If you were surprised by the draconian enforcement and expansive interpretations of EMTALA or blind-sided by the sudden revelation that the FTC Red Flag Rules will be applied to healthcare, then you have another wonderful awakening on the horizon -- Section 111 Reporting.

ON THE SURFACE

On the surface, the requirement to register and report any payments or settlements involving Medicare beneficiaries is cumbersome, demanding, and generally understandable -- Medicare wants to make sure it is not paying medical expenses
that should be covered by other insurance.

The real implications can go much deeper and will have a much more profound potential impact on healthcare providers.

SERIOUS IMPLICATIONS:

One of the most serious implications is for the healthcare provider who either missed the fact that they are required to register and report or mistakenly believed they were not required to report because someone else was doing it.

A single missed report can rack up a $1,000 per day penalty or a staggering $365,000 per year liability.  With reporting requirements attaching to worker's compensation claims, personal injury claims, and malpractice claims that involve
potential open medical claims from the dawn of the Medicare Secondary Payer status law in 1980, through today, and into
the future, once active reporting starts January 1, 2010, the potential loss from a single error can be devastating.

RISK MANAGEMENT MAY BE HAMPERED:

One of the traps built into the current interpretation of the law by CMS may turn a common risk management technique into
a huge liability -- giving "patient relations" gifts such as free food vouchers or writing off accounts either as a humanitarian or hostility-reducing gesture to placate patients who have a less than wonderful experience to prevent claims.

If the gift or write-off was to address a lost item of property, it would not trigger reporting. But, if the gift or write-off was to address a potential claim for illness or injury, it would, according to CMS.  What has your success rate been on arguing with CMS so far?

In a recent teleconference, they stated:

"We continue to receive questions along the line of actions that entities wish to call goodwill gestures such as adjusting off a hospital bill as a goodwill gesture or assuming liability but then writing off the associated care. Do they have to report that?

Those type of actions demonstrate a primary payment responsibility, so yes they do need to be reported."

Please note -- "primary payment responsibility"

More than just suggesting that you have to report this risk gesture, CMS is essentially labeling this as an admission of liability.

ALARM! ALARM!

This should send a big alarm klaxon blaring.

At a time when the President has indicated he intends to "squeeze" trillions of dollars out of the health system
providers to give "insurance" to everyone in the country, this appears to be one of the "squeeze" techniques.

AS AN EXAMPLE... A visitor with Medicare bumps into a door frame, injuring their knee under circumstances where you routinely have them go to the ED, get checked out, and you write it off to risk management (because you may not have Med Pay coverage on your premises or professional liability policies).

Under Section 111,  we now have a lot of issues in choosing to do this:

1. We must get registered as a Responsible Reporting Entity (RRE) at considerable expense in time and effort.
2. We must report quarterly -- probably even if we have nothing to report.
3. If the visitor later seeks further medical care for issues involving the same knee and Medicare pays, it is reasonable to expect that CMS may assert a claim to recover all payments made in the future for care of this patient's condition because it is "related" to the incident for which you have allegedly admitted "primary payment responsibility".
4. If we did not register because we thought we were not a RRE because our insurance carrier is our reporting agency,
   we may have a fine exposure.

If we want to get a waiver or settlement agreement on this or formal claims, how must we address the  future Medicare lien right ...your lawyer's malpractice carrier will be watching this one closely as the rules develop.

ANOTHER BIG QUESTION MARK

The next shoe to drop in this quagmire is the time bomb that CMS launched in 2008 with the "Never Events" policy -- more
accurately dubbed the "Never Pay" policy.  Providers are not supposed to bill Medicare or the patient for these.

Plaintiff's lawyers have already launched major efforts to transform this rule in automatic liability, essentially arguing that the government has declared that these things should never happen in a competent healthcare service, and therefore it is liability per se.

If we add in the concept of "primary payment responsibility" for waiving bills, and we are required to waive these "Never
Event" bills, will hospitals acquire perpetual liability for these patients?

IS THIS THE FUTURE OF US HEALTHCARE?

As we all wait with trepidation to see what new and exciting plans Congress has for healtcare, it seems obvious that no
system will be able to survive the kind of cost shifting that CMS hopes to achieve.  One has to wonder whether that is the
point -- to force the badly wounded system to its death or the point of surrender.

Does that sound preposterous?  Intentional destruction of a major part of the US economy?  Nationalization?

Ask the auto industry, banking industry, and Wall Street.

IN THE MEAN TIME --WHICH MAY BE A LOT SOONER THAN WE THINK

In the mean time, these things can go better or worse than current indications, so keep a close eye on these explosive
issues cloaked in bureaucratic legalese so your facility or practice has the best chance of survival.

Tags: Medicare, Medicare reporting, Secondary Payor, Section 111