Taking Medicare’s Interests into Consideration: Mandatory Insurer Reporting under MMSEA Section 111

A. Contextual background of the Act.

Medicare is a federally sponsored health care plan that is available to individuals who are 65 or over and to individuals who have received Social Security Disability Insurance (SSDI) benefits for more than two years. This includes a significant number of workers’ compensation claimants. Since the mid-1980s, the Medicare As Secondary Payer Act3 has made clear that if medical expenses could be covered under either workers’ compensation or Medicare, workers’ compensation, and not Medicare, should pay. Workers’ compensation is primary and Medicare is secondary. The position of Medicare was further strengthened by amendments to the Act in December of 2003. Medicare is administered by the Centers for Medicare and Medicaid Services (CMS). This agency was previously known as the Health Care Finance Administration. CMS delegates some of its work, especially work dealing with the collection of overpayments, to private contractors that vary by region and state.

The historical interplay between workers’ compensation and Medicare.

In the past, workers, their attorneys, employers, and even insurance companies have ignored or attempted to evade the fact that workers’ compensation is primary to Medicare. There were undoubtedly some instances in which a worker would go into a hospital for treatment of a work-related problem and show a Medicare card, and the hospital would bill Medicare. No one on behalf of the employer or its insurer went out of the way to tell the hospital that the bill should have been sent to workers’ compensation or to reimburse Medicare after it had paid the bill. There were also, undoubtedly, situations in which a worker and an employer agreed to settle a workers’ compensation claim and the worker asked, “What about my future medical expenses?” The employer, insurer, attorney or even judge responded by saying, “Just charge them to Medicare.”

Medicare expenditures represent about 25 percent of the total budget of the federal government. There is tremendous pressure to reduce Medicare expenses. On several occasions in the last few years, Medicare has, for example, arbitrarily reduced the amount it pays doctors by four percent or more. Medicare has been searching for every way it can to control its costs. In 2000 and 2001, studies by the General Accounting Office pointed out that Medicare was losing money by paying for certain services that should have been covered under workers’ compensation. At about the same time (perhaps in response to the GAO), CMS began to more aggressively enforce its right to have workers’ compensation insurers pay Medicare back when required.

The Problem with Settlements.

With regard to ongoing care when a worker is currently entitled to workers’ compensation, the situation is fairly straightforward: Workers’ compensation should pay and Medicare should not. The situation becomes much more complicated with regard to settlements. When a worker receives a lump sum and an employer is relieved of its liability for future benefits, in most cases, some of the lump sum is for the payment of future medical benefits. Until that amount is exhausted Medicare should not be expected to pay for medical expenses for the covered condition. When that amount is gone, Medicare should begin paying. The problems concern how we will determine how much of a settlement should be allocated for future medical expenses and how we will know when that amount has been exhausted.

Pre-approval.

In July 2001 CMS issued a memo4 to its regional offices. It suggests that under certain circumstances parties to workers’ compensation claims should not settle those cases until after CMS has had an opportunity to review the settlement and approve the allocation to future medical expenses. The memo discusses the circumstances under which the regional offices will “pre-approve” such an allocation. It discusses pre-approval in two categories of cases:

Cases in which the workers’ compensation claimant is currently entitled to Medicare benefits.

Cases in which the injured individual has a “reasonable expectation” of Medicare entitlement within 30 months of the settlement date and the settlement is over $250,000.5

Medicare announced that the ‘threshold’ for reviewing cases was to be set at $25,000. Medicare refuses to provide a pre-approval of set-aside unless the lump-sum payment to the claimant exceeds $25,000.

Set-Asides.

After a case is settled, CMS wants the parties to create some form of “set-aside” arrangement in which the funds for future medical expenses that would be covered under Medicare are placed in a trust or deposited in a separate account. Medicare will begin paying medical bills for the work-related condition only when set-aside is depleted and the funds are accounted for.

This has caused considerable difficulty for the workers’ compensation system. If a case is settled for more than $250,000, it is reasonable to devote the time and resources necessary to obtain pre-approval and create some form of set-aside agreement. However, the vast majority of workers’ compensation claims are settled for much smaller amounts. The time and effort that pre-approval and set-asides require is very substantial when compared to the amounts involved. The suggested procedures have served to create a serious burden on workers’ compensation.

