2010 PLUS International Conference MMSEA: Hurry Up and Wait for the Feds

2010 PLUS International Conference The Round-Up… Moderator: Thomas Paschos, Esq., Partner, Thomas Paschos & Associates, P.C. Panelists: Tom Blackwell, MSCC, National Vice President of Sales, Gould & Lamb, LLC Theresa J. Bradley, Esq., Staff Attorney, ProAssurance Corporations James Reed, Esq., Associate General Counsel, Loyola University Health System Michael C. Stinson, JD, Director of Government Relations, Physician Insurers Association of America

2010 PLUS International Conference Medicare as a Secondary Payer Insurer is responsible for paying medical expenses  “Responsible” = when case has settled or gone to verdict Medicare either does not pay OR Medicare pays conditionally  Insurer, plaintiff or attorney has to reimburse Medicare

2010 PLUS International Conference Present Day Medicare Medicare is under funded CMS wants its money No consistent way for Medicare to discover claims MMSEA Section 111  Payers required to report claims

2010 PLUS International Conference Penalties for Failure of Insurer to Reimburse Medicare Medicare has a claim, not a lien Medicare can sue the insurer, plaintiff & plaintiff’s attorney Double damages under the SSA Treble damages under the FCA (All in addition to fines for failure to report)

2010 PLUS International Conference Medicare Secondary Payer Act (M.S.P.) Omnibus Reconciliation Act of MMA 2003, Title III, §301  Acceptance of Liability not needed Medicare-Secondary Payer Status-all lines of insurance WC primary to Medicare since 1965

2010 PLUS International Conference Medicare Secondary Payer Act (M.S.P.) cont’d Liability and No-Fault insurers  Responsible to protect Medicare’s interest MSP gives Medicare two rights: 1. Right of Recovery 2. Consideration for Future Medicals

2010 PLUS International Conference Medicare Secondary Payer Act & Section 111 Carriers and self-insurers can suffer penalties Delayed Settlements – increased adjudication Medicare is ready to move forward Reporting began 10/1/2010 MSP compliance is their main focus Settlement language is critical

2010 PLUS International Conference Medicare, Medicaid, and SCHIP Extension Act (2007) MMSEA is government’s method to enforce MSP rights Requires insurers to “vet” Medicare status of plaintiffs The reporting requirement carries heavy penalties Data is being reviewed by third parties Timing is critical

2010 PLUS International Conference Penalties for Failing to Report Subject to a $1000 / day fine. Penalty can be assessed for data integrity issues. Only 1 period per quarter that you can send data Miss that opportunity? The penalty will be at least $90,000!

2010 PLUS International Conference Underwriting Implications: MMSEA and MSP Increased uncertainty regarding loss development pattern Limited actuarial information regarding cost implications  Increased claims handling costs  Increased claims settlement values  Increased no-fault payments  Increased defense costs

2010 PLUS International Conference Assessing Risks Associated with Medicare & MMSEA Cost implications Insured’s medical specialty Insured’s venue Jurisdictional limits of liability

2010 PLUS International Conference Understanding the Medicare and Lien Process Major steps in the lien process:  Report claim to Medicare  Request a “conditional payments” letter  Determine payments “related” to claimed injury  Report settlement to Medicare  Obtain “final demand” letter from Medicare  Pay Medicare’s claim or appeal determination (60 days to appeal)

2010 PLUS International Conference Importance of Medicare Lien Process It slows the claims process:  Increased time for resolving cases  Requires additional discovery related solely to Medicare data  May need to adjust indemnity and expense reserves  Cases with large medical specials may require Medical Set Asides

2010 PLUS International Conference Creates difficulty evaluating risks :  Files open longer (more open at a given time)  Difficult to obtain information on pending claims  Difficult to assess risks with little claims information Importance of Medicare Lien Process

2010 PLUS International Conference ProAssurance –Satisfying MMSEA Reporting Requirements Designated a Medicare compliance attorney Redesigned claims system to capture required data Drafted claims procedures to ensure compliance Conducted employee and defense attorney education Information Systems created programs to automate the reporting

2010 PLUS International Conference Involvement with CMS Consulted with CMS from the start Explained Medical Professional Liability insurance to them One-on-one meetings Industry meetings

2010 PLUS International Conference CMS Will be overwhelmed by reporting Guidance will continue to change May seek change to legislative authority

2010 PLUS International Conference CMS Trying to be realistic Wanted to accommodate industry (somewhat) Had no idea how P/C insurance worked

2010 PLUS International Conference Implementation of Reporting Requirements Even after a company complies; you may still not be able to relax:  Guidance may change at any time  Continue to monitor CMS  Must be focused on MSP issues now

