by Frank Fairchok, Vice President of Medicare Reporting Services

On September 27, 2021, CMS announced they would begin accepting record submissions where the entitlement date is up to three months in the future. This announcement was made as a broadcast e-mail with an associated entry in the “What’s New” page on the CMS website

The update reads as follows:

September 27, 2021 – Section 111 Medicare Secondary Payer (MSP) Records Will Accept Future Effective Date
Effective October 4, 2021, Section 111 MSP record submissions will accept effective dates up to three months in the future for certain Non-Group Health Plan (NGHP) claims.  Because Medicare entitlement records may have effective dates up to three months in the future, CMS is updating the COB&R systems to accept these future MSP effective dates.

When a S111 Ongoing Responsibility for Medical (ORM) NGHP record is submitted, and the Medicare Beneficiary’s entitlement is in the future (up to 3 months), the system will now create an MSP record with a future MSP Effective Date.

For example, if a Responsible Reporting Entity submits a claim that it has an ORM for on 10/05/2021 and the beneficiary’s Medicare entitlement date is 01/01/2022, the Benefits Coordination and Recovery Center (BCRC) will now accept the Medicare entitlement date of 01/01/2022 as the MSP effective date.”

Commentary
CMS has long had an issue where beneficiaries are identified by the query process close to, but in advance of, the entitlement date. For many years, when a claim was reported prior to the entitlement start date the claim was rejected with an SP disposition code and an associated SP31 error. In the NGHP User Guide 6.1, CMS described the special consideration for the SP31 error code as follows:

“[Special Consideration for SP31 Error Code
The most common way individuals become Medicare beneficiaries is through action taken by the Social Security Administration. As a result, the BCRC often receives entitlement information for individuals in advance of their actual Medicare entitlement date. If an individual is to become entitled to Medicare on 7/1/2010 and a query record is processed on 6/10/2010, the query response record disposition code may very well be ‘01’ since the record can already be matched to an identified Medicare beneficiary, albeit a future one. However, if you then send a Claim Input File Detail Record for this person and it is processed prior to the beneficiary’s actual entitlement date of 7/1/2010, it will be rejected with an SP disposition code and you will receive the SP31 error. In this case, no correction on the part of an RRE is necessary for the SP31 error. RREs only need to resubmit the record on their next quarterly Claim Input File and it will be processed and returned with the appropriate disposition. SP31 errors are not included in the 20% Error threshold described in Section 7.3.2. To be deleted April 5, 2021]”

However, the SP31 error code was retired on April 5, 2021 with guidance that records that would have been flagged with the SP31 error and resulting SP disposition code would now  be treated as disposition code 03. This would reduce the count of records with errors in the file – a change likely made to reduce claim errors, and thus file rejections, in preparation for a portion of the Civil Money Penalty rulemaking. A portion of that rulemaking looks to create fines where a Responsible Reporting Entity (RRE) attains the 20% error threshold on four out of eight consecutive reporting periods.

While moving to  disposition code 03 reduced the claims rejected in error, it did not solve the issue that an RRE would need to report the claims in the next quarterly file (if the report was made for open ORM). This announcement by CMS means that by allowing the BCRC to accept the claim with open ORM three months prior to the entitlement date, resubmission is not needed which reduces the number of disposition code 03 responses.

Further, while speculative, this change may have been made by CMS to prevent the RRE from holding submissions until on, or after, the entitlement start date for the beneficiary. While previously the industry has not had visibility into the entitlement dates for Medicare Parts A and B, the changes underway for the PAID Act will provide such visibility beginning on December 11, 2021 for RREs submitting query files, and on October 4, 2021 for those using the “Beneficiary Lookup” tool on the COBSW.

If you have questions regarding this update or other areas of Mandatory Insurer Reporting, reach out to us at [email protected].