Understanding MSP: Definitions and Important Terminology

10 - Understanding MSP: Definitions and Important Terminology (Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23) The following section provides the most commonly used MSP definitions and terms. These definitions and terms will be frequently referenced throughout this chapter of the IOM as well as the remaining Pub. 100-05. Accident - An unintended occurrence outside the normal course of events that causes illness, injury, or damage to a person or property. Age 65 or older – An individual attains age 65 on the day preceding his or her 65th birthday. Automobile - Any self-propelled land vehicle of a type that must be registered and licensed in the State in which it is owned. CMS' Claim - In the context of Workers’ Compensation (WC), no-fault, and liability claims, the amount that is determined to be owed to the Medicare program. This is the lesser of the total sum of the settlements, judgments, or awards related to the underlying WC, no-fault, or liability claim; or the amount that was paid out by Medicare, less any applicable share of procurement costs. Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) - A Title X provision that provides continuation of GHP coverage if elected. For aged or disabled Medicare beneficiaries, COBRA continuation coverage is secondary to Medicare because the coverage is by virtue of COBRA law rather than by virtue of current employment status. For an ESRD related Medicare beneficiary, COBRA continuation coverage, if elected, is primary to Medicare during the 30-month ESRD coordination period. See 42 CFR 411.161(a)(3) and 411.162(a)(3). Compromise - A settlement of differences by mutual consent or adjustment of matters in dispute by mutual concession; a negotiated settlement between parties who are in essentially equal bargaining positions, wherein neither party admits or concedes that he is entitled to less than he desires, but accepts less to affect the goal of ending the dispute. In an MSP situation under the Federal Claims Collection Act, a compromise represents the acceptance by the Regional Office (RO) of less than the full debt owed to Medicare, when the amount of the full debt does not exceed $100,000, or by Central Office (CO) when the amount exceeds $100,000. An individual who accepts a compromise has no right to appeal the remaining debt. Conditional Payment - A Medicare payment, conditioned upon reimbursement to Medicare, for items or services for which another insurer is the primary payer. Coordination Period - A period of 30 months during which Medicare benefits are secondary to benefits payable under GHPs for individuals who are eligible for Medicare because of ESRD. Current Employment Status - An individual that is: • Actively working as an employee, is the employer (including a self-employed person), or is associated with the employer in a business relationship; or • The individual is not actively working and is receiving disability benefits from an employer for up to 6 months (the first 6 months of employer disability benefits are subject to FICA taxes); or not actively working but meets all of the following conditions: ° Retains employment rights in the industry; ° Has not had their employment terminated by the employer if the employer provides the coverage or has not had his/her membership in the employee organization terminated if the employee organization provides the coverage; ° Is not receiving disability benefits from an employer for more than 6 months; ° Is not receiving Social Security disability benefits, and • Has employment-based GHP coverage that is not COBRA continuation coverage. [See 29 U.S.C. 1161-1168.] Note, A person aged 65 or older and receiving disability payments from an employer is considered to have current employment status if such payments are subject to taxes under FICA. Employer disability payments are subject to FICA tax for the first six months of disability after the last calendar month in which the employee worked for that employer. Eligibility - A beneficiary meets the legal requirements for Medicare benefits. It is still necessary to file an application to become entitled. (For example, a Social Security beneficiary is eligible for Medicare upon attaining age 65 but is not entitled until an application is filed and approved). Employee - An individual who is working for an employer or an individual who, although not actually working for an employer, is receiving payments from an employer that are subject to FICA taxes or would be subject to FICA taxes except that the employer is exempt from those taxes under the Internal Revenue Code (IRC). Employer - In addition to individuals (including self-employed persons) and organizations engaged in a trade or business, other entities exempt from income tax such as religious, charitable, and educational institutions. Included are the governments of the United States, the individual States, Puerto Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, the District of Columbia, and foreign governments. Entitled - An eligible individual becomes entitled to Medicare by filing the appropriate application. Upon approval of the application, the individual is entitled. It may also be necessary to enroll for certain services in order to get them. Family Member - A person enrolled in a GHP based on another person's enrollment. Family members may include, but are not limited to, a spouse (including a divorced or