Lead Insurers Now Allowed to Report Medicare Claims on Behalf of All Insurers on a Policy

The Centers for Medicare and Medicaid Services (CMS) has finally approved lead-only reporting on behalf of all insurers on a subscription policy. In an email from the Division of Medicare Secondary Payer Program Operations dated January 10, 2023, CMS has confirmed that “it is permissible for the lead insurer in a subscription market arrangement to act as the sole Responsible Reporting Entity (‘RRE’) pursuant to the reporting requirements in Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007.” CMS’s agreement to permit lead-only reporting is predicated on the assumption that the lead insurer will be responsible for all obligations under Section 111 and will be treated as “the sole RRE for all applicable reporting, recovery, and benefits coordination requirements.” CMS plans to formalize lead-only reporting in a future publication circulated to the public.

Previously, CMS required each insurer who funds a portion of a settlement to a Medicare beneficiary pursuant to an insurance contract that it has underwritten on a subscription market basis to report the total settlement to CMS, even though doing so resulted in duplicative reports of the same settlement.

The aviation insurance industry has been lobbying CMS since 2014 for an exception to the general rule that required all co-insurers to individually report each claim.

In December 2013, CMS had published an Advance Notice of Proposed Rulemaking (ANPRM) calling for comments from external stakeholders as to when and how penalties should be assessed under the mandatory reporting provisions of Section 111.1 Prior to issuing federal regulations, however, a U.S. administrative agency must give interested parties an opportunity to participate in rulemaking through the notice and comment process. Accordingly, Condon & Forsyth LLP submitted a comment to the ANPRM on behalf of various aviation insurers calling for lead-only reporting. Because of a lengthy delay in the rulemaking process, CMS ultimately withdrew the ANPRM.

Subsequently, in February 2020, CMS issued a Notice of Proposed Rulemaking (NPRM) with a draft final rule, to be codified in the Code of Federal Regulations,2 governing the Section 111 reporting process and, again, calling for comments from external stakeholders. Condon & Forsyth LLP again submitted a comment on behalf of various aviation insurers calling for lead-only reporting. The International Underwriting Association and the Lloyd’s Market Association likewise submitted a comment to the NPRM advocating for lead-only reporting.

After many informal discussions with CMS further explaining the position of the aviation insurance market, CMS was persuaded to approve lead-only reporting. This new common-sense development, obtained through coordinated efforts of the aviation insurance industry, will make it easier and more efficient for aviation insurers — and all insurers on subscription policies – to fulfill their Medicare reporting requirements.

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1 Rulemaking is the process used by federal agencies to create federal regulations. Congress grants rulemaking authority to federal agencies, such as CMS, to implement legislative statutes, such as Section 111.

2 For more information regarding the proposed final rule see: https://condonlaw.com/2020/02/cms-publishes-section-111-civil-money-penalties-notice-of-proposed-rulemaking/.