Are You a Self-Insurer for Medicare Section 111 Reporting Purposes?

As the Centers for Medicare and Medicaid Services (CMS) continues to refine the compliance guidelines related to Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA), business entities that self-insure all or some portion of their liability risks (i.e., self-insurers) should pay attention.

Section 111 of MMSEA imposes mandatory registration and reporting requirements on self-insurers for settlements with Medicare beneficiaries that occur on or after October 1, 2010. In a recently released alert, CMS clarified its definition of self-insurer in an effort to assist entities in determining whether their liability payment structures are considered self-insured retentions subject to the Section 111 requirements, or deductibles, which typically will not trigger the Section 111 reporting requirements. The CMS Alert clarifies that a deductible, for Section 111 purposes, refers to the risk the business entity retains with respect to the coverage provided by an insurance policy. In contrast, a self-insured retention refers to the risk the business entity retains that is not covered by an insurance policy.

Deductibles vs. Self-Insured Retentions: When Must You Report to CMS?

Where an entity engages in a business, trade or profession, deductible amounts are self-insurance for Medicare Secondary Payer purposes; however, where the self-insurance in question is a deductible and the insurer is responsible for Section 111 reporting with respect to the policy, the insurer, not the business entity, is responsible for reporting both the deductible amount and any amount in excess of the deductible it pays in connection with a liability claim payment. On the other hand, business entities that pay liability settlements out of a self-insured retention must report to CMS under Section 111. Any insurer providing excess coverage beyond the self-insured limit must report amounts it pays above the retention, but would not include the self-insured amount paid by the business entity in its report.

These distinctions and clarifications provided by CMS attempt to help business entities determine whether or not they are considered liability self-insurers subject to the Section 111 requirements.