Section 111 - Are You Ready for the New CMS Reporting Requirements?

1. Section 111 - Are You Ready for the New CMS Reporting Requirements? Presented by: Lisa K. Shortt Smith Moore Leatherwood LLP 300 N. Greene Street, Suite 1400 Greensboro, North Carolina 17401 T: (336) 378-5200 F: (336) 378-5400 Erin S. Zuiker Smith Moore Leatherwood LLP 434 Fayetteville Street, Suite 2800 Raleigh, North Carolina 27601 T: (919) 755-8700 F: (919) 755-8800 To ask a question during the presentation, click the Q&A menu at the top of this window, type your question in the Q&A text box, and then click “Ask.” After you click Ask, the button name will change to “Edit.” Questions will be queued and most will be answered at the end of the meeting as time allows.

2. Section 111 : New Reporting Rules • Since 1980, The Centers for Medicare and Medicaid Services (“CMS”) has had the right to be the Secondary Payer for any medical expenses paid on behalf of a Medicare beneficiary. • Through the MMSEA Section 111 Reporting Requirements, CMS is exerting its right to always be the payer of last resort. CMS

3. Statutory Authority • In 2007, Congress passed new legislation that added teeth to the existing Medicare Secondary Payer (“MSP”) law. • The Medicare, Medicaid and SCHIP Extension Act of 2007 (“MMSEA”) amended the MSP provisions at 42 U.S.C. 1395y(b)

4. Statutory Authority – MMSEA Section 111 • Section 111 of the MMSEA: • Includes mandatory reporting requirements to ensure Medicare’s status as a Secondary payer; • Imposes new reporting requirements on all GHPs and NGHPs; and • Includes a penalty for non-compliance = $1,000 per day, per claim.

5. Section 111 : New Reporting Rules • Mandatory Reporting Requirements: • To accomplish its status as Secondary Payer, CMS wants to know what entities are settling with Medicare Beneficiaries. • CMS now wants data, so that it can guarantee its status as a Secondary Payer. • Section 111 will enable CMS to ensure that it does not make payments if another payer is responsible.

6. Section 111 : New Reporting Rules • Section 111 Reporting only applies to Medicare Beneficiaries (it has no application to Medicaid). • Under Section 111, if you or your organization pays the medical expenses of a Medicare beneficiary, you must report to CMS.

7. Who is Impacted? • Responsible Reporting Entities (“RRE”) are those entities required to report data to CMS under Section 111 of the MMSEA • CMS has categorized RREs into: • Group Health Plans (“GHPs”); and • Non-Group Health Plans (“NGHPs”).

8. GHPs - 42 U.S.C. 1395y(b)(7) • GHPs - 42 U.S.C. 1395y(b)(7) • GHP - entity that in return for receipt of a premium, assumes obligation to pay claims. • Third Party Administrator (“TPA”) – entity that pays or adjudicates claims on behalf of the GHP. • For MMSEA Section 111, the GHP’s TPA is the RRE. • Implementation began January 1, 2009. • CMS estimates that 70% of all GHP MSP data is already reported.

9. NGHPs - 42 U.S.C. 1395y(b)(8) • Focus of this presentation is on NGHPs

10. NGHPs – The “applicable plan” • The “applicable plan” includes: • Liability insurance (including self-insurance); • No-fault insurance; and • Workers’ compensation.

11. NGHPs • Unlike GHPs, the TPA for NGHPs is not the RRE, “based solely on its status as a TPA.” • NGHPs may use an agent for reporting purposes, though the liability for noncompliance remains with the NGHP.

12. What Must be Reported? • Section 111 mandates that all payers will be responsible for reporting any: • Settlements; • Judgments; • Awards; or • Other payments for any medical expenses… That are paid on behalf of a Medicare beneficiary.

13. When To Report?

14. When To Report? • Section 111 requires a Quarterly Report to be submitted to CMS. • Each RRE was required to register between May 1, 2009 and September 30, 2009. Though registration remains open. • The RRE will be assigned an RRE ID. • Each RRE ID will be assigned a Quarterly File Submission Date.

15. When To Report? • Once registered, the RRE will begin a testing phase. • The testing phase will run through March 31, 2010. • Live data submissions will begin April 1, 2010.

