Spring Cleaning for Your Medicare Compliance Program

After a long, cold winter and the first-quarter crush of meetings and 2015 planning, spring inspires us to pause and marvel at the renewal of life and the beauty of nature. Spring also heralds the flood of checklists seen online and in popular publications reminding us that now is the time to dust the ceiling fans, scrub the baseboards, and bleach the bathtub—a litany of once-a-year tasks otherwise known as the timeless tradition of spring cleaning.

Some spring cleaning to-do items are simple; others are more ambitious. But whatever the scope of your personal spring-cleaning project, it’s also a good idea to take some time to make sure your organization’s Medicare “house” is in order.

Conditional Payments

The industry still is waiting for the Centers for Medicare and Medicaid Services (CMS) to implement fully Section 201 of the Strengthening Medicare and Repaying Taxpayers Act (SMART Act), which will allow parties to obtain CMS’ final conditional payment demand in advance of settlement. The SMART Act gives CMS until January 2016 to begin this new expedited process. The delay relates to the agency’s continuing efforts to implement a self-authentication process on the conditional payment portal.

Until then, here are some items to consider when you spring clean the conditional payment (Medicare lien) side of your house:

• Has your organization determined whether Medicare liens will be handled internally by your organization’s claims personnel or by a vendor, counsel, or other outside entity?
• If your Medicare liens are handled internally, are your claims personnel paying only Medicare’s final demand and not conditional payment letters? Is the proper documentation that shows final resolution of the lien claim being included as part of the file?
• Do you have an updated, clearly defined, easy-to-understand, step-by-step protocol in place for your entire organization when handling Medicare liens? If so, have you reviewed your protocol recently to ensure it’s still up to date and in line with case law in your jurisdiction and recent changes at CMS? Have you communicated your protocols to the appropriate front-line claims professionals? Have you provided training on your protocol and related requirements?
• Does your protocol address handling Medicare Advantage Plan demands for reimbursement?
• Do you have in place a system of checks and balances to ensure the protocol is followed?
• KAre you aware of whether the protocol is working? Have you collected data on your success rate for conditional payment negotiation (Medicare’s first asserted initial demand versus what you ultimately reimburse Medicare)?
• Have you discussed with your attorneys this protocol as well as your overall philosophy and internal guidelines around Medicare compliance?
• Have you reviewed all indemnification provisions/settlement language that your organization and your attorneys use related to Medicare liens and Medicare compliance in general?
• Have you checked to ensure that your organization has not been sanctioned with any penalties or fines for failure to reimburse Medicare liens? Does your protocol include steps designed to avoid CMS assessment of penalties, fines, or litigation against your organization?
• Have you checked to ensure no cases currently are pending against your organization in the U.S. Department of the Treasury?

Section 111 Reporting

On Jan. 5, 2015, Medicare released version 4.4 of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) Section 111 Non-Group Health Plan (NGHP) User Guide. Version 4.4 restated the current liability total payment obligation to claimant (TPOC) settlement reporting threshold of $1,000. In other words, all liability settlements with a Medicare benefit greater than $1,000 that otherwise meet CMS TPOC reporting criteria must be reported to Medicare. The threshold for reporting workers’ compensation settlements remains the same: all workers’ compensation settlements of more than $300 with a Medicare beneficiary must be reported.

One of the most interesting new developments regarding Section 111 reporting involves the concept of recovery agents. By a technical alert dated Nov. 10, 2014, CMS announced that, beginning July 13, 2015, responsible reporting entities (RREs) will be permitted, through the Section 111 reporting process, to designate a recovery agent. An RRE’s designated recovery agent will act on behalf of the RRE to conduct conditional payment investigations. The recovery agent also will receive all copies of conditional payment correspondence associated with Section 111 claim reports for the RRE.

Also on the horizon for 2015 is the overdue implementation by CMS of new Section 111 reporting penalties. Section 203 of the SMART Act modifies Section 111 reporting penalties for RREs by softening the language from “shall be subject” to a penalty to “may be subject to a civil monetary penalty up to $1,000 for each day of noncompliance with respect to each claimant.” As CMS has yet to define formally how Section 111 penalties are to be assessed, the question remains: What constitutes reporting noncompliance by the RRE? What if the RRE misses a nonessential data field or makes a clerical mistake in reporting? What level of penalty will CMS levy in such a situation?

