On December 29, 2007, President George W. Bush signed and passed amendments to the Medicare Secondary Payer (MSP) Statute entitled the "Medicare, Medicaid, and SCHIP Extension Act of 2007." This new legislation, effective for Group Health Plans on April 1, 2008, and for others as further set forth herein on July 1, 2009, amends the MSP and significantly impacts insurers, mandating new claim reporting requirements and instituting the first concrete, civil penalty for failure to comply with the MSP.
Specifically, the legislation under MSP Amendment, 42 U.S.C. ? 1395y(b)(8), requires all liability, workers' compensation, self-insured, and no-fault insurers to report to Medicare all claims involving Medicare beneficiaries. That is, insurers will now need to determine the Medicare status of all claimants with whom they are engaged in litigation. If a claimant is, in fact, a Medicare beneficiary, an insurer, as of July 1, 2009, will be required to report such claims to Medicare when they are settled, whether resolved by settlement, judgment, or other payment or award.
Under MSP Amendment, 42 U.S.C. ? 1395y(b)(7), with respect to the impact on Group Health Plans, an entity serving as an insurer or third party administrator of a Group Plan will similarly be required to report all claims that are primary to Medicare, or face penalties discussed below. Reporting is subject to further instruction from the Secretary of Health and Human Services.
Penalties for Non-Compliance
The consequence to insurers for failure to comply with the required reporting of such claims is severe and will result in a civil penalty to insurers of $1,000.00 per day, per beneficiary for non-compliance. Though a timeframe to report settled claims is not set forth or referred to in this legislation, this most likely will be subsequently addressed in the Code of Federal Regulations. In addition, it is likewise expected that further instruction regarding specifics for the processing of settlement information will be forthcoming from Medicare and the Secretary of Health and Human Services.
With the passage of this legislation, the onus indeed falls upon the insurance carriers to implement protocols to determine a claimant's Medicare status and to report settled claims involving a Medicare beneficiary–or face steep penalties for non-compliance.
This amendment essentially forces insurers to address the conditional payment aspect of MSP compliance, by introducing strict civil penalties for failure to report final settlement information for all Medicare beneficiaries, which triggers a final lien demand from Medicare with respect to its recovery of conditional payments made by Medicare on a claimant's behalf.
It should be noted that settlement reporting for claims involving all Medicare beneficiaries is required under this legislation, regardless of whether or not Medicare has actually made any conditional payments on a claimant's behalf.
The Act is undoubtedly intended to continue to preserve the Medicare trust fund, to encourage accountability to Medicare, and to implement stricter compliance with the MSP, the overall objective of which is to ensure that Medicare is a secondary, and not a primary payer, with respect to claims for which insurers are primarily responsible.
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