Top 10 Medicare Secondary Payer Myths Debunked: Part 1
Written by: Heather Schwartz Sanderson, Esq.
Throughout my 15 years of offering exclusive legal counsel in the Medicare Secondary Payer (MSP) realm, assisting workers' compensation, general liability, and no-fault insurance claims payers and attorneys with compliance, I've encountered numerous misconceptions surrounding the MSP Act and the necessary steps for compliance. Sharing the Top 10 MSP Myths related to all aspects of MSP compliance, based on my experiences, is my goal.
The MSP Act comprises three main pillars of compliance: reporting of Medicare beneficiary claims and settlements; repayment of traditional Medicare (Parts A & B) / Medicare Advantage (Part C) / Medicare Prescription Drug (Part D) conditional payments; and, potentially, the need for a Medicare Set-Aside (MSA). Unfortunately, misconceptions exist within each of these three pillars.
I'll address these myths, debunk them, and provide best practices concerning these concepts. This blog constitutes the first installment of a three-part series. The remaining two parts of this blog series will be published in the coming weeks.
Myth #1: Medicare/The Centers for Medicare & Medicaid Services (CMS) are bound by your settlement agreement. If the settlement agreement designates the Medicare beneficiary and/or their attorney to reimburse Medicare, the insurer/primary plan is protected, even if the beneficiary or their attorney fails to reimburse Medicare.
Debunking the myth: CMS is not legally bound by your settlement agreement. Medicare's maximum recovery aligns with the total settlement amount as per 42 CFR § 411.37. However, Medicare's rights under the MSP Act are absolute. Consequently, if the Medicare beneficiary doesn't reimburse Medicare, CMS may pursue any party receiving settlement proceeds in accordance with 42 CFR § 411.24(g). Settlement agreements approved by a Judge or Workers' Compensation Commission are not considered binding on CMS, according to CMS guidance, as CMS requires an evidentiary order issued "after a hearing on the merits of the case."
Best Practices: Settlement language should explicitly outline the parties' steps toward MSP compliance. It's advisable to use Custom/Non-Template Settlement Language for Medicare settlements (custom language might consider thresholds). The settlement language should clarify whether an MSA was established, its administration, and whether it's funded through a lump sum or annuity. If parties intend to specify the injuries released due to the settlement, they should agree on appropriate ICD-10 / ICD-9 codes for reporting to CMS via Section 111 reporting requirements. Lastly, the settlement agreement should address reimbursement of Medicare/Medicare Advantage/Prescription Drug conditional payments and assign responsibility for potential post-settlement conditional payment demands.
Myth #2: Section 111 Reporting doesn't intersect with/impact Medicare/Medicare Advantage/Part D plan conditional payment recoveries.
Debunking the myth: The Notice of Proposed Rulemaking (NPRM) on Section 111 Civil Monetary Penalties (CMPs), available at federalregister.gov, indicates that contradictions in Section 111 reporting data versus contested aspects in the conditional payment process could trigger civil monetary penalties against the Responsible Reporting Entity (RRE, also known as the primary plan). An example is if the RRE fails to terminate Ongoing Responsibility for Medical (ORM) in Section 111 reporting but later disputes its primary plan status in the conditional payment dispute process. Despite winning the conditional payment dispute, the RRE might face CMPs of up to $1000 per day/per claim.
Additionally, the pending NPRM, scheduled for the Final Rule release in February 2024 (see federalregister.gov), underscores CMS' stance that primary plans/RREs should provide accurate, timely, and consistent settlement information to CMS through Section 111 Reporting. Both of CMS' conditional payment recovery contractors, BCRC and CRC, use Section 111 data to identify conditional payment recovery opportunities. Medicare Advantage & Prescription Drug plans also leverage Section 111 information for this purpose.
Best Practices: Settlement language should precisely indicate accepted ICD-10 / ICD-9 codes consistent across accepted conditional payments, MSA/future medical allocation, and Section 111 reporting. Accepted/related codes should be updated throughout the claim's duration. RREs should manage Medicare reporting; Medicare beneficiary attorneys' self-reporting could result in additional recovery files at BCRC/CRC. Additionally, RREs should ensure prompt reporting of settlements/TPOCs (Total Payment Obligations to Claimant) and termination of Ongoing Responsibility for Medical (ORM).
Myth #3: Timely termination of Ongoing Responsibility for Medical (ORM) lacks importance and won't save time, money, or major headaches.
Debunking the myth: Ongoing Responsibility for Medical (ORM) is a pivotal indicator in Section 111 Reporting of a primary payer's obligation to cover injury-related medical care on a specific claim. Medicare expects not only timely ORM acceptance reporting but also timely termination reporting for ORM. The CRC uses ORM information to drive conditional payment recoveries in workers' compensation and no-fault claims.
Best Practices: Accurate and timely termination of Ongoing Responsibility for Medical (ORM) is essential to avoid conditional payments. The termination date signifies when the primary plan ceases responsibility for a Medicare beneficiary's ongoing medical care related to the injury. While reporting errors can occur and be used as a defense, rectifying them post-reporting is more challenging than promptly terminating ORM.
Stay tuned for the next two (2) parts of this blog series to discover the remaining seven of the top 10 MSP Myths Debunked! For queries, feel free to contact me at Heather@sandersoncomp.com.
