New Mandatory Medicare Insurer Reporting Requirements of Section 111 of the Medicare, Medicaid & SCHIP Extension Act (MMSEA) An Insurer Perspective on the Challenges KIM

Disclaimer Information contained herein is not intended as, nor does it constitute, legal or professional advice, nor is it an endorsement of any source cited or information provided. In no event will Travelers or any of its subsidiaries and affiliates be liable in contract or in tort to anyone who has access to this presentation for the accuracy or completeness of the information relied upon in the preparation of this presentation or for the completeness of any recommendations from cited sources. Participants should consult source material for more detail. Travelers disclaims all warranties whatsoever. Kim © 2009 The Travelers Companies, Inc. All rights reserved. Ed. 07-09. 2

Objective Provide an Insurer perspective on MMSEA challenges: 1. Obtaining the SSN or HICN 2. Defining the Responsibly Reporting Entity (RRE) 3. Registration & Reporting Hurtles 4. Data - the Devil in the Details 5. Defining a Responsible Insurer JON

1. The almighty SSN or HICN Lack of Cooperation - Can we withhold payments? - Bad faith from simply asking? - Insurance Department complaints? - Web portals like E Verify? - How do we prove “due diligence” in collecting the SSN or HICN? Non U.S. Citizens - Is a Query even necessary? Beneficiary under another SSN - How to obtain a spouse’s or parent’s SSN? JON We are working on a “due diligence” solution. We will ask about Citizenship during our investigation of the claim. We will ask about Medicare beneficiary status under another family member. © 2009 The Travelers Companies, Inc. All rights reserved. Ed. 07-09.

2. Defining the RRE In the casualty insurance world, “self-insured” is defined as assuming the risk of loss without the protection or backing of an insurance policy. CMS will consider you to be “self-insured” to the extent of your financial responsibility in the settlement, whether you are truly self-insured or under a deductible plan. ERIC – next slide is JON They have repeatedly said that they are aware that their definition of self-insurance does not match the industry’s definition, stating that “CMS is constrained by the language of the applicable statute and CMS’ regulations. It is critical that you understand and utilize CMS’ definitions for purposes of Section 111 when reviewing and implementing Section 111 instructions.” In CMS’ black and white and oversimplified world, there really is no such thing as a deductible. If you have a deductible they will consider you to be self-insured for that deductible amount. However, CMS has also stated that if the insurer is making the payments and then collecting back the deductible, the insurer will be the RRE for the entire amount. As Jon will point out, this raises some very important issues, particularly when an account under an insurance program self-pays any losses. But first, it goes without saying that CMS’ insistence upon using its own definitions, in conflict with the real world and the many different types of insurance and risk transfer programs our there, has certainly caused a great deal of discussion and a lot of angst. So Jon will now give you a clear overview of the process for determining who the RRE is under various types of insuring programs. © 2009 The Travelers Companies, Inc. All rights reserved. Ed. 07-09.

2. Defining the RRE under Insurance Plans If the Entity is insured under a… The RRE for that Entity is… Guaranteed Cost or Retrospectively Rated Insurance Policy Insurer within the insurance coverage as long as the insurer is making all payments to the beneficiary. Deductible Insurance Policy (Payments made to claimant by the Insurer) Insurer within or over the deductible as long as the Insurer pays and seeks reimbursement from the insured. (Payments made to claimant by the Insured) Insured within or over the deductible. Insurer becomes the RRE only if it assumes payment. JON If you are insured under a guaranteed cost program or a straight (true) deductible program, you do not need to do anything. Travelers will be registered as the RRE and will take care of all reporting. TPA: Third party administrators (TPAs) as defined by CMS for purposes for 42 U.S.C. 1395y(b)(7) & (8) are never RREs for purposes of 42 U.S.C. 1395y(b)(8) [liability (including self-insurance), no-fault, and workers’ compensation reporting] and only act as agents for such reporting. The RRE is limited to the “applicable plan” and may not by contract or otherwise limit its reporting responsibility although it may contract with a TPA or other entity for actual file submissions for reporting purposes. CMS calls Deductible programs “self-insurance’ if the entity pays the claimant for that amount within the deductible. 1/28: Barbara Wright: As we said, if there’s deductible that’s been paid to the claimant directly by the party that’s considered self-insured for purposes that deductible, then they’re the RRE. If the deductible is being paid out through the insurer, then the insurer will be the RRE. Unless we’re missing something, we’re not sure why this doesn’t fit within the language we’ve given in the interim guide. Deductible or Self-Funded Retention Insurance Policy The Insured Entity is the RRE for amounts paid to the claimant by the insured entity within the deductible, and the Insurer is the RRE for amounts within its insurance layer above the deductible- NOTE: If the insured continues to pay or fund a TPA excess of their retention and seeks reimbursement from the insurer, the insured remains the RRE. © 2009 The Travelers Companies, Inc. All rights reserved. Ed. 07-09.

