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 Arrigo, an expert witness, and healthcare executive, brings four decades of experience in the software, financial services, and healthcare industries. In 2000, Mr. Arrigo founded No World Borders, a healthcare data, regulations, and economics firm with clients in the pharmaceutical, medical device, hospital, surgical center, physician group, diagnostic imaging, genetic testing, health I.T., and health insurance markets. His expertise spans the federal health programs Medicare and Medicaid and private insurance. He advises Medicare Advantage Organizations that provide health insurance under Part C of the Medicare Act. Mr. Arrigo serves as an expert witness regarding medical coding and billing, fraud damages, and electronic health record software for the U.S. Department of Justice. He has valued well over $1 billion in medical billings in personal injury liens, malpractice, and insurance fraud cases. The U.S. Court of Appeals considered Mr. Arrigo's opinion regarding loss amounts, vacating, and remanding sentencing in a fraud case. Mr. Arrigo provides expertise in the Medicare Secondary Payer Act, Medicare LCDs, anti-trust litigation, medical intellectual property and trade secrets, HIPAA privacy, health care electronic claim data Standards, physician compensation, Anti-Kickback Statute, Stark law, the Affordable Care Act, False Claims Act, and the ARRA HITECH Act. Arrigo advises investors on merger and acquisition (M&A) diligence in the healthcare industry on transactions cumulatively valued at over $1 billion. Mr. Arrigo spent over ten years in Silicon Valley software firms in roles from Product Manager to CEO. He was product manager for a leading-edge database technology joint venture that became commercialized as Microsoft SQL Server, Vice President of Marketing for a software company when it grew from under $2 million in revenue to a $50 million acquisition by a company now merged into Cincom Systems, hired by private equity investors to serve as Vice President of Marketing for a secure email software company until its acquisition and multi $million investor exit by a company now merged into Axway Software S.A. (Euronext: AXW.PA), and CEO of one of the first cloud-based billing software companies, licensing its technology to Citrix Systems (NASDAQ: CTXS). Later, before entering the healthcare industry, he joined Fortune 500 company Fidelity National Financial (NYSE: FNF) as a Vice President, overseeing eCommerce solutions for the mortgage banking industry. While serving as a Vice President at Fortune 500 company First American Financial (NYSE: FAF), he oversaw eCommerce and regulatory compliance technology initiatives for the top ten mortgage banks and led the Sarbanes Oxley Act Section 302 internal controls I.T. audit for the company, supporting Section 404 of the Sarbanes Oxley Act. Mr. Arrigo earned his Bachelor of Science in Business Administration from the University of Southern California. Before that, he studied computer science, statistics, and economics at the University of California, Irvine. His post-graduate studies include biomedical ethics at Harvard Medical School, biomedical informatics at Stanford Medical School, blockchain and crypto-economics at the Massachusetts Institute of Technology, and training as a Certified Professional Medical Auditor (CPMA). Mr. Arrigo is qualified to serve as a director due to his experience in healthcare data, regulations, and economics, his leadership roles in software and financial services public companies, and his healthcare M&A diligence and public company regulatory experience. Mr. Arrigo is quoted in The Wall Street Journal, Fortune Magazine, Kaiser Health News, Consumer Affairs, National Public Radio (NPR), NBC News Houston, USA Today / Milwaukee Journal Sentinel, Medical Economics, Capitol ForumThe Daily Beast, the Lund Report, Inside Higher Ed, New England Psychologist, and other press and media outlets. He authored a peer-reviewed article regarding clinical documentation quality to support accurate medical coding, billing, and good patient care, published by Healthcare Financial Management Association (HFMA) and published in Healthcare I.T. News. Mr. Arrigo serves as a member of the board of directors of a publicly traded company in the healthcare and data analytics industry, where his duties include: member, audit committee; chair, compensation committee; member, special committee.

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