Since 2006, CMS has had three contractors to perform most of its  administrative activities within the MSP process: the Coordination of  Benefits Contractor (COBC), the Medicare Secondary Payer Recovery  Contractor (MSPRC), and the Workers’ Compensation Review Contractor  (WCRC). Figures 2, 3, and 4 illustrate how the process could work for MSP  situations that involve an auto liability insurer, a no-fault insurer, and a  workers’ compensation plan, respectively. MSP Contractor Workloads, Payments, and Medicare Savings Increased during the Initial Implementation of Mandatory Reporting for NGHPs

During the initial implementation of mandatory reporting for NGHPs, the  workloads of and CMS payments to MSP contractors, and Medicare  savings, all increased. For example, since fiscal year 2008, CMS  payments to the MSP contractors have increased by about $21 million  while Medicare savings from NGHP MSP situations—including savings  from claims denials and conditional payment recoveries—have increased  by about $124 million. The NGHP  workloads of all three MSP contractors increased to varying degrees  during the initial implementation of mandatory reporting. For example,  from fiscal year 2008 through fiscal year 2011, the number of MSP  situations involving NGHPs that were voluntarily reported to the COBC  increased by 176 percent and the number of WCMSAs submitted to the  WCRC increased by 42 percent (see table 1). Medicare Savings Increased during the Initial Implementation of Mandatory Reporting, but the Total Impact on Savings Could Take Years to Determine

Medicare savings increased during the initial implementation of  mandatory reporting for NGHPs, but an accurate estimate of savings  could take years to determine because of the lag time between initial  notification of MSP situations and recovery, the fact that not all reported  situations result in recoveries, and the fact that mandatory reporting is still  being phased in. MSP 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 from fiscal year  2008 through fiscal year 2011. CMS Is Addressing Some but Not All of the Key Challenges We Identified within the Process for MSP Situations Involving NGHPs

Within the process for MSP situations involving NGHPs, we 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. CMS Is Taking Steps to Address Challenges Related to MSPRC and WCRC Timeliness

Challenges related to the timeliness of the MSPRC and WCRC were  identified, including recent significant increases in the time required to  complete certain processes or tasks, and CMS reported taking steps to  address the challenges with each of these contractors’ performance. They include challenges related to the timing of the final  demand amounts, the cost-effectiveness in recovery efforts, and the  amounts demanded in liability settlements. The  cost-effectiveness of recovery has improved greatly. CMS Is Taking Steps to Address Some Key Challenges We Identified with Aspects of Mandatory Reporting

We identified three key challenges related to aspects of mandatory  reporting for NGHPs: determining whether individuals are Medicare  beneficiaries, supplying diagnostic codes related to individuals’ injuries,  and reporting all settlement amounts. CMS reported that it is taking steps  to address some, but not all, of these challenges. CMS Has Taken Few Steps to Address Challenges Related to Insufficient and Confusing CMS Guidance and Communication about NGHP MSP Situations

We identified key challenges related to CMS guidance and  communication of information on the MSP process, guidance on MSAs,  and beneficiary rights and responsibilities related to MSP recoveries,  resulting in communication of information that does not meet GAO  standards for internal control. CMS has taken few steps to address these  challenges. Some of these  NGHPs and NGHP stakeholder groups have raised concerns about long- standing MSP process and policies. CMS has been responsive to some of the concerns expressed by  NGHPs, in particular by continuing to delay the start of mandatory  reporting for various types of liability settlements. Additionally, there are several areas related  to the MSP program and process that still need improvement. Additionally, CMS has opportunities to improve the MSP program by  reducing specific reporting requirements for NGHPs and improving  communication with stakeholders.
Why GAO Did This Study

The Centers for Medicare & Medicaid Services (CMS) is responsible for protecting Medicares 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 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 situationsthe 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 trackincluding savings from claims denials and conditional payment recoveriesincreased 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.

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.