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Demystifying CMS Nonpayment Strategies and Mandatory Insurer Reporting Requirements

Demystifying CMS Nonpayment Strategies and Mandatory Insurer Reporting Requirements. Presented by: Roberta Carroll Senior Vice President Aon Healthcare. Session Objectives. MMSEA. Review how the current climate impacts strategy Identify CMS Non-payment strategies including:

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Demystifying CMS Nonpayment Strategies and Mandatory Insurer Reporting Requirements

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  1. Demystifying CMS Nonpayment Strategies and Mandatory Insurer Reporting Requirements Presented by: Roberta Carroll Senior Vice President Aon Healthcare

  2. Session Objectives MMSEA • Review how the current climate impacts strategy • Identify CMS Non-payment strategies including: • Medicare Secondary Payer Statutes • DRA and Hospital-Acquired Conditions • Mandatory Insurer Reporting under MMSEA • Review the penalties for non-compliance • Understand what it means (takes) to be compliant • Prioritize what to do first

  3. Understanding the Current Climate

  4. Current Environment – Ready for Change • Global spotlight on governance and finance • Diminished reimbursement • Credit risk/Interest rate risk • Need for the efficient allocation of capital • Economic Downturn • Number of un-under-insureds • Centers for Medicare and Medicaid • Inpatient Prospective Payment System [IPPS] • Hospital Acquired Conditions [HAC] • Medicare Secondary Payer Statutes [MSP] • MMSEA

  5. Capital Crisis Borrowed money (debt) - comes form bond offerings and loans from banks and other financial institutions Philanthropy - refers to charitable donations Reserves - refers to savings hospitals build up over time by having a positive net income and a return on invested money Capital - refers to the money used to fund investments in facilities and equipment Equity – refers to selling an ownership interest (used less frequently)

  6. Survey Highlights Borrowing is severely constrained ½ have put capital projects on hold: 82% facility projects 65% clinical technology 62% information technology Affects ability to meet community needs and goals such as improved quality, efficiency and coordination of care Charitable donations has become harder Capital decisions are affected as uncertainty mounts, operating performance declines and the value of reserves fails due to stock market and other investment woes

  7. Impact of the Economic Downturn on Hospitals FINALJanuary 14, 2009 Research and Analysis by Avalere Health

  8. Survey Results Difficult and expensive to finance facility and technology needs Increased cost of borrowing Decreases access to financing Number and mix of patient seeking care is changing Lower admissions and elective procedures Rising unemployment leading to increased uncompensated care Physicians seeking financial support from hospitals Financial health is worsening as patient seek less care and investment gains turns to losses Making/considering cutbacks Stress on state and federal budgets raise worries about cuts to Medicare and Medicaid provider payment Hospitals and health care are a critical part of the economy 45% of new private sector jobs were created in the health sector in 2007 Hospitals employ more that 5 million people

  9. 8.0% 7.0% 6.0% % Unemployment 5.0% 4.0% 3.0% Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- 07 07 07 07 07 07 07 07 07 07 07 07 08 08 08 08 08 08 08 08 08 08 08 08 Unemployment is Rising Unemployment Rate (Non-farm), 2007-2008 44% increase Department of Labor, Bureau of Labor Statistics, Labor Force Statistics. (2008). Access at: http://www.bls.gov/oco/cg/cgs035.htm.

  10. HFMA Survey The factors that will most affect long-term financial position and the ability to fulfill mission include: Patient volume Uninsured/underinsured Non-operating income Investment income Philanthropic giving Capital access and cost of debt Regulatory and payment “wild cards”

  11. Financial challenges continue to rank 1st on the list of hospital CEOs top concerns in ‘08, with patient safety and quality their 2nd most prominent concern

  12. Not easy tasks Patient Safety and Quality Concerns in Order of Importance

  13. Governance Refocused • Fiscal – new focus on the Board’s oversight of organizational finance • Reputation – conflicts of interest and perception of wrong doing • Clinical – only 27% of hospital boards spend 25% of time on quality • Executive compensation is being linked to quality and safety improvement

  14. Medicare as a Secondary Payer [MSP] • Medicare when first enacted in 1965 was a primary payer of health benefits with few exceptions[Federal Black Lung Program, Workers’ Compensation, Veterans Administration] • §953 COBRA of 1980 = Medicare Secondary Payer (MPS) statute was enacted making Medicare a 2nd payer to Automobile, Liability and No-Fault coverage • Medicare Secondary Payer Act: Section 1862(b) of Social Security Act (1980)

  15. What is a Primary Plan? • Under MSP statutes a “primary plan” includes: • Group health plan [GHP] • Liability insurance policy or plan (which includes a self-insured plan) • “No-fault” insurance policy • Workers’ compensation law or plan • The premise underlying the MSP program is that 3rd parties may not shift the cost of medical expenses attributed to their wrongdoing from themselves to the taxpayers.

