Recently, we’ve had many clients receive a letter from a joint data matching project sponsored by the Centers for Medicare and Medicaid Services, the Social Security Administration and the Internal Revenue Service. This project is all about one thing: Medicare Secondary Payer rules.
There has been a long-standing rule that employers are prohibited from offering an incentive of any kind to an individual who is Medicare-eligible to enroll in Medicare in lieu of the employer’s group health plan.
These rules prohibit an employer (includingg those counted together under common control group rules) with 20 or more employees from encouraging those who are 65 or older to make this switch. One important note: the 20+ rule is based on the average number of all employees (not part-time versus full-time, FTEs or any other calculation) for the prior year. Agents are often surprised when the 10-employee group (from our eyes) actually is 20+ under these rules and is subject to its penalties.
While there are fines that can be assessed for encouraging or enticing the employee to take Medicare ($5,000 per situation), the bigger “hit” is the bill for claims that Medicare paid as primary versus what they should have paid as secondary. This claim can typically be for a scary big amount; representing what the carrier (if fully-insured) or employer (if self-funded) must repay Medicare for the discovered individuals.
In short, nearly every employer who has received one of these letters is usually in shock at the amount demanded that they (or the carrier) repay. Often your client is pointing the finger at you for suggesting that Bob (who turned 65 last year and is one of the reasons their renewal was so high) go on Medicare and encouraged them to pay for his Med Supp and Part D plan premium (which you probably handled for Bob, too).
Why the rush of letters now?
In 2007, Congress passed the Medicare Modernization Act that included higher recovery through CMS’s coordination of benefits program targeting these primary versus secondary payer situations as a major source of revenue for the bill. Now this program is implementing the ultimate point: increase the number of successful recoveries from below 5% to nearly 100%.
How are they doing this? It appears that these three playmates have come together and are specifically looking for instances where an employee (or the dependent of an employee) is enrolled in Medicare and is also the employee of a group. How are they gleaning this information? By seeing where someone’s social security number is showing up both on the income tax withholding list for an employer and also on the Medicare rolls, a very simple bit of computer working asking for situations where nine digits match. Hence the term “data match.”
What does this mean for your clients? Many employers will receive the letter and have no earthly idea what it means. Some will throw it away, others will use it as evidence of a broader conspiracy to kill Kennedy and take away freedoms. The two most dangerous things that your clients can do is ignore the letter’s 30-day deadline or do a bad job trying to complete the data match questionnaire.
One important note on that: It’s complicated. There are three different stages to the process already known. First, the employer must set up an account with the data match program. Once that’s been completed, there’s a 1-2 day wait so that the account can connect with the data match questionnaire. This second stage is filled with requests for information about health plan information (back to 2011, including group ID, Rx PCN numbers and carrier information such as address and EIN) and then specific questions about a handful of employees.
Once completed (by certifying the information submitted is correct), the third stage is expected to be some additional request for information. If someone on that list waived on their own to take Medicare or was not eligible based on hours worked, the employer should have proof to provide when the request comes.
In closing, I’d like to express my appreciation for the timing of these requests. Thankfully, they weren’t rushing in during Marketplace open enrollment period, but this ACA reporting season has enough of its own headaches. Worst of all, I suspect what we’ve seen this last month is the tip of the iceberg.
Be sure to let your clients know what to expect if they get a letter, and also check with your carriers to find out if they need to be involved in the response process. Also, remind your clients that encouraging an employee to take Medicare versus staying on the group health plan may be another minefield to avoid.
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