Medicare Secondary Payer: Additional Steps Are Needed to Improve Program Effectiveness for Non-Group Health Plans
Published: 2012-03-09T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Centers for Medicare & Medicaid Services (CMS) is responsible for protecting Medicares fiscal integrity. Medicare Secondary Payer (MSP) situations exist when Medicare is a secondary payer to other insurers, including non-group health plans (NGHP), which include auto or other liability insurance, no-fault insurance, and workers compensation plans. CMS attempts to recover Medicare payments made that were the responsibility of NGHPs, but CMS has not always been aware of these MSP situations. In 2007, legislation added mandatory reporting requirements for NGHPs that should enable CMS to be aware of these situations. NGHPs reported concerns about the MSP process, and CMS delayed the start of mandatory reporting by NGHPs, in part because of these concerns. This report examines (1) how the initial implementation of mandatory reporting for NGHPs has affected the workload of and payments to MSP contractors, and Medicare savings, and (2) key challenges within the process for MSP situations involving NGHPs and the steps CMS is taking to address those challenges. GAO reviewed relevant MSP-related documents and data on MSP costs, workload, Medicare savings, and contractor performance. GAO also interviewed CMS officials, MSP contractor officials, and NGHP stakeholders.
section_title: What GAO Found
paragraphs: During the initial implementation of mandatory reporting for non-group health plans (NGHP), the workloads of and Centers for Medicare & Medicaid Services (CMS) payments to Medicare Secondary Payer (MSP) contractors, and Medicare savings, all increased. From 2008 through 2011, the NGHP workloads of all three contractors CMS uses to implement the process for MSP situationsthe Coordination of Benefits Contractor (COBC), the Medicare Secondary Payer Recovery Contractor (MSPRC), and the Workers Compensation Review Contractor (WCRC)increased to varying degrees. For example, from 2008 through 2011, the number of NGHP MSP situations voluntarily reported to the COBC increased from about 142,000 to about 392,000, the number of NGHP cases established by the MSPRC increased from about 238,000 to about 480,000, and the number of Medicare set-aside proposals submitted to the WCRC increased from about 20,000 to almost 29,000. From 2008 through 2011, the total CMS payments to the MSP contractors increased by about $21 million, and Medicare savings from known NGHP situations that CMS is able to trackincluding savings from claims denials and conditional payment recoveriesincreased by about $124 million. The total impact of mandatory reporting on Medicare savings could take years to determine for various reasons, including that mandatory reporting is still being phased in.
Within the process for MSP situations involving NGHPs, GAO identified key challenges related to contractor performance, demand amounts, aspects of mandatory reporting, and CMS guidance and communication. CMS has addressed or is taking steps to address some, but not all, of these challenges.
Contractor performance. Challenges related to the timeliness of the MSPRC and WCRC were identified, including significant increases in the time required to complete important tasks. CMS reported taking steps to address the challenges with each of these contractors performance.
Demand and recovery issues. Challenges were identified related to the timing of demand amounts, the cost-effectiveness of recovery efforts, and the amounts of Medicare demands from liability settlements. CMS reported taking steps to address some, but not all, of these challenges.
Mandatory reporting. Key challenges were identified with certain aspects of mandatory reporting: determining whether individuals are Medicare beneficiaries, supplying diagnostic codes related to individuals injuries, and reporting all liability settlement amounts. CMS reported taking steps to address some, but not all, of these challenges.
CMS guidance and communication. Key challenges were identified related to CMS guidance and communication about the MSP process, guidance on Medicare set-aside arrangements, and beneficiary rights and responsibilities. CMS has taken few steps to address these challenges.
While CMS has taken, or reported it is in the process of taking, additional steps to address these key challenges, there are several areas related to the MSP program and process that still need improvement.
section_title: What GAO Recommends
paragraphs: To improve the MSP program, GAO is making recommendations to improve the cost-effectiveness of recovery, decrease the reporting burden for NGHPs, and improve communications with NGHP stakeholders. CMS agreed with these recommendations.

section_title: Letter
paragraphs: In 2010, Medicare—the federal health insurance program that serves the  nation’s elderly and disabled—paid an estimated $509 billion to cover  medical expenses for its 47 million beneficiaries. While Medicare  typically has primary payment responsibility for a Medicare beneficiary’s  medical expenses that are covered and otherwise reimbursable by  Medicare, in some situations another insurer or insurers have the primary  payment responsibility. In these situations, referred to as Medicare  Secondary Payer (MSP) situations, Medicare is the secondary payer and  is only responsible for paying for a beneficiary’s Medicare-related health  care costs that are not the responsibility of the primary insurer or insurers.  The Centers for Medicare and Medicaid Services (CMS), an agency  within the Department of Health and Human Services, is responsible for  administering the Medicare program, including protecting its fiscal  integrity. To safeguard funds, CMS must take steps to ensure that it pays  only for those services that are the responsibility of the Medicare  program.
Workers’ compensation is a law or plan of the United States, or any state, that  compensates employees who get sick because of their jobs or are injured on the job. insurance, no-fault insurance, and workers’ compensation plans. For  example, an NGHP is the primary payer for medical expenses related to  injuries that a Medicare beneficiary sustains in an automobile accident  (see fig. 1). Since 1982, Medicare has been a secondary payer to group  health plans (GHP) in certain situations.
When MSP situations have occurred, CMS has not always been notified  that beneficiaries had other insurance that should be the primary payer.  As a result, Medicare has paid for services that were the financial  responsibility of another payer. Section 111 of the Medicare, Medicaid,  and SCHIP Extension Act of 2007 added reporting requirements— referred to throughout this report as mandatory reporting—for NGHPs  and GHPs with respect to MSP situations that should enable CMS to be  aware of MSP situations. Specifically, with mandatory reporting, CMS  should be able to identify which payments made by Medicare should be  recovered because another payer had primary payment responsibility and  situations in which CMS should avoid making payments when another  payer should be primary. Section 111 also included penalties for  noncompliance with mandatory reporting ($1,000 fine per day of  noncompliance per claimant). The Congressional Budget Office estimated  that these provisions for NGHPs and GHPs would save Medicare   $1.1 billion over 10 years in payments that could be recovered or avoided  by Medicare.
