A View From The Top

Volume 1, Issue 3   •   June 2009

Since the last installment of our newsletter, the issue of the Secondary Payer reporting requirements under Section 111 has received increased attention and continues to change and evolve as CMS continues to address questions and to define the requirements for reporting.  It was our hope to have this third installment circulated in April, 2009.  However, many of the issues revolving around the specifics for compliance with the reporting regulations were not defined sufficiently to allow us to comment or summarize. 

However, due to changes in the deadlines for reporting and some of the continuing open-ended issues in connection with compliance with the reporting requirements, I feel compelled to circulate this issue to summarize where we are and what continues to evolve with the reporting requirements.  VCM will continue to issue our newsletters as the requirements are finalized and the process continues.

Clare Bello

clare.bello@vcm-llc.com

SECONDARY PAYER REPORTING:

Timeline Changes and Reminders:

Phase I – Registration – May 1, 2009 – the RRE must begin registration with CMS.  Reminders for Registration:  The registration deadline has been extended until September 30, 2009 from the original June 30, 2009 date.
Identify the entit(ies) which need to be registered as the RRE;
Identify how many RRE ID numbers your program will require;
Identify the RRE Authorized Representative who can register the entity with CMS;
Identify the Account Manager for the RRE, who will need to be identified in the registration process;
Register the RRE(s) beginning May 1, 2009, but no later than September 30, 2009.

Phase II – Testing  – this phase has now been broken down into two deadlines:
The RRE (or its agent) begins the testing phase of the implementation process. 
July 1, 2009, for entities who have completed the registration process, testing may begin for the monthly Query capability.  CMS intends to allow the RRE to run queries in 2009 to provide information on existing files to identify those files in which there is Medicare Beneficiary, but only RREs who are fully registered and have tested this component of the upload capabilities.

January 1, 2010 – testing for the claim input files will begin and must be completed by March 31, 2010.  This testing phase revolves around the testing for the quarterly report files required under the guidelines.


Phase III –Reporting –  this deadline has been extended now to the quarter beginning April 1, 2010. 

EXTENSIONS

There are two issues to keep in mind in connection with the extensions provided by CMS:

Registration Deadline Extension:
While CMS has extended the registration deadline until September 30, 2009, an RRE should not necessarily wait to begin the registration process.

The registration process occurs in three steps with CMS:

Step 1 – the Authorized Representative must enter the RRE entity information, along with appropriate Tax ID information;
Once the information has been entered in this step, CMS provides an immediate electronic response providing the entity with an RRE ID number and the contact information of the RRE’s EDI Representative.  
At the conclusion of this step, the COBC website provides the Authorized Representative with the RRE ID number for the entity registered.  In that notice, CMS indicates that the PIN to go with the RRE ID number will be sent via US Mail within 10 Business Days to the Authorized Representative.
The next step of the registration process cannot continue until the PIN is received by the Authorized Representative.

Step 2 – Once the PIN is received from CMS, the Account Manager then goes back online to complete the registration process;
At the conclusion of this step, CMS compiles a Profile Report and sends the Profile Report and a Data Sharing Agreement back to the Authorized Representative, via US Mail;

Step 3 – Both the Profile Report and the Data Sharing Agreement must be signed by the Authorized Representative and returned to CMS;
Once the documents have been acknowledged by CMS as having been received, only then the testing phase for the RRE ID may begin.

There are some delays in this process.  Some appear to be delays by CMS based upon the volume of RREs registering, others by issues to be resolved prior to the completion of the registration process.

For example, if the Entity name of the RRE entered does not exactly match the name filed with the IRS to obtain a TIN, CMS will send a notification through the EDI representative that the registration process cannot be completed until the RRE sends proof that the TIN is properly connected to the RRE entered into the COBC website.  The provision of the proof of the TIN adds an additional step to the registration process.

Moreover, several critical issues regarding the proper identification of the RRE remain unanswered by CMS, and as such, it is important to stay on top of the CMS updates to be sure that you know when any of those issues affecting your program are decided.  Some of these remaining open issues affect the ability to determine the proper entity to register as the RRE for a program.

