Requirements Under Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA)
June 17, 2009 -- Since 1980, Medicare has been a "secondary payer" of medical services and items with primary coverage coming from liability insurance, no-fault insurance and workers’ compensation insurance. The problem for Medicare, however, was identifying the primary payers who would cover the cost for the benefits, in order to protect Medicare from becoming the primary provider.
To correct this problem, MMSEA was passed in December of 2007. It establishes mandatory reporting requirements for liability insurance (including self-insurance programs), no-fault insurance and workers’ compensation. Section 111 imposes an obligation on primary insurers/payers to identify claimants entitled to Medicare benefits and to report those claims to Medicare electronically.
Failure to comply with this requirement can result in a fine of up to $1,000 per claim per day.
The primary payers are defined by Medicare as the "Responsible Reporting Entities" (RRE's) and the registration period for RRE's began on 5/1/09 and will continue through 9/30/09.
WHO IS AN RRE?
- - For fully insured programs, the insurance carrier will be the RRE.
- - For fully self-insured programs, the insured is the RRE.
- - For insurance programs with a deductible or self-insured retention (SIR), the insurance carrier will be the RRE if payments are issued by the carrier and then subsequently reimbursed up to the retention and/or deductible limit by the insured.
- - If the insured pays claims directly to the claimant up to the deductible limit, then the insured becomes the RRE for those claims and must report them up to the point where the deductible is reached; after which, the carrier will then become the RRE.
Since Third Party Administrators (TPA’s) cannot be RRE’s under this regulation, it is very important to identify the relationship between the insurance carrier and the claims administrator for deductible and SIR programs. If the carrier is using a TPA to administer the claims, the insured becomes the RRE. This applies even if the TPA is owned by the carrier. It is the responsibility of the insured to determine if claims are being managed by a TPA and, if so, they must register as the RRE. It is highly recommended, for any insured using a deductible or SIR program, to contact their broker or insurance carrier to clearly determine whether or not the claims administrator is a TPA.
If you are the RRE, you must register on the Coordination of Benefits Secure Website (COBSW) by September 30, 2009. The website address is: https://www.section111.cms.hhs.gov/MRA.
Insurance carriers and TPAs have been working to implement reporting systems to simplify the reporting process. If your program is fully self-insured, you must register as the RRE. You can then coordinate the reporting of claims through your TPA or another service provider. It is important to note that regardless of who you appoint as your reporting agent, you are still responsible for the electronic reporting to Medicare. Any fines associated with improper or inadequate reporting will be charged to you, not your agent.
For additional information on the registration process, reporting requirements, definitions, or to download the Medicare Secondary Payer Mandatory Reporting user guide, you can access the Centers for Medicare and Medicaid Services online at: http://www.cms.hhs.gov/mandatoryinsrep/.
Particular attention must be paid to certain provisions in the D&O policy including, but not limited to, the definitions of Loss and Claim, and the affirmative treatment of how the policy will respond to a disgorgement claim. Further, severability language must be evaluated to ensure the separation of insurance interest to protect innocent directors and officers.
For more information please contact:
- Jeff Cruz, Asst. Director, Risk & Loss Advisors
- jeffreyc@barneyandbarney.com
- 858.587.7577