The public comment period closed more than a year ago on this implementation, so CMS could issue new rules any day. In the meantime, if your organization qualifies as an RRE, and as you look toward sprucing up your Section 111 reporting for spring, consider the following:

• Who actually is handling your Section 111 reporting? Do you have an internal division within your organization, or have you designated a third-party reporting agent?
• Do you have an updated, clearly defined, easy-to-understand, step-by-step protocol in place for Section 111 reporting?
• Have you reviewed your protocol recently to ensure it still is up to date and in line with CMS reporting thresholds and alerts?
• Do you know what data fields you must report to CMS and when you must do so?
• Are you aware of any reporting penalties assessed against your organization?
• Do you have a system in place to alert, or to escalate to, the proper personnel any notices your organization receives from CMS about missing data fields or other reporting errors?
• Do you know your organization’s reporting error rate? Has anyone ever investigated that error rate?
• Do you have in place a system of checks and balances to ensure that your organization is reporting the proper data in a timely fashion?
• Would Section 111 compliance training benefit your organization?
• Beginning Oct. 1, 2015, will you be prepared to report using ICD-10 codes in place of ICD-9 codes?
• Have you selected or are you planning to select by July 13, 2015, a designated recovery agent?

Medicare Set-Asides

The final steps in your Medicare compliance spring cleaning involve dusting off your Medicare Set-Aside (MSA) protocols. It may be appropriate now to refresh and update how your organization looks at MSAs.

In October 2014, CMS withdrew its notice of proposed rulemaking (NPRM) addressing future medicals in workers’ compensation and liability settlements. CMS did this quietly and with no fanfare on its website. The general liability claims industry has been watching this issue closely because the NPRM was the only indicator as to whether CMS would be moving toward implementing Liability Medicare Set-Asides (LMSAs) in liability settlements with Medicare beneficiaries.

Since the withdrawal of the NPRM, CMS has not proposed alternative rules for consideration of future medicals in liability settlements. Consequently, there is no hard-and-fast guidance from CMS on the LMSA issue. The parties to this type of settlement essentially are left to their own devices to determine how best to address Medicare’s interests—and their clients’ interests—in the context of the final settlement.

The guidelines and thresholds for obtaining an MSA in a workers’ compensation settlement have not changed with the withdrawal of the NPRM. In a workers’ compensation settlement with a Medicare beneficiary where the settlement is greater than $25,000, Medicare recommends an MSA be obtained along with CMS approval of the MSA amount. In addition, in a workers’ compensation settlement involving a claimant with a reasonable expectation of Medicare eligibility within 30 months of the date of settlement along with a settlement greater than $250,000, Medicare recommends the parties obtain an MSA and submit to CMS for approval.

As we await CMS’ possible release of new rules (or a new proposal) for Medicare Set-Asides in liability and possibly workers’ compensation claims, now may be a good time to take a fresh look at your existing MSA protocol as part of your Medicare spring cleaning:

• Are your MSAs prepared internally within your organization, or have you selected a vendor or other third party to prepare your allocations?
• Are you satisfied with your MSA service provider?
• Are your claims professionals well-versed in CMS workers’ compensation MSA thresholds?
• What is your position on professional administration of MSAs?
• KDo you have a uniform and consistent philosophy on when an MSA should be submitted to CMS for approval?
• KAre MSAs handled uniformly within your organization with each claims professional following a clearly defined protocol for MSA procurement?
• Have you developed an internal protocol for when an LMSA should be sought in a liability settlement?
• If you have internal file handling or litigation management guidelines for when an MSA should be obtained in a particular type of settlement, have those guidelines been communicated to your outside counsel?
• Are your expectations in accord with outside counsel as to if and when an MSA should be obtained in a settlement?
• Would an MSA overview or refresher training be appropriate for your organization?

Be sure to enjoy the spring, and good luck with all your spring-cleaning endeavors—whether bleaching the bathtub or revamping your Medicare compliance program.