Should you report a TPOC or ORM?

CMS coined the term Total Payment Obligation to Claimant or TPOC to mean a lump-sum judgment, award or payment to an enrolled beneficiary.  If you are making medical payments to a provider (e.g., hospital, doctor, etc.) then you have accepted Ongoing Responsibility for Medicals or ORM.

It does not matter which type of insurance

For instance, you can report a TPOC for a no-fault MedPay policy or ORM for a liability policy.  See our No-Fault Settlements November 2011 Newsletter Article for reporting TPOCs for no-fault policies and consider the following situation in which one of our clients reported ORM under a liability policy.

Our client, a hospital, was sued for medical malpractice.  The self-insured hospital agreed to pay for all medical treatment related to the injury and separately settled non-medical damages.  They reported ORM beginning with the date of injury.  The settlement for non-medical damages (e.g., pain and suffering) was not reportable -- no medicals were claimed or released.

Cases involving more than one type of insurance

It is important to consider each insurer's (insurance type) settlement.  Much like the case above, if a workers' compensation carrier pays indemnity and medical claims, they have accepted ORM.  If they subsequently compromise or commutate the claim through a lump-sum payment, they terminate ORM and report the settlement amount as a TPOC.  But what if there was a separate liability settlement related to the incident?  The key to reporting is, much like the case above, were there medicals claimed or released in the liability settlement?  For a fuller discussion see our  February 2012 News Letter Article.

Reporting Multiple TPOCs

The advent of opportunity to report additional Total Payment Obligation to Claimant (TPOC) amounts has led some liability insurers to draw incorrect conclusions.

The most straightforward reporting situation is one in which the liability is contested or only one final payment is made at settlement.  CMS instructs Responsible Reporting Entities (RREs) that "... only one Section 111 claim report is required after the TPOC Date." and "The TPOC Date is the date the obligation was established."

You paid before you settled

If the liability plan paid claims before determining the TPOC, then the RRE must submit two reports: the first indicating "ongoing responsibility for medicals" with no TPOC information (zeros in the fields) and the second terminating ongoing responsibility and providing the TPOC amount and date.

In order to understand the rationale behind that reporting requirement, it is important to understand the definition of "Ongoing Responsibility for Medicals" or ORM. CMS states: "responsibility for medicals (including a termination date, where applicable) is to be reported without regard to whether there has also been a separate settlement, judgment, award, or other payment outside of the payment responsibility for ongoing medicals. Reporting for ORM is not a guarantee by the RRE that ongoing medicals will be paid indefinitely or through a particular date; it is simply a report reflecting the responsibility currently assumed." ORM is not limited to workers' compensation and no-fault plans.

Once a liability insurer pays a claim (e.g, ambulance), they have evidenced by that act to have accepted responsibility and become the primary plan and Medicare pays secondary (See CFR 411.21). They must report they have ongoing responsibility for medicals or ORM = Y.

Medicare goes on to state, "...that. It’s important to understand the reference to “ongoing” is not related to “ongoing reporting” or repeated reporting of claims under Section 111 but rather the RRE’s responsibility to pay on an ongoing basis for the injured party’s (Medicare beneficiary’s) medicals associated with the claim."

Second it is important to review the meaning of Total Payment Obligation to Claimant or TPOC.

CMS defines TPOC as "...the Total Payment Obligation to the Claimant without regard to ongoing medical services," or the final settlement amount regardless of what had been paid up until that point.

