UPDATE ON MEDICARE’S REPORTING REQUIREMENTS SC Self-Insurers Association, Inc. General Membership Meeting November 4, 20

1. UPDATE ON MEDICARE’S REPORTING REQUIREMENTS SC Self-Insurers Association, Inc. General Membership Meeting November 4, 2010 Daniel W. Hayes, Esquire

2. Updates since April 21-23, 2010 Members Only Forum: • Various Alerts issued by CMS • www.cms.gov/MandatoryInsRep/ • U.S. v. Stricker decision (filed September 30, 2010)

3. Mediation09.14.2010 • Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 • Section 111 of the MMSEA • What is the SCHIP? • “ State Children’s Health Insurance Program” • Purpose? • Safeguard against shifting burden for ongoing medical care from primary payer to Medicare • Section 111 is in addition to other MSP provisions (MSA allocation, etc.) • We’re interested in how it impacts Non-Group Health Plans (NGHPs)

4. What is reportable? • Settlements, judgments, and awards to Medicare recipients: • Because Medicare recipient, likelihood of: • conditional (past) medical payments and • Obligation for future medical payments (must consider MSA allocation, but reviewable by CMS only if amount of settlement > $25,000) • Applies if TPOC (Total Payment Obligation to Claimant) exists on or after 10/01/10 • In general, TPOC = date settlement is signed, award/judgment filed • Also applies if ORM (Ongoing Responsibility for Medicals) exists on or after 01/01/10 • What about mass torts, class actions settlements? (See U.S. v. Stricker)

5. Refresher: • CMS Memo: March 29, 2010 • “Revised Implementation Timeline” • Two categories: • (1) Group Health Plan (GHP) • (2) Non-GHP, or NGHP • Liability Insurance (including Self-Insurance), No-Fault Insurance, and Workers’ Compensation

6. CMS Memo: March 29, 2010 (cont’d) • “Revised Implementation Timeline” • “Claim Input File” testing 01/01/10 – 12/31/10 • System will go “live” 01/01/11 • All initial claims must be submitted 01/01/11 to 03/31/11 according to assigned timeframes for RRE’s (Responsible Reporting Entities)

7. CMS Memo: April 6, 2010 • Collection of HICNs, SSNs, and EINs • HICN: Medicare Health Insurance Claim Number • SSN: Social Security Number • EIN: Tax Identification Number (actually Employer Identification Number) • Collection of this information is proper for purposes of compliance with reporting requirements under Section 111

8. Mediation09.14.2010 • New MMSEA 111 Alerts since the Members Only Forum • May 27, 2010 • June 14, 2010

9. MMSEA 111 Alert: 05/27/10 • Alert for RRE’s of Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation • RRE does not report regularly scheduled periodic payments, pursuant to statute, for obligation other than medical expenses • (Ex) weekly TTD; weekly payment of permanency award • But must separately report ORM (Ongoing Responsibility for Medicals) • Periodic “indemnity only” payments raises inference of ORM • Periodic payments not reported as TPOC (Total Payment Obligation to Claimant)

10. MMSEA 111 Alert: 06/14/10 • RRE ID Accountability and Other Registration Material • What to do if RRD creates ID’s unintentionally • Each RRE ID requires full compliance • Use of agent by RRE • Changing information for RRE with COBC (Coordination of Benefits Contractor)

11. Mediation09.14.2010 • New NGHP (Non-Group Health Plan) Alerts since Members Only Forum • May 25, 2010 • May 26, 2010 (x 3) • September 16, 2010

12. NGHP Alert: 05/25/10 • New Direct Data Entry (DDE) Option for NGHP • Available for “Small Reporters” • RRE who expects to have only an occasional claim report to make • May only submit 500 or less claim reports per calendar year • If injured party’s information does not match a Medicare beneficiary, counts toward the 500 claims limit (essentially like a “51” disposition code) • DDE reporting may begin 01/03/11 • No testing will be required

13. NGHP Alert: 05/26/10 (#1) • Revision to 02/24/10 Alert • Includes that entities with insurance plan with deductible are no longer required to report • Reported by entities’ insurer • Self-insured entities must continue to report • Whether TPA is considered RRE • Generally, NO • But see, state’s Assigned Claims Fund • Different under GHP arrangements, where TPA is the RRE

14. NGHP Alert: 05/26/10 (#2) • Risk Management Write-Offs for NGHPs • “reduction in the amount due as a risk management tool” constitutes liability self-insurance for purposes of Medicare Secondary Payer provisions • Intended by risk management to lessen probability of liability claim against it or facilitate/enhance good will • Provider reduces or W/O portion of charge to Medicare • Provide property of value to Medicare beneficiary where reasonable to expect will seek medical care

