By Angela Childers|February 26, 2020
A long-awaited proposed rule regarding late reporting of Medicare Secondary Payer data could mean potentially significant penalties for workers compensation insurers, self-insured entities and others.
The Centers for Medicare & Medicaid Services released the proposed rule for Section 111 reporting on Feb. 18 — seven years after it first accepted comments on the issue of penalties for failure to accurately report Medicare Secondary Payer data and 13 years after the creation of Section 111.
The regulation established that insurers and self-insured entities that accepted a medical responsibility in a workers compensation claim or provided payment or settlement to a Medicare beneficiary report such information to CMS.
In 2013, Congress enacted the Strengthening Medicare and Repaying Taxpayers Act, or SMART Act, which directed CMS to develop a structure for imposing fines against insurers and self-insureds — referred to as required reporting entities — that failed to accurately report data to CMS.
The law was important for CMS because it allowed the government “to better coordinate benefits … and also allows Medicare to recover the dollars that they’ve paid for medical that they later figure out should have been paid by another entity,” said Dan Anders, Chicago-based chief compliance officer for Tower MSA Partners, a provider of Medicare secondary payer services for comp insurers.
The newly proposed rule would let CMS impose penalties of up to $1,000 per day per claim for failure to register and report Medicare secondary payer data or report with sufficient accuracy. The rule also would place a five-year statute of limitations on fines and recovery by CMS.
“Just by looking at how the initial regulation is proposed here, it could be significantly damaging in terms of monetary penalties,” Mr. Anders said. “Essentially, how this is laid out, if you don’t report when you’re supposed to report … you’re looking at in one year a $365,000 fine, and obviously even more if you’re looking at multiple years for not properly reporting. The punishment wouldn’t seem to fit the crime.”
The proposed rule is “somewhat disappointing” and fails to adopt standard sliding scale penalty criteria, including an evaluation of a potential violator’s good faith, the existence of a compliance plan and adherence to industry standards, said Re Knack, chair of the Medicare Advocacy Recovery Coalition in Washington D.C., a group that advocates for improvement in CMS payer programs, and member of Seattle law firm Ogden Murphy Wallace PLLC, in an email.
“Every company in America, from the largest insurers to the smallest Main Street business, will now be exposed to potential penalties if they fail to properly ‘report’ to Medicare any settlements with Medicare beneficiaries,” she said.
The proposed rule does allow for some errors, with CMS stating that penalties will be levied for data inaccuracies above a 20% threshold in four of eight reporting periods.
Complicated International Classification of Diseases codes, also known as ICD-10s, can make accurate reporting challenging, as can properly identifying workers comp claimants who are Medicare beneficiaries, said Boston-based Shawn Deane, general counsel at Ametros Financial Corp., which provides Medicare set aside post-settlement administration services.
Employers will often overlook the possibility that injured workers under the age of 65 may be Medicare beneficiaries, if they also have a qualified disability, said Deborah Robinson-Stewart, national manager of Medicare set aside services at Genex Services LLC in Wayne, Pennsylvania.
In addition, mistakes can occur when the ongoing responsibility for medical benefits is terminated in a workers compensation case and the reporting entity failed to update that record for Medicare to indicate that the termination date has occurred.
“The proposed penalty for failing to update that (ongoing responsibility for medical) termination date is going to be calculated based on the number of calendar days that beneficiary record wasn’t updated,” Ms. Robinson-Stewart said. “If you settled the case in 2017 and CMS is now reaching out to try to collect on payments … it could be very damaging. You have to be vigilant.”
These “massive penalties for retroactive terminations” are troubling, wrote Ms. Knack, who said she hopes the agency withdraws this part of the proposal.
And those severe penalties could potentially lead required insureds or self-insureds to pay Medicare for medical costs the agency incurred in termination cases just to avoid the Section III penalty, speculated Mr. Deane.
However, given that CMS analyzed the 34 comments it received in 2013 to the SMART Act changes and incorporated some of those ideas in the proposed rule, Ms. Robinson-Stewart is optimistic that again “CMS is listening.”
“I also urge all affected stakeholders to make their voice heard and comment on the proposed rule,” wrote Ms. Knack in an email. The deadline for comments is April 20.
Even if the rule doesn’t take effect as currently written, insurers and self-insurers are on “the precipice” of penalties, Mr. Deane said, and should start conducting audits and look at the integrity of their data.
“Quality, accuracy and timeliness,” he said, “if (required reporting entities) have those three buckets taken care of, they are going to be in a good spot.”