CMS delays implementing reporting requirements until 2011

Facing mounting pressure from the insurance industry, the Centers for Medicare and Medicaid Services said it will delay the April 1 implementation date for the Medicare Secondary Payer reporting requirements until Jan. 1, 2011.

The purpose of the reporting requirements -- which originated from the Medicare, Medicaid, and SCHIP Extension Act of 2007 -- is to ensure that Medicare remains the secondary payer when a Medicare beneficiary has medical expenses that fall under the primary responsibility of a liability (including self-insurance), no-fault, or workers' comp insurance plan. Officials said it also will allow Medicare to recover any conditional payments that should have been paid by the primary insurance plan.

As of July 1, 2009, applicable plans were required to determine whether claimants, including those with unresolved claims, were entitled to benefits under Medicare. Plans were originally required to begin submitting that data to the federal government as of April 1. However, a coalition of advocacy organizations -- which included the American Insurance Association, the Self-Insurance Institute of America, and the National Association of Mutual Insurance Companies -- petitioned Department of Health and Human Services' Secretary Kathleen Sebelius to delay the deadline, citing a lack of guidance on the reporting guidelines and raising questions about the ability of the new reporting system to function properly. Additionally, NAMIC noted that the system would require them to solicit personal information and expressed concerns over the security of the system.

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The organizations also took issue with CMS' proposed penalties for violating the reporting requirements. In a letter to Sebelius, the group said it believed the penalty provision of $1,000 per day, per claim was excessive and should not be assessed on the first report submitted by any entity. The group also noted that CMS was mandating that reporting only be done once a quarter, so errors and glitches inherent in a new reporting system would not be addressed for 90 days. In essence, failure to properly report a $2,500 medical payment to a beneficiary could subject the reporting entity to a $90,000 fine, the organization argued.

Peter Foley, vice president of claims for AIA and chairman of the organization's MSP Task Force, said pushing back the deadline was the right move.

"The insurance industry has every intention to comply with the requirements, but we want the industry's data to be put forward in the best way possible to CMS," he said.

Proceed with compliance. Jim Pocius, chairman of the Medicare Practice Group at Marshall, Dennehey, Warner, Coleman & Goggin in Scranton, Pa., was somewhat surprised by CMS' decision.

"Medicare was having difficulty with various questions concerning foreign corporations and how to treat class action settlements," he said. "They were also having difficulty with getting the Responsible Reporting Entities information correct, and they seemed to be behind in putting out their new user manual. Those factors slightly mitigated my surprise when they made the announcement. I think it will take at least a year to get everyone settled in, have an accurate transfer of information, and proceed with accurate reporting."

Pocius said the other interesting aspect is that CMS is delaying any chance of anyone being fined in accordance with the law.

"The fine is $1,000 per day, per person who you don't report, so I believe the insurance industry and self-insureds, in general, will breathe a sigh of relief that they have a little more leeway before the actual reporting begins," he said.

Pocius advised insurers and employers to proceed as if the deadline had not been pushed back.

"The fact is that cases are either reportable or not reportable," he said. "The delay does not change your responsibilities to Medicare. Just because cases won't have to be reported for another year doesn't dissolve parties' interests."

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March 8, 2010

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