Medicare Set-Asides Update

Friday, August 15, 2008 | 0

By Gould and Lamb

In December 2007 the Medicare, Medicaid and State Children's Health Insurance Program (SCHIP) Extension Act became law. The portion of this law important to carriers, self-insured entities and third-party administrators who have workers' compensation, liability or no-fault auto claims (commonly referred to as non-group health plans) is Section 111.

Section 111 gave a broad outline of new mandatory reporting requirements on all claims involving a person who is Medicare eligible. It is important to note that Section 111 mandates a penalty of $1,000 per day per claim on any case that is not reported to Medicare as outlined in the law.

On Aug. 1, Medicare published a memo that defined many of the details for the reporting required in Section 111. The entire memo can be read at: https://www.cms.hhs.gov/MandatoryInsRep/Downloads/SupportingStatement.pdf.

While implementation of the new law does not take place until July 1, 2009 (for non-group health plans) it is important that carriers, self-insured entities and TPAs affected by this law be prepared well in advance. While there are still important compliance elements absent in the new CMS memo, there are some extraordinary details revealed.

In part these are: by July 1, 2009, 100% of all claims for non-group health plans (non-GHP) must be checked to determine the Medicare eligibility of the claimant/plaintiff. In cases where a claimant/plaintiff is discovered to be currently Medicare eligible up to 45 distinct data fields must be collected and reported to Medicare in a timeframe defined by CMS. Additionally, data on these identified claims must continue to be reported to CMS at a frequency of not less than every quarter. Reports on contested claims which have been resolved by a settlement, judgment or award (S/J/A) need be reported only once.

It is obvious that Medicare will use this information to promptly recover conditional payments made in workers' compensation, liability and no-fault auto cases and to flag Medicare eligible claimants/plaintiffs with claims to prevent conditional payments from being made in the future. It will become absolutely necessary for all non-GHP settlements to properly identify Medicare eligible claimant/plaintiffs, discover and resolve conditional payments, allocate some portion of the settlement for Medicare covered expenses, and to accurately report as required. The Congressional Budget Office predicts that Medicare will recover $1.1 billion in fines from this program in the first five years.

Gould and Lamb is a Bradenton, Fla. medical and financial services company that specializes in Medicare set-asides.