Medicare Secondary Payer Update: What to Know Heading Into 2024

The Centers for Medicare and Medicaid Services (CMS) has been busy in 2023 with updates and changes to Medicare Secondary Payer (MSP) compliance issues. Now is the time for all interested stakeholders to take note and ensure a best-in-class workers’ compensation program moving into the new year.

Section 111 Reporting and Civil Monetary Penalties

Earlier this year, CMS released the much anticipated final rule related to Section 111 Reporting and civil monetary penalties. This rule has been pending since the passage of the Medicare and Medicaid SCHIP Extension (MMSEA) Act of 2007. Under this law, Non-Group Health Plans (NGHP), including workers’ compensation carriers, have been required to report Medical (ORM) and Total Payment Obligation to Claimant (TPOC). Failure to properly report could result in fines “up to” $1,000 per day/claim.

• Required Reporting Entities (RRE) are subject to civil monetary penalties if they fail to report promptly;

• The Rule outlines specific “safe harbor” actions RREs can take to avoid penalties; and

• Provides CMS the ability to assess civil monetary penalties under a tiered approach.

All penalties are subject to annual adjustment under 45 CFR part 102.

Wait, There is More! CMS Takes Steps to Track Medicare Set-asides

On November 17, 2023, CMS announced additional steps it is taking to track Medicare Set-asides (MSA) through its voluntary submission process. According to agency officials, additional rulemaking was not required as they had the authority to supplement its interpretation of existing powers delegated to CMS under the existing Section 111 reporting statute and regulations.

CMS will require insurance carriers to report additional information regarding their settlements during the ORM and TPOC reports. Additional data points for collection:

• MSA amount;

• MSA Period (number of years);

• Funding Method – lump sum or annuity;

• Seed Money and annual payments for MSA (annuities only).

These reporting requirements will only apply to MSAs submitted through the voluntary Workers’ Compensation Medicare Set-aside Arrangement (WCMSA) process.

Impact of the WCMSA Process

CMS has been working overtime to ensure that many MSAs are submitted through the voluntary review and approval process. Here are some trends that we can expect in the coming year.

• Workload Review Thresholds: There likely will not be a change in the workload review thresholds. The amount for “Class I” settlements was last increased from $10,000.00 to $25,000.00 on April 25, 2006.

• Emphasis on Considering Medicare’s Interest: CMS has continued to reiterate parties should consider Medicare’s interests in settlements. This includes settlements that do not meet their current workload review thresholds. Parties are consistently warned, “[T]hese thresholds are created based on CMS’ workload and are not intended to indicate that claimants may settle below the threshold with impunity. Claimants must still consider Medicare’s interests in all WC cases and ensure that Medicare pays secondary to WC.”

• Focus on WCMSA Submission: CMS first attempted to encourage voluntary submissions through the WCMSA process when it included Section 4.3 – The Use of Non-CMS-Approved Products to Address Future Medical Care, in early 2022. While CMS softened its position after industry pushback, the most recent announcement is another attempt to “encourage” submission.

Now is the time to pay attention and review your compliance program.

How Do I Implement Best Practices?

All interested stakeholders must enter the new year with a sense of urgency regarding cooperation and communication.

• Petitioner Attorneys: Understand that reasonable requests for information from defense interests are made in good faith and not as a fishing expedition. Educate your legal team and client on issues related to MSAs. Failure to consider Medicare’s interests makes the employee a target for adverse action by CMS.

• Defense Attorneys: Clarify with opposing counsel what body parts/conditions are being claimed. This information needs to be relayed to the claim handler, who can, in turn, communicate internally with the Section 111 Reporting team. The correct ICD-10 codes must be reported to CMS. These same ICD-10 codes should also be listed in any settlement documents.

• Claim Handlers: Often, claim teams are siloed where the claim handler does not understand the basics of Section 111 reporting. Learn more about the Section 111 reporting process and why internal communication must occur. Pester defense counsel if they are not providing this information.

Now is the time to act.

Conclusions

CMS has been taking more aggressive steps to ensure compliance with the MSP compliance. All interested stakeholders need to educate themselves on what is happening and what steps must be taken as the new year draws closer.

Michael Stack, CEO of Amaxx LLC, is an expert in workers’ compensation cost containment systems and provides education, training, and consulting to help employers reduce their workers’ compensation costs by 20% to 50%. He is co-author of the #1 selling comprehensive training guide “Your Ultimate Guide to Mastering Workers’ Comp Costs: Reduce Costs 20% to 50%.” Stack is the creator of Injury Management Results (IMR) software and founder of Amaxx Workers’ Comp Training Center. WC Mastery Training teaching injury management best practices such as return to work, communication, claims best practices, medical management, and working with vendors. IMR software simplifies the implementation of these best practices for employers and ties results to a Critical Metrics Dashboard.

Contact: [email protected].

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