HEATHER IS THE CEO OF SANDERSON FIRM AND A PREVIOUS GUEST ON ADJUSTED:  When she previously visited us in October of 2021 (Season 2, Episode 23), she discussed Medicare Compliance, MSAs (Medicare Set-Asides), and Section 111 Reporting Requirements. She discussed that new rules would be coming, and they would be finalized in 2023. Sanderson Firm is a Medicare Secondary Payer Compliance Firm that serves the entire country. 

A BRIEF HISTORY OF THE MEDICARE SECONDARY PAYER ACT:  The Medicare Secondary Payer Act was enacted in 1965 for Workers’ Compensation and then became applicable in 1980 to General Liability and No-Fault Plans. If an injured worker gets hurt on the job and is currently on Medicare, Workers’ Comp would pay for the work-related injury instead of Medicare. If Medicare does pay for the Workers’ Comp injury, they are paying it conditionally, and it is subject to repayment. In the event of a settlement, Medicare wants to be protected by not having to pay for future treatment, which is why an MSA (Medicare Set Aside) may be required. 

SECTION 111 REPORTING REQUIREMENTS UPDATE: Section 111 Law was passed in 2007 and enacted in 2010. In 2020, rules were proposed on penalties for failure to report in a timely manner, and on October 11, 2023, the final rule was written. The rule will go into effect on October 11, 2024. The area that Medicare is mainly focused on is when carriers fail to report timely. 

THERE ARE TWO ELEMENTS TO REPORTING: When a claim is accepted, and medical treatment is going to be paid, flag ORM (Ongoing Responsibility for Medical) as ‘Y” in your system, so it will tell Medicare that there is a primary payer available, so they know they do not need to pay for the medical during that time. If this is not marked timely (one year late), it can cause a penalty to be issued. Another important component is terminating ORM. An adjuster must mark the ORM termination date in their system. If there is a settlement, you need to report the settlement in a timely manner by inputting the TPOC (Total Payment Obligation to Claimant) screen in your system. 

WHAT ARE THE PENALTIES? Medicare is giving Workers’ Comp carriers one year to report their TPOCs without penalty. Anything beyond one year will be subject to large penalties. Medicare just released what the new penalty scale will be with inflation. If you report a TPOC late, more than one year, but less than two years, there will be a penalty of $357.00 per day per claim. If you report a TPOC more than two years late but less than three years, there will be a penalty of $714.00 per day per claim. If a TPOC is reported three or more years late, it will be a penalty of $1428.00 per day per claim. This amount is subject to inflation. If one claim is reported three or more years late, the penalty would be $521,220.00. 

THE IMPORTANCE OF REPORTING ON ALL CLAIMS: Every claim, medical only and lost time, must be queried for Medicare status. Not all Medicare Beneficiaries are 65 and older, so make sure to query all claims. Some Medicare Beneficiaries are in their twenties or thirties, so never make assumptions. Develop the habit of querying all claims. Failure to report just one claim could result in a massive penalty. 

WHAT DATE DOES THIS GO INTO EFFECT, AND HOW FAR BACK CAN MEDICARE LOOK AT CLAIMS? The law went into effect on October 11, 2023, but becomes applicable on October 11, 2024. Every settlement from October 11, 2024, will be subject to penalties. While carriers can breathe a sigh of relief, if they have not reported the TPOC in a timely manner or correctly reported the Medicare status on older claims, Medicare can still collect conditional payments. It is important to develop good habits for the next nine months and clean up any old data. Adjusters are creatures of habit, so start developing good habits now. Do not wait until October of 2024. 

RECOMMENDATIONS TO PREVENT OR FIGHT PENALTIES:  There are times when adjusters are unable to obtain the injured worker’s Social Security Number (SSN), which prevents them from being able to perform a Medicare query. Document all efforts to obtain. If it can be proven that good faith efforts have been made to obtain the information, such as emails, letters, etc., and it is thoroughly documented, it will provide a strong defense. You must make at least three attempts to obtain the SSN. Another way to prevent penalties is to ask for help from your coworkers or management. Some of Heather’s clients utilize software that auto-flags ORM, and some have software that will not let the adjuster move forward with the claim without first addressing CMS screens.   

WHAT CAN SANDERSON FIRM DO TO HELP? They can perform Section 111 audits on files and are also a Section 111 reporting agent. They currently report for over one hundred responsible reporting entities. They own Sanderson Comply, a propriety system that pre-validates the data before sending it to Medicare, so the data is clean and without errors. They also have a consultative approach with their clients. Their reporting team gets on the phone monthly with their clients and advises them. They are very hands-on, and they also offer MSA services. If you want further information on how Sanderson Firm can help, visit www.sandersoncomp.com.