Read current MMSEA Section 111 Mandatory Insurer Reporting News and Updates authored by the former MSPRC Program Director. Centers for Medicare and Medicaid Services (CMS) promulgated the Medicare Medicaid and SCHIP Extension Act of 2007 to require Responsible Reporting Entities to report ongoing responsibility for medical payments or a payment, judgment or award to a Medicare beneficiary.  The law has become know in the insurance community variously as Section 111, Mandatory Insurer Reporting or MMSEA.  CMS released their first guidance in 2008 and user guide in 2009 (this author participated in its development).  Since that time, CMS has held numerous teleconferences and issued several updates to their user guide.

Latest News and Information

Attorneys should check for additional articles by navigating to Attorneys under Medicare Secondary Payer

Flurry of CMS Alerts: What is going on with reporting liability?

Clinical Trials

Clinical Trials Update  CMS publishes User Guide with no changes

The Debate About Reporting is Over for Two Leading Pharmaceutical Companies After Meeting with CMS

CMS holds a meeting at the request of two pharmaceutical companies -- probes clinical trial billing practices and clarifies reporting.

Is Medicare unknowingly underwriting clinical trials? Pharmaceutical, Medical Device and Biotechnology companies are all required to report their responsibility for treating clinical trial subjects under Section 111

Health Retirement Accounts

Medicare is watching: Report your HRA.  Rumor in the industry is that a number of HRA administrators have decided not to report because they think they will escape under the radar.  Learn how Medicare can find them and fine them.

Reporting Health Reimbursement Accounts to Medicare.  The Second Quarter of 2011 is the mostly likely time that Responsible Reporting Entities need to report a Group Health Plan (GHP) Health Reimbursement Arrangement (HRA) to meet Medicare Section 111Mandatory Insurer Reporting Requirements.

Hosptial Risk Management Write-Offs

Reporting Hospital Risk Management Write-Offs (Updated August 2010) How and what to report

In General

Piatt Consulting Announces Medicare Consul Services Small Business Solution -- MCS offers a low cost,  web-based solution to manually report a few claims a year.

Medicare issued Alert on Total Payment Obligation to Claimant -- Might be confusing to liability insurers.  This article attempts to explain the rationale and reporting mechanism if liability plan pays before settlement.

Frequently Asked Questions

How can I query more than 500 claimants and still use Medicare's Direct Data Entry?

Case law supports collecting HICN.  A recent case heard by the Nebraska District Court in Seger v Tank Connection may help insurers obtain a claimant's personal information

Hidden Dangers in those Pesky ICD 09 Codes (Updated) Reporting the wrong ICD 09 codes can have unintended consequences including improper demands for reimbursement and a cause of action on the behalf of the claimant.

Some things to consider when contemplating a liability set-aside They are not required by statute, regulation or CMS, but in an abundance of caution may be useful in documenting your settlement

Old Issues worth keeping in mind

Compliance Flags likely for Workers' Compensation Claims (Resolved) Subsequent claims that break ORM thresholds are likely to be found out of compliance for timely reporting.

Workers' Comp and multiple TPOCs (UPSET 27 May 2010) present a reporting problem for RREs and Medicare.

Reporting Undocumented Workers under Mandatory Insurer Reporting (Resolved)

Captive Reporting Requirements (Resolved)

Excess or Stop Loss Insurers Reporting Requirements (Resolved)

Reporting self-insured employer "deductibles." (Resolved)

Designating Third Party Administators (Administratvie Services Only) as GHP Responsible Reporting Entities (RREs) (Resolved)

No Fault Insurance has a broader meaning to CMS than industry expected

New Liability Thresholds & Relief for Reporting General Releases

The American Insurance Association (AIA) appealed to the Secretary of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) responded with clarification of pre-1980 exposure and new vastly larger reporting thresholds under MMSEA Section 111 Mandatory Insurer Reporting.

Changes in Reporting Mass Tort Cases
In response to earlier concerns expressed by the insurance industry, CMS instituted a mass torts working group.  The members of the group ranged from reporting agents to insurance company defense counsel and plaintiff attorneys.  As the meetings progressed two issues came to the forefront: 1.) Reporting cases prior to 05 December 1980 and 2.) General releases.  CMS has addressed the first issue in their latest alert published on 30 September 2011 by exempting from reporting cases in which the relevant Date Of Incident (DOI) was before 05 December 1980. CMS dealt with industries second issue by exempting “broad general release (rather than a specific release), which effectively releases exposure or ingestion on or after 12/5/1980.”  Much as they exempted during one teleconference reporting general releases that released (unclaimed) medicals as part of an employment termination. These two concessions should effectively resolve industry concerns.

Changes in Liability Reporting Thresholds
Although there has been significant external and internal pressure on CMS to establish realistic reimbursement thresholds since the June 2011 House Oversight and Investigations Subcommittee grilling of Deborah Taylor (CMS’s CFO), CMS’s change to the reporting thresholds should not be attributed to a softening on their position on the $300 dollar limit on recovery.  The most likely scenario is that CMS is trying to reduce the pressure on the Medicare Secondary Payer Recovery Contractor (MSPRC) to allow them to catch up and manage the transition to a new contractor early next year.

CMS has raised the limit for reporting a payment, judgment or award:

  • After 1 October 2011 from $5,000 to $100,000
  • After 1 April 2012 to $50,000
  • After 1 July 2012 to $10,000
  • After 1 October 2012 back to $5,000

Keep Running Queries
As alluded to above, the RRE should not confuse their reporting requirements [42 U.S.C. 1395y(b)(8)] with the Medicare Secondary Payer statute [42 U.S.C. 1395y(b)(2)] right to recover conditional payments.  Medicare is still going to issue conditional payment letters and demands for reimbursement for payments, judgments or awards over $300.  Plaintiff attorneys are still going to file their cases with the COBC and the insurer / self-insurer should still take what measures they deem fit to protect Medicare’s interest in recovering their conditional payments.  At a minimum stay on top of querying to determine which settlement involved a Medicare beneficiary.

History of Recovery Thresholds
In my role as the Medicare Secondary Payer Recovery Contract (MSPRC) Program Director I led a Six-Sigma effort to proactively reduce the time and cost of recoveries across the program.  We had many successes within our organization: we caught up on 800,000 pieces of work left us by prior contractors and got well within our contractual guidelines (e.g., less than 65 days) within a year.  One of the initiatives that the MSPRC CFO and I personally led was an effort to establish a minimum recovery amount.  It was obvious to us, as it was later to the members of the Congressional Panel, that it could cost more to recover money than it was worth.  Our analysis demonstrated that the absolute minimum collection costs were $25 -- opening the mail, sorting the mail, processing the payment, posting the payment, balancing the ledger and mailing the case closed letter.  When we first approached this subject with CMS, we were warned by our Project Officer that attempts had been made in the past by previous MSP contractors and all were rebuffed by the office of the CMS CFO (prior to Ms. Taylor’s tenure).  The CMS CFO’s logic was that it was an automated process and therefore didn’t cost “anything.”   We got the same message as before and the effort died.  I am happy to see things have changed.

Is the $300 Minimum Likely to Increase?
As noted above, the MSPRC could process a payment for $25, so why isn’t that the minimum?  As part of our Six-Sigma efforts we counted everything; for instance, the number of Conditional Payment Letters (CPL), the time it took to process them, the number that were returned as disputed, the number that were disputed more than once, AND over all of this which worked better: our then-new automated CPL tool, the old manual system or a combination.   With this data the MSPRC created simple statistical models: it takes 20 minutes to generate a CPL, 30% are disputed, 2% are disputed twice and know you know how much time on average it takes to do an entire process.  Do this for each process and you know how what the average cost per case is across the entire operation.  One suspects that the cost today is $300.  Sad news for those that were hoping for the RAND Corporation’s approved $5,000 mark.

NGHP User Guide Published without change to Clinical Trials Sponsors obligation to report.

