self-insured or TPA).  Additionally, CMS has a right of action to recover its payments from any entity, including a medical provider, supplier, physician, attorney, state agency or private insurer that has received a primary payment.  The United States may collect double damages against any such entity. (double the amount of the conditional payment lien)  Pay and Chase methodology for recovery

11. Medicare Conditional Payment Recovery in Action – US v. Harris United States sued a plaintiff’s attorney (Harris) for failing to pay off a Medicare conditional payment lien Product liability lawsuit involving a Medicare beneficiary who fell off of a defective ladder CMS paid $22,500 in treatment (conditional payment) Case settled for $25,000 CMS requested reimbursement of $10,253.59

12. Medicare Conditional Payment Recovery in Action – US v. Harris Harris failed to reimburse Medicare within 60 days Harris moved to dismiss the case claiming he couldn’t be sued and be held individually liable for the debt Court said that didn’t work, Medicare can pursue “any entity” for recovery

13. US v. Harris – Lessons learned “Any entity” includes insurance carrier, defense attorney, TPA, employer (self-insured or otherwise) To any liability, workers’ compensation, personal injury or other bodily injury settlement, ensure that Medicare’s conditional payment lien is handled Suggestions – Name Medicare as a payee to settlement check Directly question plaintiff/claimant to determine Medicare status and if Medicare has made any payments Contact MSPRC to see if a conditional payment lien exists Use settlement and release language that shifts burden upon the plaintiff/claimant to handle conditional payment lien

14. Medicare’s Aggressive Conditional Payment Recovery Stance Practical effects: Makes bodily injury cases more difficult to settle Difficult to negotiate conditional payment lien Even more difficult just to find out what it is Medicare does not give credence to apportionment of fault/defensible cases when negotiating lien – all or nothing approach Force parties to trial in order to get a judicial determination of fault

15. Medicare’s Aggressive Conditional Payment Recovery Stance Case example: WC (or Premises Liability) case: 66 year old injures himself on a slip and fall 50% chance that it is a completely defensible case [i.e. no notice (WC) or open and obvious (Prem. Liab.)] Medicare pays $30,000 for medical treatment due to hip replacement Settlement is agreed upon for $40,000 If the lien is worked out with Medicare before settlement, Medicare will negotiate and recognize the costs to obtain recovery (i.e., may drop recovery by 33% for attorney fee) = $20,000 (still a barrier to settlement) If lien is not worked out before settlement, Medicare will ask for the full amount of the lien because Medicare is taking a direct action against the primary plan and could ask for double damages = $60,000

16. Medicare’s Aggressive Conditional Payment Recovery Stance How far out can Medicare claim a right to recovery for a conditional payment? Answer: Arguably, there is a 3 year statute of limitations that would preclude Medicare from recovering on any conditional payment that was made from the date of the item or service provided. (perhaps only pertains to Group Health Insurance and not Non-group Health such as WC or liability plans) Or it could be 6 years under 28 U.S.C. § 2415(a) (action for money damages brought by US), which would accrue from the later of 1) the date of payment or 2) the date Medicare learns that there was a primary payer which should have made the payment

17. So Where are We? Welcome to Life Under the MMSEA The MMSEA of 2007. (Medicare, Medicaid & SCHIP Extension Act of 2007) What is Section 111 Mandatory MSP Reporting? The MMSEA Section 111 USER GUIDE v.1.0 http://www.cms.hhs.gov/MandatoryInsRep/Downloads/NGHPUserGuide031609.pdf

18. The MMSEA? What is Section 111 Mandatory MSP Reporting? Why are we so concerned? Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (P.L. 110-173), adds new mandatory reporting requirements for liability insurance (including self-insurance), no-fault insurance, and workers' compensation. See 42 U.S.C. 1395y(b)(7) & (8). These are the new provisions for Liability Insurance (including Self-Insurance), No-Fault Insurance, and Workers Compensation found at 42 U.S.C. 1395y(b)(8) that require mandatory reporting to CMS of bodily injury cases that involve a Medicare beneficiary.

19. The MMSEA? What is Section 111 Mandatory MSP Reporting? Why are we so concerned? It adds reporting rules; does not eliminate any existing statutory provisions or regulations. The new provisions do not eliminate CMS's existing processes if a Medicare beneficiary (or his/her representative) wishes to obtain interim conditional payment amount information prior to a settlement, judgment, award, or other payment. MMSEA does not change anything about how Medicare Set-Aside (MSA) Trusts are handled MMSEA does not make MSAs mandatory for liability cases MMSEA does include a penalty of $1,000 per day per claim for failure to report a reportable claim to Medicare

20. The Responsible Reporting Entity “RRE” Who must report: "an applicable plan." "…[T]he term 'applicable plan' means the following laws, plans, or other arrangements, including the fiduciary or administrator for such law, plan or arrangement: (i) Liability insurance (including self-insurance). (ii) No fault insurance. (iii) Workers' compensation laws or plans." These entities are called “Responsible Reporting Entities” or “RREs”.

