Letters From CMS (Medicare) to Employers Regarding Group Health Plan Reporting Are Causing Some Confusion
Many employers are receiving letters from CMS (Medicare) requesting information and it’s causing some confusion. The actual title of the letter reads “Requirement to Submit the Group Health Plan Report for the IRS/SSA/CMS Data Project”.
Here’s an overview that may help clarify for you.
This letter from CMS is separate and apart from the new ACA employer reporting requirements that recently went into effect (employers with 50+ employees). Employers are required to provide the requested information but it’s pretty basic and, other than complying with the request, not anything to really be concerned about.
This CMS request for info is associated with a provision under Medicare that was put into place quite awhile ago (@1990) and involves basic information verification. The information relates to working Medicare beneficiaries age 65+ (and possibly covered spouses) that may be enrolled in both Medicare and in a group health plan. In those cases where both Medicare and a group plan are in place some coordination of coverage takes place between Medicare and the insurance carrier to determine the proper payment of medical claims by the responsible party (insurance company or Medicare or both). This coordination of coverage typically is handled directly behind the scenes between CMS, the insurance carrier and the medical provider.
I’ll try and net it out for you without boring you to tears.
Under something called the Medicare Secondary Payor (MSP) provision, if an employee (or dependent) is enrolled in both Medicare and a group health plan sponsored by an employer with fewer than 20 employees, then Medicare is the primary payor on claims and the group health plan is the secondary payor. If an employee (or dependent) is enrolled in both Medicare and a group health plan sponsored by an employer with 20 or more employees, then Medicare becomes the secondary payor on claims and the group health plan is primary.
From time to time employers get these requests for information from CMS to determine if there are age 65+ employees that might be covered by both Medicare and a group health plan. CMS then uses the info to verify that coordination of coverage/payment of claims is being done correctly by the carriers so that CMS doesn’t pay claims that the insurance company should be paying.
Recently one of the employers that we serve posed the question “what happens if an employee that is 65+ uses Medicare instead of group health insurance”.
In that case, nothing really out of the ordinary happens. The eligible employee simply is exercising the right to elect one, the other, or both types of coverage. The 65+ year old has the option of enrolling in Medicare and/or remaining on the group health plan. The employer’s obligation is only to acknowledge that it is the employee’s option to keep their plan, enroll in Medicare, or do both. Employers can’t force 65+ employees off of the group plan and on to Medicare. The employee makes the determination.
In those cases where an employee decides to enroll in Medicare AND continue with their group plan then “coordination of benefits” rules decide which coverage (insurance company or Medicare) pays first (“primary”). The “primary payer” pays what it owes on the enrollee’s bills first, and then sends the rest to the “secondary payer” to pay. This “coordination of benefits” is handled between Medicare and the insurance carrier.
Thus, the purpose for the request for information you may have received from CMS (Medicare) is to enable Medicare to make sure that in instances where both types of coverage are in place, Medicare is in the secondary position whenever possible. CMS uses the information they collect to help them identify and recover any Medicare payments to medical providers that should have been paid by the insurance company.
The questionnaire that employers are asked to complete consists of a series of 4 or 5 related yes/no questions. Based on responses the employer then may be asked to verify dates of employment and eligibility for coverage of an employee(s)/former employee(s) that are 65+ and in CMS’ database.
Here are links to more information: