B. Josh Pettingill, MBA, MS, MSCC
Introduction
A vital step to navigating the MSP statute is understanding the dynamics between the Section 111 Reporting Requirement and the potential interplay for a Liability Medicare Set Aside (LMSA). The MSP statute precludes Medicare from paying for any item or service when payment has been made by a liability insurance policy, self-insured or no-fault plan[1]. The MSP statute gives CMS the authority to deny making payments for accident-related care when there is a primary payer involved. Additionally, if CMS inadvertently makes payments when they should not, they can seek reimbursement for those erroneous payments. The MSP statute may be the authority for CMS to deny making payments when there is a primary payer, but the Mandatory Insurer Requirement is the catalyst for CMS to identify cases for potential recovery or denials.
The Medicare, Medicaid SCHIP Extension Act (MMSEA), specifically, the Mandatory Insurer Requirement (MIR) created a mechanism for CMS to collect data about Medicare beneficiaries who receive liability, workers’ compensation or no-fault liability settlements, judgments or awards. The Section 111 Reporting Requirement gave CMS the ability to track Medicare beneficiaries electronically. There is a tremendous amount of data that gets reported every day for settlements of $750.00 or greater, involving a Medicare beneficiary. John Albert, Acting Director of the Office of Financial Management’s Division of Medicare Coordination[2], estimated that 97% of the information CMS has on file comes directly from the data that is reported by the insurance carriers (responsible reporting entities or RREs for short) at settlement.
Section 111 Reporting: The Purpose
The purpose of Section 111 Reporting “is to enable CMS to pay appropriately for Medicare-covered items and services furnished to Medicare beneficiaries. Section 111 Reporting is used as a tool for CMS to determine when other insurance coverage is primary to Medicare, meaning that it should pay for the items and services first before Medicare considers its payment responsibilities[3].” To unbundle this, Medicare does not want to pay for accident-related care if they know the plaintiff has received a portion of settlement proceeds to cover future, accident-related care. They also want to make certain they are reimbursed for any conditional payments. The reporting notification lets them know the case has resolved.
Data Reported to CMS
CMS has created a Reference Guide to document the reporting requirements[4]. Specifically, the guide includes the “What, Why, and How” of reporting. According to the reference guide, the following are required reporting data fields:
- The identity of the claimant (their Medicare Health Insurance Claim Number [HICN] or Social Security Number [SSN];
- The first letter of their first name; the first six letters of their last name;
- Date of birth and gender;
- Other information related to the claimant, such as the International Classification of Diseases 9th (or 10th) Revision (ICD-9 or ICD-10) diagnosis codes.
Below is an actual screenshot from an educational training program sponsored by CMS on reporting. One of the very first points of data that must be reported are the ICD Codes.
There is no policy or regulation that requires the defense to share with the plaintiff the information or ICD codes being reported via Section 111. The RRE’s (the insurance carriers) obtain the information that gets reported by asking the plaintiff attorneys. According to CMS, the defendant should simply “ask the individual” (plaintiff)[5]. Insurance companies will frequently include as part of a release, a separate Medicare reporting addendum and affidavit for the plaintiff to acknowledge and sign. The plaintiff has no obligation to provide that information but defendants are now making this a condition of the terms of any settlement agreement. In exchange for a full release and settlement check, the plaintiff must provide the personal information required to report to CMS. Since the defendant must report ICD codes and the system will not allow reporting without the ICD codes, it is incumbent on plaintiff attorneys to provide the correct codes to be reported. Plaintiff’s counsel must be proactive in communications with the defendant to insist on accurate reporting. When in doubt, the ICD codes should be included in the settlement agreement and release. To take this a step further, the settlement parties could also agree to include the ICD codes in the mediation agreement. That way, there can never be a dispute as to what was reported. This avoids the problems which can arise from improper codes being reported or unrelated care being included in the data provided to CMS.
Release Language, Reporting & Liability Medicare Set-Asides
Many insurance carriers demand the reporting information and require the plaintiff to do a Liability MSA in return to payment of the settlement monies. Since the insurance carrier is cutting the check to resolve the case, it gives them leverage to dictate the terms of the settlement. Some plaintiff attorneys may be more apt to agree to (or overlook) Medicare secondary payer release provisions in an effort to expedite the exchange of settlement funds. These MSP provisions demanded by the defendants are sometimes inaccurate; they may not be applicable or they may restrict the plaintiff in terms of future benefits. In many instances, the plaintiffs are not yet eligible for Medicare benefits, nor may they ever be entitled to receive Medicare benefits which makes it inappropriate to include any MSP language at all in the release.
There are defendants who still request the Section 111 MIR reporting information from plaintiffs who are not yet eligible for Medicare or may never be eligible for Medicare benefits. They sometimes also insist the plaintiff establish a Liability MSA even when they aren’t a current Medicare beneficiary. The MIR Section 111 User Guide discusses what claims are reportable[6]:
Per 6.5.1 of the CMS Section 111 NGHP User Guide:
Information is to be reported for claims related to liability insurance (including self-insurance), no-fault insurance, and workers’ compensation where the injured party is a Medicare beneficiary and medicals are claimed and/or released or the settlement, judgment, award, or other payment has the effect of releasing medicals.
It is clear from the Section 111 user guide when the plaintiff is a current Medicare beneficiary, the case should be reported[7]. It is not possible to report a claim for someone who does not yet have a Medicare number.
