Since our Newsletter in October of 2009, several key changes have been made by CMS which will require all of us to review the processes we currently have in place for compliance under MMSEA Section 111 as well as to design some new ones to stay in compliance. In this issue we will review the major changes since last October and the potential effect on a program’s compliance requirements.

Clare Bello

Clare.Bello@vcm-llc.com

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 MMSEA SECTION 111 – SECONDARY PAYER REPORTING

 

 

First and foremost, while these reporting requirements are mandatory for all lines of insurance, including medical and general liability claims, they are limited to:

 

o        Includes the assumption of an on-going responsibility for payment of medicals (ORM).

o        People age 65 or older;

o        People under age of 65 with certain disabilities; and

o        People of all ages with End-Stage Renal Disease.

o        If medicals are claimed and/or released, the settlement judgment, award or other payment must be reported regardless of any allocation made by the parties or a determination by the court.

 

(MMSEA Section 111 NGHP User Guide, v. 3.0, 2/22/2010, § 11.1, p. 40).

 

There are some thresholds established, which limit reporting under Section 111 until certain amounts are met. These thresholds differ between certain lines of coverage and even between types of reporting under Section 111. 

 

Line of Coverage	Report Type	Threshold Amount
No-Fault Insurance	TPOC	$0.00 - All Settlements are reportable
	ORM	$0.00 - All ORM obligations are reportable
Liability Insurance	TPOC	1/1/2011 - 12/31/2011 - $5,000 or less is not reportable
		1/1/2012 - 12/31/2012 - $2,000 or less is not reportable
		1/1/2013 - 12/31/2013 - $   600 or less is not reportable
		1/1/2014 - Forward - $0.00 - All settlements are reportable
	ORM	$0.00 - All ORM obligations are reportable
Workers' Compensation	TPOC	1/1/2011 - 12/31/2011 - $5,000 or less is not reportable
		1/1/2012 - 12/31/2012 - $2,000 or less is not reportable
		1/1/2013 - 12/31/2013 - $   600 or less is not reportable
		1/1/2014 - Forward - $0.00 - All settlements are reportable
	ORM	Present - 12/31/2011 - Exclusion to reporting (ALL must be met)
		*Medicals Only Claim
		*Lost time limited to 7 days or State Statute mandated time
		*All payments are made directly to the provider; and
		*Total amount paid does not exceed $750.00

(MMSEA Section 111 NGHP User Guide, v. 3.0, 2/22/2010, § 11.4, pp. 51-53).

 

In May, 2010, CMS issued numerous Alerts which can affect your program’s processes for compliance under MMSEA Section 111. These Alerts are reviewed below with VCM’s analysis of their meaning and potential compliance effects.

 

 

Many of the open ended questions throughout this compliance process have begun with the burning question of: “Who has to report this loss?” Under the purview of this question, we have seen many issues develop over the last year. Those questions have ranged from: “What entity should register if the program is a captive or risk retention group program;" to “If there is a commercial policy with a deductible who is required to report within that deductible amount?” The “Who Must Report” Alert was issued by CMS to answer some of these questions. We have split the Alert into sections below.

 

 

In the original NGHP User Guide, CMS stated that if an entity (or hospital) pays the deductible amount directly to the claimant, then TPOCs and ORMs paid to a Medicare Beneficiary within that deductible amount were to be reported by the entity directly. As of February 24, 2010 that is no longer the case.

 

The February 24, 2010 Alert, revised on May 26, 2010, changed this position as to the reporting responsibility under a deductible program. The Alert differentiates between a Self-Insured Retention (SIR) and a Deductible program. An SIR is defined within the Alert as a portion of risk retained by the insured entity which is outside the coverage provided by an insurer; whereas a deductible is a retained risk by the insured entity but is included within the overall coverage provided by the insurer. (May 26, 2010 NGHP: Who Must Report Alert, p. 3).

 

As such for all SIR programs, the Responsible Reporting Entity (RRE) remains the entity making the payment to the Medicare Beneficiary.

