New law on Medicare reporting is manageable: Attorney

DALLAS—A new federal statute that requires self-insured employers and insurers to guarantee Medicare is not the primary insurer for third-party liability claimants and injured workers will be challenging for defendants but is manageable, according to an attorney.

“It's not as dangerous and scary as some people would have you believe,” workers compensation attorney Timothy C. Gaarder told risk managers during a session at the Public Risk Management Assn.'s 30th Annual Conference, held in Dallas on May 31-June 3.

The law—the Medicare, Medicaid and SCHIP Extension Act of 2007—requires all self-insurers and insurers with general liability, workers compensation and no-fault exposures to determine whether claimants against them are eligible for any of the three federal and state-administered health insurance programs. Medicare provides health care insurance to the elderly, those on Social Security disability for at least two years, and people with permanent kidney failure; Medicaid covers the poor; and SCHIP—the State Children's Health Insurance Program—covers uninsured children in low-income families who are ineligible for Medicaid.

If a claimant is eligible for one of the programs, then a self-insurer or insurer that is paying general liability, workers comp or no-fault insurance damages to the claimant must notify the program to ensure that it does not serve as the primary insurer in that case.

The new MMSEA classifies self-insurers and insurers as “required reporting entities” and establishes the conditions under which self-insurers, insured defendants and insurance companies become RREs.

Existing law already establishes that Medicare and Medicaid are secondary payers when claimants are eligible for group health benefits, so the PRIMA session did not cover that situation. The session also focused on RREs' responsibilities for Medicare recipients.

Determining a claimant's Medicare eligibility can be challenging, according to experts, and failing to properly notify the program carries a $1,000 a day penalty under the new law.

The federal government, however, has delayed enactment of the MMSEA to Jan. 1, 2010; the new law had been set to become effective next month.

“So they've given us a big break timewise to get our protocols and systems up to speed,” said Mr. Gaarder, an associate attorney at McAnany, Van Cleave & Phillips P.A. in Kansas City, Kan.

One headache for RREs will be determining who is a Medicare beneficiary, because a claimant's Social Security number is needed to verify Medicare eligibility. Claimants are not obligated to inform RREs that they receive Medicare benefits or provide their Social Security numbers, Mr. Gaarder noted.

Companies that register as RREs with the Centers for Medicare & Medicaid Services, the federal agency that administers those two programs as well as SCHIP, will have access to a Web-based tool the federal agency plans to offer later this year to help RREs determine whether a claimant is a Medicare beneficiary, Mr. Gaarder said. But the RRE must have the claimant's Social Security number, he noted.

If Medicare already has made a payment to a claimant for which the RRE is liable, then the program must be reimbursed. The MMSEA establishes a 60-day deadline, after which RREs are subject to a penalty equal to double the payment they owe. But Mr. Gaarder said RREs must begin, not complete, their reimbursement process during that period.

A complicating factor for RREs, however, is the treatment statements they will receive from the CMS, Mr. Gaarder said. In that statement, which accompanies the conditional payment lien the CMS places against an RRE to establish its obligation as the primary insurer for a workers comp claimant, the federal agency lists all of the payments Medicare has made to the claimant without identifying which payments are the RRE's responsibility.

“That's a problem,” he said.

Another problem with the conditional payment lien is that it raises “huge liability issues” for the RRE that already has settled the claim for a smaller amount, Mr. Gaarder said.

The MMSEA considers a settlement of a claim as an admission of liability, which means the RRE would be responsible for reimbursing the CMS for amounts that exceed the settlement, Mr. Gaarder said. Unclear is whether the settlement and CMS letter would be subject to state laws that shield defendants from liability for unauthorized medical treatments, he said.

Mr. Gaarder advised risk managers to establish systems that would identify Medicare beneficiaries immediately and allow RREs to work out their obligation to CMS before settling with claimants.

The tradeoff, however, is that process could delay settlements with claimants, which could drive up settlement costs.

The RRE instead could settle with the claimant first but include a settlement provision that requires the claimant to assume responsibility for future conditional payment liens and waive any right he or she might have to sue the RRE in the future over the issue.

If the Medicare beneficiary recovered damages through a general liability claim, however, CMS will pursue its recovery through the plaintiff's attorney, Mr. Gaarder noted.

Mike Greco, president of Corporate Claims Management Inc. of Chesterfield, Mo., also clarified the conditions under which self-insurers, insurers and even insured defendants are considered RREs. That is important, he said, because the MMSEA requires quarterly reports from RREs on their payments to Medicare beneficiaries.

Self-insurers that pay claims are RREs, as are insured defendants that directly pay claims that fall within their deductibles. An insurer that pays a claimant also is an RRE, even when the insurer will be reimbursed by its policyholders for payments that fall within the policyholder's deductibles, Mr. Greco said.

Tell us what you think. Log in below to weigh in on this story.