Proposed Renewal of Medicare Secondary Payer Information Collection - Forms CMS-250 through CMS-254 (OMB #0938-0214), 67 Federal Register 901-2, January 8, 2002

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Monday, March 11th 2002

Centers for Medicare and Medicaid Services
Office of Information Services
Security and Standards Group
Division of CMS Enterprise Standards
Attention: Dawn Willinghan
Room N2-14-26
7500 Security Boulevard
Baltimore, MD 21244-1850

Dear Ms. Willinghan:

On behalf of our nearly 5,000 member hospitals, health systems, networks and other providers of care, the American Hospital Association (AHA) welcomes this opportunity to provide the Centers for Medicare and Medicaid Services (CMS) with our comments, concerns, and suggestions on the proposed renewal of and revisions to its Medicare Secondary Payer (MSP) information collection requirements.

The AHA supports CMS' efforts to ensure that Medicare claims are paid properly. But the process for determining if Medicare is a secondary payer for a Medicare claim is complex, burdensome and often a source of frustration for both health care providers and patients. Currently, hospital staff must ask every beneficiary the same questions each time they return for care. Questionnaires then have to be collected and stored for an unreasonable length of time on the small chance that a fiscal intermediary, carrier, or other entity might audit. Streamlining the MSP requirement has been the subject of many discussions with CMS staff and comment letters to the agency. It is a major element of the AHA's regulatory reform proposals - Health and Human Service Secretary Tommy Thompson even identified the MSP requirements as a burden reduction initiative.

The proposed revisions attempt to respond to issues the AHA has raised about the MSP process, but the general approach has not changed. Unlike the private sector coordination of benefits function, the MSP process does not employ statistical analysis to target the small percentage of claims where other party liability is more likely. As a result, we believe the proposed changes will neither significantly reduce the administrative burden on providers nor address the more systemic challenges that face Medicare, such as improving the MSP process and increasing savings. It does not adequately address Secretary Thompson's commitment to paperwork reduction.

Our assessment is based on specific concerns discussed in the sections below.

Specific Concerns
The AHA appreciates that under the revised procedures, hospitals no longer will be required to ask the MSP questions or collect, maintain or report information for Medicare+Choice plan enrollees. However, in other areas where CMS has responded to the AHA's previous concerns, the proposed revisions are insufficient.

Application of MSP Requirements to All Beneficiaries. CMS estimates that 5 percent of beneficiaries have other insurance primary to Medicare, while 95 percent do not, suggesting that the collection of MSP information should be more proportionate and focused - a goal not reached in this proposal. In fact, we see no analysis of the 5 percent of beneficiaries that are the source of MSP recoveries.

In the private sector, the health plans, not the providers, determine other party liability and coordinate benefits with other payers. Like Medicare, private insurers require new enrollees to identify other sources of coverage on their enrollment applications.1 However, plans rarely seek coordination of benefits information on more than five percent of their membership from such "up-front measures" as enrollment applications. Even then, much of the information is invalid by the time a claim is submitted because the person's coverage status has changed.

A more cost-effective approach is to track coordination of benefits and other party liability using statistical analyses and a targeted sampling of claims, and then pursue information for those claims where another source of coverage is most likely. Upon verification of other coverage, the claim can be sent to the appropriate insurer. The health plans and carriers, not the hospitals and other providers, generally carry out these investigations and verifications.

Medicare has moved in the right direction by designating a single Coordination of Benefits contractor to process MSP information collection. Now this one contractor will receive the requisite information to discern where an MSP situation exists. Procedures that once were delegated to fiscal intermediaries (FIs) and carriers now will be centralized and more uniform. This should improve the speed and efficiency in determining, for example, whether to pursue MSP for a trauma case. It is our hope that one day this level of uniformity and control over MSP information, will allow providers to rely on the accuracy of information in CMS' Common Working File (CWF), rather than collecting beneficiary data over and over again on CMS' behalf.

