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House Subcommittee Hears Testimony on Medicare SPS

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   June 23, 2011

With Medicare facing an uncertain financial future and seniors clamoring for steps to be taken to bolster the program's economic stability, Congress has held hearings to review how components of the program meet their statutory requirements and to hear suggestions on how the programs could be more effective.

On Wednesday morning the House Energy and Commerce Committee's subcommittee on oversight and investigation heard testimony on the Medicare Secondary Payer System. Testimony was heard from representative of the Centers for Medicare & Medicaid Services, the Government Accountability Office, businesses, law firms, consumer advocates and insurance plans.

In his opening remarks, committee chair Fred Upton (R-MI) explained that the MSPS is designed to protect Medicare funds from being spent when another payer has primary responsibility for any medical bills. He noted that because of "complex repayment and reporting requirements" the beneficiary and primary payer were often unsure who was responsible for repayment to the Medicare fund.

Upton said "there is no requirement for CMS to provide the parties with the amount due, or the amount they should set aside to cover future payments…so they can appropriately allocate and resolve these Medicare obligations…CMS is unsure when it will receive repayment. The primary payer is unsure about its bottom line, and the beneficiary, who Medicare is meant to protect, is unsure if they will receive the coverage they were promised."

Rep. Cliff Stearns (R-FL), the subcommittee chair, said the situation raised several questions, including "why can't CMS more quickly and accurately track medical costs for covered individuals?"

Deborah Taylor, CFO and the director of financial management centers for CMS, said the MSPS law is an "important mechanism for protecting the fiscal integrity of the Medicare program and the Medicare Trust Fund. Over the last decade, total MSPS savings have exceeded $50 billion."

She noted that all insurance providers, public and private, utilize a system similar to the MSPS program to resolve conflicting coverage issues with other carriers.

Taylor laid much of the responsibility for any problems at the feet of non-group health plans (NGHP), which include liability and no-fault insurance, and workers' comp plans. She noted that new reporting requirements were adopted in 2007 for employer-sponsored group health plans and NGHPs but that the "NGHP industry's unfamiliarity with MSPS rules" had led to confusion related to reporting requirements.

In his testimony James C. Cosgrove, director of healthcare for the GAO, stated that although Congress added mandatory reporting requirements in 2007 for group health plans and NGHPs the requirements were relaxed at the request of the industry and would not be in full effect until 2012.

Cosgrove said "the Congressional Budget Office estimated that these provisions for group health plans and NGHPs would save Medicare $1.1 billion over 10 years in improper payments that could be recovered or avoided by Medicare."

Marc Salam, vice president of risk management for Publix Super Markets, spoke as a member of the Medicare Advocacy Recovery Coalition or MARC Coalition, which advocates for changes in the MSPS. Among his concerns is that the current system prohibits CMS from revealing how much it has spent on medical coverage when a liability case is involved.

Salam explained that in a liability case such as a slip and fall Medicare pays for the healthcare related to the injury until a settlement is reached. "But neither the beneficiary nor the settling party knows how much money Medicare will expect in reimbursement while negotiating the settlement."

The beneficiary is responsible for reimbursing Medicare but that responsibility falls to the settling party if the beneficiary reneges and doesn't repay the trust fund. Salam suggested that CMS be permitted to provide a conditional payment amount that could be used to negotiate the liability settlement so that the trust fund "will recover more money faster."

Jason Matzus, a Pittsburgh-based attorney who represents Medicare beneficiaries in claims against third parties, supported Salam's statements and added that "it is not uncommon for it to take six months to one year to resolve the MSPS portion of a claim. In the meantime settlement funds sit in an attorney escrow account instead of being placed in the Medicare Trust Fund."

In her testimony Ilene Stein, federal policy director at the Medicare Rights Center, said because there is no timeframe for when Medicare must provide its costs in a liability case there is "uncertainty in the settlement process." She noted that there is also no time limit for Medicare to recoup its costs and there have been cases where Medicare "reaches out to a beneficiary years after a case is settled."

Additional subcommittee hearings are planned on the Medicare Secondary Payer System but have not been scheduled.


Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.

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