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7/28/2015 By Christopher Monahan

Recently we looked into the significance of Dec. 5, 1980, in the context of Medicare reporting. We reviewed example scenarios that illustrate how it’s often unclear whether claims need to be reported to Medicare. Today, we examine the potential consequences of failing to report required claims to Medicare.

When to report?

Upon registering to the Centers for Medicare and Medicaid Services (CMS), Responsible Reporting Entities (RREs) are given a seven-day window each quarter to submit, through electronic submission, all Medicare beneficiaries that have received a settlement payment. Alternatively, RREs can also report claims through direct date entry (DDE), which is required within 45 days of the Medicare beneficiary being issued payment.

Under Section 111 of the Medicare, Medicaid and SCHIP Extension Act (MMSEA), failure to report by the required deadline can result in penalties of up to $1,000 per day, per unreported claim. The federal government also has the statutory ability to sue for double damages, in addition to the amount of the conditional payment. Per the Medicare Secondary Payer Act (MSP), Medicare can go after and seek recovery from any party involved in the claim, including the defendant or RRE that already issued payment to the plaintiff. So while defendants may think Medicare reporting isn’t as critical an issue for them, compared to plaintiffs, it turns out … it’s just as significant.

Are fines truly given out?

In our Claims Management work, KCIC serves as an account manager for a number of RREs, helping them comply with CMS reporting requirements. We’ve found that the process for reporting claims through an electronic submission or Dynamic Data Exchange (DDE) is far from perfect, as there are sometimes issues with the electronic feeds or the CMS site. Do these reporting delays result in fines being given out to the RRE? Not from what we’ve seen. After working with various CMS representatives over the years and learning about the reporting process and issues encountered by numerous RREs, we’ve found that CMS is willing to work with each RRE. At the end of the day, as long as a good faith effort is put in to report the required claims on time, then no fines will be issued.
The bottom line is that CMS knows there are issues with the reporting system and there remains confusion regarding which claims need to be reported. With everyone still trying to fully grasp all aspects of the process, there is certainly flexibility. What is clear is that RREs will be in serious trouble if there is a deliberate attempt to conceal or avoid reporting claims that have an obligation to pay Medicare.

False Claims Act (FCA)

The federal government may use the False Claims Act (FCA) to file a claim against parties that attempt to commit Medicare fraud. The FCA defines a false claim as “any person who … knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government” and states that person “is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000 … plus three times the amount of damages which the Government sustains because of the act of that person”.

Similar to the MSP above, all parties involved in an award, judgment or settlement are subject to a false claim filing, since any party could assist in an attempt to conceal or avoid the obligation to the government. The Department of Justice reported that in 2013, the government collected $3.8 billion under the FCA, of which $2.6 billion came from the Department of Health and Human Services, which runs CMS.

Connecting back to exposure dates

After reading what constitutes a false claim, you may think of a doctor who submits claims for services that were not performed. In United States v. Krizek, a psychiatrist submitted claims for services to Medicare and Medicaid patients. It turned out the claims were false — the billing time for those services totaled over 24 hours in a single day.

That example seems obvious, but how does the FCA relate to Medicare beneficiaries? We learned that Dec. 5, 1980, is a crucial date in determining whether or not a claim needs to be reported to Medicare. If exposure ended before that date, then the claim did not need to be reported. But what if the reported exposure dates were altered so that exposure ended before that date, even if the exposure actually continued past Dec. 5, 1980? This would be a false claim, as the change was made “knowingly” and was “a deliberate ignorance of the truth”.

It’s another example of how significant documentation is when claims are settled. In the event a claim is filed under the FCA, parties involved in the settlement should have evidence concerning dates of exposure and proof of what was known at the time of the settlement. General release language and failure to satisfy Medicare liens are additional examples of potential false claims if, again, parties knowingly conceal and avoid their obligations to the government.

The financial consequences of failing to report to Medicare or filing a false claim can be harsh, but they can be avoided. The key takeaway is that the RRE needs to put in a good faith effort to report the necessary claims on time. By querying the CMS database on a regular basis leading up to the reporting window, the RRE can be proactive about determining each claimant’s current Medicare beneficiary status and can work with a CMS representative to ensure all necessary steps are being handled properly. Then, by maintaining proper documentation of settlements with specific evidence of exposure date, the RRE will be prepared to defend any false claim filing.

Do you have any contrary experiences with CMS? Have you ever had to deal with a false claim filing? Please share your comments. 

Christopher Monahan

About Christopher Monahan

Chris Monahan leads KCIC’s Chicago office, handling both business development and marketing responsibilities as well as claims management and analysis for new and existing clients.

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