MSEA | Section 111 of the Medicare, Medicaid & SCHIP Extension Act

MMSEA moratorium announced

Section 111 of The Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) went into effect on October 1, 2010.  However, the Centers for Medicare and Medicaid Services (CMS) has since announced a moratorium for MMSEA implementation until October 1, 2011.  The MMSEA institutes mandatory reporting of all cases settled after October 1, 2011. This requirement applies to group health, liability and no-fault insurers and to workers compensation plans. The new reporting requirements have been implemented so that Medicare can better determine whether it has a lien on any portion of a settlement or payment.

Beginning January 1, 2012, these new Medicare reporting obligations apply to all insurance companies, self-insured businesses and other businesses that make payments to Medicare beneficiaries as a result of legal claims. Medicare has termed these defendant organizations “Responsible Reporting Entities” (RRE).

The RRE is the party responsible for actually reporting the payments to the Centers for Medicare and Medicaid Services (CMS). The process begins with a query to CMS to determine whether the plaintiff is a Medicare beneficiary. The RRE is required to provide to CMS either the plaintiff’s Medicare Health Insurance Claim Number or the plaintiff’s Social Security Number.

When an RRE reports to CMS, Medicare’s agents become aware that a lawsuit exists. Medicare then has a better chance of recouping lawsuit-related funds from plaintiffs and sometimes even their attorneys. More information can be viewed at the CMS dedicated MMSEA site.

MMSEA Penalties

Failure to report claims can result in significant financial penalties for RREs totaling over $1,000 per day. However, all those involved can be penalized for their own failures to report. Medicare is entitled to double damages from anyone involved in the case if the government brings an independent cause of action. To avoid being penalized, the ultimate goal for RRE attorneys, plaintiffs’ attorneys and beneficiaries is to understand where there is coverage primary to Medicare (such as a liability suit), notify Medicare of such coverage and reimburse Medicare, when appropriate.

Both attorneys and Medicare beneficiaries are subject to interest fees and penalties if Medicare is not reimbursed. Attorneys may be exposed to increased legal malpractice insurance rates and ethical rules violations for failing to notify Medicare of payments, even if the plaintiff’s attorney was not aware the claimant was a beneficiary. Because of the MMSEA reporting requirements, Medicare will discover cases unreported by plaintiffs’ attorneys. Make sure you are prepared.

Your partner for Lien Resolution

Contact LRS to assure compliance with Section 111 of the MMSEA.