by H. Bernard Tisdale III, Esq.
Failing to comply with a new law could wind up costing some employers lots of money—if they’re self-insured or pay deductibles on Employment Practices Liability Insurance (EPLI) coverage.
As of Jan. 1, entities that pay Medicare-eligible individuals to resolve claims involving medical expenses must report those payments to Medicare. The penalty for noncompliance: $1,000 per day.
If you could conceivably have to settle a personal injury claim involving an employee who is eligible for Medicare, you need to understand this new law.
Medicare is a government-funded health insurance program primarily for individuals age 65 or older. However, Medicare isn’t intended to be the primary insurance coverage for people who have other funds available to pay for medical treatment. In other words, Medicare is a “secondary payer.”
In response to increasing Medicare costs and funding concerns, Congress passed the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA), which President Bush signed into law in December 2007.
The purpose of the act is to enable Medicare to determine when its beneficiaries have received payment or reimbursement for medical expenses that Medicare could recoup.
What is required?
Section 1395y(b)(7) of the act requires a “responsible reporting entity” (RRE) to register with the Coordination of Benefits Contractor (COBC) at the Centers for Medicare & Medicaid Services (CMS). Reporting entities must electronically file certain information on third-party claims involving payments to Medicare-eligible claimants. This information includes identifying information about the individual (including his or her Social Security number) and the amount paid to the individual to resolve all or part of a claim for medical expenses. The payment is referred to as the Total Payment Obligation to Claimant (TPOC).
An RRE can be any entity that is self-insured for all or part of a particular claim involving medical expenses. Where the claimant is a Medicare beneficiary, the RRE must report the payment to the COBC if the claimant has made a claim for medical expenses or the claim results in a settlement, judgment, award or other payment to the Medicare beneficiary that resolves claims for medical expenses.
Why is this important for employers?
The problem is this: Any employer that is self-insured for all or part of any claim for medical expenses (such as a personal injury claim, which can include discrimination or harassment claims) can be an RRE and thus subject to the reporting requirement.
Why is this important? Effective Jan. 1, 2010, an RRE that fails to properly report to the COBC a covered payment to a Medicare-eligible claimant will be subject to a civil penalty of $1,000 for each day it fails to report the payment.
Group health plan insurers and third-party administrators of self-funded group health plans were required to begin providing information to CMS on certain individuals entitled to Medicare benefits in 2008.
However, there are situations in which employers may also qualify as RREs. Since Jan. 1, 2010, employers that are fully or partially self-insured (via deductibles) for tort or employment claims that might involve personal injuries to a Medicare-eligible claimant must report employer payments to the COBC.
Author: H. Bernard Tisdale III is a shareholder in Ogletree Deakins’ Charlotte, N.C., office. He has wide experience in general civil and employment litigation.
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