Addendum 1
Client Alert: Employer Options under the Medicare Modernization Act
Keenan & Associates Client Alert
EMPLOYER OPTIONS UNDER THE MEDICARE MODERNIZATION ACT
Addendum 1
EMPLOYER REPORTING OF CREDITABLE COVERAGE
INFORMATION TO CMS
In January 2006, The Centers for Medicare and Medicaid Services (CMS), the federal agency responsible for administering Medicare, issued new guidance on the form, manner and timing of reporting creditable coverage disclosure notices by employers and other plan sponsors directly to the federal government. The majority of plan sponsors that provide prescription drug coverage to Medicare Part D entitled individuals are required to log on to the CMS website at http://www.cms.hhs.gov/apps/ccdisclosure/default.asp and complete and submit electronically a disclosure certifying that their prescription drug plans are creditable (meet the minimum Part D standards), non-creditable (do not meet the minimum Part D standards) or that they have plans that meet both criteria. This disclosure notice must be sent to CMS no later than March 31, 2006.
The requirement to provide disclosure directly to CMS was part of the original Medicare Prescription Drug, Improvement and Modernization Act of 2003, but was posted by the federal government only in January 2006. This new requirement to disclose the creditable nature of an employer’s prescription drug plan is in addition to the ongoing obligation of employers to notify their members of the creditable or non-creditable status of their plans (starting on November 15, 2005). Entities that must comply with this requirement, and with the requirement to provide individual certificates of creditable/non-creditable coverage are listed in the CMS publication entitled “Entities Required to Provide Disclosure To All Medicare Eligible Individuals” which can be obtained through the web on: http://www.cms.hhs.gov/CreditableCoverage/Downloads/ENTITIESREQUIREDTOPROVIDEDISCLOSURE.pdf.
Timing of Creditable Coverage Disclosure to CMS
For prescription drug plans with plan years that end in 2006, the disclosure application to CMS must be submitted no later than March 31, 2006.
For subsequent plan years, submission of the disclosure application must be provided within 60 days after the beginning date of the plan year for which the entity is providing the disclosure to CMS. If a prescription drug plan is being terminated, an application must be made within 30 days after the termination.
Content of Application to CMS
The employer or plan sponsor must submit all the required information requested by the CMS electronic disclosure form for all prescription plans, including both those that have creditable coverage and those that are non-creditable coverage.
Information that has to be included in the CMS creditable coverage disclosure form includes:
· The name of the employer or plan sponsor that is providing prescription drug benefits coverage, as well as that entity’s address, telephone number and tax identification number.
· Whether the drug coverage the employer or plan sponsor offers under the health care plan is creditable, non-creditable or both.
· An estimate of the number of individuals eligible for Part D coverage who were covered, as of the beginning date of the plan year, under a health care plan with prescription drug coverage.
· Check off whether the options offered by the employer or plan sponsor are creditable, non-creditable or a mixture of creditable and non-creditable. Depending on which option is chosen a pop-down screen will appear to ask the employer:
· How many plans were creditable or not creditable
· The number of individuals covered under a retiree health plan
· The date certificates of creditable coverage/non-creditable coverage were issued to Medicare entitled enrollees.
· The number of individuals, if any covered under a retiree health care plan.
· The date that a notice of creditable coverage or non-creditable coverage was provided to individuals entitled to Medicare who were enrolled in the prescription drug plan.
· Have an appropriate representative of the employer sign the application.
Employers Applying For Retiree Subsidy
Employers and other plan sponsors who have applied for a Retiree Drug Subsidy from CMS do not have to submit the on line disclosure for creditable coverage to CMS. The attestation requirements to determine creditable coverage for a retiree subsidy is at a higher level than the normal determination of creditable coverage (an attestation for a retiree subsidy requires the services of an actuary while the attestation for a determination of creditable coverage does not). Also, applications for Retiree Drug Subsidy, like the creditable coverage disclosures, are filed with CMS.
According to CMS, an employer drug plan that has successfully applied for the Medicare Part D Retiree Drug Subsidy (RDS) and is currently receiving the subsidy does not have to submit on line disclosure since the RDS application required proof of a higher level of creditability than that required by the on line disclosure. However, a recent article in Business Week (“Medicare Rx Law Creates Broad Notice Duty,” January 16, 2006, page 22) suggests that an employer sponsoring an RDS may have to submit an on line disclosure if they have Medicare entitled individuals who were not being counted as retirees for the purpose of obtaining the subsidy (and whose names are not being submitted to CMS). Employers and plan sponsors should contact CMS about Medicare entitled individuals who are not being counted as part of the retiree subsidy to determine if an on-line disclosure is required or if they have to issue certificates of creditable coverage to such Medicare entitled individuals.
Prepared by Keenan & Associates Page 3 of 3 February 6, 2006
License No. 0451271 Updated February 6, 2006