Under the reporting requirements of Section 111 of the Medicare, Medicaid and SCHIP Act of 2007, liability insurers including self-insurers have an affirmative obligation to (1) determine if a claimant is Medicare eligible and (2) notify Medicare of such entitlement. The effective date is September 30, 2009 and all settlements entered into on or after this date must comply under penalty of $1,000 per day, per claimant until remedied. On March 16, 2009, the Center for Medicare and Medicaid Services (CMS) issued their user guide. Reporting will be done in an electronic format by the Responsible Reporting Entity (RRE). The RREs will be required to register with CMS COBC (Co-Ordination of Benefits Contractor).

The RREs (liability insurer or self-insurer) must implement a procedure in their claims review process to determine whether an injured party is a Medicare beneficiary. If so, the reporting format stipulated in the regulations (the registration process and new application through the COBC secure website) must be followed.

CMS is requiring on Medicare eligible claimants detailed information in order to determine if their rights as a Secondary Payer have been taken into account. The data will include all pertinent medical information on the case, information of the nature of the claim, claimant’s data, plaintiff attorney data, RRE data and defense attorney reporting data. Essentially, everything Medicare needs to determine if their interests have been protected.

Medicare does not have systems in effect to review proposed settlements for pre-approval. Therefore, from a practical standpoint, settlements will be reviewed after the fact, and it is vital you get things right the first time.

With the new reporting requirements within the Medicare Secondary Payer Act, the ability of Medicare to track liability settlements and ensure their interests have been protected has been greatly enhanced. That any existing liens for payments already made must be satisfied as part of a settlement is well established. The new area of concern lies with future Medicare eligible expenses related to the claim. While there are no guidelines provided by CMS, the Act does state, “Medicare’s interests must be considered in every settlement”. We feel it reasonable to conclude that going forward, if there is reason to expect the claimant will become Medicare eligible within thirty months of settlement, ( turning age 65 or 24 consecutive months of social security determined disability), then clearly the issue must be addressed as part of the settlement allocation.