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MMSEA: Hurry Up and Wait for the Feds. The Round-Up…. Moderator: Thomas Paschos, Esq. , Partner, Thomas Paschos & Associates, P.C. Panelists: Tom Blackwell, MSCC , National Vice President of Sales, Gould & Lamb, LLC Theresa J. Bradley, Esq. , Staff Attorney, ProAssurance Corporations

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Hurry Up and Wait for the Feds

the round up
The Round-Up…


  • Thomas Paschos, Esq., Partner, Thomas Paschos &Associates, P.C.


  • Tom Blackwell, MSCC, National Vice President of Sales,

Gould & Lamb, LLC

  • Theresa J. Bradley, Esq., Staff Attorney, ProAssurance Corporations
  • James Reed, Esq., Associate General Counsel, Loyola University Health System
  • Michael C. Stinson, JD, Director of Government Relations, Physician Insurers Association of America
medicare as a secondary payer
Medicare as a Secondary Payer
  • Insurer is responsible for paying medical expenses
      • “Responsible” = when case has settled or goneto verdict
  • Medicare either does not pay OR
  • Medicare pays conditionally
    • Insurer, plaintiff or attorney has to reimburse Medicare
present day medicare
Present Day Medicare
  • Medicare is under funded
  • CMS wants its money
  • No consistent way for Medicare to discover claims
  • MMSEA Section 111
    • Payers required to report claims
penalties for failure of insurer to reimburse medicare
Penalties for Failure of Insurer to Reimburse Medicare
  • Medicare has a claim, not a lien
  • Medicare can sue the insurer, plaintiff &plaintiff’s attorney
  • Double damages under the SSA
  • Treble damages under the FCA

(All in addition to fines for failure to report)

medicare secondary payer act m s p
Medicare Secondary Payer Act (M.S.P.)
  • Omnibus Reconciliation Act of 1980.
  • MMA 2003, Title III, §301
    • Acceptance of Liability not needed
  • Medicare-Secondary Payer Status-all linesof insurance
  • WC primary to Medicare since 1965
medicare secondary payer act m s p cont d
Medicare Secondary Payer Act (M.S.P.) cont’d
  • Liability and No-Fault insurers
    • Responsible to protect Medicare’s interest
  • MSP gives Medicare two rights:

1. Right of Recovery

2. Consideration for Future Medicals

medicare secondary payer act section 111
Medicare Secondary Payer Act & Section 111
  • Carriers and self-insurers can suffer penalties
  • Delayed Settlements – increased adjudication
  • Medicare is ready to move forward
  • Reporting began 10/1/2010
  • MSP compliance is their main focus
  • Settlement language is critical
medicare medicaid and schip extension act 2007
Medicare, Medicaid, and SCHIP Extension Act (2007)
  • MMSEA is government’s method to enforceMSP rights
  • Requires insurers to “vet” Medicare statusof plaintiffs
  • The reporting requirement carries heavy penalties
  • Data is being reviewed by third parties
  • Timing is critical
penalties for failing to report
Penalties for Failing to Report
  • Subject to a $1000 / day fine.
  • Penalty can be assessed for data integrity issues.
  • Only 1 period per quarter that you can send data
  • Miss that opportunity? The penalty will be atleast $90,000!
underwriting implications mmsea and msp
Underwriting Implications: MMSEA and MSP
  • Increased uncertainty regarding loss development pattern
  • Limited actuarial information regarding cost implications
    • Increased claims handling costs
    • Increased claims settlement values
    • Increased no-fault payments
    • Increased defense costs
assessing risks associated with medicare mmsea
Assessing Risks Associated with Medicare & MMSEA
  • Cost implications
  • Insured’s medical specialty
  • Insured’s venue
  • Jurisdictional limits of liability
understanding the medicare and lien process
Understanding the Medicare and Lien Process
  • Major steps in the lien process:
    • Report claim to Medicare
    • Request a “conditional payments” letter
    • Determine payments “related” to claimed injury
    • Report settlement to Medicare
    • Obtain “final demand” letter from Medicare
    • Pay Medicare’s claim or appeal determination(60 days to appeal)
importance of medicare lien process
Importance of Medicare Lien Process
  • It slows the claims process:
    • Increased time for resolving cases
    • Requires additional discovery related solely to Medicare data
    • May need to adjust indemnity and expense reserves
    • Cases with large medical specials may require Medical Set Asides
importance of medicare lien process1
Importance of Medicare Lien Process
  • Creates difficulty evaluating risks:
    • Files open longer (more open at a given time)
    • Difficult to obtain information on pending claims
    • Difficult to assess risks with little claims information
proassurance satisfying mmsea reporting requirements
ProAssurance –Satisfying MMSEA Reporting Requirements
  • Designated a Medicare compliance attorney
  • Redesigned claims system to capture required data
  • Drafted claims procedures to ensure compliance
  • Conducted employee and defense attorney education
  • Information Systems created programs to automate the reporting
involvement with cms
Involvement with CMS
  • Consulted with CMS from the start
  • Explained Medical Professional Liability insurance to them
  • One-on-one meetings
  • Industry meetings
  • Will be overwhelmed by reporting
  • Guidance will continue to change
  • May seek change to legislative authority
  • Trying to be realistic
  • Wanted to accommodate industry (somewhat)
  • Had no idea how P/C insurance worked
implementation of reporting requirements
Implementation of Reporting Requirements
  • Even after a company complies; you may still not be able to relax:
    • Guidance may change at any time
    • Continue to monitor CMS
    • Must be focused on MSP issues now
congress reaction to reporting requirements
Congress Reaction to Reporting Requirements
  • Remains to be seen
  • Nothing this year
  • Legislation this year could be base for 2011 action
    • Medicare Secondary Payer Enhancement Act
    • Requires Medicare to promptly respond to demand letters
    • $5,000 threshold for reimbursement
    • Safe harbors for reporting
    • No SSN requirement
    • User fees to pay for system
medicare enforcement nationwide
Medicare Enforcement - Nationwide
  • CMS will probably allow for an “adjustment period”
  • Within 6 months, CMS will expect compliance
  • CMS are likely to refer claims to DOJ when insurers:
    • Should have known about a claim
    • Knew of a claim & intentionally failed to report 
medicare enforcement regional
Medicare Enforcement - Regional
  • “Tough” regions include Chicago & East Coast
  • Southern regions (Dallas/Atlanta) known to “negotiate”
  • Recent trend– coordination & cooperation among regions:
    • Establish consistent thresholds
    • Handle all similar cases similarly
who has exposure
Who Has Exposure?
  • Anyone involved in the claims process
  • In practice:
    • Any source of payment (insurers/self-insured entities) is highly exposed
    • CMS and DOJ rarely actively pursue patients/claimants and their attorneys
insurers how to avoid litigation and ensure compliance
Insurers – How to Avoid Litigation and Ensure Compliance
  • Don’t get complacent
  • Monitor CMS for guidance changes
  • Get active with Congress
insurers how to avoid litigation and ensure compliance1
Insurers – How to Avoid Litigation and Ensure Compliance
  • Develop Compliant Settlement Language
  • Record all attempts to collect MMSEA data
  • Initial claimant - include request for 5 fields
  • Start MSP compliance process early
insurers how to avoid litigation and ensure compliance2
Insurers – How to Avoid Litigation and Ensure Compliance
  • Familiarize yourselves with the reporting requirements
  • Designate a compliance specialist
  • Develop systems within claims department to obtain and capture data
  • Develop safety net to ensure compliance
  • Educate staff and defense attorneys
  • Educate plaintiffs’ bar
self insured s how to avoid litigation and ensure compliance
Self Insured's - How to Avoid Litigation and Ensure Compliance
  • Insist that your attorneys protect your interests when payment is made:
    • Issue a multi-party check (Medicare as a payee)
    • Demand indemnity language in the release
  • Take advantage of CMS resources:
    • Computer-based, on-line training
    • Town hall conference calls
    • CMS, MMSEA Section 111 web site
self insured s how to avoid litigation and ensure compliance1
Self Insured's - How to Avoid Litigation and Ensure Compliance
  • Make sure your defense attorneys are MMSEA/MSP educated
  • Include Medicare compliance language in all settlement documents
  • Collect query Data early in Claim’s Life Expectancy
  • Keep records of all attempts to collect data.
avoiding litigation and ensuring compliance
Avoiding Litigation andEnsuring Compliance
  • TPAs and attorneys:
    • Inform clients of handling protocols forMedicare claims
    • Develop Compliant Settlement Language
    • Record all attempts to collect MMSEA data
    • Initial claimant contact should include requestfor 5 fields
    • Start the MSP compliance process early
preventing actions and ensuring compliance
Preventing Actions and Ensuring Compliance
  • Notify Medicare of claim prior to reporting
  • Take steps to ensure Medicare reimbursement/ set-aside
preventing actions and ensuring compliance1
Preventing Actions and Ensuring Compliance
  • Report Timely
  • Keep Records
  • Verify data
  • Strictly follow your handling protocols,once established
preventing actions and ensuring compliance2
Preventing Actions and Ensuring Compliance
  • Establish strong professional relationship with contractor
  • Your reputation at claims professional level is very valuable
  •  Establish a process to identify every potential claimant
  • Catch all claimants who become Medicare eligible during pendency of case
predictions effect on industry tpa attorneys claims
Predictions – Effect on Industry/TPA/Attorneys/Claims
  • Crippling effect on settlement negotiation process
  • Increased frustration
  • Initial confusion and mistakes (on both sides)
  •  Eventually will become part of business process
predictions effect on industry tpa attorneys claims1
Predictions – Effect on Industry/TPA/Attorneys/Claims
  • More Clients from liability and auto
  • More E&O issues
  • Claim Frequency will diminish
  • Severity will increase
  • Case management will become a priority forall lines
  • No long term effect on number of settlements
predictions costs
Predictions - Costs
  • Increased settlement values
  • Increased defense costs
  • Increased business costs
predictions future enforcement by the government
Predictions – Future Enforcement by the Government
  • Concern is “bundling” of claims with insurers on the hook for all reimbursements
  • No dramatic change
  • Congress still wants Medicare to be solvent
  • “Fixes” may be possible - bipartisan
  • 2012 election will dominate agenda – spending will be the key issue
many thanks to
Many Thanks To…
  • Thomas Paschos, Esq., Thomas Paschos & Associates, P.C.,

PH: 215-636-5555/856-354-1900; E-Mail: [email protected]

  • Tom Blackwell, MSCC, Vice Pres. of Sales, Gould & Lamb, LLC.

PH: (941) 798-2098; E-Mail: [email protected]

  • Theresa J. Bradley, Staff Attorney, ProAssurance Companies

PH: 205.877.4466; E-Mail: [email protected]

  • James L. Reed, Jr., Associate General CounselLoyola University Health SystemPH: (708) 216-3708; E-Mail: [email protected]
  • Mike C. Stinson, JM, Director of Government RelationsPhysician Insurers Association of AmericaPH: 301.947.9000; E-Mail: [email protected]