Government Issues Work Plan implicating Medicare Secondary Payer
Jeff Signor
October 5, 2012

Jeff Signor- Chief Operations Officer

The Office of Inspector General (“OIG”), an entity within the Department of Health and Human Services (“HHS”) has released a Work Plan for Fiscal Year 2013.  This Work Plan sets forth various projects to be addressed during the fiscal year by the Office of Audit Services, Office of Evaluation and Inspections, Office of Investigations, and Office of Counsel to the Inspector General.  The Work Plan includes projects planned in each of the Department’s major entities: the Centers for Medicare & Medicaid Services; the public health agencies; the Administrations for Children & Families; and Administration on Aging. Information is also provided on projects related to issues that cut across departmental programs, including State and local government use of Federal funds, as well as the functional areas of the Office of the Secretary of HHS. Some of the projects described in the Work Plan are statutorily required, such as the audit of the Department’s financial statements, which is mandated by the Government Management Reform Act.

The Work Plan does not provide additional details on jobs to be undertaken or information on the status of jobs contained in its Work Plan.  For example, although estimated issue dates are provided in the Work Plan, revised estimates or current status is not provided.

One item that is contained in the Work Plan makes specific reference to the SCHIP Extension Act of 2007:

Medicare as Secondary Payer—Improper Medicare Payments for Beneficiaries With Other Insurance Coverage:  We will identify improper Medicare payments made for services to beneficiaries who have certain types of other insurance coverage to assess the effectiveness of Medicare’s controls to prevent such payments. (Social Security Act, § 1862(b)).  We will determine whether selected non-Medicare health plans properly reported insurance coverage information to Medicare as required. (Medicare, Medicaid and SCHIP Extension Act of 2007, §111). (OAS; W-00-13-35317; various reviews; expected issue date: FY 2013; new start)

Franco Signor Commentary:

The fact that OIG is including an effort to investigate for compliance with the reporting requirements contained in the SCHIP Extension Act is telling.  We do not yet know what this will mean to the casualty industry; however, it is logical to conclude that enforcement efforts are underway to use Reporting Data to ensure compliance with the Medicare Secondary Payer Act.  Responsible Reporting Entities are currently providing a good deal of information to Medicare with regard to settlements, judgments or awards.  The threshold for liability reporting was lowered to $5,000 as of October 1, 2012.

1.      Reporting:  Some in the industry are using this development to indicate a movement toward enforcement of the $1,000 per day per claim penalty that arises for failure to comply with the SCHIP Extension Act.  We are all quite aware of this penalty, and we may now be seeing which entity is being charged with its enforcement.  It is extremely important that all RREs are complying with the Act’s requirements by employing logic to their existing Reporting protocols.  We firmly believe that many in the industry are simply capturing data and pushing it to Medicare without guidelines or protocol managing this process.  Franco Signor LLC assists the RRE with a Reporting Logic tool contained in a proprietarily developed iComply program.  We remain available to assist the RRE community with any questions on this important topic!

Some examples of the need to apply Reporting Logic are as follows:

a. Is your claim operation appropriately flagging a claimant as a Medicare Beneficiary?

b. With respect to ORM, are you properly closing the file with Medicare?  No-Fault and Med-Pay are much different than TPOC Settlements.

c. With respect to penalty enforcement, do your examiners understand the importance of timely reporting and the RRE’s reporting window?

2.      Conditional Payments:  Once Medicare is made aware of a settlement, judgment or award, it will be extremely easy for the OIG to ascertain whether conditional payments have been satisfied for the claim in question.  The Medicare Secondary Payer Recovery Contractor (“MSPRC”) is already charged with ensuring payments are made for all such settlements, judgments or awards; however, it would make sense to conclude that investigatory efforts will be strengthened by OIG efforts.

An example of conditional payments being identified at the time of reporting concerns the case wherein Medicare was not aware of the claim until at the time of reporting.  Under Medicare’s existing scheme, Conditional Payment Notices (“CPNs”) are issued if Medicare’s fist notice of the settlement occurs at time of reporting.  We predict that a good deal of CPNs will issue as a result of matters being reported, post-settlement, that Medicare was not aware of prior to the settlement.  Such notices lead to a real dollar-for-dollar exposure to the parties, including the RRE.  Franco Signor LLC is staffed with professionals at the ready to offer solutions to responding to such notices, including the potential need to dispute charges as unrelated.  Call us to help with your claims postured in this fashion!

3.      Protecting Medicare’s Interests:  The settlement of a liability case may involve future incident-related care and treatment.  Medicare has not finalized any formal process for evaluating this issue, other than announcing an array of options contained in the Advanced Notice of Proposed Rule Making (“ANPRM”).  It is not a leap in logic for Medicare to take steps to ensure post-settlement monies are not being spent by Medicare to provide incident-related treatment.

An example of what the investigatory efforts of the OIG Work Plan could lead to concern the high dollar settlement that is reported to Medicare.  Let’s assume that within months of receiving the Mandatory Insurance Reporting information, the claimant undergoes a surgery.  We believe Medicare’s first response to such surgical costs will be to deny payment based upon the settlement.  The logic for such denial is that claimant received settlement dollars for the same injury, and that such future treatment should be paid for out of the settlement.  However, Medicare may take a political hit if it suspends Medicare benefits to the elderly and inform populations.  Depending upon how the ANPRM efforts take form, it is reasonable to conclude that Medicare will cover such post-settlement surgical treatment, consider such payments “conditional” and look to the RRE for repayment.