1. Medicare Secondary Payer Compliance for US Property & Casualty Insurance
2 November 2010

2. Objectives Why Gould & Lamb? Definition of: Social Security Medicare
Medicare Secondary Payer Act
Medicare Recovery Rights
Past Payments
Future Payments
MSP Compliant S/J/A
Penalties for Non-Compliance
Medicare Medicaid SCHIP Extension Act 2

3. Why Gould & Lamb?
Gould & Lamb is a single source to satisfy Medicare Secondary Payer (MSP) compliance as well as Mandatory Insurer Reporting (MIR) obligations for the Lloyd’s Market
OneSource© System is the technology solution for automated MSP notification and MIR
Gould & Lamb is the United States’ largest and leading MSP and MIR Compliance provider 3

4. Social Security
The Social Security Act (42 U.S.C.A. § 301 et seq.), designed to assist in the maintenance of the financial well-being of eligible persons, was enacted in 1935
Social Security pays benefits to people who cannot work because they have a medical condition that is expected to last at least one year or result in death
US Federal law requires this very strict definition of disability 4

5. Social Security (cont.)
US workers are required to make payroll contributions to Social Security
In general, to qualify for disability benefits, one must meet two different earnings tests:
A “recent work” test based on age at the time of disability
A “duration of work” test to show sufficient work quarters under Social Security
After 24 months of receiving Social Security Disability Insurance benefits, Medicare eligibility is automatically established 5

6. Medicare A US Federal health insurance program for individuals:
Age 65 or older
Under age 65 with certain disabilities
After 24 months of receiving Social Security Disability Insurance (SSDI)
Suffering from End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS) 6

7. Medicare Statistics (Kaiser Family Foundation)
47M Americans currently have Medicare coverage
8M are permanently disabled under 65
16% of the Medicare population is under 65 and permanently disabled
Medicare is 12% of the Federal budget and 20% of the total national healthcare expenditures
Medicare spending is predicted to double from $528B (approx. £330B) in 2010 to $1,038B (approx. £649B) in 2020
Next 20 year predictions:
People on Medicare is projected to rise from 47M to 79M
Ratio of workers per beneficiary will decline from 3.7 to 2.4
By 2017, Part A Medicare trust fund is projected to be depleted
Part A spending has exceeded income since 2008 7

8. 8

9. Medicare – Part A Part A Hospital Insurance
Beneficiary is automatically enrolled if eligible for Medicare benefits
Benefit coverage under Part A includes inpatient care in hospitals and short term skilled nursing facilities (but not custodial or long-term care)
Hospice (palliative) care
Home Health care services as defined by Medicare coverage guidelines (Beneficiaries must meet certain conditions to receive these benefits) 9

10. Medicare – Part B Part B Medical (Outpatient) Insurance
Beneficiary is required to elect and enroll for Part B benefits upon eligibility
Benefit coverage under Part B includes:
Outpatient physician office visits
Outpatient rehabilitation (physical and occupational therapy)
Home Health Care (as defined by Medicare coverage guidelines)
Outpatient surgical and ambulatory care procedures 10

11. Medicare – Part D Part D Prescription Drug Coverage Formulary
1 January 2006, Medicare prescription drug coverage became available to Medicare beneficiaries
The Medicare Beneficiary may choose to elect and enroll for Part D benefits upon eligibility
Private companies provide prescription drug coverage. Beneficiaries choose the drug plan they wish to enroll in, and most pay a monthly premium.
Formulary
Prescription Drug coverage
Exclusions 11

12. Medicare Secondary Payer Act
42 U.S.C. 1395y(b) [section 1862(b) of the Social Security Act], and 42 C.F.R. Part 411
Medicare has been secondary to workers’ compensation benefits from the inception of the Medicare program in 1965.
The liability insurance (including self-insurance) and no-fault insurance MSP provisions were effective December 5, 1980. 12

13. Medicare Secondary Payer Act
Medicare is precluded from paying for a beneficiary’s medical expenses when payment “has been made or reasonably can be expected to be made under a workers’ compensation plan, an automobile or liability policy or plan (including a self-insurance plan), or under no-fault insurance.”
Primary Payers (CFR ): Workers’ Compensation, Liability, Auto No Fault, USL&H, and Jones Act 13

14. Medicare Recovery Rights
Two aspects of protecting Medicare:
Compromise: Right of recovery for past Medicare payments (conditional payments, a.k.a. Medicare liens)
Commutation: Consideration for Medicare recovery of future injury-related, Medicare covered medical expenditures (future allocation) 14