Section 111 added mandatory reporting but did not eliminate or change  any existing MSP laws or regulations. Prior to mandatory reporting,  NGHPs and GHPs involved in MSP situations already had an obligation  to notify and repay Medicare when they determined that Medicare should  not have paid first. Likewise, Medicare beneficiaries had an obligation to  take whatever actions were necessary to obtain any payment that could  be reasonably expected from an NGHP or GHP and to cooperate with  CMS in any action CMS took to recover payments Medicare had made.  These obligations remain, although prior to mandatory reporting the  parties involved in MSP situations may not have always complied with  them. For example, prior to mandatory reporting, absent CMS being  notified about an MSP situation and any specific correspondence from  CMS to the beneficiary about MSP obligations, a beneficiary might not  have been aware of any responsibility to repay Medicare for the related  medical expenses.
MSP mandatory reporting has not been fully implemented. GHPs were  required to begin reporting in January 2009. While NGHPs were  scheduled to begin mandatory reporting in July 2009, CMS delayed this  deadline several times, in part because of concerns raised by the  insurance industry. Certain NGHPs, including workers’ compensation and  no-fault insurers, were required to begin reporting in January 2011. Other  NGHPs, including most liability insurers, were required to begin phased-in  reporting in January 2012.
NGHPs and beneficiary advocacy groups have reported concerns related  to CMS’s process for handling MSP situations involving NGHPs. These  concerns include issues with communication, policies and procedures,  obtaining timely information, and the performance of MSP contractors.  For example, NGHPs have reported disagreements with CMS MSP  policies. Some of these difficulties may be because some NGHPs are  interacting with CMS for the first time. These concerns were highlighted  during a June 22, 2011, hearing held by the Subcommittee on Oversight  and Investigations, House Committee on Energy and Commerce, about  making improvements to the MSP process.
Because of the reported concerns, you asked us to examine the issues  surrounding the process for MSP situations involving NGHPs. In this  report, we (1) describe how the initial implementation of mandatory  reporting for NGHPs has affected the workload of and payments to MSP  contractors, and Medicare savings, and (2) examine key challenges  within the process for MSP situations involving NGHPs and the steps  CMS is taking to address these challenges.
To determine how the initial implementation of mandatory reporting for  NGHPs has affected the workload of and payments to MSP contractors,  and Medicare savings, we interviewed officials from CMS and the  contractors it uses to implement the MSP process about the effect of the  initial implementation of mandatory reporting. We also obtained and  examined documentation and data from CMS and its MSP contractors  regarding the contractors’ workloads and CMS payments to the  contractors, as well as data on Medicare savings for fiscal years 2008  through 2011. We interviewed CMS and MSP contractor officials about  the data received to learn about data collection methods, quality control  efforts, and any data limitations. We determined that the data were  sufficiently reliable for use in this report. We also interviewed NGHP  stakeholders, such as organizations representing insurance companies  and attorneys, to obtain their perspectives on how the initial  implementation of mandatory reporting has affected their interactions with  CMS and its contractors on MSP issues.
To determine the key challenges within the process for MSP situations  involving NGHPs, we interviewed officials from CMS, its MSP contractors,  and NGHP stakeholders, such as organizations representing insurance  companies, attorneys, and beneficiaries, to better understand the MSP  program and the process for situations involving NGHPs and their  perspectives on any challenges within the process. In order to further  understand the reported challenges, we also reviewed relevant CMS  documentation, including MSP regulations, manuals, and user guides;  CMS and contractor MSP-related web pages; and articles and reports by  NGHP stakeholders and government agencies. We aligned the key  challenges identified through interviews with other evidence, such as data  on contractor performance and guidelines established in our Standards  for Internal Control in the Federal Government and the related Internal  Control Management and Evaluation Tool. To examine any steps CMS  was taking to address the challenges, we interviewed officials from CMS,  the MSP contractors, and NGHP stakeholders, and reviewed CMS and  MSP contractor documents and websites.
We conducted this performance audit from February 2011 through March  2012 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Medicare’s payments in MSP situations can vary depending on the  circumstances of the situation. CMS oversees all MSP activities and  administers the MSP program, with contractors performing most of CMS’s  administrative activities within the process for MSP situations involving  NGHPs. The process for MSP situations that involve NGHPs generally  includes five basic components—notification, negotiation, resolution,  mandatory reporting, and recovery.
subsections: section_title: Medicare Payments in MSP Situations Involving NGHPs
paragraphs: Medicare payments can vary in different MSP situations. In most MSP  situations involving NGHPs, Medicare will pay initially for medical  treatment related to the incident and later seek to recover those  payments. When CMS is notified that an MSP situation exists in which an  NGHP has accepted primary responsibility for ongoing medical services,  Medicare will start denying the related claims. However, more commonly,  CMS is notified about a potential MSP situation that is not yet resolved,  and Medicare continues to make payments until the situation is resolved  and there is a settlement, judgment, award, or other payment. Medicare  does this to ensure that the beneficiary has access to needed medical  services in a timely manner. CMS refers to any payments made by  Medicare for services where another payer has primary responsibility for  payment as conditional payments. Once a resolution is reached  between the beneficiary and the NGHP, Medicare will seek to recover any  conditional payments made.
To help prevent Medicare from making future payments related to MSP  situations involving NGHPs, when an individual is expected to have future  medical expenses (including Medicare-covered drug expenses) related to  his/her accident, injury, or illness, CMS states that all parties involved in  negotiating a resolution of those situations are responsible for protecting  Medicare’s interests. One way to accomplish this is through a Medicare  set-aside arrangement (MSA)—a voluntary arrangement where a portion  of the proceeds from a settlement are set aside to pay for all related  future medical expenses that would otherwise be reimbursable by  Medicare if Medicare were the primary payer.payments for medical expenses related to the MSP situation until the  MSA funds are exhausted. While MSAs can be used in liability or no-fault  situations, they are most common for workers’ compensation situations,  where they are known as Workers’ Compensation Medicare Set-Aside  Arrangements (WCMSA).
section_title: Roles of CMS and CMS Contractors in MSP Activities
paragraphs: CMS oversees all MSP activities and administers the MSP program,  through activities such as developing program policy and guidance. In  addition, CMS communicates to stakeholders—including NGHPs,  beneficiaries, providers, and attorneys—about the MSP process, policies,  and guidance. For example, CMS maintains websites related to parts of  the MSP process, from which NGHPs and beneficiaries can obtain  information about their respective responsibilities in MSP situations  involving NGHPs. GAO has established guidelines on internal control that  are relevant for federal agencies such as CMS. Internal control includes  the components of an organization’s management that provide  reasonable assurance that certain objectives are being achieved,  including effective communication with external stakeholders.