  16. What is MMSEA?(Medicare, Medicaid, and SCHIP Extension Act of 2007) • AKA- Senate Bill S.2449; MSCHIP; MMSEA/111; MIR (Mandatory Information Reporting) Section 111; or simply 111, MMSEA (pronounced “MC”) • Signed into law on December 29, 2007, and includes modifications to MSP laws • Section 111 [see 42 U.S.C. 1395y(b)(7)&(b)(8) - [PL 110-173] • Imposes reporting requirements upon GHPs, liability insurance plans [including self-insurance], no-fault insurance plans and workers’ compensation plans • Section 7 GHP reporting - Effective January 1, 2009 • Section 8 non-GHP plans - Effective July 1, 2009

  17. Responsible Reporting Entities? CMS defines RRE as follows: • Entity who has paid a settlement, award, judgment, or other payment on or after July 1, 2009 with a Medicare eligible beneficiary (or claimant), or has responsibility for ongoing medical payments to a claimant on or after July 1, 2009.

  18. “MMSEA Section 111“ Major Elements of the Law • “Self Insured” for non-GHP as defined by CMS includes • Any entity that pays its own claims • An entity that engages in a business, trade, or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part. • Any entity that “self-insures” a deductible insurance program. • Any entity that pays or funds the settlement of its own claims

  19. Complying with MMSEA • First, determine if you are an RRE • Do you have a guaranteed cost program? • If yes, you are not an RRE • Are you self-insured or have a captive? • If yes, you are an RRE • Do you have a deductible? • If funded by the carrier – not an RRE • If you fund the deductible, either directly or through your TPA - you are an RRE • A TPA cannot be an RRE under NGHP

  20. Risk Retention Pools • CMS recognizes that some entities may elect to manage their loss exposures for liability, no-fault, or workers’ compensation by joining with other similarly situated entities in forming self-insurance pools (such as joint powers authorities or risk retention pools where permitted by law). ALL of the following conditions must be met in order for the “pool” to qualify as an RRE: a. The “pool” itself must be a separate legal entity. b. The pool must have full responsibility to resolve and pay claims using pool funds. c. The individual participating members or entities may not be involved in the decisions in how individual claims are resolved. • IF ANY ONE OF THESE CONDITIONS IS NOT MET, THEN THE PARTICIPATING MEMBER REMAINS AN RRE. If you are a member of a risk retention pool, we strongly encourage you to have discussions with your pool managers, brokers, and consultants to discuss these conditions and how they affect your legal responsibilities under MMSEA

  21. Are Captives RREs? • Further clarification from CMS on how captives will be treated under MMSEA is being awaited. Because CMS has been very consistent with “follow the money” it is anticipate rules will be promulgated based on if there has been any actual risk transfer. • In circumstances where the captive is a wholly owned subsidiary of a company and accepts no risks outside of the parent company, it is anticipated that CMS will allow that company flexibility in designating an RRE. I • If the captive accepts risks outside of the parent and takes on characteristics of a risk retention “pool” then it is anticipated that CMS will treat that captive like a pool. • Ensure that all captive polices are written on a “reimbursement” basis where the owner/parent pays claims and the captives reimburses the parent/owner after the fact.

  22. RRE Registration • Registration for reporting and file submission with the COBC must be completed by the RRE. (May 1, 2009 – September 30, 2009) • An RRE may register as many times as necessary for various lines of coverage • An RRE can appoint an RA; however, only one Registered Agent may be appointed per RRE • A Registered Agent may represent multiple RREs • An agent may not register for an RRE • CMS provides computer-based training (“CBT”) for RREs pre-registration. You can call COBC’s EDI Department to register for on-line training at646-458-6740.

