By Carrie Barr and Shawn R. Deane
In part one of this two-part article, we will provide the history behind Medicare conditional payment compliance and Section 111 reporting.
Customarily, Medicare Secondary Payer (MSP) compliance programs and protocols involve ad hoc referrals for separate services on a specific claim to identify risk and comply with MSP requirements. In particular, as it relates to conditional payments, the decision to refer a claim for MSP compliance attention is often discretionary and inconsistent. Many times there is an attempt to shift the burden to another party to the settlement, making MSP compliance a veritable hot potato. Among other issues, this approach increases the potential for noncompliance, makes measuring results difficult, and misses opportunities for cost mitigation.
The prevailing philosophy looks at each MSP compliance point as a disparate and independent obligation, and this isn’t an incorrect viewpoint to take when conceptualizing the general requirements under the MSP Act. However, a tremendous opportunity is available in MSP compliance in shifting from one-off, claim-by-claim attention toward a holistic program that involves integrating compliance points — namely Section 111 reporting and the conditional payment process — into a unified approach.
Because of recent changes to reporting and recovery involving Medicare contractors, new technologies and reporting capabilities, and a more integrated approach to compliance — there is incredible potential to:
The Medicare Secondary Payer Act provides the federal government with a unique statutory right of recovery to recoup Medicare payments made on behalf of beneficiaries involved in workers' compensation, liability, and no-fault (PIP/med-pay) matters. The MSP Act generally prohibits Medicare from making payment when another form of insurance (a primary payer) is available to pay.1 This is essentially a coordination-of-benefits function.
However, Medicare will make a payment on the condition that it will be reimbursed if there is demonstration that a primary payer has responsibility to make payment for treatment paid for by Medicare.2 This responsibility can be evidenced by a settlement, judgment, award, or other payment.3 Essentially, when a settlement occurs, Medicare can recover monies it reimbursed to providers for a claimant-beneficiary’s treatment connected to the underlying claim. In recent years, Medicare has become increasingly aggressive in conditional payment recovery. In 2013, the Medicare recovery contractor recouped $585 million4 in conditional payments compared with just $42,014,107 in 2008.5
In 2007, the MSP Act was amended to include provisions that require insurance carriers and self-insureds, typically referred to as responsible reporting entities (RRE), to report claims with Medicare beneficiaries in certain instances. These reporting triggers occur when an RRE has assumed the assumption of ongoing responsibility of medicals (ORM) for a claimant-beneficiary (typically in workers' compensation and no-fault claims) and when there is a settlement or judgment, referred to in the parlance as a total payment obligation to claimant (TPOC).
A third component to Section 111 reporting requirements involves the RRE submitting a monthly query to determine if claimants in open claims are entitled to Medicare. Threshold data, including the claimant’s name, date of birth, Social Security number, and gender, are submitted to Medicare to determine if a claimant is receiving Medicare benefits. The thrust behind the MSP Act is to preserve the Medicare trust fund, and Section 111 is the largest contributor to growth of Medicare savings — from $6.5 billion in 2007 and $7 billion per year in 2011 and 2012 to almost $9 billion in fiscal year 2013.6
While Section 111 reporting does not substantively alter Medicare conditional payment recovery rules, the ORM report provides Medicare with unprecedented insight into cases where it should not be paying for medical treatment. Reporting ORM has also begun to facilitate the transfer of MSP data from the coordination of benefits to the recovery entity of the Benefits Coordination and Recovery Center (BCRC).7 The Section 111 ORM report by itself will not necessarily establish an MSP recovery case on every claim, but in practice, this is occurring with growing frequency and is part of a larger reformation. As of February 1, 2014, the Coordination of Benefits Contractor (COBC, the entity charged with obtaining MSP data) was merged with the Medicare Secondary Payer Recovery Contractor (MSPRC, the group responsible for recovering conditional payments), in large part, to consolidate and streamline data collection and recovery operations. The BCRC is now the single entity that receives Section 111 data and processes Medicare recovery claims. As such, there will likely be greater integration between reporting, coordination of benefits, and recovery.8
The Section 111 process also drives Medicare’s conditional payment recovery because receipt of a Section 111 TPOC report triggers Medicare’s statutory right of conditional payment recoupment. Medicare is notified when it can transmit a demand for conditional payments it made, and it is not reliant on parties voluntarily self-reporting a settlement. Furthermore, the monthly query process to determine if a claimant is receiving Medicare benefits is at the epicenter of the conditional payment process. Determining Medicare entitlement is a requisite inquiry as to whether pursuing conditional payments is necessary. If a claimant is entitled to Medicare, then it is possible that Medicare has made conditional payments.
In a utopian scenario, Section 111 reporting would prevent all erroneous Medicare conditional payments, the ORM report would produce a conditional payment letter 100 percent of the time, and a demand for conditional payment recovery would flow from the TPOC report with a listing of only accurate conditional payments owed. Unfortunately, this is not the environment in which we operate, and there are many existing gaps in the parameters that Medicare has provided.
Carrie Barr is senior vice president of Sales and Services at ISO Claims Partners, a leading national provider of services that assist insurers, third-party administrators, and self-insureds with requirements related to Medicare compliance and improving claims outcomes.
Shawn Deane, Esq., is director of product development at ISO Claims Partners.