Medicare and Medicaid Programs; Medicare-Medicaid Coverage Data Bank Requirements: Preliminary Guidance

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

[BPO-125-N]

Medicare and Medicaid Programs; Medicare-Medicaid Coverage Data

Bank Requirements: Preliminary Guidance

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice.

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SUMMARY: This notice informs the public about section 1144 of the

Social Security Act, which is self-implementing, and provides

preliminary guidance to employers who are required to report

information about all individuals covered by group health plans to a

newly established Medicare-Medicaid Coverage Data Bank. Information in

the data bank will be used to help identify situations where employer

group health plans are responsible for making primary payments for

services received by Medicare or Medicaid beneficiaries. This notice

provides: information on the background and legislative authority for

the data bank; definitions of key terms; reporting requirements; the

identity of entities that are required to, or may, report; reporting

dates; penalties for noncompliance; and methods of reporting.

DATES: Employers must report this information for each calendar year

beginning January 1, 1994, and before January 1, 1998. Reports for

calendar year 1994 must be filed no later than February 28, 1995.

Reports for future years must be filed no later than the end of

February of the following year.

ADDRESSES: Comments: Written requests for information or comments on

provisions included in this notice should be addressed as follows:

For all aspects of this notice other than methods of reporting: Mr.

William Zavoina, Bureau of Program Operations, 367 Meadows East

Building, 6300 Security Boulevard, Baltimore, MD 21207, (410) 966-5882

and 966-9188 (faxes).

For methods of reporting: Mr. John Van Walker, Bureau of Data

Management and Strategy, 1705 Building, E-2, 6300 Security Boulevard,

Baltimore, MD 21207, (410) 966-6371 (faxes).

Copies: To order copies of the Federal Register containing this

document, send your request to: New Orders, Superintendent of

Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date

of the issue requested and enclose a check or money order payable to

the Superintendent of Documents, or enclose your Visa or Master Card

number and expiration date. Credit card orders can also be placed by

calling the order desk at (202) 783-3238 or by faxing to (202) 275-

6802. The cost for each copy is $4.50. As an alternative, you can view

and photocopy the Federal Register document at most libraries

designated as Federal Depository Libraries and at many other public and

academic libraries throughout the country that receive the Federal

Register.

FOR FURTHER INFORMATION CONTACT:

John Van Walker, (410) 966-6347, Methods of reporting; William Zavoina,

(410) 966-7461, All other issues.

SUPPLEMENTARY INFORMATION:

I. Background

Under the Medicare program, section 1862(b) of the Social Security

Act (the Act) provides that there are circumstances under which other

third party payers, such as automobile medical, all forms of no-fault

and all forms of liability insurance, worker's compensation, and

certain group health plans, are primary payers to Medicare. Section

1862(b) of the Act also requires that HCFA obtain from the Internal

Revenue Service information concerning working beneficiaries and

working spouses of beneficiaries and determine whether they have health

insurance through their own or their spouse's employers. Under the

Medicaid program, section 1902(a)(25) of the Act, States must use all

reasonable methods to ascertain the availability of third parties who

are legally liable to pay for the medical care of Medicaid recipients.

Section 13581 of the Omnibus Budget Reconciliation Act of 1993

(OBRA 93) added a new section 1144 to title XI of the Act. This section

requires the Secretary of HHS to establish a Medicare-Medicaid Coverage

Data Bank. Under this section, employers having or contributing to

group health insurance plans must report annually to the Secretary

certain information, including the following: the name and taxpayer

identification number (TIN) of the electing individual; the type of

group health plan elected; the name, address, and identification number

of the group health plan; the name and TIN of every other person

covered as a result of the electing individual's election to have group

health plan coverage; the period during which such coverage is elected;

and the name, address, and TIN of the employer. Employers must report

this information for each calendar year beginning January 1, 1994, and

before January 1, 1998.

The data bank was established to further the purposes of section

1862(b) of the Act in the identification of, and collection from, third

parties responsible for payment for health care items and services

furnished to Medicare beneficiaries and in the identification of, and

the collection from, third parties responsible for the reimbursement of

costs incurred by any State plan under title XIX with respect to

Medicaid beneficiaries, upon request by the Medicaid State agency

administering the plan.

