CMS Flexes Its Recovery Muscles with ICD-10 Codes Transition

Oct. 1, 2015, was an important date that set into motion Centers for Medicare & Medicaid Services (CMS) tools designed to increase Medicare Secondary Payer (MSP) compliance. The transition to ICD-10 coding and the expanded reach of the Commercial Repayment Center (CRC) to non-group health plans (NGHPs) will significantly increase CMS’ ability to coordinate benefits with existing plans and recover payments that should not have been paid because of the existence of such primary plans.

All responsible reporting entities (RREs) will be required to report ICD-10 diagnosis codes when they submit ongoing responsibility for medical (ORM) and total payment obligation to claimant (TPOC) data pursuant to Section 111 of the Medicare and Medicaid SCHIP Extension Act of 2007 (MMSEA). The requirement applies to those claims with a CMS date of injury on or after Oct. 1, 2015. ICD-10 codes are voluntary for older losses, but before a reporting event, the RRE must select whether such claim will be reported as ICD-9 or ICD-10, as both codes will not be accepted. Failure to properly code will result in rejection of the record by CMS and could subject the RRE to penalties.

ICD-10 coding is more detailed than ICD-9; the Centers for Disease Control (CDC) indicates that there are nearly 19 times more procedure codes and nearly five times more diagnosis codes in ICD-10 versus ICD-9. The additional detail included in ICD-10 will strengthen CMS’ ability to improve coordination by increasing the accuracy of the injury related to the claim, as well as help it to identify situations in which it may have paid for prior treatment.

In response to this change, NGHP RREs should prepare to transition to using ICD-10 codes for corresponding MSP compliance requirements, particularly for conditional payment reimbursement and Medicare Set-Asides (MSAs).

MMSEA Section 111 Reporting

CMS’ alert, dated July 1, 2015, provides ORM information to determine whether Medicare can make payment for those claims. The alert strongly encouraged RREs that have ORM to notify CMS to report accurate ICD-10 codes because Medicare’s claims processing centers will use this information to pay accordingly.

What this means: MMSEA Section 111 reporting was designed to increase CMS’ visibility into claims and settlements with Medicare beneficiaries so that Medicare can properly coordinate benefits and use the data to recoup conditional payments. While MMSEA Section 111 reporting has been in place since 2010, there was a learning curve for both CMS and RREs when reporting the data to CMS. When considering the increased comfort levels of CMS and the RREs, along with the ICD-10 conversion, it creates a perfect storm for CMS to use the data it received to protect the Medicare trust funds.

Conditional Payment Resolution

CMS announced that beginning Oct. 1, 2015, the CRC will begin handling commercial recoveries (primarily against RREs for workers’ compensation and no-fault) and move away from the recovery caseload that the Benefits Coordination and Recovery Center (BCRC) presently handles. Because of this, starting Oct. 25, 2015, RREs can expect that conditional payment notices (CPNs) not addressed within 30 days will become debts owing to the Department of Treasury. These notices will be triggered by MMSEA data and will not require the occurrence of a settlement, judgment, or award.

What this means: It will not be business as usual with the CRC. During a recent webinar, CMS announced that the CRC will issue CPNs on cases with open ORM, and if no response or dispute is received within 30 days to the CPN, the CRC will issue a demand letter wherein immediate reimbursement to CMS is expected and interest will begin to accrue immediately. Previously, CMS (through the BCRC) had not pursued recovery until a settlement, judgment, or award had taken place. Therefore, the CRC’s recovery efforts on ORM cases will be vastly different than what we are used to.

Additionally, the CRC is a private contractor of CMS that receives a contingency fee for its recoveries; therefore, recovery efforts will be more aggressive altogether, not only on cases that have open ORM, but also TPOCs. It is fair to say that, together with ICD-10 coding providing more detail on claims paid by Medicare and having two contractors now handling conditional payment recoveries (the BCRC and CRC), we will see aggressive recovery efforts by CMS. RREs should be aware of these impending changes and be mindful of the correspondence received by CMS so it can be responsive to recovery efforts on the part of either the CRC or BCRC.

Medicare Set-Asides

Medicare Set-Asides with dates of injury after Oct. 1, 2015, will need to incorporate ICD-10 coding into the allocation. The online portal used for submission of Workers’ Compensation Medicare Set-Asides (WCMSA) has recently added a statement that “all WCMSA proposals with a date of incident on or after Oct. 1, 2015, should be submitted using the new ICD-10 codes.”

What this means: With ICD-10 coding, CMS also will have greater visibility into the type, nature, and degree of medical care that a claimant will require in the future. Allocations for future medical care submitted to CMS will need to be clear on which ICD-10 codes are related and unrelated to the injury. Additionally, where a claimant may be at maximum medical improvement for a particular injury, payers would be wise to obtain a treating physician’s statement that no future care is needed prior to submitting the MSA to CMS so that CMS does not allocate for the future care associated with the particular diagnosis or ICD-10 code.

October 2015 will bring about a great deal of change with ICD-10 coding coming into play. Additionally, with CMS becoming more aggressive with its recovery contractors and its intention to use ICD-10 coding to coordinate benefits, payers would be wise to ensure that all claims with Medicare beneficiaries are coded accurately using ICD-10.