By Barbara Fairchild & Jon Gunter, Co-CEOs, IMPAXX
2022 was filled with significant and surprising events from the Medicare Secondary Payer (MSP) compliance standpoint. In this two-part series, we will explore the eight key events that shaped 2022 and the lessons we can learn from these events as we begin 2023.
Lesson One: It’s Time to Get Ready
In Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007, CMS carved out the ability to issue Civil Monetary Penalties (CMPs) of up to $1,000 a day for each day of non-compliance for each claimant. Although there were some fits and starts as well as fear surrounding if, and when, CMPs would be imposed by CMS, nothing really happened. Fast forward to February 2020, when CMS issued a proposed rule outlining three potential areas for which CMPs could be imposed. First, failing to report Total Payment Obligation to Claimant (TPOC) within the required time frame of one year.
Second, when responses to CMS’ recovery efforts contradict what is reported via Section 111. Third, when error tolerance thresholds are exceeded in four out of eight consecutive reporting periods.
In March 2022, CMS took the next step in the rulemaking process by sending a “final rule” to the executive branch for review and approval. In fact, February 18, 2023, marks the three-year anniversary of the “standardized time limit” for publication of the final rule per the unified agenda. But what does that mean, other than we could see a final rule any day now? It means that right now you have an opportunity to review, assess, and (if needed) revamp your Section 111 Reporting program before CMS begins issuing CMPs.
Not sure what a compliant Section 111 Reporting program looks like? Really, there are two fundamental components of reporting. First, make sure you have a comprehensive Section 111 system to report your data to CMS. Second, confirm what you are reporting is accurate. Remember, just because all fields are complete in your system does not automatically translate to accurate information. Education, training, updating systems, catching errors before they go to CMS, auditing, and oversight are just some of the elements needed to create and maintain a complaint Section 111 Reporting program.
Lesson Two: Artificial Intelligence and Data Analytics are Changing the Game
The use of AI and data analytics has become a game changer in the claims, settlement, and Medicare compliance process. Data that used to take months (or years) to analyze can now be processed in hours, sometimes even minutes. It has allowed us to create better safety programs, and when claims do occur, it helps assess settlement values on a more macular level. We have also seen data analytics used to help forecast future medicals, the most favorable jurisdictions/judges, and even the most desired counsel to litigate a claim. It seems the possibilities are endless when it comes to the evolution of AI and data driven solutions.
Despite all these advances, we cannot forget, eliminate, or underestimate the most essential factor in our work – the human element. The Medicare Set-Aside (MSA) process provides a great example of why the human element is so vital. Data and AI can play an important role in determining what pricing or modalities to include in an MSA, but what about assessing the impact of a judicial decision or statute on an allocation, or recognizing potential mitigation opportunities to reduce exposure, or understanding the nuances of the jurisdiction, judge, or opposing counsel that is not readily apparent in data elements?
While it is true that knowing when and how to use data and AI solutions, as part of the claims management and Medicare Compliance process can be a game changer, it can be equally important to know its potential limits and identify when the human element is necessary as well.
Lesson Three: Managing Funds Is Critical
In March 2022, with the release of the new language in Section 4.3 of the WCMSA Reference Guide, CMS noted that it “may” deny benefits for a Medicare beneficiary if the MSA is not reasonable and if the claimant does not properly administer the MSA funds. This is not “new” policy for CMS. In fact, even for MSAs approved and reviewed by CMS, denials can occur when there is an MSA that has not been exhausted, if a beneficiary fails to properly spend the funds from the MSA, or potentially by mistake.
Denials can also occur when beneficiaries are enrolled in a Medicare Advantage Plan. The U.S. Department of Health and Human Services, Office of Inspector General, issued a Report in Brief in April 20221, noting that some Medicare Advantage Organizations (MAOs) denied prior authorization and payment requests, which met Medicare coverage rules, by using MAO clinical criteria that are not part of Medicare coverage rules, requesting unnecessary documentation, and making manual review errors and system errors.