More importantly, the systems now should be in place to replicate the private sector's more focused approach to coordination of benefits. Statistical analyses can target for further investigation those beneficiaries most likely to have employer-sponsored, other government, or auto accident insurance. Such analyses also can identify claims most often associated with accidents, as well as claims for ongoing treatment, such as outpatient chemotherapy or radiation for cancer. In this latter instance, a change in primary insurer is highly unlikely. AHA recommends that CMS immediately undertake an analysis of the source of MSP recoveries and use that analysis to significantly target and reduce the collection of MSP information.

Hospital Reference Laboratories. The proposal still requires hospitals to collect MSP information from the beneficiary or representative for hospital reference lab services, but would allow the hospital to update the MSP questionnaire once every 60 days. (The hospital would remain liable for repayment of any claim where Medicare became the secondary payer due to a change that occurred in a beneficiary's status in the interim.) It is difficult for hospitals acting as reference laboratories for physician offices to track down the beneficiary and ask about other sources of coverage. Also, this requirement is inequitable since it applies only to hospital labs and not to independent labs. The AHA again strongly urges that CMS delete the requirement to obtain MSP information for specimens sent to hospital reference laboratories.

Policy for Recurring Outpatient Services. Under CMS' proposed revision, hospitals must continue to collect or verify MSP information for hospital patients receiving recurring outpatient services. Following initial collection, hospitals would be allowed to verify the MSP information once during each subsequent monthly billing cycle (or 30 days) during which recurring services were furnished. But a more focused effort makes sense here. The Medicare beneficiary population is unlikely to change health insurance status in the time period in question. If CMS continues to require periodic verifications, the AHA urges that the policy be changed to verification once every 90 days for patients that require recurring services. When Secretary Thompson spoke at our annual meeting in April 2001, he identified MSP as a paperwork reduction initiative and said it "would be smarter to fill out that form once every quarter rather than once a week." AHA recommends that the collection of MSP information for recurring outpatient services be limited to once every quarter (or 90 days) and that CMS develop a targeting strategy.

Record Retention Requirement. The supporting statement for the revised information collection requirements says that five years is "generally recognized as the standard for record retention in the industry." CMS has changed the provision to recommend rather than require that records be retained for 10 years, but that distinction has little value. In fact, it could lead hospitals to greater liability. The provision also states that the "absence of the completed MSP questionnaire does not constitute a valid defense against CMS claims for repayment of recovery actions." And later it says that hospitals must still produce MSP documentation for 10 years in response to Department of Justice investigations. This revision is misleading and potentially damaging to hospitals that attempt to honor the rule in the first instance only to find themselves in jeopardy over the long term. AHA recommends that CMS clearly establish that a hospital's obligation to produce MSP questionnaires should end after five years, with no continuing liability to produce records.

CWF Information Overrules More Current MSP Information. Hospitals are required to determine whether Medicare is primary or secondary by obtaining MSP information for each inpatient admission and outpatient encounter. The determination may be made in conjunction with eligibility information obtained through on-line access to Medicare's CWF. Our hospitals have found, however, that if information collected on the MSP is more current or differs from the CWF, the claim is rejected. Furthermore, it appears that CMS never uses the new information to update the CWF. Clearly, this is an area that needs improvement. As previously stated, the AHA recommends that CMS devote significant energy to develop its new centralized coordination of benefits contractor. CMS should ensure that the CWF is updated on a timely basis when providers supply more current information.

Understated Cost Estimates. The CMS estimate of the resource burden of MSP data collection continues to understate the burden placed on hospitals. The estimate assumes that of about 148 million hospital inpatient and outpatient claims processed by FIs, 95 percent will have no other source of insurance coverage, while 5 percent will. CMS continues to estimate that a negative response takes one minute of the admitting department's time at a cost of $10.00 per hour. One minute assumes the patient is sitting in front of the staff person, is lucid and has accurate memory recall. Hospital staff say these assumptions simply are not realistic. This was amply demonstrated almost two years ago to CMS staff when they accompanied the AHA on a site visit to a local hospital and witnessed the time it took beneficiaries to recall names and dates.

