Tag Archives: Section 111

Casualty Actuarial Study Finds Medicare Mandatory Reporting Requirements May Cause Modest Loss Increases in Workers Compensation and Liability Claims

ss-card-in-walletArticle by Rafael Gonzalez, Esq.
Vice President, Strategic Solutions

Over the last couple of weeks, a study prepared for The Casualty Actuarial Society, which was the source of a presentation at the CAS Centennial Celebration and Annual Meeting, in New York, NY, delivered on November 12, 2014, has been getting a lot of attention. The study, titled “Medicare Secondary Payer Status – The Impact of Section 111 Reporting Requirements“, is written by Guy A. Avagliano, FCAS, MAAA, Philip S. Borba, Ph.D., Christine M. Fleming, J.D., ACAS, MAAA, and Craig P. Taylor, ACAS, MAAA of Milliman, Inc.  What follows is a verbatim summary of the information, research, findings, and conclusions of the authors as published on July 6, 2015.

Purpose of Study

The study examines Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Section 111 or MMSEA), which introduced formalized reporting requirements of medical services received by Medicare beneficiaries in various lines of insurance coverage, including liability, self-insured, no-fault, and workers compensation. The study was “undertaken to investigate the potential impacts of the Section 111 reporting requirements on property-casualty losses, and in particular to assist practicing casualty actuaries with the potential impacts of the reporting requirements.”

Mandatory Reporting

Section 111 requires mandatory reporting for ORM and TPOC. The study indicates “ongoing responsibility for medicals (ORM) refers to the ongoing responsibility for payment of the injured party’s medical treatment, including medical-only claims with more than $750 in payments and all indemnity claims.” The study also indicates “total payment obligation to the claimant (TPOC) refers to the settlement, judgment, award, or other payment in addition to the ORM. A TPOC is generally a one-time or lump sum settlement, judgment, or award. Structured settlements are considered TPOCs.”

The study points out “there is no threshold for TPOC claims for no-fault insurance, as all TPOC payments made under a no-fault coverage must be reported to CMS.” The study also points out “thresholds for reporting TPOC payments for workers compensation became effective for payments made on or after October 1, 2010, and thresholds for liability became effective for payments made on or after October 1, 2011.” The study indicates that “as of January 1, 2014, an insurer or self-insured is required to report TPOC payments made on or after October 1, 2013, that were over $2,000. As of January 1, 2015, the threshold for workers’ compensation and liability claims is $300 for payments made on or after October 1, 2014.”

The study indicates that “under Section 111, insurers and self-insureds are required to report to CMS certain information on incidents where a Medicare beneficiary has received medical treatment or where a one-time payment (such as a lump sum, settlement, or judgment) includes provisions for medical treatments. This information includes identifiers for the claimant and the insurer (or self-insured) and diagnostic information for the medical treatments (such as the International Classification of Diseases 9th (or 10th) Revision (ICD-9 or ICD-10) diagnosis codes).” Therefore, when a Medicare beneficiary receives medical treatment in the future for which payment is sought under Medicare, “CMS will use this information to determine whether the medical treatment was related to a previous injury that was covered by an insurer or self-insured. If CMS determines the medical service was related to the prior injury, CMS will seek reimbursement for payment for the medical service from the insurer or self-insured.”

General Findings

Because there is little information with which to estimate the financial impact of the new reporting requirements, for this study, the authors show “through case illustrations how losses may increase for insurers and self-insureds.” Using very generalized assumptions, the authors present “possible aggregate estimates for a hypothetical insurer for workers’ compensation and private passenger automobile coverages.” The study therefore provides “the practicing actuary with an approach for evaluating the impact of Section 111 claims where Medicare has been making payments and has not been reimbursed by the property-casualty insurer or self-insured.”

The authors found that the “Section 111 reporting requirements may cause modest increases in losses for injured workers and individuals 65 and over for cases where Medicare has been making payments without being reimbursed by the property-casualty insurer or self-insured.” The study illustrates the potential impact on losses in 10 cases (workers’ compensation, private passenger automobile, and homeowners cases).

Specific Findings

For the hypothetical insurer with the conditions or types of workplace injuries described in the report, the authors estimate “the impact to be an increase in total losses (medical and indemnity) between 0.9% and 5.7% for workers 65 and over.” Using a set of generalized assumptions, the authors estimate “the aggregate impact on medical losses for injured workers 65 and over to be between 11% and 25%, which when spread across all workers the estimated increase is from 0.5% to 1.3% depending on the condition or type of injury.” For private passenger automobile injuries (and again, using a set of generalized assumptions), the authors’ estimated impact is “a 0.4% to 0.8% increase in total losses for individuals 65 and over, and an estimated increase of 0.07% to 0.13% in total losses for all ages.” Although the authors included a homeowners claim in their case illustrations, they “did not estimate an aggregate impact due to the lack of information on medical payments for homeowners claims.”

