MMSEA: Hurry Up and Wait for the Feds

1. MMSEA: Hurry Up and Wait for the Feds

2. The Round-Up… Moderator: • Thomas Paschos, Esq., Partner, Thomas Paschos &Associates, P.C. Panelists: • Tom Blackwell, MSCC, National Vice President of Sales, Gould & Lamb, LLC • Theresa J. Bradley, Esq., Staff Attorney, ProAssurance Corporations • James Reed, Esq., Associate General Counsel, Loyola University Health System • Michael C. Stinson, JD, Director of Government Relations, Physician Insurers Association of America

3. Medicare as a Secondary Payer • Insurer is responsible for paying medical expenses • “Responsible” = when case has settled or goneto verdict • Medicare either does not pay OR • Medicare pays conditionally • Insurer, plaintiff or attorney has to reimburse Medicare

4. Present Day Medicare • Medicare is under funded • CMS wants its money • No consistent way for Medicare to discover claims • MMSEA Section 111 • Payers required to report claims

5. Penalties for Failure of Insurer to Reimburse Medicare • Medicare has a claim, not a lien • Medicare can sue the insurer, plaintiff &plaintiff’s attorney • Double damages under the SSA • Treble damages under the FCA (All in addition to fines for failure to report)

6. Medicare Secondary Payer Act (M.S.P.) • Omnibus Reconciliation Act of 1980. • MMA 2003, Title III, §301 • Acceptance of Liability not needed • Medicare-Secondary Payer Status-all linesof insurance • WC primary to Medicare since 1965

7. Medicare Secondary Payer Act (M.S.P.) cont’d • Liability and No-Fault insurers • Responsible to protect Medicare’s interest • MSP gives Medicare two rights: 1. Right of Recovery 2. Consideration for Future Medicals

8. Medicare Secondary Payer Act & Section 111 • Carriers and self-insurers can suffer penalties • Delayed Settlements – increased adjudication • Medicare is ready to move forward • Reporting began 10/1/2010 • MSP compliance is their main focus • Settlement language is critical

9. Medicare, Medicaid, and SCHIP Extension Act (2007) • MMSEA is government’s method to enforceMSP rights • Requires insurers to “vet” Medicare statusof plaintiffs • The reporting requirement carries heavy penalties • Data is being reviewed by third parties • Timing is critical

10. Penalties for Failing to Report • Subject to a $1000 / day fine. • Penalty can be assessed for data integrity issues. • Only 1 period per quarter that you can send data • Miss that opportunity? The penalty will be atleast $90,000!

11. Underwriting Implications: MMSEA and MSP • Increased uncertainty regarding loss development pattern • Limited actuarial information regarding cost implications • Increased claims handling costs • Increased claims settlement values • Increased no-fault payments • Increased defense costs

12. Assessing Risks Associated with Medicare & MMSEA • Cost implications • Insured’s medical specialty • Insured’s venue • Jurisdictional limits of liability

13. Understanding the Medicare and Lien Process • Major steps in the lien process: • Report claim to Medicare • Request a “conditional payments” letter • Determine payments “related” to claimed injury • Report settlement to Medicare • Obtain “final demand” letter from Medicare • Pay Medicare’s claim or appeal determination(60 days to appeal)

14. Importance of Medicare Lien Process • It slows the claims process: • Increased time for resolving cases • Requires additional discovery related solely to Medicare data • May need to adjust indemnity and expense reserves • Cases with large medical specials may require Medical Set Asides

15. Importance of Medicare Lien Process • Creates difficulty evaluating risks: • Files open longer (more open at a given time) • Difficult to obtain information on pending claims • Difficult to assess risks with little claims information

16. ProAssurance –Satisfying MMSEA Reporting Requirements • Designated a Medicare compliance attorney • Redesigned claims system to capture required data • Drafted claims procedures to ensure compliance • Conducted employee and defense attorney education • Information Systems created programs to automate the reporting

17. Involvement with CMS • Consulted with CMS from the start • Explained Medical Professional Liability insurance to them • One-on-one meetings • Industry meetings

18. CMS • Will be overwhelmed by reporting • Guidance will continue to change • May seek change to legislative authority

19. CMS • Trying to be realistic • Wanted to accommodate industry (somewhat) • Had no idea how P/C insurance worked

20. Implementation of Reporting Requirements • Even after a company complies; you may still not be able to relax: • Guidance may change at any time • Continue to monitor CMS • Must be focused on MSP issues now

