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Even before the recent economic meltdown, we had all heard that Medicare was going to run dry as the baby boomers aged. One of the ways that the federal government sought to narrow that massive funding gap was to make sure that they knew whenever another payer might have some liability for a Medicare-eligible citizen and that Medicare was always treated as the "payer of last resort."

Initially, payers were essentially left on the "honor system" to identify, review and report potentially eligible claims to Medicare. However, the federal government was clearly underwhelmed with the initial compliance of claims-payers. The subsequent passage of the Mandatory Insurer Reporting Requirements of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA for short) added some rather dramatic teeth to the mandatory reporting requirements.

Under Section 111 of the MMSEA, insurers will now be required to first determine whether a claimant is entitled to Medicare benefits and, if so, then submit a series of required data elements about that claimant to the Department of Health & Human Services. Payers who fail to comply will be subject to penalties of $1,000 per day for every claim that is not reported in a timely manner.

The mandatory reporting went into effect for group health plans as of January 1, 2009. Non-group health plans (which include liability insurance, no-fault insurance and workers' compensation payers) will go live on July 1, 2009.

Given the size and scope of this penalty, if payers do not quickly prepare for and subsequently comply with this legislation, the workers' compensation industry might just end up single-handedly paying off the national debt through fines!

So what can claims-payers do to prepare? First and foremost, educate themselves on the specifics of the amendment and its potential consequences for their organizations. The full text of the amendment, along with answers to a series of frequently asked questions, can be found on the Health & Human Services Web site. There are even computer-based training modules available designed to help organizations better understand the reporting requirements, file formats and data-file-transmission protocols that will be used.

If the HHS Web site does not provide all of the answers or clarity your organization's needs, several of the larger Medicare Set-aside firms have begun publishing regulatory alerts and updates relating to MMSEA 111. Some of the best additional information about MMSEA 111 can be found at PMSI via their Settlement Solutions division or Crowe Paradis' MSA subsidiary.

Once a claims organization has a deeper understanding of all the requirements of MMSEA 111, given the relatively short timeline before the stiff penalties go into effect, companies must make a quick determination of whether to build or buy a compliance solution.

The best solution for a claims organization likely depends on the flexibility of their claim system. Those that have recently upgraded their system may be able to build their own compliance solution in time, while those still on legacy claims systems may find it easiest to work with an external partner on compliance.

Service companies like PMSI and Crowe Paradis are already offering their clients compliance solutions in conjunction with their MSA services, but-claims payers can also leverage technology-driven solutions from firms such as iSpace to ensure compliance.

Regardless of which approach payers take, the one thing that is certain is that they must be ready by July 1, 2009. As much as we all might like to see the federal budget deficit reduced, paying penalties of $1,000 per day per claim is not the best solution for anyone.

DAVID HUTH is a senior partner in the Chicago-based Maddy Bowling Consulting Inc.

January 26, 2009

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