The postponed Medicare reporting requirement: what you need to know

January 28, 2011
in Employment Law

by H. Bernard Tisdale III and Dorothy D. Parson, Esqs.

The Centers for Medicare and Medicaid Services (CMS) recently postponed until next year a requirement that certain partially self-insured employers must report any one-time or lump-sum payments to persons entitled to Medicare benefits. The requirement was to have applied to payments made in connection with settlements, judgments or awards involving the release of potential liability for medical expenses.

Previously, payments that occurred on or after Oct. 1, 2010, were to be reported in the first quarter of 2011. The new deadline requires reporting in the first quarter of 2012 any payments occurring on or after Oct. 1, 2011.

This extension does not apply to payments made to Medicare beneficiaries pursuant to no-fault insurance or workers’ compensation claims. Any such payments occurring on or after Oct. 1, 2010, still must be reported in the first quarter of 2011.

Reporting requirement origins

Medicare is a government-funded health insurance program primarily for people age 65 or older. However, Medicare isn’t intended as primary insurance coverage if other funds are available to pay for medical treatment. Thus, Medicare is a “secondary payer.”

In response to funding concerns for Medicare, the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) was enacted. The law was written to enable Medicare to recover money from beneficiaries who received payments for medical expenses from third parties. The law requires entities that make such a payment to report it to Medicare.

Who must report?

An entity that is either fully or partially self-insured may be a “Responsible Reporting Entity” (RRE) required to report payments made to a Medicare beneficiary when the payments are for medical benefits or are in exchange for a release that has the effect of waiving claims for medical benefits.

For instance, an employer that is not insured—or that has to pay a deductible or co-pay on a liability insurance policy or that pays a portion of a settlement or judgment—is considered a “self-insured plan” that must report payments to the CMS. (However, if payment to a beneficiary is partially paid by the RRE as part of its deductible, and partially paid by the insurer in the amount exceeding the deductible, then the insurer must report both the deductible and any excess paid beyond the deductible, rather than the RRE.)

What must be reported?

If the RRE is an employer that is at least partially self-insured or is a liability insurer carrier, and it makes a one-time or lump-sum payment to resolve all or part of a claim to someone eligible for Medicare, the CMS calls that a Total Payment Obligation to Claimant (TPOC).

TPOCs occurring on or after Oct. 1, 2011, must be reported in the first quarter of 2012.

This obligation applies to settlements or other agreements between an employer and a Medicare-eligible person that include a full release of all claims by the individual. In those cases, any payment occurring on or after Oct. 1, 2011, in exchange for that release must be reported.

That’s true even if the individual never asserted any claim for medical benefits, as long as the release would have the effect of releasing any such claim.

What it means for employers

An RRE that fails to report covered payments will be subject to a civil penalty of $1,000 per day per violation.

Thus the extension will benefit liability insurers (including self-insured employers). They will have more time to review the regulations and begin the process of registration with the CMS.

Registering with the CMS is complicated. The CMS cautions that RREs must begin the registration process a full calendar quarter before the obligation to submit reports begins. This period allows for testing of the technical elements of the reporting process.

However, the CMS also has announced a “small reporter” option, which bypasses the testing period for those entities that will submit 500 or fewer claim reports per calendar year.


Authors: H. Bernard Tisdale III is managing shareholder in the Charlotte, N.C., office of Ogletree Deakins, and Dorothy D. Parson is an associate in the firm’s Indianapolis office.

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