With regard to a deductible policy, the following scenarios may trigger different reporting responsibilities under MMSEA Section 111:

Deductible Scenario	Reporting Entity under MMSEA Section 111
Deductible - Claim Reported to Carrier	Carrier has the obligation to report the TPOC for both the deductible and any TPOC amount paid over the deducitble amount
Deductible - Claim NOT Reported to Carrier	If an insured settles a claim within the deductible amount and does not report the claim to the carrier prior to doing so - the insured will retain the obligation of reporting the TPOC and/or ORM as the RRE.
Re-insurance; Stop-Loss; Excess Insurers; Umbrella Insurers and Guaranty Funds	The trigger for reporting as to these carriers and under these policies continues to revolve around whether the carrier is making a payment directly to the Medicare Beneficiary or reimbursing the underlying primary insured. If payment is made by that carrier directly to the claimant, that carrier has an obligation to report the full TPOC amount to CMS.

(May 26, 2010 NGHP: Who Must Report Alert, pp. 4-5).

 

Recommendation: If you have registered your entity as an RRE solely for the purpose of reporting the deductible amounts paid under a commercial policy and your carrier is now going to be reporting the deductible for you through their RRE as part of that policy, then you should contact your EDI Representative at CMS to delete your RRE ID as soon as possible. However, if there are other self-insured portions of your program for which you will continue to be responsible to report under MMSEA Section 111, then no change to your registration is required.

 

 

CMS has indicated that because the intent of the fronting carrier and the insured is that “the insurer will not ultimately retain any risk under the insurance policy,” it is generally the insured who is the RRE for a fronted program. 

 

However, the formal trigger stated in the May Alert for reporting purposes is as follows: “Where the insured pays the claim, the insured is the RRE. Where the insurer pays the claim, the insurer is the RRE.” (May 26, 2010 NGHP: Who Must Report Alert, p. 5).

Entities in Bankruptcy/Liquidation:

The alert states three rules regarding the reporting obligations of an entity in liquidation and/or bankruptcy:

Liquidation Scenario	Reporting Entity under MMSEA Section 111
TPOC Paid from Liquidation Proceeds	Where the settlement; payment; award or judgement is paid to a Medicare Beneficiary from the liquidation proceeds, the RRE remains the entity in liquidation/Bankruptcy
TPOC Paid is funded by entity other than liquidated party (i.e. State Guaranty Fund)	The RRE is identified based upon who makes the payment directly to the claimant. If it is the Guaranty Fund, then that entity becomes the RRE for reporting under Section 111
Partial Payments from Bankruptcy Estate	To the extent that the initial payment made to a Medicare Beneficiary does not satisfy the entire TPOC obligation and to the extent that there are additional payments made later, the entity issuing payment to the Medicare Beneficiary is the RRE for reporting purposes

(May 26, 2010 NGHP: Who Must Report Alert, p. 5).

 

 

Where there are multiple defendants in a single settlement agreement with a claimant, all defendants’ insurers must report their settlement payments under MMSEA Section 111 and may not eliminate the need to report by having one insurer agree to make the payment to the claimant. In those cases where there is joint & several liability in connection with the settlement, judgment, payment or award, the parties must report the global amount of the settlement as the TPOC. (May 26, 2010 NGHP: Who Must Report Alert, p. 6).

 

Where a sponsor to a clinical trial makes payments to a Medicare Beneficiary for complications or injuries arising out of the trials, such payments are considered payments by a liability insurer and must be reported under MMSEA Section 111. (May 26, 2010 NGHP: Clinical Trials Alert).

 

The payments are considered to be the acceptance of an On-Going Responsibility for Medicals (ORM) and should be reported as such. (May 26, 2010 NGHP: Clinical Trials Alert). It is important to remember that the reporting of an ORM is NOT subject to any thresholds and as such, all payments made are reportable no matter the amount paid.

 

Finally the incident date to be reported to CMS is the date that the injury or complication first arose during the course of the clinical trial. (May 26, 2010 NGHP: Clinical Trials Alert). 

 

 

As you will recall from our prior newsletters regarding MMSEA Section 111 reporting, the issue of whether or not the write off and/or waiver of medical bills constitutes a reportable event under MMSEA Section 111 has been a long unresolved issue. On May 26, 2010, CMS issued an Alert amending the Section 111 reporting guidelines to address this issue.

