CMS Unexpectedly Announces 9-Month Delay Of Requirement To Report Liability Payments Under The Medicare Secondary Payer Statute

On February 16, 2010, the Centers for Medicare and Medicaid Services ("CMS"), the agency within the Department of Health and Human Services that oversees the Medicare program, unexpectedly announced that it will delay, from April 1, 2010 to January 1, 2011, the start date for electronic filing of settlements, judgments, awards, or other payments made to Medicare beneficiaries, whether such payments are made by liability insurers, no-fault insurers, workers' compensation, or businesses that self insure their liability risks. CMS indicated that further guidance will be issued the week of February 22, 2010.

This reporting requirement was added to the Medicare Secondary Payer ("MSP") statute, 42 U.S.C. §1395y(b), in 2007 and is codified at 42 U.S.C. §1395y(b)(8). The purpose of the MSP statute, which was first enacted in 1980, is to reduce the growth of Medicare by shifting primary payment responsibility to other entities that are responsible for paying for health care.

Until CMS's recent announcement, reporting was set to begin on April 1, 2010, and applied to every personal injury settlement payment (initially, at or above $5,000) made to a Medicare beneficiary on or after January 1, 2010. Insurance carriers and other companies have been testing CMS's electronic reporting system for several months, and there were many policy and technical issues still to be resolved. This is because the implementation of this new reporting program has proven to be extremely complex for CMS, in part because of the large number of entities that have signed up to make reports.

The delay in reporting will give CMS additional time to consider the many issues that have arisen during the past several months. The delay should also benefit the entities making the reports (known as RREs - Responsible Reporting Entities) by giving them more time to test the reporting system and attempt to have their various issues addressed. CMS indicated in its announcement that it expects RREs to continue testing the system to ensure that they are able to file their electronic reports when the system goes live next year.

CMS's announcement raises several important questions, the most important of which is whether the reporting delay will result in a corresponding delay in the date of the settlements that will have to be reported to CMS (currently settlements entered into on or after January 1, 2010 must be reported). This may be addressed in the further guidance CMS promised to provide next week.

If you have any questions regarding this development, or would like more information regarding the MSP reporting program, please contact Bob Roth of our Health Care Group or Robert Willmore of our Torts Group.