The Secretary must establish fees for services provided under

section 1144 of the Act to cover the administrative costs to the data

bank of providing the services. (These fees will not affect employers

or other public parties and thus are not discussed in this notice.)

The law limits disclosure of information by the Secretary under

rules similar to those of section 6103(a) and (p) of the Internal

Revenue Code of 1986 and provides for penalties for unauthorized

willful disclosure. The Secretary is authorized, until September 30,

1998, to disclose any information in the data bank, obtained pursuant

to section 6103(l)(12) of the Internal Revenue Code 1986 and the data

bank provisions. In addition, the Secretary is authorized, until

September 30, 1998, to disclose any other information in the data bank

to the Medicaid State agency (as described in section 1902(a)(5) of the

Act), employer, or group health plan solely for the purposes for which

the data bank was established.

The law also provides for penalties for failure to report required

information as described in part II of subchapter B of chapter 68 of

the Internal Revenue Code of 1986.

Section 1144 of the Act defines several terms as well. These are

Medicare beneficiary, Medicaid beneficiary, group health plan, TIN,

electing individual, and employer.

HCFA, acting on behalf of the Secretary, is carrying out the

statutory provisions relating to the Medicare-Medicaid Coverage Data

Bank.

The provisions of section 1144 of the Act discussed in this notice

are self-implementing. We are publishing this notice to provide general

guidance to employers and other interested parties as soon as possible.

We plan in the future to publish additional guidance as necessary.

Employers and other interested parties may rely on the guidance

provided in this notice in planning the processes and procedures that

they will use to comply with the data bank requirements.

We are recommending that the Congress enact legislation that delays

implementation for 18 months. This proposed schedule will allow us to

work with Congress and the business community to ensure that the data

bank is consistent with health care reform. Although we are

recommending a delay, employers should continue to comply with the

existing data bank provisions in the absence of legislative changes.

II. Reporting Requirements

Key Definitions

For purposes of this notice, the following definitions apply.

An ``employer'' is defined as any entity who has, or contributes

to, a group health plan, with respect to which at least one employee of

such employer is an electing individual. Included in the definition of

an employer are State and local governments, and religious and

charitable organizations.

An ``electing individual'' is defined as an individual associated,

or formerly associated, with the employer in a business relationship

and who elects coverage under the employer's group health plan. This

includes former employees, retirees, franchisees and their employees,

contractors and their employees, and employees covered as a result of

the Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L. 99-

272) continuation of health care coverage requirements. Also included

in the definition of an electing individual are ``guest workers,'' who

are individuals who have come to the United States from other

countries. Excluded from the definition are employees who provide

domestic services in the home of an employer and who receive less than

a specified amount in cash remuneration for those services in a

quarter. Currently, the specified amount is $50.

A ``group health plan'' is defined as a plan (including a self-

insured plan) of, or contributed to by, an employer (including a self-

employed person) or employee organization, to provide health care

(directly or otherwise) to the employees, former employees, employer,

others associated or formerly associated with the employer in a

business relationship, or their families. This includes those group

health plans that cover only a limited number of services. Also

included in this definition are multiple employer plans, Taft-Hartley

trusts, and other multiemployer health and welfare benefit trusts to

which an employer contributes. Also included are group health plans

sponsored by an employer to which the employer does not contribute

(``employee-pay-all'' plans).

A ``Medicare beneficiary'' is an individual who is entitled to

benefits under part A, or enrolled under Part B, of title XVIII of the

Act, except that individuals 65 years of age or older who qualify

solely for Medicare Part A benefits on the basis of paying premiums are

excluded for purposes of the data bank provisions.

A ``Medicaid beneficiary'' (also referred to as a Medicaid

recipient) is an individual entitled to benefits under a State plan for

medical assistance under title XIX of the Act. The definition includes

State plans operating under a Statewide waiver under section 1115,

``Demonstration Projects.'' All States and territories have such a

Medicaid program.

A ``TIN,'' or tax identification number, is the social security

number of an individual and the employer identification number of an

employer.