15. Medicare Recovery Rights: Past Payments
Compromise: Medical payments made by Medicare where a primary payer has not paid promptly
Medicare makes a “Conditional Payment” reserving their rights to proceed against the primary payer for reimbursement
Conditional Payment Research (CPR)
Conditional Payment Negotiation (CPN) 15

16. 16

17. Penalties for Non-Compliance: Conditional Payments
42 USC 1395 (y)(b)(2)(B) allows the US Federal Government to bring an action against “any” responsible party
Double damages plus interest may be collected from the primary payer
Medicare may refuse to recognize any settlement contrary to the MSP
Medicare may refuse future benefits to claimant for treatment related to alleged injury 17

18. Medicare Recovery Rights: Future Payments
Commutation: Consideration for Medicare recovery of future injury-related, Medicare covered medical expenditures
Claim Settlement Allocation (CSA)
Liability Settlement Allocation (LSA)
Liability Medicare Set-aside Allocation (LMSA) 18

19. Medicare Recovery Rights: Future Payments
Liability CSA, LSA, LMSA
CSA
LSA
LMSA
General orthopedic
injuries and/or zero
allocation without
cost projections
Any of the following
conditions CRPS, chronic
pain with SCS or ITP,
major psych condition,
immunodeficiency,
vision/hearing loss with
prosthesis and/or zero
allocation with
Total settlement amount
greater than
$250,000, not workers’
compensation and/or
underlying workers’
compensation injury
and/or non-workers’
compensation
catastrophic claim 19

20. 20

21. MSP Compliant Settlement/Judgment/Award
Resolution of conditional payments
Settlements must “adequately consider” Medicare’s interests
Applicable if future medicals are limited or closed by settlement 21

22. MSP Compliant Settlement/Judgment/Award
No cost shifting to Medicare by “primary payer”
Medicare can make conditional payments and seek reimbursement from the “primary payer”
Absent “adequate consideration” of Medicare’s interests, Medicare may fail to recognize the settlement 22

23. Potential Penalties for Non-Compliance: Future Medical
Medicare may refuse to recognize any settlement contrary to the MSP Act
Medicare may refuse future benefits to claimant for treatment related to alleged injury 23

24. Medicare Medicaid SCHIP Extension Act
Former President George W. Bush signed the bill into law on December 29, The law is designed to provide a funding vehicle for the State Children’s Health Insurance Program by establishing a series of reporting requirements and a civil money penalty for non-compliance.
Section 111 requirements are applicable to Group Health Plans and Workers’ Compensation, Liability and No-Fault Auto plans (collectively referred to as non-GHP). 24

25. Responsible Reporting Entity (RRE)
What is an RRE?
The self insured entity or carrier that has assumed, been assigned or adjudicated as the primary payer responsible for ongoing medical care or has entered into a settlement/judgment/award to or for the benefit of the injured party
An insured entity that engages in a business, trade, or profession and acts without recourse to its insurance
“Self-Insured Retention” refers to the risk the insured retains that is not included in the coverage provided by the insurer 25

26. Responsible Reporting Entity
An RRE is not:
A third party claims administrator
An entity that is responsible for payment within a deductible
“Deductible” refers to the risk the insured retains with respect to the coverage provided by the insurer
The entity that reimburses the assumed, assigned or adjudicated primary payer 26

27. RRE Registration
Must be completed and deemed “production ready” within 180 days of commencement
Gould & Lamb participated in the Pilot Test and is “production ready” for all associated RREs, therefore individual testing is not required
Gould & Lamb will assist with the registration process 27

28. Triggering Events for Reporting
For claims involving Medicare eligible injured parties:
Acceptance of Ongoing Responsibility for Medical (ORM)
Responsibility for making a payment to or for the benefit of the injured party/beneficiary
Post 1 January 2010
Termination of ORM
Settlement/Judgment/Award
Total Payment Obligation to the Claimant (TPOC)
Post 1 October 2010 28

29. Penalties for Non-Compliance
Section 111 of SCHIP serves 4 purposes:
$1,000 per day, per claim fine (approximately £640)
Estimated $1.1B in fines to fund SCHIP (approximately £702,068,400)
Discover billions in unresolved Medicare liens (conditional payments) and seek immediate recovery
Cease making ongoing conditional payments in the future
Ensure that all settlements “adequately consider” (allocate) Medicare’s interests as required by law 29

30. OneSource© System
Technologically diverse, internally developed and maintained technology solution for MIR
Accepts proprietary Gould & Lamb, standard CMS and Universal File Specifications
Manual data entry via website
Provides an automated Medicare-approved reporting solution
Significantly reduces exposure to Medicare penalties for non-compliance to the Lloyd’s Market 30