 

The Alert begins with the analysis that any entity that carries its own risk, in whole or in part is deemed to have a self-insured liability insurance plan. As such, CMS has concluded that risk management write-offs (including a reduction in the amount due as a risk management tool) constitutes liability self-insurance for the purposes of MMSEA Section 111 reporting obligations. (May 26, 2010 NGHP: Risk Management Write-offs, p. 1).

CMS has provided three instances regarding the potential requirement for reporting of a risk management write off or good will gesture. 

Write Off Scenarios	Reportable?
A Facility reduces a medical bill in connection with a potential claim involving a Medicare Beneficiary	NO - CMS acknowledges that a facility is required to show any such reduction in billing to Medicare and so there is no reporting requirement under MMSEA Section 111
A Facility offers something of value (gift card) to a Medicare Beneficiary to avoid the filing of a claim; and the entity risk manager reasonably believes that the Medicare Beneficiary will or may seek additional treatment.	YES - the value is reportable as a TPOC and is subject to the threshold amounts over the next 3 years.
An Entity other than the reporting entity offers something of value (gift card) to a Medicare Beneficiary to avoid the filing of a claim; and the reporting entity risk manager reasonably believes that the Medicare Beneficiary will or may seek additional treatment	YES - the value is reportable as a TPOC and is subject to the threshold amounts over the next 3 years.

(May 26, 2010 NGHP: Risk Management Write-offs, p. 1 - 2). 

 

In the first instance, the meaning of the statement by CMS seems clear. Under the existing Medicare billing rules, where a facility or physician reduces the total amount of a medical bill, the bill itself must reflect the reduced amount when the bill is submitted for reimbursement to Medicare. As such, CMS has deemed that the billing processes and the regulations governing those requirements do not require additional reporting by the provider under MMSEA Section 111.

 

The second instance is somewhat less than clear. On its face, CMS states in the Alert that if a facility or provider:

(a) offers something of value to a Medicare Beneficiary as a good will gesture; and

(b) it is offered in order to avoid the assertion of a claim; and

(c) there is a reasonable belief that the Medicare Beneficiary will or may seek additional treatment; THEN

(d) the value of the property given is reportable “as a TPOC from liability insurance.” 

 

(May 26, 2010 NGHP: Risk Management Write-offs, p. 1).

 

It is important to note at the outset of this analysis that under an insurance analysis of this rule, the three criteria, without an actual assertion of a demand or claim, generally is not a “Claim” under a liability insurance policy. As such, we must assume that CMS is deeming any such actions that meet the three criteria above to be “self-insurance”.

 

Let’s look at a fact pattern to flush out the potential reporting obligations under this new requirement:

 

1.                  A visitor to Hospital A slips and falls in the lobby. In accordance with longstanding hospital policy, an investigative exam is performed in the ED to determine if there are any injuries. No injuries are found and the visitor indicates that she is unharmed. As a goodwill gesture, the Patient Safety Officer provides the visitor with a $100.00 gift card to a neighboring restaurant for the inconvenience of the event.  All of the ED bills are written off by the Hospital.

 

What if any of these actions are to be reported under MMSEA Section 111? Below is our analysis and a potential process to be developed at the facility level to determine compliance and reporting requirements under the new Alert.

 

 

Since this is a visitor, the first step, as in all MMSEA Section 111 reporting analyses is to determine whether the visitor is a Medicare Beneficiary. This might be accomplished in connection with the ED visit. Otherwise, the facility will have to seek that information directly from the visitor through the use of the CMS issued SSN Collection Form and/or by running a Query through CMS to reach a determination as to Medicare status; (Remember: Queries can only be run once per month).

 

If they are a Medicare Beneficiary, then the facility must have put into place procedures to allow for the collection of the required information for the reporting of the value provided to CMS under MMSEA Section 111.

Currently, as a TPOC, this goodwill gesture would not be reportable under the established threshold amounts over the next three (3) years. (See thresholds listed above). However, after 2014, such a gesture could potentially be reportable and the rest of this analysis would be applicable.

 

b.                  Is the ED Visit reportable? 