Despite requests from pharmaceutical firms, the Centers for Medicare and Medicaid Services (CMS) published the latest version of their Mandatory Insurer Reporting User Guide version 3.2 dated 17 August 2011 without changes to the language or relief from the current reporting deadline of 1 January 2010.

After months of ongoing negotiations and meetings between two large pharmaceutical firms and CMS, brokered by Piatt Consulting, CMS has repeatedly put off changing their stance about the requirement to report injuries to Medicare beneficiaries arising out of clinical trials.  If CMS was going to deviate from the position it took last year that clinical trials constitute a liability plan that accepts liability for ongoing medical claims arising from a clinical trial, the new User Guide version would have been the vehicle of choice.  Change may yet come, but the odds are diminishing and clinical trial sponsors should weigh the risks of waiting too long to comply.

Consents that imply sponsor’s obligation to pay is secondary
Some clinical trial sponsor’s consent agreements (contracts) state the sponsor will pay for medical costs if another plan will not pay: implying they are secondary to any other plan.  Consent agreements that pay secondary when the claimant is a Medicare beneficiary do not conform to Federal statutes and may open the way for civil action by CMS for double damages. Sponsors should note that Medicare may not pay primary when payment can reasonably be expected to be made under a liability plan (see 42 U.S.C. § 1395y(b)(2)(A)(ii)) and includes a contract obligation as prima facie evidence of a reimbursement obligation under 42 C.F.R. § 411.22(b)(3).   Although the case involved a Group Health Plan, a recent Sixth Court of Appeals decision in Bio-Medical Applications v Central States  (09-6121/6169) rejected decisions of earlier courts that a plan’s obligation to pay has to be demonstrated by a civil suit before action for double damages can be tried.  It found that an existing contract for the insurer to pay [the provider] is sufficient.  Also of interest in this case was the Court’s decision that healthcare providers may sue a plan for double damages under the statute.  This decision, it seems, could be readily applied to the relationship between the clinical trial site (provider) and the clinical trial sponsor (plan).  Read our full analysis

Piatt Consulting has been actively working with two Pharma 15 companies to help them report claims for medical treatment made by Medicare beneficiaries enrolled in clinical trials under Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA).  Clinical trials sponsors that do not report are subject to civil action by CMS for fines up to $1,000 per day per unreported beneficiary and may face double damages under Title 42 U.S.C. 1395y(b)(8) of the Medicare Secondary Payer (MSP) statute.

The Debate About Reporting is Over for Two Leading Pharmaceutical Companies After Meeting with CMS.

For some leading pharmaceutical firms the debate over whether Title 42 U.S.C. 1395y(b)(8) of the Medicare Secondary Payer (MSP) law is applicable to Clinical Trials has ended.  They signaled their intention to comply in separate letters and during a meeting with CMS about meeting Medicare’s new MSP law: Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA).  Under Section 111 Medicare can levy civil penalties of $1,000 per day per unreported Medicare beneficiary.

The leading firms’ acceptance of their obligation to report under Section 111 was not immediate and reminiscent of earlier efforts of the industry to seek clarification dating as back as far as April of 2004.  At that time, clinical trials sponsors requested guidance from CMS about the applicability of the MSP law in general.  Mr. Gerald Walters, Director, Financial Services Group, Office of Financial Management for CMS responded in part: “An entity that engages in a business trade or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by failure to obtain insurance, or otherwise) in whole or in part [42 U.S.C. § 1395y(b)(2)(A)(ii)].  The clinical trials sponsor’s agreement with the trial participant that it will pay for medically necessary services related to injuries participants may receive as a result of participation in the trial constitutes a plan or policy of insurance under which payment can be reasonably expected to be made in the event such an injury occurs.  A liability insurance policy or plan must make payment without regard to an individuals’s Medicare eligibility [42 C.F.R. § 411.32(a)(1)].  Therefore, Medicare will not make payment if it is aware of a situation such as you described.”

