GAO Report: Medicare Secondary Payer: Additional Steps Are Needed to Improve Program Effectiveness for Non-Group Health Plans
The GAO Report was requested by Congressman Pete Stark (D-California) in response to the numerous complaints relating to mandatory reporting. In general, the report focuses on reporting and conditional payment issues, but it covers Medicare set-asides as well. The report does not provide much in the way of new information to the industry and the recommendations are limited at best.
The report gives an overview of the industry, providing a synopsis of the stages of MSP compliance: reporting, conditional payments and MSAs. One interesting point of note, the report does indicate that liability and no-fault settlements may use MSAs to meet their MSP obligations (p.7), the illustrative figures on pages 12-14 only indicate that future medicals needs be taken into consideration for workers’ compensation settlements.
This article focuses on the MSA portions of the report which indicates that the workload of the WCRC increased by 42% from 2008 to 2011, a seemingly daunting number, but subtracting out the MSAs that did not meet the review thresholds, the increase was only 12%. Given that a non-reviewable MSA should take minimal time to reject, an increase of 50% on the review time of an MSA when the WCRC is only receiving 12% more does not seem reasonable, although the GAO Report did not seem to make that connection. Additionally, the payments to the WCRC increased 78%, which is almost twice the increase in submissions including the non-reviewable submissions.
The report indicates that CMS has saved $861 million in 2011, an increase of 17% over 2008, directly through conditional payment recoveries and claim denials. This is across all three types of NGHP, with liability not surprisingly given the new reporting, showing the greatest growth.
CMS has estimated that they have avoided costs averaging $1.14 billion over the past four years due to Workers’ Compensation Medicare Set-aside Allocations. We believe this number is likely overstated as many claimants do not treat their injury after settlement and do not save their set-aside funds in a separate account as agreed. This number is based entirely on approved set-asides. A more valid number would be the amounts reported annually by the claimants and professional administrators as to what was spent on the medical treatment of the injuries. Although this data should be available, the report does not indicate that the GAO reviewed it.
In addition to the actual and purported savings attributable to the program, the report reviewed the current “challenges,” known to the rest of the industry as “problems,” that CMS faces, with timeliness being at the top of the list. For conditional payments, CMS has committed to developing automated solutions for claimants and their representatives to get payment information faster. They have also allowed the contract with the current MSPRC contractor to expire, although they do not yet have a replacement, thus the current COBC contractor continues to do the work.
For MSAs, they claim that the average processing time in April 2010 was 22 days, but the processing time had increased to 95 days in September. We can only assume that the average included the responses to non-reviewable cases, as any case that actually was reviewed, even at the beginning of 2010, certainly took longer than 22 days. CMS is supposedly addressing this by hiring a new contractor with a review capacity of 2,500 cases per month who is schedule to start on July 2, 2012 so we will soon know if the situation will improve or not.
The second challenge was “guidance and communication” which the report noted was practically non-existent. CMS indicated in January 2012 that a WCMSA user manual would be forthcoming, but as of yet, such a manual has not been published. Also noted was CMS’ intention to “operationalize policy regarding the reporting of future medical expenses in liability insurance situations,” but no time horizon was provided for this publication either.
In general, the report concluded that the program did provide the Medicare Trust Funds with some savings, that any additional savings derived from mandatory reporting is unknown at this time, and that better communication would lead to less confusion in the industry. Based on these conclusions, the report made the following recommendations:
• Develop a reasonable reporting standard that eliminated the need for NGHPs to report cases in which a recovery by Medicare would not be likely.
• Make the submission of ICD-9 codes optional for liability NGHPs
• Develop guidance regarding liability and no-fault set-aside arrangements.
• Revise the communication materials with beneficiaries to ensure that beneficiary rights and responsibilities are more clearly communicated.
• Create a centralized website that will house all information for MSP compliance.
In general, the report did not provide enough information for the insurance industry to push for significant reform in the MSP arena. The GAO made it sound like all of the issues that it revealed were already being addressed by CMS therefore there was little else to be done. While it is true that things have begun to change, it remains to be seen whether the changes will be improvements. Between the web portal and new contractor, WCMSA turn around times should improve. COBC has already improved conditional payment resolutions since taking over the MSPRC. They are not as monumental as we could have hoped, but they are changes and it is a lot more that we have received in last ten years so we should be grateful.
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