Medicare Set-Aside Arrangements

The study distinguishes between the Section 111 reporting requirements and a Medicare Set-Aside Arrangement (MSA).  While Section 111 requires insurers and self-insureds to report to CMS personal identifier and diagnostic information for Medicare beneficiaries receiving medical treatments for an incident subject to a property-casualty insurance coverage (including incidents covered by self-insurance), “a Medicare Set-Aside Arrangement is a voluntary financial agreement that allocates a portion of a settlement to pay for future medical services related to a claim. Section 111 reporting is required by statute; Medicare Set-Aside Arrangements are voluntary.” The authors also point out that, as a practical matter “Section 111 concerns all claims with medical payments over $750, including claims with ongoing medical treatment. By contrast, MSAs only concern large settlements. CMS will only review MSA submissions where the claimant is a Medicare beneficiary and the total settlement is greater than $25,000 or the claimant has a reasonable expectation of enrolling for Medicare within the next 30 months and the total settlement is greater than $250,000.”

10 Cases that Illustrate Situations

To highlight the effect of Section 111, the authors developed 10 cases to illustrate situations that may arise under the Section 111 reporting requirements. Six cases concern work-related injuries covered by workers’ compensation, three cases were injuries subject to automobile coverage, and one case was for a homeowners coverage incident. The cases were developed to show a variety of situations across different liability coverages. “For the conditions associated with the case illustrations, the estimated financial impact to the insurer or self-insured was the difference between the current case reserve estimates and the potential losses.”

Study Findings and Estimates

Aggregating across the three claim groups, the study estimates “medical losses for workers 65 and over could increase by 17%, which converts to an increase of 0.9% across all workers.” Across the three assumed levels of impact, the study estimates “medical losses for injured workers 65 and over could increase by 11% to 25%, which when spread across all workers the estimated increases are from 0.5% to 1.3%.”

For private passenger automobile, the authors used estimates for injuries under five separate coverages and for injuries under all coverages, using information on the percentage of payments for medical care and the average medical payments. The study indicates that “the Section 111 reporting requirements may increase the average medical payments for individuals 65 and over by $842 to $1,685 (based on 2012 loss experience), or by 1.3% to 2.6% for this age group. The 1.3% to 2.6% estimated impact on medical payments for individuals 65 and over translates to an estimated increase of 0.2% to 0.4% in medical payments for all ages.” For total losses, the study estimates an “impact of 0.4% to 0.8% increase in total losses across injured individuals 65 and over, and an estimated increase of 0.07% to 0.13% for all ages.”

It is undeniable that Medicare Section 111 Mandatory Reporting has added significant administrative burdens for claim payers and handlers. Burdens that include collection of such data, and communicating same to Medicare on a consistent and accurate format. It is also undeniable that Mandatory Reporting has provided Medicare with information that allows it to track and monitor liability, self-insured, no-fault, and workers compensation claims. Information that includes the name of the primary payer, its insurer, date and description of the accident, injuries associated with said claim, medical professionals providing care for such injuries, as well as representatives involved in the claim.

The combined effect of this is Medicare’s consistent ability to seek reimbursement of conditional payments made by Medicare in liability, self-insured, no-fault, and workers compensation primary payers. As Medicare is better able to identify conditional payments that are the responsibility of primary payers, it is also undeniable that primary payers (liability, self-insured, no-fault, and workers compensation entities) will continue to see an increase in their costs or losses.

As the industry waits for the Mandatory Reporting process to mature, and therefore better data to become available, with hopefully a more accurate description of such losses and the specific effect of this new process requirements on all liability, self-insured, no-fault, and workers compensation claims, Helios Settlement Solutions has been and continues to be a national leader in this arena. Our MedicareConnect mandatory reporting platform is the industry’s most accurate reporting service available, with a 99.98% acceptance rate. As a result of such reliable data, Helios Settlement Solutions is the only national compliance vendor currently able to offer its clients custom crafted services and reports aimed at early identification of Medicare beneficiary status, early identification of unreimbursed conditional payments, and early identification of future allocation needs. All of these are offered with an eye toward mitigation of the potential costs and losses mentioned in the study reviewed here. To speak with us about such products and services, contact us at 888.672.7674, or contactus@helioscomp.com.

CMS Web Address Change for Section 111 COBSW

Insurance LawCMS has released an alert to notify all users that the web address for the NGHP Section 111 COBSW will change effective June 14, 2015. Starting on that date, users navigating to the old address will be redirected to the new address. The redirect will be in effect for 90 days only and users will need to use the new address as of September 13, 2015.