Mr. Walters may have exhibited a bit of unwarranted optimism, when he closed his letter with an offer to “...work with them (sponsors) to resolve their repayment obligations... ,” but at that time he was relying on § 411.25  Primary payer's notice of mistaken Medicare primary payment.  The regulation requires plans to give notice to Medicare when they were aware of their primary payment responsibility.   Today, CMS uses Section 111 and its potential for civil penalties to enforce sponsors’ obligation to give notice through their formal Mandatory Insurer Reporting process.

In response to the enactment of Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007, Pfizer took the lead in requesting clarification in an October of 2009 letter to the Centers for Medicare and Medicaid Services (CMS), subsequently endorsed by PhRMA in November of that year, asserting that the Section 111 did not apply to Clinical Trials.  The basis of the argument revisited whether or not a Clinical Trial is a “plan” under 1395y(b)(8) and hence required by Section 111 to report.

Unfortunately, most likely due to Mr. Walters statement that a clinical trial was a “liability insurance policy or plan” and subsequent reiteration that a clinical trial was a “liability” plan in the Section 111 NGHP User Guide, sent the wrong message to the attorneys following this issue.

Liability, as used by Medicare in this instance, is meant to encompass the larger meaning of a legal responsibility, duty or obligation. It is a liability that arises from a contract as expressed in the Clinical Trial’s commitment at the outset of a clinical trial to pay the cost of  medical care provided to treat injuries incurred by the study subjects as the result of clinical services received during a clinical trial.

It is not relevant, as some have asserted, in the context of a contractual obligation, whether or not the trial provides treatment in response to any threatened or actual personal injury (e.g., medical claims arising out of a tort).  When the beneficiary seeks medical treatment (e.g., doctor’s visit) in connection with an injury (e.g., Adverse Event) arising from the trial they are making a claim for medical treatment.  Under Section 111 the trial sponsor is responsible for reporting the injury and paying for the treatment under 42 U.S.C. § 1395y(b)(2)(A)(ii).  Liability for ongoing treatment (e.g., payment of medical claims) and reporting is similar another injury-oriented type of insurance -- workers’ compensation.

Some may recall that in June 2000, President Clinton signed a hortatory Presidential Memorandum directing Health and Human Services to change their clinical trial policy of not paying for medical claims they would have otherwise paid if the beneficiary was not enrolled in a clinical trial.  This has been misinterpreted by many to be and Executive Order directing Medicare to pay for injuries arising out the trial.  In fact, during the teleconference, CMS asked what mechanisms are in place to distinguish between when Medicare can be billed and when the clinical trial sponsor should be billed?  CMS stated that Medicare would pay for standard of care associated with the underlying ailment for those beneficiaires enrolled in a clinical trial.  CMS offered as an example that if x-rays where part of the trial protocol, Medicare could be billed for the x-rays as long as the number of x-rays did not exceed the beneficiary’s standard of care annual allotment.  If the beneficiary required more x-rays, then the clinical trial sponsor would have to pay for them.  Except in very limited situation (e.g., Category A devices), Medicare does not pay for diagnostic or medical treatment arising out of a trial.


Highlights of the teleconference

CMS heard the concerns of two major pharmaceutical companies about their difficulties in collecting data from clinical trial sites because either the trial site or IRB was unwilling to release HIPAA and Privacy Act information.  CMS asserts that these entities should supply the data.  To facilitate the release, the companies provided a contact within CMS’s parent organization, HHS, and their sister organization, the FDA, that could help streamline the release of relevant data.  At the behest of the companies, CMS took under consideration as to whether these difficulties warranted some relief in reporting deadlines.

CMS may have left with some sense of the scope of the savings to be gained by reporting to enforce proper billing across clinical trials. CMS demonstrated a sincere interest in learning how a pharmaceutical company managed billing during the trial and payment for medical treatment for chronic problems arising out of the trial after the trial was completed.

Several attorneys from the HHS Office of General Counsel, responsible for filing actions in Federal Court to enforce MSP law were present at the meeting. Clearly, this meeting was intended not only to discuss reporting, but adherence to MSP statues and reimbursement in general.  HHS OGC may file an action under Title 42 U.S.C. 1395y(b)(8) for double damages to recover payments for medical claims they feel should have been paid by the clinical trial sponsor going as far back as December 05, 1980, not to mention $1,000 per day per beneficiary.

