The Centers for Medicare and Medicaid Services recently issued guidance under their Coordination of Benefits Agreement that may catch many employers who are managing Health Reimbursement Arrangements (HRA’s) by surprise. CMS requires all insurance carriers to provide a detailed, electronic data feed on all claims paid by a health plan to coordinate any potential Medicare reimbursements or recoveries. While this program has been in place for some time, CMS is reviewing filed data and is reaching out to employers who sponsor HRA’s or informal reimbursement arrangements of $1,000 or more in a plan year to obtain similar data. From those clients we have contacted, most are smaller fully-insured plans unaware of this responsibility, or employers unwilling to pay for outside third-party administration of these transactions.
This is not an easy process, as significant claim reimbursement or payment detail must be regularly filed in a specific electronic format.Failure to comply can result in penalties and fines being assessed to the plan sponsoring employer.Detailed information can be obtained at www.cms.gov/COBAgreement. A user guide, dated November, 2010, can be downloaded for plan administrator review.
We would expect professional claims administrators, who regularly administer these arrangements for employers, will be responsible for filing this information on the employers behalf. This is the same information they are required to provide on claims for self-funded plans. However, outside HRA administration can be somewhat costly, especially on top of fully insured premiums, and as a result many employers – both small and large – have taken this process “inside” as part of their HR or payables department. Even if the reporting and payment process is outsourced to a third party administrator, all employers should confirm that their TPA is complying with the necessary electronic claim data reporting required under these regulations.
This new requirement has significantly increased the employer responsibility and complexity involved in administering these programs. Any internal processes to handle either direct provider claim payments, or reimbursements for such charges paid directly to plan members, need further review. If you have questions about such an arrangement, or have considered adding it at open enrollment, we recommend you discuss your administrative processes with your Horton Benefits professional advisor.