Finally, it is also important to note that in order to complete step 2 of the registration process, an RRE must have decided how it will submit the required reports to CMS.  This means that the program must know if they will do the reporting themselves or whether they will engage an agent to do the reporting for them.  The program must provide the reporting agent information in step 2 of the registration process.

Recommendation:
Although the extension feels as if it is adding significant additional time for an entity to get ready to register, the length of time required to get through the registration process has increased and there are many important decisions to be made by the RRE before the registration process can be completed.  It is recommended that you identify your RREs and get the registration process started as soon as possible.

New Testing Deadlines: 
CMS has changed some of the testing requirements with the extensions provided as well.  Initially, there was no separate testing protocol for the monthly query functions.  The only testing requirements revolved around the quarterly reports and those data fields.  As such, there was to have been no access to the query function until there was successful testing on the quarterly report functionality.

With the new deadlines, these requirements have changed.  There will now be query testing available beginning on July 1, 2009, after which, an RRE will have access to the query function, even prior to the testing phase on the quarterly reports.

This is significant for those RREs who will need to use the query function to identify those claimants who are Medicare Beneficiaries, to begin to collect data that may be required for reporting purposes to CMS on those claims.

The quarterly file upload testing is not scheduled to begin until January, 2010.  In this phase of the testing, the RRE will be required to test the quarterly flat file feeds to be certain that the RRE is ready for formal reporting beginning April 1, 2010.

These changes are beneficial to the RREs who are registering now, as access to the query function will allow the programs to begin to collect additional information to be ready for reporting at the end of the 1st quarter of 2010.

Recommendation:

OUTSTANDING REPORTING ISSUES:

The reporting extensions come at a good time for entities required to report under the new guidelines, as there are several key questions which require additional guidance from CMS.  We will take a look at some of those issues in this issue.

Health Systems – Is the System the RRE or is each hospital required to be registered? On a Town Hall Conference call on June 9, 2009, CMS indicated that in situations where the Health System or parent entity is the named insured in a program, under which the individual hospitals are also insured, then the health system can register as the RRE without identifying the subsidiary hospitals in the process.

Once an RRE, Always an RRE?
One of the issues raised in this process is a result of the requirements that once an entity has been registered as an RRE with CMS, there continues an on-going obligation to submit quarterly reports on behalf of that entity.  For some programs, there may only be one report ever required to CMS, yet the obligation is on-going.  In the June 9, 2009 CMS Town Hall conference call, CMS indicated that they will be investigating the ability for an RRE to become inactive to stop the reporting requirements to CMS triggered by registration.

Captives with Fronting Carriers – Who is the RRE?
One of the continuing outstanding questions in this process arises in connection with captive insurance programs utilizing a fronting insurance carrier. 

In many of these types of insuring arrangements an entity with an off-shore captive purchases an insurance policy through a commercial insurance carrier, while providing reinsurance to the carrier through its captive.  In those situations, the fronting insurer may or may not retain a portion of the risk written.  In many cases the carrier is reinsured 100% by the captive.

In addition, in many of these types of programs, the authority to manage the claims of the program is contracted back to the insured entity.

The claims are made to a claimant with money from the captive program.  These payments may be made directly by the captive to the claimant with approval by the fronting carrier or they may be made through the fronting carrier, but funded through the captive under the reinsurance agreements.

Recall also that most captive programs are off-shore programs with reimbursement agreements between the captive and the named insured under the policy.  In situations without a fronting carrier, that named insured is the RRE for reporting purposes under the CMS Reporting Guidelines.  That named insured is usually the same insured under the fronting policy.

Finally, it is the insured that has the claim information needed to report to CMS, as it has assumed the responsibility for the claims management; the insured’s captive has likely funded the payment of the claim through the front to the claimant; the insured is the RRE for that captive program; and yet, the insurance policy is that of the carrier with all of the insurance obligations that are attributed to that policy.

SO – the burning question has been:  Who is the RRE for reporting purposes?  The fronting insurer? OR The insured with the captive?

