mmsea: hurry up and wait for the feds

2010 PLUS International Conference

MMSEA:Hurry Up and Wait for the Feds


The Round-Up…

Moderator:• Thomas Paschos, Esq., Partner, Thomas Paschos &

Associates, P.C.

Panelists:• Tom Blackwell, MSCC, National Vice President of Sales,

Gould & Lamb, LLC• Theresa J. Bradley, Esq., Staff Attorney, ProAssurance

Corporations• James Reed, Esq., Associate General Counsel, Loyola University

Health System• Michael C. Stinson, JD, Director of Government Relations,

Physician Insurers Association of America


Medicare as a Secondary Payer

• Insurer is responsible for paying medical expenses “Responsible” = when case has settled or gone

to verdict

• Medicare either does not pay OR

• Medicare pays conditionally Insurer, plaintiff or attorney has to reimburse

Medicare


Present Day Medicare

• Medicare is under funded

• CMS wants its money

• No consistent way for Medicare to discover claims

• MMSEA Section 111

Payers required to report claims


Penalties for Failure of Insurer to Reimburse Medicare

• Medicare has a claim, not a lien

• Medicare can sue the insurer, plaintiff &

plaintiff’s attorney

• Double damages under the SSA

• Treble damages under the FCA

(All in addition to fines for failure to report)


Medicare Secondary Payer Act (M.S.P.)

• Omnibus Reconciliation Act of 1980.

• MMA 2003, Title III, §301

Acceptance of Liability not needed

• Medicare-Secondary Payer Status-all linesof insurance

• WC primary to Medicare since 1965


Medicare Secondary Payer Act (M.S.P.) cont’d

• Liability and No-Fault insurers Responsible to protect Medicare’s interest

• MSP gives Medicare two rights:

1. Right of Recovery

2. Consideration for Future Medicals


Medicare Secondary Payer Act & Section 111

• Carriers and self-insurers can suffer penalties

• Delayed Settlements – increased adjudication

• Medicare is ready to move forward

• Reporting began 10/1/2010

• MSP compliance is their main focus

• Settlement language is critical


Medicare, Medicaid, and SCHIP Extension Act (2007)

• MMSEA is government’s method to enforceMSP rights

• Requires insurers to “vet” Medicare statusof plaintiffs

• The reporting requirement carries heavy penalties

• Data is being reviewed by third parties

• Timing is critical


Penalties for Failing to Report

• Subject to a $1000 / day fine.

• Penalty can be assessed for data integrity issues.

• Only 1 period per quarter that you can send data

• Miss that opportunity? The penalty will be at

least $90,000!


Underwriting Implications: MMSEA and MSP

• Increased uncertainty regarding loss development pattern

• Limited actuarial information regarding cost implications Increased claims handling costs Increased claims settlement values Increased no-fault payments Increased defense costs


Assessing Risks Associated with Medicare & MMSEA

• Cost implications

• Insured’s medical specialty

• Insured’s venue

• Jurisdictional limits of liability


Understanding the Medicare and Lien Process

• Major steps in the lien process: Report claim to Medicare Request a “conditional payments” letter Determine payments “related” to claimed injury Report settlement to Medicare Obtain “final demand” letter from Medicare Pay Medicare’s claim or appeal determination

(60 days to appeal)


Importance of Medicare Lien Process

• It slows the claims process: Increased time for resolving cases

Requires additional discovery related solely to Medicare data

May need to adjust indemnity and expense reserves

Cases with large medical specials may require Medical Set Asides


• Creates difficulty evaluating risks:

Files open longer (more open at a given time)

Difficult to obtain information on pending claims

Difficult to assess risks with little claims information

Importance of Medicare Lien Process


ProAssurance –Satisfying MMSEA Reporting Requirements

• Designated a Medicare compliance attorney

• Redesigned claims system to capture required data

• Drafted claims procedures to ensure compliance

• Conducted employee and defense attorney education

• Information Systems created programs to automate the reporting


Involvement with CMS

• Consulted with CMS from the start

• Explained Medical Professional Liability insurance to them

• One-on-one meetings

• Industry meetings


CMS

• Will be overwhelmed by reporting

• Guidance will continue to change

• May seek change to legislative authority


CMS

• Trying to be realistic

• Wanted to accommodate industry (somewhat)

• Had no idea how P/C insurance worked


Implementation of Reporting Requirements

• Even after a company complies; you may still not be able to relax:

Guidance may change at any time

Continue to monitor CMS

Must be focused on MSP issues now


Congress Reaction to Reporting Requirements

• Remains to be seen• Nothing this year• Legislation this year could be base for 2011 action