Medicare is only aware of two companies that are actively reporting or in the process of preparing to report.  If your firm is not on that list and you are reporting, my advice is to alert CMS to the fact as soon as possible.

Related Piatt Consulting Articles

Is Medicare unknowingly underwriting clinical trials?
CMS holds a meeting at the request of two pharmaceutical companies

David Piatt is the former Medicare Secondary Payer Recovery Contract Program Director, a consultant and frequent speaker on reporting and MSP statue.  He has been an active participant in discussions with CMS and his company Medicare Consul Services provides services to sponsors enabling them to report.

The Centers for Medicare and Medicaid, CMS, held a meeting on the 28th of July 2011 with two of the largest US pharmaceutical companies to discuss issues surrounding the reporting of claims of ongoing responsibility for medical care arising out of a clinical trial under the Section 111 Mandatory Insurer Reporting as promulgated under the MMSEA, Medicare Medicaid and SCHIP Extension Act of 2007.

Although the pharmaceutical companies requested the meeting to discuss the difficulties surrounding the collection of privacy act and HIPAA information from clinical trial sites, CMS took the opportunity to investigate what steps pharmaceutical companies have taken to ensure that Medicare has not been inappropriately billed for services that should have been paid by them as the trial sponsor.  CMS took the additional and unusual step of inviting three attorneys from Health and Human Services (HHS) Office of General Council (OGC) to a Mandatory Insurer Reporting meeting to hear the answers.

There were two questions and one interpretation that particularly warrant consideration by the pharmaceutical industry.  They are paraphrased from Piatt Consulting meeting notes as below:
  • What mechanisms are in place to distinguish between when Medicare can be billed and when the sponsor should be billed?
  • What mechanisms are in place to pay any chronic problem that go beyond the completion of the trial?
  • It doesn't matter whether or not the subject was taking a placebo or not, the point is whether or not they paid to treat.
Each of these key points is discussed in greater detail in the remainder of this article.

What mechanisms are in place to distinguish between when Medicare can be billed and when the clinical trial sponsor should be billed?

CMS briefly touched on the substance of a June 2000, Presidential Memorandum stating that Medicare would pay for appropriate standard of care for the underlying ailment for those beneficiaries enrolled in clinical trials; then asked how the clinical trial sponsor distinguished between a standard of care and clinical trial related billing event.  As an example CMS offered that if x-rays where part of the trial protocol, Medicare could be billed for the x-rays as long as the number of x-rays did not exceed the beneficiary’s appropriate standard of care.  If the beneficiary required more x-rays, then the clinical trial sponsor would have to pay for them.

Clinical trial sponsors generally contract with clinical trial sites to administer and monitor the efficacy of the drug or device being studied.  As part of the competitive bidding process, candidate trial sites review the trial protocol and develop proposals based on the tests, procedures, medications and the length of the study.  A proposal generally includes regular visits with the research staff (usually medical doctors and/or nurses) to monitor the test subjects health and to determine the safety and effectiveness of the treatment(s) they are receiving.  The clinical trial site has to gauge the costs it will incur to implement the trial protocol and submit a proposal to the trial sponsor that is competitive and yet still meets that profit goal of the site as a business entity.  It is important to note, that inherent in a trial is the potential for the adverse events, some of which may be anticipated based on earlier phases of testing while others may arise during the trial. The payment to a clinical site for medical treatment by the trial sponsor clearly establishes the clinical trial as a “plan” under Medicare Secondary Payer (MSP) statute and is at the heart of Medicare’s question.  If the clinical trial sponsor views the testing as having been completely outsourced through a fixed price contract payment, the sponsor may not have a lot of detail about how the funds are expended. 

Interestingly, it is the agreement with the trial subject to pay for medical claims arising out the trial, not the contract with the clinical trial site, that identifies the clinical sponsor as ultimately responsible to reimburse Medicare for any inappropriately billed medical claims.  It establishes them as the Responsible Reporting Entity (RRE) under Mandatory Insurer Reporting and as a potential future defendant under Medicare Secondary Payer statutes.  How the trial sponsor writes and manages the contract with their clinical trial sites becomes even more critical.

The sponsor is responsible for a clinical trial site’s billing oversights.

Submitting Section 111 reports can stop improper billing at the site.

What mechanisms are in place to pay any chronic problem that go beyond the completion of the trial?

As a follow up to probing about how a clinical trial sponsor ensures they are paying for treatment during a trial; CMS asked if someone ended up with a chronic problem, how is it paid for?

Any attorney with experience with Medicare and Workers’ Compensation will recognize this as a question about how the trial sponsor has “Considered Medicare’s Interest” in future medical costs.

Unlike Workers’ Compensation law or perhaps liability tort actions, the answer to that question lies in content of the trial sponsor’s consent agreement.  If the agreement (e.g., contract) limits their financial liability to the period of the trial, then they have no further obligation to the beneficiary, and hence Medicare, for any continued coverage after the trial for treating their affliction.

It doesn't matter whether or not the subject was taking a placebo or not, the point is whether or not they paid to treat.  CMS stifled any debate that might have occurred on the subject of whether or not a beneficiary that participated in the trial was administered a placebo when they said the trigger for reporting was a payment.

Tort or Contract?
Contract.  The legal basis for enforcing Medicare Secondary Payer statutes arising from clinical trials is one of contract, not tort.  It is their consent form in which they agree to pay for any injuries arising out the trial that forms the legal basis for a civil action.  Whether or not the beneficiary is taking a placebo is not germane to the fact there is a contract to treat a beneficiary.

To further illustrate the point that it is a matter of contract, consider the following argument.

In 42 U.S.C. 1395y(b)(2)(A) “An entity that engages in a business, trade, or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part...”

In 42 C.F.R § 411.21  “Plan means any arrangement, oral or written, by one or more entities, to provide health benefits or medical care or assume legal liability for injury or illness,” clearly encompasses the written consent form as an assumption of legal liability.

In 42 C.F.R  § 411.50   General provisions. “Liability insurance means insurance (including a self-insured plan) that provides payment based on legal liability for injury or illness or damage to property,” this regulation provides CMS the opportunity to use payment as prima facie evidence of an insurance plan regardless whether or not a written agreement is in place.

Unfortunately, many attorneys involved in analyzing whether or not they should recommend reporting to Medicare believe they are only responsible for reporting when they make a payment in excess of the payment they made to the clinical trial site to conduct the trial and assume these payment will be a tort  -- compensation in lieu of treatment or a settlement for negligence in conducting the trial.  Hopefully, we have demonstrated that is these are not situations of ongoing responsibility for medical coverage, rather represent one-time monetary awards that should be reported as “Total Payment Obligation to Claimant” or TPOC.

Summary

CMS heard the concerns of two major pharmaceutical companies about their difficulties in collecting data and heard a request that they contact someone within their parent organization, HHS, and CMS’s sister organization the FDA that could help streamline the reporting.  CMS took under consideration as to whether these difficulties warranted some relief in reporting deadlines, but was not forthcoming.

CMS demonstrated a sincere interest in learning how a pharmaceutical company managed billing. CMS may have left with some sense of the scope of the savings to be gained by reporting to enforce proper billing.  The HHS OGC may have left with a sense of the size of an award they could win via their right to file an action for double damages with a Federal Court on behalf of their beneficiaries to recover conditional payments going as far back as December 05, 1980, not to mention $1,000 per day per beneficiary.

Medicare is only aware of two companies that are actively reporting or in the process of preparing to report.  If your firm is not on that list and you are reporting, our advice is to alert CMS to the fact as soon as possible.

Disclaimer: The author is not an attorney and opinions expressed in this article should not be taken as legal advice, or the views CMS. The opinions expressed in this article and on this web site are those of author based on his experience as the Former MSP Program Director, consulting with RREs and attorneys.