No other changes to the COBSW are being announced at this time other than the address change. The new address is as follows, but is not expected to be active prior to June 14, 2015: https://www.cob.cms.hhs.gov/Section111/

This alert dated May 18, 2015, but released publicly on May 26, 2015, can be found at the following address: http://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Mandatory-Insurer-Reporting-For-Non-Group-Health-Plans/Downloads/New-Downloads/Technical-Alert-New-Web-Address-for-the-Section-111-COBSW.pdf

For more information, please contact Frank Fairchok, Senior Manager of MedicareConnect at Frank.Fairchok@helioscomp.com.

CMS Educates the Public about ICD-10 through Instructional Videos; ICD-10 Set to go Live October 1, 2015

frankCMS has introduced two new videos on ICD-10. The videos can be found here. The videos are exceptional in explaining ICD-10 basic concepts and drives home why ICD-10 will help better communicate diagnoses in the healthcare industry than previously was available with ICD-9.

ICD-10 will not only be required by providers when billing for medical services, but additionally RREs will also have to utilize ICD-10 when reporting claims through MMSEA Section 111 to CMS. As a reminder, CMS last year issued a memorandum outlining the ICD-10 process for RREs which is set to begin October 1, 2015 (link can be found here).

Are you ready for ICD-10 implementation? MedicareConnect, our industry leading Mandatory Insurer Reporting (MIR) solution, is ahead of the curve for the October 1, 2015 ICD-10 implementation date and completely ready for the transition. Helios provides a free lookup tool which converts ICD-9 to ICD- 10 and can be found here (users can simply enter their e-mail address for access).

For more information on the ICD-10 transition or MedicareConnect, please contact Frank Fairchok, MedicareConnect Program Manager, at Frank.Fairchok@helioscomp.com.

CMS Issues NGHP User Guide Version 4.5; Reaffirms that Orders Contradicting the MSP will not receive Deference

heatherCMS has updated their User Guide for Non Group Health Plans. The update is dated February 2, 2015. The only update to the guide is the following:

The updates listed below have been made to the Policy Guidance Chapter Version 4.5 of the NGHP User Guide. As indicated on prior Section 111 NGHP Town Hall teleconferences, the Centers for Medicare & Medicaid Services (CMS) continue to review reporting requirements and will post any applicable updates in the form of revisions to Alerts and the User Guide as necessary.

The following update was made to Chapter III for this release: RREs generally are not required to report liability insurance (including self-insurance) or no-fault insurance settlements, judgments, awards or other payments where the date of incident (DOI) as defined by CMS was prior to December 5, 1980. For this release, new policy language was added to the following document: “Liability Insurance (Including Self-Insurance): Exposure, Ingestion, and Implantation Issues and December 5, 1980.” (Section 6.5)

  • Any operative amended complaint (or comparable supplemental pleading) must occur prior to the date of settlement, judgment, award, or other payment and must not have the effect of improperly shifting the burden to Medicare by amending the prior complaint(s) to remove any claim for medical damages, care, items and/or services, etc.
  • Where a complaint is amended by Court Order and that Order limits Medicare’s recovery claim based on the criteria contained in this alert, CMS will defer to the Order. CMS will not defer to Orders that contradict governing MSP policy, law, or regulation.

This information was provided in a previous August 19, 2014 CMS alert; therefore, it appears that CMS has simply incorporated that alert into the User Guide. However, it is noteworthy that CMS continues to point out it will not abide by court orders that contradict MSP policy, law, or regulation. Particularly in the liability context, this could certainly cause some anxiety for settling parties since without an official LMSA process, the courts are now often times issuing orders that no LMSA obligations remain. CMS could later look upon that court order and state that the order contradicted MSP regulations.

However, there are steps that parties can take to take into account Medicare’s interests and decrease the likelihood that CMS would find that the settlement/order contradicts MSP regulations. For example, in the recent liability case Berry v. Toyota Motor Sales (click here to read our blog on this case), the plaintiff was able to obtain opinions from its treating providers that no future medical treatment related to the claim would be needed. Since CMS has stated that if a treating physician certifies in writing that no future care is needed, no LMSA would be required, CMS would not later find that the order contradicted MSP policy in this case.

The fact that CMS has continued to reiterate its policy that it will not defer to court orders that contradict MSP policies and regulations should not come as a shock, and as previously stated, if parties take proactive steps to demonstrate the protection of Medicare’s interests, CMS would likely defer to the court’s decision on the matters relative to the MSP in the court order.

The new User Guide can be found here, and the August 19, 2014 alert can be found here. For questions, please contact heather.sanderson@helioscomp.com.