Medicare Secondary Payer Enhancement Act

Requires Medicare to promptly respond to demand letters

$5,000 threshold for reimbursement

Safe harbors for reporting

No SSN requirement

User fees to pay for system


Medicare Enforcement - Nationwide

• CMS will probably allow for an “adjustment period”

• Within 6 months, CMS will expect compliance

• CMS are likely to refer claims to DOJ when insurers: Should have known about a claim

Knew of a claim & intentionally failed to report


Medicare Enforcement - Regional

• “Tough” regions include Chicago & East Coast

• Southern regions (Dallas/Atlanta) known to “negotiate”

• Recent trend– coordination & cooperation among regions:

Establish consistent thresholds

Handle all similar cases similarly


Who Has Exposure?

• Anyone involved in the claims process

• In practice:

Any source of payment (insurers/self-insured entities) is highly exposed

CMS and DOJ rarely actively pursue patients/claimants and their attorneys


Insurers – How to Avoid Litigation and Ensure Compliance

• Don’t get complacent

• Monitor CMS for guidance changes

• Get active with Congress



• Develop Compliant Settlement Language

• Record all attempts to collect MMSEA data

• Initial claimant - include request for 5 fields

• Start MSP compliance process early



• Familiarize yourselves with the reporting requirements

• Designate a compliance specialist

• Develop systems within claims department to obtain and capture data

• Develop safety net to ensure compliance

• Educate staff and defense attorneys

• Educate plaintiffs’ bar


Self Insured's - How to Avoid Litigation and Ensure Compliance

• Insist that your attorneys protect your interests when payment is made: Issue a multi-party check (Medicare as a payee) Demand indemnity language in the release

• Take advantage of CMS resources: Computer-based, on-line training Town hall conference calls CMS, MMSEA Section 111 web site


Self Insured's - How to Avoid Litigation and Ensure Compliance

• Make sure your defense attorneys are MMSEA/MSP educated

• Include Medicare compliance language in all settlement documents

• Collect query Data early in Claim’s Life Expectancy

• Keep records of all attempts to collect data.


Avoiding Litigation andEnsuring Compliance

• TPAs and attorneys: Inform clients of handling protocols for

Medicare claims

Develop Compliant Settlement Language Record all attempts to collect MMSEA data Initial claimant contact should include request

for 5 fields Start the MSP compliance process early


Preventing Actions and Ensuring Compliance

• Notify Medicare of claim prior to reporting

• Take steps to ensure Medicare reimbursement/ set-aside



• Report Timely

• Keep Records

• Verify data

• Strictly follow your handling protocols,once established



• Establish strong professional relationship with contractor

• Your reputation at claims professional level is very valuable

• Establish a process to identify every potential claimant

• Catch all claimants who become Medicare eligible during pendency of case


Predictions – Effect on Industry/TPA/Attorneys/Claims

• Crippling effect on settlement negotiation process

• Increased frustration

• Initial confusion and mistakes (on both sides)

• Eventually will become part of business process


Predictions – Effect on Industry/TPA/Attorneys/Claims

• More Clients from liability and auto

• More E&O issues

• Claim Frequency will diminish

• Severity will increase

• Case management will become a priority forall lines

• No long term effect on number of settlements


Predictions - Costs

• Increased settlement values

• Increased defense costs

• Increased business costs


Predictions – Future Enforcement by the Government

• Concern is “bundling” of claims with insurers on the hook for all reimbursements

• No dramatic change

• Congress still wants Medicare to be solvent

• “Fixes” may be possible - bipartisan

• 2012 election will dominate agenda – spending will be the key issue


Questions&

Answers


Many Thanks To…

• Thomas Paschos, Esq., Thomas Paschos & Associates, P.C.,

PH: 215-636-5555/856-354-1900; E-Mail: [email protected]• Tom Blackwell, MSCC, Vice Pres. of Sales, Gould & Lamb, LLC.

PH: (941) 798-2098; E-Mail: [email protected]• Theresa J. Bradley, Staff Attorney, ProAssurance Companies

PH: 205.877.4466; E-Mail: [email protected]• James L. Reed, Jr., Associate General Counsel

Loyola University Health SystemPH: (708) 216-3708; E-Mail: [email protected]

• Mike C. Stinson, JM, Director of Government RelationsPhysician Insurers Association of AmericaPH: 301.947.9000; E-Mail: [email protected]

mmsea: hurry up and wait for the feds

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nofault insurers responsible

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schip extension act

omnibus reconciliation

failure of insurer

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