Developing a Medicare Game Plan: Meeting the MSP Challenge

By Dorothy Kelly and Mark Popolizio

Medicare Secondary Payer (MSP) compliance continues to present challenges to claims departments. To meet these concerns, primary payers need a Medicare strategy from the outset. Recognizing the major MSP issues and how best to navigate them should be an integral part of claims practice. This article intends to acquaint primary payers with the major factors for consideration in developing sound MSP compliance protocols and best practices for claims handling with respect to liability, workers' compensation, and other non-group health claims.

Pregame Planning
Embracing the new Medicare reality is an important first step. “Business as usual” no longer applies. Armed with a new reporting law, the Centers for Medicare and Medicaid Services (CMS) now has access to more claims information. And for primary payers, simply “pinning it on the plaintiff” is either not an option or will not provide ironclad protection.

Once in the proper mind-set, the primary payer can focus on building MSP compliance protocols. Decision makers at the highest levels should generate these parameters and disseminate them for companywide adherence. Ensuring that senior executives address MSP issues also promotes consistent claims practices, alleviates confusion, and minimizes risk by eliminating ad hoc approaches.

Thinking in Threes
Any MSP compliance program should center around three main considerations:

cover imageSection 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007
Section 111 involves the electronic reporting of certain claims and settlements to CMS by responsible reporting entities (RREs). RREs are subject to penalties of $1,000 a day per claim for noncompliance. Qualifying as an RRE is based on certain factual and situational criteria. Typically, RREs are insurance carriers or self-insureds; plaintiffs and their lawyers are never RREs.

Conditional payment reimbursement
Conditional payments involve the statutory obligation of primary payers (and other parties) to reimburse Medicare for payments made for a plaintiff’s accident-related medical care. Medicare enjoys strong and broad recovery rights against multiple parties for conditional payments, including the right to seek double damages against primary payers in certain situations.

Future interests/MSAs
The issue of Medicare’s future interests relates to ensuring that parties are not improperly shifting the burden of the plaintiff’s future medical care to the Medicare program as part of claim settlement. The Medicare Set Aside (MSA) is CMS’s voluntary and recommended compliance vehicle in this area.

All three MSP components constitute separate and independent compliance obligations. As such, it is imperative to address each component on every claim to determine if specific compliance action is necessary.

Communication Is Key
MSP compliance protocols are useless if not effectively communicated. The form of communication varies depending on the audience.

cover imageTo start, the primary payer must communicate and explain MSP protocols to all applicable claims personnel. An interactive training component should be part of this rollout. Likewise, defense counsel must know the protocols, along with the exact role counsel is expected to play. Too often, counsel interprets MSP compliance obligations differently or does not have a full understanding of client objectives.

Plaintiff’s counsel should also be advised as to how MSP compliance issues will be addressed. In general, this involves clearly communicating what information is needed from him or her, how any conditional payment reimbursement issues will be handled, and whether an MSA will be necessary.

Timing is also important. In advance of settlement negotiations, counsel needs to know how the primary payer proposes to address MSP compliance matters. Failure to communicate all relevant MSP matters in a timely fashion can ultimately derail a settlement and invite litigation. MSP compliance is simply too complex for “after the fact” considerations or eleventh-hour scrambling.

COA Dashboard: Settled Date Trend

Building MSP Compliance Protocols
After preparing a solid foundation, the primary payer must generate actual MSP compliance protocols. While an exhaustive review into each possible component is beyond the scope of this article, the following provides a general overview of key consideration points:

Determining Medicare status
The plaintiff’s Medicare beneficiary status lies at the center of determining MSP compliance obligations. As such, primary payers need to establish processes to obtain this critical information. There are a few options to consider.

  • Make a direct request to the plaintiff or his or her counsel as part of the discovery process. However, the obvious concern with this approach is it relies entirely on third-party representation without independent confirmation.
  • Submit a request to the Social Security Administration. While this approach obtains information from an official source, the process can take time because the plaintiff’s authorization is needed and there is a wide discrepancy in administrative response times.
  • Use the CMS Query Process system under Section 111, which is perhaps the most feasible option. Through this system, an RRE (or its duly registered reporting agent) can submit monthly electronic requests for a plaintiff’s Medicare status, to which CMS generally provides a response within 14 days.

