The Medicare Secondary Payer Statute and Its Application to Healthcare Providers
Tuesday, September 22, 2009

Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 ("MMSEA") (P.L. 110-173), adds new mandatory reporting requirements for group health plan (GHP) arrangements and for liability insurance (including self-insurance), no-fault insurance, and workers compensation. See 42 U.S.C. 1395y(b)(7) and (8).

How do these reporting requirements apply to you, the provider?

Briefly, if a patient is injured by a health care provider, Medicare must pay secondary to any payment for Medicare-covered services that may be made pursuant to a judgment or settlement by the provider's professional liability insurer or by the health care provider itself. Under the Medicare Secondary Payer ("MSP") rules, payments to the beneficiary by the provider are considered self-insurance. If the provider's settlement with a beneficiary includes payment of Medicare-covered medical expenses, Medicare is legally allowed to seek recovery of prior payments, and furthermore to avoid any payment for future medical expenses that are covered by the settlement.

In order to permit the Centers for Medicare and Medicaid Services ("CMS") to better enforce the MSP rules, Section 111 of the MMSEA added new mandatory reporting requirements for insurers. Health care providers that self-insure their professional liability risks will be subject to the same reporting requirements as commercial professional liability insurers.

A few key elements of the MMSEA reporting requirements are as follows:

Responsible Reporting Entity

The Responsible Reporting Entity ("RRE") is the entity that makes payment to the claimant or representative of the claimant, regardless of whether a third party (e.g., captive insurer) reimburses the self-insured entity. If a hospital makes payments to professional liability claimant and is then reimbursed by its self-insurance trust or captive insurer, the hospital is the RRE. 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 Third Party Administrator ("TPA") or other entity, as its agent, for actual file submissions for reporting purposes.

Registration and Testing

RREs must register online with Medicare Coordination of Benefits Contractor between May 1, 2009 and June 30, 2009. The registration process is further described here. RREs must still register and start testing as scheduled, however CMS has recently extended the permissible testing period through December 31, 2009. RREs are required to begin live production submission no later than their assigned submission window in the January - March quarter of 2010. However, if RREs complete testing before January 2010, they may begin submitting live production files in the October - December quarter of 2009.

Reporting

RREs must report on a quarterly basis, in an electronic format specified by CMS, any settlement, judgment, award or other payment made on or after July 1, 2009, with respect to a Medicare beneficiary, regardless of whether there has been an admission or determination of liability. RREs are to report once there has been a settlement, judgment, award or other payment. In the case of professional liability settlements, even if the settlement agreement provides that the payment is limited to lost income or other non-medical expenses, if medical expenses are claimed by the claimant or are released by the claimant, the payment still must be reported. CMS is not bound by an allocation of medical expenses made by the parties.

RREs must report on claims for which the RRE still has an ongoing responsibility for medicals as of July 1, 2009, and the ongoing responsibility for medicals pre-dates July 1, 2009.

 

NLR Logo

We collaborate with the world's leading lawyers to deliver news tailored for you. Sign Up to receive our free e-Newsbulletins

 

Sign Up for e-NewsBulletins