The Centers for Medicare & Medicaid Services (CMS) has recently proposed new ways to calculate fines for various entities responsible for paying for Medicare beneficiaries’ health costs if they fail to properly report their obligations to CMS.
Under Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (“Section 111 reporting”) Group Health Plans and “Non-Group Health Plans” are required to report to CMS if they provide benefits to people who have Medicare. Non-Group Health Plans are generally things like liability and no-fault insurers (such as car insurance policies providing “medpay” coverage for medical expenses that result from car accidents) and also workers compensation arrangements. These entities have the responsibility for paying for medical costs before Medicare, meaning that Medicare should only be paying for medical costs if, for some reason, one of these entities doesn’t pay. Sometimes, if there is likely going to be a very long delay before these non-Medicare plans would pay for someone’s medical treatment, Medicare will pay for those treatments and then will go to these plans and get reimbursed from them.
Section 111 Reporting is supposed to make sure that Medicare knows when another entity is responsible for paying for the medical treatment for people on Medicare. In order to make sure that these other entities, like car insurance companies with med-pay, actually make these reports, Congress has imposed a fine of $1,000 per day for each individual these other entities fail to properly report their coverage of.
The proposed new rules from CMS are designed to implement this $1,000 a day fine and to make it clear what acts will incur the fines and which ones won’t. Under these new rules if a group health plan fails to perform any of its reporting within one year of the date it begins covering someone, it will face a $1,000 fine per day, leading to a maximum $365,000 fine per year. If a non-group health plan fails to report within one year of the date of a settlement (or whenever its payment obligation begins) it will face a fine of “up to” $1,000 a day (though potentially less) per individual up to a maximum of $365,000 per year. If either of these types of entities makes its reports under Section 111 but later provides Medicare information that contradicts its reporting when Medicare seeks to get reimbursed for anything it had already paid at that point (i.e. if the entities change their claims after Medicare comes seeking reimbursement) those entities will face a $1,000 a day fine for the number of days it failed to update its reporting.
Finally, if the data that is reported is found by CMS to have errors, CMS would impose a fine of $1,000 per day for each “quarterly reporting period” up to $90,000 per 90 days for group health plans and $250 per day for non-group health plans for the first quarter, increasing by $250 per day for each subsequent quarter (so after four quarters they, too, would face $1000 a day). The non-health plans would then have that fine reduce by $250 for any subsequent quarter where they comply (so it would take three quarters worth of compliance to work back down to the starting $250 a day fine).
All of the above means that if a group health plan, or a non-group health plan, makes its Section 111 reports within one year of the coverage effective date, or of a settlement, or other event that begins its payment obligation, and the reports are at least 80% accurate, there will be no fine. Additionally, a non-group health plan can avoid fines if it can show that it cannot get the required information to make reports after making a “good faith” effort to get that information.
It is not entirely clear what effect, if any, these rules and fines for group health plans and non-group health plans will have for litigants. Plaintiff’s obligations to use settlement proceeds designed to compensate for future medical expenses for those medical expenses rather than to pocket that money and have Medicare foot that bill remain unchanged. What Section 111 has done is increase the information that Medicare has in order to seek reimbursement for plaintiffs who pocketed that money. These next rules will make Section 111 even stronger by setting thresholds and adding certainty to Medicare’s enforcement of Section 111 and therefore likely will increase the reporting of settlements to it. Additionally, Plaintiffs counsels will be well advised to make sure to get any conditional payment information from Medicare in advance of any settlement so that they can make sure not to disburse any funds to their clients which Medicare will be immediately seeking reimbursement for.