MYTHS about Mandatory Insurer Reporting and Medicare Secondary Payer

Unfortunately there are many myths about reporting and recovery.  Every Responsible Reporting Entity (RRE) should be sure to perform some due diligence to ensure they are not being misinformed by various publications, websites or sales pitches.  This article attempts to debunk some of these myths.  While its editor strives to keep it current and use quotes from CMS where they exist, there may be some out-of-date information lurking in one of the hundred or so articles.  Check the CMS web site and documentation regularly.  If you have a question about anything you read within, please drop us an email or ask a question about it on one of the many CMS teleconferences -- everyone likes to hear Barb Wright layout specifics.

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The Myths

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  • MSAs - You have to settle all of your Workers' Compensation claims through a structured settlement (MSA) as part of preparing for Mandatory Insurer Reporting.
  • Recoveries - Medicare will seek to recover funds from Insurers
  • Recovering more than the Settlement Amount -- Medicare will seek recovery for more than the settlement
  • Liability Set-Asides - Medicare requires a liability set-aside
  • Reporting - You have to report claimants that are eligible for Medicare

Some Facts

Medicare Set-Asides (MSA) and Mandatory Insurer Reporting - MSAs are not required in order to close your workers' compensation cases.  Medicare has provided explicit direction in the NGHP User Guide (paragraph 11.9) that states that, "For ORM assumed prior to January 1, 2010, if the claim was actively closed or removed from current claims records prior to January 1, 2010, the RRE is not required to identify and report that ORM under the requirement for reporting ORM assumed prior to January 1, 2010."  Medicare has clarified that statement during teleconferences to mean that if you administratively closed the case through common business practices or by State statue, the case does not have to be reported.  Insurers do not have to go back and "close" each case through a structured settlement or MSA.

Medicare does not seek recovery directly from Insurers - The Medicare Secondary Payer Recovery Contractor (MSPRC) is responsible for recovering "overpayments" "conditional payments" or as some in the industry call them "liens." The MSPRC also recovers "mistaken payments" (see our November 2011 News letter for a description of mistaken payments:  ORM Reimbursement Demands) from GHP insurers acting on behalf of their covered employers and workers' compensation carriers or other insurers that accept ongoing responsibility for paying for medical claims (reported as Ongoing Responsibility for Medicals or ORM).  The MSPRC recovers settlements from beneficiaries, not insurers.  The MSPRC follows the money.

Statutes may support recovery from insurers in a civil suit. The MSPRC does not pursue insurers, but in 2009 Medicare's attorneys tried to recover from plaintiff attorneys, insurers and their defendants through the civil courts (see US vs Stricker).  The action was triggered by the failure by Stricker et al (a plaintiff attorney firm) to report a mass tort settlement, which cost Medicare the opportunity to pursue recovery from the claimant - beneficiaries. Stricker, unfortunately, was dismissed by the court based on expiration of the statute of limitations before Medicare's right of recovery was decided.  Reporting under Section 111, Mandatory Insurer Reporting should prevent that particular situation from occurring again.

Medicare does not require Liability Set-Asides - Medicare's requirement is that funds allocated in a settlement for "future medicals" must be properly expended by the beneficiary on medical claims related to the injury before Medicare will once again pay primary.  Medicare does not require that a workers' compensation or liability settlement MSA be set-up, reviewed or approved by Medicare. Insurers acting in an abundance of caution, may wish to get an MSA to avoid being the possibility Medicare may seek recovery in a civil action (e.g. US vs Stricker).

Enrolled vs Eligible - You only have to report payment, judgment or award to enrolled Medicare beneficiaries -- Medicare does not require you to report Medicare "eligible" claimants.  If you have assumed responsibility for ongoing payments (ORM) and you are still responsible for medical claims when the claimant enrolls in Medicare, then you report that individual at that time.

Medicare will not seek to recover more than the settlement amount -- By Health and Human Services Code of Federal Regulations Medicare can not recover more than the settlement amount.  If, for instance, the Insurer settles the claim for $2,000, but the medicare conditional payments (lien) exceed that amount, Medicare only seeks recovery from the settlement amount minus any procurement costs (e.g., attorney fees).