Failure to Obtain Approval for lump-sum settlements that foreclose the possibility of future medical.

An insurance company who fails to make certain that CMS approval has been obtained is on the hook for double the amount of the settlement.

Current practice for mitigating this exposure is:
Review the medical situation and prepare a defensible estimate of how much of a lump-sum settlement should be allocated to future medical expenses. This is sometimes called a “life care plan.”

Obtain pre-approval from CMS of the amount of the settlement that will be allocated to future medical expenses.
Create a Medicare set-aside arrangement. These are sometimes formal trusts, sometimes less formal agreements, that pay or keep track of the expenditure of the portion of the settlement that is allocated to future medical expenses. These vendors have played a significant role in the situation.

The status of conditional payments or payments for medical treatment by Medicare which should have been paid for by the workers’ compensation insurer remain the province of Medicare in every case.

Conditional payments.

The Medicare statute does not allow Medicare to make a payment if a workers’ compensation policy should be the proper primary payer. In the case of a denied claim, the workers’ compensation carrier will not pay for medical treatment. In such cases Medicare pays for the medical treatment conditioned on the premise that the workers’ compensation carrier must reimburse Medicare if the workers’ compensation carrier has or had the responsibility to make primary payment.

If Medicare has provided treatment, then Medicare’s interest must be considered.

If Medicare has not paid for treatment for the disability/injury alleged in the claim petition, then the next query must be reached. Simply put, the type of closure must be known.

As Medicare will treat the judgment of a workers’ compensation judge as final as to compensability and causal relationship, closure by way of Judgment with dismissal does not trigger a Medicare interest.

Just what does it mean to be “Medicare Eligible”?

“Medicare eligible” identifies any claimant who could receive Medicare benefits currently.

What is a “Reasonable Expectation” for entitlement to Medicare?

A workers’ compensation carrier has a “reasonable expectation” that a claimant will become entitled to Medicare when (1) the claimant has already applied for SSDI, (2) the claimant was denied SSDI but may appeal that decision of denial, (3) Is currently appealing a decision of denial for SSDI, (4) has end-stage renal disease, and (5) is 62.5 years old (and therefore will be entitled to Medicare in 30 months)

This set of fact prerequisites establishing a “reasonable expectation” is not likely to be known by the respondent in a pending workers’ compensation case. Defense counsel should be expected affirmatively ask these questions of claimant’s attorney during the settlement process.

Need for set-aside.

Because there is a possibility that Medicare may become responsible for additional (prospective) medical care for an injury or disability which is resolved by way of a lump-sum dismissal, Medicare demands that the claimant set-aside money to pay for the future medical costs. If Medicare determines that no set-aside is necessary, then a waiver will be issued.

Best Practices for obtaining a Set Aside.

On September 26, 2009 Medicare issued guidance as to how Set-Aside proposals “could” be submitted to Medicare. We expect that these recommendations will now be ‘best practices’ for dealing with Set-Aside arrangements.

The New Forms (Sept 2009).

Medicare has issued a 38-page “checklist” including sample forms that it ‘recommends’ submitters utilize. According to CMS, “cases using this or similar format can generally be processed more quickly with fewer errors – resulting in faster determinations at less cost to submitters and the government.” The ‘recommended’ submission form is divided into numbered sections to correspond to the electronic folders in which CMS scans and files documents for review. For submissions by CD-ROM, grouping and naming documents by the CMS conventions is the preferred method of delivery.

CMS recommends the following numbered sections:

Section 05 – Cover Letter;
Section 10 – Consent Form;
Section 15 – Rated Ages;
Section 20 – Life Care/Treatment Plan;
Section 25 – Court/WC Board Documents;
Section 30 – WCMSA Administration Agreement;
Section 35 – Medical Records;
Section 40 – Payment Information;
Section 50 – Supplemental – Additional Information.

