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In August of 2010, Pete Stark Chairman of the Subcommittee on Health for the House Ways and Means Committee sent a letter to the GAO requesting an examination of “issues surrounding Medicare Secondary Payer rules as they apply to Non-Group Health Plans".  Representative Stark requested the GAO examine a number of issues due to “concerns reported by NGHPs involving their interactions with CMS on issues where Medicare is the secondary payer.”  The following issues were identified:

1)      “What aspects of CMS’s reporting and settlement procedures create challenges for non-group health plans and what options could help address them?”

2)      “What are the current MSP workload, costs, and the amount of collections from the non-group health plans and how is that anticipated to change under mandatory reporting?”

3)      “What process does CMS use to track spending on beneficiaries who have received MSAs in workers compensation settlements and how much of the MSA money has been used to pay for Medicare-covered services?”

4)      “What have been CMS’s timeframes for responding to requests from settling parties for information on Medicare’s interest in settlements?”

In March of 2012, the GAO issued a 47 page report in response to the inquiry.  Given the length of the report, it is impossible to summarize everything succinctly.  Instead, I will hit the notable findings.  First, the GAO report indicates that self-reporting and Mandatory Insurer Reporting under the MMSEA has reaped sizable savings for the Medicare program thru increased MSP recoveries.  According to the report, there was a $21 million dollar increase in total CMS payments to the MSP contractors from 2008 through 2011 and a corresponding savings of $124 million (savings from known NGHP situations that CMS is able to track including savings from claims denials and conditional payment recoveries). 

The report made 5 recommendations to CMS to improve upon the effectiveness of the MSP program and process for NGHPs.  They are as follows:

1)      The Acting Administrator of CMS should periodically review recovery thresholds for appropriateness.  In addition, CMS shouldn’t require NGHPs to report through Mandatory Insurer Reporting cases for which the agency will not seek recovery.

Comment:  This is a step in the right direction, but right now the thresholds are ridiculously low.  CMS will not issue demands for $25.00 or less and will not recover certain conditional payments for liability settlements of $300 or less.  The threshold might as well be ZERO!  CMS agreed with this recommendation and will review at the conclusion of 2012.  However, I don’t expect that there will be a significant increase to the threshold. 

2)      ICD-9 codes should be optional for reporting of claims under the Mandatory Insurer Reporting law. 

Comment:  CMS said it would consider this, but they really want the info in that form to make it easier to identify what is injury related treatment.  It is disconcerting that CMS is accumulating this data since an injury victim’s Medicare number can be flagged based upon injury related ICD-9 codes and then future care can be denied.  I seriously doubt that CMS will agree to forego collection of this information.

3)      Develop a centralized MSP program website, to include links to information about various parts of the MSP process.

Comment:  This is needed badly.   CMS is working on this according to their response. 

4)      Develop guidance regarding liability and no-fault set-aside arrangements.

Comment:  Exactly what we really need in this regard.  CMS’s response agreed with this recommendation and indicated it is “working to clarify some longstanding liability and no-fault set-aside policy.”  Not sure what that means or where it comes from!  The CMS response did say they were going to use “notice and comment rulemaking to seek industry comments related to these areas of the MSP program.”  That should be very interesting.  Stay tuned ….

5)      Review and revise correspondence with beneficiaries so that they understand their rights as well as responsibilities under the MSP program.

Comment:  CMS agreed with this recommendation.  CMS intends to review all MSP related correspondence and make revisions as necessary.

It is good to see that there is a focus on addressing these issues by CMS (at the behest of Congress).  The ship seems to be slowly turning in the right direction.  The fact that the government is seeing positive results in terms of recovery efforts for conditional payments and savings as a result of MSAs in the Workers’ Compensation world means that we will likely see continued stepped up enforcement of the MSP.  I would predict that MSAs in the liability settlement world is the “New Frontier” and likely will result in massive savings to the Medicare trust fund if implemented.  We are already seeing them done more and more frequently as a result of the Mandatory Insurer Reporting laws and resulting hysteria.  What we need though is reduction of conditional payment obligations based upon limited recoveries and we need the same mechanism in place for MSAs in the liability context.  The report delves into this issue some but Medicare is resistant to those arguments.  Perhaps the Hadden case will be addressed by the US Supreme Court to resolve that issue.

Stay tuned!