The Centers for Medicare & Medicaid Services (CMS) recently announced a revised implementation schedule for the Medicare secondary payer (MSP) reporting requirements under the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA).1 Pursuant to this statute, certain entities must report specified information to CMS about group health plan (GHP) and non-GHP arrangements to facilitate proper coordination of benefits with the Medicare program. CMS refers to the affected entities as “responsible reporting entities” (RREs), which include GHPs, entities that are liability insurance plans or are self-insured, and no-fault insurance. In certain circumstances health care providers and medical device, pharmaceutical, and biological manufacturers may satisfy the definitions of “liability insurance” or “self-insurance,” and therefore should be aware of this revised timeline so that they may take steps to create the necessary systems to comply.
Prior to this release from CMS, all RREs would have had reporting obligations as of July 1, 2009. As set forth more fully below, CMS is implementing this requirement in three phases: registration, testing, and submission of information. In general, RREs that are not GHPs, especially including liability insurers and companies that assume an obligation to pay a tort claim, are required to register by September 1, 2009. Non-GHP RREs are not required to register at this time if they will have nothing to report, however. Non-GHP RREs may start testing their query functions to identify claimants who are Medicare beneficiaries as of July 1, 2009, but are not obligated to begin testing their reporting systems until January 1, 2010, nor to begin required reporting until April 1, 2010.
Medicare Secondary Payer Mandatory Reporting Requirements
Effective July 1, 2009, the MMSEA requires liability insurance (including self-insurance), no-fault insurance, and workers’ compensation plans, and their fiduciaries or administrators, to report to the Secretary of Health and Human Services the identity of any claimant who has been determined to be entitled to Medicare benefits.2 Entities that fail to comply with these requirements may be subject to a civil money penalty of $1,000 per day of noncompliance with respect to each claimant, and may also face potential liability under the federal False Claims Act for “causing” improper claims to be submitted to Medicare.
The MMSEA allows CMS to implement the new reporting requirements “by program instruction or otherwise,”3 and CMS has chosen to implement the law through instructions posted on its Web site. Definitions of key terms are found in the User Guide on this site. For purposes of the reporting requirements, CMS defines a “liability insurer” (except for self-insurance) as “an entity that, in return for the receipt of a premium, assumes the obligation to pay claims described in the insurance contract and assumes the financial risk associated with such payments.”4 CMS describes “liability self-insurance” by referring to the Social Security Act provision that established that “an entity that engages in a business, trade, or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part.”5 In the User Guide, CMS explains, “self-insurance or deemed self-insurance can be demonstrated by a settlement, judgment, award, or other payment to satisfy an alleged claim (including a deductible or co-pay on a liability insurance, no-fault insurance, or workers’ compensation law or plan) for a business, trade or profession.”6 However, if an entity is self-insured solely for the deductible or copay portion of a liability insurance policy, and it pays the deductible or co-pay to the insurer for distribution rather than to the claimant, the self-insured entity would not be an RRE. The User Guide also defines “claimant” as including, “1) an individual filing a claim directly against the applicable plan, 2) an individual filing a claim against an individual or entity insured or covered by the applicable plan, or 3) an individual whose illness, injury, incident, or accident is/was at issue in ‘1)’ or ‘2)’.”7
While liability insurers are obvious targets of the new MMSEA requirements, entities like drug and device manufacturers also may have a reporting requirement arise in some circumstances. Most obviously, if a person suffers an injury or illness from use of its product, makes a claim against the entity for damages, and the entity has a judgment entered against it or enters into a settlement, it likely would meet the requirements of being a primary payer with a demonstrated obligation to pay.
CMS’s Implementation of the Mandatory Reporting Requirements
CMS is implementing the mandatory reporting requirements in phases. In the first phase, all RREs must register with the Coordination of Benefits Contractor (COBC) through a secure Web site. In the second phase, entities must test their ability to submit files properly. In the final phase, entities submit production files of the required information. The dates for each phase differ depending on whether the entity is a GHP or one of the other types of RREs.
CMS initially planned to begin testing for liability insurance, no-fault insurance, and workers’ compensation RREs on July 1, 2009, and to begin requiring submission of production files on October 1, 2009. However, on March 20, 2009, CMS announced that it extended the testing and submission schedule,8 and in a more detailed timeline released on May 12, CMS provided a detailed schedule of the registration, testing, and submission processes for these plans. Under
CMS’s revised implementation timeline, the registration period for liability insurance, no-fault insurance, and workers’ compensation plans will run from May 1 to September 30, 2009.9 Beginning on July 1, 2009, RREs that have completed registration may begin using an optional test and production query function to determine whether a claimant is a Medicare beneficiary. All liability insurance (including self-insurance), no-fault insurance, and workers’ compensation RREs must test submission of claim files between January 1 and March 31, 2010.10 These RREs must begin submitting product files based upon a predetermined schedule with the COBC between April 1 and June 30, 2010.11
Although CMS delayed submission of production files from liability insurance, no-fault insurance, and workers’ compensation plans, CMS will use the statutory deadline of July 1, 2009, to identify the data that these plans must submit. When these plans submit their initial production files, they must include information for “all claims involving a Medicare beneficiary as the injured party where the settlement, judgment, award, or payment date is July 1, 2009, or subsequent, and claims on which ongoing responsibility for medical payment exists as of July 1, 2009, regardless of the date of an initial acceptance of payment responsibility.”
CMS began implementation for GHPs in 2008, and GHPs with an existing Voluntary Data Sharing Agreement/Voluntary Data Exchange Agreement (VDSA/VDEA) began submitting production files in the first quarter of 2009. GHPs that did not have a prior VDSA/VDEA with CMS were required to register in April 2009 and will have until July 1, 2009 to perform the required testing.13 Under the revised implementation timeline released on May 12, 2009, these GHPs will submit their first production files based upon a predetermined schedule with the COBC between July 1, 2009 and October 1, 2009.14 GHPs that have only Health Reimbursement Account information to submit are subject to a different timeframe, with registration between May 1 and June 30, 2010, testing between July 1 and September 30, 2010, and submission of production files occurring October 1 and December 31, 2010.15
CMS has extended its implementation timeline for the Medicare secondary payer mandatory reporting requirements for GHPs, liability insurance (including self-insurance), no-fault insurance, and workers’ compensation plans, but affected entities should begin working now to ensure that they are prepared to comply with CMS’s schedule.