By now, most of our readers are familiar with the Mandatory Insurer Reporting statute, commonly called “Section 111 Reporting,” because it originated in Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007. As it applies to the insurance claims and defense industry, Section 111 mandates that insurers or self-insured entities, and sometimes third-party administrators, report to Medicare when the entity learns a claimant is a Medicare beneficiary. While Section 111 applies to standard health insurance, it also applies to “non-group health plans,” or NGHPs, a group that includes workers’ compensation, liability, and no-fault coverage plans. For NGHPs, any claim with a total payment obligation to the claimant (TPOC) value over $750 is subject to Section 111 reporting. However, “ongoing responsibility for medicals,” or ORM does not need to be reported when medical expenses paid directly to the providers do not exceed $750 and the claimant lost seven days of work or less. The purpose of the reporting is to prevent Medicare money from being spent on treatment where a primary insurance plan should be responsible, by providing to the Medicare program the data it needs to identify such claims and treatments. Over the years, the Section 111 program has evolved to its present-day online reporting system, and last fall the Centers for Medicare and Medicaid Services (CMS) updated its policy manual to provide a system for escalating unresolved issues, as well as an updated paperwork reduction disclosure. With potential penalties of $1,000 per day for non-compliance with the statute, most entities are more than happy to comply. CMS also continues to keep stakeholders awaiting guidance on its pending proposed rules on penalties for civil liability insurers non-compliance with reporting, and these are now expected to be announced later in 2020. However, there can be other consequences resulting from how the entity complies, as well as how CMS works with the data it receives from mandatory reporting. These consequences can be avoided or mitigated by approaching Section 111 with strategic planning for each case.
Probably the two most critical data items involved in Section 111 reporting are the diagnosis coding and the period of dates when the entity has ORM. As practitioners well know, the use of diagnosis codes is quite divergent between health care providers, insurers, state workers’ compensation agencies, courts, and CMS itself. Therefore, it becomes critical in Section 111 reporting to make certain the codes being reported are correct and are limited to the injuries covered by the entity’s claim. It also remains important to frequently re-check the reported codes as the claim investigation proceeds and as the claimant’s condition evolves during the pendency of the claim. Misstated diagnosis codes can result in CMS seeking reimbursement for medical treatment wholly unrelated to the claim or can cause CMS to deny coverage when the claimant needs care for an unrelated condition. Understating or omitting diagnosis codes can result in delays or errors when it comes to the time of closing out conditional payments reimbursement to CMS. Similarly, the reporting and updating of ORM status should be as accurate as possible and must be consistent with any trial awards or settlement documents. If a settlement or award closes future medical rights before the claim is resolved, the ORM should be reported as closed. Care should also be had for fully disputed and denied claims. In most instances, if there is a legal defense to liability, then ORM is never triggered. In other words, if there is no liability, there is no “responsibility for medicals” and thus there is no need for an ORM report.
Once the TPOC amount is finalized and ORM is closed, the TPOC should also be reported, even if the ORM closure happened earlier. If the case subsequently settles on a disputed basis for less than or equal to $750, there is no need to make a TPOC report since it is less than the TPOC reporting threshold. These kinds of cases include absolute defenses to liability, such as where there is no coverage (e.g., the claimant was not an employee, or the claimant is not covered by the terms of the applicable liability policy) or where the statute of limitations has expired. They can also include factual defenses like causation. In some cases, the ORM and TPOC (if any) may need to be closed at the same time.
The point of accurate reporting is to ensure CMS adjusts its records to properly account for potential conditional payments, but also to enable the claimant to access his or her Medicare benefits for treatment no longer covered under the claim. Given all the potential scenarios in a particular claim, Section 111 reporting should never be a rote or automated process. The unique circumstances of each case should be considered, and regular updating should conform the reporting to the changing facts as the case progresses. We at NBKL can assist in developing a customized strategy for Section 111 compliance to ensure that exposure for conditional payments is minimized and that the claimant’s access to Medicare benefits is maximized on a case-by-case basis.