In October, the Centers for Medicare & Medicaid Services (CMS) started the clock on enforcement of long-required submission information involving Medicare beneficiaries. Since 2010, non-group health insurance plans have been required to report to CMS all claims involving Medicare beneficiaries in which more than $750 in benefits have been provided. Up until this October, however, there was no enforcement mechanism or penalty. However, since October 11, civil monetary penalties may start to accrue if Section 111 reporting requirements are not met, with payments becoming due as of October 11, 2025. While this change is seen as a dramatic one in the Medicare world, even bigger changes loom in 2025.
Starting on April 4, 2025, CMS is imposing additional Section 111 reporting requirements on workers’ compensation carriers. As of that date, carriers must report Medicare Set-Aside (MSA) data and information on all workers’ compensation claims involving Medicare beneficiaries, regardless of the settlement amount. CMS has publicly taken the position that when it says “all,” it means “all,” and that the reporting requirement includes claims where a formal MSA was not obtained or, if CMS approval of the MSA was not pursued or obtained, includes nonsubmit MSAs.
It is important to note that this new requirement does not change anything with regard to CMS’ review of MSAs. The same review threshold requirements that apply now (more than $25,000 for a settlement involving a Medicare beneficiary or more than $250,000 for a settlement involving a claimant who is not yet a Medicare beneficiary but who has a reasonable expectation of becoming one within 30 months of settlement) will not change.
Although it is expected that more details will come out as April 2025 gets closer, information published by CMS indicates it will be requiring carriers to submit seven pieces of data when a claim involving a Medicare beneficiary is settled: the MSA amount, the MSA period, whether the MSA was funded with a lump sum or through a structure, the initial or “seed” money paid, the annual amounts paid (if an annuity is being used), the case control number and the name of the person (including the injured worker) who is administering the MSA.
It is difficult to know the basis for this new requirement, but CMS claims it is enacting it in further consideration of Section 111 and the agency’s stated goal of protecting the Medicare trust. It has, however, indicated that this requirement will be stringently enforced, and that litigation and/or civil penalties may be pursued for carriers that fail to comply. It would appear as if CMS is also trying to obtain more data as to how many claims are being settled without CMS-approved MSAs, including nonsubmit or evidence-based MSAs, so that it can potentially develop more stringent requirements on carriers in the future, all in the guise of protecting the trust.
While all of these changes certainly should scare carriers into compliance, the entire “house of cards” may fall in the next several years as part of the fallout of a recent, well-publicized decision from the United States Supreme Court. There are many in the legal community who believe that the decision issued in June 2024 in the Loper Bright Enters. v. Raimondo case will have major implications on federal agencies, including CMS. Loper Bright Enters, Nos. 22-451, 22-1219, 2024 U.S. LEXIS 2882 (June 28, 2024).
In the Loper Bright decision, the Supreme Court overruled the decision in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). In Chevron, the Supreme Court held that a federal agency’s interpretation of law must be upheld if 1) Congress did not address the issue specifically and 2) the agency’s interpretation was reasonable. The “Chevron doctrine,” as it came to be known, was the law of the land up until Loper Bright.
Scholars agree that the impact of Loper Bright could be far-reaching and may take many years to fully assess. Since CMS is a federal agency, CMS’ interpretation of federal law is subject to much more scrutiny than it was under the Chevron doctrine. While the Medicare Secondary Payer Act (MSPA )is federal law, CMS has published its own administrative guidance with its own interpretation of the statute and continually provides updates. In light of Loper Bright, CMS’ interpretation of the MSPA is subject to greater challenge, which could lead to further legislation. In fact, there is at least one lawsuit pending right now that is being pursued in an effort to challenge CMS’s administrative powers.
While unrelated to the Loper Bright decision, Congress has debated the Coordination of Medicare Payments and Workers’ Compensation Act (the COMP Act) since 2019. The legislation, which has bipartisan support, is designed to actually put some law behind some of CMS’ guidance. Among the bill’s stated goals are to create certainty in determining amounts to be included in MSAs, provide an appeal process for parties to challenge decisions from CMS and increase revenue to Medicare by allowing an option for direct payment of the MSA amount to CMS rather than to the claimant/beneficiary. The Loper Bright decision and the end of the Chevron doctrine could potentially lead Congress to consider the COMP Act or pursue additional legislation to address the myriad issues with CMS.