16. Responsible Reporting Entity (“RRE”) • Section 111 mandates that the RRE report specific information to CMS beginning in 2010. • An RRE is the entity that actually pays the claim on behalf of a Medicare eligible individual. • Examples: • An entity has 1st Dollar coverage for their liability insurance, the Insurer is the RRE because the Insurer pays the claim in full. • An entity has a Self-Insured Retention (“SIR”) amount of $500,000, the Insured is the RRE for any monies paid to a Medicare beneficiary out of the SIR amount. • An entity does not have an insurance policy, but settles for $10,000 with an injured party who is a Medicare beneficiary, the entity paying the claim is the RRE.

17. RRE • The RRE may contract with a TPA for their insurance obligations, however the TPA is not the RRE “based solely on its status as a TPA.” • The Section 111 Reporting responsibility remains with the RRE. • The penalty of $1000/day/claim remains with the RRE.

18. What Data? • Data elements include: • Social security number; • Date of injury; • Plan information; • Settlement amounts; and • Legal representation information.

19. How is Data Reported? All submissions must be in an electronic format .

20. Types of Settlements • CMS has identified two Types of Settlements: • Total Payment Obligation to the Claimant (“TPOC”); and • Ongoing Responsibility for Medicals (“ORM”).

21. TPOC • TPOC payments require only one reporting event: • If at time of payment, the individual receiving payment is a current Medicare beneficiary = Report • If at time of payment, the individual receiving payment is not a current Medicare beneficiary = Do Not Report • That’s it!

22. Reporting TPOCs • All TPOCs as of January 1, 2010. • TPOCs Interim Thresholds: • 2010 – payments below $5000.00 exempt • 2011 – payments below $2000.00 exempt • 2012 – payments below $600.00 exempt • But note, if multiple TPOCs are reported on the same record or if a deductible is involved, the combined total is used in determining the threshold.

23. ORM • ORM payments require two reporting events: • If at time of payment, the individual receiving payment is a current Medicare beneficiary = Report; and • The second report is at the time the ORM payment obligation terminates.

24. ORM • Note: If at the time of payment, the individual is NOT a Medicare beneficiary, but later becomes a Medicare beneficiary, the RRE is responsible for monitoring the individual’s change in status and reporting the data to CMS.

25. Reporting ORMs • ORMs incurred as of July 1, 2009 are reportable. • No-fault and liability ORMs, including self-insurance, have no de minimus dollar threshold . • Workers’ Compensation ORMs – exempt through 12/31/2010, if meet ALL of the following: • “Medicals only”’ • “Lost time” of no more than 7 calendar days • All payment(s) has/have been made directly to the medical provider • Total payment does not exceed $600.00

26. What will Section 111 Cost to Implement? • CMS estimates it will take RREs approximately 375 hours to develop the administrative processes to comply with Section 111.

27. What will Section 111 Cost to Implement? • However, compliance requires: • Potential collection and entry of over 200 data fields per claimant; • Potential for 199 error codes; • Ongoing Quarterly Reports; • Internal Monitoring of an individual’s Medicare status for ORM payments; and • Failure to Report = $1000/day/claim.

28. What will Section 111 Cost to Implement? • CMS has developed strict guidance for reporting: • Data must be reported in a certain form and format; • Data must be converted into a “flat file” in ASCII format; and • Data cannot be reported: • in Excel; • in Word; or • In a manner that does not control every aspect of data entry into the required field.

29. Section 111 Medical Payments by Liability Entities www.smlcompliance.com • Software is designed to drive proper data entry by: • Restricting field inputs, • Identifying errors with error reports, • Formatting fields to the required specifications, • Automatically creating the reports specified by CMS, and • Importing the Medicare Response files and generating reports.

30. Questions??

31. Erin S. Zuiker Smith Moore Leatherwood LLP 434 Fayetteville Street, Suite 2800 Raleigh, North Carolina 27601 T: (919) 755-8700 F: (919) 755-8800 Lisa K. Shortt Smith Moore Leatherwood LLP 300 N. Greene Street, Suite 1400 Greensboro, North Carolina 17401 T: (336) 378-5200 F: (336) 378-5400