From an insurance perspective, one would look first to the insuring agreement.  The fronting carrier has issued an insurance policy which obligates it to pay claims to third parties for claims against its insured.  While it is reinsured by the captive, it remains that the carrier has the direct insuring language that would initially dictate a conclusion that the fronting carrier is the appropriate reporting entity. 

However, CMS has indicated that:  “We understand that the industry does not agree with our definition of self insurance.  But we have a statutory definition that we’re working with.”  (FTS-HHS HCFA Transcript, May 14, 2009, p.52).

Pursuant to the CMS analysis, CMS looks to the money source to determine the RRE for reporting purposes.  In these situations: they have looked to the control over the management of the claims, as well as the ultimate source of the funding of payments on those claims to the captive.  Since the captive is off-shore with reimbursement insuring agreements, CMS indicates that the identification of the proper RRE again comes back to the named insured of the captive and the fronted policy.

While CMS has not issued a formal written guideline on this issue as of the date of this newsletter; in the May 14, 2009 Town Hall Conference Call, CMS did state the following with regard to this issue:

“(CMS):    [y]ou have entity X who needs to have f[ronting] insurance because of state law.  Entity X purchases that fronting policy but the fronting policy never pays anything.  The purchaser is paying all the claims.  That’s a fair statement?

(Question):    That’s Right.

(CMS):    Okay in that case the purchaser who we would consider the insured yes is in fact the RRE.”

(FTS-HHS HCFA Transcript, May 14, 2009, p.43).

CMS has indicated that they will be issuing supplemental guidelines with examples of their determination of the proper RREs in these types of programs.  However, they were very clear that in the event of a dispute between insurers as to who the RRE should be, there will be no formal mechanism in place to help the insurers resolve the question.  (FTS-HHS HCFA Transcript, May 14, 2009, pp. 52-53).

Recommendation:
Any entity with a fronted program should look at the program as a whole to determine whether the entity would have any obligation to register outside of the fronting issue, i.e. reporting for an SIR for the program or to report bill waivers within the entity.  In the event that the entity is required to register with CMS for reporting requirements at all, go forward with the registration process and give CMS time to issue a formal guideline on the fronting issue.

Bill Waivers and CMS Reporting Requirements:
The reporting requirements for the waiver of bills by an RRE are another area of great upheaval under the CMS reporting guidelines.  In general, CMS has taken the position that the waiver of a medical bill in connection with a Medicare Beneficiary constitutes a reportable event to CMS.

This position raises numerous issues for each RRE, beginning with how does a hospital, who is an RRE begin to gather and track that information for reporting purposes.  For example, many decisions to waive bills within a facility are done within the financial systems of the organization.  Waiver of bills could be a result of a myriad of reasons, none of which give rise to a reportable insurance event.

So, if the RRE is reporting to CMS through their claims management company, the claims management company will report to CMS only the information contained in the claims data it is managing.  If the bill waiver instances are not reported to the claims management company, then they are not part of the data set being reported.  How, then, does the RRE report the waiver instances?  Do they begin to report all waiver instances to their TPA?  If so, what effect will that have on a captive’s or RRG’s actuarial experience?  If not, does the RRE now have to develop its own separate reporting mechanism to CMS in addition to the reporting being done by the claims management company?

While the initial thresholds set by CMS will help narrow those instances of reporting, how does the RRE deal with the fact that the thresholds reduce each year for the next three (3) years?  In addition, the thresholds are cumulative, so if more than one bill is waived and the total exceeds the threshold, the waiver is likely to be reportable to CMS.  

How does the RRE adjust its triggers for identifying reportable instances with the changing thresholds?

CMS has not issued a formal guideline on this issue, yet either.  However, CMS has shown an inclination to make the waiver of bills for a medical beneficiary reportable.  (FTS-HHS HCFA Transcript, May 14, 2009, pp. 29-30; 56). 

Recommendation:
Each healthcare provider who receives reimbursement from Medicare should begin contemplating how to compile the information on patients for whom bills are waived, including the exact charges being waived and the reasoning for the waiver.  The program should also begin to contemplate how they will physically report this information to CMS after April 1, 2010.

