Claims recently asked Kathy Donovan, senior compliance counsel for Insurance Compliance Solutions at Wolters Kluwer Financial Services, to tell us more about a "brave new world" of Medicare reporting and what insurers will need to do to stay compliant. Here's what she had to say:
What are the new mandatory Medicare reporting requirements?
The Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) set forth a detailed mandatory claim reporting requirements compliance timeframe for many property and casualty insurers. These insurers, known as non-group health plan insurers (NGHP), are defined in that Act as being an "applicable plan" for liability insurance (including self-insurance), no-fault insurance, and workers' compensation insurance, including the fiduciary or administrator for such a law, plan, or arrangement. The reporting requirements — generally referred to as Section 111 requirements from the 2007 Act — apply when the injured claimant under the P&C policy is a Medicare beneficiary. All applicable claims, based on the current interim reporting thresholds established by the Centers for Medicare and Medicaid Services (CMS), involving a Medicare beneficiary where, on or after July 1, 2009, there is a settlement, judgment, award or other payment that constitutes payment or reimbursement for medical costs, must be reported.
Additionally, all applicable claims involving ongoing responsibility for medicals (ORM), to the extent that responsibility will extend beyond July 1, 2009, must be reported regardless of the date the responsibility was established. CMS posts key information for NGHP insurers about these mandatory reporting provisions and applicable claims at: http://www.cms.hhs.gov/MandatoryInsRep/03_Liability_Self_No_Fault_Insurance_and_Workers_Compensation.asp#TopOfPage.
What prompted this reporting?
Medicare is and has been struggling with under-funding. Historically, there have been (and continue to be) obligations imposed on Medicare beneficiaries who receive a liability settlement or award to refund amounts to Medicare for the conditional payments previously made. These Section 111 requirements further recognize the status of Medicare as a Secondary Payer (MSP), referring to the situations where Medicare has no primary payment responsibility. This federal program is always a secondary payer to those insurers indicated above. Information reported by insurers that have registered as Responsible Reporting Entities (RREs) will be used by the CMS in the processing of claims submittals to Medicare. Billings will be evaluated to determine if the MSP situation applies. This will therefore facilitate the shifting of the payment burden to insurers that are the primary payers and minimize the significant outflow of Medicare funds.
What steps do P&C insurers need to take now?
A significant deadline that is approaching in the very near term is the required registering as an RRE. Starting May 1, 2009 and continuing through September 30, 2009, these applicable NGHP entities must register as Responsible Reporting Entities (RREs). This registration period permits the appropriate designations of individuals who will play key roles in the reporting to and communication with the CMS staff, with Computer Based Training. The testing phase begins on July 1, 2009 for test and production query input files, with claim input file testing starting on Jan.1, 2010. While the original Act required actual reporting to be effective on July 1, CMS indicates that live production files will not be accepted until Jan. 1, 2010. Noncompliance enforcement and penalties will not be imposed until Apr. 1, 2010. Therefore, the year 2010 will be the first time compliant reporting is required, with quarterly submissions.
What help is available?
CMS staff is running periodic information sessions via "town meeting style" open door teleconference events. All are designed to ease the transition for insurers in this brave new world of reporting, provide a structured forum to respond to questions raised previously, take new questions, and outline steps taken by CMS to periodically modify the User Guide.
The CMS has also conducted specific teleconference events that solely address workers' compensation and no-fault insurance due to the specificity of questions posed to CMS on these two lines, with the first workers' compensation-only one held on Apr. 9, 2009, and the first liability and no-fault one held Apr. 21, 2009. Additional teleconferences are scheduled through Dec. 15, 2009 with time allotted for individual questions to the CMS staff. Transcripts of the NGHP teleconferences, as they become available, can be downloaded at https://www.cms.hhs.gov/MandatoryInsRep/07_NGHP_Transcripts.asp#TopOfPage.
What are the penalties for failing to comply?
Enforcement penalties, as specified in 42 USC 1395y, mandate that an applicable plan that fails to comply with the reporting requirements "…with respect to any claimant shall be subject to a civil money penalty of $1,000 for each day of noncompliance with respect to each claimant." Such an enforcement provision can very quickly result in insurers incurring substantial monetary amounts without realizing the significance of their omission, given the quarterly reporting periods.
Failure to report just one Medicare beneficiary for one quarter results in a $90,000 fine. Assuming a modest number of five Medicare beneficiaries inadvertently omitted from the reporting file for only a couple of months imposes a $300,000 fine on the RRE. The risk associated with potential failure is directly related to the insurer's complete understanding and implementation of a repeatable process that guarantees all reporting is done completely and in a timely manner. There does not appear to be any latitude in the imposition of these penalties. Of note, these penalties are in addition to the underlying Medicare secondary payer claim associated with each respective claimant. To maximize the opportunity for compliance and minimize risk, insurers should evaluate whether they are an RRE and, if so, register as soon as possible to start the setup and testing process to ensure there is a solid foundation for the mandatory Medicare reporting.
Kathy Donovan is senior compliance counsel for the Insurance Compliance Solutions group at Wolters Kluwer Financial Services, which provides regulatory intelligence, policy management, process management, and oversight to help financial services organizations address their compliance needs.
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