The Centers for Medicare and Medicaid Services (“CMS”) recently proposed methods for calculating penalties on entities who fail to submit Medicare Secondary Payer (“MSP”) reporting. Group health plans (“GHP”) and non-group health plans (“NGHP,” which include liability insurance, no-fault insurance, and workers compensation arrangements) must complete this quarterly MSP reporting, as outlined below:
- GHPs must report employees and dependents with Medicare coverage who also have employer GHP coverage that may pay primary to Medicare. The GHP’s insurer or third-party administrator (TPA) is responsible for MSP reporting.
- NGHPs must report whether a Medicare beneficiary received a settlement, judgement, or payment from a NGHP that may pay primary to Medicare.
The purpose of the reporting is to help CMS determine whether Medicare pays secondary to an individual’s GHP coverage or NGHP payment. CMS may delay processing a claim or deny a claim if their records indicate that a Medicare beneficiary has a GHP or NGHP that would pay the claim first.
Under the MSP reporting rules, entities that fail to comply with the reporting requirements may be subject to a penalty of up to $1,000 per day per individual. Recently, CMS proposed regulations that outline methods for calculating this penalty:
- GHPs that fail to report an individual within one year of their effective coverage date may be subject to a penalty of $1,000 per day of noncompliance for each individual (up to $365,000 per year).
- NGHPs that fail to report an individual within one year of the date of a payment may be subject to a penalty of $1,000 per day of non-compliance for each individual (up to $365,000 per year).
- Entities that submitted reporting but subsequently submitted contradictory information may be subject to a $1,000 penalty for each day the entity fails to appropriately update the individual’s records.
- Entities that submitted reporting with more than 20% inaccurate information for any four of the last eight reporting periods, may be subject to a daily penalty ($1,000 per day per individual for GHPs and $250 per day per individual for NGHPs).
CMS will not impose a penalty if:
- GHPs report coverage within one year of the individuals’ effective coverage date;
- NGHPs report information within one year of the date of the settlement; or
- NGHPs are unable to obtain the required reporting information from Medicare beneficiaries after documenting good faith efforts.
Employer Impact:
Employers with GHPs are not subject to the MSP reporting, unless they are self-insured <u>and</u> self-administer their plans. Insurers are responsible for fully insured employers MSP reporting and TPAs are generally responsible for MSP reporting for self-insured employers.
Insurers or TPAs may send information requests to employees or dependents with Medicare coverage to collect information for the reporting. Employers should be aware of this reporting so they can respond to questions from employees regarding any MSP information requests.
Additional Resources:
CMS Proposed Rule for MSP Reporting Penalties
CMS Fact Sheet on Proposed MSP Reporting Penalties
Mandatory Insurer Reporting for Group Health Plans
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