Unraveling The MMSEA Sec. 111 Reporting Requirements

Terms CMS – The Centers for Medicare & Medicaid Services (CMS) COBC – Coordinator of Benefits Contractor MSPRC – Medicare Secondary Payer Recovery Contractor (www.msprc.info) MMSEA/SCHIP – New mandatory reporting law MSPA - Medicare Secondary Payer Act – Law passed in 1980 CP – Conditional payment (Medicare “lien”) MSA – Medicare Set-aside

Medicare Compliance

MMSEA/SCHIP MSPA Medicare Compliance Mandatory Reporting Query Function MSPA MSA Conditional Payments

MMSEA/SCHIP Mandatory Reporting Query Function Medicare Compliance SOLUTION: TECHNOLOGY CLAIMS HANDLER

MSPA Medicare Compliance MSA Conditional Payments SOLUTION: CLAIMS HANDLER CLIENTS DEFENSE COUNSEL PLAINTIFF COUNSEL

Subject to Change Background When does reporting start? Electronic Registration for all RRE’s Started May 2009 Testing of Electronic Transmissions January 2010 – Dec 2010 First Live Data Submission to CMS January 1, 2011 Reporting of Cases that Settle October 1, 2010 Updated 2/26/10 7

CMS changed the definition of RRE Drastic change RRE Definition Change CMS changed the definition of RRE Drastic change Affects which entity has to report Many cases switches burden From Insured to Carrier Carriers will have burden of reporting many, many more cases The purpose of this slide is to identify the significance of the change in RRE definition Discuss the potential for carriers to require more involvement as respects claim handling best practices as the RRE definition changes. Sedgwick CMS is still assessing process changes we need to implement to support the new change. Communications with directions for process change will be distributed shortly

We are not reporting every case. We are only reporting: What are we reporting? We are not reporting every case. We are only reporting: Medicare Beneficiary only; and Settlement value of $5,000* or more. *decreases over time

MMSEA – Impact Data collection Especially for liability (SS# and ICD) Concern about timely reporting $1,000 day per case civil penalty More emphasis placed on pre-settlement Medicare lien resolution Introduction of MSAs to liability cases

Conditional Payment Analysis Report Case Settle Case “Connecting the Dots” Invoice issued - CP Defendant, Plaintiff, Plaintiff’s Attorney Conditional Payment Analysis MSPA MSPRC Report Case MMSEA COBC Settle Case State Law

Settlement Provisions Parties cannot transfer their responsibilities under the MSPA to other parties. Settlement and Release

“Connecting the Dots” – Example 1 Total Cost: $130,000 Invoice issued - CP $30,000 Defendant Conditional Payment Analysis MSPRC Report Case COBC Settle Case $100,000

Conditional Payment Timeline Estimated CP Amount Final Demand Date of Settlement Date of Loss

Conditional Payment - Solutions “Check” option Best result for defendant – no worries about future issues Case can be closed once payment is issued Has to be spelled out in settlement documents Difficult to convince opposing counsel to do this “Escrow” option More problematic – examiner has to deal with MSPRC Files open longer post settlement Risk that final demand is substantially greater than estimated conditional payment amount Risk should be allocated in settlement documents

Medicare Liens and MSAs Medicare liens - conditional payments that Medicare made before settlement MSAs – a trust setup through the settlement documents to prevent the transfer of expenses to Medicare after settlement 16

Medicare Secondary Payer Act Date of Settlement Date of Injury Conditional Payment MSA

Medicare Set-asides MSA CMS is currently only reviewing and approving for WC May still be needed for liability - MSPA Can still have MSA language in a settlement even though CMS may not approve it Harder to calculate for liability MSA

Medicare Set-asides For liability cases: CMS: No formal approval process Settlement includes future medical Settlement value a good indicator They provide an extra layer of defense

Medicare Compliance - Tips Determine if a claimant is on Medicare or Social Security Disability (SSDIB) as early as possible Once a claimant is determined to be Medicare or SSDIB advise opposing counsel “Put down your swords when it comes to Medicare issues” Discuss with opposing counsel the possibility of dealing with conditional payments or Medicare set-aside in any future settlement

Medicare Compliance - Tips Check your settlement documents Include MSA language Include CP language Check your claims handling procedures Evaluate CP implications Evaluate MSA possibilities

Medicare Compliance - Tips At settlement time have two things ready: Estimated Conditional Payment Amount MSA amount, if necessary Incorporate those into your settlement

Medicare Compliance - Tips If going to trial: Be prepared to educate judge concerning Medicare issues May need to do a special jury verdict form that contains: Damages for future medical treatment Damages for past medical treatment

Medicare Compliance – Important Points Need to understand the distinction between a conditional payment and a Medicare set-aside Each component requires separate analysis: Reporting Medicare set-aside Conditional payment Each case may need none, one, or more of each component to be compliant

Impact on Litigation Education Trial Strategies Risk Managers Examiners Defense Attorneys Claimant Attorneys Judges Education Trial Strategies Early intervention with Medicare beneficiaries Cost to settle Time to settle

Questions?

Need Further Information? Michael R. Merlino II, Esq. Gwinnett Commerce Center 3700 Crestwood Parkway, Suite 600 Duluth, GA 30096 Business: (678) 628-1336 Mobile: (770) 842-9628 E-mail: Michael.Merlino@sedgwickcms.com