GAO Issues Report Suggesting Improvements to the MSP Program

CMS has been under scrutiny since June 22, 2011 when they were questioned regarding the MSP program during a congressional oversight hearing. Deborah Taylor, the Chief Financial Officer of CMS, faced very difficult questioning during the hearing regarding financial controls that CMS had in place to ensure the MSP regime was operating efficiently.

On April 3, 2012, the release of a report by the GAO entitled “Medicare Secondary Payer- Additional Steps Are Needed to Improve Program Effectiveness for Non-Group Health Plans” was disseminated, seemingly in response to a request from Representative Stark (D-CA-9) on August 10, 2010.  Both CMS officials and a group of NGHP stakeholders were consulted during the review period which mainly included a review of processes and statistics over the last four years. For a copy of the GAO Report, please click here.

The GAO Report focused on multiple areas of interest to the industry and provided a quantitative overview of the increase in MSP contractor workloads, CMS payments to contractors, and Medicare savings from 2008 through 2011. The Report noted that the increase in workload is directly related to the delays CMS and its contractors have been experiencing.  CMS has stated that the increase in workloads is expected to continue and could be due to mandatory reporting and the industry’s submissions of ineligible WCMSA submissions.

One of the more significant points the GAO made was that the MSP process should always be cost effective.  If administrative costs exceed the recovery amount, the intent to protect Medicare’s interest becomes questionable. While CMS has taken steps to address some of these concerns, there are other issues that have not been adequately addressed, such as how to appropriately consider Medicare’s interest in liability settlements, the lack of a formal appeals process for WCMSAs and the significant turnaround times for WCMSA reviews.

The report concluded with the GAO making the following recommendations to HHS to improve the effectiveness of the MSP process:

  • CMS should review the recovery thresholds periodically to ensure recovery efforts are being conducted in the most cost-effective manner possible
  • CMS should not require NGHPs to report MSP cases which the Agency would not pursue for recovery
  • CMS should consider making the submission of ICD-9 codes an optional component of reporting for liability NGHPs
  • CMS should take the following actions to improve communication:
    • Develop a centralized MSP program website
    • Develop guidance regarding liability and no-fault set-aside arrangement
    • Review and revise the correspondence sent to beneficiaries to ensure rights and responsibilities are more clearly communicated

The GAO’s MSP report concludes with comments made by the HHS in response to the GAO’s recommendations. HHS generally concurred with the majority of the GAO’s recommendations, and stated that several items were already being worked on. Of interest, in response to developing guidance regarding liability and no-fault set-aside arrangements, CMS responded that it was currently working on this and plans to use notice and comment rulemaking to seek industry input.   The liability industry has been waiting for guidance from CMS in this area, and will certainly welcome the opportunity to comment on how this should process should be implemented, if at all. However, it begs the question of why the workers’ compensation industry did not have an opportunity for notice and comment rulemaking with regard to WCMSAs. Perhaps that is forthcoming as well?

While the GAO study did not bring any major ground-breaking issues to light, it certainly brings the need for improvements to the MSP process to the forefront of the government’s attention.   This GAO Report, along with other legislative activity such as the SMART Act, should promote more streamlined processes so that the MSP program operates efficiently and properly takes into account the interests of both the insurance industry as well as the Medicare Trust Fund.

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