Medicare Part D: Disclosing Creditable Coverage Status to CMS

Employers have Medicare Part D compliance issues whether or not their plans provide retiree prescription drug coverage. Our previous article about Medicare Part D ("New Prescription Drug Benefit Rules Under Medicare Part D," available at http://www.millernash.com/showarticle.aspx?Show=407), describes the notice that an employer offering prescription drug coverage must provide to Medicare Part D eligible individuals. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 also requires employers to notify the Centers for Medicare and Medicaid Services ("CMS") whether the prescription drug coverage offered by the employer is "creditable" or "noncreditable." For plan years that end in 2006, the initial disclosure notice must be filed electronically with CMS by March 31, 2006. Disclosure must be provided annually or more often for each plan year after that, as described below.

Who Must Provide Notice to CMS?

With some exceptions, all employers that provide prescription drug coverage to Part D eligible individuals must disclose to CMS whether the coverage is creditable. (The creditable coverage status of prescription drug coverage should have been determined last fall when notice had to be provided to Part D eligible individuals. Absent any later prescription drug plan changes, that determination can be relied on in providing the disclosure notice to CMS.) An employer providing prescription drug coverage through a Part D prescription drug plan does not have to notify CMS. Similarly, an employer that has applied for and been approved to receive the retiree drug subsidy is exempt from filing the notice with respect to the retirees for which the employer is receiving the subsidy.

When Must Notice Be Provided?

There are four separate times that the disclosure notice must be provided to CMS:

• For plan years that end in 2006, no later than March 31, 2006;
• For plan years that end in 2007 and beyond, within 60 days after the first day of each plan year (for a plan year beginning July 1, 2006, this would be August 30, 2006);
• Within 30 days after the termination of the prescription drug plan; and
• Within 30 days after any change in the creditable coverage status of the prescription drug coverage.

What Must Be Included in the Notice?

CMS has prepared a form that employers must use when providing information about the creditable coverage status of the prescription drug plan. The following information must be provided: identifying employer information; the type of coverage (e.g., employer-provided group health plan coverage); the number of prescription drug coverage options (e.g., HMO, PPO, indemnity) and the creditable coverage status of each option offered by the employer (but data for all coverage options that are creditable (and all noncreditable coverage options) may be combined); the plan year; an estimate of the number of Part D eligible individuals expected to be covered under the plan as of the first day of the plan year; an estimate of the number of Part D eligible individuals expected to be covered under a retiree plan; the date on which the notice of creditable (or noncreditable) coverage was last provided to Part D eligible individuals; contact information for the individual who is submitting the disclosure notice on behalf of the employer; and the date of the disclosure notice to CMS.

How Do I Provide Notice to CMS?

The CMS form is available at http://www.cms.hhs.gov/apps/ccdisclosure/default.asp. That form must be completed and submitted electronically to CMS by the employer. This is the only way to give notice to CMS.