Medicare's written direction in these situations is as follows: "For claims where there is no settlement, judgment, award, or other payment TPOC (which is essentially a single payment obligation, regardless of how the actual payout is structured) but the insurer (including self-insured) or workers’ compensation has assumed ongoing responsibility for medicals associated with the claim (ORM) for the injured party, two reports under Section 111 are required. The first report is when the no-fault insurance, liability insurance (including self-insurance) or workers’ compensation assumes the ORM and the second is when ORM terminates. The RRE provides basic information about the claim in the first report including a ‘Y’ in the ORM indicator and the no-fault insurance policy limit (if applicable). On the second report, the RRE provides the ORM termination date (date when ongoing responsibility for medicals ended) and, if a no-fault case, the date the no-fault policy limit was exhausted (if applicable). The first report will be an add record and the second report will be an update record. The second report will have a ‘Y’ in the ORM Indicator too. The RRE does not provide a TPOC Date and TPOC Amount on either report of ongoing responsibility for medicals unless there was a settlement, judgment, award, or other payment TPOC amount in addition to the termination of the ORM."

In summary

All types of insurance may at one time or another report either TPOC or ORM or even both situations in one report.  A general rule of thumb is that if you paid the beneficiary report a TPOC; if you paid a provider, report ORM.  Reporting multiple TPOCs was really aimed at collecting additional payment information for mass tort settlements and should probably be rarely used.

Still Confused?

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Piatt Consulting offers Medicare Reporting Agent Services, Software for Reporting Agents and Medicare Claims Resolution.  Sometimes we just answer questions :-)

 

Reporting Undocumented and Guest Workers

The industry is concerned about how to report Group Health Plan coverage or a payment, judgment or award of a liability, workers' compensation or no-fault to the Centers for Medicare and Medicaid Services.

CMS's response is straightforward -- an undocumented worker by definition does not have a Social Security Number (SSN) and is therefore not eligible for Medicare.  The industry should not report these individuals.

Guest workers with an alien number are not to be reported either.

The employer / insurer should monitor the undocumented / guest worker's status and if they do get an SSN and become Medicare beneficiaries, then the RRE must report any ongoing responsibility at that time.

CMS has designated Third Party Administrators as Responsible Reporting Entities (RREs)

According to the Society of Benefit Administrators, "TPAs have a relationship with their clients much like that of their sister professions CPA and law firms. ...the relationship resembles that between an employer or plan and their independent CPA firm or outside law firm with retainer

CMS could perhaps simplify the question of Responsible Reporting Entity by assigning it to the applicable plan.  The plan's sponsor or Board of Trustees can contract with other entities (TPA, ISO or Agent) to meet the requirements.

Partial Resolution...

CMS is locked into the GHP reporting requirements of 1395y(7)(A)  "...an entity serving as an insurer or third party administrator..."  Although CMS has not issued any written guidance, CMS has made it clear during subsequent teleconferences that the Insurer, not the TPA, is responsible for reporting, but may use a TPA as a vehicle for reporting -- editor

In response to our article and contact with CMS, CMS has clarified the role of the TPA in reporting NGHP as follows:

"Third party administrators (TPAs) as defined by CMS for purposes for 42 U.S.C. 1395y(b)(7) & (8) are never RREs for purposes of 42 U.S.C. 1395y(b)(8) [liability (including self-insurance), no-fault, and workers’ compensation reporting] and only act as agents for such reporting. The RRE is limited to the “applicable plan” and may not by contract or otherwise limit its reporting responsibility although it may contract with a TPA or other entity for actual file submissions for reporting purposes. The applicable plan must either report directly or contract with the TPA or some other entity to submit data as its agent. (Where an RRE uses another entity for claims processing or other purposes, it may wish to consider contracting with that entity as its agent for reporting purposes)."

Disclaimer -- Piatt Consutling and our staff cannot render legal, accounting or medical service.  We can only try to provide accurate and authoritative information in regard to the subject matter covered.  If legal advice or other expert assistance is required, the services of a competent professional in that area should be sought.

There may be some confusion about the term "deductible" as  it is being used in the context of self-insured plans (see below).  Self-insured plans pay the entire claim.  If an individual claim exceeds the attachment point, then the plan is reimbursed by excess reinsurance.  Some in the industry have referred to the amount paid by the plan minus the amount reimbursed by the excess reinsurance as the "deductible" and it does not represent any additional payment or co-payment that should be added by CMS to the total payment, judgment or award.