21. Congress Reaction to Reporting Requirements • Remains to be seen • Nothing this year • Legislation this year could be base for 2011 action • Medicare Secondary Payer Enhancement Act • Requires Medicare to promptly respond to demand letters • $5,000 threshold for reimbursement • Safe harbors for reporting • No SSN requirement • User fees to pay for system

22. Medicare Enforcement - Nationwide • CMS will probably allow for an “adjustment period” • Within 6 months, CMS will expect compliance • CMS are likely to refer claims to DOJ when insurers: • Should have known about a claim • Knew of a claim & intentionally failed to report 

23. Medicare Enforcement - Regional • “Tough” regions include Chicago & East Coast • Southern regions (Dallas/Atlanta) known to “negotiate” • Recent trend– coordination & cooperation among regions: • Establish consistent thresholds • Handle all similar cases similarly

24. Who Has Exposure? • Anyone involved in the claims process • In practice: • Any source of payment (insurers/self-insured entities) is highly exposed • CMS and DOJ rarely actively pursue patients/claimants and their attorneys

25. Insurers – How to Avoid Litigation and Ensure Compliance • Don’t get complacent • Monitor CMS for guidance changes • Get active with Congress

26. Insurers – How to Avoid Litigation and Ensure Compliance • Develop Compliant Settlement Language • Record all attempts to collect MMSEA data • Initial claimant - include request for 5 fields • Start MSP compliance process early

27. Insurers – How to Avoid Litigation and Ensure Compliance • Familiarize yourselves with the reporting requirements • Designate a compliance specialist • Develop systems within claims department to obtain and capture data • Develop safety net to ensure compliance • Educate staff and defense attorneys • Educate plaintiffs’ bar

28. Self Insured's - How to Avoid Litigation and Ensure Compliance • Insist that your attorneys protect your interests when payment is made: • Issue a multi-party check (Medicare as a payee) • Demand indemnity language in the release • Take advantage of CMS resources: • Computer-based, on-line training • Town hall conference calls • CMS, MMSEA Section 111 web site

29. Self Insured's - How to Avoid Litigation and Ensure Compliance • Make sure your defense attorneys are MMSEA/MSP educated • Include Medicare compliance language in all settlement documents • Collect query Data early in Claim’s Life Expectancy • Keep records of all attempts to collect data.

30. Avoiding Litigation andEnsuring Compliance • TPAs and attorneys: • Inform clients of handling protocols forMedicare claims • Develop Compliant Settlement Language • Record all attempts to collect MMSEA data • Initial claimant contact should include requestfor 5 fields • Start the MSP compliance process early

31. Preventing Actions and Ensuring Compliance • Notify Medicare of claim prior to reporting • Take steps to ensure Medicare reimbursement/ set-aside

32. Preventing Actions and Ensuring Compliance • Report Timely • Keep Records • Verify data • Strictly follow your handling protocols,once established

33. Preventing Actions and Ensuring Compliance • Establish strong professional relationship with contractor • Your reputation at claims professional level is very valuable •  Establish a process to identify every potential claimant • Catch all claimants who become Medicare eligible during pendency of case

34. Predictions – Effect on Industry/TPA/Attorneys/Claims • Crippling effect on settlement negotiation process • Increased frustration • Initial confusion and mistakes (on both sides) •  Eventually will become part of business process

35. Predictions – Effect on Industry/TPA/Attorneys/Claims • More Clients from liability and auto • More E&O issues • Claim Frequency will diminish • Severity will increase • Case management will become a priority forall lines • No long term effect on number of settlements

36. Predictions - Costs • Increased settlement values • Increased defense costs • Increased business costs

37. Predictions – Future Enforcement by the Government • Concern is “bundling” of claims with insurers on the hook for all reimbursements • No dramatic change • Congress still wants Medicare to be solvent • “Fixes” may be possible - bipartisan • 2012 election will dominate agenda – spending will be the key issue

38. Questions&Answers

39. Many Thanks To… • Thomas Paschos, Esq., Thomas Paschos & Associates, P.C., PH: 215-636-5555/856-354-1900; E-Mail: tpaschos@paschoslaw.com • Tom Blackwell, MSCC, Vice Pres. of Sales, Gould & Lamb, LLC. PH: (941) 798-2098; E-Mail: tom.blackwell@gouldandlamb.com • Theresa J. Bradley, Staff Attorney, ProAssurance Companies PH: 205.877.4466; E-Mail: Tbradley@proassurance.com • James L. Reed, Jr., Associate General CounselLoyola University Health SystemPH: (708) 216-3708; E-Mail: JREED@lumc.edu • Mike C. Stinson, JM, Director of Government RelationsPhysician Insurers Association of AmericaPH: 301.947.9000; E-Mail: Mstinson@piaa.us