At that time, $10.00 per hour was low. In our June 7, 2000 comments on the Office of Management and Budget's review of the CMS request for clearance and estimated regulatory burden for distribution of the "Important Message from Medicare," the AHA recommended $12.00 per hour for a similar task. In the September 26, 2000 Federal Register notice, CMS (then HCFA) re-estimated the burden using the AHA-suggested $12.00 per hour amount. Completing the MSP questionnaire and distributing the "Important Message from Medicare" are accomplished by comparably trained administrative staff. We pointed out this inconsistency in our November 20, 2000 letter commenting on the MSP requirements. Now, almost two years later, CMS' estimate of the MSP requirements still uses the $10.00 per hour amount. The AHA recommends that CMS be consistent and use an hourly rate of $12.00, updated for inflation. Further, we again recommend that the agency use an average of three minutes per MSP questionnaire, which more accurately reflects hospital experience in dealing with the elderly.

CMS also fails to include a cost estimate for storing the forms. Whether stored on paper, microfiche or by computer, significant administrative costs are associated with storage, especially since hospitals are effectively required to store MSP questionnaires for double the normal record retention period (i.e., 10 rather than five years). These storage costs must be included because records must be maintained longer than the industry standard. The AHA strongly urges CMS to include storage cost in calculating hospitals' administrative burden of MSP questionnaires.

Need for More Comprehensive Examination of MSP Policy in Light of HIPAA Standards and Objectives. As we noted in our letter of January 16, 2002 to CMS regarding the Health Insurance Portability and Accountability Act (HIPAA), the AHA is concerned that the HIPAA transaction standard for coordination of benefits, which we support, cannot by itself yield the expected efficiencies and savings without the development of certain business rules to direct the implementation. In order to better understand this process and develop an improved and uniform approach, the AHA recommended that HHS convene a workgroup to examine existing variations in state laws and business practices around the coordination of benefits and MSP. We also recommended that the workgroup's findings be shared with an industry consensus group in order to encourage the development of uniform recommendations on primary and secondary payer obligations around coordination of benefits.

As part of such a consensus building exercise, the AHA also recommended that HHS develop national guidelines for business practices regarding the maintenance of, access to and inquiries into insurance benefit coverage information. Guidelines should be developed to define and standardize the information contained on insurance enrollment cards, including a way to link directly providers at the point of care with the eligibility verification files of covered individuals. This would make the task much easier for providers and ease the stress on patients. AHA recommends not only that CMS improve the MSP process as described, but actively participate in a broader-based initiative to streamline the administrative burden and costs associated with coordination of benefits by all payers as part of HIPAA implementation.


AHA understands the importance of MSP recoveries to the program, which yield significant savings. It is understandable that CMS wishes to increase those savings through improvements in the process, such as the movement to a single coordination-of-benefits contractor and many of the other procedural changes described in this proposal.

But, since Medicare shifts much more of the coordination of benefits function to providers compared to private payers, CMS has an obligation to energetically pursue efficient administrative approaches as well as improved MSP recoveries. Our hospitals cannot afford to continue diverting so many resources to paperwork, rather than patient care.

The AHA appreciates the opportunity to submit these comments. If you have any questions regarding our comments, please contact me; Carmela Coyle, senior vice president for policy, at (202) 626-2266; or Ellen Pryga, director for policy development, at (202) 626-2267.


Rick Pollack
Executive Vice President

cc: John Graham, Administrator, Office of Information and Regulatory Affairs, OMB

Scheur, Barry S. et al., Other Party Liability and Coordination of Benefits, in Kongstvedt, Peter R. editor, The Managed Health Care Handbook, fourth edition, Gaithersburg, Md., Aspen, 2001, p. 762.



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