Since 2006, CMS has had three contractors to perform most of its  administrative activities within the MSP process: the Coordination of  Benefits Contractor (COBC), the Medicare Secondary Payer Recovery  Contractor (MSPRC), and the Workers’ Compensation Review Contractor  (WCRC). Current contractor responsibilities are as follows:
COBC: The COBC collects, manages, and maintains information in  the CMS data systems about other health insurance coverage for  Medicare beneficiaries and initiates MSP claims investigations. The  information the COBC collects is available to other CMS contractors.
MSPRC: The MSPRC uses information updated by the COBC as well  as information from CMS’s data systems to identify and recover  Medicare payments that should have been paid by another entity as  primary payer. Once a resolution has been reached between the  beneficiary, or other individuals authorized by the beneficiary, and the  NGHP, the MSPRC calculates the final amount owed to Medicare and  issues a demand letter to the beneficiary or other individual authorized  by the beneficiary.
WCRC: The WCRC evaluates proposed WCMSA amounts and  projects future medical expenses related to workers’ compensation  accident, injury, or illness situations that would otherwise be payable  by Medicare. The WCRC generally only reviews proposed WCMSA  amounts for current Medicare beneficiaries within certain thresholds,  referred to as CMS workload review thresholds. WCRC- recommended WCMSA amounts are forwarded to one of six CMS  regional offices for final approval.
section_title: Process for MSP Situations Involving NGHPs
paragraphs: The process for MSP situations that involve NGHPs generally includes  five basic components—notification, negotiation, resolution, mandatory  reporting, and recovery. However, the details of the process, and the  administrative tasks that must be conducted, can vary depending on  when in the process notification occurs, the type of insurance involved  (liability, no-fault, or workers’ compensation), and the type of resolution  reached.may vary, in general, the process contains the following components:   While the details vary by situation and the timing of notification
Notification: The COBC is notified that a beneficiary’s accident, injury,  or illness is an MSP situation and creates a record. Notification can  come from various sources—including the beneficiary, an attorney, a  physician, or the NGHP—and can occur at various times during the  process for MSP situations involving NGHPs. While mandatory  reporting requires NGHPs to report MSP resolutions to the COBC,  NGHPs or other involved parties may also provide voluntary  notification earlier in the process. For example, a beneficiary’s  attorney could provide notification of an MSP situation involving an  NGHP shortly after an accident occurs. After notification of the MSP  situation, Medicare usually continues to make conditional payments  although it may begin denying claims. Once the record for an MSP  situation is created by the COBC, the MSPRC issues an MSP rights  and responsibilities letter to the beneficiary or the beneficiary’s  representative, such as an attorney, which explains the applicable  MSP law and how MSP recovery works.
Negotiation: Negotiation occurs between the NGHP and the injured  beneficiary or the beneficiary’s representative. The point in the  process at which notification of a potential MSP situation is made can  affect the number and amount of conditional payments made by  Medicare as well as whether, and the extent to which, information on  conditional payments is available during the negotiation. For  example, if CMS is notified about a potential MSP situation early in  the process, the MSPRC can provide information about what it has  identified as any related claims that have been paid by Medicare. This  information may then be used during the negotiations. This  information is provided in writing through a conditional payment letter.  For workers’ compensation situations that involve future medical  expenses, the WCRC may be involved in reviewing proposed  WCMSA amounts.
Resolution: Resolution is reached between the beneficiary or the  beneficiary’s attorney and the NGHP. The type of resolution varies  and can include the NGHP assuming ongoing responsibility for  payment of medical claims related to the injury or illness, a lump sum  payment, a Medicare set-aside arrangement, or a combination of any  of these. The beneficiary or the beneficiary’s representative submits  the resolution information to the MSPRC. For resolutions that include  a WCMSA, no payments are made by Medicare for medical expenses  related to the workers’ compensation injury or illness until the set- aside is exhausted. The administrator of the WCMSA, typically the  beneficiary or the beneficiary’s representative, must submit an annual  accounting of the set-aside funds to the MSPRC.
Mandatory reporting: The NGHP reports the resolution to the COBC.
Regardless of whether notification of the MSP situation occurred  earlier in the process, after a resolution is reached in which the  Medicare beneficiary or someone on the beneficiary’s behalf receives  a settlement, judgment, award, or other payment from the NGHP, the  NGHP is required to report information about the MSP situation and  its resolution to the COBC under mandatory reporting. The data  NGHPs are required to submit include information to identify the  beneficiary; diagnosis codes for the injury, accident, or illness;  information concerning the policy or insurer; information about the  injured party’s representative or attorney; and settlement or payment  information.
Recovery: The MSPRC seeks to recover Medicare’s conditional  payments that have been made. The MSPRC calculates the total  amount owed to Medicare and issues a demand for payment— referred to as a demand letter. This letter is typically issued to the  beneficiary or the beneficiary’s representative. The MSPRC compares  the resolution data reported by the NGHP under mandatory reporting  to any resolution data submitted by the beneficiary, or the  beneficiary’s representative, to ensure that the resolution data match.  Either payment is received and the case closed or a response is  received challenging all or part of the demand. If no response is  received, debt delinquent more than 180 days is referred to the  Department of the Treasury for collection action. The beneficiary has  the right to question, appeal, or request a waiver of recovery of the  amount demanded.
Figures 2, 3, and 4 illustrate how the process could work for MSP  situations that involve an auto liability insurer, a no-fault insurer, and a  workers’ compensation plan, respectively. In each case, the timing of  notification and the parties involved in each step can vary.
section_title: MSP Contractor Workloads, Payments, and Medicare Savings Increased during the Initial Implementation of Mandatory Reporting for NGHPs
paragraphs: During the initial implementation of mandatory reporting for NGHPs, the  workloads of and CMS payments to MSP contractors, and Medicare  savings, all increased. For example, since fiscal year 2008, CMS  payments to the MSP contractors have increased by about $21 million  while Medicare savings from NGHP MSP situations—including savings  from claims denials and conditional payment recoveries—have increased  by about $124 million. However, because mandatory reporting is still  being phased in, particularly for most liability settlements, it is too soon to  determine the full impact of its implementation.
subsections: section_title: MSP Contractors’ NGHP Workload Increased during the Initial Implementation of Mandatory Reporting for NGHPs
paragraphs: CMS MSP contractors’ NGHP workloads increased during the initial  implementation of mandatory reporting, and workloads are expected to  continue to increase as mandatory reporting is phased in. The NGHP  workloads of all three MSP contractors increased to varying degrees  during the initial implementation of mandatory reporting. For example,  from fiscal year 2008 through fiscal year 2011, the number of MSP  situations involving NGHPs that were voluntarily reported to the COBC  increased by 176 percent and the number of WCMSAs submitted to the  WCRC increased by 42 percent (see table 1). Although mandatory  reporting for NGHPs did not begin to be phased in until January 1, 2011,  CMS officials told us that the effects of the mandate began earlier as the  voluntary reporting of MSP situations (by NGHPs, attorneys, or  beneficiaries) increased after the law’s passage in December 2007.