31. Key Data Elements Received from the Lloyd’s Market
On All Claims to Perform Medicare Query Function (MQF)
First Name
Last Name
Gender
Date of Birth
Social Security Number
AKA “The Big 5” 31

32. Key Data Elements Received from the Lloyd’s Market
For Claims Involving Medicare Eligible Injured Parties/Beneficiaries (partial population over time)
CMS Date of Incident
Post 12 December 1980
First date of exposure, implantation, ingestion or traumatic injury
ORM Indicator
Yes/No
TPOC Date & Amount
ICD9 Alleged Cause of Injury and Diagnosis Codes
State of Venue
Policy Number
Plan Insurance Type
Tax Identification Number (pseudo-TIN) 32

33. Data Elements Provided to the Lloyd’s Market by Gould & Lamb
Weekly Claim Status File provided as a snapshot of claims sent to Gould & Lamb, which includes:
Medicare Secondary Payer Alerts
Record ‘Last Update’ Date and ID
Mandatory Insurer Reporting (MIR) Flag and ‘Last Report’ Date
Injured Party Medicare Eligibility Status
Data Validation Status and Validation Description
Quarterly Claim Response File from Medicare includes:
Disposition Status of each Claim Record
Disposition Error Codes
Compliance Flags1 33

34. Security and Data Transfer Mechanisms
File exchanges via:
Secure File Transfer Protocol (SFTP)
Secure Socket Layer encrypted website (HTTPS)
PGP encryption, if desired
iService (HTTPS website)
Detailed Disaster Recovery Plan, including failover to “warm site”
“Need to know” data segregation via Siebel 8.0 34

35. Mandatory Insurer Reporting (MIR) Workflow35

36. iService Web Portal 36

37. iService Login Screen 37

38. iService Claims Tab 38

39. iService New Claim Entry39

40. iService Claim Edit 40

41. iService Data Validation41

42. iService Successful Data Validation42

43. iService Medicare Responses Tab43

44. iService Additional Features
User account management
Audit tracking
Ad hoc reporting and data extraction
Customizable views
Performance monitoring
Integrated technical support
Video tutorials 44

45. Implementation Key Dates For Reporting Training
Tentative CMS Production Date: 15 April 2011
Monthly Query: 8th of every month
Big 5 Data to Gould & Lamb by 6 February 2011
Claim Data to Gould & Lamb by 13 April 2011
Training
Once a complete TPA list received, a welcome letter is distributed providing a high level overview of objectives, expectations and plans for upcoming training
Project management software
Numara – TrackIt! 45

46. Implementation Dedicated team approach
Dedicated Client Liaison Specialists to each Managing Agent /TPA
Assume ownership of implementation, Assisted by Report Services Coordinator with participation and oversight by Reporting Services Manager
Overall tracking, oversight and performance evaluation by VP of IT and Strategic Services 46

47. Implementation Track record
Depends on complexity and IT solution engaged with client
Began conducting Medicare Queries in July 2009
Completed Pilot Test in February 2010 (one of only three companies at the time)
Sent first production Quarterly Claim File for an RRE in July 2010 and have reported for 712 RREs to date 47

48. Implementation Escalation process
Questions / issues presented to the Client Liaison Implementation Specialist (via ) not responded to within two business days, escalated to John Miano, Manager of Reporting Services
If Manager of Reporting Services does not respond within one business day, escalated to VP of Information Services, Scott Huber
If VP of Information Services not respond within one business day, escalated to Deb Pfeifle, CEO 48

49. Implementation Linking group to London office
Weekly teleconference
Live meetings as needed prior to CMS designated mandate and for RRE reporting group
Viability of Achieving the 180 days
Various solutions to meet production goals
iService Only – direct data entry 49

50. Conclusion
Gould & Lamb is Your Partner in Compliance, providing the single source to satisfy all Medicare Secondary Payer (MSP) compliance issues as well as Mandatory Insurer Reporting (MIR) requirements for the Lloyd’s Market
OneSource© System is the most flexible and advanced technology solution in the industry
This is just the beginning 50

51. Thank You
Contact information
Telephone Number:
Toll Free Telephone Number:
Deborah Pfeifle, Ext. 1404
President & COO
Russell Whittle, Ext. 1554
VP of MSP Compliance
Kip Daniels, Ext. 1077
Executive Vice President Strategic Services
Scott Huber, Ext. 1456
Vice President of Information Services
John Miano, Ext. 1518
Manager of Reporting Services
Website: 51

52. Acronyms 52

53. Acronyms 53

54. Acronyms 54

55. Acronyms 55