Medicare, Medicaid, and SCHIP Extension Act (MMSEA) Section 111 Reporting: Identifying Reporting Triggers – 2011 Updates

It is important to be familiar with the criteria for reporting to avoid being late in adhering to the MMSEA Section 111 requirements. The determination of whether to submit a claim is dictated by two criteria, both of which must be met to require reporting:

1. The claimant is Medicare-entitled; and

2. The per claim dollar payment thresholds have been met.

This article will focus on per claim dollar payment thresholds.

TPOC settlements, judgments, awards, or other payments are reportable once the alleged injured individual to or on whose behalf payment will be made has been identified and the TPOC amount for that individual has been identified. Where these criteria are not met as of the TPOC date, such as when there is a settlement involving an allegedly defective drug, CMS states that documentation establishing when these criteria are met should be retained [see October 14, 2010 Alert for Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation – Reporting Timeframe].

Take note that there are differing dollar thresholds for workers’ compensation claims and liability claims, and those thresholds are temporary and change each year until none exists. It is important to understand the difference between the various thresholds and to apply the correct one; otherwise, there’s the risk of unintentionally subjecting oneself or one’s represented Responsible Reporting Entities (“RRE”) to hefty fines and penalties.

Background

Despite the fact that Section 111 reporting only involves claims with Medicare-entitled people, the property and casualty insurance industry was concerned about many low-dollar and nuisance types of claims that would be required to be reported. Since each reportable claim may require up to 119 data elements, it is easy to see why there was consternation and apprehension.

For instance, based on National Council on Compensation Insurance (“NCCI”) statistics, approximately 70% of all workers’ compensation claim reports are of the “No Compensable Lost Time” (“NCLT”) variety, commonly called “Medical Only” (“MO”) files. Although these claims account for about 7 out of every 10 new reports, they only account for approximately 3% of the overall workers’ compensation dollar spent because they are usually very minor cases with no indemnity component. To ask for a massive amount of data on these minor cases places a large burden on claims handlers. The same is true with minor liability claims that are settled for nuisance vales. A nuisance value is typically considered as an amount under $5,000.

To partially address the concerns expressed by the property and casualty insurance industry, CMS issued another Alert dated March 20, 2009, establishing interim reporting dollar thresholds for low-value workers’ compensation and liability claims, respectively. The thresholds were further refined in the February 22, 2010 release of Version 3.0 of the MMSEA Section 111 User Guide as well as the July 12, 2010 release of Version 3.1 of the MMSEA Section 111 User Guide. The current threshold amounts set forth in the August 17, 2011 release of Version 3.2 of the MMSEA Section 111 User Guide are as follows:

Liability Insurance and Workers’ Compensation Total Payment Obligations to the Claimant (“TPOC”)—For reporting taking place during the first year, 2012, claims having a TPOC of $5,000 or less do not need to be reported. In the second year, 2013, the threshold drops to $2,000. In 2014, the threshold drops again to $600. Finally, in 2015, all TPOCs, regardless of size, must be reported. After less than enthusiastic feedback from the industry of the eroding threshold limits in subsequent years in liability claims, CMS was quick to point out that that they may consider changing these thresholds or leaving them in place longer than originally outlined in the March 20, 2009 Alert memo and in MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting: Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation User Guide, Version 3.2 (August 17, 2011), at 71–72. Therefore, it is important to keep abreast of the latest CMS promulgations concerning Section 111 reporting. The webpage to monitor closely is www.cms.hhs.gov/MandatoryInsRep.

While the dollar thresholds remain the same, please note that in the November 9, 2010 Alert, in addition to CMS delaying implementation of only liability TPOC reporting by one year, it also pushed out the phased dollar thresholds for all forms of insurance by one year as well. Any TPOC of less than $5,000 with a TPOC date prior to January 1, 2013, less than $2,000 during 2014, and less than $600 in 2015, will be rejected [November 9, 2010 Alert “I. Revised Implementation Timeline for TPOC Liability Insurance (Including Self- Insurance) Settlements, Judgments, Awards or Other Payments and II. Extension of Current Dollar Thresholds for Liability Insurance (Including Self-Insurance) and Workers’ Compensation”].

RECENT DEVELOPMENT: On September 30, 2011, CMS announced another delay in liability TPOC reporting based upon additional dollar amount thresholds. For settlements, judgments or awards occurring on or after October 1, 2011, the threshold was set to $100,000.00 with a reporting requirement in first quarter 2012. For TPOCs occurring on or after April 1, 2012, the threshold was set to $50,000.00 and expected to be reported in third quarter 2012. For TPOCs occurring on or after July 1, 2011, the threshold is $25,000.00 with a fourth quarter reporting requirement. On October 1, 2012, the original phase in resumes with TPOCs of $5,000.00 or more reported in first quarter 2013, TPOCs of $2,000.00 or more reported in 2014, TPOCs of $600.00 or more reported in 2015 and no exclusions starting in 2016.

PRACTICE POINT: For automobile no-fault insurance, there is no minimum dollar threshold for reporting an ORM claim obligation, or for reporting TPOC payments. They both must be reported or else there will be a violation of Section 111’s reporting requirements [MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting: Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation User Guide, Version 3.2 (August 17, 2011), at 70].

