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last updated on February 18, 2009

MEDICARE SECONDARY PAYER

THE ISSUE

The Medicare, Medicaid, and SCHIP Extension Act enacted in late 2007 adds new information reporting requirements for purposes of coordination of benefits under Medicare Secondary Payer requirements.

IT IS IMPORTANT BECAUSE

Beginning July 1, 2009, an applicable plan (including self-insurance, automobile, homeowners’ insurance, no-fault insurance, and workers’ compensation) must determine whether a claimant (including an individual whose claim is unresolved) is entitled to benefits under Medicare and submit information as directed by the federal government with respect to the claimant. The secretary of the Department of Health and Human Services is directed to establish the information to be collected, and the timing and method of reporting. Failure to comply with requirements is punished by civil money penalties of $1,000 per day with respect to any claimant.

On Aug. 4, 2008, the Centers for Medicare & Medicaid Services published the Paperwork Reduction Act notice for the Section 111 mandatory Medicare Secondary Payer reporting in the Federal Register.

While the statute provides that information will be collected electronically, CMS is directed to proscribe the content, manner, and frequency of such reporting. Late last year, CMS released the PRA notice that proposed information be collected via a secure website and other coordination of benefit data collection processes, such as the Internal Revenue Service/Social Security Administration/Centers for Medicare & Medicaid Services Data Match will be eliminated or curtailed. Collection of data is proposed to be no more than quarterly. Non-group health plan data reporting will be on an ongoing basis for no-fault insurance and workers’ compensation for non-contested claims and on a one-time basis for contested cases where there is a single settlement, judgment, award, or other settlement. CMS will “recommend” data retention of 10 years for Medicare Secondary Payer-related information. Administrative offset is, and will continue to be permitted for 10 years.

The supporting documents proposed a number of data elements to be collected, maintained, and remitted by covered entities. Data elements included insured party identification (name, address, date of birth, and social security number), beneficiary information (name, address relationship, and Taxpayer Identification Number or Social Security Number), primary plan information (insurance type, name, address, policy and claim numbers, and policy limits), attorney/representative information (name, address, and TIN/SSN), incident information (date, nature, cause of injury, state of venue, ICD-9 code, body part, and product liability information), and resolution information (settlement date, amount claim resolution, and funding). The proposed supporting documents also provided a number of proposed definitions.

CMS held a town hall meeting on Oct. 29, 2008, and is conducting a series of ongoing teleconferences to discuss the proposal. The current data collection proposal raises a number of concerns for insurers. The proposed data elements are more expansive than the information gathered and retained by most insurers. As such, computer reprogramming, reformatting claims documents, and retraining adjusters and company personnel will be necessary. Since CMS has not finalized the reporting procedures or data elements, it will also be difficult for most insurers to make these changes in time to meet a July 1, 2009, reporting deadline.

NAMIC has been working on this important issue for the last year and has held separate and joint industry meetings with CMS officials to address concerns with the requirements and to ensure that the reporting would not be overly burdensome for its members. Specifically, NAMIC raised the following concerns with the reporting requirements:

• liability for accuracy of information, urging CMS to permit insurers to rely on the accuracy of self-reporting from claimants and to develop a disclosure form for voluntary use by plans to collect such information;
• number and specificity of data elements advising CMS of state law restrictions on collection of certain information, including social security numbers, and the difficulty in obtaining information related to attorneys and encouraging a limited number of data elements;
• reporting and recordkeeping burden on insurers requesting flexibility in reporting, including use of third-party reporting agents at the option of the insurer;
• frequency of reporting, urging CMS to limit the frequency of required reports;
• reporting on individual company or consolidated basis, advising CMS of the difficulty of consolidating data for some companies and urging an option to report on a consolidated basis at the discretion of the company;
• reporting of exhaustion of benefits, advising CMS of the importance of terminating reporting responsibility upon reaching policy limits or other exhaustion of liability; and,
• leniency in enforcement, urging CMS to recognize the significant transitional issues facing insurers and to exercise proper discretion in enforcing penalties.

NAMIC was successful in working with the CMS to rectify a number of problems created by the reporting requirements. During the most recent meetings, CMS officials assured NAMIC that the agency’s emphasis will be on data collection and cooperation, rather than on the collection of fines and penalties.

NAMIC was also victorious in ensuring that the reporting would be on a quarterly basis instead of a monthly basis. Additionally, the reporting would be permitted at the discretion of the company, on an individual company or consolidated basis, either directly or through a third-party reporting agent. Agency officials further indicated they would develop a self-certification form that insurers could elect to use to collect information from claimants.

One of the biggest challenges that insurers are facing is that CMS has not finalized the reporting procedures or data elements that it will collect. Therefore, if will be difficult for insurers to make the necessary changes such as reprogramming computer software, reformatting claims documents, and retraining adjusters and company personnel to meet the July 1 reporting deadline. In addition, CMS is proposing reporting requirements for all cases for which future benefit may be payable, which could expose an extraordinary number of files.

NAMIC will continue working with the CMS to reduce to the greatest extent possible the administrative burdens imposed by the new statutory reporting requirements.

LEGISLATIVE HISTORY

Section 1862(b) of the Social Security Act of 1980, 42 USC Section 1395y(b)(5), established Medicare payments as secondary to other payments for health care. The Tax Equity and Fiscal Responsibility Act of 1982 expanded and clarified Medicare as the secondary payer to additional primary plans (group health plans, workers’ compensation plans, liability insurance, or no-fault insurance). Both underinsured motorists and uninsured motorists are included in the definition of liability insurance for Medicare reimbursement purposes. Personal Injury Protection and medical payments are considered no-fault insurance. The statutes provide a right of subrogation for payments made on behalf of those insureds and grant CMS the right to recover funds from any primary payer even if the third party payer has already reimbursed the beneficiary or provider.

NAMIC POSITION

NAMIC opposes an overly broad application of the new reporting requirements for insurers under the Medicare Secondary Payer and has been working with the Centers for Medicare and Medicaid Services to streamline the reporting procedure.

NAMIC also supports access to the Medicare eligibility database for claimant identification and the ability to use third-party data reporters but opposes holding insurers responsible for false or inaccurate information provided by beneficiaries.

NAMIC will continue to work to delay the July 1, 2009, reporting deadline, trying to ensure that insurers have an adequate amount of time to make the necessary changes such as reprogramming computer software, reformatting claims documents, and retraining adjusters and company personnel prior to any reporting deadline.

CONTACT INFORMATION

For more information please contact Marliss McManus, senior federal affairs director, at (202) 628-1558 or mmcmanus@namic.org.