In light of US Medicare legislation now in effect, the below is meant to update members on recently-enacted requirements regarding disclosure of payments made to Medicare beneficiaries
Effective 1 October 2011, the Medicare, Medicaid & SCHIP Extension Act of 2007 (MMSEA) will require that quarterly reports are filed electronically to Medicare by a Reponsible Reporting Entity (RRE) who resolves a personal injury claim by settlement, judgment, award or other payment. These new requirements will impact nearly every US or foreign shipowner who faces personal injury claims in the US.
By way of background, in 1980, the US Congress enacted the Medicare as Secondary Payer Act (MSP) which allows the Centers for Medicare and Medicaid Services (CMS) to pursue damages against any entity that attempts to shift the burden of medical costs to Medicare. The purpose of the MSP statute is to ensure that CMS is not primarily responsible for payment of medical expenses for Medicare beneficiaries [1] if another payer is available. 42 U.S.C. § 1395y(b).
The MSP statute specifically provides that Medicare may not make payment on behalf of a beneficiary if, “payment has been made or can reasonably be expected to be made under a worker’s compensation law or plan . . . or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance. 42 U.S.C. § 1395y(b)(2)(A)(ii). As a result, Medicare will look to one of these designated plans or policies as the “primary” payer for all injury or illness related medical expenses. Under this statute, CMS has the right to seek reimbursement of medical expenses paid to Medicare that an insurance carrier or self-insured should have paid. 42 U.S.C. §1395y(b)(2)(B).
In 2007, Congress enacted the Medicare, Medicaid & SCHIP Extension Act of 2007 (known as MMSEA) which is designed to enhance the enforcement of the MSP law. These requirements are intended to make it easier for CMS to determine when the Medicare program does not have primary payment responsibility to Medicare reimbursable expenses. Section 111 of the MMSEA mandates that liability insurers, including self-insurers, no fault insurers and workers’ compensation plans identify claimants who are entitled to Medicare benefits and submit , in electronic format, certain information to CMS concerning this Medicare-eligible individuals. This information must be provided in the form, manner and frequency [2] specified by the Secretary of Health and Human Services and must be submitted “after the claim is resolved through a settlement, judgment, award, or other payment, regardless of whether or not there is a determination or admission of liability.” 42 U.S.C. § 1395y(b)(8).
The purpose of the new requirements is (1) to protect the US Medicare system from making payments in situations where a private insurer and/or a tortfeasor is deemed to be the primary payer obligated to make payments to the Medicare beneficiary and (2) to avoid possible duplicate payments to the Medicare beneficiary. The failure to comply with Medicare’s new reporting rules can result in a civil penalty of USD 1,000.00 per day of non-compliance, per claimant.
The entities responsible for complying with the reporting requirements are referred to as responsible reporting entities or RREs. In light of the "pay to be paid" principle contained in the Association's Rules, a shipowner should consider itself to be the RRE and it has the responsibility to report any qualifying payments made to Medicare beneficiaries. If there are questions about whether a particular claimant is a Medicare beneficiary or if the payment requires reporting to CMS, a shipowner should consult with counsel as soon as possible as determinations of eligibility are complex and fact-dependent.
These reporting regulations were originally scheduled to go into effect on July 1, 2009 but there have been delays in their implementation. The timetable to report settlements, judgments, awards or other payments is being phased in over time and is as follows:
- payments of over USD 100,000 made on or after October 1, 2011 must be reported to CMS in the quarter beginning January 1, 2012. This means reporting must be done by March 31, 2012.
- payments of over USD 50,000 made on or after April 1, 2012 must be reported to CMS in the quarter beginning July 1, 2012. This means reporting must be done by September 30, 2012.
- payments of over USD 25,000 made on or after July 1, 2012 must be reported to CMS in the quarter beginning October 1, 2012. This means reporting must be done by December 31, 2012.
- payments over a minimum threshold (yet to be determined) made on or after October 1, 2012 must be reported to CMS in the quarter beginning January 1, 2013. This means reporting must be done by March 31, 2013.
CMS has provided voluminous guidance documents which are available at https://www.cms.hhs.gov/
Questions have been raised about whether these reporting requirements apply to entities which do not have a US domicile or subsidiary. At present, there are no exceptions to this reporting requirement based on the domicile of the shipowner RRE. Therefore, if the RRE determines that the claimant is Medicare eligible, the RRE has s duty to report to CMS regardless of its foreign domicile or presence outside the US.
In light of these reporting requirements, various third-party contractors can be retained by members to assist in the Medicare reporting requirements. We encourage members to ask the Skuld claimshandler and/or legal correspondents to provide recommendations for reputable contractors.
[1] In general terms, US citizens are eligible to receive Medicare benefits if they are 65 years of older, if they are In under age 65 and have certain disabilities, or if, regardless of age, they have end-stage renal disease.
[2] On 16 March 2009, CMS published on its website Version 1 of the Mandatory Reporting User Guide and it outlined the form, manner and frequency with which it expects to receive data from liability insurers, self-insurers, no fault insurers and workers’ compensation plans. On 11 August 2011, CMS published Version 3.2 of its User Guide. This document is 311 pages in length and it is available here (PDF).