The Remote Brief with Brendon: Are Goodwill Payments Reportable?
Question: “Brendon – we had a customer, a Medicare beneficiary, shop in our grocery store several days ago, and she slipped and fell on a puddle of water that leaked from a damaged case of bottled water that our stock clerk had set down minutes earlier. One of our shift managers witnessed the event, and our customer stated that her right hip and wrist were sore but that she ‘didn’t want to make a big deal out of it.’ Our store has clear liability insurance exposure here since there was no wet floor sign and the stock clerk left the damaged water case unattended, so out of concern that the customer would file an insurance claim, we decided to give her a $500 store gift card for her trouble. No formal claim was ever opened, no release or waiver was ever signed, and we closed this matter. Do we have to report anything to Medicare under Section 111 since this involved the closing a potential claim with an injured Medicare beneficiary?”
Background and Answer: This is a great scenario to walk through because it touches on a commonly overlooked area of Medicare Secondary Payer (MSP) compliance: risk management write-offs. Many entities operating in the retail, hospitality, and service industries regularly provide “goodwill” gestures to customers involved in on-premises incidents without realizing that these gestures could trigger federal reporting obligations under Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Section 111).
There are a few things to consider when determining if reporting obligations apply.
· First, the Centers for Medicare & Medicaid Services (CMS) draws a distinction between two types of risk management actions:
o Reductions in charges or write-offs (e.g., a healthcare provider reducing a bill for services rendered to the injured Medicare beneficiary); and
o Provision of property of value (e.g., cash, gift cards, or other tangible consideration provided to the injured Medicare beneficiary)
In this case, the grocery store did not reduce or write off a portion of the injured customer’s shopping bill; instead, the store provided the Medicare beneficiary with a $500 gift card, which is property of value.
· Second, CMS also draws a distinction between two categories of entities:
o Providers, physicians, and other suppliers; and
o All other entities
In this case, the grocery store falls squarely within the “any other entity” category given that grocery stores are not providers, physicians, or other suppliers.
These distinctions matter because CMS applies different rules depending on which types of risk management actions and categories of entities are at play. Now that we have identified the proper risk management action and entity type, we know that the following federal policy guidance applies:
NGHP User Guide – Chapter III: Policy Guidance,
Section 6.5.1.7 Risk Management Write-Offs and Related Actions
In instances where any other entity has reduced its charges, written off some portion of a charge or provided other property of value to a Medicare beneficiary as such a risk management tool when there is evidence, or a reasonable expectation, that the individual has sought or may seek medical treatment as a consequence of the underlying incident giving rise to the risk, the entity shall report the reduction, write-off or property of value provided as a TPOC from liability insurance (including self-insurance). If the amount of the reduction, write-off or property of value provided is less than TPOC reporting threshold, it need not be reported under Section 111.
In this case, the grocery store clearly provided property of value (the $500 gift card) to a Medicare beneficiary as a risk management tool. In other words, the grocery store specifically provided the gift card for purposes of lessening the probability of a liability claim and/or to facilitate customer goodwill. Furthermore, there was evidence the Medicare beneficiary could seek medical treatment as a result of the incident given that she sustained documented injuries.
Here though, the $500 property of value (gift card) is less than CMS’ current $750 Total Payment Obligation to the Claimant (TPOC) reporting threshold. As such, the grocery store does not have a reportable Section 111 TPOC. If the gift card had exceeded $750, the grocery store would be compelled to report the arrangement as a TPOC. As we can see, CMS treats these as TPOCs from liability insurance (or self-insurance) to prevent end-runs around Section 111 reporting, but the normal exceptions (e.g., the $750 reporting thresholds) still apply.
Sanderson Firm routinely assists our clients in navigating complex MSP compliance questions, including those involving risk management write-offs, and Section 111 reporting obligations. If you have a question regarding this article or have a question or idea regarding MSP issues for a future The Remote Brief with Brendon column, please email Brendon at brendon@sandersoncomp.com.