Workers’ Compensation Ongoing Responsibility for Medical (“ORM”)—Workers’ Compensation ORM claims are excluded from reporting requirements if all of the following criteria exists: (1) the claim is for “medicals only”; (2) the lost time for the worker is no more than seven days (unless limited otherwise by state law); (3) all payment(s) has/have been made directly to the medical provider; and (4) total payment for medicals does not exceed $750. The original memo indicated this exclusion applied to settlements in 2010; however, since the reporting date was pushed back to January 1, 2011, this threshold is still in force only for the first year of reporting (therefore, including all file submissions through December 31, 2011) [CMS User Guide, Version 3.2 (August 17, 2011), at 70–71]. Contrary to the TPOC thresholds, there is no “erosion” of the threshold amount over the years to come. In 2012, all workers’ compensation ORM will require reporting.

Section 111 reporting is required upon claim settlement, or upon partial settlement, such as what can occur in workers’ compensation resolutions with one aspect of the benefit resolved and the other left open. The discussion below describes a few of the reporting triggers in greater detail.

Total Payment Obligations to Claimant (“TPOC”)

Any TPOC settlement, judgment, award or other payment on or after October 1, 2010 comprises a reporting trigger, notwithstanding any ORM obligations. A TPOC payment concerns a single payment obligation, either a lump-sum payment or annuity, and CMS requires that the TPOC payments be reported only once. This applies to workers’ compensation and liability payments. An extensive table that outlines various reportable events can be found in the MMSEA Section 111 User Guide [see MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting: Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation User Guide, Version 3.2 (August 17, 2011), at 75–81].

The date of the TPOC can be determined by a few different methods. The first method is by using the date the settlement agreement is executed by the parties to the resolution, unless formal court approval is required. If court approval is required, then the appropriate date is when a court of competent jurisdiction signs the order of approval. In the absence of a written agreement, the appropriate date is the date the payment is issued. For further information, see the MMSEA Section 111 User Guide [see MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting: Liability Insurance (Including Self- Insurance), No-Fault Insurance, and Workers’ Compensation User Guide, Version 3.2 (August 17, 2011), at 193].

Determining the TPOC amount is also critical. The definition of the TPOC amount is the amount of the total monetary payment obligation to the claimant. If an annuity or structured settlement was used as the settlement vehicle, the TPOC amount is determined by the total payout of the annuity, not the present value or purchase price [MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting: Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation User Guide, Version 3.2 (August 17, 2011), at 194, field number 101].

Ongoing Responsibility for Medicals (“ORM”)

Notwithstanding the first-year exclusion, the trigger for reporting an ORM is actually the assumption of responsibility for ORM by the RRE in no-fault and workers’ compensation claims. This is when the coverage determination is made or the RRE is otherwise required to assume ORM, not when the first medical payment is actually made. In fact, no payments have to actually be paid on the claim for the ORM reporting requirement to be triggered.

In many instances, even with the assistance of computers, it will be difficult to decipher when an ORM is accepted prior to payments actually being made. Setting triggers based on a financial payment amount is relatively simple. However, having responsibility for reporting the claim based on the acceptance of an ORM can be potentially problematic. For further information on this subject, see the MMSEA Section 111 User Guide [see MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting: Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation User Guide, Version 3.2 (August 17, 2011), at 100].

Further complicating reporting determinations is that no medical claims ever have to be made after reporting an ORM, and there may never be a TPOC to report. Regardless, a termination of the ORM must be sent. To date, CMS has not published a list or articulated when termination of ORM reporting should transpire. However, common sense situations seem to apply, including the following:

1. Irrevocable settlement of a global nature (all benefit types are terminated as a result of resolution).

2. The injured person dies.

3. The Statute of Limitation (“SOL”) runs.

4. The injured person recovers from the injury and no further treatment is required (written note from the treating physician that no additional treatment is required for the injured person is needed to justify ORM reporting termination in this instance).

5. Policy limits (in non-workers’ compensation claims) are exhausted.

6. The claim is controverted (denied) based on lack of negligence by the afflicting party, contributory negligence by the afflicted party, a course and scope issue in a workers’ compensation claim, or no link between the manifestation of disability and the claimed injury and no payments of any kind are ever made.

7. A defense judgment or award when no money is awarded.

8. A court ruling that ends responsibility.

Keep in mind that the above list is not exhaustive; it is merely illustrative of particular scenarios that would ideally terminate ORM reporting.

© Copyright 2011 LexisNexis. All rights reserved. This article was excerpted from The Complete Guide to Medicare Secondary Payer Compliance, 2011 Edition, Jennifer C. Jordan, Editor-in-Chief.

 Jennifer C. Jordan is General Counsel at MEDVAL, LLC. She has become recognized nationally as an expert in Medicare Secondary Payer compliance. She has been an invited guest speaker at numerous industry events, for individual and trade organizations, and is a trusted advisor to several state agencies. She provides formal continuing education programs for nationally recognized providers in both the MSP and structured settlements. She has been invited to write for various journals and national publications, such as the American Bar Association's Tort, Trial and Insurance Practice magazine, The Brief. And most notably, her expertise has been recognized even by the United States Department of Justice, having been retained to consult in a constitutional claim brought against the Department of Health and Human Services in the Ninth Circuit in 2008.