A new report sponsored by the Casualty Actuarial Society Committee on Health Care Issues provides a framework to estimate the potential future financial impact of Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) on the property and casualty insurance and self-insurance industry.
Medicare Secondary Payer Status: The Impact of Section 111 Reporting Requirements details the probable effect on losses for 10 cases involving workers compensation, private passenger automobile, and homeowners insurance. The analysis revealed that recent Section 111 reporting requirements may cause modest increases in losses for injured workers and individuals 65 and over for cases where Medicare has been making payments without being reimbursed by the property-casualty insurer or self-insured.
Section 111 requires property/casualty insurers and self-insureds to report to the Centers for Medicare and Medicare Services (CMS) certain information on medical treatments received by Medicare beneficiaries. Reporting began for workers compensation insurers on January 1, 2010, and for liability insurers on January 1, 2012.
“Although Section 111 went into effect over the past few years, there has been little information with which to estimate the financial impact of the new reporting requirements,” says Guy Avagliano, FCAS, a consulting actuary at Milliman and one of the study’s authors. “This report provides a framework to better help property-casualty insurers and self-insureds evaluate the impact of those requirements.”
For a hypothetical insurer, the report estimates the impact for a particular condition or injury in the case illustrations to be an increase in total losses (medical and indemnity) between 0.1% and 0.3% for all workers. Using a set of generalized assumptions, for all conditions and injuries, the research estimates the aggregate impact on medical losses could be between 0.5% and 1.3% for all workers. For private passenger automobile injuries (and again, using a set of generalized assumptions), the estimated impact is an increase between 0.07% and 0.13% for all ages.
“The analysis of these ten cases indicated a clear increase in losses,” says Philip Borba, a principal and senior consultant at Milliman. “While the examples used will not be applicable to every scenario and every company, the research can provide tools and insight to property and casualty insurers moving forward.”
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