Medicare Common Working File
After the data gets reported to CMS, CMS will update (or establish) what is known as the “common working file” for that Medicare beneficiary. This file is automatically created by the federal government when an individual enrolls in Medicare. This common working file (CWF) is a tool used by CMS to track national Medicare records for individual beneficiaries enrolled in the program. The CWF is used to determine eligibility and to monitor the appropriate use of Medicare benefits[8]. If Medicare receives a bill from any treating physician (or another provider) which matches the ICD codes in the common working file, then benefits could be denied. CMS recently announced that any LMSA will also be tracked to the CWF[9]. That is important because it enables the provider to observe that an LSMA was established and potentially seek payment from the LMSA first before billing Medicare.
Conclusion
Plaintiff attorneys need to proceed with caution with regard to the reporting data but also the Medicare set aside release language. Inappropriate provisions in the release could constrain their client’s options relative to receiving public benefits and have adverse tax implications, which could result in a legal malpractice claim. Below are several examples of Medicare language commonly used by insurance carriers and included in the release or in an addendum to the release that is either not accurate or taken out of context as it relates to MSP compliance:
- I (plaintiff) understand that should future medical treatment related to the “Accident” be required, the expense associated with that treatment will be paid solely from the proceeds of this settlement.
- I am aware that no further medical expense or prescription drug expense related to the treatment I have received or will receive in the future related to the “Accident” will be submitted to Medicare for payment.
- I understand that if Medicare is not protected as set forth in the Extension Act, Medicare may cease all benefits otherwise available to me.
- I understand and agree that I will not make an application for Social Security Disability benefits.
Inclusion in the release of the above language may be detrimental to the plaintiff’s ability to receive future benefits for accident-related care. An MSA is never required by any law or statute even in workers’ compensation cases; however, it is the preferred method for considering Medicare’s future interests when settling cases involving a Medicare beneficiary who requires future medical care. The risk still exists for the plaintiff to lose their Medicare coverage if Medicare’s future interests are not adequately considered and accounted for. Given the current inner workings of Medicare, the risk for denial of benefits is extremely low, but it still is a risk nonetheless.
Plaintiff’s counsel should be proactively dealing with the defense counsel in terms of what they report, as inaccurate reporting can cause problems with conditional payments as well as eligibility for future benefits. For example, if a case involves neck and back injuries, but the defense takes the position that the neck is pre-existing and settles for payments exclusively for the back but reports the ICD codes for the neck and back, this is problematic. Another problematic issue is reporting the wrong date of the accident which could trigger Medicare to issue a new final demand for conditional payments.
Synergy has observed firsthand examples of all of these occurrences. In a recent liability case, there was an MSA done but Medicare sent the plaintiff a bill post-settlement for a surgery that was not related to the liability claim. It was a coordination of benefits nightmare to resolve this issue. On another case, a defendant failed to report the case in a timely manner. It had been over a year since the resolution. The plaintiff received a letter from CMS indicating they were recently made aware of a settlement and for the plaintiff to provide CMS all of the case details to determine whether or not there were conditional payments owed.
Currently, there is no “one size fits all” approach to MSP compliance for liability cases. All parties must make their best effort to consider Medicare’s interests. Section 111 Reporting has given CMS the ability to track current Medicare beneficiaries settling claims but the reality is CMS handles every liability case differently. The importance of correct data reporting can’t be overstated. Not only can the wrong body parts potentially be denied due to improper reporting but the information that gets reported is forever linked to the plaintiff’s common working file. ICD codes that are reported can trigger future denials of care. Therefore, until CMS provides formal guidance on LMSAs, the plaintiff’s bar and the insurance carriers must consult with competent MSP compliance experts, advise their respective clients on what the potential implications are for not properly taking into account Medicare’s interests, and document the file regarding what was done, in order to protect Medicare’s interests.
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[1] The MSP is a series of statutory provisions enacted in 1981 as part of the Omnibus Reconciliation Act with the goal of reducing federal health care costs. The MSP provides that if a primary payer exists, Medicare only pays for medical treatment relating to an injury to the extent that the primary payer does not pay. CFR Title 42, Part 411, Subpart B, Section 411.20 (2) provides “[s]ection 1862(b)(2)(A)(ii) of the Act precludes Medicare payments for services to the extent that payment has been made or can reasonably be expected to be made promptly under any of the following” (i) Workers’ compensation; (ii) Liability insurance; (iii) No-fault insurance. The one exception is conditional payments pre-settlement.
[2] (https://www.cms.gov/About-CMS/Leadership/ofm/Office-of-Financial-Management-.html)
[3] https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Mandatory-Insurer-Reporting-For-Non-Group-Health-Plans/Overview.html
[4] https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Mandatory-Insurer-Reporting-For-Non-Group-Health-Plans/Downloads/New-Downloads/NGHPQuickRef.pdf
[5] Section 3-2 of the MIR Reference Guide
[6] https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Mandatory-Insurer-Reporting-For-Non-Group-Health-Plans/Downloads/New-Downloads/NGHPUserGuideVer52Ch3Policy.pdf
[7] Past Medicare beneficiaries can be also be reported. It is possible to lose Medicare eligibility but the plaintiff may still have a Medicare number in the system.
[8] https://searchhealthit.techtarget.com/definition/common-working-file-CWF
[9] https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R1787OTN.pdf
