DIRTY HARRY WANTS TO KNOW DO YOU FEEL LUCKY?
Clint Eastwood in the original Dirty Harry movie asks the robber the now infamous question - "Do I feel lucky? Well do 'ya?"
It's a question that we at Innovative Employee Benefits think any employer who is contemplating self-administering their Health Reimbursement Arrangement (HRA ) or self-funded reimbursement plan should ask of themselves.
So, " Do you feel lucky?" Because we believe that's what it's going to take luck to successfully pull off a self administered reimbursement plan or HRA.
You might think that you can save some bucks if you don't have to pay someone to administer your plan (and now days, who doesn't want to come up with ways to save money?)
But administration of an HRA or self-funded reimbursement plan is much more complicated that just writing checks to participants. There are any numbers of complexities that can trip you up.
Speaking of wanting to save money, the federal government and Medicare are interested in doing just that, which is why self-funded reimbursement plans and HRA s, along with other group health plans, are now required to submit their plan enrollment electronically each quarter to the Centers for Medicare and Medicaid Services (CMS).
The coordination of coverage rules for Medicare and group health insurance is not a "one-size fits all" where Medicare is always the primary payer or always the secondary payer. Which one is correct depends upon a number of factors employer size, the different reasons for Medicare entitlement and it's easy to make mistakes in the determination.
By self-administering the HRA or self-funded reimbursement plan, an employer becomes the group insurance plan administrator, and as such, is required to register with CMS as a Section 111 Registered Reporting Entity (RRE) and begin submitting electronic enrollment files, which will certainly involve your IT Department creating a transmission program based upon the file specifications that can be found in the 250 page CMS Section 111 User Guide.
Medicare is particularly interested in making sure that overpayments in this area are not made as this is an effective way to save the government money without having to mandate additional taxes. Non-compliance in this area can be very expensive fines of up to $1000 per day. Are you prepared to produce an Explanation of Benefit to be submitted to CMS as evidence of reimbursement you've made to your employee?
And, as if that wasn't enough, in addition to the Section 111 pitfalls above, add the regulatory environment of HIPAA! Self-administering a group insurance plan will bring a higher level of HIPAA Privacy and Security scrutiny because, by becoming the claims payer, you will now be dealing directly with Protected Health Information (PHI and e-PHI) which will need to be treated and secured in the manner mandated by the HIPAA & HITECH regulations. Just this past fall, a new layer of HIPAA Security was mandated, dealing specifically with the issue of electronic PHI (e-PHI), whether housed on servers, laptops, flash drives, mobile devices, copier/scanners, etc. and ad infinitum - all the places that our technological world now potentially has this information.
The specifics for HIPAA Privacy and Security compliance are certainly beyond the scope of this communication, but suffice it to say that non-compliance in this area can result in significant fines ranging from $100 to $50,000 for each violation, and $25,000 to $1,500,000 for similar violations in the same year.
It's easy to see it would take only a few days worth of non-compliance fines to wipe out any "savings" that you might be hoping to gain. So, before you "pull the trigger" and take on the administration of your HRA or self-funded reimbursement plan, think again.
Coming up with sound workable solutions for our clients is what we strive for and the purpose of our collaborative client, broker, and administrator relationship.
