A View From The Top

Volume 1, Issue 1   •   February 2009

As we head toward the end of the first quarter of 2009, one of the main questions at the forefront of everyone’s minds is:  “What are the CMS Secondary Payer mandatory reporting requirements under Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007, and how can I be sure my program is protected and reporting properly?”  At VCM, we have delved into this issue both from the regulatory standpoint as well as from the technology requirements to determine how to further support the healthcare professionals we value as clients, partners and colleagues. 

To aid our clients and partners, VCM will provide three consecutive issues of our newsletter dedicated solely to each of the three major deadlines outlined in Section 111. 

What follows is our Phase I analysis of the Section 111 reporting requirements for liability insurance (including self-insurance), no-fault insurance, and worker’s compensation.

Clare Bello

clare.bello@vcm-llc.com

COMPLIANCE WITH CMS – MANDATORY SECONDARY PAYER REPORTING:

Timeline:

Phase I – May 1, 2009 – the RRE must begin registration with CMS.  At the time an RRE registers it will be provided with its quarterly reporting schedule, which may or may not be aligned with the calendar quarter, as well as with the RRE ID number needed to submit reports.

Phase II – July 1, 2009 – the RRE (or its agent) must submit an initial data file as a test report for the RRE.  COBC will return a Claim Response report, identifying any errors and/or corrections to the data submitted.

Phase III – October 1, 2009 – the RRE (or its agent) will be required to submit regular quarterly reports to CMS.  The quarterly report schedule will be assigned once the RRE registers with the COBC.

PHASE I – GETTING REGISTERED:

It is critical to note that the CMS requirements for the Secondary Payer Mandatory Reporting obligations being placed into effect this year are not yet finalized by CMS, and as such, some of the information VCM has included in this newsletter is subject to change and/or to be updated as further processes are developed and released by CMS.

WHO NEEDS TO REGISTER?

The first question regarding these mandatory reporting requirements is:  Do the regulations under Section 111 include professional liability and general liability claims?  The answer is, yes: Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 has added new mandatory reporting requirements for insurers and self-insured programs for payments made, whether settlements, judgments, awards or other payments on or after July 1, 2009, which involve a Medicare beneficiary.  (MSP Mandatory Reporting Interim Record Layout, December 5, 2008, p. 3).

The second question is:  If we are already reporting information to COBC, aren’t we already in compliance?  The answer is, no.  CMS has indicated in the telephonic town hall meetings regarding these regulations that; if the reporting is “not done within the Section 111 process, they are not compliant with the Section 111 provision.  If they have other reasons for that self-identification, that’s fine.  But it doesn’t eliminate the Section 111 requirements."  (FTS-HHS HCFA Transcript, January 28, 2009, p.10).

The third question for many of our clients and partners might also be, do these regulations apply to my captive, risk retention group or deductible or self-insured retention?  The answer is, yes.  Under the regulations any entity responsible for assumption of any risk and the payment of medical claims, is subject to these mandatory reporting requirements.  (MSP Mandatory Reporting Interim Record Layout, December 5, 2008, p. 3).

Responsible Reporting Entity:

Under the Section 111 requirements, all entities are deemed to be a “Responsible Reporting Entity” (RRE) if they offer liability insurance, including self-insurance programs.  Under the CMS guidelines, a self-insured program is deemed to be a business or profession which carries its own risk in whole or in part.  As such, most healthcare programs enrolled in any form of alternative risk transfer programs, such as Self-Insured Retentions (SIR), Captives and/or Risk Retention Groups (RRG) are likely to be affected by and/or subject to these reporting requirements.  (MSP Mandatory Reporting Interim Record Layout, December 5, 2008, pp. 3-4).

Essentially what Medicare, through CMS, is looking to accomplish is to obtain reimbursement for indemnity dollars paid to Medicare Beneficiaries as part of settlements in liability cases, such as medical malpractice, and/or in the resolution of worker’s compensation claims.  As such, the responsibility for reporting to Medicare under Section 111 rests with the entity responsible for the payment of indemnity dollars to resolve the claim.  This responsibility may alter throughout the resolution of the claim, depending upon the amount paid and whether there are numerous layers of coverage through numerous insurers being triggered to pay the claim.