21. Are You an RRE? Are you an RRE? Third party administrators (TPAs) are never RREs for purposes of 42 U.S.C. 1395y(b)(8) [liability (including self-insurance), no-fault, and workers’ compensation reporting] and only act as agents for such reporting. The RRE is limited to the “applicable plan” and may not by contract or otherwise limit its reporting responsibility although it may contract with a TPA or other entity for actual file submissions for reporting purposes. The applicable plan (RRE) must either report directly or contract with the TPA or some other entity to submit data as its agent. (Where an RRE uses another entity for claims processing or other purposes, it may wish to consider contracting with that entity as its agent for reporting purposes).

22. Are You an RRE? Q: I am a TPA for an insurance carrier. Am I an RRE? A: No. The carrier is the RRE. Q: I am a TPA for a large self-insured employer, am I an RRE? A: No. The self-insured employer is the RRE. Q: If I am a TPA as described above, can I perform reporting for my contracted carrier or self-insured? A: Yes. However, CMS has stated that the underlying responsibility (i.e. penalties) remains with the RRE. Thus, we anticipate contractual/indemnification agreements need to be put in place between RREs and TPAs to address who is responsible for reporting and/or penalties

23. Are You an RRE? Q: My company is self-insured up to a deductible of $100,000 for workers compensation losses, thereafter the carrier pays 100%. We pay “dollar one” for everything up to $100,000? Am I an RRE? A: Yes, for claims under $100,000 that involve Medicare beneficiaries. Once the claim reaches the deductible, however, the carrier is the RRE. Q: My company has a deductible of $50,000 for commercial general liability losses. The carrier pays “dollar one” up front and the carrier administers the claim, we simply reimburse the carrier once the claim is complete. Am I an RRE? A: No. The carrier is the RRE for any loss here, regardless of the total amount of the loss.

24. Are You an RRE? Are you an RRE? RREs will register on-line through the Coordination of Benefits Contractor’s (COBC’s) secure website. This begins May 1, 2009 and runs through June 30, 2009. This is not up yet. Once an RRE's registration application is submitted, the COBC will begin working with the RRE to set up the data reporting and response processes. COBC will assign a “Section 111 Reporter ID#” to each registered RRE.

25. What claims do I have to report? Bodily injury claims that involve a Medicare beneficiary Who is a Medicare beneficiary?

26. How someone becomes a Medicare beneficiary: 65 years of age or older Has been “Entitled” to Social Security Disability (SSDI) benefits for greater than 24 months “Entitlement” date comes after 5 full calendar months have passed from the “Disability” date. “Disability” date is often the date of accident or the date the claimant stopped working. In other words, Medicare eligibility comes in on the first day of the calendar month 29 months after the date “Disability” for Social Security Disability. End stage kidney failure

27. Determining an Individual’s Medicare Status Beginning May 1, 2009, CMS will implement a beneficiary verification system that will be available through a query function on its new database The query function will provide a method whereby a SSN can be submitted to the database via a file submission, and CMS will respond with a response file indicating whether the SSN can be identified as belonging to a Medicare beneficiary Good: no longer have to deal with attempting to determine Medicare status of plaintiff/claimant by conventional means (requesting from claimant attorney) Bad: Responsibility is now squarely on RREs and TPAs to determine eligibility status – no excuses

28. What claims do I have to report? What triggers reporting? Bodily injury to a Medicare beneficiary. When is reporting required? “Once a payment obligation is established. (Settlement, judgment, award or other payment)” “Other payment” includes initial payment/acceptance of medical treatment expenses under a work comp policy Once payment obligation is terminated (i.e. closure of case including closure of future medical)

29. What claims do I have to report? Injuries that occur after July 1, 2009 to a Medicare beneficiary If it’s a wc case, must report when you take on medical responsibility. Also, if you close medical later, you must report when you close medical (i.e. pay out a full and final settlement) If it’s a liability case, must report when you pay the settlement, judgment or award

30. What claims do I have to report? What about injuries that occur after July 1, 2009 that do not involve a Medicare beneficiary? No requirement to report so long as the individual is not a Medicare beneficiary However, as soon as the individual does become a Medicare beneficiary, if medical is open (ORM) then the claim becomes reportable once the individual becomes Medicare eligible Example: WC case, date of accident 01/02/2010. Claimant is 20 years old at the time. Medical is left open for life. 45 years later claimant becomes Medicare eligible due to his age -> claim is required to be reported in 2055; or Claimant becomes Medicare eligible in 2030 due to application and receipt of SSD benefits -> claim is required to be reported in 2030. Special Exception: next slide