CMS officials told us they expect that the COBC’s and MSPRC’s  workloads will continue to increase once mandatory reporting is phased in  for most liability MSP situations. CMS officials and an NGHP stakeholder  group both told us that many liability MSP situations were not reported to  CMS prior to mandatory reporting. CMS officials could not estimate the  extent of future increases because CMS has no reliable estimates on the  actual number of liability cases that include MSP situations.
The increased number of WCMSA proposals submitted to the WCRC  during the past 4 years may be due, in part, to the NGHP industry’s  increased submission of ineligible and $0 WCMSA proposals in reaction  to mandatory reporting. While the number of WCMSA submissions  increased by 42 percent from fiscal year 2008 through fiscal year 2011,  some of these submissions were not eligible for WCRC review—for  example, they did not meet the minimum reporting thresholds—and the  number of ineligible WCMSA submissions has grown rapidly. Ineligible  submissions increased by about 148 percent from 2008 through 2011,  growing from about 4,500 ineligible submissions in 2008 to about   11,200 ineligible submissions in 2011. Although mandatory reporting did  not add any new WCMSA requirements, a CMS official told us the NGHP  industry may be submitting more WCMSA proposals that are not eligible  for WCRC review because it wants documentation from CMS stating that  a WCMSA did not meet CMS’s review thresholds.
Similarly, although not directly related to any reporting requirements,  WCRC officials said that they have also seen an increase in $0 WCMSA  proposals. A workers’ compensation plan may submit these proposals  when a settlement amount meets the minimum thresholds and is eligible  for WCRC review, but the plan is asserting that it does not have  responsibility for paying the beneficiary’s future medical expenses.  WCRC officials told us that when an NGHP submits a $0 WCMSA  proposal, it may be seeking CMS confirmation that it does not have  responsibility for paying the beneficiary’s future medical expenses.
section_title: CMS’s Payments to MSP Contractors Increased during the Initial Implementation of Mandatory Reporting
paragraphs: The total amount of CMS payments to the MSP contractors increased  during the initial implementation of mandatory reporting. Total CMS  payments to the MSP contractors in fiscal year 2011 were about   $21 million higher than payments in fiscal year 2008 (see table 2).  Payments for the MSPRC’s services increased by the greatest amount  over this period—increasing about $16 million from 2008 through 2011.  While CMS’s overall contractor payments increased during this time  period, the percentage increases in payments to the COBC and MSPRC  were substantially lower than the increases in their workloads (see   table 3).
In order to control costs and contractor workloads, CMS is taking steps to  improve the overall efficiency of the MSP program. CMS officials told us  that they intend to move the MSP program to more of a “self-service”  model. In this model, NGHPs, attorneys, and beneficiaries could obtain or  submit required information through contractor websites or contractor  automated phone lines, rather than submitting information via mail or fax,  or waiting to speak to a customer service representative, as has  traditionally been the process. This may result in increased efficiencies in  the MSP process, for example, by allowing both NGHP stakeholders and  MSP contractors to receive necessary information more quickly. Officials  estimated that these steps will be able to reduce the workload performed  per case by the MSP contractors.
section_title: Medicare Savings Increased during the Initial Implementation of Mandatory Reporting, but the Total Impact on Savings Could Take Years to Determine
paragraphs: Medicare savings increased during the initial implementation of  mandatory reporting for NGHPs, but an accurate estimate of savings  could take years to determine because of the lag time between initial  notification of MSP situations and recovery, the fact that not all reported  situations result in recoveries, and the fact that mandatory reporting is still  being phased in. MSP savings from known NGHP situations that CMS is  able to track—including savings from claims denials and conditional  payment recoveries—increased by about $124 million from fiscal year  2008 through fiscal year 2011. Savings attributable to liability insurance  increased by the greatest amount during this time period, growing from  about $342 million in fiscal year 2008 to about $448 million in fiscal year  2011. In addition to these savings, Medicare also avoids costs as a result  of the use of MSAs. CMS only tracks cost-avoided savings attributable to  approved WCMSA proposals, not other types of MSAs, and accounts for  the savings by reporting the total WCMSA amounts approved each fiscal  year. These numbers therefore represent the maximum cost-avoided  savings that could potentially be realized through these WCMSAs in the  future. See table 4 for the total amount of MSP savings from NGHP  situations and WCMSAs approved from fiscal year 2008 through fiscal  year 2011. Because of a change in CMS policy implemented in 2009, it is  unclear to what extent the increases in approved WCMSA amounts can  be attributed to mandatory reporting.
While Medicare savings attributable to NGHP MSP situations have been  increasing overall, it is too soon to determine the total impact that  mandatory reporting will have on NGHP Medicare savings. Savings  amounts have not increased as quickly as the overall increase in NGHP  MSP situations reported to CMS. There are two reasons why this may be  occurring. CMS officials told us that because it can take several years for  a case involving an NGHP MSP situation to be resolved, there is a delay  between when increases are seen in the number of new situations  reported and when increases are seen in the amounts of demands and  recoveries. Additionally, since there is not necessarily a recovery demand  issued for every NGHP situation reported, an increase in the number of  reported cases will not necessarily result in a corresponding increase in  recoveries. These MSP situations represent cost-avoided savings, but  CMS officials told us that to the extent that these situations are working  appropriately and CMS is not receiving claims, they have no way of  knowing the savings associated with these situations.
section_title: CMS Is Addressing Some but Not All of the Key Challenges We Identified within the Process for MSP Situations Involving NGHPs
paragraphs: Within the process for MSP situations involving NGHPs, we identified key  challenges related to contractor performance, demand amounts, aspects  of mandatory reporting, and CMS guidance and communication. CMS  has addressed, or is taking steps to address some, but not all, of these  challenges.
subsections: section_title: CMS Is Taking Steps to Address Challenges Related to MSPRC and WCRC Timeliness
paragraphs: Challenges related to the timeliness of the MSPRC and WCRC were  identified, including recent significant increases in the time required to  complete certain processes or tasks, and CMS reported taking steps to  address the challenges with each of these contractors’ performance.
