2010 Medical Professional Liability Symposium Chicago, IL ~ March 18 & 19, 2010 MMSEA Section 111 Reporting: The Elephant in the Room?

Moderator: Jim Blinn, MBA, Principal, Advisen Ltd. Panelists: Samuel D. Carucci, Esq., US Casualty Claims Manager, Allied World Assurance Company Paul Lavelle, President, LVL Claims Services LLC Mark Popolizio, JD, Vice President of Customer Relations, NuQuest/BridgePointe Lindsay Turner, Esq., Senior Associate, Wiley Rein LLP

Session Overview Overview of MMSEA Section 111 The Challenges of Section 111 Claims Issues and Medical Professional Liability Concerns Open Discussion

Chicago, IL ~ March 18 & 19, 2010 Overview of MMSEA Section 111 (Medicare, Medicaid, and SCHIP Extension Act of 2007) Mandatory Insurer Reporting Lindsay Turner Wiley Rein LLP

Why are you here? You fear those $1,000 a day penalties for non-compliance with Section 111 You know Section 111 will change your company’s claims handling and settlement practices You’ve heard CMS has changed the rules AGAIN You were assigned the coveted job of Section 111 Coordinator

Why did Congress Mandate Section 111 Reporting? 1980 Medicare Secondary Payer (MSP) Statute made P&C Insurers (also called Non- Group Health Plans or NGHPs) the primary payers  Statute permits recoupment of Conditional Payments from: Medicare beneficiaries or their counsel Providers who receive payment from insurer settlements Private Insurers  Conditional Payments occur when Medicare pays because It doesn’t know an NGHP claim exists or that the claim has been paid The NGHP claim won’t be resolved anytime soon (Cont’d)

Why did Congress Mandate Section 111 Reporting? Problems Remain:  CMS has had limited success pursuing recovery of Conditional Payments from beneficiaries  Medicare seldom learned about NGHP settlements/claims payments  NGHPs have had little incentive to identify themselves as primary payers or have not been aware of claimant’s Medicare beneficiary status  Insufficient federal funds to ferret out NGHPs The Latest Fix: Section 111 Reporting

MMSEA Section 111: A Quick Overview Who reports? Responsible Reporting Entities (RREs) – typically the Insurer or Self-Insured Entity What is reported? All settlements, judgments, awards and other payments made to Medicare beneficiaries As compensation for/in exchange for release of: medical expenses  Typically arising out of claims for bodily injury  But also claims for pain and suffering/emotional distress (Cont’d)

MMSEA Section 111: A Quick Overvie MMSEA Section 111: A Quick Overview Why? Medicare may have paid medical expenses related to these claimed injuries Both lump sum payments and payment of future medicals must be reported  TPOC: Total Payment Obligation to the Claimant  ORM: Ongoing Responsibility for Medicals  Structured settlements/Medicare Set Asides not required

What Insurers? What Policies What Insurers? What Policies? Section 111 requires “Applicable Plans” to report Why? Applicable plans are the primary plans under the MSP Statute and Medicare wants a roadmap to recover conditional payments For NGHPs this means:  Liability carriers (including PL lines) and self-insured entities  No-fault insurance carriers  Workers’ compensation plans and carriers (Cont’d)

What Insurers? What Policies? Major Issues Remain Unresolved  Potential exception for undefined professional lines  Foreign insurers CMS doesn’t have regulatory powers under the Constitution to require all foreign insurers to report  Multiple Defendant/Mass Tort Settlements Who reports? Claims payments excluded by 1980 MSP cut-off date?  No-Fault Policies CMS may be sweeping other policy types under this umbrella

Reporting Timeline NGHPs do not begin reporting until First Quarter 2011 (previously Second Q 2010) Push Back of Dates Triggering TPOC and ORM Reporting:  TPOC Settlements: On or after October 1, 2010 (previously January 1, 2010)  ORM Settlements/Payments: Existing responsibility as of January 1, 2010 (previously July 1, 2009), regardless of initial date responsibility was accepted

Who Must Report? RRE Determination RRE determination is “fact and situational” specific CMS’ RRE directives contained in the 2/24/10 “Alert” Generally, RREs fall within the following classes:  Carriers  Self insurance Deductible v. SIR key determinant per new RRE guidelines  Reinsurance, excess, umbrella, etc.  Fronting insurance  Joint pools/JPAs  State assigned claims funds  Bankruptcy & liquidation TPAs & RRE status Role and limitations of Section 111 “reporting agents” Specific issues and considerations

Determining Medicare Status RREs required to determine CL’s Medicare status However, Section 111 does:  NOT provide the process or procedure to use  NOT require CL and/or his/her lawyer to release necessary information to help make this determination  NOT provide an informed consent provision. Issues & Considerations  RREs must develop practice and protocol directed at determining Medicare status  CMS’ Query Function & Model Language Operating Mechanics Limitations Safe Harbor & Due Diligence Protections?

Section 111 “Reporting Triggers” & Exceptions Section 111 Reporting – In general When Must I Report?  Two Reporting Triggers 1. Total Payment Obligation to the CL ---- TPOC 10/1/10 Base Date 2. On-Going Responsibility for Medical --- ORM 1/1/10 Base Date  TPOC v. ORM  TPOC reporting exceptions: Interim Monetary Thresholds  ORM reporting exceptions: Qualified Special WC

Section 111 “Reporting Triggers” & Exceptions Issues & Considerations  Determining TPOC Date  “Assuming” ORM  “Terminating” ORM  Look Back Period  Risk Management Write Offs, Gift Cards, Good Will Gestures, etc.

17 Mass Torts Reporting ▫ Cost of reporting v. costs of not reporting ▫ Claim balance Defense Counsel ▫ Collecting data ▫ Protecting notice Settlements ▫ Use of trusts (468B)

18 Structured Settlements Data Collection ▫ Use of a third party ▫ Resistance from plaintiff? Future Medicals ▫ Future CMS and the never ending trip

19 Medical Professional Liability The claim within a claim within a claim and multiple reporting. How these cases will gum up the works.

Chicago, IL ~ March 18 & 19, 2010 Open Discussion