PAID Act Plus SMART Act Requires NGHPs to Report or Pay Penalties

The Medicare, Medicaid and SCHIP Extension Act (MMSEA) of 2007 contains mandatory insurer reporting in Section 111 for “Non-Group Health Plans” or NGHPs.  NGHPs liability insurance (including self-insurance governed by ERISA), no-fault insurance and workers’ compensation.

There is a new law passed by Congress on December 11, 2020, that goes into effect in late 2021.  The Provide Accurate Information Directly (PAID) Act requires for the Centers for Medicare and Medicaid Services (CMS) provide additional data enabling Non-Group Health Plans (NGHPs) who are Responsible Reporting Entities (RREs) to search for Medicare beneficiary enrollment information using a single point of query to locate Medicare Part A, Medicare Part B as well as managed Medicare (called Medicare Advantage under Part C) as well as Prescription Drug (Part D) Plans for the prior 3 years.

MMSEA, PAID Act Enhancements Focused on Small NGHP Plans that use Direct Data Entry (DDE)

What many attorneys, industry analysts and policy wonks missed is that some of the most important enhancements as part of the PAID Act are meant to address “DDE Users.” which are typically small NGHPs who do direct data entry. To qualify for the DDE method, the RRE must be a Small Reporter which is defined as an RRE that intends to submit 500 or fewer claim reports per year. [i]   Those NGHPs with higher volume already have an integrated portal that can be queried using the National Electronic Data Interchange Transaction Set Implementation Guide, Health Care Eligibility Benefit Inquiry and Response, ASC X12N 270/271 (004010X092A1). [ii]

New Data Available from CMS in MMSEA Section 111 Query

Effective December 11, 2021, the three-year span of Medicare Part A, Medicare Part B, Medicare Advantage and Medicare Part D Prescription Drug data will be provided in the NGHP Section 111 Query Response File. The data includes:

  1. Contract Number,
  2. Contract Name,
  3. Plan Benefit Package Number,
  4. Plan address,
  5. effective dates for the previous 3 years (up to 12 instances each for Part C and for Part D). This is consistent with the SMART Act provisions that set a three-year statute of limitations on a Medicare secondary payer claim by the Secretary for reimbursement against an applicable plan that becomes a Medicare primary payer pursuant to a settlement, judgment, award, or other judicial action.

MMSEA Eligibility Checking System Improvements

In compliance with the PAID Act, the HIPAA Eligibility Wrapper (HEW) application, has been updated to utilize new data in the NGHP X12 271 file format and convert it to a fixed-length S111 Query Response flat file.  The HEW system works on both Windows and mainframe versions.   It is important to note that the HEW has been in existence since 2009. These are merely updates to an existing CMS capability.

CMS issued new user guides on October 4, 2021:

Benefits from Strengthening Medicare and Repaying Taxpayers Act of 2012

H.R.1063 – The Strengthening Medicare and Repaying Taxpayers (SMART) Act made the penalties for failure to comply with Section 111 MMSEA which may include penalties of up to $1,000 per day for non-compliance. It also required that Medicare supply final conditional payment reimbursement information and clarify penalty provisions.  The SMART Act also sets forth Safe Harbors including ‘good faith efforts’ to identify a beneficiary.

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Citations and Sources

[i] See CMS Training regarding Direct Data Entry for MMSE Section 111 liability insurance (including self-insurance), no fault insurance and worker’s compensation user guide.

[ii] See Medicare Coordination of Benefits (COB) System Interface Specifications 270/271 Health Care Eligibility Benefit Inquiry and Response HIPAA Guidelines for Electronic Transactions Companion Document for Mandatory Reporting Non-GHP Entities

[iii] In Prior User guides up to version 6.4 this documentation appeared: “A value of ‘TN’ in the TIN Disp Code (Field 22) Note: A TN30 error will be returned on the response file if Field 22 does not contain four numeric digits, all zeroes, or all spaces. However, the error no longer causes records to reject.”

Michael F. Arrigo

Michael is Managing Partner & CEO of No World Borders, a leading healthcare management and IT consulting firm. He serves as an expert witness in Federal and State Court and was recently ruled as an expert by a 9th Circuit Federal Judge. He serves as a patent expert witness on intellectual property disputes, both as a Technical Expert and a Damages expert. His vision for the firm is to continue acquisition of skills and technology that support the intersection of clinical data and administrative health data where the eligibility for medically necessary care is determined. He leads a team that provides litigation consulting as well as advisory regarding medical coding, medical billing, medical bill review and HIPAA Privacy and Security best practices for healthcare clients, Meaningful Use of Electronic Health Records. He advises legal teams as an expert witness in HIPAA Privacy and Security, medical coding and billing and usual and customary cost of care, the Affordable Care Act and benefits enrollment, white collar crime, False Claims Act, Anti-Kickback, Stark Law, physician compensation, Insurance bad faith, payor-provider disputes, ERISA plan-third-party administrator disputes, third-party liability, and the Medicare Secondary Payer Act (MSPA) MMSEA Section 111 reporting. He uses these skills in disputes regarding the valuation of pharmaceuticals and drug costs and in the review and audit of pain management and opioid prescribers under state Standards and the Controlled Substances Act. He consults to venture capital and private equity firms on mHealth, Cloud Computing in Healthcare, and Software as a Service. He advises ERISA self-insured employers on cost of care and regulations. Arrigo was recently retained by the U.S. Department of Justice (DOJ) regarding a significant false claims act investigation. He has provided opinions on over $1 billion in health care claims and due diligence on over $8 billion in healthcare mergers and acquisitions. Education: UC Irvine - Economics and Computer Science, University of Southern California - Business, studies at Stanford Medical School - Biomedical Informatics, studies at Harvard Medical School - Bioethics. Trained in over 10 medical specialties in medical billing and coding. Trained by U.S. Patent and Trademark Office (USPTO) and PTAB Judges on patent statutes, rules and case law (as a non-attorney to better advise clients on Technical and Damages aspects of patent construction and claims). Mr. Arrigo has been interviewed quoted in the Wall Street Journal, New York Times, and National Public Radio, Fortune, KNX 1070 Radio, Kaiser Health News, NBC Television News, The Capitol Forum and other media outlets. See and for more about the company.

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