Why the Ever-Evolving Medicare Secondary Payer Landscape Requires a Diligent MSP Services Partner
Written by: Heather Sanderson, Esq., MSPA, MSACP
In the context of workers’ compensation, general liability, and no-fault claims, which may be subject to Medicare Secondary Payer (MSP) requirements due to the injured party being a Medicare beneficiary or having a reasonable expectation of Medicare enrollment within 30 months of the settlement, having a diligent MSP services provider is more important than ever. Crucial MSP services include Section 111 Mandatory Insurer Reporting, conditional payment recovery resolution, and Medicare Set-Asides, particularly in workers’ compensation claims.
It is imperative insurance payers and self-insured employers understand the gravity of the consequences should their MSP vendor or third-party administrator (TPA) improperly perform these services. Further, in the context of a TPA that bundles in the MSP compliance work, there can be stark differences between a TPA that does not specialize in the ever-evolving MSP landscape versus a Medicare compliance partner actively managing MSP services in the best interests of the payer as well as the injured party, and subject to active market competition that pushes them to provide best-in-class products and services.
If you are not outsourcing your MSP services, or your MSP services provider/TPA is not providing you with regular report cards/statistics on cost savings and results in compliance, it’s important to understand that you may not only be leaving money on the table that a specialized MSP provider could have identified and saved for you, but also you may be potentially subjecting your organization to significant exposures for non-compliance under the MSP Act.
Let’s discuss this in greater detail and explore why insurance payers and self-insured employers should consider the importance of working with a specialized MSP services provider or in the context of a TPA that bundles its Medicare services, unbundling MSP services from the TPA relationship, or how to best vet the MSP service offerings of a bundled service.
Please note that this is Part 1 of a 2-part series. Part 2 will follow next week.
Medicare Section 111 Reporting
Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) added mandatory reporting requirements with respect to Medicare beneficiaries who have coverage under group health plan (GHP) arrangements as well as for Medicare beneficiaries who receive settlements, judgments, awards or other payment from liability insurance (including self-insurance), no-fault insurance, or workers’ compensation, collectively referred to as non-group health plan or NGHP insurance.
With Section 111 reporting comes the threat of Civil Money Penalties (CMPs). The Final Rule implementing CMPs of up to $1,000 per day/per claim (annually adjusted) for untimely reporting went into effect on October 11, 2024, and we will see the first CMP notices issue in early 2026. The Centers for Medicare & Medicaid Services (CMS) will randomly audit 250 records per quarter for Section 111 compliance per year.
Legitimate concerns arise when utilizing a TPA for Section 111 reporting services because this is not their main area of expertise, and many do not ensure proper oversight of data to ensure accurate and timely submission to CMS. Further, many insurance payers and self-insured employers may not realize that if your data is not timely submitted by the TPA, you are subject to the CMPs, not your TPA.
While your TPA may have Errors and Omissions coverage, are there caps/liability limitations in play, and, if so, do you know what they are? A single instance of non-compliance in the Section 111 reporting realm could cost an insurance payer or self-insured employer $365,000 (annually adjusted). Sanderson Firm’s best-in-class reporting solution, SandersonComply, pre-validates data to reduce reporting errors, and thus decreases the likelihood of a hefty CMP against your organization. At Sanderson Firm, we constantly audit our clients’ Section 111 reporting data to ensure accurate and timely reporting.
Medicare Conditional Payments
Today’s MSP landscape not only commands resolution of traditional Medicare conditional payments, but also Medicare Advantage Plan (MAP) and Part D Prescription Drug Plan (PDP) conditional payments. Failure to identify and resolve conditional payments both with traditional Medicare and MAPs/PDPs can lead to U.S. Department of the Treasury offsets or double damages for insurance payers and self-insured employers.
In our experience, many TPAs are not timely addressing these recovery cases, are not obtaining the full available reductions, and many of them ignore the 800-pound gorilla in the room: Medicare Advantage Plans. Often, and despite being the reporting agent for the carrier/self-insured, we learn the TPA hasn’t even looked at the PAID Act data, let alone investigated the MAP/PDP enrollment of injured parties for their insurance payer and self-insured clients. This creates ginormous exposure for insurance payers and self-insureds, especially since almost 55% of Medicare beneficiaries are enrolled in a private Medicare plan rather than traditional Medicare. MAPs sue for double damages routinely.
Stay tuned for Part 2 next week and hear more about the importance of cost containment in MSAs and how to best protect against MSP exposures with a specialized MSP services provider.
