With Medicare still in financial short and long term trouble, the US Department of Health and Human Services (HHS), and its Center for Medicare and Medicaid Services (CMS), have become increasingly more aggressive about making sure Medicare is the secondary payer pre and post settlement in auto, liability, no-fault, and workers compensation claims. As a result, insurers, self insureds, and third party administrators responsible for payment of auto, liability, no-fault, and work comp claims must be aware of and understand their responsibilities under the Medicare Secondary Payer Act (MSP), and be prepared for the multiple risks associated with MSP compliance. What follows is part one of a four-part analysis of risks associated with each of the MSP compliance components: Mandatory Insurer Reporting (MIR), Conditional Payment Resolution (CPR), and Medicare Set Asides (MSA). This first of a four part series focuses on MIR compliance risks for auto, liability, no-fault, and work comp primary payers.
Up to $1,000 Civil Money Penalty Per Day Per Claim for Non-compliance
An applicable plan shall determine whether a claimant (including an individual whose claim is unresolved) is entitled to Medicare benefits; and if entitled, submit such required information with respect to the claimant to the Secretary of HHS in a form and manner (including frequency) specified by the Secretary. An applicable plan that fails to comply with the requirements of MIR with respect to any claimant shall be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant. Although final rules regarding such requirements have not been published or adopted by HHS, the statutory burden has existed since the enactment of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (42 U.S.C. 1395y(b)(7)&(b)(8)) and have been mandatory in workers compensation claims since 1/1/10 and in liability claims since 1/1/11.
Although the civil money penalty program is not yet complete, CMS has built an intricate Disposition, Error, and Compliance Flags system allowing it to identify errors and flag files not currently in compliance. For example, an SP Claim Response File Disposition Code would indicate that the record was not accepted by the BCRC due to errors in the data reported. In other words, the record was returned with at least one error code, which must be corrected and resubmitted on the next quarterly file submission, unless otherwise specified in the error description, or as instructed by the EDI Representative.
There are numerous Claim Response File Error Codes. In general, when an RRE receives an error related to a Claim Input File Detail Record and/or a TIN Reference File Detail Record, the corrected record(s) needs to be resubmitted on the next Quarterly Claim Input File submission. If TIN Reference File records are not corrected, subsequently processed Claim Input File Detail Records with matching RRE TIN/Office Code will reject. Error codes are prefaced with two letters followed by two numbers. Error codes that begin with a “C” indicate that the error occurred in the Claim Input File. Error codes that begin with a “T” indicate that the error occurred in the TIN Reference File.
The Claim Response File Compliance Flag Codes include three codes warranting compliance flags. Compliance Code 01 is used when the most recent TPOC date submitted on an add record is more than 135 days older than the File Receipt Date. Compliance Code 02 is used to warn RREs that as of October 1, 2015, ICD-10-CM diagnosis codes are required on all claim reports with a CMS DOI of October 1, 2015 and subsequent dates. Compliance Code 03 is used when the ORM termination date on an add or update record is more than 135 days older than the File Receipt Date.
Improper Reporting of ORM Date and Termination of ORM
Ongoing responsibility for medicals (ORM) refers to the RRE’s responsibility to pay, on an ongoing basis, for the injured party’s medical care associated with a no-fault or workers’ compensation claim. The trigger for reporting ORM is the assumption of ORM by the RRE—when the RRE has made a determination to assume responsibility for ORM, or is otherwise required to assume ORM—not when the first payment for medicals under ORM has actually been made. Medical payments do not actually have to be paid for ORM reporting to be required. Therefore, irrespective of the date of actual first payment of medical care associated with the claim, ORM is generally established as soon as the RRE has accepted compensability or responsibility for ongoing medical care related to the claim.
Once ORM has been accepted by the RRE, it should never be unaccepted. Instead, when ORM ends, the RRE reports an ORM Termination Date. Other than a TPOC settlement, judgment, award, or other payment, ORM ends in no-fault and workers compensation situations when policy limit is reached, coverage has been denied, the claimant is determined not to be an employee of the employer, it is established that the accident did not take place in the course and scope of employment, the statute of limitations has run, medical evidence indicates injuries are not related to the claim, medical opinions show there is no further need for medical care related to the claim, or there is a judicial finding of no coverage, causation, further medical need, or entitlement exists.
ORM does not end in no-fault and workers compensation situations if the RRE remains responsible for medical care related to the claim, if indemnity benefits are settled or exhausted but medical entitlement remains open, if the payer administratively closes its file but the claimant remains eligible for medical care payments connected to the claim, or if there remains unused dollars within policy limits that may go towards medical care related to the claim.
Improper reporting of ORM date and termination of ORM may open an RRE to up to $1,000 civil money penalty and will have a detrimental effect on conditional payments resolution. An incorrect ORM date (usually a reported ORM that is later than what the actual ORM date should have been) may open an RRE for liability for conditional payments for medical expenses associated with the claim made prior to such incorrectly accepted ORM date. An incorrect termination of ORM (usually a reported ORM termination date that is earlier than what the actual ORM termination date should have been) may also open an RRE for liability of conditional payments for medical expenses associated with the claim made after such incorrect termination of ORM.