Reporting of Total Payment Obligations to Claimant (TPOC) Amounts:
The issues revolving around the reporting requirements of the TPOC amounts are many and varied.  The questions range from the need to report more than one TPOC amount to questions requesting clarification of the difference between multiple TPOC payments and the trigger of On-going Responsibilities for Medicals (ORM) reporting requirements.

Some examples of the questions raised in this area are:

Can claimant’s attorney fees be deducted from the amount of the TPOC reported to CMS?  Perhaps.  If the payment to the claimant is a single amount, from which it is anticipated that the claimant will be required to pay attorneys fees, then no; the fees cannot be deducted from the TPOC amount reported to CMS.  If, however, there is a separate attorney award amount over and above the amount paid to the claimant, then the attorney fees would not be included in the TPOC amount.

Can punitive damage awards be deducted from TPOC amount reported?  No.  CMS has clearly indicated that they are not bound by the allocation of the losses by the parties.  CMS requires that the punitive damage aware be reported by the insurer and they will deal with whether there is a right to recover any portion of the award with claimant and his/her counsel.  (FTS-HHS HCFA Transcript, May 14, 2009, pp. 23).  

What if there are multiple insurers paying on a claim?  CMS’ position is in the event that an insured has multiple insurers contributing to the settlement of a single global settlement to a claimant; all insurers must report the global settlement amount to CMS – not just their portion of the settlement.

What if there are multiple defendants involved in a claim?  If the settlement amount is not specifically divided and stated among the defendants who are party to a settlement agreement, then all must report the entire settlement amount to CMS.  If the settlement dollars are specifically indicated in the agreement, the parties may report only the portion for which the insurer will ever be obligated to pay.

Do I add ORM payment amounts to the TPOC for final reporting?  No.  Under the reporting requirements, CMS does not want ORM amounts added to the TPOC amount entered.  In connection with the ORM, CMS only wants a report at the beginning of the obligation to make on-going medical payment and at the end.  CMS does not ever seek to know the amount of those payments – only the timeframe in which the obligation was in place.  A TPOC payment, however, is a separate amount of money paid for the settlement or resolution of the claim in its entirety and that amount must be reported.  (FTS-HHS HCFA Transcript, May 14, 2009, p. 9).  

What amount do I report for a structured settlement/ annuity?  The TPOC is “the calculated amount based on either what the minimum payout of that annuity or structured settlement will be or based on the time period that was used in calculating that structured settlement or annuity – whichever one results in the larger amount….It is only when the settlement actually calls for or dictates or includes the annuity or structured settlement that you would be taking that into account in calculating your TPOC amount.”  (FTS-HHS HCFA Transcript, May 14, 2009, p. 22).  

REMAINING OUTSTANDING ISSUES:

CMS has identified several other areas of inquiry which they continue to consider and for which there are still no formal positions being taken by CMS.  Many of these issues will continue to affect your ability to complete your compliance preparations under the CMS guidelines.  These issues are:

Safe Harbors.  There continues to be conversation with CMS regarding the need to create good faith parameters and/or safe harbors for programs who diligently attempt to comply with the reporting requirements.  CMS has indicated that they are in the process of developing model language for NGHP programs to use to create a safe harbor in the event that a claim is missed due to inadvertent incorrect SSN information regarding a claimant.

Bankruptcy.  CMS continues to deal with the need for formal requirements in connection with insurers or entities which are bankrupt but continue to have run-off claims which may be subject to the Medicare reporting requirements.

Clinical Trials.  CMS is working to issue reporting guidelines for payments to Medicare Beneficiaries arising out of clinical trials.

Mass Tort Litigation.  CMS continues to have no formal position in connection for the reporting requirements in connection with mass tort litigation.

CONCLUSION:

It is clear that there remain many outstanding issues to be resolved prior to the initiation of the first formal reporting to CMS in April of 2010.  VCM will continue to publish our newsletters as developments occur in these areas up to an including until the formal reporting date of April of 2010.

For our prior newsletter installments regarding these reporting requirements or for more information about VCM, our services and our CMS reporting system solutions, please visit our website at www.vcm-llc.com or contact VCM at customerservice@vcm-llc.com.

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