2. Defining the RRE under true Self-Insurance If the Entity is insured under a… The RRE for that Entity is… Self-Insured Plan (Self or TPA Administration) Self-Insured for all amounts within the SIR. Excess Insurance Policy (Payments made to the claimant by the Excess Insurer) Self-Insured for amounts within the SIR layer. Excess Insurer for amounts paid to the claimant in the excess layer. (Payments made as reimbursement to Self-Insured) Self-Insured for amounts it pays within and in excess of the SIR when excess carrier reimburses the self-insured for excess loss rather than paying it directly to the claimant. JON – next slide is ERIC Deductible: Where an entity is self-insured for a deductible but the payment of that deductible is done through the insurer, then the insurer is responsible for including the deductible amount in the amount it reports as a settlement, judgment, award or other payment. TPA: Third party administrators (TPAs) as defined by CMS for purposes for 42 U.S.C. 1395y(b)(7) & (8) are never RREs for purposes of 42 U.S.C. 1395y(b)(8) [liability (including self-insurance), no-fault, and workers’ compensation reporting] and only act as agents for such reporting. The RRE is limited to the “applicable plan” and may not by contract or otherwise limit its reporting responsibility although it may contract with a TPA or other entity for actual file submissions for reporting purposes. © 2009 The Travelers Companies, Inc. All rights reserved. Ed. 07-09.

3. Data – the devil in the detail 35 to potential of over 70 on a single claim: Record ID: 3 Demographics: 10 Attorney: 0 – 11 Payments: 5 Insurance: 15 – 20 (contact fields) Medical: 2 – 20 (ICD9 & E Codes) JON – next slide is ERIC MOVE THESE: RREs are to report only with respect to Medicare beneficiaries (including a deceased beneficiary if the individual was deceased at the time of the settlement, judgment, award or other payment). If a reported individual is not a Medicare beneficiary or CMS is unable to validate a particular SSN or HICN based upon the submitted information, CMS will reject the record for that individual. The Applied Disposition Code (Field 25) on the corresponding Claim Response File detail record will indicate the reason for rejection. Data that is incorrect will be rejected, not posted. You will have until the next quarter to correct it. If there are a number of data errors in a submission, then CMS will suspend processing and contact the RRE to correct the errors and resubmit. “If we get bad data and act on it, it’s going to come back to bite you, too”). RREs are to report once there has been a settlement, judgment, award or other payment. Notice to CMS of a pending claim or other pending action does not satisfy an RRE’s reporting obligations with respect to 42 U.S.C. 1395y(b)(8). If the individual was not a Medicare beneficiary at the time responsibility for ongoing medicals was assumed, the RRE must monitor the status of that individual and report when that individual becomes a Medicare beneficiary unless responsibility for ongoing medicals has terminated before the individual becomes a Medicare beneficiary. Where payment is made pending investigation, the RRE must report this as an assumption of responsibility for ongoing medicals. If responsibility for ongoing medicals terminates upon completion of the investigation, the termination of responsibility for ongoing medicals must be reported. California WC – if you pay w/out liability pending investigation, then that payment must be reported as an ORM, then if you stop payments (e.g., deny liability), then you have to issue an update record to terminate the ORM to CMS. There is no age threshold for reporting for 42 U.S.C. 1395y(b)(8). There is no exception to the reporting requirements for alleged de minimus or “nuisance” settlements, judgments, awards or other payments. (CMS is gathering data related to this issue and will issue instructions if it adopts a de minimus or “nuisance value” exception for reporting purposes.) “No medicals” – If medicals are claimed and/or released, the settlement, judgment, award or other payment must be reported regardless of any allocation made by the parties or a determination by the court. The geographic location of the incident, illness, injury is not determinative of the RRE’s reporting responsibility as Medicare beneficiaries who are injured or become ill outside of the United States often return to the U.S. for medical care. For liability insurance (including self-insurance) each new payment obligation must be reported as a separate settlement, judgment, award, or other payment. Note: Where a payment obligation is satisfied through a structured settlement or purchase of an annuity, there is a single report with respect to the total amount of the obligation. © 2009 The Travelers Companies, Inc. All rights reserved. Ed. 07-09.

4. Reporting & Registration Hurtles - How far back do you go? - What about Medical Bill write-offs? Registration - How many ID & PINs are needed? - How much detail is needed on subsidiaries? - How helpful is EDI Representative assistance? JON © 2009 The Travelers Companies, Inc. All rights reserved. Ed. 07-09.

... wonder who he might be referring to... 5. A Responsible Insurer Provide detailed feedback, inquiries, suggestions and criticisms to CMS, both directly and through AIA. Prepare detailed claim system upgrades, workflows, and protocols to report to CMS as either an RRE or Reporting Agent for customers. Provide Webinars for customers that are also available for replay on the insurer’s Website. Prepare and distribute specific instructions, including CMS screen prints, on how to register as an RRE to self-insured customers. Provide months of internal educational sessions for all Claim Professionals who handle bodily injury claims all lines of casualty insurance. JON We remain fully engaged with CMS and continue to offer suggestions and inquiries to CMS on a constant basis. Note that no matter what role Travelers will play under your particular insurance program, we will be in full compliance with CMS requirements at every step in the process, from registering as the RRE to engaging our customers as the reporting agent, from testing through implementation, and submission of records through correction of those records. ... wonder who he might be referring to... © 2009 The Travelers Companies, Inc. All rights reserved. Ed. 07-09.