FAQs:

  1. When must Medicare’s interest be considered?
    Medicare’s interest must always be considered whenever:
    (A) Medicare has paid for treatment for a disability/injury alleged in the claim petition; and/or
    (B) In the closure of a workers’ compensation case the petitioner is Medicare entitled and future medicals for a disability/injury maintained in the claim petition are being foreclosed.
  2. When is a petitioner considered “Medicare entitled”?
    A petitioner is Medicare entitled if he or she is:
    65 years or older (assuming sufficient work quarters); or
    On Social Security Disability (SSD) for 24 months or longer; or
    Suffering from End Stage Renal Disease (ESRD).
  3. What does the CMS/Medicare review and approval process entail?
    CMS has emphasized that there are two separate and distinct tracks or processes involved in MSPS cases (the “Past Payment” track and the “Future Consideration” track). Both tracks must be considered and appropriately managed when applicable to adequately deal with Medicare’s interests.
  4. What is the “Past Payment” track?
    This track involves repayment (or obtaining a waiver) for any conditional payments made by Medicare on behalf of the petitioner for injuries or disabilities alleged in the claim petition pending the closure of the workers’ compensation case. To initiate this “past payment” process, one should first call the “MSP Claims Investigation Project” with the file and case information. CMS will take the necessary information, provide a bar code number, and send the necessary consent form.

Once the claim is reported, a fiscal intermediary is assigned by CMS, and one will then need to deal directly with the fiscal intermediary for resolution of any past payment issues.

Medicare providers have up to eighteen (18) months to file for Medicare payment when Medicare is being utilized. Counsel should therefore advise a petitioner who is Medicare entitled not to utilize Medicare for disabilities or injuries alleged in the claim petition. Additionally, it would be prudent for petitioner’s counsel to obtain information on all medical treatment petitioner received in the two years prior to the anticipated case closure to avoid medicare paid bills after the case is closed. An appropriate Motion for Medical Treatment is the proper mechanism to resolve treatment issues arising from alleged work-connected injuries or medical conditions.

  1. What is the “Future Consideration” track?According to CMS, a Workers’ Compensation Medicare Set-aside Arrangement (WCMSA) is appropriate whenever future medical benefits are foreclosed in the resolution of a workers’ compensation case. Specifically, a CMS/Medicare approved WCMSA is required whenever future medicals are being foreclosed and:

(A) Petitioner is Medicare entitled (regardless of the settlement amount); or

(B) Petitioner has a reasonable expectation of becoming a Medicare beneficiary within 30 months of the settlement date and the settlement totals more than $250,000.00.

Note: Since very few workers’ compensation settlements in New Jersey are over $250,000, situations under this section would not be a common occurrence. A “reasonable expectation of becoming a Medicare beneficiary within 30 months of the settlement date” would likely include those situations where the petitioner: (1) has applied for Social Security Disability (SSD); (2) has been denied SSD, but is appealing or anticipates appealing the denial; (3) is 62 years and 6 month old (and thus would be eligible for Medicare within 30 months); or (4) has End Stage Renal Disease but does not yet qualify for Medicare based upon ESRD.

This track involves obtaining CMS/Medicare review and approval of any WCMSA whenever liability for future medical benefits is being foreclosed for an injury or disability maintained in the claim petition. (Situations where no monies need to be withheld are referred to as “$0.00 WCMSA” situations.)

Note: The parties to the workers’ compensation case must agree on how this two-track process will be handled and how the costs involved will be allocated. Options for obtaining Medicare approval may include: Petitioner’s attorney doing the work; Respondent’s attorney doing the work; or hiring specialized legal counsel or a vendor to do the work.

  1. Is repaying Medicare for conditional payments (or obtaining a waiver), as previously discussed in Question 4, always required when the petitioner has received Medicare benefits?
    Yes.

Avoiding MSP Complications – Our Checklist.

Each carrier and self-insured must establish protocols to comply with the Medicare reporting requirements imposed by the “Medicare, Medicaid and SCHIP Extension Action of 2007” (‘MMSEA’). Each carrier and self-insured is left to its own devices to come up with these protocols. We have seen many of our clients turn to vendors to review claims and communicate with Medicare.

