"CMS' magnifying glass has reached the liability industry," said Rob Sokol, director of commercial sales-Medicare Secondary Payer compliance at Allsup.
"Liability insurers can expect Medicare to continue examining the federal agency's involvement in settlements for Medicare-entitled beneficiaries," Sokol
"The concern for insurers is developing a strategy now to protect their settlements as these developments with Medicare continue to unfold."
In addition, insurers are experiencing increased scrutiny as a result of the reporting requirements associated with Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA).
CMS requirements state that effective Jan. 1, 2011, all responsible reporting entities (RREs), without exception, must comply with MMSEA reporting requirements or face stiff penalties of $1,000 per day and other liabilities.
The act requires group health plans, liability insurers, no-fault insurers and workers' compensation insurers to report information to CMS
about payments to Medicare beneficiaries.
"These signs point to a new environment for the liability industry-and the next step should be investigating and developing a strategy to protect their settlements," Sokol
Medicare's reporting requirements highlight the necessity of having a formal process for addressing the federal program's interest in cases where the individual receiving a settlement is Medicare-eligible, he
explained. (Note: The Medicare Secondary Payer Act, enacted in the 1980s, allows Medicare to seek reimbursement for money they paid for an individual's healthcare that should have been paid by another insurer, i.e., when Medicare is "secondary" payer.)
Protecting Settlements, Acknowledging Medicare
In some ways, the liability industry is fortunate that service providers such as Allsup
have already established a process for ensuring these protections for settlements.
The critical tool for addressing Medicare's interests in liability settlements is the Medicare set-aside (MSA), Sokol
Documentation of medical expenses provides greater protection and benefits the liability insurer, the attorneys, the Medicare program and the individual.
In this way, MSAs fill a vital role for workers' compensation settlement, and the practice can be applied in the same way to the liability sector.
"Establishing an MSA is a prudent, risk-mitigating step," Sokol said.
Companies can expect additional new developments related to Medicare Secondary Payer (MSP) compliance, Sokol
"It's important to locate Medicare Secondary Payer compliance experts like Allsup who can help your organization properly document settlements and ensure protection against increasing Medicare scrutiny," Sokol
"Everything we've seen up to this point is that Medicare is continuing to develop this process of recovering from those entities who are primary payers."
"Now is the time to take protective measures," Sokol