A Conference Report
By Tom Hagy
What is working and not working with MMSEA reporting in the mass torts arena? What are the nuts and bolts mass tort attorneys and insurers need to know? What approaches are RREs taking that you might employ? And what are the recent developments in this ever-evolving area that may impact your reporting obligations and best practices?
James Tanella is managing director with PACE Claims Services, which provides claims administration – from claims intake through resolution – for insurance companies and policyholder defendants in mass tort actions involving asbestos, benzene, silica and other toxic substances. Tanella spoke at HB’s seminar titled “The Medicare Mandatory Reporting Requirements: What You Need to Know About Medicare, Medicaid and SCHIP,” held on Sept. 21, 2010, near Los Angeles.
There has been some uncertainty as to who needs to comply with MMSEA, Tanella began. While a lot of burden has shifted to the insurers, he said, “a lot of our policyholder defendant clients still view themselves as an RRE, even though they could interpret the law as they are not on the hook.”
“One of the things we have seen is that people are taking the conservative approach and even if they are not necessarily . . . an RRE. If they view themselves as having any of the responsibilities of reporting they are going ahead and doing it,” he said.
There are a couple different options for RREs, Tanella pointed out. “They can report on their own, and a lot of the larger entities are doing that by establishing internal duties and processes to do their own reporting. Also, TPAs can be engaged.” What a TPA can bring to the table, he explained, is “a certain amount of expertise and the time to execute a lot of the mechanics of the reporting.”
“No matter who does the actual reporting,” Tanella cautioned, “the RRE does not get off the hook. You can’t transfer that liability to anybody in terms of the reporting. So if there is a problem with the reporting or there is a mistake, ultimately the RRE is on the hook.”
What payments need to be reported? Settlements after Oct. 1, 2010; the $5,000 threshold, which, he said, graduates down to zero in a couple of years; post-12/5/1980 exposures; and Medicare eligibility.
“What our clients are doing is saying, ‘Let’s ignore that threshold because I don’t want to have to worry about next year changing it . . . Let’s just go with zero dollars right now.’ I don’t think that’s what CMS envisioned because I think they put that in to reduce the flow of claims coming into them, but it has backfired a little bit because folks are concerned about having to make the change down the road and are starting out with the zero-dollar threshold.”
Exposure related to settlements after Dec. 5, 1980 is a big issue in asbestos litigation and other mass torts, he said. If there is no exposure after that date, Medicare does not have a claim. “Then you get into the questions: What is the exposure? What was the claimant’s exact exposure profile? Does it relate to exposure to my product or any asbestos product? You get into a lot of questions there. From my clients’ perspective they have been pretty conservative. If there is any exposure or they envision any interpretation of exposure after that date, they are going to determine that claim as reportable. Others could take a more aggressive approach, for instance, and say ‘Well, there is asbestos exposure to products after 12/5/1980, but none to my product, so I am not going to report that.’ It’s an interpretation question, but the general theme I have seen is that most folks are being conservative and reporting any claim that might be interpreted as reportable.”
Tanella said working out settlements with plaintiffs has really become a “mini-industry” when it comes to gathering and sharing information to comply with the reporting rules. He said “the plaintiffs and defendants and the carriers are all aware that they are in this together and there is a lot to figure out, but you’ve got a lot of parties there and a lot of different views as to what should be shared and how the process should work, so that’s going to take some time.”
From the mechanical reporting side, once your settlement is complete, you want to walk through the three critical decision steps: Is there a dollar threshold? Is there exposure after 12/5/80? Is the claimant Medicare eligible? “We set up for our clients very mechanical processes to determine [which] rules we are going to apply, define those claims, run the query, and away it goes,” he said. “You may have a large volume of claims and different interpretations, so if you can set your rules up front to determine what you need to report it is going to make your life a lot easier.”
Tanella said CMS’ query tool “gives you another arrow in your quiver” to make sure you are reporting the appropriate claims.
What Data Are Required? The HICN number is critical as an important tracking number for CMS, he said. The injury and what the person is being compensated for also are important data points. “The ICD9 codes may require you to do some mapping of your data fields,” he went on, “so you may have an injury that you capture related to asbestos or benzene or whatever the exposure may have been, then map that into the appropriate ICD9s. What you will find is that it is not necessarily a clean match-up, so from a rules perspective you want to define what an injury in your world is – to what it is in the ICD9. This will take some decision making to make sure you are reporting out the level CMS is looking for.”
What if you can’t get the data you need to fulfill your reporting obligations, such as a social security number? “Some of our clients are taking the position not to settle or pay the claim until they get the information. [I am] not sure that’s going to work. Certain plaintiff firms say ‘OK we agree we are going to do that’ but other firms are going to take a different position. You need to be flexible to figure out how you are going to answer that question. Are you going to just document the fact that ‘hey, we weren’t able to get it’ and put it in the file . . . . or are you going to stand firm and say ‘we’re not going to pay’? Most of our clients are taking the position, ‘Well, we think the plaintiffs are going to work with us and get us the information we need in order to do our reporting.'”