Our Checklist:

Carriers must determine which claimants are Medicare beneficiaries and those non-Medicare beneficiaries who have a reasonable expectation of entitlement within 30 months of the settlement date.
A claims representative should determine entitlement to Social Security and Medicare as early as possible in the file’s life. Warning flags include:
(a) Has the claimant been out of work more than six months (SSD);
(b) Has the claimant been off work for 30 months or longer (Medicare);
© Was it a catastrophic injury?;
(d) Is the settlement value over $250,000 (including the cost of medicals paid)?;
(e) Does the claimant admit to applying for SSD and getting denied or is the SSD denial on appeal?;
(f) Is the claimant aged 62 and six months old or older?; and
(g) Does the claimant have end-stage renal disease?
Our rule of thumb is that where the parties negotiate a settlement that terminates the obligation of the self-insured or carrier to pay for future medicals, even if the claimant denies being on Social Security Disability, independent verification should be obtained. A vendor can be used to identify Social Security recipients.
If the claimant is on Medicare but the settlement is less than $25,000 (and forecloses the possibility of the carrier/self-insured being responsible for future medicals) CMS will not review the settlement and either ‘approve’ a proposed set-aside or ‘waive’ Medicare’s set-aside requirement. In such an instance, the carrier/self-insured can prepare their own set aside agreement with the claimant. At settlement, appropriate consent and/or testimony should be obtained from the payee, making sure they understand that the payee must ‘spend down’ the allocable amount with medical bills prior to submitting bills to the compensated injury to Medicare.
One way of verifying that a payee is not on Medicare is to ask for copies of recent pay stubs. If the pay stubs are less than six months old, they cannot be a Medicare beneficiary.

Does the Medicare Secondary Payer Act apply to third-party Liability cases?

The MSP has been in effect since 1980, and there has been little effort to enforce its provisions in third-party liability cases. Moreover, there has been no indication from CMS that they would seek to exercise their MSP rights retroactively. Indeed, the workers’ compensation example has shown that CMS is not interested in ‘looking back’ to impose MSP responsibility.

The MSP Act applies to third-party liability cases.

All insurers, third-party health plans, self-insured plans, and self-administered plans must identify situations where the Plan is or has been primary to the Medicare program. The requirements of the MMSEA including the carrier/self-insured’s duties to identify claimants and provide “such other information as the Secretary may specify” certainly signal the beginning of an enforcement effort by CMS in third-party liability cases.

What entities are required to report to the Government.

The Centers for Medicare/Medicaid Services (CMS) requires their interests be protected prior to any settlement of the medical portion of a claim for qualified individuals. Recent laws mandate that claims with the potential to be covered under the CMS regulations must be reported. Penalties for noncompliance are $1,000 per claim, per day.

Responsible Reporting Entities – specific situations.

The law constantly refers to “the plan.” The term “plan” is not usually used in the insurance industry. For our purposes, read the term “plan” interchangeably with “insurer.” 42 U.S.C. 1395y(b)(8) provides that the “applicable plan” is the RRE and defines “applicable plan” as follows:

“APPLICABLE PLAN- In this paragraph, the 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.”

Corporate structure and RREs:

An entity may not register as an RRE for a sibling in its corporate structure.
An entity may register as an RRE for itself or for any direct subsidiary in its corporate structure.

A parent entity may register as an RRE for any subsidiary in its corporate structure regardless of whether or not the parent would otherwise qualify as an RRE.

For purposes of this rule regarding corporate structure and RREs, a captive is considered a subsidiary of its parent entity and a sibling of any other subsidiary of its parent.

A subsidiary may not register as an RRE for its parent.
The general concept is that an entity may only register for another entity if that second entity is below it in the direct line of the corporate structure. For example an entity may register for a direct subsidiary or the subsidiary of that subsidiary.

“Deductible” vs. “Self-Insured Retention” (SIR):

“Deductible” refers to the risk the insured retains with respect the coverage provided by the insurer.

“Self-Insured Retention” refers to the risk the insured retains that is not included in the coverage provided by the insurer.

“Payment”:

When referring to “payment” of an ORM or TPOC in this “Who Must Report” section, the reference is to actual physical payment rather than to who/which entity ultimately funds the payment.