31. What claims do I have to report? Special Exception Rule Special exception rule to reporting claims: if the RRE obtains a “signed statement from the injured individual’s treating physician that he/she will require no further medical items or services associated with the claim/claimed injuries, regardless of the fact that the claim may be subject to reopening” then the claim may be closed No report if not a Medicare beneficiary Send termination report if claimant is Medicare beneficiary Page 31 of USER GUIDE v1.0

32. What claims do I have to report? Injuries that occurred before July 1, 2009 If there is open medical responsibility (ORM) on a file, and the claimant is now a Medicare beneficiary, you must report this claim (CMS is giving RREs until October of 2010 to obtain and report this data) No date given by CMS as to how far back RREs must look (could go past 1960) [i.e. 20 year old injured in WC accident in 1956; medical left open; 20 year old is now 73 and Medicare eligible with open medical from WC –> claim must be reported] This also includes claims that are currently open paying medical from a recent injury and settlement is anticipated soon after July 1, 2009. Qualified Exception Rule: see next slide

33. What claims do I have to report? Qualified Exception Rule Qualified Exception Rule: “For Ongoing Responsibility for Medical (ORM) assumed prior to July 1, 2009, if the claim was actively closed or removed from current claims records prior to January 1, 2009, the RRE is not required to identify and report that ORM” Page 52 of USER GUIDE v1.0

34. What claims do I have to report? Q: Is there a dollar minimum for claims that are required to be reported? A: Yes For liability cases and work comp cases where no medical has been paid, settlements involving Medicare beneficiaries that are less than $5,000 do not need to be reported. (through Dec. 2010) [$2,000 for 2011, $600 for 2012]

35. What claims do I have to report? Q: Is there a dollar minimum for claims that are required to be reported? A: Yes For work comp med only cases, if medical payout is less than $600, then no reporting is required. CMS is still “actively soliciting data for purposes of a more liberal threshold” for med only claims

36. What claims do I have to report? Work comp, auto accident, general liability bodily injury case to a Medicare beneficiary. Compensability of injury is denied for medical or legal reasons. You send the plaintiff/claimant out for an independent medical examination by your expert witness physician and pay the expert witness $750 for the evaluation. Does this constitute an “other payment” which would trigger reporting? No. No reporting here. However, if the case goes forward and a verdict or award is given in favor of the plaintiff, or the case is settled, payment of the award or settlement would trigger reporting despite the fact that no medical other than the expert was paid.

37. What claims do I have to report? Examples A Medicare beneficiary is injured on the job on 2/15/09 and files a work comp claim. Work comp assumes responsibility for ongoing medicals The claim is still open as of July 1, 2009. Report? Yes. By October 2010. Why? Ongoing responsibility for medical exists as of July 1, 2009 for Medicare beneficiary.

38. What claims do I have to report? Examples Same facts as before, except wc case settles in June 2009 full and final Report? No. Same facts as before except wc cases settles in June leaving medical open Report? Yes, by October 2010. Only have to report responsibility for ongoing medical, don’t have to report settlement.

39. The MMSEA? What is Section 111 Mandatory MSP Reporting? Why are we so concerned? What must be reported: 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. See Input Claim File Layout

40. The MMSEA? What is Section 111 Mandatory MSP Reporting? Why are we so concerned? When/how reporting must be done: In a form and manner, including frequency, specified by the Secretary. Information shall be submitted within a time specified by the Secretary after the claim is resolved through a settlement, judgment, award, or other payment (regardless of whether or not there is a determination or admission of liability). Data reported for purposes of Section 111 by RREs will be submitted electronically to the COBC secure website. Upon registration, RREs will be given a 7-day window once per quarter in calendar year in which to complete all reporting Claims that become reportable (trigger) 45 days before the 7- day window must be reported in that quarter’s window or penalties may apply Claims that trigger within 45 days of the RREs 7-day window fall under a grace period and are not required to be reported until the following quarter

41. Why do I need to know about this legislation?  If you are an RRE for purposes of Section 111, federal law requires that you report appropriately. CMS’s focus is on obtaining complete and accurate data.  Their penalty for failure to report a claim is $1,000 per day per violation. Consequently, it is important that all business entities, including the self-employed and self-insured, to determine if they are an RRE for purposes of Section 111 reporting.

