Changes to Medicare Reporting on the Horizon
Workers' compensation payers must ensure they are putting the proper steps into place to report all Medicare-eligible claims. Thanks to new provisions to the MSP statute, reporting will now be enforced and not based on an honor system.
Workers' compensation payers could soon face stiff consequences for failing to report Medicare-eligible claims in a timely manner. This is due to changes to the Medicare, Medicaid and State Children's Health Insurance Program (SCHIP) Extension act, which was signed into law in 2007. The Center for Medicare and Medicaid Services (CMS) is no longer relying on payers to accurately report information and is taking steps to ensure compliance. Severe financial penalties — up to $1,000 per day -- could be imposed for each claim that is not reported in a timely manner. It could also lead to CMS's recovering double the amount of Medicare payments, refusal of payments, or even litigation.
This article will provide a quick overview explaining how to determine which claims are Medicare eligible and the steps for complying with the new law.
Determining Medicare Eligibility
The Medicare, Medicaid and SCHIP Extension Act of 2007 was signed into law by President Bush in December 2007. This act amends the existing Medicare Secondary Payer (MSP) statute by establishing expanded reporting guidelines. The MSP statute is designed to protect Medicare's interests by preventing payers from shifting financial responsibility for medical expenses to the federal government.
It's critical for workers' compensation payers to determine whether they have injured parties who are Medicare eligible and report them to CMS prior to July 1, 2009. A Medicare-eligible person is one who is either 65 years old or older, younger than 65 with a disability and received Social Security disability benefits for 24 months or a diagnosis of end-stage renal disease. After July 1, workers' compensation insurers could be fined $1,000 per day for each claim that is not reported.
If it is determined that the insured is eligible for Medicare benefits, then the payer must provide supporting, pertinent information to CMS. Affected workers' compensation payers must report payment of a claim or acceptance of an obligation to pay a claim to a Medicare beneficiary. If a claim is paid on or after July 1 to an injured party that is or was a Medicare beneficiary as the result of a settlement, award, judgment, or other payment, then that payment must be reported to CMS the following quarter.
Complying with the New Reporting Requirements
Payers should begin planning now and put proper processes into place to ensure compliance by July 1. Workers' compensation insurers should include information related to Medicare Set-Asides (MSA) for Medicare-eligible claims being reported to CMS. An MSA is a federally mandated account used to pay future medical expenses for conditions related specifically to the coverage of the policy. Because pharmacy expenses often are the most significant medical expense of a claim, it is critical for insurers to include accurate cost projections.
Medicare Set-Aside arrangements are determined using analysis of the claim and medical information. The analysis accounts for the following information:
- The date and nature of the injury
- Type and extent of the injury or illness
- Rated age of the injured party and life expectancy
- Date and basis of Medicare entitlement
- Review of medical and pharmacy payment history
- Comprehensive review of medical records
- Physician recommendations
- Extent of disability
- Medicare coverage limitations
- Fee schedules and future medical needs for treatment of the injury through life expectancy (life care plan or detailed cost projections)
A pharmaceutical cost projection can provide payers with valuable information and potentially save settlement dollars. Pharmaceutical cost projections should be conducted by highly credentialed pharmacists specializing in pain management with experience in retail, home delivery, home infusion, hospital, and managed care pharmacy.
A comprehensive pharmaceutical cost projection report is completed based on review of prescription drug history and medical records. A clinical pharmaceutical team ensures only diagnosis and age-appropriate treatment recommendations are included in the review.
Pharmaceutical cost projections are often the most costly portion of the MSA. A pharmacy benefit manager can provide the expertise necessary to complete the cost projection, as well as provide evaluations performed by clinical pharmacists to project reasonable and necessary treatment regimens for the allowed conditions. Cost projections are based on the current treatment program and best-practice guidelines (evidence-based medicine).
Clinical pharmacists should also be available to collaborate with physicians to make appropriate treatment changes, if applicable, which may prove to be more cost effective.
Additionally, because CMS is requiring that Medicare-eligible claims information be submitted electronically, it is important to ensure the pharmacy benefit manager's claims management system is current, flexible, and can integrate easily with your system.
Benefits of Obtaining Pharmaceutical Cost Projections
In addition to compliance with the expanded Medicare Secondary Payer statute, there are numerous benefits of obtaining pharmaceutical cost projections for workers' compensation claims. Pharmacy expenses typically account for 7 percent to 12 percent of total workers' compensation costs, according to recent analysis by the Workers' Compensation Research Institute. Reviewing and managing medication in claims can help workers' compensation payers with their cost containment strategy. Challenges associated with managing medication costs include price inflation, paying for expensive brand medications, and filling non-compensable medications. On average, inappropriate utilization of prescription medications due to overspending costs payers an additional 10 percent to 15 percent each year. Without proper management, these challenges can cause an overall rise in the cost of pharmacy expenses and a decrease in insureds' satisfaction.
Conclusion
Workers' compensation payers must ensure they are putting the proper steps into place to report all Medicare-eligible claims. Thanks to new provisions to the MSP statute, reporting will now be enforced and not based on an honor system. Non-compliance will have costly ramifications, with fines of up to $1,000 per claim per day. In addition to meeting Medicare reporting requirements, accurately projecting an injured party's medical expenses during the life of a claim can help payers contain medication expenses and reduce overall settlement dollars.