Required Information

Each employer, directly or indirectly, must provide or make a

reasonable good faith effort to provide the information summarized

below. The information must be provided for each calendar year

beginning on or after January 1, 1994 and before January 1, 1998. When

an employer is unable to provide all the information specified below

with respect to an electing individual, the employer must provide all

available information and explain the reasons for the failure to

provide the missing information.

(1) The name and TIN of the electing individual.

(2) The type of group health plan coverage (single or family)

elected by the electing individual.

(3) The name, address, and identifying number of the group health

plan elected by such electing individual. This means the name and

address of the group health plan elected by the electing individual and

the identification number that the employer uses to identify that group

health plan; and the name and address of the entity that processes

claims on behalf of the group health plan and the identification number

used by that entity to identify the group health plan.

(4) The name and TIN of each other individual covered under the

group health plan pursuant to such election. This means each other

covered individual covered for some portion of the calendar year. The

employer is not obligated to report TINs of infants under one year of

age at the end of the calendar year for which a report will be filed

and those prohibited by law from having a social security number, such

as dependents of migrant farm workers who are not U.S. citizens.

(5) The period during which such coverage is elected. This means

the actual dates that the electing individual had coverage under the

group health plan.

(6) The name, address, and TIN of the employer.

The employer's report with respect to each electing individual must

include the required information on all group health plans of or

contributed to by the reporting employer under which the electing

individual has elected coverage during the calendar year and all

entities that processed claims on behalf of the group health plans

during any period of the calendar year.

An employer is expected to obtain the name and TIN of the electing

individual (item 1), the type of coverage (item 2), the plan and claims

processing entity information (item 3), the coverage period information

(item 5), and the employer information (item 6). When the employer does

not provide the names and TINs of other covered individuals, an

employer is deemed to have made a reasonable good faith effort to

provide the information with respect to the name and TIN of each other

individual covered by the group health plan (item 4) with respect to

the reports for a specified calendar year if the employer can prove

that it has established a systematic method to obtain the necessary

information that includes both (i) a documented initial effort to

obtain the necessary information from the electing individual and (ii)

a documented follow-up effort if the electing individual does not

respond to the initial effort.

Reporting Entities

The data bank provisions require employers to provide the required

reports. Section 1144(c)(1)(B) of the Act contains a special rule that

permits an employer to satisfy the reporting requirement if the report

is made in accordance with section 101(f) of the Employee Retirement

Income Security Act of 1974 (ERISA) (29 U.S.C. 1021). This conforming

amendment to ERISA, enacted by section 4301 of OBRA 93, imposes certain

obligations on plan sponsors, plan administrators, insurers, third

party administrators, and any other persons who, under the plan,

maintain the information necessary to enable the employer to comply

with the data bank reporting requirements (hereafter referred to as

``information maintainers''). Upon request of any employer with (a)

fewer than 50 employees and (b) a plan other than a multiemployer or

multiple employer plan, the information maintainer must provide the

required information directly to the data bank. Upon request of an

employer with (1) any number of employees and (2) a multiemployer or

multiple employer plan, an information maintainer must provide the

required information, at the option of the information maintainer, to

the data bank or the employer. In any other case, the information

maintainer must provide the required information, at the option of the

employer, to the data bank or to the employer.

The data bank will also accept required information from entities

other than information maintainers who act as agents of the employer

for the purpose of providing information to the data bank.

Dates of Reporting

Reports for calendar year 1994 must be filed no later than February

28, 1995. Reports for future years must be filed no later than the end

of February of the following year.

Penalties for Failure to Report

Under the Act, HCFA may impose certain penalties described in the

Internal Revenue Code when there is a failure by an employer, other

than a governmental entity, to report. The penalties are those

otherwise associated with a failure to file a correct informational

return with the Internal Revenue Service. The current base penalty is

$50 for each failure associated with a report with respect to a single

individual. The current potential maximum base penalty for any employer

is $250,000. The penalty is increased in the case of intentional

disregard of the reporting requirement. The penalty is not imposed if

it can be shown that the failure is due to reasonable causes.

In determining whether to impose these penalties in a particular

case, we will consider all attendant circumstances, including the

nature of the failure and the employer's reasonable good faith efforts

to obtain and provide the required information.

