Most workers’ compensation claims adjusters would agree that the best claim is a closed one. Although the ideal settlement closes all aspects of the claim at once, this is not always feasible. The unique circumstances of a claim may result in an indemnity only settlement with future medical rights remaining open. The settlement terms will often provide that the open medical rights will close after either a fixed period of time, or once a specific event occurs, such as the carrier’s election to secure and fund a Centers for Medicare and Medicaid Services (CMS) approved Medicare Set-Aside (MSA) determination. If the parties subsequently elect to close out open medical, a second settlement agreement will be entered into for the agreed upon value of the future medical rights.
The two distinct settlements are a straightforward occurrence for the claims handler. The two settlement dates however may cause confusion when it comes to the Section 111 reporting obligations under the Medicare, Medicaid, and SCHIP Extension Act of 2007. This article will address the guidance provided by CMS as well as some of the ways in which these bifurcated settlements are being reported.
By way of background, Section 111 reporting obligations may arise in settlements involving a Medicare beneficiary. If the Medicare beneficiary claimant’s claim has been accepted, the Responsible Reporting Entity (“RRE”) has an obligation to report the carrier’s/employer’s Ongoing Responsibility for Medicals (ORM) in the claim and the accepted diagnosis codes. If the claim has been denied, there is no obligation to report ORM.
The second Section 111 reporting obligation involves the Total Payment Obligation to Claimant (TPOC) once the case fully settles. The Total Payment Obligation to the Claimant is defined as “the dollar amount of a settlement, judgment, award or other payments in addition to or apart from ORM.” (MMSEA Section 111 NGHP User Guide, Version 5.9) If the case was denied and no ORM report was made, the RRE should only report the TPOC settlement provided the settlement exceeds the applicable Section 111 reporting threshold. Currently, the Section 111 TPOC reporting threshold is $750.00. If the case was accepted and the settlement closes out all aspects of the claim at the same time, the RRE should report both the termination of the ORM and the TPOC under Section 111. The TPOC date is the date that the appropriate court approves the settlement agreement. If court approval is unnecessary, the TPOC date is the date that the written agreement is signed. In this scenario, the ORM date will be the same as the TPOC date since all the issues are being resolved simultaneously.
Now consider a situation involving an accepted case with a Section 111 ORM report and a settlement agreement to pay a specific amount for indemnity while keeping medical open for a fixed number of years. Since Section 111 ORM reporting options do not allow for the ORM termination date to fall in the future, and the value of the open medical for a fixed number of years cannot be definitively established, what is the best way to address this under Section 111? According to information provided during one of CMS’ early Section 111 Non-Group Health Plan Town Halls, the ORM report should not be terminated until the fixed number of years passes. The TPOC report however should be made since an indemnity agreement was reached. A second TPOC report would be made when the future medical obligation closes and ORM terminates. This position appears to be consistent with subsequent guidance issued in the MMSEA Section 111 NGHP User Guides. The definition of TPOC states that it “generally reflects a “one time” or “lump sum” settlement, judgment, award, or other payment intended to resolve or partially resolve a claim.” (emphasis added). Our recent discussions with the Commercial Repayment Center (CRC) and Benefits Coordination & Recovery Center (BCRC) however, suggest that only one TPOC report should be made in this fact pattern, i.e. when the ORM terminates. This is not always the practice that is being followed by claims handlers.
There are also situations where the ORM termination date may occur before the TPOC date. According to the MMSEA Section 111 NGHP User Guide (Version 5.9), ORM may be terminated under the following circumstances:
- the beneficiary’s treating physician has provided a signed statement that no additional injury related medical items or services will be needed;
- the medical benefits available to the beneficiary have exhausted under applicable state law; or
- the insurer’s responsibility for ORM has been terminated under the terms of the applicable insurance contract, such as when the maximum coverage benefit has been paid out.
An exhaustion of benefits under state law may occur when the parties go to trial and the judicial body issues a full and final order that terminates the employer’s obligation for ongoing medical benefits. Although the parties may settle the indemnity months or years later, ORM may be terminated after the judicial order becomes final. It is important to note that an ORM termination date should not be reported if the ORM is subject to reopening or otherwise subject to an additional request for payment. If state law prohibits the closure of future medical, you may have a TPOC report without ever terminating the ORM.
Section 111 mandatory reporting is intended to keep Medicare as a Secondary Payer when a primary payer with a demonstrated responsibility for the claim is available. It impacts both conditional payment recovery and generally allows Medicare to avoid making future payment for injury related medical services. Proper reporting by the RRE is required to facilitate the Section 111 goals and to prevent the imposition of penalties.
Claims handlers should be mindful of the need to properly terminate ORM since the termination date serves as the cutoff date for the CRC’s conditional payment recovery efforts in the claim. The TPOC date in cases without ORM reporting serves the same purpose; conditional payment recovery shifts to the BCRC. When reporting bifurcated settlements, CMS’ guidance is ambiguous. Since the termination of ORM is key to limiting conditional payment recovery efforts by the CRC against the insured, best practices may dictate one TPOC report at the time that ORM is being terminated. Additional clarification may be provided during the upcoming CMS Section 111 Non-Group Health Plan reporting webinar on August 13, 2020 at 1:00 pm ET.
Our MSP compliance team is here to keep you informed and aid with your Medicare Secondary Payer compliance needs.