Problems related to the timeliness of the MSPRC have been identified,  and several actions have been taken or are under way by CMS to  address these problems. NGHPs and beneficiary advocates have cited  performance problems with the MSPRC that include the length of time  taken to answer phone calls and to issue demand letters after resolutions  for an MSP situation were provided to the MSPRC. MSPRC data show  that from fiscal year 2008 through fiscal year 2011 the average wait time  for NGHP callers has increased from an average of less than 3 minutes to  an average of more than 38 minutes. During that same period, the  number of NGHP-related calls handled by the MSPRC’s customer service  representatives increased from about 550,000 in fiscal year 2008 to about  630,000 in fiscal year 2011, and the number of calls abandoned after   31 seconds or more increased from about 30,000 in fiscal year 2008 to  about 220,000 in fiscal year 2011. CMS officials told us that while the  MSPRC did not have a specific performance standard for average call  wait times in its contract, they found the current average wait time of over  38 minutes for NGHP-related phone calls unacceptable.
In fiscal year 2011, the MSPRC averaged about 76 days to issue a  demand letter when notice of settlement was the initial notification of the  MSP situation to the MSPRC. If the MSPRC was aware of the MSP  situation prior to receiving the notice of settlement, it averaged about   48 days to issue a demand letter. Delays in issuing demand letters could  result in delays in distributing funds from MSP situation resolutions to  beneficiaries. CMS officials stated that the agency has a performance  standard stating that the issuance of a demand letter within 20 days is  timely if the case was established prior to settlement and the initial  conditional payment letter was issued.
CMS and MSPRC officials attributed some of the MSPRC’s performance  challenges to higher-than-expected workloads. MSPRC officials attributed  their inability to keep up with increased call volumes to a lack of  resources, stating that since the contract’s inception they have not been  adequately funded by CMS for their workloads. They stated that CMS has  consistently underestimated the annual volume of calls the MSPRC would  receive. CMS officials acknowledged that when the contract started in  2006, at which time the MSP recovery tasks were transitioned from CMS  claims contractors to the MSPRC, CMS underestimated the MSPRC  workload. Officials said that just when the MSPRC was close to catching  up from that transition, mandatory reporting was announced, which  created a new, additional workload.
CMS reported that the agency was taking several steps intended to  address MSPRC performance challenges. For example, CMS did not  renew the contract with the entity that served as the MSPRC since  October 1, 2006, and is planning to make a significant change to its  current MSP contracting structure by combining the functions of the  current COBC and MSPRC. CMS intends to streamline the MSP data and  debt collection processes for Medicare stakeholders by establishing a  centralized coordination of benefits and MSP recovery organization. CMS  reports that this approach will allow the agency to minimize duplicative  activities that were previously performed by both the COBC and MSPRC,  provide a single point of contact for internal and external stakeholders,  and consolidate MSP responsibility under one umbrella. CMS is also  working to develop a web-based MSPRC portal, which will enable  beneficiaires and beneficiaries’ representatives to, among other things,  obtain information about their Medicare claim payments. Table 5 presents  the steps CMS is taking to address MSPRC performance challenges and  the anticipated results of taking these steps. Most of these steps were  either implemented only recently or have not yet been implemented,  therefore it is too soon to tell to what extent these functions currently  performed by the MSPRC will improve as a result of these actions.
The average processing time for the WCRC to review WCMSA proposals  has increased significantly over the past year and a half, resulting in  delays in the resolution of MSP cases, and several actions have been  taken or are under way by CMS that are intended to reduce processing  time. According to WCRC data, the average processing time for all cases  increased from 22 days in April 2010 to 95 days in September 2011 (see  fig. 5). While the current WCRC contract does not include a  performance standard related to the length of time for the WCRC to  review submitted WCMSA proposals, WCRC officials told us they would  like WCMSA reviews to be completed within 45 days. CMS and WCRC  officials report that a number of factors contributed to the WCRC’s review  process taking longer, including increased workload. For example, while  in fiscal year 2011 the WCRC contract estimated that the WCRC would  review 1,700 WCMSA proposals each month, the WCRC received an  average of about 2,400 WCMSA proposals per month and was able to  review an average of about 2,100 per month. As a result, a backlog grew.  According to WCRC data, over the past several years, an increasing  number of submitted WCMSA proposals were determined by the WCRC  to be ineligible for review, meaning that more of the WCRC’s time has  been spent responding to ineligible proposals. Also, CMS reported that a  change made to the data system used by the WCRC to process  WCMSAs resulted in a decrease in system performance, which  significantly increased review time from September 2010 through January  2011, adding to the backlog of WCMSA proposals to be reviewed.
Several actions have been taken or are under way by CMS to reduce the  average processing time for WCMSA proposal review. For example, in  fiscal year 2011 CMS provided the WCRC with additional funding that  enabled the WCRC to authorize overtime for its employees to attempt to  decrease the existing backlog of submitted WCMSA proposals. CMS is  also currently in the process of awarding a new WCRC contract.  According to CMS officials, the new contract provides for an increased  estimated number of monthly WCMSA proposal reviews—increasing the  number from 1,700 a month to from 2,000 to 2,500 a month. Additionally,  CMS implemented a web-based portal—the WCMSA Portal  (WCMSAP)—which is intended to improve the efficiency of the WCMSA  submission process. The WCMSAP allows registered users, such as  beneficiaries, attorneys, and insurance companies, to directly enter  WCMSA case information electronically, upload documentation, and  receive up-to-date case status information electronically. CMS conducted  a pilot test with 10 WCMSA submitters that according to COBC officials,  collectively represented 80 percent of all WCMSA submissions. We  contacted the 10 WCMSA submitters that participated in the WCMSAP  pilot, and they told us that the WCMSAP could improve the overall   The WCMSAP became  WCMSA submission and review process.available for use by all WCMSA submitters on November 29, 2011.  Finally, CMS hired a contractor to conduct an assessment of its WCMSA  process, which could result in recommendations to address related  policies and procedures, such as the average processing time. CMS  officials told us that they expected to receive a draft of the contractor’s  report in March 2012, with a final report in June 2012.
section_title: CMS Is Taking Steps to Address Some of the Key Demand and Recovery Challenges We Identified
paragraphs: We identified three key challenges related to demand and recovery of  MSP amounts. They include challenges related to the timing of the final  demand amounts, the cost-effectiveness in recovery efforts, and the  amounts demanded in liability settlements. CMS officials reported that the  agency was taking steps to address some, but not all, of these  challenges.