  23. Responsibilities of an RRE • Register as a RRE • Implement claim procedures for identification of Medicare-eligible beneficiaries (including SSN or HICN) • Prepare electronic reporting files (currently 150 data elements) formatted to COBC’s Input Claim File Layout • Provide electronic reports to COBC on new claims on a quarterly schedule assigned to the RRE by the COBC • RRE can assign a Reporting Agent (RA) at the time of registration. However, RREs remain responsible for any civil money penalties (CMP) allowed under MMSEA/111

  24. Authorized Representative • Each RRE must assign or name an Authorized Representative. The Authorized Representative: • Individual with legal authority to bind the organization to a contract • Has ultimate accountability for RRE’s compliance • Cannot be a user of the COBSW. • Cannot be an agent of the RRE. • May perform the initial registration on the COBSW, but will not be provided with a Login ID. • Will designate the Account Manager. • Must approve the account setup, by physically signing the profile report including the Data Use Agreement, and returning it to the COBC. • Will be the recipient of COBC notifications related to non-compliance with Section 111 reporting requirements.

  25. Appointment of a Reporting Agent • CMS allows the retention of Reporting Agents (RA) for purposes of reporting claims to CMS • While RRE may retain an RA, the RRE remains responsible for civil penalties under the Act. • TPAs are not allowed to be RREs under Section 8 Third-party administrators (TPAs) as defined by CMS for purposes for 42 U.S.C. 1395y(b)(7) & (8) are never RREs for purposes of 42 U.S.C. 1395y(b)(8) [liability (including self-insurance), no-fault, and workers’ compensation reporting] based solely upon their status as this type of TPA. (Note that for purposes of 42 U.S.C. 1395y (b)(7) reporting for group health plan arrangements, this type of TPA is automatically an RRE.)

  26. Reporting • Who Must Report: • An applicable plan • The term 'applicable plan' means the following laws, plans, or other arrangements, including the fiduciary or administrator for such law, plan, or arrangement: (i) Liability insurance (including self-insurance). (ii) No-fault insurance. (iii) Workers' compensation laws or plans." 42 U.S.C.1395y(b)(8)(F) • What Must Be Reported: • The identity of a Medicare beneficiary whose illness, injury, incident, or accident was at issue as well as such other information specified by the Secretary to enable an appropriate determination concerning coordination of benefits, including any applicable recovery claim. Data elements determined by the Secretary.

  27. Projected Population Growth & Medicare Impact Projections of the Population for the United States: 2010-2050 (NP2008 T1 & T2, August 14, 2008. Population Division, U.S. Census Bureau

  28. Reporting Thresholds for Liability Insurance (including Self Insurance) for “TPOC” • July 1, 2009 to December 31, 2010 • $0 to $5,000* • January 1, 2011 through December 31, 2011 • $0 to $2,000* • January 1, 2012 through December 31, 2012 • $0 to $600* • Where multiple records submitted on the same claim by the same RRE, the combined TPOC CANNOT EXCEED the total threshold amount! Example: July 2, 2009, liability settlement with Medical Payments coverage settlement of $4,000 and Indemnity of $1,000. Total TPOC of $5,000 threshold met and must be reported under MMSEA.

  29. Important Dates & Deadlines • March 2009 CMS released NGHP Users Guide. Guide will provide specific information on the means and methods required of RREs and their RAs comply with MMSEA Section 111 • May 11, 2009 Alert extending the registration, testing and reporting dates • May 1, 2009 – September 30, 2009 RREs must register with the COBC on their secure website RREs should be prepared to identify their reporting agent to the COBC at the time of registration. • July 1, 2010 Test and Production Query Input Files Accepted CMS Alert

  30. Important Dates & Deadlines • January 1, 2010 Claim Input File Testing Begins • January 1, 2010 Production Claim Input Files Accepted • April 1, 2010 to June 20, 2010 Initial Claim Input File Submission Due – (based on assigned reporting window date (within 7-day window) • April 1, 2010 Noncompliance enforcement and penalties after April 2010

  31. Coordination of Benefits Contractors • Pending litigation is reported by plaintiff attorneys • CFR 411.52 says the beneficiary must file a claim • Beneficiary hires an attorney and they must contact the COBC • Why do plaintiff attorneys alert COBC before settlement? • They need the information to litigate for special damages (e.g., medical bills) • If they don’t, they could be liable for malpractice when Medicare seeks recovery from the beneficiary after settlement • Medicare holds plaintiff attorneys responsible under Section 1862. [41 U.S.C. 1395y] 1862 (b) • “…the United States may recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan's payment to any entity.”