Third Party Administrators (TPAs):

Third party administrators (TPAs) as defined by CMS for purposes for 42 U.S.C. 1395y(b)(7) & (8) are never RREs for purposes of 42 U.S.C. 1395y(b)(8) [liability (including self-insurance), no-fault, and workers’ compensation reporting] based solely upon their status as this type of TPA. (Note that for purposes of 42 U.S.C. 1395y (b)(7) reporting for group health plan arrangements, this type of TPA is automatically an RRE.)
However, while entities which meet this definition of a TPA generally only act as agents for purposes of the liability insurance (including self-insurance), no-fault insurance, or workers’ compensation reporting they may, under specified circumstances, also be an RRE. See, for example, the discussion of State established “assigned claims funds.”

Although it may contract with a TPA or other entity as its agent for actual file submissions for reporting purposes, the RRE is limited to the “applicable plan”. An RRE may not by contract or otherwise limit its reporting responsibility. The applicable plan 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 to act as its agent for reporting purposes.

Acquisition/ Divestiture or Sale (Not Under Bankruptcy Liquidation):

An entity which is an RRE is acquired by another entity. The acquiring entity is the RRE as of the effective date of acquisition. The acquiring entity is the RRE with respect to acquired claims, including ORM.

Bankruptcy:

Where an RRE has filed for bankruptcy, it remains the RRE to the extent that settlements, judgments, awards or other payments are paid to or on behalf of the injured party after approval by a bankruptcy court. However, bankruptcy does not eliminate reporting obligations for bankrupt companies or their insurer, regardless of whether a bankrupt company or insurer is the RRE, for payments made pursuant to court order or after lifting the stay.

Deductible Issues vs. Re-insurance, Stop Loss Insurance, Excess Insurance, Umbrella Insurance, etc.:

Generally, the insurer is the RRE for Section 111 reporting.
Where an entity engages in a business, trade, or profession, deductible amounts are self- insurance for MSP purposes. However, where the self-insurance in question is a deductible, and the insurer is responsible for Section 111 reporting with respect to the policy, it is responsible for reporting both the deductible and any amount in excess of the deductible. The deductible is not reported as “self-insurance”; it is reported under the applicable policy number. The total of both the deductible and any amount in excess of the deductible is reported. (Please note that government entities are considered to be entities engaged in a business.)

If an insured entity engages in a business, trade, or profession and acts without recourse to its insurance, it is responsible for Section 111 reporting with respect to those actions. For example: A claim is made against Company X which has insurance through Insurer Y. Company X settles the claim without informing its insurer. Company X is responsible for Section 111 reporting for the claim regardless of whether or not the settlement amount is within the deductible or in excess of the deductible.

For re-insurance, stop loss insurance, excess insurance, umbrella insurance, guaranty funds, patient compensation funds, etc. which have responsibility beyond a certain limit, the key in determining whether or not reporting for 42 U.S.C. 1395y(b)(8) is required for these situations is whether or not the payment is to the injured claimant/representative of the injured claimant vs. payment to the self-insured entity to reimburse the self-insured entity. Where payment is being made to reimburse the self-insured entity, the self-insured entity is the RRE for purposes a settlement, judgment, award or other payment to or on behalf of the injured party and no reporting is required by the insurer reimbursing the self-insured entity.

Fronting Policies:

The intent with “fronting” policies is that the insurer will not ultimately retain any risk under the insurance policy. The expectation of both the insured and the insurer is that the insured will retain the ultimate risk under the insurance policy for all claims. Where the insured pays the claim, the insured is the RRE. Where the insurer pays the claim, the insurer is the RRE.

Liquidation (settlement, judgement, award or other payment obligation against the entity in liquidation):

To the extent that settlement, judgment, award, or other payment to or on behalf of the injured party is funded from the assets of the entity in liquidation, the entity in liquidation is the RRE.

To the extent that a portion of a settlement, judgment, award or other payment obligation to or on behalf of the injured party is funded by another entity from that other entity’s assets (for example, payment by a state guarantee fund), the entity that makes payment is the RRE.

To the extent that a payment does not fully satisfy the entity in liquidation’s debt to the injured party, the amount reported is the amount paid. Any subsequently approved interim or final payments would be handled in the same manner. That is, they would be reported as additional TPOC amounts. 


