Over the last several years, The Centers for Medicare and Medicaid Services (CMS) has taken an increasingly tough stance on health plans that distribute Annual Notice of Change (ANOC) and Evidence of Coverage (EOC) documents with unclear and/or inaccurate benefit information.
CMS is no longer sending health plans warnings for these errors; they are imposing civil money penalties (CMPs) for thousands of dollars that health plans must pay. For instance, CMS recently imposed a CMP in the amount of $132,000 to a health plan for failing to provide accurate benefit information to 2,400 enrollees in its Contract Year (CY) 2017 ANOC and EOC documents. For larger health plans, fines can quickly add up to millions of dollars.
CMS’s reasoning behind these fines is that if members receive inaccurate information related to premiums, deductibles and co-pays, they may enroll in a plan under false expectations.
Methodology for CMPs
For each affected enrollee, CMS calculates the CMP amount by applying a standard formula. Under the standard formula, CMS applies a standard penalty amount of $25 per affected enrollee and can adjust for two aggravating factors; prior offenses ($15) and/or delivering the errata mailing after December 31st ($15) for a potential CMP of $55 per affected enrollee.
For example, a health plan with 30,000 members that sends out inaccurate or untimely benefit information to 10,000 of those members will be charged the standard penalty amount per enrollee of $250,000. If they’ve had a prior offense, an additional $150,000 will be added to this fine, and another $150,000 if their members don’t receive their errata mailing by December 31.
The total is then adjusted to meet the enrollment-based penalty maximum for a total CMP of $300,000 for health plans between 20,000 – 49,999 members. A totally unbudgeted amount that no health plan can afford.
On top of these fines, health plans must absorb the cost of creating copy and sending all the affected enrollees an errata mailing with the correct information. In addition, health plans run the risk of negatively impacting the member’s perception of their health plan which could affect their Star Ratings.
The Benefit of Self-Reporting
Fortunately for health plans, CMS allows plans to identify and report any errors in their ANOCs and EOCs by Oct. 31. While self-reporting doesn’t clear the plan of fines from CMS, potential fines could be much lower for those health plans that self-report before the October deadline.
Cody’s Document Accuracy Assessment services can help health plans identify and report these errors. With Cody’s over 10 years of experience of creating ANOCs & EOCs, our team is highly skilled at drafting and reviewing ANOC and EOC documents on time and in compliance, and can be a valuable asset to your organization after you finalize these materials. Contact us today to find out more about our Document Accuracy Assessment services.