Improper Reporting of Cause of Injury and ICD Diagnosis Codes
It is critical to report ORM with information regarding the cause and nature of the illness, injury or incident associated with the claim. Medicare uses the information submitted in the Alleged Cause of Injury, Incident or Illness (Field 15) and the ICD Diagnosis Codes (starting in Field 18) to determine what specific medical services claims, if submitted to Medicare, should be paid first or primary by the RRE and considered only for secondary payment by Medicare. The ICD-9/ICD-10 codes provided in these fields must provide enough information for Medicare to identify medical claims related to the underlying injury, incident or illness claim reported by the RRE.
There are however ICD-9 and ICD-10 diagnosis codes that are not accepted by CMS for Section 111 reporting and are to be excluded from all claim report records. None of these excluded codes may be submitted in Field 15 Alleged Cause of Injury, Incident, or Illness or the ICD Diagnosis Code 1-19 (Fields 18-36) on the Claim Input File Detail Record.
Improper reporting of cause of injury and ICD diagnosis codes may open the RRE to up to $1,000 civil money penalty and will have a detrimental effect on conditional payments resolution and set aside allocations. An incorrect cause of injury or ICD diagnosis code (usually reporting a cause of injury or code that is not related to the claim, or failing to report a cause of injury or code that is known to be related to the claim) may open an RRE for liability for conditional payments for medical expenses associated with the claim. An incorrect cause of injury or ICD diagnosis code may open an RRE for liability for future set aside allocations, as CMS may require funding for such incorrectly reported causes of injury and ICD diagnosis codes, or if omitted, may revisit the incorrect amount of future funding previously approved or may deny payment of medical expenses related to the claim until all settlement dollars, not just those previously incorrectly allocated, have been spent on such related medical care.
Improper Reporting of TPOC
The Total Payment Obligation to the Claimant (TPOC) refers to the dollar amount of a settlement, judgment, award, or other payment in addition to or apart from ORM. A TPOC generally reflects a one-time or lump sum settlement, judgment, award, or other payment intended to resolve or partially resolve a claim. It is the dollar amount of the total payment obligation to, or on behalf of, the injured party in connection with the settlement, judgment, award, or other payment.
The TPOC Date is not necessarily the payment date or check issue date. The TPOC Date is the date the payment obligation was established. This is the date the obligation is signed if there is a written agreement, unless court approval is required. If court approval is required, it is the later of the date the obligation is signed or the date of court approval. If there is no written agreement, it is the date the payment (or first payment if there will be multiple payments) is issued.
Improper reporting of TPOC date and amount may open the RRE to up to $1,000 civil money penalty and will have a detrimental effect on conditional payments resolution and set aside allocations. An incorrect TPOC date (usually reporting a TPOC date that is sooner than correct one, also used as ORM termination date) may open an RRE for liability for conditional payments for medical expenses associated with the claim made after such reported incorrect TPOC date. An incorrect TPOC amount (usually reporting a TPOC amount that does not correlate with actual settlement, judgment, award or payment) may open an RRE for liability for conditional payments for medical expenses associated with the claim if the incorrectly reported amount in any way limited Medicare’s right to full reimbursement of its conditional payments. Reporting an incorrect TPOC date and amount may open up an RRE for liability regarding set aside allocations in that if either the incorrect date or amount prolonged or limited the use of such future allocated amounts, CMS may require further funding to coincide with the correct TPOC date, or may revisit the incorrect amount of future funding previously approved or may deny payment of medical expenses related to the claim until all settlement dollars, not just those previously incorrectly allocated, have been spent on such related medical care.
These are by no means the only MSP compliance risks auto, liability, no-fault, and work comp primary payers face every day on every file. They are however the most common seen throughout the country. In my next blog, I will discuss conditional payment compliance risks for auto, liability, no-fault, and work comp primary payers.
Flagship Services Group is the premier Medicare compliance services provider to the property & casualty insurance industry.
About Flagship Services Group
Medicare and Medicaid compliance needs of P&C self-insureds, insurance companies, and third party administrators. We specialize in P&C mandatory reporting, conditional payment resolution, and set aside allocations. Whether auto, liability, no-fault, or work comp claims, we have assembled the expertise, experience and resources to deliver unparalleled MSP compliance and cost savings results to the P&C industry. To find out more about Flagship, our folks, and our customized solutions, please visit us at www.flagshipservicesgroup.com. To speak with us about any of our P&C MSP compliance products and services, you may also contact us at 888.444.4125 or firstname.lastname@example.org.
About Rafael Gonzalez
Rafael Gonzalez, Esq. is President of Flagship Services Group. He speaks and writes on mandatory insurer reporting, conditional payment resolution, set aside allocations, CMS approval, and MSA and SNT professional administration, as well as the interplay and effect of these processes and systems and the Affordable Care Act throughout the country. Rafael blogs on these topics at Medicare Compliance for P&C Insurers at www.flagshipservicesgroup.com/blog. He is very active on LinkedIn, Twitter, Instagram, and Facebook. He can be reached at email@example.com or 813.967.7598.