CMS Mandatory Insurer Reporting

SPECIAL CONSIDERATIONS WHERE LIABILTY SELF-INSURANCE WHICH IS A DEDUCTIBLE OR CO-PAYMENT FOR LIABILTY INSURANCE, NO-FAULT INSURANCE, OR WORKERS’ COMPENSATION IS PAID TO THE INSURER OR WORKERS’ COMPENSATION ENTITY FOR DISTRIBUTION (RATHER THAN DIRECTLY TO THE CLAIMANT):
As indicated in the definition of “liability self-insurance,” such deductibles and co-payments constitute liability self-insurance, and require reporting by the self-insured entities. However, in order to avoid two entities reporting with possible confusion where the deductibles and/or co-payments are physically being paid by the insurer or its TPA, CMS is considering requiring such deductibles and co-payments to be reported as part of the insurer or TPA’s report. CMS specifically seeks comments on this approach. If this approach is not adopted, both entities will have to report in this situation. Regardless of the final decision on this approach, CMS may need to add a few additional data elements (in the form of a question or otherwise) so that it will clearly be able to identify such situations.

Resolution

In response to our article and contact with CMS, CMS has clarified as follows:

Where an entity is self-insured for a deductible but the payment of that deductible is done through the insurer, then the insurer is responsible for including the deductible amount in the amount it reports as a settlement, judgment, award or other payment.

 

Excess and Stop Loss Insurance are forms of reinsurance purchased by self-insured employer plans (e.g., Individuals companies or Captives) to insure against catastrophic (individual claims) and aggregate losses.

The term Stop Loss is generally used by the self-insured industry to mean reinsurance for self-insured medical benefits in situations where a claim exceeds an attachment point (generally between $10,000 and $250,00 depending on the size of the plan) or the aggregated claims exceed a specified dollar figure over the life of the contract.

Self-insured workers compensation trusts use a similiar reinsurance product to transfer risk.

How Excess and Stop Loss works...

In general, employers pay a monthly premium into a trust (and directly or indirectly to the Excess or Stop Loss Reinsurer) for coverage.  The trust pays all claims. In the case of a Captive, payments are made from a trust set up in the name of its participating employers.

If an individual claim exceeds a specific dollar value (generally set between $10,000 and $250,000) called the "attachment point" or "specific stop loss," then the Stop Loss insurance reimburses the trust for the balance of the claim.  For instance, if a Captive with an attachment point of $100,000 is presented with a claim for $250,000, the Captive pays $250,000 from the trust and is reimbursed (usually annually) by the Stop Loss reinsurer for the $150,000.  The Captive puts the $150,00 back into the trust.   Captives also contract with a Stop Loss reinsurer to protect their aggregate claim costs over the period of the contract.

It seems clear that the self-insured plan (trust) that purchased the excess insurance is responsible for reporting the payment, judgment or award.

CMS is considering...

Early on, during the efforts to define the requirements for Mandatory Insurer Reporting, CMS decided that reinsurers would not be required to report; however, during a CMS Town Hall meeting a TPA representing excess liability and workers compensation insurance for school districts asked how the first and second levels would be reported.

This question is a non-sequiter given the description of the industry above and was perhaps posed by a TPA hoping to find additional business.  Hopefully, it will not lead CMS to change their mind about not requiring reinsurers to report.

Resolution

In response to our article and contact with CMS, CMS has clarified as follows:

"Re-insurance, stop loss insurance, excess insurance, umbrella insurance, guaranty funds, patient compensation funds which have responsibility beyond a certain limit, etc. -- The key in determining whether or not reporting for 42 U.S.C. 1395y(b)(8) is required for these situations is whether or not the payment is to the injured claimant/representative of the injured claimant vs. payment being made to self-insured entity to reimburse the self-insured entity. Where payment is being made to reimburse the self-insured entity, the self-insured entity is the RRE for purposes of the payment made to the injured individual and no reporting is required by the insurer reimbursing the self-insured entity."