Under Section 111 Mandatory Insurer Reporting, Responsible Reporting Entities (RREs) are required to report ICD 09 Event Codes and ICD 09 Diagnosis Codes.  The diagnosis codes, DX codes in CMS parlance, are stored on the Common Working File (CWF) and used by the MACs (intermediaries) to deny medical claims related to the reported DX codes.  Over the last year, many claims processors and insurers have noticed an uptick in Medicare denials.  The majority of the denials can be attributed to increased data from Section 111 reporting, but lack of provider sophistication and problems at the MACs have been contributing to the problem.  CMS has addressed the MAC issues by issuing guidance on determining relatedness of medical claims.

Providers are part of the problem

Some providers do not realize they can bill Medicare for claims unrelated to the incident, so they do not even try to submit the claim when they see an MSP record on the CWF.  Others do not realize that they can bill Medicare conditionally, if the insurer is unlikely to pay within 120 days.  These denials have sent many beneficiaries and claims processors to 800 - MEDICARE.

800-MEDICARE is inconsistent

Unfortunately, the quality of the response from 800 MEDICARE are not consistent and frequently wrong.  Some Call Service Representatives (CSRs) have told the insurers they must terminate their reported ORM before any claims can be approved. This is patently not the case and we sent along such reports to CMS, where they are currently in the process of updating the CSRs scripts to provide better guidance in these situations.

Be Aware of How your Report Affects Medicare Denials

Another problem has been that MACs were inconsistently denying claims.  That problem has been addressed and should be improving.  The solution is interesting and is directly impacted by the DX codes the RRE chooses to submit -- making specificity less important in some instances.  For instance, codes for Pheumonconiosis and other lung diseases due to external agents (e.g., asbestos) are 501- 508.  Any claim associated with that range of DX codes will be denied.  For instance, if the RRE reports 501 and a claim is presented encoded as 505, the claim will be denied.  Similarly all fractures of the skull will be lumped together.  Other codes will be grouped by 3-digit categories.  For instance, dislocations (DX codes 830 through 839) will be treated as related within that three digit code; if the RRE reports 831.1, a claim will be denied when encoded as 831.2, but a claim encoded as 832.1 will not be denied.  Codes with a fifth digit, will be lumped into the 4-digit grouping -- so they are irrelevant when reported by the RRE to the denial process.

Impact to reporting

Our recommendation is to continue to use the most specific codes to establish an audit trail for your responsibility to pay medical claims or clearly define your liability, but you do not have to submit multiple codes in the same 3-digit category.  For instance, reporting 832.2 and 832.3.
Once an insurer reports acceptance of Ongoing Responsibility for Medicals (ORM), the Coordination Of Benefits Contractor (COBC) posts the associated injury codes on the Common Working File (CWF).  Attempts by providers to bill Medicare for related treatment are denied.  If all works well, the insurer will not see a reimbursement demand from the MSPRC; however, mistakes happen.  If Medicare “mistakenly” pays a medical claim when another plan is primary (e.g., yours), the MSPRC will send a demand to the insurer.  Medicare regulations also allow for Medicare to pay conditionally when the insurer denies that claim or when the beneficiary is incapacitated.  In practice, there is no easy way for a provider to code a medical claim so they may be paid conditionally.

HHS Regulations for Group Health Plans

The regulations surrounding the ORM recovery of payments and the appeal process is well defined for Group Health Plans (GHP), but non-existent for Non-Group Health Plans.   The GHP obligation to reimburse Medicare for mistaken and conditional payments can be found at 42 CFR § 411.10(b)(4) and (c)(1).  The “defense” from such a reimbursement demand can be found at 42 CFR § 412 which states that the GHP can submit a copy of the policy that specifies services covered, conditions of coverage, benefit levels and limitations with respect to persons entitle to Medicare or with an explanation of the plan’s allegation that it does not owe CMS any amount.  The GHP plan may appeal an MSPRC decision to a hearing officer (see 42 CFR § 411.115) and appeal the hearing officer’s decision to the Administrator under 42 CFR § 411.124.  The decision of the Administrator is final, with no stated appeal to Federal Court.  The penalty for a GHP plan for not reimbursing Medicare is “referral” to the Internal Revenue Service and the IRS is authorized by 42 CFR § 411.130(b)  [to] ... impose[s] a tax on employers .. The tax is equal to 25 percent of the employer’s ... expenses.