Stakeholders, such as attorneys and NGHPs, reported that because CMS  does not provide a final demand amount prior to a settlement, they have  difficulty determining an appropriate settlement amount, which delays  settlements. CMS is taking several steps to address this challenge.  NGHP stakeholders reported that it would be helpful if CMS could  calculate a final demand amount that can be provided to concerned  parties prior to settlement, rather than after settlement. CMS officials  stated, however, that they do not know what the final demand amount will  be because Medicare continues to make conditional payments up to the  settlement date.negotiations, beneficiaries can view all their claims paid to date by  Medicare on the MyMedicare.gov website.
CMS officials also noted that during settlement  CMS is taking steps that may improve NGHP stakeholders’ ability to  obtain or estimate Medicare’s demand amount prior to settlement. For  example, as of September 30, 2011, beneficiaries can obtain the latest  issued Medicare conditional payment amounts through an automated,  self-service feature of the MSPRC phone line. In November 2011, CMS  implemented an option for beneficiaries to pay Medicare a fixed 25  percent of their settlement amount for certain liability situations involving a    physical-trauma-based injury with settlement amounts of $5,000 or less. In December 2011, CMS announced an option for beneficiaries,  beginning in February 2012, to self-calculate conditional payment  amounts for liability insurance MSP situations with settlement amounts of  $25,000 or less that involve physical-trauma-based injuries.MSPRC will review the proposed self-calculated conditional payment  amount and, if it finds the amount accurate, will respond with Medicare’s  final conditional payment amount within 60 days.
CMS has sometimes spent more in administrative costs attempting to  recover certain conditional payment amounts than the demands are  actually worth, but has recently implemented two initial recovery  thresholds and may consider additional thresholds once it has had an  opportunity to review 2012 data. NGHP stakeholders provided an  example of a demand letter issued by the MSPRC for an amount of  $1.59; one NGHP stakeholder noted seeing numerous examples of  demand letters for amounts less than $5.00. MSPRC officials confirmed  that they have traditionally pursued any recoveries the MSPRC was made  aware of, regardless of the administrative costs to recover them. In 2004  we noted the importance of improving the cost-effectiveness of the MSP  recovery process, and CMS concurred with our recommendations. The  cost-effectiveness of recovery has improved greatly. In 2004, we reported  that CMS recovered only 38 cents for every dollar spent on recovery  activities in fiscal year 2003, but in June 2011 CMS reported that MSP  activities have provided an average rate of return on recoveries of   $9.32 for each dollar spent since fiscal year 2008. NGHP stakeholders  suggested that CMS should take an additional step to improve cost- effectiveness by setting a recovery threshold based on the settlement  amount that would likely yield a recovery amount at or above CMS’s cost  to recover that money.
Among other things, the Federal Claims Collection Act permits the Secretary of Health  and Human Services to end collection actions on certain claims when the cost of  collecting such claims is likely to be more than the amount recovered. 31 U.S.C.   § 3711(a)(3). See also, 31 C.F.R. §§ 903.1-903.5. Additionally, the MSP statutory  provision provides for the waiver of conditional payment requirements, including  repayment, when the Secretary determines that such a waiver is in the best interests of  Medicare. 42 U.S.C. § 1395y(b)(2)(B)(v). $200.additional recovery thresholds for certain NGHP situations once officials  have had a chance to review 2012 data, which will include information on  some liability MSP situations.
NGHP stakeholders suggested that because CMS does not recognize the  concept of proportionality in liability settlement situations a  disproportionate share of liability settlement amounts may be paid to  Medicare; however, CMS has a process that may sometimes address this  challenge. The concept of proportionality in liability settlement amounts is  relevant in situations when individuals and liability insurers agree to settle  for less than the full amount of incurred expenses associated with the  alleged incident, and therefore the amount of medical expenses to be  reimbursed to an individual’s health plan is proportionally reduced. NGHP  stakeholders said that CMS does not recognize this concept for MSP  situations and instead wants 100 percent reimbursement of claims it paid.  They assert that CMS should recognize proportionality in these situations  and likewise proportionally reduce Medicare’s demand amount in these  cases. NGHP stakeholders stated that if CMS does not proportionally  reduce Medicare’s demand amount in these situations, it could leave  beneficiaries without any compensation for issues such as pain and  suffering or lost wages. However, CMS officials said that the concept of  proportionality is in conflict with MSP provisions granting CMS a priority  right of recovery, which entitles Medicare to full recovery for the expenses  it paid up to the settlement amount. Nonetheless, CMS officials said that  Medicare beneficiaries may contact the appropriate CMS regional office  prior to settling a case to request a pre-demand compromise in the event  that the demand amount would consume the entire settlement. CMS  officials told us that they do not, however, advertise the availability of this  option and do not keep data on how often compromises are requested or  granted. Limited MSPRC data on those compromise requests of which  the MSPRC is made aware suggest that about two out of every three  compromise requests are approved by the reviewing CMS regional office.
section_title: CMS Is Taking Steps to Address Some Key Challenges We Identified with Aspects of Mandatory Reporting
paragraphs: We identified three key challenges related to aspects of mandatory  reporting for NGHPs: determining whether individuals are Medicare  beneficiaries, supplying diagnostic codes related to individuals’ injuries,  and reporting all settlement amounts. CMS reported that it is taking steps  to address some, but not all, of these challenges.
NGHP stakeholders reported difficulty in determining whether individuals  are Medicare beneficiaries for the purposes of mandatory reporting, and  CMS has taken a step to address the challenge and is considering  another. NGHP stakeholders have reported difficulty obtaining the  information needed from individuals involved in NGHP situations in order  to determine whether an individual is a Medicare beneficiary, and whether  the NGHP is therefore required to report the situation. In order to verify an  individual’s Medicare eligibility, an NGHP either needs the person’s  Medicare Health Insurance Claim Number (HICN) or the person’s Social  Security number, first initial of the first name and last six characters of the  last name, date of birth, and gender. NGHP stakeholders report that  individuals are reluctant to surrender sensitive information, such as Social  Security numbers, to NGHPs—particularly as there may be an adversarial  relationship between the individual and the NGHP (i.e., that individual is  suing the insurer or self-insured company). Without this information, the  NGHP cannot verify whether the individual is a Medicare beneficiary and  cannot submit the mandatory reporting record. Therefore, NGHP  stakeholders also reported concerns that they could be subject to  mandatory reporting noncompliance fines if not being able to obtain this  information led to being unable to submit a mandatory reporting record.
