Medicare Secondary Payer:
Additional Steps Are Needed to Improve Program Effectiveness for Non-Group Health Plans
GAO-12-333, Mar 9, 2012
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What GAO Found
During the initial implementation of mandatory reporting for non-group health plans (NGHP), the workloads of and Centers for Medicare & Medicaid Services (CMS) payments to Medicare Secondary Payer (MSP) contractors, and Medicare savings, all increased. From 2008 through 2011, the NGHP workloads of all three contractors CMS uses to implement the process for MSP situations—the Coordination of Benefits Contractor (COBC), the Medicare Secondary Payer Recovery Contractor (MSPRC), and the Workers’ Compensation Review Contractor (WCRC)—increased to varying degrees. For example, from 2008 through 2011, the number of NGHP MSP situations voluntarily reported to the COBC increased from about 142,000 to about 392,000, the number of NGHP cases established by the MSPRC increased from about 238,000 to about 480,000, and the number of Medicare set-aside proposals submitted to the WCRC increased from about 20,000 to almost 29,000. From 2008 through 2011, the total CMS payments to the MSP contractors increased by about $21 million, and Medicare savings from known NGHP situations that CMS is able to track—including savings from claims denials and conditional payment recoveries—increased by about $124 million. The total impact of mandatory reporting on Medicare savings could take years to determine for various reasons, including that mandatory reporting is still being phased in.
Within the process for MSP situations involving NGHPs, GAO identified key challenges related to contractor performance, demand amounts, aspects of mandatory reporting, and CMS guidance and communication. CMS has addressed or is taking steps to address some, but not all, of these challenges.
- Contractor performance. Challenges related to the timeliness of the MSPRC and WCRC were identified, including significant increases in the time required to complete important tasks. CMS reported taking steps to address the challenges with each of these contractors’ performance.
- Demand and recovery issues. Challenges were identified related to the timing of demand amounts, the cost-effectiveness of recovery efforts, and the amounts of Medicare demands from liability settlements. CMS reported taking steps to address some, but not all, of these challenges.
- Mandatory reporting. Key challenges were identified with certain aspects of mandatory reporting: determining whether individuals are Medicare beneficiaries, supplying diagnostic codes related to individuals’ injuries, and reporting all liability settlement amounts. CMS reported taking steps to address some, but not all, of these challenges.
- CMS guidance and communication. Key challenges were identified related to CMS guidance and communication about the MSP process, guidance on Medicare set-aside arrangements, and beneficiary rights and responsibilities. CMS has taken few steps to address these challenges.
While CMS has taken, or reported it is in the process of taking, additional steps to address these key challenges, there are several areas related to the MSP program and process that still need improvement.
Why GAO Did This Study
The Centers for Medicare & Medicaid Services (CMS) is responsible for protecting Medicare’s fiscal integrity. Medicare Secondary Payer (MSP) situations exist when Medicare is a secondary payer to other insurers, including non-group health plans (NGHP), which include auto or other liability insurance, no-fault insurance, and workers’ compensation plans. CMS attempts to recover Medicare payments made that were the responsibility of NGHPs, but CMS has not always been aware of these MSP situations. In 2007, legislation added mandatory reporting requirements for NGHPs that should enable CMS to be aware of these situations. NGHPs reported concerns about the MSP process, and CMS delayed the start of mandatory reporting by NGHPs, in part because of these concerns. This report examines (1) how the initial implementation of mandatory reporting for NGHPs has affected the workload of and payments to MSP contractors, and Medicare savings, and (2) key challenges within the process for MSP situations involving NGHPs and the steps CMS is taking to address those challenges. GAO reviewed relevant MSP-related documents and data on MSP costs, workload, Medicare savings, and contractor performance. GAO also interviewed CMS officials, MSP contractor officials, and NGHP stakeholders.
What GAO Recommends
To improve the MSP program, GAO is making recommendations to improve the cost-effectiveness of recovery, decrease the reporting burden for NGHPs, and improve communications with NGHP stakeholders. CMS agreed with these recommendations.
For more information, contact Kathleen M. King at (202) 512-7114 or kingk@gao.gov.