Multiple Defendants:

Where there are multiple defendants involved in a settlement, an agreement to have one of the defendant’s insurer(s) issue any payment in obligation of a settlement, judgment, award or other does not shift RRE responsibility to the entity issuing the payment. All RREs involved in the settlement remain responsible for their own reporting.
For a settlement, judgment, award or other payment with joint and several liability, each insurer must report the total settlement, judgment, award, or other payment – not just its assigned or proportionate share.

Multi-National Organizations, Foreign Nations, American Indian, Alaskan Native Tribes:

Liability insurance (including self-insurance), no-fault insurance and workers compensation plans associated with multi-national organizations, foreign nations, American Indian and Alaskan Native tribes are subject to the MSP provisions and must be reported accordingly.

Self-Insurance Pools:

RRE for liability insurance or workers’ compensation self-insurance pools – Entities self- insured in whole or in part with respect to liability insurance or workers’ compensation may elect, where permitted by law, to join with other similarly situated entities in a self-insurance pool such as a joint powers authority (JPA).
“Review or approval authority” means that the self-insured entity has the ability to affect the payment or other terms of the settlement, judgment, award or other payment (including ORM).

If all three of the characteristics below are met, the RRE is the self-insurance pool:

  1. The self-insurance pool is a separate legal entity.
  2. The self-insurance pool has full responsibility to resolve and pay claims using pool funds.
  3. The self-insurance pool resolves and pays claims without review or approval authority by the participating self-insured entity. When a self-insured entity in the self- insurance pool (including, for example, a JPA) has the review or approval authority for the payment of claims and/or negotiated resolutions, the self-insurance pool is not the RRE, the individual self-insured members are the RREs.
    Exception: Where the statute authorizing the establishment of a self-insurance pool stipulates that said self-insurance pool shall be licensed and regulated in the same manner as liability insurance (or workers’ compensation, where applicable), then the self-insurance pool is the RRE. Absent meeting this exception, unless all three of the characteristics specified under the preceeding bullet apply to the self-insurance pool, the participating self-insured entity is the RRE.

Where the individual members are the RREs, each of the members would have the option of using the self-insured pool (or another entity) as its agent for purposes of Section 111 reporting.

State established “assigned claims fund”:

RRE for a State established “assigned claims fund” which provides benefits for individuals injured in an automobile accident that do not qualify for personal injury protection/medical payments protection from an automobile insurance carrier:

  • “Review or approval authority” means that the State agency has the ability to affect the payment or other terms of the settlement, judgment, award or other payment (including ORM).
  • Where there is a State agency which resolves and pays the claims using State funds or funds obtained from others for this purpose, the established agency is the RRE.
  • Where there is a State agency which designates an authorized insurance carrier to resolve and pay the claims using State-provided funds without State agency review and/or approval, the designated carrier is the RRE. (Note: This would be an example of the rare situation where a TPA entity would also be an RRE for NGHP.)
  • Where there is a State agency which designates an authorized insurance carrier to resolve and pay the claims using State-provided funds but the State agency retains review or approval authority, the State agency is the RRE. Example: A State agency pays no-fault claims using a State fund which is not under the agency’s control. Additionally, the State agency designates an insurance carrier to resolve liability insurance claims, but the State agency retains payment responsibility. The State agency is the RRE for both the liability insurance and the no-fault insurance. It may report both types of insurance under a single RRE ID # or obtain a separate RRE ID # for each type of insurance.
  • Workers’ Compensation:

    See the change to the “Workers’ Compensation Law or Plan” at the end of this document.

    The law provides, in part: “For purposes of the reporting requirements at 42 U.S.C. 1395y(b)(8), a workers’ compensation law or plan means a law or program administered by a State (defined to include commonwealths, territories and possessions of the United States) or the United States to provide compensation to workers for work-related injuries and/or illnesses. The term includes a similar compensation plan established by an employer that is funded by such employer directly or indirectly through an insurer to provide compensation to a worker of such employer for a work-related injury or illness.”