For example, if a hospital is insured through a commercial, dollar one policy, the RRE would be the insurance company, as all of the responsibility for insuring and paying the claim remains with the insurance company.  (MSP Mandatory Reporting Interim Record Layout, December 5, 2008, p. 4).  Any deductible paid through the insurer would remain the reporting responsibility of the insurance company.  Id.  Any obligation of the hospital to pay the deductible outside the insurance company would trigger RRE responsibility back to the hospital. Id.

Another example is in the case of a hospital with a Self-Insured Retention (SIR) for each and every claim before the commercial policy is responsible for the payment of the claim.  In this example, the SIR is managed and paid by the hospital.  As such, the hospital is considered to be the RRE for the SIR dollars paid on the claim to a Medicare Beneficiary.  This means that the hospital is individually required to be registered with Medicare as an RRE and is required to submit quarterly reports on the payments of settlements, judgments, awards or other payments to a Medicare Beneficiary to resolve a medical malpractice and/or general liability claim within that SIR limit.

For both of the examples listed above, if the claim becomes the responsibility of a different carrier at the next layer of coverage (i.e. an excess insurer), the reporting obligations to Medicare for the claim also transfer to the insurer responsible for the payments at that layer of coverage.  (MSP Mandatory Reporting Interim Record Layout, December 5, 2008, p. 4).

In the case of RRG programs and captives, the obligation of registering as an RRE is going to be governed by the language through which the insurance is provided in each specific program.  If the policy is one of indemnification, i.e. the insured pays the claim and is reimbursed by the captive, then the insured is considered the party responsible for paying the claim and is the RRE required to report to CMS regarding the payments on any medical malpractice claims involving Medicare beneficiaries.  (MSP Mandatory Reporting Interim Record Layout, December 5, 2008, p. 4).  Indemnification language is not unusual in single parent captive programs.

With regard to Risk Retention Groups, the insurance language may look more like that of commercial coverage, thus making the RRG responsible as the RRE for registration and reporting obligations under Section 111.

Recommended First Step:        Look at your program’s insurance policy language to determine whether there is indemnification language versus insurance language to determine which entities are to be considered RREs under Section 111.  Each entity identified will then need to register with CMS beginning May 1, 2009.

Under Section 111, CMS has recognized that a single RRE may need to submit separate reports for various facilities and/or different purposes or lines of coverage.  As such, the regulations do provide that a single RRE may register more than once to establish separate IDs under which the various reports would be submitted.  (MSP Mandatory Reporting Interim Record Layout, December 5, 2008, pp. 5-6).

Multiple RRE Identifications

How do we determine whether more than one registration of a single RRE is necessary?  Again, each program will need to look at its composition to make this determination.  For example, if a captive program has a policy which allows for reimbursement to a health system with multiple facilities, one question which needs to be addressed is whether each of the facilities requires the flexibility to be able to file a separate report and/or Medicare query or whether the health system can move in lock-step for reporting purposes across all entities.  If it is not feasible to have all of the facilities move in lock-step for the quarterly reporting required, then the health system may want to consider creating multiple RRE ID numbers for the facilities within the system to allow for the ability to be compliant with the secondary reporting requirements.

Another consideration is whether separate lines of coverage require multiple registration by a single RRE.  Many hospitals and healthcare programs, including captives and RRGs, provide coverage crossing several lines of insurance.  Many facilities who will register has an RRE under the regulations will be responsible for reporting Worker’s Compensation, General Liability and Professional Liability claim settlements and/or payments.  If those claims are managed separately, then consideration should be given to registering for separate RRE ID numbers for each of the lines of coverage.  (MSP Mandatory Reporting Interim Record Layout, December 5, 2008, pp. 5-6).

Finally, CMS is going to provide access to a query capability to be submitted to CMS on behalf of an RRE in order help the RRE reach a determination as to whether a claimant is a Medicare beneficiary.  The query will be based upon a claimant’s Social Security Number and basic personal information and will generate notice from CMS to the RRE and/or its agent whether a particular claimant is a Medicare beneficiary and thus subject to reporting under the Section 111 regulations.  This query function will be done via an electronic file upload to CMS on behalf of an RRE and while the query file is not limited to a particular number of files to be queried, it is limited to one query per month per RRE ID number.  (FTS-HHS HCFA Transcript, January 22, 2009, pp. 18-21; FTS-HHS HCFA Transcript, January 28, 2009, pp. 17-18; 24-25). 

Again, if your program has claims being managed by separate groups, separated by lines of coverage and/or are in more than one physical location, the RRE may require more than one ID number, to allow for the claims adjusters to submit their own monthly queries on their own files.

Recommended Second Step:    Determine the flow and flexibility needed for the ability to report quarterly to CMS and to submit the monthly queries and register each RRE as many times as needed to establish the correct number of RRE ID numbers for reporting purposes.

The Section 111 guidelines indicate that the reporting functions can be done by an RRE through an agent, such as a TPA, once the RRE has been properly registered with CMS.  VCM recommends that the determination as to how to organize the registration and reporting for the program for each line of coverage be determined prior to the May 1, 2009 deadline for the registration process with CMS.

THE REGISTRATION PROCESS:

The registration of the RRE is the first deadline to be met this year in connection with establishing compliance for the mandatory reporting process.  This step is necessary in order to allow a program to submit the required reports under Section 111. 

Under the regulations, CMS indicates that while an RRE may not contractually transfer its ultimate reporting obligation to CMS to a third party, it may assign a third party as its agent for the actual submission of the reports.  (MSP Mandatory Reporting Interim Record Layout, December 5, 2008, p. 4).

In addition, in response to specific questions about programs wishing to use both a TPA for claims management, as well as a third party vendor for the submission of the reports, CMS has identified three distinct roles which can be utilized under the regulations for the management of the mandatory reporting requirements.  (FTS-HHS HCFA Transcript, January 22, 2009, pp. 7-8; FTS-HHS HCFA Transcript, January 28, 2009, pp. 6-7).  Those roles and obligations, as discussed in these transcripts, are outlined below.

RRE – Authorized Representative

The RRE must determine at the beginning of the registration process who its “Authorized Representative” will be.  An Authorized Representative must be an employee or member of the RRE and must be the person authorized to establish the RRE with CMS as a reporting entity.  The Authorized Representative will also be accountable for signing off on the accuracy of information in the set-up profile submitted to CMS and to be accountable for the reporting to CMS for the RRE.  (FTS-HHS HCFA Transcript, January 22, 2009, pp. 7-8; FTS-HHS HCFA Transcript, January 28, 2009, pp. 6-7).

The Authorized Representative of the RRE shall cause the RRE to be registered with CMS.  This will be done through the Coordination of Benefits Contractor (COBC).  This shall be a secure web-site, which is currently being developed and is expected to be available by the May 1, 2009 deadline for the beginning of registration for RREs.  (FTS-HHS HCFA Transcript, January 22, 2009, pp. 7-8; FTS-HHS HCFA Transcript, January 28, 2009, pp. 6-7).

The Authorized Representative will be requested to sign off on the Data Use Agreement with CMS and to generate and finalize the profile report of the RRE which establishes the RRE ID number for the reporting.  (FTS-HHS HCFA Transcript, January 22, 2009, pp. 7-8; FTS-HHS HCFA Transcript, January 28, 2009, pp. 6-7).

Finally, the Authorized Representative shall assign an “Account Manager” within the system to the program.  (FTS-HHS HCFA Transcript, January 22, 2009, pp. 7-8; FTS-HHS HCFA Transcript, January 28, 2009, pp. 6-7).

RRE – Account Manager

The Account Manager of the RRE ID under the Section 111 regulations can be either an employee or member of the RRE itself or can be an authorized third party, such as a TPA managing claims on behalf of the RRE.  (FTS-HHS HCFA Transcript, January 22, 2009, pp. 7-8; FTS-HHS HCFA Transcript, January 28, 2009, pp. 6-7).

The Account Manager is responsible for the day to day management of the administration of the Section 111 reporting requirements, as well as the other authorized users under that RRE ID number.  (FTS-HHS HCFA Transcript, January 22, 2009, pp. 7-8; FTS-HHS HCFA Transcript, January 28, 2009, pp. 6-7).

The Account Manager will have the ability to either submit the reports directly to CMS, on behalf of the RRE, or to invite a vendor or other person to be an “Account Designee” for the RRE.  (FTS-HHS HCFA Transcript, January 22, 2009, pp. 7-8; FTS-HHS HCFA Transcript, January 28, 2009, pp. 6-7).

The Account Manager will be responsible for the management of the users for the RRE.

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