  32. COBS and the Common Working File • What does the COBC do whey they learn of a claim? • Record pending liability suit on the Common Working File (CWF) • Providers and Intermediaries consult CWF to accept or deny Medicare claims

  33. Medicare Prescription Drug, Improvement, and Modernization Act of 2003 Pub. L. No. 108-173, § 301, 117 Stat.2066, 2221 • Elaborated the definition of “self-insured” to include corporations that simply carry the risk of not purchasing insurance (MMA § 301(b)(1)) • Made clear that Medicare may make a conditional payment when the primary plan has not made or is not reasonably expected to make prompt payment. • Clarifying language: Pursuant to 42 U.S.C. 1395y(b)(2)(B)(iii), in order to recover payment made under this title for an item or service, the United States may bring an action against any or all entities that are or were required or responsible (directly, as an insurer or self-insurer, as a third-party administrator, as an employer that sponsors or contributes to a group health plan, or large group health plan, or otherwise) to make payment with respect to the same item or service (or any portion thereof) under a primary plan. The United States may, in accordance with paragraph (3)(A) collect double damages against any such entity. In addition, the United States may recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity.

  34. Conditional Payments • CFR 411.52 allows Medicare to pay conditionally if: • Medicare does not reasonably expect the 3rd party insurer to make its primary payment promptly. Promptly is considered to be within 120 days. • Or the liability insurer has denied the claim

  35. Recovering Conditional Payments • The Medicare Secondary Payer Recovery Contractor (MSPRC) • Recovering conditional payments after a liability settlement • From the beneficiary • Demands are sent to the beneficiary with a copy to the attorney • If the demand is not paid in 60 days interest begins accruing and the beneficiary receives an Intent To Recover (ITR) Letter threatening collection by the Department of Treasury • If the demand is not paid in 120 days then the beneficiary is referred to Treasury

  36. “Follow the Money” • Insurers and Self-Insured have had a reporting obligation • Anyone having “knowledge” of a situation where Medicare should not pay primary had an obligation to report or be subject to double damages Section 1862 [42 U.S.C. 1395y] • Recovery from Insurers and Self-Insured is not part of the normal MSPRC process • Medicare can seek recovery and damages from Insurers and Self-Insured through the courts • Insurers and Self-Insured settled with the beneficiary • Beneficiary has the money • The MSPRC follows the money and seeks recovery from the beneficiary

  37. Protecting Medicare’s Interest • It is easier to recover the money before it gets in the hands of the beneficiary • The beneficiary is less likely than an attorney or insurer to know about Medicare’s right to recover conditional payments • Some refer to this as “Protecting Medicare’s Interest” • There are no explicit laws or regulations requiring entities to protect Medicare’s interest • MSP holds the beneficiary responsible right up to collections from Treasury

  38. Protecting Medicare’s Interest cont… • If there is no attorney involved • You can determine the conditional payment amount by requesting an Interim Conditional Payment Letter (CPL) from the MSPRC and withhold that amount from settlement for reimbursement to Medicare • If you are aware of Medicare claims by virtue of direct knowledge from the Medicare Secondary Payer Recovery Contractor (MSPRC) or by indirect knowledge from the fact you paid no medicals, then consider sending a two party check to the MSPRC with details about the beneficiary and incident • At a minimum, make sure the beneficiary is aware of Medicare’s right to recover and seek a release at settlement

  39. Penalties for Non-Compliance • Section 111 of the MMSEA added certain reporting requirements and civil penalties to Section 1862(b) [42 USC 1395y(b)] upon “any entity, a plan administrator” who fails to comply with the reporting requirements under the Act. Those entities (further described by CMS as “Responsible Reporting Entities” “shall be subject to civil money penalty of $1,000 for each day of noncompliance for each individual for which the information [required] should have been submitted.” While MMSEA Section 111 adds the reporting requirements and penalties, it does not change any of the other provisions of the MSP statutes under Section 1862(b).

  40. Steps for Reporting • Determine individuals that will be the RRE’s Authorized Representative, Account Manager and Account Designees. • Determine whether reporting agents will be used. • Determine how claim files will be submitted – one file for the RRE or separate files based on line of business, agent, subsidiaries, etc., which will require more than one RRE ID. • Determine which file transmission method you will use. If you choose SFTP/HTTPS, you will transmit files via the COBSW. If you choose Connect:Direct (AGNS) establish a connection to AGNS, if you don’t have one yet, and create transmission jobs and datasets. • Complete your registration for each RRE ID needed, including file transmission information on the COB Secure Web site (COBSW) between May 1, 2009, and September 30, 2009.

