Vol. 22, No. 1, 17. Workers' Compensation and Liability Lawyers Beware: Section 111 of the MMSEA Imposes Significant New Penalties for Failing to Protect Medicare's Interests.

• Author: by Mark Popolizio and Carrie T. Taylor

Utah Bar Journal

Volume 22.

Vol. 22, No. 1, 17.

Workers' Compensation and Liability Lawyers Beware: Section 111 of the MMSEA Imposes Significant New Penalties for Failing to Protect Medicare's Interests

Utah Bar JournalVol. 22, No. 1January/February 2009Workers' Compensation and Liability Lawyers Beware: Section 111 of the MMSEA Imposes Significant New Penalties for Failing to Protect Medicare's Interestsby Mark Popolizio and Carrie T. TaylorOn December 29, 2007, President Bush signed into law the Medicare, Medicaid, and SCHIP Extension Act (MMSEA). Section 111 of the MMSEA significantly amends the "notice and reporting" requirements under the Medicare Secondary Payer Statute (MSP) relating to workers' compensation, liability (including self-insurance) and no-fault cases. This new law becomes effective July 1, 2009, for all primary payers except for group health plans for which the effective date is January 1, 2009.(fn1) The penalty for non-compliance is steep: $1000 per day, per claim.

All workers' compensation and liability practitioners need to understand the requirements of Section 111 since it will have a significant impact on claims handling and settlement. Counsel representing employers, self insureds, and insurance carriers need to pay especially close attention to not only the requirements of Section 111, but the proposed policy procedures currently being issued by the Centers for Medicare and Medicaid Services (CMS) as the new law places significant obligations on these entities.

Now is the time for counsel to be consulting with their clients to assure that they are: (1) aware of Section 111 and CMS's proposed policy guidelines, (2) developing the necessary internal procedures for proper Section 111 compliance, and (3) determining what, if any, role counsel is expected to play in the process.

In order to fully appreciate the significance and impact of Section 111, it is first necessary to understand how the new law fits into the larger picture of Medicare compliance under the MSP and, specifically, the obligation to protect Medicare's interests for conditional payments.

MEDICARE CONDITIONAL PAYMENTS and PRIMARY PAYER COMPLIANCE

The MSP, codified at 42 U.S.C. § 1395y, was enacted in 1980 to control the increasing costs of the Medicare program. The statutory provisions under 42 U.S.C. § 1395y, combined with supporting provisions under the Code of Federal Regulations, including 42 C.F.R. § 411.20, et. seq., and 42 C.F.R. § 411.40, et. seq., are often collectively referred to as the MSP.

The primary aim of the MSP is to assure that primary payers, and not Medicare, assume responsibility for medical treatment for accident related injuries. The MSP is designed to prevent a responsible third party from "shifting" the burden of an individual's medical care to the Medicare program. Under the MSP, a "primary plan" includes

an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance.. . . An entity that engages in a business, trade or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part.

42 U.S.C. § 1395y(2)(A).The general rule under the MSP is that Medicare will not make payment for medical services if "payment has been made or can reasonably be expected to be made under a workmen's compen-sation law or plan of the United States or a state or under an automobile or liability policy or plan (including self-insurance) or under no fault insurance." 42 U.S.C. § 1395y(b)(2)(A)(ii).

However, Medicare may make "conditional payments" if a primary plan "has not made or cannot reasonably be expected to make payment. . .promptly." 42 U.S.C. § 1395y(b)(2)(B)(i). Any such payment made by Medicare "shall be conditioned on reimbursement to the appropriate Trust Fund." Id.

Primary payers are obligated to reimburse Medicare for conditional payments. "Conditional payment" is defined as "a Medicare payment for services for which another payer is responsible, made either on the bases set forth in subparts C through H of this part, or because the intermediary or carrier did not know that the other coverage existed." 42 C.F.R. § 411.21. Medicare conditional payments can arise in a number of ways as part of claims handling. For example, conditional payments can arise in situations where the primary payer denies the claim and refuses to pay for medical treatment...