To assist NGHPs with this challenge, CMS has provided them with model  language that they can use to document their unsuccessful attempts to  obtain individuals’ HICNs or Social Security numbers. This model  language is a sample statement to be signed by the individual indicating  whether the individual is a Medicare beneficiary for use in cases when the  NGHPs cannot otherwise determine the individual’s Medicare status.  CMS has stated that if an individual refuses to furnish a HICN or Social  Security number, and the NGHP reporting entity chooses to use this  model language, CMS will generally consider the reporting entity  compliant for purposes of mandatory reporting.officials stated that CMS and a number of other federal agencies are  currently conducting internal studies to evaluate possible alternatives that  could be used in lieu of Social Security numbers.
ICD-9 codes are used by the Medicare claims contractors to determine whether specific  Medicare claims should be denied or paid. NGHPs submitting incorrect ICD-9 codes could  result in beneficiaries’ claims that are actually unrelated to their MSP situations being  incorrectly denied. created within the CMS data systems. Therefore, CMS would already  have had access to the related codes.
Some NGHP stakeholders assert that they should not have to report all  liability settlements, as CMS may be able to recover very little from  certain settlements, and CMS is evaluating data to determine if  appropriate reporting thresholds could be established. An official of an  organization representing NGHPs has stated that liability settlements of  less than $25,000 include a small portion of annual settlement payments  but constitute a large number of individual claims. Therefore, the official  suggested that liability NGHPs should not have to report these  settlements to CMS as it would just increase the reporting burden on  NGHPs while yielding small recovery amounts. However, recovery data  show that for fiscal year 2011, the MSPRC issued almost 57,000  demands for liability settlements under $25,000. These demands related  to these settlements totaled almost $71 million, with an average demand  amount of about $1,250.
Nonetheless, CMS is evaluating its data and the agency is considering  implementing reporting thresholds, if appropriate. However, CMS officials  expressed concern that setting reporting thresholds could have  unintended consequences. If thresholds were set at, for example,  $25,000, then the NGHP industry might begin settling many cases at  amounts just under $25,000 in order to avoid mandatory reporting. CMS  officials reported that any determination of reporting thresholds should  wait until liability reporting data are available so the data can be analyzed  and an appropriate threshold set. CMS officials also note that the  establishment of any mandatory reporting thresholds would not eliminate  CMS’s recovery rights for settlements below the threshold.
section_title: CMS Has Taken Few Steps to Address Challenges Related to Insufficient and Confusing CMS Guidance and Communication about NGHP MSP Situations
paragraphs: We identified key challenges related to CMS guidance and  communication of information on the MSP process, guidance on MSAs,  and beneficiary rights and responsibilities related to MSP recoveries,  resulting in communication of information that does not meet GAO  standards for internal control. CMS has taken few steps to address these  challenges.
The overall presentation and organization of MSP process guidance for  situations involving NGHPs on the CMS website does not ensure that  pertinent information can be identified by external stakeholders, including  NGHPs. For example, there is no main web page for the MSP program.  Instead, information relevant to the MSP process for situations involving  NGHPs is categorized on the main Medicare home page in two separate  sections—some MSP process information falls under “Coordination of  Benefits” and other process information falls under “Medicare Secondary  Payer Recovery.” This makes it difficult to find any recent developments  or changes to the MSP process as a whole, as an individual has to check  multiple web pages to locate recent news. Additionally, while CMS has  created an MSP manual, there is no direct link to the manual under the  Coordination of Benefits or Medicare Secondary Payer Recovery  headings on the Medicare home page. Also, because CMS regularly  updates its MSP policies and process by issuing memos or “alerts,” it is  difficult to determine what the current policy is or what may have changed  in the process.
CMS has issued guidance regarding WCMSAs, but finding current, official  WCMSA guidance can be challenging, and CMS has issued little other  MSA guidance. While CMS has a policy manual for describing the MSP  process in general, no similar manual, or chapter in the MSP process  policy manual, describes WCMSA policy. Further, while guidance in the  form of memorandums related to WCMSAs exists, no manual or similar  document currently exists to organize this guidance. The WCMSA-related  memorandums are accessible on the CMS website, but are poorly  organized, making it difficult to find memorandums on particular topics. As  a result, NGHP stakeholders have reported that it is difficult to find  updated WCMSA policies. However, CMS officials told us in January  2012 that the agency was developing a WCMSA user manual that would  be available through the CMS website. Stakeholders also said that the  WCMSA review and approval criteria are not clear, and expressed a  desire for CMS to make this information more transparent. Furthermore,  CMS has established an e-mail address to accept questions regarding  WCMSA submission policy, but the actual e-mail address is not well  publicized and is difficult to find.
Additionally, while guidance exists for WCMSAs, CMS has issued very  little guidance related to liability MSAs and NGHP stakeholders reported  inconsistent handling of liability MSAs. CMS issued its first formal  memorandum related to MSA for liability situations on September 29,  2011, detailing when it would consider Medicare’s interests satisfied with  respect to future medical expenses in liability settlements. But this is the  only formal memorandum related to liability MSAs that CMS has  provided. And unlike for WCMSAs, CMS does not have a formal review  and approval process for liability or no-fault MSA arrangements. Upon  request, some CMS regional offices will review liability or no-fault MSAs,  but this is at the regional office’s discretion. NGHP stakeholders report  variation in regional office response, including which regional offices will  review liability MSAs, policies (such as setting thresholds for review), and  regional office responsiveness. Regarding developing policies and  procedures for liability MSAs, CMS officials report that the agency is  working to operationalize policy regarding the reporting of future medical  expenses in liability insurance situations, including an option to allow for  an immediate payment to Medicare for future medical costs. This would  provide an additional option for taking Medicare’s interests into account  rather than the option of establishing an MSA. CMS officials did not report  that they were taking any steps to address regional office variation in  liability MSA review.
CMS communications with beneficiaries regarding their rights and  responsibilities in the MSP recovery process are not always sufficient or  clear and CMS has taken few steps to address this challenge.  Specifically, two letters sent to beneficiaries are not sufficient or clear with  regard to the beneficiary’s rights to dispute unrelated claims. The rights  and responsibilities letter, which is sent to beneficiaries by the MSPRC  after it is notified of an MSP situation, does not make beneficiaries’ rights  and responsibilities clear regarding their ability to dispute the conditional  payments that the MSPRC identifies. While the letter notes that the  beneficiary should expect to receive a letter detailing the conditional  payments Medicare has made to date, it does not explain that this letter  may contain some unrelated claims and the beneficiary should review the  document carefully. Furthermore, it does not explain that the beneficiary  has the right to dispute any claims unrelated to the MSP situation. While  CMS revised the rights and responsibilities letter in 2011, the revisions  did not address these issues.
