New Penalties on MSP Reporting

New Medicare rules are making it imperative for employers to ensure that they obtain and report social security numbers and other identifying information regarding all beneficiaries covered under their group health plans. This blog discusses the rules, what has changed, and what employers should do to comply.

 

BACKGROUND

Federal law makes Medicare a “secondary payer” to other coverage under most circumstances. That means that if a Medicare beneficiary has any other additional insurance available to pay their medical bill, that additional insurance will be obligated to pay the claim first—as a “primary” payer—before Medicare pays. To facilitate this, Section 111 of the of the Medicare, Medicaid, and SCHIP Extension Act of 2007, requires group health plans to report certain information to the Centers for Medicare & Medicaid Services (CMS)1. This information enables CMS to correctly pay for the health insurance benefits of Medicare beneficiaries by determining primary versus secondary payer responsibility.

 

GROUP HEALTH PLAN RESPONSIBLE REPORTING ENTITY (RRE) REPORTING OBLIGATIONS

Group health plans must report coverage provided to Medicare beneficiaries within one year of the effective date of the coverage. Generally, the responsible reporting entity (RRE) is the insurer (for fully-insured plans), or the third party administrator (TPA, for self-funded plans). In the case of a group health plan that is self-insured and self-administered, the plan administrator or fiduciary would be the RRE. As part of this reporting, RREs are required to report the Medicare ID or social security number of every Medicare beneficiary covered under the group health plan.

These reporting obligations apply broadly to employer-sponsored group health plans, whether self-funded or fully insured, and whether covered by ERISA or exempt due to local government plan status. The reporting obligation does not apply to FSA plans, HSA plans in which Medicare beneficiaries may not make a contribution, or Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs).

 

WHAT HAS CHANGED? PENALTIES FOR NON-COMPLIANCE

While the RRE reporting obligations have been in place for some time, CMS recently finalized its rule specifying how and when it will calculate and impose civil money penalties (CMPs) when group health plan and non-group health plan RREs fail to meet their Medicare Secondary reporting obligations. Going forward, CMS plans to randomly sample 1,000 records per year to ensure that RREs are reporting all of the required data.

Penalties

A group health plan that fails to report information regarding a Medicare beneficiary or beneficiaries will be subject to a civil monetary penalty (a fine) of $1,000/beneficiary/day that the information has not been reported.

Effective Date

The final rule becomes applicable on October 11, 2024. Penalties may be imposed beginning one year later, as of October 11, 2025.

 

WHAT DO RRES NEED TO DO

If they have not already done so, RREs should obtain Medicare ID numbers or SSNs from all Medicare-covered persons covered under the group health plan. Because Medicare is available to some persons under the age of 65, employers should ask participants in the plan to identify whether they are Medicare beneficiaries.

Below are links to a letter and a model form that CMS has developed that RREs may use to obtain that information.

• Letter: https://www.cms.gov/medicare/coordination-of-benefits-and-recovery/mandatory-insurer-reporting-for-group-health-plans/downloads/new-downloads/revisedcollectionssneins.pdf
• Model Form: https://www.cms.gov/files/document/mmsea-111-mbi-ssn-collection-ghp-model-language.pdf

CMS has stated that subscribers and dependents should routinely cooperate in furnishing either their HICN (or SSN if they do not have a HICN available) as requested by their group health plan RRE.

If an individual refuses to furnish a HICN or SSN, and the GHP RRE chooses to use the Model Form, CMS will consider the RRE compliant for purposes of its next Section 111 file submission if:

• A signed copy of the model language in the format provided is obtained (even if the individual is later discovered to be a Medicare beneficiary).
• With respect to that same individual, the RRE has the model language (with the picture of the Medicare ID card) re-signed and dated at least once every 12 months.

The RRE should retain this documentation. 

 

ADDITIONAL INFORMATION

The Final Rule can be found here: https://www.govinfo.gov/content/pkg/FR-2023-10-11/pdf/2023-22282.pdf

The CMS FAQ Alert can be found here: https://www.cms.gov/files/document/medicare-secondary-payer-and-certain-civil-money-penalties-frequently-asked-questions.pdf

Earlier guidance can be found here: https://www.cms.gov/medicare/coordination-of-benefits-and-recovery/mandatory-insurer-reporting-for-group-health-plans/downloads/new-downloads/alertguidanceforhicnsssns.pdf

 

Article sourced with permission from our associates at Keenan See original article at: https://www.keenan.com/knowledge-center/news-and-insights/briefings/new-medicare-reporting-rules/

1 Similar provisions are applicable to carriers and self-funded entities that pay settlements, judgments, awards, or other payments from liability, no-fault, or workers’ compensation coverage to Medicare beneficiaries. The application of these rules to property, liability or workers’ compensation plans is not discussed in this Blog.