Workers Compensation and No Fault Reimbursement

Medicare Advocacy Recovery Coalition (MARC) correctly asserts that there is no formal appeals process for Non-Group Health Plans and in particular situations in which a Workers’ Compensation and No-Fault plan has accepted ORM.  In practice, the MSPRC will remove unrelated (disputed) medical claims much as they will do in liability.  They may consider appeals based on lack of coverage as they do with Group Health Plans.  The beneficiary has extensive administrative remedies and the insurer would do well to enlist their assistance, if other avenues of redress are foreclosed.  There is no “referral” to Treasury or the IRS for non-payment.  Medicare relies on their independent right to sue for double damages as the whip to ensure reimbursement.
We, at Piatt Consulting, have written several articles and spoken at conferences on the hot topic of liability set-asides.  Neither a workers’ compensation Medicare set-aside (WCMSA), nor a liability Medicare set-aside (LMSA) is required by statute [42 U.S.C. 1395y], but CMS’s Patel Memo lent a certain amount of credibility to WCMSAs.  Now CMS has published a policy statement about when a LMSA is not required:

Where the beneficiary’s treating physician certifies in writing that treatment for the alleged injury related to the liability insurance (including self-insurance) “settlement” has been completed as of the date of the “settlement”, and that future medical items and/or services for that injury will not be required, Medicare considers its interest, with respect to future medicals for that particular “settlement”, satisfied.

CMS's short memo may have been meant to ameliorate the fears of insurers and facilitate settlement, but it will undoubtably be held up by some as “evidence” they are “required.”

A No-Fault insurer may not pay the claimant without further litigation; for example, under the aegis of comparative fault. If the claimant subsequently sues to recover benefits, they sue for breach of the no-fault insurance contract.  As the suit is against the policy, any settlement should be reported to Centers for Medicare and Medicaid Services (CMS) under Section 111 Mandatory Insurer Reporting as a no-fault Insurance type (“D”) -- not as a liability settlement (“L”).  In this situation, rather then risk the perception by Medicare that their policy either had, or continues to have, any Ongoing Responsibility for Medicals (ORM), the insurer should report ORM as “N” (No).  The RRE should enter the settlement amount under the “Total Payment Obligation to Claimant”  (TPOC) and indicate that the no-fault policy limits have been met by entering the No-Fault Insurance Limit (Field 81) as indicated on the policy and setting the Exhaust Date for Dollar Limit for No-Fault Insurance (Field 82) equal to the TPOC Date.

The reason that I bring this to your attention is twofold.  First, during one teleconference, there was some confusion and perhaps contradictory advice provided by CMS.  One suggestion was that above situation be reported as a "liability settlement."  This was confusing and when I asked for clarification -- or rather, suggested approach above -- it was tabled.  The second is that my experience at the MSPRC is that no-fault policies are generally perceived by staff as required to pay for medical claims (e.g., accept ORM) until the policy limit is exhausted.  Reporting the settlement as a TPOC with ORM set to N, should send a clear message to the MSPRC that a lump sum payment has been made to the beneficiary to settle the case and that the no-fault insurance policy is no longer liable for paying medical claims.  In other words, the MSPRC should recover any conditional payments from the beneficiary and close the no-fault case.
When the attorney successfully sues for breach, they commonly add a Bad Faith claim for damages arising from the breach of the no-fault policy including claims like pain and suffering, attorney's fee etc.  This would be reported as a liability settlement only if it included compensation for medical claims.
If the no-fault insurance pays for some medical claims, but the claim is subsequently settled for a lump-sum disbursement, then the insurer should report ORM = Y and report the ORM termination date at the same time they report the TPOC and TPOC date.  In this situation, the current $100,000 settlement limit does not apply: the RRE is obligated to report the ORM regardless of the settlement amount.

As part of CMS’s published alerts on 30 September 2011, they added a list of improvements to be deployed in the near future including a self-service portal.

The MSPRC Portal

Rumors abound that one company or another has “direct electronic access to CMS” and they can download a Conditional Payment Letter (CPL) or Demand in the blink of an eye.  Not true.  When we broached this topic for the first time in 2006, CMS Information Security rejected the idea outright, although they did allow us to publish CPLs and Demands on their Medicare Beneficiary Portal in 2008.  Now it appears things may change.

How would it work?
When the MSPRC learned of an MSP case from the Coordination Of Benefits Contractor (COBC), the first thing that happened was that all the claims from the Date Of Incident (DOI) to the present had to be collected from the various MAC repositories around the country.  When there are no claims to review the analysts say the case is in skeletal because of the “SKL” returned by the computer program.  Before sometime in 2008, “filtering” the collected medical claims, looking for ones that were “related,” was strictly a manual process.  After that, the claims were automatically filtered by a computer program.

It took awhile for the new program to be fine-tuned and during that time the MSPRC implemented a “double-check” policy of requiring analysts to give the output a quick review.  That double-check process was still in place when I left, but as things were working out at the time, it’s quality as measured by disputes matched that of an analyst -- neither are perfect.

Envision logging into the portal and identifying the MSP case using the same key data used to report under MMSEA.  If the insurer reported the case, the computer programs will have run their course and the CPL should be ready.  If the report hasn’t been made yet, you will have to enter it yourself.  Then, in about a day or two, the system emails you -- your CPL is ready.  Can online disputes be far behind?

If you want to get a feeling for what might be ultimately behind this largesse look at H.R. 1063: Strengthening Medicare And Repaying Taxpayers Act of 2011