the impact of new medicare reporting enforcement requirements on auto no fault 6 7 09
DESCRIPTION
Auto No-fault; Medicare reporting; cost containmentTRANSCRIPT
The Impact of New Medicare Reporting Enforcement Requirements on Auto No-Fault Insurers
AutoMed Solutions White Paper
The Impact of New Medicare Reporting Enforcement Requirements on Auto No-Fault Insurers
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Introduction
Effective July 1, 2009, auto no-fault insurers will be required to determine the beneficiary status for all claims as part of an amendment to the Medicare Secondary Payer statute. Auto no-fault insurers must report details of any settlement involving a Medicare beneficiary to the Centers for Medicare and Medicaid Services (CMS) or face fines of $1,000 per day per claim.
Since non-compliance is costly, it is critical for auto no-fault insurers to formulate a plan now for addressing the new requirement. This position paper provides background on the Medicare Secondary Payer statute and what it means for no-fault insurers. It also offers insight on how pharmacy benefit managers can assist with aspects of the law that pertain to certain medical expenses.
Overview of the Medicare, Medicaid and SCHIP Extension Act of 2007
The Medicare, Medicaid and SCHIP Extension Act was signed into law by President Bush in December 2007. This act amends the existing Medicare Secondary Payer statute by establishing new reporting guidelines for all liability insurers, including auto no-fault insurers. Essentially, the law is designed to prevent auto no-fault insurers from shifting financial responsibility for medical expenses to the federal government.
The term Medicare Secondary Payer means that another entity, and not Medicare, has the primary responsibility for a claim. By law, Medicare is supplemental to no-fault insurance when the injury date is on or after December 5, 1980. That means all suppliers, physicians, providers and so forth must bill the no-fault insurer first and Medicare second.1
A Medicare eligible person is one who is either 65 years old or older, younger than 65 with a disability and has received Social Security disability benefits for 24 months, or has been diagnosed with end-stage renal disease.
According to the new provisions, no-fault insurers must report Medicare eligible claims that occur on or after July 1, 2009, as well as those with an ongoing responsibility for payment of medical services. CMS provides helpful example
The Impact of New Medicare Reporting Enforcement Requirements on Auto No-Fault Insurers
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reporting scenarios on pages 36-39 of the MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting User Guide.2
Non-compliance is stiff and may not only result in fines, but failure to comply with the Medicare Secondary Payer statute can also result in serious repercussions such as litigation against the auto no-fault insurer. In addition, CMS could potentially recover double the amount of Medicare payments and/or refuse payment for the treatment related to the injury.
Medicare Set-Aside Arrangements Defined
A Medicare Set-Aside arrangement (MSA) is a federally-mandated account used to pay future medical expenses for conditions related specifically to the coverage of the policy. For example, in auto no-fault this would be medical conditions related specifically to the automobile accident.
Auto no-fault insurers will be required to project all future medical expenses, including prescription drug costs, when submitting information related to Medicare Set-Asides. This will ensure that money is earmarked from a settlement to pay for future, injury-related, Medicare-covered services.
MSA arrangements are determined using analysis of the claim and medical information. The analysis accounts for the following information:
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)
The Impact of New Medicare Reporting Enforcement Requirements on Auto No-Fault Insurers
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Steps for Complying with the New Law
Auto no-fault insurers should begin planning now and put proper processes into place to ensure compliance by July 1, 2009. A pharmacy benefit manager provides the expertise necessary to complete a pharmaceutical cost projection, which is often the most costly portion of the MSA.
A pharmaceutical cost projection can provide insurers 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.
Pharmacy benefit managers should have 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.
Additional 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 auto no-fault claims.
Managing medication costs has become a key business issue for auto no-fault insurers, with approximately $3.26 billion in medication expenses associated with auto accidents each year.3
The Impact of New Medicare Reporting Enforcement Requirements on Auto No-Fault Insurers
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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 costs auto no-fault insurers an additional 10 to 15 percent each year due to overspending.4 Without proper management, these challenges can cause an overall rise in the cost of pharmacy expenses and a decrease in insured satisfaction.
Auto no-fault insurers can gain more control over medication costs by putting the proper processes into place. A solid understanding of settlement costs combined with a strong utilization review program can provide greater insight into total medication costs while streamlining pharmacy benefits. This can result in significant cost savings for auto no-fault insurers and reduce overall settlement dollars where Medicare is involved.
The Impact of New Medicare Reporting Enforcement Requirements on Auto No-Fault Insurers
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About AutoMed Solutions
AutoMed Solutions, powered by Progressive Medical, is a pharmacy benefit manager that has provided pharmacy management solutions for more than 20 years. Here are some features and benefits of AutoMed Solutions Pharmaceutical Cost Projections:
Conducted by highly credentialed pharmacists holding degrees from Bachelor of Science to Doctorate of Pharmacy who are pain management specialists with experience in retail, home delivery, home infusion, hospital and managed care pharmacy.
Completed based upon review of prescription drug history and medical records.
Include diagnosis and age appropriate treatment recommendations in the review.
Performed by clinical pharmacists to project reasonable and necessary treatment regimens for the allowed conditions.
Based on current treatment programs and best practice guidelines (evidence-based medicine).
Include clinical pharmacists collaborating with physicians to make appropriate treatment changes, if requested, which may prove to be more cost effective.
For more information on Pharmaceutical Cost Projections offered by AutoMed Solutions, please call 866.271.8678 or visit www.progressive-medical.com.
The Impact of New Medicare Reporting Enforcement Requirements on Auto No-Fault Insurers
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References1 MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting User Guide
2 MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting User Guide
3 PhRMA, Prescription Medicine Spending Trends, July 26, 2006
4 Progressive Medical, Inc., Internal Audit, 2006