Medicare Secondary Payer (MSP) Act – New 2009 Reporting Requirements for your Health Plan and HRA

Published January 2009

Recent amendments to the Medicare Secondary Payer Act (MSP) were introduced to reduce Medicare fraud and to ensure that all group health plan coverage is primary to Medicare for employers with more than 20 employees. In order to ensure compliance, new reporting requirements have been established that are anticipated to begin sometime between April and June 2009. For BASIC, we will be required to meet these reporting requirements for Health Reimbursement Arrangement (HRA) plans. At this time it has been determined that these requirements are not required for Flexible Spending Accounts (FSA).

Currently there is a voluntary reporting process in place for group health plans and the new mandatory reporting process will build upon the existing voluntary process. These new reporting requirements are in addition to existing statutory provisions and regulations. Stiff penalties have been established for not meeting these reporting requirements.

At this point there are still a lot of questions around these new reporting requirements and some aspects are being refined by CMS, including the specific data that must be collected and reported, timing of reporting, and how the data will be reported to CMS. Below is the information available at this time and, although not addressed in this article, these amendments also impact worker’s compensation if the claimant is a Medicare beneficiary. If you have an HRA with BASIC, you will receive more communications in the coming months. To keep up to date on this requirement, please visit CMS’s website:


What is the primary purpose of this new reporting requirement?
The primary purpose of this new requirement is to reduce Medicare fraud, by identifying situations where the group health plan might be paying secondary to Medicare for employers with more than 20 employees.

All insurers of insured group health plans, plan administrators or fiduciaries of employer-sponsored self-insured group health plans need to gather information from plan sponsors and plan participants to ensure plans are or have been primary to Medicare and to submit this information to CMS.

What is this new requirement?
Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 added a new mandatory reporting requirement for group health plans and for liability insurance, no-fault insurance and workers’ compensation, if the participant or claimant is determined to be Medicare entitled. These requirements can be found in 42 U.S.C. Sections 1395y(b)(7) and (8).

How does this affect BASIC and our clients?
BASIC, as a Third Party Administrator (TPA) for HRAs, is required to comply with the reporting requirements for BASIC HRA plans. If you have an HRA with BASIC, we will be contacting you in the coming months to explain more about these reporting requirements and partner for collecting the necessary information that must be reported.

Responsibilities of Insurers Under MSP

  • Quarterly report to CMS with an electronic data feed of plan participants and dependents, either all or those age 54 and older and/or Medicare eligible.
  • Notification to CMS when a plan pays secondary to Medicare.

Responsibilities of Employers Under MSP

  • Assure that your plans identify those individuals to whom the MSP requirement applies.
  • Assure that your plans provide for proper primary payments where by law Medicare is the secondary payer.
  • Assure that your plans do not discriminate against employees and employees’ spouses age 65 or over, people who suffer from permanent kidney failure, and disabled Medicare beneficiaries for whom Medicare is secondary payer.
  • Accurately and timely submit data required for reporting.
  • Ensure that insurers and administrators are meeting reporting requirements.


When is this reporting requirement effective?
The law took effect on January 1, 2009 for group health plans and July 1, 2009 for liability insurance, no-fault and workers’ compensation. In April, all insurance TPAs must register with CMS. At that time, BASIC will be informed by CMS as to when we need to report for our HRA clients.

Who is responsible for making the filing?
For insured group health plans, the insurer or third party administrator will be responsible for making the filing and for self-insured group health plans; the plan administrator or a fiduciary will be responsible for the filing.

While BASIC is responsible for the filing for HRAs, we will require additional information from our clients beyond enrollment information. We are hopeful that most of the information will be the same as that provided to the group health plan since they must comply with the same reporting requirements. More information will be sent to our BASIC HRA clients once there is clarification of the data needed and procedures for filing.

How will the information be reported?
The Department of Health and Human Services (HHS) has designated CMS to handle reporting requirements. The reporting will be and entirely paperless and electronically secure process handled by CMS.

How often must this filing be made?
CMS has not yet indicated the frequency of the filing, but not more than quarterly for group health plans.

When is the filing due?
Deadlines have not yet been established but expected to be established in April.

What are the penalties for not complying?
Failure to meet the filing requirements could be subject to a civil monetary penalty of $1,000 for each day of noncompliance for each individual for which the information should have been submitted. This means $1,000 per participant or dependent (age 54 or older and/or Medicare eligible) on the insured plan for each day the information is late. In addition, violators will remain subject to any other relevant penalties prescribed by law and for any Medicare Secondary Payer liability.