August 20, 2009

CMS' NEW RESPONSIBLE REPORTING ENTITY REQUIREMENTS

Background

New provisions under section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 ("MMSEA"), signed into law December 29, 2007, adds new mandatory reporting requirements with respect to Medicare beneficiaries who have coverage under group health plan ("GHP") arrangements and for Medicare beneficiaries who receive settlements, judgments, awards or other payments from liability insurance entities (including self-insurance), no-fault insurance, and worker's compensation (collectively referred to as non-group health plans).[1]  These changes will affect self-insured hospitals and hospitals that enter into settlement agreements with Medicare beneficiaries.  Congress expanded the Medicare Secondary Payer ("MSP") provisions to ensure Medicare's interests are protected when a Medicare beneficiary[2] receives a personal injury settlement, judgment or other related award.  Although in existence since 1980, the MSP rules have not been strictly adhered to by insurance carriers or self-insured entities.  Under the new provisions, an entity deemed a Responsible Reporting Entity ("RRE") must report any settlement reached with a Medicare beneficiary in addition to other reporting requirements discussed below.  This alert provides a basic overview of the new reporting requirements.

Under the new requirements, a RRE can be the following: an insurer (or funder) with respect to liability, worker's compensation, no-fault insurance as well as an entity that is self-insured.  General examples of a RRE can be described as follows:

• An entity who funds or pays in whole, or in part, a personal injury settlement, judgment or other award or payment to a Medicare beneficiary;
• A paying entity that simply reimburses another entity that has paid a settlement, judgment or other award on the paying entity's behalf is not considered a RRE.  However, if this payment was to a third-party administrator or results from a settlement agreement, then the entity may be considered a RRE;
• If an entity has a deductible plan and pays directly to a claimant, then the entity will likely be recognized as a RRE.

There are on-going discussions between various industry organizations and CMS about who in fact will be deemed a RRE.  Public comment ended August 16, 2009, with respect to a key provision in the User Guide clarifying the RRE definition to which CMS is expected to issue new guidance in the coming weeks.

What are the New Reporting Requirements?

Under the new guidelines, CMS has set up an on-line registration process whereby any entity or organization that is deemed a RRE must set up a user file and register to obtain a RRE identification number.  The new reporting requirements will require RREs do the following for each claim involving a Medicare beneficiary: 

• Must send an inquiry to CMS when a determination must be made as to whether a claimant or party to a claim is a Medicare beneficiary;
• Notify the CMS Coordination of Benefits Contractor[3] ("COBC") of a potential liability claim if there is an expectation of making a payment - if there is no anticipation of payment, no report to the COBC is required.  The proper ICD-9 code (up to five) should be reported to the COBC detailing the nature of the beneficiary's injuries;
• Send a quarterly report to CMS noting any settlement, judgment, or other award paid to a Medicare beneficiary - also referred to as a Total Payment Obligation to Claimant ("TPOC").

In a law alert released on May 11, 2009, CMS announced a new timeline changing key dates with respect to the new RRE implementation process.  An entity considered a RRE should be aware of the following timeline:

• All RREs or entities that have pending actions with Medicare beneficiaries and/or believe they will be a RRE in the future must register with CMS to obtain a RRE identification number - the registration period for liability insurance (including self-insurance), no-fault insurance, worker's compensation entities has been extended to September 30, 2009;
• "Test" files for those RREs already registered began trial submissions to CMS on July 1, 2009;
• Actual claims input file testing is set to begin January 1, 2010;
• Beginning in the quarter April 1, 2010 to June 30, 2010, each RRE will be assigned a time to begin filing their first required "live" claims.

How Will This Work When Handling Medicare Beneficiary Personal Injury Claims?

While CMS is still refining the details, the real effect of the new provisions is that no longer can a defendant simply seek indemnification from a plaintiff for potential Medicare liens.  Now, all parties to a settlement or claim must ensure that if a Medicare beneficiary is involved, CMS is properly queried to verify the claimant's Medicare status.  If the claimant is determined to be a Medicare beneficiary, the RRE is then required to utilize the on-line reporting system and submit quarterly reports outlining any settlement, judgment or award made to a Medicare beneficiary.  Potential RREs should be keenly aware of the new reporting requirements as a failure to report a settlement award or payment can result in civil penalties of $1,000 per day, per claim.  The penalties can occur even if the RRE is unaware the claimant is a Medicare beneficiary.

Several issues are still under consideration by CMS - in particular several questions remain about hospitals that are self-insured and who will qualify as a RRE.  For example, one issue under consideration by CMS is whether a hospital who writes off care provided to a Medicare beneficiary (i.e. an individual slips and falls in a hospital), must report the value of care provided as a final settlement.  Hall Render will continue to monitor the RRE reporting requirements and will report new updates as information becomes available from CMS.

If you have questions as to whether your organization may be a identified as a RRE and must register for future reporting, please feel free to contact, Chris Riegler criegler@hallrender.com, 317.977.1420 or Mark Douglas at mdouglas@hallrender.com, 317.977.1485.

For more information on the RRE reporting requirements, visit CMS' website:

CMS Responsible Reporting Entity Overview