Beginning October 1, 2011, primary insurers will assume responsibility for reporting to the federal government any payments (lump sum or installment) made to Medicare recipients who have alleged bodily injury or emotional distress.  Primary insurers include group health plan insurers, liability insurers (including self-insurers), no-fault insurers, and workers' compensation insurers.  Such reporting is mandatory, regardless of whether there has been a determination of liability, and includes any settlement in which the primary insurer accepts responsibility for paying an individual's ongoing or future medical expenses.

The Medicare, Medicaid, and SCHIP Extension Act of 2007 ("MMSEA"), which amended the Medicare Secondary Payer Act ("MSPA"), created the new requirements shifting the reporting burden to insurers.  Before the passage of MMSEA, injured Medicare recipients who received payments or settlements under these insurance programs carried the burden of reporting an insurer's payment.

Insurers should report payments to the Centers for Medicare & Medicaid Services ("CMS"), which is part of the U.S. Department of Health and Human Services.  Failure to comply with MMSEA exposes insurers to liability and costly penalties, $1,000 per day of noncompliance per matter.  Furthermore, MMSEA authorizes CMS to bring a recovery action against an insurer for double the amount of all lost Medicare reimbursement payments, together with interest. 

Employers should anticipate that their insurance carriers will request they transmit certain identifying information on all individuals receiving payments under applicable insurance policies.  Failure to provide this information in a timely manner could expose the insurer to substantial liability, which the insurer could potentially seek to recover from the employer.