Revisiting Medicare Mandatory Reporting of Settlements, Judgments, Awards, and Payments

On October 5, 2020, the Centers for Medicare and Medicaid Services (“CMS”) published Version 6.0 of its Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation USER GUIDE (the “User Guide”). The User Guide provides information and instructions for the Medicare Secondary Payer (“MSP”) Non-Group Health Plan (“NGHP”) mandatory reporting implementation requirements pursuant to Section 111 of the Medicare Medicaid SCHIP Extension Act of 2007 (“MMSEA”). Id.

Chapter 3, the Policy Guidance Chapter of the User Guide provides an overview of Section 111 related legislation and MSP rules, as well as information describing the policy framework behind the MSP liability insurance (including self-insurance), no-fault insurance and workers’ compensation reporting requirements mandated by MMSEA Section 111. The other four chapters of the NGHP User Guide are Introduction and Overview, Registration Procedures, Technical Information, and Appendices.

Total Payment Obligation to Claimant (TPOC)

Based on the User Guide, Volume 3, Chapter 6: Responsible Reporting Entities (RREs), CMS defines TPOC as “a settlement, judgment, award, or other payment, in addition to or apart from Ongoing Responsibility for Medical (ORM).” Id. In other words, a TPOC generally reflects a “one-time” or “lump sum” settlement, judgment, award, or other payment intended to resolve or partially resolve a claim. “TPOC then is the dollar amount of the total payment obligation to, or on behalf of the injured party in connection with the settlement, judgment, award, or other payment.” Id.

The computation of the TPOC amount includes, but is not limited to, “all Medicare covered and non-covered medical expenses related to the claim(s), indemnity (lost wages, property damages, etc.), attorney fees, set-aside amount (if applicable), payout totals for all annuities rather than cost or present values, settlement advances, lien payments (including repayment of Medicare conditional payments), and amounts forgiven by the self-insured and carrier/insurer.” Id.

The TPOC date is not necessarily the payment date or check issue date. The TPOC date is the date the payment obligation was established. “This is the date the obligation is signed if there is a written agreement, unless court approval is required. If court approval is required, it is the later of the date the obligation is signed or the date of court approval. If there is no written agreement, it is the date the payment (or first payment if there will be multiple payments) is issued.” Id.

Liability TPOC

Based on the User Guide, Volume 3, Chapter 6, CMS requires RREs to report Liability TPOC dates on or after October 1, 2011 . RREs may, but are not required to, include TPOCs with dates prior to October 1, 2011. Id.

“As of January 1, 2020, the threshold for physical trauma-based liability insurance settlements will remain at $750. In other words, all Liability TPOCs over $750 must be reported. This threshold however does not apply to non-trauma liability reporting for alleged ingestion, implantation, or exposure cases. When it comes to these, any settlement, regardless of amount, should be reported for these types of cases.” Id.

“RREs are required to report liability insurance (including self-insurance) TPOCs only if the cumulative TPOC amount exceeds the reporting threshold for the most recent TPOC date. The BCRC will total all TPOC amounts reported on the claim record when determining if the claim meets the applicable reporting threshold.” Id.

No-Fault TPOC

Based on the User Guide, Volume 3, Chapter 6, CMS requires RREs to report all no-fault insurance TPOCs with dates on or after October 1, 2010 . RREs may, but are not required to, include no-fault TPOCs with dates prior to October 1, 2010. Id.

CMS has implemented a $750 threshold for no-fault insurance TPOC amounts dated on or after October 1, 2016. In other words, “RREs are required to report no-fault TPOCs only if the cumulative TPOC amount exceeds the reporting threshold for the most recent TPOC date. When there are multiple TPOCs, the BCRC will total all TPOC amounts reported on the claim record when determining if the claim meets the applicable reporting threshold.” Id.

As of January 1, 2020, CMS maintained the $750 threshold for no-fault insurance, where the no-fault insurer does not otherwise have ongoing responsibility for medicals. “This threshold does not apply to non-trauma liability reporting for alleged ingestion, implantation, or exposure cases. Any settlement, regardless of amount, should be reported for these types of cases. RREs may submit TPOCs that are less than or equal to the TPOC dollar threshold and will not be penalized for doing so.” Id.

Workers Compensation TPOC

Based on the User Guide, Volume 3, Chapter 6, CMS requires RREs to report TPOCs with dates on or after October 1, 2010. RREs may, but are not required to, include TPOCs with dates prior to October 1, 2010. Id.