What is made clear from these facts, statistics, and findings is that beneficiaries need support after settlement. Professional administration not only relieves the beneficiary from having to navigate the complex world of MSA administration, but it can also help prevent MSA funds from being exhausted prematurely. Even for claims where professional administration is not utilized, parties should still consider some type of self-administration support to help the claimant answer day-to-day questions, complete bill reviews, and take advantage of discounts.
Lesson Four: There Are Multiple Options to Reduce Settlement Costs
Reducing settlement costs is a key element in successful claims handling. It can be done in a variety of ways, from carving out a reversionary interest in professionally administered MSA funds to taking control of Medicare lien investigation and disputes to reduce exposure and costs.
However, one underutilized settlement tool is the use of structured settlement annuities. Structures are financially secure, specialized annuities that deliver a stable future stream of annual payments to fund a Medicare Set-Aside (they can also be used to fund the non-MSA portions of a settlement). Structures reduce costs by lowering the price of the MSA at settlement, which can save dollars on the file or free up funds to allocate to other portions of the settlement, thereby bridging the gap between offer and claimant’s demand. The set schedule of payments is also tax free to the claimant and can assist against premature or improper use of the funds.
Another consideration is the type of MSA program being utilized. While MSAs are often thought of as a commodity, when viewing the MSA process as a program, there are several settlement cost reduction opportunities. Understanding your obligations under the MSP statute and vetting that knowledge against the many approaches to MSP compliance is key. As such, spending time researching this concept can pay huge dividends over the course of a given year.
Join us next week as we explore the four remaining lessons learned in 2022.
About Barbara Fairchild
Barbara brings 35 years of experience and proven performance in the insurance industry, specializing in catastrophic case management, drug and medical utilization review, and critical-care nursing. She transitioned into Medicare Secondary Compliance in 2003 providing extensive business development and significant growth nationwide.
As an instructor, Barbara has taught multiple courses and participated in conference presentations and webinars across the United States. She is also a member of The National Medicare Secondary Payer Network (MSPN), the Medicare Advocacy Recovery Coalition (MARC), and a commissioner for the International Commission on Health Care Certification CLCP board. Barbara holds a Bachelor of Science degree in Nursing from St. Louis University, graduating with honors. Additional professional credentials include Registered Nurse, Certified Life Care Planner, and Medicare Set-Aside Consultant – Certified.
About Jon Gunter
Jon has over 30 years of experience in the insurance industry including 10 years with a national property/casualty carrier where he functioned as an SIU specialist, Claims Manager, and Corporate Trainer before moving on to a national third-party administrator where he managed a team responsible for the WC claims oversight of one of the largest hotel chains in the country. He transitioned to the Medicare compliance space in 2004 and has focused on providing innovative MSP solutions for over 19 years.
Jon has written and contributed to articles on Medicare Secondary Payer related matters, is a former instructor with the California Insurance Education Association (IEA), is a Certified Medicare Secondary Payer Professional (CMSP) and is a member of The National Medicare Secondary Payer Network (MSPN). In addition, Jon frequently presents at both national and regional industry conferences and events. He is a graduate of California State University, Fullerton, and holds a Bachelor of Arts in Business Administration.
From Section 111 Reporting, Medicare-Set Asides, Cost Projections, and Structured Settlements to MSA Administration, AI Solutions, Lien Resolution, and Settlement Consulting, IMPAXX offers a comprehensive suite of innovative products and services to help you effectively navigate the constantly changing Medicare Secondary Payer (MSP) landscape. IMPAXX is one of the nation’s largest Medicare Set-Aside solution providers, and our dedicated and knowledgeable team of professionals use their decades of experience, extensive industry knowledge, and sophisticated understanding of Medicare Secondary Payer requirements, to create customized options to meet your unique needs.
1 U.S. Department of Health and Human Services, Office of Inspector General, Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care, April 2022 (PDF)
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