As previously described, there is a special rule at section

1144(c)(1)(B) of the Act that permits some employers to satisfy data

bank reporting obligations through a filing in accordance with section

101(f) of ERISA. Section 4301(c)(2) of OBRA 93, enacted as a conforming

amendment to section 502(c) of ERISA, authorizes the Secretary of Labor

to assess a civil penalty of not more than $1000 on information

maintainers for each failure to provide information to the data bank or

the employer as provided in section 101(f)(1) of ERISA. A failure

relates to specific information deficiencies with respect to a single

electing individual. These provisions and their implementation are the

responsibility of the Secretary of Labor.

We will not impose a penalty under the data bank provisions upon an

employer if an information maintainer has the responsibility to provide

complete and accurate information to the data bank, or if the failure

of the employer is attributable to the failure of an information

maintainer to provide complete and accurate information to the

employer, unless the failure of the information maintainer results from

the failure of the employer to provide complete and accurate

information to the information maintainer.

We will impose penalties as described above upon an employer if the

employer's agent (other than an information maintainer) fails to

provide the requisite information to the data bank.

Methods of Reporting

OBRA 93 specifically charges us with minimizing the burden of

reporting on employers. We are therefore providing for at least three

methods for filing data bank reports. We will make available scannable

paper forms and pre-formatted diskettes upon request by employers and

publish the electronic format to be used by employers submitting

reports on magnetic cartridges. We may establish limitations on

employer choices based on the number of electing individuals for whom

reports must be filed by an employer, information maintainer, or other

entity serving as an agent of the employer in any reporting year. All

reports will be sent to a single location that we will designate later

this year. Additionally, we will designate a coding system to permit

employers to explain certain data consistency and completeness problems

when filing data bank reports and thereby greatly reduce the need for

us to contact employers later concerning reporting irregularities.

Additional information on methods of reporting for 1994 will be

furnished to employers if the Congress does not delay implementation as

we have suggested.

III. Collection of Information Requirements

This document contains information collection requirements that

must be approved by the Office of Management and Budget (OMB) under

section 3504(h) of the Paperwork Reduction Act of 1980 (44 U.S.C.

3504). We are publishing our estimate of the burden that this

information collection activity will place on reporting entities in a

separate Federal Register notice in accordance with our standard

procedure pertaining to information collection requirements submitted

to OMB for approval. That notice invites interested parties to comment

on the estimate by writing to the address provided.

IV. Impact Analysis Statement

Executive Order 12866 (E.O. 12866) requires us to submit to the

Office of Management and Budget (OMB) for review any regulatory action

that is identified as economically significant; that is, may have an

annual effect on the economy of $100 million or more or adversely

affect in a material way the economy, a sector of the economy,

productivity, competition, jobs, the environment, public health or

safety, or State, local, or tribal governments or communities.

In addition, we generally prepare a flexibility analysis that is

consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601

through 612) unless the Secretary certifies that a notice will not have

a significant economic impact on a substantial number of small

entities.

Also, section 1102(b) of the Act requires the Secretary to prepare

an impact analysis if a notice may have a significant impact on the

operations of a substantial number of small rural hospitals. This

analysis must conform to the provisions of section 604 of the RFA. For

purposes of section 1102(b) of the Act, we define a small rural

hospital as a hospital that is located outside of a Metropolitan

Statistical Area and has fewer than 50 beds.

We recognize that the collective costs of complying with the

requirements outlined in this notice may meet the $100 million

threshold of E.O. 12866. The costs associated with this notice are the

result of the statute and not established by any discretionary

requirements imposed by HCFA. However, due to the economic significance

of the provisions, we have submitted this notice to OMB for review and

are soliciting comments on the costs and burdens associated with data

bank compliance. When the final guidance is issued, a final analysis of

the costs and benefits of the data bank will be made available.

(Catalog of Federal Domestic Assistance Program No. 13.714, Medical

Assistance Program; No. 13.773 Medicare--Hospital Insurance Program;

and No. 13.774, Medicare--Supplementary Medical Insurance Program)

Dated: April 14, 1994.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

[FR Doc. 94-11345 Filed 5-9-94; 8:45 am]

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