  41. Steps for Reporting cont… • Receive your profile report via e-mail indicating your registration and account setup were accepted by the COBC. • Verify, sign and return your profile report to the COBC. • Review file specifications, develop software to produce Section 111 files, and schedule your internal quarterly submission process. • Test each Section 111 file type you will be exchanging with the COBC. • Submit your initial Claim Input File by your assigned production live date. • Submit your Query File as needed but no more than monthly ongoing. • Submit your quarterly Claim Input File ongoing during your assigned submission periods.

  42. Facts to Remember! • If the insurance and self-insured company reports they have met the Mandatory Insurer Reporting statutes • Medicare Secondary Payer statutes are a separate issue from Mandatory Insurer Reporting under MMSEA • Medicare Secondary Payer Recovery Contractor (MSPRC) follows the money and seeks recovery of conditional payments from the beneficiary, and not the liability insurer • Medicare may seek damages from others if they cannot collect from the beneficiary, but these cases are rare and pursued in the courts

  43. Strategies for Compliance • Review current claims management practices in managing MSP claims for all lines of coverage contemplated under MMSEA. • Analyze exposure as an RRE as respects your current insurance program. • Understand the registration process and timeframes • Analyze current TPA’s claims practices with CMS’s proposed (and final) reporting protocols in CMS Users Guide with proposed recommendations and action plans. • Develop MMSEA claims “best practices” for use and consideration by their current TPAs.

  44. Strategies for Compliance cont… • Have processes in place to respond to error codes, compliance flags or disposition code requiring the RRE to resubmit the claim. • Review current TPA or Reporting Agent contracts. Evaluate contractual risk transfer of MMSEA/111 and MSP exposures to TPA or Reporting Agent. • Review current E&O coverage (TPA/RA) to ensure it also includes coverage for statutory civil penalties as an element of damages. • Perform compliance audits to ensure compliance. Change program as necessary

  45. Relationship with HACs Continuing in its effort to preserve the Medicare Trust and just as CMS has implemented the non-payment strategy for Hospital-Acquired Conditions (HACs) , the Mandatory Insurer Reporting (MIR) Requirements under MMSEA will reinforce efforts to ensure Medicare is a secondary payer (MSP) when other applicable Plans are available.

  46. Rational for Hospital Acquired Conditions • Passive payer ►active purchaser • Fee-for-service schedules and PPS are not based on quality or unnecessary cost avoidance • Nonpayment for HAC promotes better quality while avoiding unnecessary costs • Supports Medicare’s VBP • Public support to pay less for HAC

  47. Deficit Reduction Act of 2005 • Section 5001(c) of Public Law 109-171 required CMS to identify by October 1, 2007 at least two preventable complications of care that could cause patients to be assigned to a higher paying DRG. • Those conditions were mandated to be: • high cost or high volume or both, • result in the assignment of a case to a DRG that has a higher payment when present as a secondary diagnosis, and • be reasonably preventable through the application of evidence-based guidelines.

  48. Deficit Reduction Act of 2005 • The DRA mandated that for discharges occurring on or after October 1, 2008, the presence of one or more of these preventable conditions would not lead to the patient being assigned to a higher paying DRG. That is, the case would be paid as though the secondary diagnosis was not present. • The DRA required hospitals to submit the secondary diagnoses that are present on admission (POA) when reporting payment information for discharges on or after October 1, 2007.

  49. HAC & “Never Events” • National Quality Forum “Never Events” • 6 of the 10 Hospital-acquired conditions are now on the list • Pressure ulcers Stage III & IV • Blood incompatibility • Air embolism • Hospital acquired Injuries from falls [death or serious injury], electric shock [death or serious disability], or burns [death or serious disability] • Retained objects [unintentional] • Hypoglycemia [death or serious disability]

  50. Risk Mitigation • Prevent HAC including infections • Quantify and understand the impact of these and future changes • Develop tools such as preadmission and admitting screening/testing guidelines and protocols • Educate staff to POA coding requirements • Report to others in the organization adverse events • Understand and comply with jurisdictional requirements for reporting • Stress the importance of appropriate documentation

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