Beneficiaries also receive a conditional payment letter, which CMS  regards as a first step in determining conditional payments, but that is not  made clear to the beneficiaries. Beneficiary advocates report that these  letters often include charges for unrelated medical services. As a  consequence, according to an attorney who represents Medicare  beneficiaries, beneficiaries are often asked to return too great a portion of  their settlements to Medicare. CMS officials stated that they consider the  conditional payment letter the first attempt at determining the conditional  payments based on the information the MSPRC has, and that they want  the beneficiary and beneficiary’s attorney to help clarify which claims are  related. They told us that the beneficiary is in the best position to clarify  which claims are related, and that the MSPRC will work with the  beneficiary and the beneficiary’s attorney prior to issuing the demand  letter. However, while the conditional payment letter states that the  beneficiary should inform the MSPRC if any of the identified conditional  payments are inaccurate or incomplete, the language used in the  conditional payment letter does not convey that the MSPRC will work with  the beneficiary and the beneficiary’s attorney prior to issuing the demand  letter. Additionally, the letter does not include that CMS may be willing to  compromise its demand amount if it appears the conditional payments will  consume the beneficiary’s entire settlement. The letter also does not  include the beneficiary’s rights to appeal the amount of the MSP claim, as  well as to seek a waiver of recovery, once the demand letter is issued.  CMS did not report any plans to revise the language used in the  conditional payment letter.
section_title: Conclusions
paragraphs: CMS has a responsibility to protect the Medicare Trust Funds by ensuring  that funds owed the program are recovered. Mandatory reporting should  increase CMS’s awareness of MSP situations and therefore increase  recoveries and MSP savings. Thus far, the initial implementation of  mandatory reporting for NGHPs has greatly increased the number of  MSP NGHP situations reported to CMS. MSP savings have also shown  increases and should continue to increase as mandatory reporting is fully  implemented. However, the volume of liability settlements that have yet to  be reported to CMS is unknown; therefore, the extent to which workloads,  recoveries, and savings will increase is also unknown.
As a result of mandatory reporting, some NGHPs, particularly liability  insurers, are interacting with CMS for the first time. Some of these  NGHPs and NGHP stakeholder groups have raised concerns about long- standing MSP process and policies. Additionally, mandatory reporting  increased the MSP contractors’ workloads, leading to performance  delays. CMS has been responsive to some of the concerns expressed by  NGHPs, in particular by continuing to delay the start of mandatory  reporting for various types of liability settlements. CMS has also  evaluated and modified some of its long-standing MSP policies and  procedures, and is in the process of considering additional changes and  program improvements. However, because these changes are new or still  being implemented, it is too soon to tell the effect that they will have on  improving the MSP process. Additionally, there are several areas related  to the MSP program and process that still need improvement.
In order to maximize its ability to protect the Medicare Trust Funds,  CMS’s efforts to recover conditional payments when Medicare should not  have been the primary payer need to be cost-effective. CMS recently  implemented two recovery thresholds—a low, across-the-board threshold  based in part on provisions in the Federal Claims Collection Act and a  higher threshold that applies to certain liability MSP situations. CMS  officials said the agency will consider setting additional recovery  thresholds for certain NGHP situations once the agency has had a  chance to review 2012 data. If recovery thresholds need to later be  adjusted based on 2012 data, then CMS could make adjustments as  appropriate. CMS could also improve program effectiveness by aligning  mandatory reporting thresholds with recovery thresholds, once they are  set.
Additionally, CMS has opportunities to improve the MSP program by  reducing specific reporting requirements for NGHPs and improving  communication with stakeholders. While CMS’s main goal with mandatory  reporting should be to obtain necessary information to pursue MSP  recoveries, CMS could take steps to lessen the burden on NGHPs,  without substantially increasing the burden on CMS or its contractors.  Communication between CMS and various NGHP stakeholders, including  beneficiaries, also needs improvement. Ensuring that these stakeholders  have current, complete information so that they can understand the MSP  process and policies, and their roles and responsibilities in the process, is  essential for ensuring the overall effectiveness of the program.
section_title: Recommendations for Executive Action
paragraphs: We are making five recommendations to CMS to improve the  effectiveness of the MSP program and process for NGHPs.
To ensure cost-effectiveness in the agency’s NGHP recovery process, we  recommend that the Acting Administrator of CMS review recovery  thresholds periodically for appropriateness to ensure that the agency’s  recovery efforts are being conducted in the most cost-effective manner  possible, and not require NGHPs to report on cases for which the agency  will not seek any recovery.
To potentially decrease the administrative burden of mandatory reporting  for NGHPs, we recommend that the Acting Administrator of CMS  consider making the submission of ICD-9 codes an optional component of  reporting for liability NGHPs.
To improve the agency’s communication regarding the MSP process for  situations involving NGHPs. we recommend that the Acting Administrator  of CMS take the following three actions: develop a centralized MSP program website, to include links to  information about the various parts of the MSP process; develop guidance regarding liability and no-fault set-aside  review and revise the correspondence with beneficiaries, such as  letters sent during the recovery process, to ensure that beneficiary  rights and responsibilities are more clearly communicated.
section_title: Agency Comments
paragraphs: We received written comments on a draft of this report from the  Department of Health and Human Services on behalf of CMS. These  comments are reprinted in appendix I.
CMS agreed with our recommendation to review recovery thresholds  periodically for appropriateness and our three recommendations to  improve the agency’s communication regarding the MSP process for  situations involving NGHPs. CMS also agreed to consider our  recommendation on potentially making the submission of ICD-9 codes an  optional component of reporting for liability NGHPs. However, the agency  also noted that about 95 percent of NGHPs reporting data to CMS have  provided the required ICD-9 codes, and provided reasons why allowing  text descriptions rather than ICD-9 codes could increase the burden on  parties such as beneficiaries.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Secretary of Health  and Human Services, the Acting Administrator of CMS, appropriate  congressional committees, and other interested parties. In addition, the  report will be available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or kingk@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix II.
section_title: Appendix I: Comments from the Department of Health and Human Services
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, key contributors to this report  were Gerardine Brennan, Assistant Director; Christina Ritchie; and Lisa  Rogers. Laurie Pachter; Jessica C. Smith; and Jennifer Whitworth also  provided valuable assistance.