January 31, 2023

Volume XIII, Number 31


January 30, 2023

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CMS Fixes Some Health Plan Identifying Number (HPID) Problems, But Other Problems Remain

Most group health plans must apply to the Centers for Medicare & Medicaid Services by November 5 for a unique health plan identifying number (HPID).  Although self-insured health plans must apply for HPIDs, the application process was not designed with these plans in mind.

In a post this summer, we identified several deficiencies in the HPID rules that will make the application process difficult for employers.  CMS has recently fixed a few problems; but with the November 5 deadline fast approaching, the agency still has not addressed other fundamental shortcomings of the HPID rules.

CMS Will Now Issue Multiple HPIDs to the Same Employer

An employer must obtain an HPID for each “controlling health plan” (more about that term below) that has 50 or more participants.  Most large employers have more than one controlling health plan.  For example, if an employer maintains separate group health plans for union-represented active employees, non-union active employees, and retirees, the employer probably sponsors at least three controlling health plans and needs three HPIDs.

CMS’s on-line application system previously recognized only one controlling health plan for each employer identification number (EIN).  As a result, an employer that sponsored more than one health plan could obtain an HPID only for one plan: the application system refused to issue HPIDs for additional health plans under the same EIN.

CMS announced last week that it has solved this problem.  CMS has updated its Health Plan and Other Entity Enumeration System so that the system will now issue HPIDs to multiple controlling health plans that register using a single employer identification number.  A Quick Guide and a more detailed Health Plan ID User Manual posted on CMS’s website help employers navigate the application system.

NAIC Number or Payer Identification Number No Longer Required

CMS has also revised the part of the application that required a group health plan to provide an NAIC number or Payer Identification Number in order to proceed.  NAIC numbers are issued to insurance companies, but not to self-insured group health plans.  Group health plans generally do not have Payer Identification Numbers, either.  Instead, a group health plan uses the Payer Identification Numbers of many different third-party administrators and other claims-paying agents that make payments on the plan’s behalf.  The HPID on-line application now permits a self-insured group health plan to enter “not applicable” rather than provide these numbers.

“Controlling Health Plan” and “Subhealth Plan” Definitions Still Unclear

The HPID rule distinguishes between a “controlling health plan,” which must obtain its own HPID, and a “subhealth plan,” which may either obtain its own HPID or use the HPID of its controlling health plan.  A controlling health plan controls its own activities and policies, or is controlled by an entity that is not a health plan; a subhealth plan’s activities and policies are directed by a controlling health plan.

This distinction is designed mainly for hospitals, HMOs, insurers, and other entities that are in the business of providing health care or health coverage through parent-subsidiary groups and similar structures.  It is not at all clear how the “controlling health plan” and “subhealth plan” concepts apply to self-insured employer group health plans, which might include a number of different benefit options and payment structures under a single administrative umbrella.

For example, if an employer wishes to track enrollment and claims data separately for different benefit options under a single group health plan, may the employer treat each option as a subhealth plan and obtain separate HPIDs, or must the employer treat all of the options as part of a single controlling health plan?  If the employer’s health plan provides coverage through HMOs in certain geographic regions, are the HMOs separate controlling health plans (because they control their own activities and policies), even though they provide benefits under the employer’s plan?  What about dental and vision plans that are part of an umbrella group health plan: do they need separate HPIDs, or can they operate under the umbrella plan’s HPID as long as they are part of a single ERISA plan?  If an employer maintains a self-insured health reimbursement arrangement in connection with an insured group health plan, does the health reimbursement arrangement need a separate HPID?

CMS has not yet answered these and many other questions about how the “controlling health plan” and “subhealth plan” definitions apply to employer group health plans.  Without answers to these basic questions, employers apparently must make their best guess as to how many HPID applications they need to file before November 5.

© 2023 Covington & Burling LLPNational Law Review, Volume IV, Number 272

About this Author

Amy Moore, Covington, Employment Attorney
Retired Partner

Amy Moore advised some of the world's largest multinational companies on a wide range of tax, ERISA, health care, and employment law issues concerning all types of compensation arrangements and benefit programs. She was ranked as one of the top 20 employee benefits lawyers in the nation.

Ms. Moore’s clients included state governments, national tax-exempt organizations, and private companies as well as Fortune 500 companies. She helped employers and service-providers comply with the complex laws and regulations governing health plans and wellness programs. She...