2010 PLUS International Conference Congress Reaction to Reporting Requirements Remains to be seen Nothing this year Legislation this year could be base for 2011 action  Medicare Secondary Payer Enhancement Act  Requires Medicare to promptly respond to demand letters  $5,000 threshold for reimbursement  Safe harbors for reporting  No SSN requirement  User fees to pay for system

2010 PLUS International Conference Medicare Enforcement - Nationwide CMS will probably allow for an “adjustment period” Within 6 months, CMS will expect compliance CMS are likely to refer claims to DOJ when insurers:  Should have known about a claim  Knew of a claim & intentionally failed to report

2010 PLUS International Conference Medicare Enforcement - Regional “Tough” regions include Chicago & East Coast Southern regions (Dallas/Atlanta) known to “negotiate” Recent trend– coordination & cooperation among regions:  Establish consistent thresholds  Handle all similar cases similarly

2010 PLUS International Conference Who Has Exposure? Anyone involved in the claims process In practice:  Any source of payment (insurers/self-insured entities) is highly exposed  CMS and DOJ rarely actively pursue patients/claimants and their attorneys

2010 PLUS International Conference Insurers – How to Avoid Litigation and Ensure Compliance Don’t get complacent Monitor CMS for guidance changes Get active with Congress

2010 PLUS International Conference Insurers – How to Avoid Litigation and Ensure Compliance Develop Compliant Settlement Language Record all attempts to collect MMSEA data Initial claimant - include request for 5 fields Start MSP compliance process early

2010 PLUS International Conference Insurers – How to Avoid Litigation and Ensure Compliance Familiarize yourselves with the reporting requirements Designate a compliance specialist Develop systems within claims department to obtain and capture data Develop safety net to ensure compliance Educate staff and defense attorneys Educate plaintiffs’ bar

2010 PLUS International Conference Self Insured's - How to Avoid Litigation and Ensure Compliance Insist that your attorneys protect your interests when payment is made:  Issue a multi-party check (Medicare as a payee)  Demand indemnity language in the release Take advantage of CMS resources:  Computer-based, on-line training  Town hall conference calls  CMS, MMSEA Section 111 web site

2010 PLUS International Conference Self Insured's - How to Avoid Litigation and Ensure Compliance Make sure your defense attorneys are MMSEA/MSP educated Include Medicare compliance language in all settlement documents Collect query Data early in Claim’s Life Expectancy Keep records of all attempts to collect data.

2010 PLUS International Conference Avoiding Litigation and Ensuring Compliance TPAs and attorneys:  Inform clients of handling protocols for Medicare claims  Develop Compliant Settlement Language  Record all attempts to collect MMSEA data  Initial claimant contact should include request for 5 fields  Start the MSP compliance process early

2010 PLUS International Conference Preventing Actions and Ensuring Compliance Notify Medicare of claim prior to reporting Take steps to ensure Medicare reimbursement/ set-aside

2010 PLUS International Conference Preventing Actions and Ensuring Compliance Report Timely Keep Records Verify data Strictly follow your handling protocols, once established

2010 PLUS International Conference Preventing Actions and Ensuring Compliance Establish strong professional relationship with contractor Your reputation at claims professional level is very valuable Establish a process to identify every potential claimant Catch all claimants who become Medicare eligible during pendency of case

2010 PLUS International Conference Predictions – Effect on Industry/TPA/Attorneys/Claims Crippling effect on settlement negotiation process Increased frustration Initial confusion and mistakes (on both sides) Eventually will become part of business process

2010 PLUS International Conference Predictions – Effect on Industry/TPA/Attorneys/Claims More Clients from liability and auto More E&O issues Claim Frequency will diminish Severity will increase Case management will become a priority for all lines No long term effect on number of settlements

2010 PLUS International Conference Predictions - Costs Increased settlement values Increased defense costs Increased business costs

2010 PLUS International Conference Predictions – Future Enforcement by the Government Concern is “bundling” of claims with insurers on the hook for all reimbursements No dramatic change Congress still wants Medicare to be solvent “Fixes” may be possible - bipartisan 2012 election will dominate agenda – spending will be the key issue

2010 PLUS International Conference Questions & Answers

2010 PLUS International Conference Many Thanks To… Thomas Paschos Tom Blackwell Theresa J. Bradley James L. Reed, Jr Mike C. Stinson

2010 PLUS International Conference Many Thanks To… Thomas Paschos, Esq., Thomas Paschos & Associates, P.C., PH: / ; Tom Blackwell, MSCC, Vice Pres. of Sales, Gould & Lamb, LLC. PH: (941) ; Theresa J. Bradley, Staff Attorney, ProAssurance Companies PH: ; James L. Reed, Jr., Associate General Counsel Loyola University Health System PH: (708) ; Mike C. Stinson, JM, Director of Government Relations Physician Insurers Association of America PH: ;