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A Better Partnership

Publications

Mar 2009
23
March 23, 2009

Keeping Track of Your Health Plan's Medicare Disclosure Obligations

Over the last few years, Congress has made a number of changes to the Medicare program, including the creation of the Medicare Part D prescription drug program. It has also been working on reducing the obligations of Medicare to pay benefits when Medicare participants also participate in other health plans — known as the Medicare Secondary Payer program. Both of these programs impose disclosure requirements on employer-sponsored health plans.

Medicare Secondary Payer Program Introduces New Reporting Requirements

The Medicare Secondary Payer (MSP) program is designed to make sure that in most cases the Medicare program will pay secondary to other health plans — including the group health plan that your company sponsors for active employees. The rules also prohibit your company from offering financial or other incentives to individuals who are entitled to Medicare benefits in an effort to get them to opt out of your group health plan.

The newest obligation under the MSP program generally requires your company's group health plan to report to the Centers for Medicare and Medicaid Services (CMS) information about actively employed participants who may be Medicare-eligible, or about the covered spouse or other family member of an actively employed participant who may be Medicare-eligible. CMS will use this data to identify Medicare beneficiaries who may be covered by a group health plan that should pay primary to Medicare. Failure to report could result in a penalty of up to $1,000 for each day of noncompliance for each individual for whom information should have been submitted — and any other penalties and claims permitted under the MSP regulations (such as claims to recover medical expenses a plan should have covered on a primary basis).

The good news is that the reporting obligation lies primarily with your insurer (if you have an insured group health plan) or third party administrator (if you have self-insured benefits). If your company has any self-insured health benefits that it administrates in-house, however, your company is also subject to these requirements and may have to report directly to CMS. If you have to report directly to CMS and have not previously entered into a data sharing or exchange agreement with CMS, you will need to do so in April 2009.

For the most part, a "group health plan" includes any plan that provides or pays for health care for your employees (including self-employed persons), former employees, others associated or formerly associated with your company in a business relationship, or their families. CMS officials have informally commented that health flexible spending accounts (FSAs) are not considered group health plans, but that health reimbursement accounts (HRAs) are considered group health plans. If you have not yet had a discussion with your insurers or third-party administrators about the MSP reporting program, you should inquire to make sure that they are actively submitting data for your plans.

The MSP program also imposes reporting requirements on liability insurance (including self-insurance) and workers’ compensation insurance that go into effect in June 2009.

CMS Updates Medicare Part D Notice Forms for 2009 

The Medicare Part D prescription drug program is a voluntary program for those eligible to participate in Medicare. To guard against adverse selection, the program is set up so that individuals who do not elect to participate in the Medicare Part D program when first eligible will have to pay a higher premium (also known as a late-enrollment penalty) for the rest of their lives. A late enrollee, however, will not have to pay the late enrollment penalty if the individual did not sign up when first eligible because he or she had prescription drug coverage that was at least as good as the Medicare Part D program (known as "creditable coverage").

To ensure that individuals know whether they have creditable coverage or not, group health plans that cover any prescription drugs, including an employer-sponsored health plan, must send Medicare-eligible individuals a notification at least once each year that explains whether the coverage for that year is creditable coverage or non-creditable coverage. There are limited exemptions for plans that contract with a Medicare Part D plan or that contract directly with Medicare to become a Part D plan, and for retiree plans where an employer has successfully applied for the retiree drug subsidy. And while no disclosures are required for health flexible spending accounts (FSAs) or health savings accounts (HSAs), disclosures are required for health reimbursement arrangements (HRAs) if the HRA reimburses prescription drug expenses. If you are not sure whether your prescription drug program is creditable or noncreditable coverage, you should talk to your insurer or third-party administrator.

The notice of creditable or non-creditable coverage must be provided prior to November 15 of each year — which is when the annual open enrollment period for the Medicare Part D prescription drug program begins. Because you may not know which of your participants has family members eligible for Medicare, it is recommended that you provide this notice to all participants in your plan, perhaps as part of your annual open enrollment packet. You should also include the notice in the enrollment materials provided to all employees newly eligible for your group health plan, and provide the notice upon an individual’s request. If the status of your prescription drug coverage changes or you drop all coverage of prescription drugs, then you must also promptly provide a new notice to your participants. Keep in mind that if you know that a participant’s spouse or dependent lives at a different address than the participant, you will have to mail the spouse or dependent a separate copy of the notice.

Although there is no specific form required, Medicare regulations specify certain information that must be included in the notice. CMS has made model forms available, and has recently posted new model forms that were to be used beginning January 1, 2009. The forms are available at http://www.cms.hhs.gov/CreditableCoverage. If you have been using CMS's model forms, you will need to update your forms for 2009.

Medicare Part D Also Requires Reporting to CMS

In addition to the notice of creditable or non-creditable coverage that your group health plan must send to Medicare-eligible participants and beneficiaries, your group health plan also must report the status of its prescription drug coverage to CMS. This must be disclosed annually to CMS within 60 days of the start of a new plan year as we discussed in an e-bulletin we sent earlier this year. It can be found at www.wnj.com/publications (January 29, 2009, "Your Medicare Part D Disclosure to CMS May Be Due Soon.")

You must file the disclosure electronically at the CMS Web site at http://www.cms.hhs.gov/CreditableCoverage. Also, if you terminate prescription drug coverage or change the coverage so that creditable coverage becomes non-creditable (or vice versa), you must file a new electronic disclosure with CMS within 30 days of the change.

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