The Query Process requires the plaintiff’s Social Security number (SSN) or health insurance claim number (HICN) to use this system. Accordingly, the compliance protocols should contain an identified process to obtain this information. This is one area where defense counsel may be particularly helpful. There should also be a contingency plan for instances where a plaintiff refuses to provide his or her SSN. Be sure to document the efforts made to obtain this information (and the plaintiff’s refusal to provide it). In addition, RREs and their counsel must be aware of recent judicial decisions in which plaintiffs have been ordered to release their SSNs for Query Process purposes. Such decisions may provide the basis for an appropriate court motion to compel the release of this information.

Plaintiff is a Medicare beneficiary
Positive confirmation of Medicare status triggers consideration of all three MSP compliance obligations as follows:

Section 111: If the RRE has accepted “ongoing responsibility for medicals” (ORM), the claim is reportable. The ORM reporting trigger typically involves workers' compensation, no-fault, or med-pay claims. In addition, under the CMS “total payment obligation to the claimant” (TPOC) reporting trigger, all settlements, judgments, awards, or other payments involving a Medicare beneficiary that exceed the agency’s monetary reporting thresholds are reportable.

Conditional payments: CMS recently introduced a web portal that allows parties to obtain conditional payment information and dispute conditional payment claims electronically. The portal aims to decrease dramatically agency turnaround times and reduce inefficiencies. However, CMS permits no more than 20 users per tax identification number to use the web portal method, which could limit the potential effectiveness of the tool for larger primary payers and other organizations.

Alternatively, primary payers can obtain conditional payment information using CMS’s traditional multistep method. This is a separate and additional reporting process from Section 111 reporting. The primary payer also needs to determine who will assume responsibility for reimbursing CMS. A common industry practice is to make the plaintiff responsible for reimbursing Medicare. However, it should be noted that this may not necessarily shield the primary payer from 42 C.F.R. § 411.24(h) and (i), which permits Medicare to pursue the primary payer in instances when the plaintiff fails to reimburse Medicare’s conditional payments.

cover imageMedicare Set Asides: A positive confirmation of Medicare status also raises the issue of whether inclusion of an MSA or some other action is appropriate to protect Medicare’s future interests.

Regarding workers' compensation (WC), the primary payer must consider CMS’s MSA policies. A WC-MSA is deemed appropriate for CMS review and approval if the plaintiff is a Medicare beneficiary at the time of the settlement and the total settlement amount (as defined by CMS) is greater than $25,000.

The issue of future interests concerning liability remains the source of great debate and uncertainty for a variety of reasons, including the lack of guidance from CMS. A complete examination into this complex issue is outside the scope of this article. However, primary payers should determine their compliance obligations based on their interpretation of the MSP statute and related regulations, review of various CMS statements, and other considerations, such as the developing case law in this area.

Plaintiff is NOT a Medicare beneficiary
If the plaintiff is not a Medicare beneficiary at the time of settlement and has not been a beneficiary at any point during the claim, Section 111 reporting and conditional payment reimbursement are nonissues. However, Medicare’s future interests must still be considered.

For example, under the CMS workers' compensation MSA review thresholds, the agency considers the submission of an MSA for its review and approval appropriate in situations where the plaintiff is not a Medicare beneficiary at the time of settlement but has “a reasonable expectation of Medicare enrollment within 30 months of the settlement date” and the total settlement amount is greater than $250,000.

Primary payers need to consider CMS policies on these points. It should be noted that the Query Process does not return the information needed to determine whether a plaintiff has a “reasonable expectation of Medicare enrollment” per CMS’s definition of the term. As such, separate processes to obtain the information must be established.

For the past decade, CMS has been intensifying and expanding its enforcement activities to protect Medicare’s rights. With implementation of Section 111’s electronic reporting mandates, CMS now has the tools to take those efforts to much higher levels. To meet the challenge, now is the time for primary payers to erect the necessary compliance protocols to avoid possible — and significant — liability and penalties under the MSP.

Dorothy Kelly is chief executive officer for Crowe Paradis Services Corporation and Mark Popolizio, Esq., is Section 111 senior legal counsel. Crowe Paradis is a leading national provider of services that help insurers, administrators, and employers with legal requirements related to Medicare.