 

No. Under the first bullet point of the CMS Alert, since the bill follows the Medicare Rules the bill for the ED visit is not reportable. (May 26, 2010 NGHP: Risk Management Write-offs, p. 1).

 

In addition, the ED Visit is not reportable so long as it was performed as a defense evaluation to determine if there was any injury and as such liability. Such an exam is deemed to be investigatory in nature by CMS and is not reportable under Section 111. (MMSEA Section 111 NGHP User Guide, v. 3.0, 2/22/2010, § 11.10.2, p. 85), See also, (NGHP Town Hall Call Transcript, 9/8/2009, pp. 43-44).

 

 

No. Under the rules issued in this Alert there must be an indication that if the value provided were not to be given, then a claim would be asserted. In addition, the value of the property provided was less than the current TPOC threshold amount.

 

 

No. At the time that the visitor left the facility, she had given every indication that she felt fine and as such there would be no reasonable expectation that she would or might seek additional medical treatment in the future.

 

As such, it does not appear that the fact pattern described above would trigger the reporting requirements under MMSEA Section 111. However, if any of the analysis questions above were answered in the affirmative, then reporting could be triggered under the new reporting requirements governing Risk Management Write-Offs. (May 26, 2010 NGHP: Risk Management Write-offs, p. 1).

 

Recommendation: It is imperative that each facility implement clear internal guidelines and rules with regard to the proffering of goodwill value provided to any claimants to allow for: (1) the identification of Medicare Beneficiaries; (2) the analysis of the facts involved to determine whether reporting under MMSEA Section 111 is triggered; and (3) the process to provide an ability to collect the required data and to allow for the physical reporting of such events to CMS under MMSEA Section 111. 

 

On May 25, 2010, CMS issued an Alert indicating that they would be building and providing a Direct Data Entry (DDE) reporting option for “Small Reporters” in lieu of an RRE registering for the electronic quarterly reporting processes currently set forth in the NGHP User Guide. While there is still very little information as to the exact functionality of this option, we will attempt to analyze the potential benefits and pitfalls of the option offered through CMS.

 

First, CMS defines a “Small Reporter” as an RRE with 500 or fewer NGHP claim reports per calendar year. (May 25, 2010 NGHP: Direct Data Entry Alert, p. 1). While this may appear to apply to many liability carriers, it is important to understand all of the submissions which will count toward the 500 count. For example, the DDE does NOT allow for any separate query function in order for a liability insurer to monitor whether or not a claimant becomes a Medicare Beneficiary during the life of a file. (May 25, 2010 NGHP: Direct Data Entry Alert, p. 2).  Instead, an RRE would be required to go into the DDE and enter a claimant’s personal information as if ready to report a file to CMS. At that point, the DDE offers a “real time” check as to whether a claimant is a Medicare Beneficiary. If there is no match, the program will stop there. (May 25, 2010 NGHP: Direct Data Entry Alert, p. 2). While this appears to function as a query function, it also counts as a file submission for purposes of the 500 cap for each year. (May 25, 2010 NGHP: Direct Data Entry Alert, p. 3). 

 

It is also unclear what an RRE would do when running the first part of the reporting to determine if someone is a Medicare Beneficiary and the real time report indicates they are. The DDE would continue forward as if a TPOC were to be reported immediately, when, in fact, the RRE may not yet be ready to submit a TPOC amount.

 

As we know from the NGHP User Guide, CMS requires each RRE to “implement a procedure in their claims review process to determine whether an injured party is a Medicare beneficiary.” (MMSEA Section 111 NGHP User Guide, v. 3.0, 2/22/2010, p. 81). So for a medical malpractice program, where a program has 25 open claims and suits which need to be monitored throughout the life of the file to know whether the claimant becomes a Medicare Beneficiary, it is likely that a query would be run each quarter during the life of the file. As such, just monitoring these files through the DDE option would be counted as 100 file submissions by the RRE before any TPOCs or ORMs are actually submitted.