15. NGHP Alert: 05/26/10 (#3) • Clinical Trials & NGHPs • If payments are made by sponsors of clinical trials for complications or injuries arising out of the trials, considered payment by liability insurance (including self-insurance) • Must be reported

16. NGHP Alert: 09/16/10 • Further definition of “Small Reporter” for purpose of Direct Data Entry (DDE) • Registration overview for DDEs • Further considerations for DDEs

17. United States of America v. James J. Stricker, et al. • “Memorandum Opinion Granting Certain Defendants’ Motions to Dismiss” • Filed with U.S. District Court N.D. of Alabama, 09/30/10 • FN 1: “Not all defendants filed motions to dismiss. The court does not presume to know why . . . .” • “Accordingly, the decision set forth in this Memorandum Opinion and accompanying Order does not apply to those Defendants.”

18. U.S. v. Stricker • BACKGROUND • 2003 underlying class action tort settlement • Monsanto Company and its predecessors produced PCB’s (Polychlorinated biphenyls) at a chemical manufacturing plant one mile west of downtown Anniston, AL • The EPA determined PCB exposure could cause health dangers including cancer, decreased fertility, still births, and birth defects • 1000’s of toxic-tort actions filed in Alabama against Monsanto and predecessor companies

19. U.S. v. Stricker • All cases were consolidated in both Alabama state and federal courts • Global settlement reached on 08/20/03 • $300 million • Involved combined total of more than 20,500 people • $275K placed in Court trust; remainder to be paid in annual installments through 2013 • Conditions to release: • Funds released into attorney-maintained trust once 75% of adult plaintiffs signed releases • Could be disbursed to plaintiffs once court approved all minor settlements and 97% of releases signed

20. U.S. v. Stricker • Department of Justice filed suit 12/01/09 against plaintiff attorneys and defendant corporations/insurance carriers under Medicare Secondary Payer statute • Alleged 907 unnamed recipients also received Medicare payments for unidentified medical expenses related to PCB contamination • (Some) defendants filed Motion to Dismiss based upon statute of limitations

21. U.S. v. Stricker • Issues for Court: • (1) What SOL applies to each class of defendants (corporate defendants, plaintiff attorneys)? • (2) When did the government’s cause of action accrue for each class of defendants?

22. U.S. v. Stricker • MSPA does not include a SOL • Parties agreed SOL under the “Federal Claims Collection Act” would apply • 3 years if founded upon tort; • 6 years if founded upon contract

23. U.S. v. Stricker • Corporate Defendants: • No express contract between government and corporate defendants • Any reimbursement duties based solely on MSP statute • Liability, if any, arises out of defendants’ liability in tort settlement • “But for” the tort liability, no liability for reimbursement • So, 3 year statute of limitations applies under tort

24. U.S. v. Stricker • When did government’s cause of action accrue against corporate defendants? • Court focused on determining at what point did defendants’ responsibility to pay arise in relation to the underlying class-action settlement • For corporate defendants, accrued on date settlement agreement executed and approved by Court on 08/20/03 • So even if 6 year SOL applied, government lawsuit filed 12/01/09 would have been barred

25. U.S. v. Stricker • Plaintiff Attorneys: • Conceded 6-year statute of limitations based upon contractual nature of attorney fees received from their clients • So, issue is when did government’s cause of action accrue against plaintiff attorneys?

26. U.S. v. Stricker • Government argued no responsibility to pay arose until 12/02/03, when all minor settlements were approved by court, 97% of plaintiffs had signed releases, and funds could be disbursed • DOJ lawsuit filed 12/01/09---one day prior to 6 years later • Settlement was “conditional” • The Court did not agree • 97% certification was “condition subsequent” to contract • Did not affect overall enforceability of settlement agreement

27. U.S. v. Stricker • Government’s right to intervene against plaintiff’s attorneys accrued no later than 10/29/03, when funds transferred from Court into attorneys’ escrow account • Lawsuit filed against plaintiff attorneys on 12/01/09 barred by 6-year SOL

28. Why is U.S. v. Stricker important? • Provides framework for calculating government’s statute of limitations for filing lawsuits to collect reimbursement • When applied in context of mandatory reporting requirements, may be able to calculate either 3-year or 6-year SOL’s based upon date of Total Payment Obligation of Claimant (TPOC), or when settlement agreement is signed (or award/judgment filed) • Likely 3-year SOL applicable to corporate defendants/carriers • Likely 6-year SOL applicable to plaintiff attorneys • Shows the government can be defeated on MSP lawsuits (but not over yet . . . )