3 Ways Medicare’s New Fiscal Year May Impact Workers’ Compensation Payers

As the fall leaves turned this year, so did the landscape of Medicare Secondary Payer compliance that the industry faces.

Several items dovetailed with the start of fiscal year for the Centers for Medicare and Medicaid Services on Oct. 1, potentially altering existing processes for industry stakeholders, most notably in the conditional payment reimbursement arena.

Also of interest are an OIG audit and a recent installment of Medicare Learning Network Matters. Coupled with procurement for various contractor positions administering the Medicare Secondary Payer program, these developments pose changes for the last quarter of 2022 and into 2023.

Here’s what you need to know.

1) The OIG Audit

If you thought Medicare’s collection efforts were aggressive in the past, a recent governmental report could motivate the agency to find and reclaim even more money paid out by Medicare.

The Medicare Secondary Payer law exists to ensure that Medicare isn’t making payments that other insurance coverage should, such as workers’ compensation in the event of work injuries or liability insurance in the event of motor vehicle accidents or other bodily injury claims.

Since 1980, Congress has granted Medicare status as a secondary payer in these instances, also equipping the agency with powerful authority to seek reimbursement to the extent that it can, even assert double damages against payers failing to reimburse the Medicare Trust.

But a recent government accountability report suggests that current recovery efforts aren’t meeting the goal of that legislation.

On July 25, 2022, The U.S. Department of Health and Human Services Office of Inspector General published findings based on 148 Medicare audit reports issued during a 27-month period from October 1, 2014, through December 31, 2016, essentially summating that CMS was collecting just over half of the $498 million identified as overpayments.

This disparity is not new: Findings from a prior OIG report revealed that Medicare had not recovered $332 million of the $416 million believed to be overpayments at that time.

Research suggests the life expectancy of this health insurance program to be dwindling with revenues sufficient to cover operating costs through only 2028 for Part A Hospital insurance. The program is not expected to disintegrate in 2029, but without additional revenue, it will begin to experience shortfalls leading to delays and/or denials in payments, among other issues.

Findings and recommendations from the most recent audit include:

• $120 million of the $498 million identified overpayments were verified as collected.
• While CMS reported it had collected $272 million, it did not provide adequate documentation to verify collection of the remaining $152 million.
• CMS did not take corrective action consisting of six recommendations previously made by OIG, only fully implementing two of the four that had been agreed upon.*

OIG recommendations included the following:

• Continue recovery efforts for any collectible portion of the $226 million in uncollected overpayments.
• Determine what portion of the unverified $152 million was actually collected and can be accounted for.
• Revise 42 CFR Section 405.980 and corresponding manual instructions related to the reopening period for claims to be consistent with Section 1870 of the Social Security Act.
• Develop a plan for resolving costs, including procedural recommendations.

According to the report, CMS concurred with OIG’s recommendation to continue its efforts to recover any collectible portion of the $226 million in uncollected overpayments.

While this study poses myriad downstream impacts to the MSP stakeholder community in terms of more aggressive recovery efforts, potentially most concerning is the recommendation for revisions to popular regulations allowing payers to engage in ongoing appeals of conditional payment amounts the government attempts to collect.

Proposed revisions to this series of regulations could alter the timeframes currently available for insurance companies and other payers, narrowing the window of opportunity currently available to file appeals when conditional payment amounts are not owed by the payer.

2) “The MSP Contractor”

For many years, the processing of Medicare claims has been conducted by The Benefits Coordination & Recovery Center (BCRC) or the Coordination of Benefits Contractor (COBC). As of October 13, there will be a new player at the helm of Medicare benefits coordination.

On August 12, 2022, CMS released its periodical publication MLN Matters, a publication directed to an audience of medical service providers, announcing an update to the Internet Only Manual (IOM) 100-05 Medicare Secondary Payer Manual, Chapter 5. Chapter 5 is described as a chapter explaining MSP policy and operational procedures. The alert states that as of October 13, 2022, what will be known as “The MSP Contractor” will supplant the BCRC and COBC for coordination of benefits.

The MSP Contractor is defined as primarily an information-gathering entity, which depends on various sources for obtaining information. It will be responsible for initiating MSP development and making MSP determinations.

It will also be responsible for ensuring the accuracy and timeliness of updates to the Common Working File (CWF), determining the existence or validity of MSP for Medicare beneficiaries and handling all MSP related inquiries, except those related to specific claims or recoveries.

Also, once the MSP record has been established on CWF by the MSP Contractor, it will be responsible for all MSP activities related to the identification and recovery of debts. In terms of the practical implications of the alert, the following were highlighted for medical providers, suppliers and facilities:

• MACs may incorrectly deny claims when provided services aren’t related to the liability, no-fault or workers’ compensation claim. If the diagnosis codes are within the family of codes on the MSP NGHP record, it is still possible that the injury is not related to the claim. Evidence can be furnished showing unrelatedness and the MAC may make proper payment.
• If the provider indicates Medicare to be primary, CMS will assume this is correct and that there is no other primary coverage.
• Claim Adjustment Reason Codes (CARCs) show why a claim wasn’t paid by a no-fault insurer and whether Medicare should pay.

3) Procurement

At least two government contractors administering tasks espoused within Medicare Secondary Payer obligations are in procurement, raising the possibility that new contractors could enter the stage in the coming months.

The first contract is for the Workers’ Compensation Review Contractor, which has historically been tasked with review of Workers’ Compensation Medicare Set-Asides submitted by settling parties to ensure that settlement dollars are earmarked for future claim-related medical treatment so that Medicare will not be asked to foot medical bills down the road.

The RFP for this contract has expanded to include review and processing of other Non-Group Health Plan allocation reports, which likely references liability or no-fault Medicare Set-Asides. The industry has braced in a holding pattern for more than a decade in anticipation of rules and guidance surrounding MSAs and submissions set forth by Medicare for liability and no-fault insurance lines, expecting something akin to the existing guidance for Workers’ Compensation Medicare Set-Asides published and circulated by the Agency.

A proposed rule currently sits with The White House on the desk of the Office of Management and Budget’s Office of Information and Regulatory Affairs, awaiting final review and publication.

The RFP for the WCRC position anticipates an award date of November 14, 2022. Historically, a change in contractor for this job results in some shuffling about with new personnel, potentially slowing down operations for a spell until the new folks are up and running.

The Commercial Repayment Center, the contractor managing conditional payments specific to workers’ compensation claims, is facing contract expiration. Performant was awarded this contract in 2017, originally held by CGI when the CRC came into existence. The CRC was created in 2015 to work in tandem with the Benefits Coordination and Recovery Center, which managed liability conditional payments.

Performant will be completing the fifth year of its five-year contract at the conclusion of 2022. In the past, changes surrounding a new CRC have included alterations in the timeframes of correspondence and varying degrees of aggressiveness in collections efforts. &

*Corrective action recommendations published May 18, 2012, included (1) pursuit of legislation to extend the status of limitations so that the recovery period exceeds the reopening period for Medicare payments, (2) ensure its Audit Tracking and Reporting System (ATARS) is updated, (3) ensure CMS collections information is consistent with ATARS, (4) collect amounts made after audit period to the extent the law allows, (5) verify the collected amounts are accurate, and (6) provide specific guidance to contractors about collections.