CMS Pub. 100-16, ch. mc86c17b, § 370.3

Section 1862(b)(1)(C) of the Act provides that a group health plan may not take into

account that an individual is entitled to Medicare solely on the basis of ESRD during the

period when Medicare is secondary payer.

Further, a group health plan may not differentiate on the basis of the existence of ESRD,

the need for renal dialysis, or in any other manner in the benefits it provides between

individuals having ESRD, and other individuals covered by such plan.

Examples of discriminatory actions by a group health plan or LGHP that constitute

noncompliance with these provisions include:

• Failure to make primary payment on behalf of an individual for whom Medicare

is secondary;

• Providing secondary or complementary coverage to such an individual;

• Refusal to allow such an individual to enroll or re-enroll in the group health plan

or large group health plan because of Medicare entitlement;

• Providing a different level of benefits for individuals for whom Medicare is

secondary than it provides for other persons enrolled in the plan;

• Imposing limitations on benefits, exclusions of benefits, reductions in benefits,

higher premiums, higher deductibles or coinsurance, longer waiting periods,

lower annual or lifetime benefit limits, or more restrictive pre-existing illness

limitations for persons for whom Medicare is secondary payer that are not

applicable to others enrolled in the plan;

• Terminating coverage because a person has become entitled to Medicare; or

• Failure to cover routine maintenance dialysis services or kidney transplants.

The Medicare cost-based HMO/CMP should refer any case of a nonconforming group

health plan to the RO servicing its area. The HMO/CMP should include, in addition to

the beneficiary’s name, address, and SSN or HICN, the formal name and address of the

nonconforming group health plan; the name and address of the entity required or

responsible for making payment on behalf of the plan (e.g., the employer, an insurer, or a

third party administrator (TPA)); a copy of the employer’s agreement with the TPA; the

name of the sponsoring or contributing employer or employee organization; the employer

or employee organization taxpayer identification number; year(s) of violation; the

provider’s name, address and identification number; the specific amount of Medicare

payments associated with the nonconformance; the specific date(s) of service; the

specific procedure or diagnosis code(s); the MSP type (e.g., ESRD or working aged); and

a full explanation of the reasons for the referral. The CMS RO reviews the case file for

completeness and obtains any needed additional information. When the file is complete,

the RO refers the case to CMS CO. CMS CO reviews the case and refers it to the Internal

Revenue Service (IRS) to impose the excise tax on employers and employee

organizations that have contributed to the plan.

The excise tax penalty for nonconformance with the working aged and ESRD MSP

provisions can be imposed for acts of discrimination occurring on or after December 20,

1989. The excise tax penalty for nonconformance with the disability MSP provision can

be imposed for acts of discrimination occurring on or after January 1, 1987.