Are you concerned about adjusters having the necessary knowledge and skills to properly manage Medicare Secondary Payer (MSP) compliance? You are not alone! The time for a data-driven, analytic-powered approach to compliance is now. Today’s industry leaders and early adopters have already begun embracing this method. An analytic-powered approach uses high-quality data and strong algorithms to augment human decision-making in the process, removing the burden of compliance from the adjusters’ desks.
Medicare Secondary Payer Medicare was implemented in 1965 as the primary payer for medical claims involving Medicare beneficiaries not covered by workers’ compensation (WC), federal black lung, or veteran’s administration benefits. In 1980, to collect as much money for the Medicare trust fund through rule making, Congress enacted the Medicare Secondary Payer Act which expanded Medicare’s recovery to group health and non-group health plans or self-insurance for liability, automobile and no-fault. This includes all plans under the P&C lines that paid for any medical or personal injury, travel insurance, medical payments coverages (under commercial and personal property plans), as well as plans that typically do not pay for a bodily injury, such as treatment for medical professional liability, director, officer and errors/omission policies. Medicare has a right to both reimbursement for Medicare dollars paid, and recovery of payments that Medicare might make in the future where another primary plan exists.
Primary Payer Survey We randomly and confidentially surveyed 36 non-group health primary payers, including carriers, third-party administrators, state funds and self-insured entities, to learn about their MSP compliance programs. This graph presents the results:
Companies surveyed agree 100% that MSP compliance delays or interferes with claims settlements. However, few have a formal monitoring process (4%), a fragmented vendor panel is used (71%), and few (30%) have a centralized program, such as an internal department or individual responsible for the oversight of MSP compliance. Most compelling is that 92% of companies surveyed do not have any confidence that their adjusters or claim handlers are capable enough to identify the risk or execute on MSP compliance at the time of settlement.
These results clearly reveal an absence of risk management or quality measures for identifying, managing or monitoring MSP compliance. Further, most payers do not establish their own internal best practices, relying instead on external vendor suggested best practices, which hold considerable variability. The overall results conclude that MSP compliance lacks transparency and control.
Data is Power! An Analytic-Powered Approach to MSP Analytic-powered or data-driven decision management (DDDM) is an approach to governance, using data that has been appropriately gathered and verified to make business decisions. This technique has been around since the early days of the computer in the 1950’s when data was first mined and extracted for analysis. Today, business intelligence has advanced to offer technology based dashboards that display data in an organized form for analysis and decision making. These tools no longer require an expensive IT staff to gather and analyze information. The quality of the data and effectiveness of the analysis are the foundations for a successful data driven solution. Using data intelligence, primary payers can identify, manage and control MSP exposure and make informed decisions about managing MSP compliance risks.
The difference between an analytic-powered and a conventional approach to Medicare Secondary Payer is dramatic. An analytic-powered approach relies upon a robust claims data warehouse of real medical transactions for bodily injuries over time. A standardized digital platform with algorithms and tables is applied. Given the same exact set of medical claim variables, an outcome will be the same every time. Software offers tighter security standards, HIPAA (PHI/PII) protection with fewer hands touching the files. The process remains in the control of a payer’s management team and can stay within the confines of its IT structure.
Case Study Comparison We analyzed the experience of a primary payer who sent the same set of medical records, for a given claim involving a Medicare beneficiary, to 5 different MSA preparers.
Conventional methods are subjective, non-standardized, and therefore variable in nature. The same medical variables or medical claims record information can be reviewed by five different people and interpreted differently by each person; the same variables are not reproducible or consistent. Today’s conventional methods increase the complexity of future care analysis and vendor dependency, and we can understand why adjusters are both challenged and frustrated by claims involving MSP compliance.
“Non-Group Health Plans and self- insureds are frustrated by the world of Medicare Set-Asides. This frustration has led to attempts to change the policy guidance in Congress, numerous meetings with CMS, and searches for new solutions. Some of the “Best in Class” have determined that the only way to secure superior outcomes is to control the process, bringing it inside their organizations and using data to secure superior results, thereby affording themselves an advantage in the marketplace.” Peter R. Foley C.P.C.U., C.I.C, Principal at C.L.A.I.M.S, LLC and former Vice President, Claims Administration, American Insurance Association.
A data analytics approach will not only drastically improve the quality, reliability and validity of an MSP program, but it will provide robust dashboard capabilities, which can remove the responsibility for MSP from the adjusters’ desks’, improving transparency, control and risk management that cuts the overall total cost of MSP compliance by nearly half. Companies who boldly seek to adopt and adapt new technologies to remain relevant in today’s economy will attract and retain the best talent today for tomorrow’s sustainability.
Conclusion Our survey of 36 companies exposes the failure of the current state of MSP compliance and highlights the need for disruptive and revolutionary change. As future guidance for MSP compliance is released, there is a risk of greater complexity for primary payers and third-party administrators who rely on conventional practices. The future is here for a fully integrated, data-driven solution that is streamlined, efficient and compliant with the intent of the MSP Act that is more user friendly and mitigates risk at a lower cost.