Question: My company is settling a liability claim. We are named on the release but are not directly paying the plaintiff who is a Medicare beneficiary. The total amount of the settlement is $25,000 and it will be paid by our co-defendant’s insurer, and our contribution of $3,500 will be paid to that insurer. Do we have a Section 111 reporting obligation? If so, what should we report?
Answer: Today’s question implicates Medicare’s mandatory insurer reporting requirements. Identifying and understanding how to fulfill these obligations is an important element to claims handling, made critical by the impending regulations outlining whether and how Medicare may penalize non-compliant entities.
In this case we must decide if a reporting obligation exists and, if so, how that obligation may be fulfilled. Here, the questioner is asking about whether to report a “TPOC” or the total payment obligation to the claimant. TPOC refers to a one time settlement, judgment, award, or other payment that is intended to resolve or partially resolve a claim. If a TPOC occurs – and any settlement that releases a claim for medical benefits or damages with a Medicare beneficiary is a TPOC – then the responsible reporting entity (RRE) must report the TPOC date as well as the amount.
So, under these facts, does our questioner have a TPOC reporting obligation? If so, what’s the TPOC amount? In this liability case, the total overall settlement value is $25,000 and the questioner is indirectly contributing $3,500 by paying another liability insurer. The plaintiff will receive one check, even though the release names multiple entities. With only one check, there’s only one obligation, right and it’s on the paying entity, right? Wrong.
Medicare’s policy on this set of facts is clear: “[w]here there are multiple defendants involved in a settlement, an agreement to have one of the defendant’s insurer(s) issue any payment in obligation of a settlement, judgment, award, or other does not shift RRE responsibility solely to the entity issuing the payment. All RREs involved in the settlement remain responsible for their own reporting.”[1] Because the release names our questioner’s organization, it does have a TPOC reporting obligation. A claim by the plaintiff for medical damages or benefits is being released for $25,000. Since the release names our questioner’s company and Medicare policy creates a TPOC obligation for that company, it must report a TPOC. The question then becomes what TPOC amount must the RRE report?
Medicare requires RREs settling with Medicare beneficiaries for more than $750[2] to report the TPOC date and amount. If the questioner were to settle separately from the co-defendant and issue payment directly to the plaintiff, there is a clear obligation to report a $3,500 TPOC amount as the NGHP user guide indicates: “[w]here there are multiple defendants and they each have separate settlements with the plaintiff, the applicable RRE reports that separate settlement amount.” That is not what is happening here, though, so we need to look to the policy on settlements involving multiple contributing parties. In that situation Medicare’s basic policy is “all RREs involved in the settlement remain responsible for their own reporting.”
Here the plaintiff is settling for $25,000, which will be paid in one check by the co-defendant’s insurer. To the extent the release separately identifies each contributing party’s portion, each party reports the amount it contributes. But in in a global settlement, things get a little murkier. If it is the case the release is either silent as to the amount each released entity contributes, or if the settlement or state law involves joint and several liability then “each RRE must report the total settlement, judgment, award, or other payment – not just its assigned or proportionate share.”
Even if we assume the parties are not jointly and severally liable but the release is silent as to the amount our questioner’s company contributes, then the RRE must report the full $25,000 as the TPOC amount even though the RRE only pays $3,500 to the co-defendant. Simply put, unless something in the settlement specifically identifies each released party’s obligation, all released entities should report the entire amount even if the cumulative result will be that Medicare receives multiple $25,000 TPOC reports.
ExamWorks Clinical Solutions has the largest and most experienced team of Section 111 reporting experts in the country. With the looming threat of a final rule on civil money penalties, tap our team to check on your existing Section 111 reporting process. And, if you have an obligation to report but have not yet registered – don’t delay. Contact our Mandatory Insurer Reporting Team at MIRService.Support@examworks-cs.com or 678-222-5454 to schedule an evaluation today.
[1] NGHP User Guide version 5.8. Chapter 3 p. 6-6
[2] Medicare reporting and recovery thresholds are evaluated annually and may change.