common law spouse); a natural, adopted, or foster child; a stepchild; a parent; or a sibling. FICA - The Federal Insurance Contributions Act, the law that imposes Social Security taxes on employers and employees under §21 of the Internal Revenue Code. Fiduciary - A person in a position of trust with regard to the affairs of another, who has a duty to act primarily for the benefit of the other, with respect to a particular undertaking. GHP (Group Health Plan) - Any arrangement of, or contributed to by, one or more employers or employee organizations to provide health benefits or medical care directly or indirectly to current or former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families. An arrangement by more than one employer is considered to be a single plan if it provides for common administration of the health benefits (e.g., by the employers directly or by a benefit administrator or by a multi-employer trust or by an insuring organization under a contract or contracts). A plan that does not have any employees or former employees as enrollees (e.g., a plan for self-employed persons only) does not meet the definition of a GHP and Medicare is not secondary to it. Thus, if an insurance company establishes a plan solely for its self- employed insurance agents, other than insurance agents, the plan is not considered a GHP. However, if the plan includes insurance agents or other employees or former employees, it is considered a GHP. The term "GHP" includes self-insured plans, plans of governmental entities (Federal, State, and local such as the Federal Employees Health Benefits Program), and employee organization plans. Examples of the latter are union plans and employee health and welfare funds. Employee-pay-all plans are also included (i.e., GHPs which are under the auspices of one or more employers or employee organizations but which do not receive any contribution from the employer). Individual policies (including Medigap policies) purchased by or through an employee organization, employer or former employer of the individual or family member of the individual are considered employer offered GHPs. However, coverage under the TRICARE, formerly known as the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) is not considered to meet the definition of a GHP. It is secondary to Medicare since the law makes Medicare primary to TRICARE unless the individual is under active duty status. Any health plan (including a union plan) in which a beneficiary is enrolled because his/her employment or a family member's employment meets this definition. Judgment - The official and authentic decision of a court of justice upon the respective rights of the parties to an action submitted to it for determination. LGHP (Large Group Health Plan) - A GHP that covers employees of either: • A single employer or employee organization that employed at least 100 full-time or part-time employees on 50 percent or more of its regular business days during the previous calendar year; or • Two or more employers or employee organizations at least one of which employed at least 100 full-time or part-time employees on 50 percent or more of its regular business days during the previous calendar year. • It includes individual policies (including, in rare circumstances, Medigap policies) purchased by an or through an employer or former employer of the individual or family member. Liability - Responsibility or fault for damages arising out of a specified incident. Liability Insurance - Insurance (including a self-insured plan) that provides payment based on alleged legal liability for injury, illness or damage to property. It includes, but is not limited to, automobile liability, uninsured and under-insured motorist, homeowner's liability, malpractice, product liability and general casualty insurance. It includes payments under State "wrongful death" statutes that provide payment for medical damages. Liability Insurance Payment - A payment by a liability insurer, or an out-of-pocket payment, including a payment to cover a deductible required by a liability insurer, by any individual or other entity that carries liability insurance or is covered by a self-insured plan. Lump Sum Commutation Settlement - A workers’ compensation settlement in which the beneficiary accepts a lump sum payment that compensates for all future medical expenses and disability benefits related to the work injury or disease. Lump Sum Compromise Settlement - A workers’ compensation settlement that provides less in total compensation than the individual would have received if he or she had received full reimbursement for lost wages and lifelong medical treatment for the injury or illness. This may occur when compensability is contested. MSP - The "Medicare Secondary Payer" provisions of the Social Security Act, also used to describe situations where those provisions apply. Med-Pay - A payment made by an insurer intended specifically to pay for medical expenses without regard to the fault of any party to the accident. Med-Pay is a form of no-fault insurance. Multi-employer Group Health Plan - A plan that is sponsored jointly or contributed to by two or more employers (sometimes called a multiple employer plan) or by employers and unions (as under the Taft-Hartley law). No-Fault Insurance - Insurance that pays for medical expenses for injuries sustained or on the property or premises of the insured, or in the use, occupancy, or operation of an