GAO Gives Ammunition to Change Medicare Reporting for NGHPs

NU Online News Service, April 5, 3:30 p.m. EST

WASHINGTON—Based on a new Government Accountability Office study, the insurance industry and plaintiff’s lawyers are renewing their call for passage of legislation that they argue would make the Medicare Secondary Payment program work better.

At issue for non-group health plans, such as auto insurers and workers’ compensation plans is the reporting threshold to Medicare. The NGHP’s are seeking a threshold that does away with reporting claims in small amounts, such as the current threshold of $600 for workers’ compensation-related claims and $5,000 for liability. Industry favors thresholds as proposed under legislation filed last year in the House and Senate of $5,000 minimum.

Current legislation on the table, the Strengthening Medicare and Repaying Taxpayers Act (SMART Act) was introduced in the House and Senate in 2011to remedy a 2007 law mandating greater reporting requirements and lower costs for the Medicare that has created problems for everyone.

Industry officials and officials of the American Association for Justice, which represents plaintiff lawyers, say a senior who has been injured—and later obtains recourse through the legal system—often cannot access their settlement until Medicare is reimbursed for any medical costs.

In earlier comments, Melissa Shelk, a vice president for federal affairs at the American Insurance Association, said that, “This is an issue we have in common with the trial lawyers.”

She said settlement of claims affects not only insurers and employers, but also affects the plaintiffs. “We want a more efficient system for dealing with claims involving Medicare beneficiaries.”

Willem O. Rijksen, vice president of public affairs for the American Insurance Association, reacted to the GAO report saying, “As the report indicates, continued substantive improvements need to be made to the MSP system.”

He adds that it remains cumbersome and confusing for all stakeholders. 

“While AIA is encouraged by the GAO report’s recommendation to increase the threshold amount, we find its recommendation for guidance on liability and no-fault set-asides to be troubling.”

He added that the AIA continues to support the SMART Act, “which addresses some of the issues raised in the report and will better protect consumers and streamline the MSP reporting system.”

David Farber, a lawyer for the Medicare Advocacy Recovery Coalition (MARC), a group of large employers who earlier this year worked with members of the House to craft the original bill, said that his group is “delighted that the GAO has recognized the issues that exist in the MSP program today.”

He adds that several of the issues identified by the GAO can only be solved legislatively. We continue to work with Congress to pass the SMART Act as soon as possible.”

AAJ president Gary Paul was tougher, saying, “MSP continues to be an inefficient, slow and uncertain system that leaves the health and financial security of senior citizens at risk while costing the taxpayers millions of dollars every year.”

He says the GAO report recommends a recovery threshold for reporting claims to improve the system’s cost-efficacy; the SMART Act would create this threshold and has support from insurers, business and consumer advocate groups.”  

CMS has always attempted to recover Medicare payments made that were the responsibility of non-group health plans, but CMS has not always been aware of these MSP situations.

The problem was heightened in 2007, when a new law added mandatory reporting requirements for NGHPs designed to make it easier for the Centers for Medicare and Medicaid Services, which administers the program, to get prompter and greater repayments.

The GAO report said that from 2008 to 2011, under the new law, Medicare recoveries increased by $124 million, and the number of reports to the agency by NGHPs more than tripled in some cases.

But the report also said that during the same period, total CMS payments to the MSP contractors increased by about $21 million.

GAO also acknowledged in the report that, “The total impact of mandatory reporting on Medicare savings could take years to determine for various reasons, including [the fact] that mandatory reporting is still being phased in.”

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