By Dan Anders, Chief Compliance Officer, Tower MSA Partners
Section 111 Mandatory Insurer Reporting is a Medicare compliance requirement that most employers and other workers’ compensation payers think someone is handling correctly for them. While there’s been talk about stiff penalties for quite some time, none have been assessed, so why worry?
With a name like “Mandatory Insurer Reporting,” there actually is cause for concern. Accurate Section 111 reporting is required and there’s reason to believe that penalties will finally go into effect in the near future. To avoid the penalties, payers should make certain they’re prepared to provide accurate reporting.
In 2007, Section 111 of the Medicare, Medicaid and SCHIP Extension Act expanded the Medicare Secondary Payer Act to require non-group health plans (NGHPs), including workers’ compensation and liability carriers, to electronically submit information about claims involving Medicare beneficiaries to the Centers for Medicare and Medicaid Services (CMS). This data includes acceptance and termination of ongoing responsibility for medicals and settlement. Part of the idea was to ensure that Medicare does not pay for medical treatment that another entity, like an auto or workers’ compensation insurance carrier, should cover.
The entities tasked with Section 111 reporting are called Responsible Reporting Entities (RREs). RREs are defined as liability insurance (including self-insurance) no-fault insurance and workers’ compensation plans. RREs handle their own reporting or assign that responsibility to a reporting agent, such as a third-party administrator or MSP compliance service provider.
Impact of the 2012 SMART Act
From the beginning, non-compliance carried a hefty Civil Money Penalty (CMP) of $1,000 per day, per claim. However, this was never enforced and the 2012 SMART ACT changed the language to say that CMPs of “up to” $1,000 per day, per claim “may be” imposed.
Additionally, the act required CMS to propose specific regulations before it could implement CMPs, so they did not become a viable concern until February 2020. That’s when CMS issued draft regulations that specified when and how much it could impose in penalties, recommending penalties of up to $1,000 per day up to a maximum of $365,000 (365 days) per injured worker – if:
- An RRE fails to register or report ORM at all,
- An RRE submits information with mistakes that exceed error tolerances set by the secretary of the Health and Human Services in four out of eight reporting periods, or,
- An RRE’s response to CMS’s conditional payment recovery efforts contradicts its Section 111 reporting data. The RRE’s penalty would be based on the number of days it failed to report accurate updates to the beneficiary’s records.
CMS’s proposal outlined an appeal method and featured a 30-day, informal pre-notice process to give RREs a chance to respond with mitigating information before a penalty notice is issued. Still, the potential penalties are severe. Industry stakeholders, including the National Alliance of Medicare Set-Aside Professionals (now the National Medicare Secondary Payer Network) and the Medicare Advocacy Recovery Coalition (MARC), responded with detailed comments that will hopefully ease the final regulations.
What Can RREs Do Now?
While waiting for these, payers would be well served to examine their Section 111 reporting processes to ensure their compliance. Some practical steps include:
Identify claimant Medicare beneficiaries: In order to properly identify each claimant’s Medicare beneficiary status, capture the Big Five data elements, namely, first and last name, date of birth, gender and Medicare Beneficiary Identifier (MBI) or Social Security Number (SSN) or at least the last five digits of the SSN from every claimant. In the alternative, document good faith efforts at attempting to obtain this data.
Accuracy in reporting diagnosis codes: CMS’s coordination of benefits and conditional payment recovery efforts rely on the RRE reporting accurate diagnosis codes accepted and/or settled on the claim. RREs must make sure their internal processes result in the correct codes being reported. This may involve training the claims handlers or team assigned to enter these codes and an effective quality assurance process.
Reporting when required: Section 111 reporting is required when Ongoing Responsibility for Medicals (ORM) is accepted and terminated on the claim and where there is a Total Payment Obligation to the Claimant (TPOC) meaning settlement, judgment, award, or other payment. While ORM acceptance and TPOC are generally reported on a timely basis, ORM termination may not be. If ORM is left open, CMS assumes the carrier continues to accept responsibility for medicals.
When mishandled, any of these can be an opportunity for a penalty. So, be sure to ask your Section 111 reporting provider these questions:
- Does the reporting platform provide 24/7 visibility into claims/data so you can check your data anytime?
- Does your system proactively check and cross-check data fields to identify potential errors and exposures before reporting occurs?
- Is the Section 111 reporting data the same data used to dispute conditional payments?
- What is the Quality Assurance process to ensure that ORM is terminated along with the reporting of the TPOC, i.e., when the settlement closes out medical?
- Does your reporting partner ensure that the diagnosis codes in Section 111 claims data match those in the corresponding MSA?
- Is your reporting partner proactively reviewing your claims data to ensure all three elements of compliance (Section 111 reporting, conditional payment, and MSA) align with one another?
COVID-19 may have slowed the promulgation of this regulation, but it will be published at some point. With Medicare’s budget already strained and talk of lowering the eligible age to 60, CMS will need to take steps to protect Medicare. Likewise, payers need to do everything to protect themselves from penalties by making sure their claims systems accurately communicate with their MSP providers and that their MSP/MSA providers carefully comply with CMS.
About Dan Anders
Daniel M. Anders, Esq., MSCC, CMSP, is an expert in Medicare Secondary Payer (MSP) compliance and Medicare Set-Aside (MSA) preparation. As Chief Compliance Officer for Tower MSA Partners, Anders oversees all aspects of regulatory compliance associated with the MSP status and local, state and federal laws. His responsibilities include ensuring the integrity and quality of Tower’s services and products, including its MSA program.
With 18 years of experience working with employers, insurers, third-party administrators, attorneys and claimants, Anders provides education and consultation to Tower’s clients on all aspects of MSP compliance. He presents at webinars and industry conferences, including WCI and the National Workers’ Compensation & Disability Conference & Expo. A respected subject matter expert, Anders writes articles, is frequently interviewed for insurance and workers’ compensation publications, and regularly contributes to Tower’s MSP Compliance Blog.
An attorney and certified Medicare Set-Aside Consultant, Anders joined Tower in 2016. He previously served as Senior Vice President of MSP Compliance for ExamWorks Clinical Solutions and has extensive litigation experience from his earlier position with the Chicago law firm of Wiedner & McAuliffe.
Anders is a member of the Illinois State Bar Association and president of the National Medicare Secondary Payer Network (MSPN), formerly the National Alliance of Medicare Set-Aside Professionals (NAMSAP). He has been involved in the organization for years, having served on MSPN’s executive committee for several years and co-chairing its Policy & Legislative Committee.
Anders earned his Juris Doctor degree from Chicago-Kent College of Law and his bachelor’s degree from Loyola University Chicago. He lives in the Chicago area.
About Tower MSA Partners
Headquartered in Delray Beach, Florida, Tower MSA Partners provides Medicare Secondary Payer services that focus on settlement optimization via pre-MSA intervention and cost mitigation.
Services include pre-MSA Triage, Medicare Set-Asides, physician peer reviews, drug utilization reviews, CMS submissions, medical cost projections, life care plans, conditional payments, and Section 111 reporting.
Tower leverages leading edge technology to proactively stage claims and works collaboratively with clients to identify issues and intervene to modify outcomes. Tower remains involved in the claims through final resolution, MSA and/or other settlement.
This model enables Tower’s clients to provide better care to injured workers, reduce claim and MSA costs, and obtain CMS acceptance of the MSA. For more information, call 888-331-4941 or visit www.towermsa.com or https://towermsa.com/blog/.