On December 29, 2007 President Bush signed into law the “Medicare, Medicaid and SCHIP Extension Action of 2007” (‘MMSEA’). The MMSEA made changes to the nation’s three major health programs: Medicare, Medicaid, and the State Children’s Health Insurance Program (SCHIP). Section 111 of the MMSEA imposes complicated reporting obligations on self-insured and insurance carriers who settle claims with plaintiffs who have received, or who are qualified to receive, Medicare benefits for the injuries that are the subject of their claims. Specifically, RREs must identify claimants who are Medicare beneficiaries and report data regarding their identities and claim to Medicare.
Liability insurers, self-insured defendants, and defense attorneys must take all steps necessary to ensure their compliance with the reporting requirements imposed by MMSEA Section 111. The MMSEA imposes substantial fines on ‘Responsible Reporting Entities’ (“RRE”) who fail to report qualifying claims. CMS may seek reimbursement from plaintiffs, defendants, carriers, and both the claimants’ attorneys and defense attorneys.
Mandatory reporting was initially scheduled to begin July 1, 2009. This was pushed back to April 1, 2010 and now is set for January 1, 2011. RREs must register with CMS, and should have already done so.
Triggers for reporting requirements include settling a claim with a payee who received Medicare payments. In addition, CMS has set a ‘declining’ table of reviewable claims values: $5,000 in 2010, $2,000 in 2011, and $600 in 2013. In other words, if a RRE is going to settle a claim for $601 in 2013, and the claimant is Medicare-entitled, the settlement must be reported to CMS. Even if the settlement falls below these “threshold” levels, Medicare’s reimbursement rights exist.
Noncompliance can result in fines of up to $1,000 per day per claimant.
During settlement negotiations, RREs and their representatives must take care to determine whether a claimant is a Medicare beneficiary and find out if there is a Medicare lien. The lien must be paid from settlement proceeds before money is distributed to the claimant and must be paid within 60 days of payment to the claimant.
My guide for Complying with MMSEA
Each carrier and self-insured must establish protocols to comply with the Medicare reporting requirements imposed by the “Medicare, Medicaid and SCHIP Extension Action of 2007” (‘MMSEA’). Each carrier and self-insured is left to its own devices to come up with these protocols. We have seen many of our clients turn to vendors to review claims and communicate with Medicare.
Carriers must determine which claimants are Medicare beneficiaries and those non-Medicare beneficiaries who have a reasonable expectation of entitlement within 30 months of the settlement date.
A claims representative should determine entitlement to Social Security and Medicare as early as possible in the file’s life. Warning flags include: (a) Has the claimant been out of work more than six months (SSD); (b) Has the claimant been off work for 30 months or longer (Medicare); (c) Was it a catastrophic injury?; (d) Is the settlement value over $250,000 (including the cost of medicals paid)?; (e) Does the claimant admit to applying for SSD and getting denied or is the SSD denial on appeal?; (f) Is the claimant aged 62 and six months old or older?; and (g) Does the claimant have end-stage renal disease?
Our rule of thumb is that where the parties negotiate a settlement that terminates the obligation of the self-insured or carrier to pay for future medicals, even if the claimant denies being on Social Security Disability, independent verification should be obtained. A vendor can be used to identify Social Security recipients.
If the claimant is on Medicare but the settlement is less than $25,000 (and forecloses the possibility of the carrier/self-insured being responsible for future medicals) CMS will not review the settlement and either ‘approve’ a proposed set-aside or ‘waive’ Medicare’s set-aside requirement. In such an instance, the carrier/self-insured can prepare their own set aside agreement with the claimant. At settlement, appropriate consent and/or testimony should be obtained from the payee, making sure they understand that the payee must ‘spend down’ the allocable amount with medical bills prior to submitting bills to the compensated injury to Medicare.
One way of verifying that a payee is not on Medicare is to ask for copies of recent pay stubs. If the pay stubs are less than six months old, they cannot be a Medicare beneficiary.