“The Medicare match rates are very high,” Tanella said. “When we run our clients’ data through the query tool, we are getting 65-80% confirmations that these are Medicare beneficiaries. Our clients’ claims involve asbestos, benzene, silica – folks that are a little bit older and have different demographic than other types of claimants, but the match rate has been higher than our clients anticipated. That means there are going to be a lot of claims to report. We highly recommend using the query tool and not relying on the claimant to say whether they are or are not Medicare eligible. That way if CMS questions eligibility, you have the information from the query tool.”
Is the query tool accurate? “We have seen instances where CMS says the claimant is not Medicare eligible and we have information from the claimant that says they are, so we’re not sure the query tool is 100% yet, but it may be a timing question in the data set that CMS has. So, ‘belt and suspenders’ there – I would encourage you to use the query input tool.”
When you test the input file process, use real data, Tanella emphasized. “Use real claimant information you have. Don’t put in [fictitious names like] Mickey Mouse and Donald Duck. A lot of times when you test it, it doesn’t really matter, but what we’ve seen is that when you test, use the real data because it may kick out things that you may not anticipate.” It is important to make sure data are formatted property once you get into production mode so CMS will accept the files. “This takes time,” he warned, “so don’t wait. Get involved and start doing your testing right away. CMS has suggested it takes 90 days to fully test but it’s going to take a lot longer than that as we approach the end of the year. A lot of companies are waking up and saying ‘we better do something about that.’ The volume has been increasing so if you haven’t done that yet you better get started.”
RREs can move into production once fully tested. “CMS is no longer requesting empty files,” he said, “so go ahead and move into production once you are tested.”
Have a single point of contact. “This is important,” Tanella said. “Have someone in your organization that is the senior-most guru . . . . You are going to be assigned one Electronic Data Interchange representative. You are going to be dealing with one person at the COPC or really the CMS representative. You will want to have that one-to-one correspondence and connection because there are a lot of moving parts. You don’t want to have that information dispersed throughout your organization because it will lead to confusion and errors on your end.”
The HICN number is very important, he said: make sure that information is properly captured in your data set.
“When working through the testing process,” Tanella advised, “try to break the submission. For example, send a high volume of claims in, or send in weird claims or whatever you may have that may be different from the regular reporting process, because . . . once you get through that process and into live production, CMS is going to anticipate that all that stuff has been worked out, so try to break it if you can.”
Have Version 3.1 of the manual on your desk as you are going to reference it quite a bit, he said. “The biggest change was a lot of RRE responsibilities shifting to insurers. It addresses a lot of technical issues. The disappointing part of Version 3.1 was that it did not address a lot of questions that folks were hoping it would in terms of clarifying mass tort claims . . . Folks were hoping for a panacea, but it really just clarified a lot of minor issues other than this RRE question so, unfortunately . . . it wasn’t exactly what people were expecting . . . .”
A direct data entry tool has been introduced, Tanella said. Rather than forcing RREs to submit electronic claim files they can go in and test one or two at a time. “The limit on that is 500 claims in the year, so if you are a really small volume entity it might be a good tool for you to investigate. We haven’t tested, but you should know that if you use it, you do not have access to the query tool so you will have to use this tool to report claims. Any claim you have to report, whether it’s a Medicare beneficiary or not, counts toward that 500, so be careful and be sure that tool is right for you. Because it’s new we don’t have a whole lot of input on it, but it sounds compelling if you’re a small reporting entity.”
In a layered liability program structure, do all excess carriers have responsibility to report? an audience member asked. “Most of our clients on the insurance side are saying if they have a piece of the settlement then they are accepting that they are an RRE,” he said. “I think that goes to the conservative nature of it. If the settlement is for $5,000 and my piece is only $100, some are taking the position that it’s not really reportable because it’s not a $5,000 settlement. Really, what we’re seeing, most folks are saying if the settlement in aggregate is more than $5,000 and I have any piece of it, I am going to go ahead and report it.”
Does it matter at all if the policy is a reimbursement policy versus a “pay on behalf of” policy? the same attendee asked. “What we’ve seen is that most folks are saying we are going to go ahead and report it,” Tanella answered. “If money is being paid out, we don’t want to be held on the hook based on a technicality or an interpretation that may not be correct.”
In asbestos claims, where there are a multitude of defendants, does each of the defendants have responsibility to report? asked another member of the audience. “Every defendant we represent feels as though they are on the hook,” Tanella said. “Now, if they don’t pay more than $5,000 for their own piece, they are not going to report it, but if they themselves are paying really anything they are going to go ahead and report that claim. It’s more complex where you have these multiple party situations. Generally people are waiting to see how this plays out and [will] start in January reporting it.”
Tanella summarized by saying: “If you haven’t already – get started. Have a plan. Make decisions as you need to and then document them, because you don’t know what CMS is going to ask you about. Make sure you document the decisions you make and include that in your CMS files.”