Status Legend:
- Review Pending
- Open
- Closed - implemented
- Closed - not implemented
Recommendations for Executive Action
Recommendation: To improve the effectiveness of the MSP program and process for NGHPs, and to improve the agency's communication regarding the MSP process for situations involving NGHPs, the Acting Administrator of CMS should review and revise the correspondence with beneficiaries, such as letters sent during the recovery process, to ensure that beneficiary rights and responsibilities are more clearly communicated.
Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services
Status: Open
Comments: As of June 2012, CMS indicated that it was still in the process of reviewing all MSP-related correspondence to ensure that it is clear and can be easily understood by the beneficiary. In May 2012 CMS estimated completing this task by the second quarter of 2013.
Recommendation: To improve the effectiveness of the MSP program and process for NGHPs, and to improve the agency's communication regarding the MSP process for situations involving NGHPs, the Acting Administrator of CMS should develop guidance regarding liability and no-fault set-aside arrangements.
Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services
Status: Open
Comments: As of August 2012, CMS was still in the process of developing guidance regarding liability and no-fault set-aside arrangements. In June 2012, CMS issued notice of proposed rulemaking (ANPRM) on this topic entitled "Medicare Secondary Payer and 'Future Medicals' (CMS-6047-ANPRM)". The 60-day comment period for that notice ended on August 14, 2012.
Recommendation: To improve the effectiveness of the MSP program and process for NGHPs, and to improve the agency's communication regarding the MSP process for situations involving NGHPs, the Acting Administrator of CMS should develop a centralized MSP program website, to include links to information about the various parts of the MSP process.
Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services
Status: Open
Comments: As of June 2012, CMS indicated that its development of a centralized MSP website was still in process. In May 2012 CMS reported that its targeted completion date for a centralized MSP website was the second quarter of 2013.
Recommendation: To improve the effectiveness of the MSP program and process for NGHPs, and to ensure cost-effectiveness in the agency's NGHP recovery process, the Acting Administrator of CMS should review recovery thresholds periodically for appropriateness to ensure that the agency's recovery efforts are being conducted in the most cost-effective manner possible, and not require NGHPs to report on cases for which the agency will not seek any recovery.
Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services
Status: Open
Comments: As of June 2012, CMS indicated that its review of recovery thresholds was still in process. In May 2012 CMS reported that it planned to implement standard operating procedures to annually review recovery thresholds in the fourth quarter of 2012. It also reported that it would review 2012 data in the first quarter of 2013 to consider whether new or revised recovery thresholds should be implemented.
Recommendation: To improve the effectiveness of the MSP program and process for NGHPs, and to improve the agency’s communication regarding the MSP process for situations involving NGHPs, the Acting Administrator of CMS should review and revise the correspondence with beneficiaries, such as letters sent during the recovery process, to ensure that beneficiary rights and responsibilities are more clearly communicated.
Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve the effectiveness of the MSP program and process for NGHPs, and to improve the agency’s communication regarding the MSP process for situations involving NGHPs, the Acting Administrator of CMS should develop guidance regarding liability and no-fault set-aside arrangements.
Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve the effectiveness of the MSP program and process for NGHPs, and to improve the agency’s communication regarding the MSP process for situations involving NGHPs, the Acting Administrator of CMS should develop a centralized MSP program website, to include links to information about the various parts of the MSP process.
Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve the effectiveness of the MSP program and process for NGHPs, and to potentially decrease the administrative burden of mandatory reporting for NGHPs, the Acting Administrator of CMS should consider making the submission of International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9) codes an optional component of reporting for liability NGHPs.
Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services
Status: Open
Comments: As of June 2012, CMS indicated that is was still considering this recommendation. The agency reported in May 2012 that by January 1, 2013 it planned to have determined whether any reporting elements could be modified or eliminated, including ICD-9 codes.
Recommendation: To improve the effectiveness of the MSP program and process for NGHPs, and to ensure cost-effectiveness in the agency’s NGHP recovery process, the Acting Administrator of CMS should review recovery thresholds periodically for appropriateness to ensure that the agency’s recovery efforts are being conducted in the most cost-effective manner possible, and not require NGHPs to report on cases for which the agency will not seek any recovery.
Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.