    Where “workers’ compensation law or plan” means “a law or program administered by a State (defined to include commonwealths, territories and possessions of the United States) or the United States to provide compensation to workers for work-related injuries and/or illnesses,” the following rules apply:

    • Where the applicable law or plan authorizes an employer to purchase insurance from an insurance carrier and the employer does so, follow the rules in the subsection for “Deductible Issues vs. Re-insurance, Stop Loss Insurance, Excess Insurance, Umbrella Insurance, etc.”
    • Where the applicable law or plan authorizes an employer to self-insure and the employer does so independently of other employers, follow the rules in the subsection for “Deductible Issues vs. Re-insurance, Stop Loss Insurance, Excess Insurance, Umbrella Insurance, etc.” (Here the reference is to “self-insurance” other than a “deductible.”)
    • Where the applicable law or plan authorizes employers to join with other employers in self-insurance pools (e.g., joint powers authorities) and the employer does so, follow the rules in the subsection for “Self-Insurance Pools”.Where the applicable law or plan establishes a State/Federal agency with sole responsibility to resolve and pay claims, the established agency is the RRE.

    In situations where the applicable law or plan authorizes employers to self-insure or to purchase insurance from an insurance carrier and also establishes a State/Federal agency to assume responsibility for situations where the employer fails to obtain insurance or to properly self-insure –

    • “Review or approval authority” means that the agency has the ability to affect the payment or other terms of the settlement, judgment, award or other payment (including ORM).
    • Where such State/Federal agency itself resolves and pays the claims using State/Federal funds or funds obtained from others for this purpose, the established agency is the RRE.
    • Where such State/Federal agency designates an authorized insurance carrier to resolve and pay the claim using State/Federal-provided funds without State/Federal agency review and/or approval, the designated carrier is the RRE.
    • Where such State/Federal agency designates an authorized insurance carrier to resolve and pay the claim using State/Federal-provided funds but State/Federal agency retains review or approval authority, the State/Federal agency is the RRE.
    • Where “workers’ compensation law or plan” refers to “a similar compensation plan established by an employer that is funded by such employer directly or indirectly through an insurer to provide compensation to a worker of such employer for a work-related injury or illness” follow the rules for insurer or self-insured, as applicable, including the rules for self- insurance pools. (Here the reference is to “self-insurance” other than a “deductible.”)

    Ongoing Reporting

    RREs must report new claims for Medicare beneficiaries that received settlements, judgments, awards or medical payments during the quarterly reporting period. They must also report any changes or corrections to claims that were previously reported and final notification on any previously reported claims if the Ongoing Responsibility for Medical Payments (ORM) has ended.

    RRE Registration

    Non group health, liability insurance, no-fault insurance, workers’ compensation and others are RREs as defined by the CMS must register between May 1, 2009 and September 30, 2009. In order to register, the RRE must report the approximate number of reported claims during the last calendar year, for each line of business that resulted in a medical payment to a claimant. RRE ID numbers, a government EDI representative and due dates for live production and subsequent reporting will be assigned upon registration. Refer to the MMSEA User Guide for additional details on the responsibilities of employers, TPAs and agents.

    C. What Information is necessary for reporting.

    Initial Claim Report

    1. Single Settlement claims (i.e. one-time payment with no further responsibility to the claimant) for any liability claim for a Medicare beneficiary if the settlement, payment, judgment, or award occurred on or after October 1, 2011 must be included in the initial report.
    2. Single Settlement claims for Workers’ Compensation or No-Fault claim for a Medicare beneficiary if the settlement, payment, judgment, or award occurred on or after October 1, 2010 must be included in the initial report.
    3. For claims involving Ongoing Responsibility for Medicals (ORM) (with or without a settlement), any claim for a Medicare beneficiary where the RRE has ORM as of January 1, 2010 must be included in the report. The claim should be reported when the ORM is first assumed, and an additional termination record must be included if the ORM terminates between January 1, 2010 and the date of the initial quarterly report. 
Initial Reporting Exception: Do not report an ORM claim if there have been no payments or activity since January 1, 2010, and activity is not anticipated in the future. Important Note: If a claim was not included in the initial report based on inactivity and incurs payment in the future, that claim must be included in the next quarterly report following the incurred payment.