“As of January 1, 2020, CMS will maintain the $750 threshold for workers’ compensation settlements, where the workers’ compensation entity does not otherwise have ongoing responsibility for medicals. This threshold does not apply to non-trauma liability reporting for alleged ingestion, implantation, or exposure cases. Any settlement, regardless of amount, should be reported for these types of cases.” Id.

“RREs are required to report workers’ compensation TPOCs only if the cumulative TPOC amount exceeds the reporting threshold for the most recent TPOC date. The BCRC will total all TPOC amounts reported on the claim record when determining if the claim meets the reporting threshold.” Id.

10 TPOC Recent Issues

As with all components of MSP compliance, especially with mandatory reporting of TPOCs, change is constant. What’s true in 2019 is not necessarily true in 2020. As a result, CMS continues to update the User Guide periodically and provide updates on all components of an RRE’s responsibility to report a settlement, judgment, award, or other payment. The following are ten (10) recent notable changes for the liability, no-fault, and workers compensation insurance industries:

1. TPOCs Funded Through Annuity.

A TPOC is reported in its total lifetime value, not just present cost value, regardless of whether it is funded through a single lump sum payment, or an annuity or as a structured settlement paid out weekly, monthly, quarterly, or annually. Id.

2. TPOCs Where There is No Admission or Determination of Liability.

RREs must report settlements, judgments, awards, or other payments regardless of whether or not there is an admission or determination of liability. Reports are required with either partial or full resolution of a claim. Id.

3. TPOCs in Joint Settlements, Judgments, Awards, or Payments.

When there are joint settlements, judgments, awards, or other payments, where multiple defendants are coming together to jointly settle a liability, no-fault, or work comp claim, each RRE reports its own settlement/judgment/award/other payment responsibility. Id.

4. TPOCs with Multiple Defendants But Separate Settlements.

Where there are multiple defendants and they each have separate settlements with the plaintiff, each RRE reports its own separate settlement amount. Id.

5. TPOCs in Joint and Several Liability Situations.

For a settlement, judgment, award, or other payment with joint and several liabilities, each RRE must report the total settlement, judgment, award, or other payment – not just its assigned or proportionate share. Id.

6. Multiple TPOCs Involving the Same Individual.

When there are multiple settlements involving the same individual, each RRE must report appropriately. If there will be multiple records submitted for the same individual but coming from different RREs, they will be cumulative rather than duplicative. Id.

7. TPOCs with Both Medical and Non-Medical Issues.

For purpose of required mandatory insurer reporting under 42 U.S.C. § 1395y(b)(8), the RRE does not make a determination of what portion of any settlement, judgment, award, or other payment is for medicals and what portion is not. The RRE reports the full TPOC amount, and does not separate medical vs. non-medical issues if medicals have been claimed and/or released or the settlement, judgment, award, or other payment otherwise has the effect of releasing medicals. Id.

8. TPOCs Where Medicals are Claimed and/or Released.

If medicals are claimed and/or released, the settlement, judgment, award, or other payment must be reported regardless of any allocation made by the parties or a determination by the court. In other words, TPOC does not separate medical vs. non-medical issues if medicals have been claimed and/or released or the settlement, judgment, award, or other payment otherwise has the effect of releasing medicals. Id.

9. TPOCs Where Medicals are Not Claimed and/or Released.

RREs are not required to report liability insurance (including self-insurance) settlements, judgments, awards or other payments for “property damage only” claims which did not claim and/or release medicals or have the effect of releasing medicals. Id.

10. TPOCs of Indemnity Only Claims.

Similarly, “indemnity-only” settlements, which seek to compensate for non-medical damages, should not be reported. The critical variable to consider is whether or not a settlement releases or has the effect of releasing medicals. If it does, regardless of the allocation (or lack thereof), the settlement must be reported. If it does not and the RRE continues to have ORM, the TPOC of the indemnity-only portion of the claim does not have to be reported. Id.

By Rafael Gonzalez

Rafael is a partner in Cattie & Gonzalez, PLLC, the first national law firm focusing its entire law practice on Medicare and Medicaid compliance issues in the liability, no-fault, and work comp industries. He is an attorney with extensive expertise in auto, medical malpractice, products liability, nursing home, med-pay, and workers compensation claims, as well as social security, Medicare, Medicaid, and affordable care compliance. He is active on LinkedIn, Twitter, Facebook, Instagram, and YouTube.  

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