Medicare Secondary Payer Reporting
January 1, 2011 | Aging Services Risk Management
When the Medicare program was enacted in 1965, Medicare was the primary payer for a Medicare beneficiary’s care with a few exceptions. In 1980, Congress passed the first of several provisions known as Medicare secondary payer requirements, shifting costs from the Medicare program to other payers if private sources of payment, such as a group health plan, are available to pay for a beneficiary’s care. The provisions also establish that Medicare will make a conditional payment for a beneficiary’s care if the primary payer’s payment will not be made in a timely manner. The conditional payment must be repaid to Medicare when the primary payer makes its payment. In addition to group health insurance, Medicare is a secondary payer when the beneficiary receives compensation for medical and surgical care through liability insurance, no-fault insurance, and Workers’ Compensation.
In today’s fiscally constrained environment, Medicare wants to aggressively seek repayment as a secondary payer once the primary payer covers the beneficiary’s care. To prevent duplicate payments for a beneficiary’s treatment, Medicare is requiring group health plans and other insurers to inform the federal government about payments, claims, and settlements involving Medicare beneficiaries. As an example, a malpractice insurer that, by way of a settlement or verdict, pays a beneficiary’s claim for medical or surgical care allegedly related to an injury resulting from care must notify the government of the claim so that Medicare can recover from the beneficiary any funds the federal government has already paid for the care. Continuing care organizations with self-insurance arrangements, including those with a deductible or self-insured retention, must also comply with the reporting requirements, enacted in legislation passed in 2007.
The reporting provisions affect many healthcare organizations, including hospitals, continuing care organizations, and physician practices in several contexts. If an organization self-insures its employee medical benefits, it would be required to report as a group health plan if it serves as a primary payer for healthcare provided to employees who are Medicare beneficiaries. Medicare secondary payer reporting can also apply to a variety of liability insurers that pay claims for an injury or illness to a Medicare beneficiary. These include insurers for homeowners’ liability, automobile liability, uninsured motorist liability, product liability, and general and professional (malpractice) liability. This Risk Analysis focuses on continuing care organizations that self-insure or have a deductible or self-insured retention for general and professional liability coverage. Nevertheless, continuing care organizations that self-fund a Workers’ Compensation or group health plan or self-insure other types of risks (e.g., automobile liability) should be aware of their reporting obligations.
Additionally, the reporting requirements will affect an organization’s approach to litigation involving care provided to a Medicare beneficiary. In such cases, risk managers should work closely with their organizations’ counsel and insurance company to ensure that all necessary procedures are followed so that the organization can meet its reporting obligations.
Continuing care organizations affected by the reporting requirements have already invested time and resources into testing their information technology systems’ ability to transmit the required data for reporting and to protect the privacy and security of Medicare beneficiary data. Given that their reporting responsibilities are ongoing, risk managers should ensure that efforts are in place to monitor compliance with the requirements and to coordinate the responsibilities of the various departments affected by the reporting requirements. The penalties for failing to comply are steep. Medicare can collect civil monetary penalties of $1,000 per day per claimant whose...