United States: 2015 Medicare Reform

Last Updated: August 27 2015
Article by Ann H. Stewart

Attorneys resolving worker's compensation claims with Medicare beneficiaries have been required for many years to consider Medicare's interests before entering into a settlement agreement.  Medicare has been, by law, "secondary" to other types of insurance and coverage, including liability insurance, group health insurance, and worker's compensation programs, insured or self-insured.  Because of this, employers and insurers need to be aware of the various reporting requirements, recent regulatory guidelines and recently proposed changes to the MSP laws.

Medicare Secondary Payer Mandatory Reporting

For many years, the MSP laws and regulations were poorly understood and CMS rarely enforced claims.  In 2007, Congress amended the law with the Medicare, Medicaid and SCHIP Extension Act, designed to strengthen the procedures for Medicare to recover its interests.  This amendment required companies with ongoing responsibility for medical care to Medicare beneficiaries to make regular reports to the Centers for Medicare and Medicaid Services (CMS) and those settling cases with Medicare beneficiaries to report every settlement, judgment, award, or other payment made to a beneficiary to CMS.  Penalties for failure to report properly were significant; however, the reporting and repayment procedures continued to evolve after the amendments became effective in 2011. 

The SMART Act

In response to the delays and uncertainty surrounding the reporting process, Congress passed The SMART Act (Strengthening Medicare and Repaying Taxpayers Act of 2012), which amended the MSP laws.  The SMART Act, signed into law in January 2013, was designed to improve the MSP process to enable parties to settle claims quickly, speed repayments to Medicare, and limit CMS’s ability to claim reimbursement.

  • Appeal Rights

On February 27, 2015, CMS published its final rule implementing provisions of the SMART Act.  The rule, which became effective April 28, 2015, included the structure that granted Applicable Plans a right to appeal final determinations from CMS when CMS pursued the Applicable Plan for reimbursement.  CMS intends to provide Applicable Plans the same appeal rights as it currently provides Medicare beneficiaries.  Applicable Plan means liability insurance (including self-insurance), no-fault insurance, or a worker’s compensation law or plan.

Partial SSN Criteria Change

On January 5, 2015, CMS expanded the submission requirements to allow Responsible Reporting Entities (RRE) to submit partial Social Security Numbers to determine Medicare enrollment status for mandatory reporting purposes. CMS modified its current matching criteria to allow queries with the last 5 digits of an individual’s Social Security Number.  To ensure accuracy, CMS will require that four other data points must be an exact match.  RREs should still use complete Social Security Numbers and health insurance claim numbers, when possible, but this change will be helpful in the event that the data is not complete.

Procedural Changes - Collection Contractor and ORM

On July 2, 2015, CMS published a bulletin outlining a change in procedure regarding the MSP claims and limits to Medicare payments where ongoing responsibility for medical care (ORM) exists. 

  • Effective October 2015, Commercial Repayment Center will be responsible for handling claims where Medicare is directly pursuing insurers (liability, no fault, self-insureds or worker’s compensation plans) as the identified debtor for conditional payment recovery.  Actions against a beneficiary for conditional payment recovery will continue to be handled by the Benefits Coordination and Recovery Center.
  • Effective January 1, 2016, where insurers report that it has ongoing responsibility for medical care, CMS will determine whether it will make payment for those claims, and discontinue providing medical care to beneficiaries that match the coding.  Therefore, it is important that reporting entities report the ICD codes accurately.  This practice should reduce its conditional payment recovery potential. 

Medicare Set-Aside Bills

In 2015, Medicare Set-Aside bills intended to reform the process and procedures surrounding worker’s compensation Medicare Set-Aside allocations and MSP Act cases have been introduced in both the United States Senate and House of Representatives.  The bills are similar to bills which were introduced last year, but failed to pass.  The primary provisions of the bills include:

  • Amendments to Medicare compliance thresholds,
  • Creation of a Qualified Medicare Set-Aside (QMSA) and a formal structure to appeal a  CMS determination of QMSA allocations, 
  • Percentage Reduction in future medical allocation for disputed conditions,
  • Optional Direct Payment to satisfy Medicare’s future interests, and
  • Formal recognition of state worker’s compensation statutes and fee schedules as binding.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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