Changes to Medicare Reporting on Horizon

Workers’ compensation payers could soon face stiff consequences for failing to report Medicare eligible claims in a timely manner. This is due to changes to the Medicare, Medicaid and State Children’s Health Insurance Program (SCHIP) Extension act, which was signed into law in 2007.

The Center for Medicare and Medicaid Services (CMS) is no longer relying on payers to accurately report information and is taking steps to ensure compliance. Severe financial penalties — up to $1,000 per day could be imposed for each claim that is not reported in a timely manner. It could also lead to CMS recovering double the amount of Medicare payments, refusal of payments or even litigation.

This article will provide a quick overview on how to determine which claims are Medicare eligible and steps for complying with the new law.

Determining Medicare Eligibility

The Medicare, Medicaid and SCHIP Extension Act of 2007 was signed into law by President Bush in December 2007. This act amends the existing Medicare Secondary Payer (MSP) statute by establishing expanded reporting guidelines. The MSP statute is designed to protect Medicare’s interests by preventing payers from shifting financial responsibility for medical expenses to the federal government.

It’s critical for workers’ compensation payers to determine if they have any injured parties who are Medicare eligible, and report them to CMS prior to July 1, 2009. A Medicare eligible person is one who is either 65 years old or older, younger than 65 with a disability and received Social Security disability benefits for 24 months or a diagnosis of end-stage renal disease. After July 1, workers’ compensation insurers could be fined $1,000 per day for each claim that is not reported.

If it is determined that the insured is eligible for Medicare benefits, then the payer must provide supporting, pertinent information to CMS. Affected workers’ compensation payers must report payment of a claim or acceptance of an obligation to pay a claim to a Medicare beneficiary. If a claim is paid on or after July 1 to an injured party that is or was a Medicare beneficiary as the results of a settlement, award, judgment or other payment, then that payment must be reported to CMS the following quarter.

Complying with the New Reporting Requirements

Payers should begin planning now and put proper processes into place to ensure compliance by July 1. Workers’ compensation insurers should include information related to Medicare Set-Asides (MSA) for Medicare eligible claims being reported to CMS. An MSA is a federally-mandated account used to pay future medical expenses for conditions related specifically to the coverage of the policy. As pharmacy expenses are often the most significant medical expense of a claim, it is critical for insurers to include accurate cost projections.

Medicare Set-Aside arrangements are determined using analysis of the claim and medical information. The analysis accounts for the following information:

• The date and nature of the injury
• Type and extent of the injury or illness
• Rated age of the injured party and life expectancy
• Date and basis of Medicare entitlement
• Review of medical and pharmacy payment history
• Comprehensive review of medical records
• Physician recommendations
• Extent of disability
• Medicare coverage limitations
• Fee schedules and future medical needs for treatment of the injury through life expectancy (life care plan or detailed cost projections

A pharmaceutical cost projection can provide payers with valuable information and potentially save settlement dollars. Pharmaceutical cost projections should be conducted by highly credentialed pharmacists specializing in pain management with experience in retail, home delivery, home infusion, hospital and managed care pharmacy.

A comprehensive pharmaceutical cost projection report is completed based upon review of prescription drug history and medical records. A clinical pharmaceutical team ensures that only diagnosis and age appropriate treatment recommendations are included in the review.

Pharmaceutical cost projections are often the most costly portion of the MSA. A pharmacy benefit manager can provide the expertise necessary to complete the cost projection as well as provide evaluations performed by clinical pharmacists to project reasonable and necessary treatment regimens for the allowed conditions. Cost projections are based on the current treatment program and best practice guidelines (evidence-based medicine).

Clinical pharmacists should also be available to collaborate with physicians to make appropriate treatment changes, if applicable, which may prove to be more cost effective.Clinical pharmacists should also be available to collaborate with physicians to make appropriate treatment changes, if applicable, which may prove to be more cost effective.

Additionally, since CMS is requiring that Medicare eligible claims information be submitted electronically, it is important to ensure that the pharmacy benefit manager’s claims management system is current, flexible and can easily integrate with your system.

Benefits of Obtaining Pharmaceutical Cost Projections

In addition to compliance with the expanded Medicare Secondary Payer statute, there are numerous benefits of obtaining pharmaceutical cost projections for workers’ compensation claims. Pharmacy expenses typically account for seven to 12 percent of total workers’ compensation costs, according to recent analysis by the Workers’ Compensation Research Institute.

Reviewing and managing medication in claims can help workers’ compensation payers with their cost containment strategy. Challenges associated with managing medication costs include price inflation, paying for expensive brand medications and filling non-compensable medications. On average, inappropriate utilization of prescription medications due to overspending costs workers’ compensation payers an additional 10 to 15 percent each year. Without proper management, these challenges can cause an overall rise in the cost of pharmacy expenses and a decrease in insured satisfaction.

With more than 4 million workers injured on the job each year (U.S. Bureau of Labor Statistics), payers are looking for ways to reduce costs. Engaging in a medical therapy management program that includes clinical review by a pharmacist can often result in cost savings of tens of thousands of dollars. This approach also ensures that injured parties receive appropriate medications to help them get back to work more quickly.

Conclusion

Workers’ compensation payers must ensure that they are putting the proper steps into place to report all Medicare eligible claims. Thanks to new provisions to the MSP statute, reporting will now be enforced and not based on an honor system. Non-compliance will have costly ramifications – with fines of up to $1,000 per claim per day. In addition to meeting Medicare reporting requirements, accurately projecting an injured party’s medical expenses over the life of a claim can help workers’ compensation payers contain medication expenses and reduce overall settlement dollars.

About the Author
Tron Emptage, RPh, MA, is Executive Vice President of Business Development at Progressive Medical, Inc. He oversees Progressive Medical’s Clinical Services Department, which provides drug formulary design and management, clinical review by a pharmacist and/or physician, drug utilization review and Ask-a-Pharmacist and Ask a PMI Nurse call-in hotlines for answering pharmacy-related questions. He can be reached at Tron.Emptage@progressive-medical.com or 800.777.3574.