    Subsequent Claim Report

    1. Single Settlement claims (i.e. one-time payment with no further responsibility to the claimant) for any claim for a Medicare beneficiary where the settlement, payment, judgment, or award has occurred since the last quarterly report date must be included in the next quarterly report.
    2. For new ORM claims (with or without settlement), any claim for a Medicare beneficiary where the RRE has accepted ORM after the last quarterly report date must be included as “New” in the next quarterly report.
    3. For claims that have been previously reported with ORM and the ORM has terminated since the last quarterly report date, a termination record must be included in the next quarterly report. If the ORM was initiated in the same quarter, two records must be sent—the initial record and the termination record. 
Termination Reporting Exception: If a claim has been initially been reported and if the RRE has received a signed statement from the claimant’s treating physician that there will be no further medical items or services, file a termination ORM status. Important Note: Any claim for a Medicare beneficiary with an early report of termination that incurs payment in the future, must be included in the next quarterly report following the payment.
    4. Any changes or updates to key fields in a previously reported claim must be reported immediately. Some require a single update record, and some require deletion of the previously reported record and addition of a new record with the correct data (marked below with *).

    Key information fields.

    • Name*
    • TINs
    • ICD-P Codes
    • SSN/HICN*
    • ORM Status*
    • Cause Codes
    • Gender*
    • TPOC Information Line of Business*
    • Date of birth*
    • Date of Incident*

    *=required.

    Grace Period for Claim Reporting

    The CMS is allowing a grace period for any claims that become reportable within 45 days of the quarterly deadline. These claims may be reported in the next quarter report at the RRE’s discretion.

    Interim Reporting Exclusions – Workers’ Compensation Only

    The CMS has set interim reporting and statutes of limitations. Workers’ compensation ORM claims meeting all of the following criteria are to be excluded from quarterly reporting due through December 31, 2012:

    • Medicals only
    • Lost time of no more than 7 calendar days
    • All payment(s) have been made to provider
    • Total payment does not exceed $750.00

    Dollar Threshold Reporting Exclusions

    For liability insurance (including self-insurance) and Total Payment of Obligation to Claimant (TPOC) for workers’ compensation, claims do not have to be reported for the following dates and dollar amounts.

    If there are multiple TPOCs reported by the same RRE on the same record, the combined TPOC amounts must be considered in determining whether or not the reporting exception threshold is met. For TPOCs involving a deductible, where the RRE is responsible for reporting both any deductible and any amount above the deductible, the threshold applies to the total of these two figures.

    These thresholds are solely for purposes of the required reporting responsibilities for purposes of 42 U.S.C. 1395y(b)(8) (the Section 111 MSP reporting requirements for liability insurance including self- insurance, no-fault insurance, and workers’ compensation). These thresholds are not exceptions and do not act as a “safe harbor” with respect to any other obligation or responsibility of the Medicare Secondary Payer provisions.

    These thresholds are interim thresholds while CMS is implementing the Section 111 reporting process. CMS reserves the right to change these thresholds and will provide appropriate advance notification of any changes.

    CMS is still actively soliciting data relevant to determining reporting thresholds, including for the purposes of a more liberal threshold for workers’ compensation ORM.

    D. The penalties for incomplete submissions or noncompliance.

    Failure to report claims can result in significant financial penalties for RREs totaling over $1,000 per day. However, all those involved can be penalized for their own failures to report. Medicare is entitled to double damages from anyone involved in the case if the government brings an independent cause of action. To avoid being penalized, the ultimate goal for RRE attorneys, plaintiffs’ attorneys and beneficiaries is to understand where there is coverage primary to Medicare (such as a liability suit), notify Medicare of such coverage and reimburse Medicare when it is appropriate.

    Both attorneys and Medicare beneficiaries are subject to interest fees and penalties if Medicare is not reimbursed. Attorneys may be exposed to increased legal malpractice insurance rates and ethical rules violations for failing to notify Medicare of payments, even if the plaintiff’s attorney was not aware the claimant was a beneficiary. Because of the MMSEA reporting requirements, Medicare will discover cases unreported by plaintiffs’ attorneys. Make sure you are prepared.

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    Greg Lois is the managing partner of LOIS LLC, a 19-attorney law firm dedicated to defending employers and carriers in New York and New Jersey workers' compensation claims. Greg is the author of a popular series of "Handbooks" on workers' compensation, and is the co-author of the 2016 Lexis-Nexis New Jersey Workers' Compensation Practice Guide. Greg can be reached at 201-880-7213 or glois@lois-llc.com