automobile, regardless of who may have been responsible for causing the accident. This insurance includes, but is not limited to, automobile, homeowners, and commercial plans. It includes "medical payments coverage," "personal injury protection," or "medical expense coverage." Examples of no-fault insurance include homeowners and commercial medical payments insurance, commonly referred to as Med-pay coverage. Nonconforming Group Health Plan or Large Group Health Plan - A plan that at any time during the calendar year takes into account that an individual is eligible for, or receives, benefits based on working aged or disability, e.g., a plan fails to pay primary benefits for Medicare entitled individuals for whom Medicare is secondary payer in accordance with the MSP provisions and regulations as found in 42 CFR §411.10 and 42 CFR §411.130. Partial Waiver - A decision by the Medicare program to relinquish the right to collect a portion of a debt from a specific entity. A partial waiver is not to be confused with a compromise. It is different in that it does not arise from negotiation or offer but under 1870(c) of the Act, which provides the beneficiary the right to request waiver, and Medicare the authority to grant or deny waiver, based on factual data. Section 1870(c) allows a partial waiver to a person who is without fault or where the adjustment or recovery would defeat the purpose of Title II or XVII of the Act (hardship) or be against equity and good conscience. An individual may appeal a determination based on 1870(c) of the Act if the determination grants only partial waiver of a debt. Payment in full – An amount that the provider, physician, or other supplier is obligated to accept (e.g., contractually), or voluntarily accepts, for medical services to an individual from the insurer (e.g., the GHP) in full satisfaction of the patient’s payment obligation. Because Medicare payments are made on behalf of the beneficiary, satisfaction of a patient’s payment obligation satisfies any Medicare payment obligation. Plan - Any arrangement by an employer, more than one employer, or an employee organization to provide health benefits or medical care to current or former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families. An arrangement by more than one employer is a single plan if the arrangement provides for common administration of the health benefits. An arrangement may be administered by the employers directly, by a benefit administrator, by a multi-employer trust, or by an insuring organization under a contract or contracts which stipulate that the organizations provide all employees enrolled in the plan the same benefits or the same benefit options. Primary Payer - When used in the context in which Medicare is the secondary payer, any entity that is or was required or responsible to make payment with respect to an item or service (or any portion thereof) under a primary plan. These entities include, but are not limited to, insurers or self-insurers, third party administrators, and all employers that sponsor or contribute to group health plans or large group health plans. Primary Payment -Payment for an item or service that is made, or reasonably expected to be made, by the entity that has primary payment responsibility. When used in the context in which Medicare is the secondary payer, payment by a primary payer for services that are also covered under Medicare. Primary Plan - When used in the context in which Medicare is the secondary payer, a group health plan or large group health plan, a workers’ compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan), or no-fault insurance. Proceeds - Benefits paid under any insurance plan or policy, or annuity contract. Procurement Costs - Attorney fees and other costs directly related to securing a settlement or judgment that are borne by the beneficiary against whom CMS seeks to recover. Prompt or Promptly - With regard to liability insurance means payment within 120 days after the earlier of: • The date a claim is filed with an insurer or a lien is filed against a potential liability settlement; or • The date the service was furnished or, in the case of inpatient hospital services, the date of discharge. With regard to no-fault and WC insurance, prompt or promptly means payment within 120 days after receipt of the claim. Proper Claim - A claim that is filed timely and meets all other claims filing requirements specified by the plan, program, or insurer (e.g., mandatory second opinion, prior notification before seeking treatment). Recovery - Proceeds obtained from a judgment, settlement, erroneous or conditional payment. Secondary –With respect to Medicare payment, means that Medicare is the residual payer to all plans that are primary plans with respect to services provided to a Medicare beneficiary. Self-Employed Person - An individual is considered to be self-employed during a particular tax year only if the individual's self-employment income, as determined by the IRS, was at least equal to the amount specified in §211(b)(2) of the Act, which defines self-employment income for Social Security purposes. Set-Aside Arrangement – An administrative mechanism used to allocate a portion of a settlement, judgment or award for future medical and/or future prescription drug expenses. A set-aside arrangement may be in the form of a Workers’ Compensation Medicare Set- Aside Arrangement (WCMSA), No-Fault Medicare Set-Aside Arrangement (NFSA) or Liability Medicare Set-Aside Arrangement (LMSA). SSI (Supplemental Security Income for the Aged, Blind and Disabled) - The Federal subsistence income maintenance program for eligible individuals. Title XVI of the Social Security Act enacted SSI in 1972 for the purpose of assuring a minimum level of income for people who are age 65 or over, blind, or disabled, and who do not have sufficient income and resources to maintain a standard of living at the established Federal minimum income level. Self-Insured Plan - A plan under which an individual, or a private or governmental entity, carries its own risk instead of taking out insurance with a carrier. The term includes a plan of an individual or other entity engaged in a business, trade, or profession, a plan of a nonprofit organization such as a social, fraternal, labor, educational, religious, or professional organization, and the plan established by the Federal government to pay for liability claims under the Federal Tort Claims Act. An entity that engages in a business, trade or profession shall be deemed to have a self-insured plan for purposes of liability insurance if it carries its own risk (whether by failure to obtain insurance or otherwise) in whole or in part. (With regard to FTCA claims, CMS attempts to collect its mistaken payment from the Federal agency that is settling the claim. If a resolution cannot be reached, CMS must submit the conflict to the Department of Justice for resolution.) Settlement - An adjustment or agreement by which parties having a dispute between them ascertain what each owes the other. In the MSP liability context, settlement refers to a monetary amount from a liability insurer agreed to by a party in satisfaction of a liability dispute. Spouse – (on or before December 31, 2014) means a person of the opposite sex who is a husband or a wife. Spouse - (effective on January 1, 2015) for purposes of the working aged provisions means a person who is entitled to Medicare as a spouse based upon the Social Security Administration’s rules or a person whose marriage is valid in the jurisdiction in which it was performed including one of the 50 states, the District of Columbia, or a U.S. territory or a foreign country, so long as that marriage would also be recognized by a U.S. jurisdiction. Statute of Limitations - A specific time period within which certain claims must be filed and after which the claim may no longer be enforced. Subrogation - The substitution of one person or entity for another. Under the Medicare subrogation provision, the program is a claimant against the responsible party and the liability insurer, to the extent that Medicare has made payments to or on behalf of the beneficiary. Under-insured Motorist Insurance - Insurance under which the policyholder's level of protection against losses caused by another is extended to compensate for inadequate coverage in the party’s policy or plan. Uninsured Motorist Insurance - Insurance under which the policyholder's insurer pays for damages caused by a motorist who has no automobile liability insurance or carries less than the amount of insurance required by law. Waiver - The relinquishing of an established right. In an MSP situation, it is the forgiveness of the party's obligation to satisfy Medicare's claim, in whole or in part, if certain conditions are met. Workers' Compensation Agency - Any governmental entity that administers a Federal or State WC law. This term includes WC commissions, industrial commissions, industrial boards, WC insurance funds, WC courts and, in the case of Federal WC programs, the U.S. Department of Labor. Workers' Compensation Carrier - Any insurance carrier authorized to write WC insurance under the state or federal law, the state compensation fund where the state administers the WC program, and the beneficiary's employer where the employer is self-insured. Workers' Compensation Law or Plan - A government-supervised and employer-supported system for compensating employees for injury or disease suffered in connection with their employment, whether or not the injury was the fault of the employer. Workers' compensation does not usually cover agricultural employees, interstate railroad employees, employees of small businesses, employees whose work is not in the course of the employer's business (e.g., domestic employees), casual employees, and self-employed people. Although WC programs were initially designed to cover accidental injuries suffered in the course of employment, all States now provide compensation for at least some occupational diseases as well. Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) - The recommended method to protect Medicare’s interests in workers’ compensation (WC) settlements, judgments, or awards which allocate funds from the settlement for future medical and/or prescription drug expenses. The amount of the set aside is determined on a case-by-case basis and should be reviewed by CMS, when appropriate. Working Aged – Medicare is secondary for Medicare beneficiaries age 65 or older who are covered under a GHP by virtue of their own current employment status or the current employment status of a spouse of any age. This provision applies to GHPs of employers and employee organizations, including multi- employer and multiple employer plans which have at least one participating employer that employs 20 or more employees. Wrongful Death - A death caused by a wrongful act, neglect, or fault.