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CMS Requirement Imposes Strict Paid Claims Reporting Requirements

The Centers for Medicare and Medicaid Services (CMS) is a secondary payer when Medicare beneficiaries are compensated for their past and future medical expenses in liability claims. CMS, therefore, is entitled to be reimbursed for medical expenses it paid on behalf of a beneficiary who recovers those medical expenses in a liability, workers’ compensation, medical professional liability (malpractice), or no-fault claim. CMS is also entitled to take into account compensation paid for future medical expenses when determining its obligations to pay for medical expenses incurred after resolution of the case. To help CMS recover more of its funds paid on behalf of Medicare beneficiaries and to improve its management of future medical expenses that have already been paid by settlement or judgment, the Medicare, Medicaid, and SCHIP Extension Act of 2007 established reporting requirements for liability insurers (like Physicians Insurance), self-insured organizations, workers' compensation insurers, and others who pay claims to Medicare beneficiaries.

What this means

The name of and the amount paid to a Medicare beneficiary whose illness, injury, incident, or accident was at issue in a paid claim must be reported to CMS. Liability insurers, no-fault insurers, workers' compensation insurers, and self-insured organizations that pay such claims must register with CMS as “required reporting entities” (RREs). Reporting to CMS is required for claims settled or tried to a verdict on or after October 1, 2011. There have been a series of temporary exceptions in place for settlements under certain dollar amounts, and during 2013, reporting is required if the amount paid is greater than $2,000. This reporting threshold goes down to $300 in 2014. The penalty for failing to report claims and for late reports can be a fine of up to $1,000 per day per claim.

This reporting obligation has created an enormous data collection project for CMS. All liability payers, not just medical professional liability claim payers, will be reporting claims paid to Medicare beneficiaries. And this duty to report extends beyond insurers to include any organization or individual making such payments on their own without insurance. At the same time, all no-fault and workers’ compensation insurers will be reporting payments made to Medicare beneficiaries.

Issues at hand

As a medical professional liability insurer, Physicians Insurance is an RRE. We have implemented extensive system changes in order to collect and report required data in the format CMS requires. Considerable staff time has been required to parse and understand the reporting requirements, program our computers, test the system, train staff, and implement the controls needed to assure accurate and complete reporting. We report paid claims as required. CMS has created an alternative reporting mechanism for RREs who report fewer than 500 payments annually. Physicians Insurance is using this alternative reporting mechanism, although the company is also prepared to report as originally anticipated if there are technical difficulties with this option.

How we stepped up to bat

In tandem with the Physician Insurers Association of America (PIAA), Physicians Insurance was actively involved in commenting on CMS’s draft reporting guidelines and the various versions of what has now become, in Version 4.0, a 448-page User Guide. We served on a PIAA task force that explained to CMS many of the practical issues that will delay settlements, inhibit collection of required data from understandably resistant plaintiffs, and create confusion and concerns about how CMS will use the data. There were in-person meetings between CMS and PIAA staff, and CMS staff held a full-day meeting with PIAA member companies to review the entire reporting process.

Recent federal legislation, which was supported by Physicians Insurance, will streamline the reporting process and provide greater clarity to insurers and self-insured organizations required to reimburse Medicare for "conditional payments" of medical expenses. Under this law, CMS is expected to inform litigants of the amount of its claim for reimbursement in a more timely manner. On November 19, 2013 CMS’s interim final rule to implement the law went into effect. It is too soon to know if these rules will reduce the impediments to finalizing settlement agreements with Medicare beneficiaries. We will report to you further once we have some “real world” experience with the new rules.

For more information, you can explore the CMS User Guide at

If you have questions about the CMS paid claims reporting requirements, contact Gary Morse, Senior Vice President, General Counsel, and Secretary of Physicians Insurance, at (206) 343-7300, (800) 962-1399, or
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David Kinard
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