Risk Insider: Roy Franco

An Inside Look at CMS Developments

By: | June 27, 2014

Roy Franco is chief legal officer of Franco Signor LLC, a leading Medicare secondary payer compliance services company. He oversees the company’s legislative advocacy program and is a founder of the Medicare Advocacy Recovery Coalition, the group responsible for the recent SMART legislation. He can be reached at [email protected]

The Centers for Medicare & Medicaid Services (CMS) is deliberate in the actions it takes. Updates take months, if not years, of back-and-forth within the agency. Political by nature, change takes time and are typically incremental, but always done to further CMS’ objectives — increase recovery of conditional payments and improve coordination of benefits. The following are observations of recent news and what it may lead to.

Coordination of Benefits & Recovery. Medicare Secondary Payer Recovery Contractor (MSPRC) and Coordination of Benefits Contractor (COBC) no longer exist. What operated as silos with information flowing in one direction between COBC’s Common Working File to the MSPRC Recovery Management Accounting System (ReMAS), now flows both ways. Consequently, Section 111 MMSEA data from Responsible Reporting Entities (RREs) are triggering Final Demands to Medicare beneficiaries. If not timely paid, CMS reduces Social Security benefits. Look next for reimbursement in claims involving Ongoing Responsibility for Medical (ORM) with no settlement, judgment or award.

Medicaid Reporting. CMS pays $500B to state Medicaid programs each year. Last December, a U.S. Budget agreement changed how Medicaid was to be reimbursed in personal injury settlements. The law requires 100 percent recovery to take effect on 10/1/2014, but extended to 10/1/2015. In the interim, States are encouraged to improve recovery laws. Rhode Island currently requires reporting, and others will follow with their own reporting rules for insurers and those that self-insure for losses.

Liability Medicare Set Asides. CMS submitted proposed regulations to the Office of Management & Budget for future medicals in liability settlements. No rules exist today, except for one CMS policy memorandum that is not helpful. Parties don’t know what reasonable steps to take to protect Medicare’s interest. Claimant’s future Medicare benefits are in jeopardy and with rules stalled since last October, parties are looking to courts to approve allocations. Are rules really necessary with Medicare deducting from social security benefits? Expect settlements to falter.

Office of Inspector General. There is little doubt that this CMS sister agency is responsible for Section 111 Penalty enforcement as OIG has included as part of its work plan for the past two years. OIG recently proposed regulations to enhance enforcement capabilities under the Civil Monetary Penalty regulations. Public comment is due 7/11/2014 and could it be a step toward Section 111 penalty enforcement. Next, watch for the publication on safe harbors required by SMART, and possible RAC Auditors.

WCMSA User Guide. Section 4.1.4 was added to the User Guide. CMS clarified how it would treat hearings on the merits. Generally, CMS respects allocations that result, but only if Medicare’s interests were adequately addressed. CMS reserved its right to set aside any settlement under 42 C.F.R. §411.46. Some have interpreted this change as an “alternative” to the WCMSA approval process. It is unlikely CMS has decreased its focus on the objective of improving coordination of benefits. Acquiescence to state boards on what is adequate to fund future losses is inconsistent. Primary plans should seek guidance from CMS first. Watch for further CMS clarification.

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