Reporting Hospital Risk Management Write-Offs to Medicare under MMSEA Section 111 Reporting

How and what a hospital reports can alter the impact on their risk retention or their insurance experience when they report to Medicare under Section 111 Mandatory Insurer Reporting.

Hospitals approach mitigating the risk of a potential liability suit much like any other insured entity: they try to rectify the situation and placate the potential claimant before matters escalate.  For hospitals this might include a second surgery, cosmetics or just a free pass to the cafeteria.  These  payments are referred to as risk management write-offs by Medicare for the purposes of MMSEA Section 111 Mandatory Insurer Reporting and hospitals as responsible reporting entities must report them.

 

Medicare includes risk management write offs under the MSP law

In order to bring hospital write offs into the purview of Medicare Secondary Payer statue (42 U.S.C. 1395y) for both MSP recovery and Mandatory Insurer reporting, Medicare defines a hospital write off as "... a risk management tool to lessen the probability of a liability claim against it [Hospital or Provider] and/or to facilitate/enhance customer good-will, entities may reduce charges for items and services (write-off) or provide something of value (e.g., cash, gift card, etc)."   CMS then adds, to seal the verdict, that, "Risk management write-offs (including a reduction in the amount due as a risk management tool) constitute liability self-insurance for the purposes of the Medicare Secondary Payer provisions."  With that, hospital risk management write offs are now squarely in the sights of Medicare and the Medicare Secondary Payer Recovery Contractor.

 

How to report a hospital risk management write-off

In the Non-Group Health Plan Mandatory Insurer Reporting User Guide, Medicare outlines separate methods for reporting hospital risk management write offs:

Discounted Medicare claims are to be reported via current claims processing systems and

Gifts or discounted services or products are not covered by Medicare through Mandatory Insurer Reporting guidelines.

In the first situation, in which a provider discounts a Medicare claim, the provider is to submit a claim reflecting the unreduced permissible (e.g., limiting charge) amount and then subtract the discount from the original claim.  The discount claim is supposed to identifiable as being attributable to liability insurance.  It is important to note that "... providers and beneficiaries make their own agreements on payment without billing Medicare, which Medicare allows them to do." (see page 143 of CMS Billing IOM clm104c1), so this is not the same as not reporting.  Providers can code a claim as covered and non-covered in one bill (effectively reporting a non-billable transaction) and retain the liability for that bill through standard encoding practices, but it is not readily apparent how they attribute the non-covered claim to liability insurance.   If the provider wants to be thorough and clearly assume liability for the tort through standard processes, they can do so via the Medicare Secondary Payer Questionnaire.

The other two options for providing a risk management write off -- freebies and discounts on services and products Medicare does not cover -- are to be reported under Medicare Section 111 Mandatory Insurer Reporting and are clearly recoverable under the Medicare Secondary Payer statue (42 U.S.C. 1395y).  The responsible reporting entity is to report them as liability insurance.

 

What to report under a hospital risk management write off

The first option is to report it as Ongoing Responsibility for Medicals (ORM), signaling CMS that Medicare should pay secondary over the duration; however, a problem arises when considering when to close the ORM period.  If, as some in the hospital industry have suggested, there is no general release signed after the write-off, there is no audit trail indicating that the Hospital really has ended their responsibility.  Additionally, the Hospital will have to report all write-offs, even the gift cards, because there is no lower limit to reporting ongoing responsibility for medicals.  Given CMS's description of risk management write-offs as: ["property of value" or "...reduced ... charges, written off some portion of a charge or provided other property of value] ... [as .. a risk management tool when there is evidence, or a reasonable expectation, that the individual has sought or may seek medical treatment as a consequence of the underlying incident giving rise to the risk..."] it is apparent that these events can be characterized as discrete, individual attempts to reduce risk of litigation and can be reported as one-time TPOCs.  Reporting risk management write offs as TPOCs will minimize the impact on your risk retention and / or insurance experience.

 

What does reporting a risk management write off mean to the hospital?

 

Medicare may deny payment for claims related to the injury

 

If you report ongoing responsibility for medicals (ORM), then based on the injury information that you provide in reporting, Medicare could deny payment of claims related to that injury.  The beneficiary’s only recourse will be to seek medical services and products from you.  If they are not forthcoming, the beneficiary may have a cause for action.  If you are reporting a one-time settlement (TPOC), the beneficiary’s access to Medicare will not be denied.

 

You may want to take steps to Protect Medicare’s Interest

 

The insurer (self-insured) should take steps to protect Medicare's interest -- Although it seems unlikely that Medicare would expect you to put that new wheelchair you intend to give the beneficiary in the closet and wait to see if the MSPRC requires the beneficiary to sell in in order to pay any conditional payments;  if you intend to give a gift of significant monetary value (e.g., over the $5,000 reporting limit), then you should consult legal council and / or contact us.

 

Select a knowledgeable firm to help you report your hospital risk management write offs under MMSEA Section 111 Mandatory Insurer Reporting.ﾠ Review our reporting solution Medicare Consul Services or contact us now