 

Indeed, CMS is very clear in the alert that: “The DDE option is intended for RREs who expect to have only an occasional claim report to make. RREs that will have claims to report on a frequent and on-going basis are advised to use the current file submission methods instead of the DDE option to ensure that RREs are able to adhere to the timely reporting requirements.” (May 25, 2010 NGHP: Direct Data Entry Alert, p. 3).

 

In addition to the loss of the query function, which liability insurers will need over time due to the length of the file life of a liability claim/suit, the DDE has other limitations which should be considered. First, the Alert indicates that a file that is started for submission will only be kept on the COBC website for a period of thirty (30) days, after which it will be deleted. (May 25, 2010 NGHP: Direct Data Entry Alert, p. 3). 

 

What the alert does not address is how long will a file which is submitted successfully be kept on the COBC website for future reference by the RRE. For example, those cases in which there is an ORM assumed during the life of the file and then a subsequent end of the ORM must be reported. Under the current quarterly claim submission process, the original submission would be updated by adding only the changed information to CMS. Under the DDE submission, it appears that all fields for the CMS report might have to be entered all over again and the update would then also be counted against the 500 file submission cap. 

 

It is unclear whether a history of files submitted under the DDE option would be available anywhere to an entity once the file is submitted and accepted by CMS. It is not outlined in the Alert whether a copy of what is being submitted by the entity will be available to save and keep at the time of submission; nor is it clear what format any such copy would be in, whether it would be in a readable format such as Adobe or whether it would be in the flat file format required for submission by CMS. An RRE deciding to use this submission method would still need to develop internal saving and/or storage capability to keep files submitted to CMS in the event that an update or amendment of the file is required.

 

Indeed, CMS indicates that the file submission process under the DDE option contains the same number of data fields to be submitted under the electronic process and that “the manual data entry for a single claim report may take a considerable amount of time.” (May 25, 2010 NGHP: Direct Data Entry Alert, p. 3).  As such, a program should carefully consider how many submissions beyond a settlement they may have in connection with the program prior to deciding to utilize the DDE option.

 

Another question we raise, is how would an RRE would deal with response files for submissions with either errors or compliance flags? If, for example, a file submission were to be rejected due to an error in the initial submission, would the RRE be able to pull up the submitted file to correct only the error for re-submission or would the RRE be required to type the entire file submission over again to correct the error? Would the correction file submitted also then count against the 500 file submission cap?

 

Finally, if an entity were to exceed the 500 file submission per year limit set by CMS, they would be required to then revert to a quarterly, electronic file submission process, which would require testing for at least a calendar quarter prior to being able to submit settlements, which would cause some untimely reports of TPOCs for an RRE.

 

Recommendation: For those liability insurance programs which have a continuous or on-going reporting responsibility, such as medical malpractice, where the claims generally involve medical costs as part of their resolution and/or release, the DDE option is likely not a good choice at this point. For these insurers the ability to run queries to monitor Medicare status of a claimant is critical, as is the ability to submit update to files as the case evolves. Finally, the ability to keep a history of the reports submitted is also critical for the on-going insurer to keep documentation of compliance under MMSEA Section 111.

 

However, for programs which are in run-off, Bankruptcy tail claims or liability lines of insurance where a claim involving medicals and a Medicare Beneficiary is rare (such as employment or non-medical professional liability lines) this DDE option would be a great alternative to an on-going quarterly requirement for reporting under MMSEA Section 111.

 

The reporting requirements under Section 111 remain complex and difficult to develop reporting structure and processes around. We hope that the explanations in these newsletters, which constitute our analysis of the regulations, help your program develop the reporting solutions needed by next year. There are many more evolutions of the processes under Section 111 to come. We will continue to issue newsletters as the changes warrant. 

 

In our next newsletter, we will begin to look at what happens after a report under MMSEA Section 111. Specifically, what are our obligations with regard to past Medicare Payments and potential future medical bills in connection with the settlement of liability cases with a Medicare Beneficiary? These issues involve many open-ended questions and will be the subject of many opinions and discussions as the answers evolve over time.

 

In the meantime, for our prior newsletter installments regarding these reporting requirements or for more information about VCM, our services and our industry leading CMS reporting system solution, Trideo, please visit our website at www.vcm-llc.com or contact VCM at Clare.Bello@vcm-llc.com.