Back to Resources

A New Era in MSP Compliance

A New Era in MSP Compliance

As MSP compliance grows more stringent, insurers benefit from technology that cuts costs, increases accuracy and accelerates reporting.

Medicare Secondary Payer (MSP) compliance is changing. The rapid evolution of technologies is making it possible to automate portions of the process that were previously beyond reach, empowering claims professionals and those responsible for the creation of Medicare Set-Asides (MSAs), conditional payment resolution and Section 111 reporting with new tools that increase their efficiency and vastly improve accuracy.

The stakes are higher, as well. We have seen a marked shift in policy in recent years, as the Centers for Medicare and Medicaid Services (CMS) has increased its focus on cost recovery. This has manifested itself most noticeably in the form of new MSP compliance policies and increased enforcement measures. Starting Jan. 1, responsible reporting entities (RREs) could face penalties of up to $1,000 per claim, per day, for failure to properly comply with Section 111 reporting requirements.

In addition, CMS has increased coordination between Section 111 reporting and cost-recovery programs, which will permit greater scrutiny and empower the agency to implement these increased enforcement measures. Conditional payment debt recovery measures can now be categorized as aggressive, with swift referral of unresolved debt to the U.S. Department of Treasury.

At the same time that MSP compliance is growing more stringent, though, insurers are benefiting from improvements in technology that are driving costs down, increasing accuracy and accelerating the reporting process through automation. Old-school methods are losing viability, especially in light of technology innovations that have arrived on the scene in recent years.

MSP Compliance the Old-School Way

To better understand how technology is changing the game, let’s look at how things have been done in the past. Traditional MSP vendors have been tasked with examining a patient’s medical records to identify the types and effectiveness of medical treatment rendered, recommending physicians for future care, scrutinizing Medicare coverage determinations, reviewing claim payment histories, consulting workers’ compensation fee schedules and researching Redbook average wholesale price (AWP) pharmacy costs, all in the name of MSA preparation. The tedious, painstaking and manual effort involved in creating an MSA involves the use of highly trained and specialized medical and, oftentimes, legal personnel.

All of the efforts of your MSP compliance vendor don’t merely drive up the vendor’s cost; it can drive internal costs higher, as well. CMS Workers’ Compensation Review Center (WCRC) policies require a 24-month lookback at active treatment records relative to a single date or multiple dates of loss, so claims adjusters or their support staff must typically pull a select subset of patient and payment records to fulfill the current MSP compliance requirements. The amount of documentation to be retrieved by the client and reviewed by the MSP compliance vendor can be voluminous in many cases, driving costs up even further.

Many MSP compliance vendors still rely on insurers to manually supply other important information, as well, including demographic data, the First Report of Injury form, covered and denied body parts, a pharmacy benefit management summary (PBM), pertinent legal documentation and more, depending on case specifics. Some of that information may require authorization to speak with a third-party vendor, which can complicate matters even further. All of this takes time, which in turn drives costs.

There is a time delay associated with this manual methodology, as well. In most cases, reports can be produced in a matter of a week to 10 days, but in some cases they may require several weeks, depending on their complexity, the volume of documentation involved and the capacity of the vendor. If the MSA is needed in a hurry, most MSP compliance vendors will impose an additional charge to expedite the process. Those rush fees can add up quickly, even doubling the total cost of producing a single report.

Given the sheer volume of information that might need to be reviewed to create an MSA, it’s no surprise that errors occur. Strong quality assurance (QA) programs ensure the accuracy of the reports before delivery to the client, but, again, QA efforts, although necessary, can increase costs and delay report delivery times.

AI Is Changing the Game for MSP Compliance

One of the key challenges associated with medical claims, generally speaking, is the abundance of unstructured and semi-structured data that might be involved. This is precisely why MSP compliance has been such a high-skill, labor-intensive process. But today, artificial intelligence and machine learning (AI/ML) have advanced to the point at which they can accurately ingest the kind of information that previously required extensive human involvement.

Today, we can read various types of documents and can use AI and machine learning to derive meaning from them. Natural language processing (NLP) can discern the subtle, but extraordinarily important, differences between phrases such as “patient reports no back pain” and “pt rpts no prior hx of back pain.” While claims and MSP compliance professionals still have an important role to play, AI gives them a distinct head start in the process, first by filtering out the right information, then by ingesting it, making sense of it and highlighting key attributes of the cases that require attention.

When claims adjusters are relieved of the problem of preparing information for an MSP compliance vendor, they can instead focus on their core responsibilities. AI can ingest everything, automatically filtering out what it needs for a particular report. AI now automates tasks that were once thought to fall outside the realm of automation.

This level of automation also makes it possible to easily develop multiple versions of an MSA report quickly, enabling adjusters and managers to assess the risk levels associated with various claims’ scenarios and potential outcomes. This, in turn, gives insurers greater control over claim decisions while helping them to remain fully compliant with CMS policies and regulations.

For MSP compliance, in particular, AI applications can improve the process even further by incorporating CMS feedback into decision-making algorithms. In other words, AI/ML can learn which elements of a report rendered development requests and counter-higher approvals from Medicare’s WCRC, and AI/ML can incorporate feedback and tailor future reports to more closely conform to CMS expectations.

Lower Costs, Increased Accuracy and Efficiency

AI technology is no longer just a visionary idea; AI has arrived, and it’s transforming the way insurers do business. Innovative insurance companies are already reaping the benefits of this technology. Tom Veale, president of TRISTAR Risk Management, reports that his company has saved over 33% on compliance costs after adopting a purpose-built AI approach designed to handle MSP reporting, risk analysis and compliance.

AI and machine learning will continue to gain momentum. In the short term, that will provide competitive advantage to early adopters (as is already happening at TRISTAR and other organizations). As adoption increases, the old ways of managing MSP compliance will be rendered increasingly obsolete. CMS policies and enforcement measures will only serve to accelerate that trend.

Christine Melancon

Christine Melancon, director of regulatory compliance at CLARA Analytics, has spent her entire career working in the healthcare industry, emerging as a true leader, particularly in the areas of Medicare Secondary Payer (MSP) compliance and Medicare Set-Asides (MSAs).

Sarah Strang

It's Easy To Get Started

Optimize claims outcomes with the power of AI