42. Purpose of the Registration Process Responsible Reporting Entities (RREs) will provide notification to the COBC of their intent to report data in compliance with the requirements of Section 111 of the MMSEA. Registration by the RRE must be completed before testing between the RRE (or its agent) and the COBC can begin. Although an RRE may use an agent for reporting purposes, the RRE itself must complete the registration process directly.

43. Purpose of the Registration Process Through this registration process, the COBC will obtain the information needed to: Certify the registrant is a valid RRE for Section 111 Assign a Section 111 Reporter ID to each RRE Develop a Section 111 reporting profile for each RRE, including estimates of the volume and type of data to be exchanged for planning purposes Assign a production live date and file submission timeframe to each RRE Establish the necessary file transfer mechanisms, and Assign a COBC Electronic Data Interchange Representative (EDI Rep) to each RRE to assist with ongoing communication.

44. The Registration Process RRE’s will register on the COBSW (Coordination of Benefits Secure Website) from May 1, 2009 through June 30, 2009. Details on how to complete the Section 111 registration process on the COBSW is now available at www.Section111.cms.hhs.gov

45. The Registration Process An Authorized Representative will complete and submit the registration for the RRE using a new Internet-based application on the COBSW. The Authorized representative must have “the legal authority of the company to bind the company to a contract and the terms of MMSEA Section 111 requirements and processing.” Authorized Representative will go to www.Section111.cms.hhs.gov to register. www.Section111.cms.hhs.gov After registration application is submitted, the information provided will be validated by the COBC. A letter with an assigned RRE ID and a PIN, along with a contract will be sent to the Authorized Representative. The Authorized Representative, using the RRE ID and PIN will then log back in and can then designate an Account Manager

76. The Registration Process The Account Manager: Will log in to the COBC using the RRE ID and PIN Enter personal information (name, job title, address, phone, e-mail) Create a Login ID for the website Enter information about expected reporting volume Select a file transmission method [https (secure server), Connect:Direct, other software] Can enter the Reporting Agent’s (TPA, other agent) name and contact info The Account Manager will be the administrative contact for the RRE and will control the overall account profile.

77. The Registration Process Each RRE must complete the registration process regardless of whether a Reporting Agent will be submitting files on that entity’s behalf. A Reporting Agent may not complete the registration for a Responsible Reporting Entity.

78. RREs and Agents Step 1 - RRE signs up and designates an “Authorized Representative.” Authorized Representative is most likely an employee/manager/vice-president of the RRE Step 2 - RRE will assign an “Account Manager.” Account manager will set up individual log-in accounts. May designate an agent such an a TPA to do reporting. Individual log-in personnel will submit reportable claims files during 7 day window. Individual log-in personnel can submit SSNs to the query database once per month.

79. Website for Information http://www.cms.hhs.gov/MandatoryInsRep/ To become a subscriber to receive updated information provided by Medicare to the website: Go to “Related Links Inside CMS” at the bottom of the page Click on the hyperlink: For e-mail updates and notifications COBC Secure Website for registration and reporting: www.Section111.hhs.govwww.Section111.hhs.gov

80. Timeline for implementation of MMSEA 01/01/09 - 06/30/09: Recommended systems development period. 05/01/09 - 06/30/09: Electronic registration via the COBSW for all liability/no-fault/workers’ compensation RRE’s. 07/01/09 - 09/30/09: Testing period for all liability/no- fault/workers’ compensation RRE’s. 10/01/09 - 12/31/09: All liability/no-fault/workers’ compensation RRE’s submit their first Section 111 production files based upon a predetermined schedule with the COBC. 01/01/10: All liability/no-fault/workers’ compensation RRE’s will be submitting Section 111 production files by this date. Penalties begin for failure to report.

81. Computer Based Training Computer Based Training courses designed for RRE’s will be made available on the CMS website (they are not currently available). The CBT is designed to help RRE’s (and agents) with the actual reporting process. They are offered free of charge.

82. Computer Based Training Here’s what the CMS says about the CBT courses: “Our CBTs include in depth training on MMSEA Section 111 reporting requirements, file transmission, file formats, and file processing.” “Courses are broken down into manageable, easy to comprehend modules. Each CBT includes a course completion time so you will know exactly how much time you'll be spending before you begin.” “Training is self-managed, allowing you to learn at your own pace, anytime and anywhere you have a computer with an internet connection.” “Once you have registered, you will be provided with a curriculum of CBT courses allowing you to choose the classes you need.”

83. Computer Based Training If you are an RRE, registration for the courses may be made 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. Once the COBC has processed your request, you will be registered. The NGHP curriculum is not currently accessible, but registrants will be notified automatically as soon as NGHP CBT courses are available.