“Medicare Secondary Payer” is the term used when the Medicare program does not have primary payment responsibility for medical claims (that is, another entity has the responsibility for paying a medical claim before Medicare). Current law makes Medicare the secondary payer to group health plan coverage in certain situations, and the secondary payer to all forms of liability insurance (including self-insurance), no-fault insurance, and workers’ compensation.
To better assist the government in identifying these other primary sources of payment, and to thereby alleviate the financial burden upon the Medicare program, Congress enacted the Medicare, Medicaid, and SCHIP Extension Act of 2007. This legislation imposed and expanded mandatory registration and reporting requirements upon a varied class of entities that may have primary payment responsibility for medical claims. These entities, which the government terms Responsible Reporting Entities (RREs), must register with the CMS Medicare Coordination of Benefits Contractor (COBC) by September 30, 2009. Health care providers must determine whether they may qualify as an RRE. If they do, they face stiff penalties for failing to timely register and report.
The key to this determination is understanding who qualifies as an RRE. There are two categories: 1) those that make payments under a group health plan, and 2) those that make payments pursuant to liability insurance (including self-insurance), no-fault insurance, and workers’ compensation. Most employers, administrators, and insurers are familiar with how these registration and reporting requirements apply to group health plans, which became effective July 1, 2009. This Alert is designed to focus upon the second category, namely, liability insurance, self-insurance, no fault insurance, and workers’ compensation.
“Liability insurance” is defined as any insurance that pays based upon a legal liability for injury or illness, including self-insurance, auto insurance, homeowners insurance, malpractice insurance, product liability insurance, and general casualty insurance. A “liability insurance payment” includes both a payment by a liability insurer and an out-of-pocket payment, such as a payment to cover a deductible required by a liability insurance policy. “No-fault” insurance includes auto insurance, homeowners insurance, or other commercial plans, and is sometimes referred to as “medical payments coverage,” “personal injury protection,” or “medical expense coverage.”
"Self-insurance” is defined by the law as any entity that carries its own risk instead of through a commercial carrier. An entity is deemed to have a self-insurance plan if it carries its own risk (whether by a failure to obtain insurance or otherwise) in whole or in part. A payment made as a deductible or co-payment on a liability insurance policy can also constitute a form of self-insurance.
Clearly, most liability insurers qualify as RREs, and must register under the law. What may be less well understood is that any health care provider who makes a payment to a Medicare beneficiary in any of the above ways is also considered an RRE, and therefore, must register and report the payment to CMS.
The registration process requires any entity qualifying as an RRE to notify the COBC of its intent to report information about payments made to Medicare beneficiaries. To register, an entity must set up an account and log in at https://www.section111.cms.hhs.gov. This site provides additional guidance about what information is necessary during the registration process. Registration is a two step process including (1) account registration to create a new RRE identification number and (2) account set up. Prior to registering, RREs should determine who will serve as the Authorized Representative who will then designate its Account Manager. Following account registration, the entity will be assigned an RRE ID and Personal Identification Number (PIN). Both the RRE ID and the PIN will be required to finalize the account setup phase. Although an RRE may contract with an agent to do the actual reporting of payments on behalf of the company, the obligation to register cannot be delegated.
An RRE must report information to CMS concerning payments made to or on behalf of a Medicare beneficiary, on and after January 1, 2010, which includes payments for past, present, or future medical expenses. As discussed above, payments made toward a deductable or co-payment of a liability insurance policy can trigger reporting. Additionally, RREs must report all payments tendered to a Medicare beneficiary in relation to an ongoing obligation for medical expenses that existed on or after July 1, 2009. Payments must be reported regardless of whether the reporting entity disputes the validity of the medical claim, or even if the payout is designated as not for medical expenses, as long as the initial claim related to some type of personal injury or illness.
here are stiff penalties for failing to comply with these notice requirements. Failure to report can result in fines of up to $1,000 per day of noncompliance for each Medicare beneficiary to whom payment was made. Clearly, noncompliance can have significant ramifications, so it is important to fully understand and comply with these reporting requirements.
Please note that CMS is continuing to refine its approach with respect to the implementation of these registration and reporting requirements. Below are some links that provide more detailed information.
Documents and Links:
Please note that this draft deals with questions relating to who must report, third party administrators, corporate structure reporting for RREs, and deductibles along with a variety of other items. The Public Comment period for this draft ended on August 16, and as of today (August 28, 2009) no final document has been issued by CMS.
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