The Compliance Gap: How You See Your Compliance vs. How Medicare Sees ItBy Shawn Deane | September 19, 2016
There are two main categories of Medicare compliance: (1) Reporting and (2) Recovery. Although the law and regulations clearly state what must be done in each category and who must comply, the actual process of compliance can be quite challenging. Many of the requirements in both categories are similar, with multiple parties often sharing the compliance risk.
Despite the industry saying “frequency leads to severity,” in Medicare claims, the opposite is also true. When it comes to Medicare claims, the lack of frequency can lead to severity, because when there aren’t enough key compliance indicators (KCIs), the risk of penalties and liabilities increases. In other words, failure to abide by Medicare’s regulations and secure the appropriate compliance milestones can increase your exposure to risk. These milestones include Section 111 ORM and TPOC reports, conditional payments, final demands, and proper closure documents. Just as the industry uses key performance indicators (KPIs) to track claim outcomes, Medicare and its contractors are using KCIs to watch the industry’s level of compliance.
Review the tables below for a self-assessment that will help you gauge your actual compliance standing. These tables can help you understand any differences between how you see your compliance versus how Medicare sees your compliance.
First, here are some guidelines that can clarify the Medicare compliance landscape for liability and no-fault claims. As a general rule, there should be a 1-to-1 claim ratio between reporting (Section 111) and recovery (conditional payments). Although not every Medicare claim will include a lien amount, you’ll need to receive confirmation from Medicare that no lien exists. Medicare created the reporting requirements for the sole purpose of facilitating its recovery efforts against the industry, so it’s important to ensure you’re connecting the compliance dots. One way to think about how Medicare’s compliance requirements work together and, more important, how they could cause you grief is to use the analogy of filing and paying taxes. If you filed your taxes but never paid them, then you wouldn’t be compliant with the tax regulations. Similarly, Medicare’s Section 111 reporting rule is like filing taxes, and the recovery category is like paying them. You want to make sure you do both.
So how do you know where you stand? Take a look at the three tables below to see if your understanding and your numbers add up to the compliance grade you want. Table #1 outlines the various requirements that must be complied with and who must comply. Table #2 illustrates an example of compliance with the reporting side, but only partial compliance with the recovery side. And Table #3 shows what true and complete compliance actually looks like. The tables also follow the general rule of thumb that about 10 percent of all your bodily injury claims should involve a Medicare beneficiary.
Table #1 – The What and Who of Compliance
Note: Medicare has recently announced it is once again considering expanding the Medicare Set-Aside review process to liability and no-fault claims. This further increases the need to know where you stand on compliance.
Once you know what categories you must comply with, you can assess your compliance level and any potential exposure by reviewing Tables 2 and 3. These tables illustrate what compliance, or the lack thereof, looks like.
Table #2 – Assumptions
- RRE is compliant with Section 111 reporting requirements (that is, runs monthly queries and reports no-fault and liability claims as ORM and TPOC respectively).
- RRE has some type of process to address the recovery requirements, but the lack of conditional payments, final demands, and closure documents shows the compliance gaps on the recovery side. For example, although the RRE processed 1,000 files successfully under Section 111, it only achieved compliance on 500 files under the recovery regulations. While there can be many reasons for the lack of compliance on the recovery side, these numbers simply show the standing of compliance.
Table #2 – Compliant with Reporting but Noncompliant with Recovery
Table #3 – Assumptions
- RRE is compliant with Section 111 reporting requirements (that is, runs monthly queries and reports no-fault and liability claims as ORM and TPOC).
- RRE is compliant with conditional payments, final demands, and closure documents. The RRE successfully obtained all compliance documents under the recovery regulations. In other words, all 1,000 files (not just 500 of them) secured conditional payment letters, final demands, and closure documents.
Note: It is assumed that any conditional payment and/or final demand was properly analyzed, reduced, and paid. As such, no compliance exposure exists. Once again, these numbers simply show the standing of compliance.
Table #3 – Compliant with Reporting and Compliant with Recovery
As you review the tables, you can begin to assess your own compliance level by inputting your own data. And if you don’t have the data, you can begin to gather the information you need to gauge your compliance standing. While you may think you’re compliant in Medicare’s eyes, it’s better to know for sure.
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