Illinois Hospital Association

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May 14, 2009

Mandatory Reporting of Workers’ Compensation and Liability Payments to Medicare Beneficiaries

Please monitor IHA’s web site and the CMS web site for updates on the implementation of the requirements described in this Memorandum.

Summary

Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA Section 111) adds mandatory reporting requirements for liability and workers’ compensation insurers and self-insured entities. Businesses are self-insured to the extent they (i) do not purchase liability insurance or (ii) have deductibles or self-insured retentions. Such entities are required to report specified information about settlements, judgments, awards or other payments made to or on behalf of injured Medicare beneficiaries. "Other payments" are not explicitly defined by the Act or the User Guide issued by CMS; however, CMS has said that adjusting a hospital bill is a reportable payment.

Insurers and self-insured entities which make such payments are referred to as Responsible Reporting Entities (RREs). RREs must register between May 1, 2009 and September 30, 2009 and test the RRE’s electronic data exchange between January 1, 2010 and March 31, 2010. RREs are required to begin live production submission no later than their assigned submission window in the April – June quarter of 2010. However, if RREs complete testing before April 2010, they may begin submitting live production files in the January - March quarter of 2010.

All registration, testing and data submission is done electronically. The penalty for non-compliance with the reporting obligation is $1,000 per day, per claim, in addition to any other penalties available at law. Similar requirements became effective January 1, 2009 for group health plans which provide benefits to Medicare beneficiaries.

It should be noted that Section 111 reporting is an additional, more comprehensive method for CMS to determine if Medicare is a secondary payer. It does not replace or eliminate any existing obligations under the Medicare Secondary Payer provisions.

Entities Required to Register
The first inquiry is whether your hospital is an RRE and therefore required to register. In general, liability and workers’ compensation insurers, self-insured pools, and self-insured entities which make payments, or write-off charges, for injured Medicare beneficiaries are RREs and must register. Third party administrators (TPAs) are not RREs and therefore do not register. When registering, an RRE may designate a TPA or another entity as its agent for reporting purposes, but the RRE remains responsible for compliance with the reporting requirement. In most cases, the entity which makes the payment to the claimant appears to be the RRE, but this may not be true for insurance fronting arrangements. Where a deductible is paid by the insurer or pool and is reimbursed by the covered employer, the insurer or pool becomes the RRE. However, if your hospital pays the claimant, or writes-off a bill, it is the RRE.

Registration
RREs which reasonably expect to make a covered payment to a Medicare beneficiary on or after January 1, 2010 or have, as of July 1, 2009, an ongoing responsibility for medicals on behalf of a Medicare beneficiary, must register electronically with the CMS Coordination of Benefits Contractor (COBC) between May 1, 2009 and September 30, 2009. RREs with no reasonable expectation of having a claim to report need not register until there is an expectation of having a claim to report, but must then register in time to allow a full quarter for testing. Registration is accomplished electronically and requires planning to identify specified personnel and to determine whether more than one RRE ID may be desirable. Once registered, quarterly reporting is required, even if there is no new data to report.

After Registration
Once registration, account set-up and testing of the data submission process are complete, a RRE will be assigned a quarterly file submission window for submitting electronic data files. Testing and data submission is electronic, will likely require substantial computer programming by the hospital or use of an agent, and requires the inclusion of specified data, some of which is not currently collected by many RREs. RREs also have an affirmative duty to determine if a claimant is Medicare eligible and to only submit claims for such individuals. CMS will allow each RRE to query its database monthly to identify those claimants who are Medicare eligible prior to submitting a Section 111 report. The query function will be available July 1, 2009 for registered RREs which are in testing status.

Interim Reporting Thresholds
CMS has established de minimus dollar thresholds which must be met before reporting pursuant to Section 111; however, these thresholds are not exceptions to any other obligation or responsibility your hospital may have with respect to the Medicare Secondary Payer provisions, are interim while CMS is implementing the Section 111 reporting process and CMS reserves the right to change the thresholds. The thresholds, which are not per payment or write-off, but cumulative per claimant, are currently as follows:

  1. For no-fault insurance, there is no de minimus dollar threshold.
  2. For liability insurance (including self-insurance), there is no de minimus dollar threshold for reporting the assumption/establishment of ongoing responsibility for medicals.
  3. For workers’ compensation there is no de minimus dollar threshold for reporting the assumption/establishment of ongoing responsibility for medicals but claims with a total payment not exceeding $600 which meet other specified criteria are excluded from the reporting requirement.
  4. For liability insurance (including self-insurance) and workers’ compensation total payment obligation to a claimant (TPOC), the following dollar threshold amounts are exempt from reporting:
    1. For TPOC dates of January 1, 2010 through December 31, 2010, TPOC amounts of $0.00 - $5,000.00.
    2. For TPOC dates of January 1, 2011, through December 31, 2011, TPOC amounts of $0.00 - $2,000.00
    3. For TPOC dates of January 1, 2012 through December 31, 2012, TPOC amounts of $0.00 - $600.00.

Additional Information
We continue to work with AHA in seeking clarification of several matters including issues related to hospital write-offs, payment of deductibles and the dates applicable to reporting ongoing responsibility for medicals.

Additional information, including a copy of the User Guide (Appendix F provides the statutory language), alerts, notices of Town Hall conference calls regarding the reporting requirement, and transcripts of prior calls may be found on the CMS Section 111 web page.

Staff Contact: Jody Wittenberg 630-276-5627