Notifying Medicare. 42 CFR 411.25. $5k Threshold?havw
Jeff Signor
May 8, 2010

The SCHIP Extension Act has delivered a one-two punch to the liability industry since it was passed on December 29, 2007.  On one hand it does what the Centers for Medicare & Medicaid Services (CMS) has long desired – the ability to know about every settlement, award or judgment involving a Medicare beneficiary liability claim.   On the other hand, to provide the required information it has been a game changer to the way the Medicare beneficiary liability claim is approached by parties – no longer is it acceptable to lay responsibility to complete the Medicare obligation at the Medicare beneficiary’s feet.   The result is a knock-out for the industry that does not prepare itself for the flurry that comes with MSP n0n- compliance.

Medicare Secondary Payer (“MSP”) compliance is best achieved when the primary plan notifies the Coordination of Benefits Contractor (“COBC”) of a personal injury claim involving a Medicare beneficiary, “[i]f it is demonstrated to a primary payer that CMS has made a Medicare primary payment for services for which the primary payer has made or should have made primary payment…” (See 42 CFR 411.25).

Primary plans hesitate when claims are valued at $5,000 or below.  Most in the industry are confused about the $5,000 threshold because of the SCHIP Extension Act.  Under SCHIP, primary plans are obligated to electronically report settlements, judgments, awards or other payments if the payment to the beneficiary exceeds $5,000 (at least for next year).  Failure to report such payments to a Medicare beneficiary that exceed the threshold expose primary plans to $1,000 per day for every claim missed.  (See 42 USC 1395y(b)(8)(E)(i)).  SCHIP was passed in December of 2007.  The start date for SCHIP reporting has been delayed twice by the Centers for Medicare and Medicaid Services (“CMS”) and will now commence January 1, 2011, retroactive to October 1, 2010.

The regulation cited above, 42 CFR 411.25, was amended in 1989.  Therefore, primary plans have had the obligation to notify Medicare of payments to beneficiaries for over 20 years.  The improper solution to this regulation would be to draft releases obligating plaintiff’s to be responsible for Medicare, and to indemnify the primary plan if Medicare ever came knocking.  This indemnification language does not work, especially the point in time when SCHIP electronic reporting starts.  The primary plan may be caught in the middle because Medicare will use the information for recovery purposes.

Notifying Medicare in EVERY Medicare beneficiary claim early on, is a best practice that Franco Signor LLC recommends to avoid potential Medicare recovery actions that may be triggered when SCHIP reporting takes effect.   We can assist you with your MSP compliance needs.   Do not take on unnecessary risk with non-compliance, similar to the parties  in U.S. v. James J. Stricker, et al., Civil Action No. 1:09-cv-02423-KOB, U.S. Dist. Court, Northern District of Alabama, Eastern Division.

Jeff Signor, Principal, Franco Signor LLC, (May 8, 2010).