October 13, 2016

CMS Plans to Overhaul Medicare's Beneficiary Identification System: What You Need to Know
From international law firm Arnold & Porter LLP comes a timely column that provides views on current regulatory and legislative topics that weigh on the minds of today’s physicians and health care executives.

CMS is preparing to phase out identification of Medicare beneficiaries by Social Security number (SSN) and will, in their place, roll out a new system of Medicare Beneficiary Identifiers (MBIs). Beginning April 2018, CMS will start issuing new Medicare cards containing MBIs to enrolled beneficiaries and, at the same time, cease issuing cards with SSNs to new enrollees. In response, providers must take steps to ensure they will be able to process Medicare transactions using MBIs while — at least for a brief transition period — also maintaining a system compatible with beneficiaries’ SSNs. Health providers, health plans, and state Medicaid Agencies, among others, must successfully integrate MBI-compatible systems or risk interruption to or potential loss of Medicare funds.

Enacted as part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), the SSN Removal Initiative (SSNRI) was designed to help protect the integrity of private health care and financial information and to safeguard federal health care benefit and service payments. SSNRI requires significant changes both to CMS’s internal systems and the systems of its many business partners. Although this initiative may appear as only one small dot on an otherwise crowded regulatory horizon, providers should start preparing early for this consequential shift.

By December 31, 2019, CMS plans to transition all Medicare beneficiaries from SSNs to the new MBI-based system. The phase-in presents many challenges to providers, both technical and administrative. For example, during the transition period, CMS will allow providers to submit claims under a patient’s SSN or MBI. However, CMS will return only the MBI on a remittance advice, even when the claim is submitted using a SSN. Any disconnect between a beneficiary identifier on a submitted claim and that on a returned remittance advice will have to be addressed internally by the provider. Perhaps more importantly, starting in April 2018 new Medicare enrollees will be assigned MBIs only. As a result, failure to have an MBI-compatible system up and running by April 1, 2018, will impair a provider’s ability to confirm the eligibility of, and to bill for services furnished to, new Medicare enrollees.

To prepare, providers should begin examining how the transition from SSN to MBI will affect their practice management systems and business processes, including billing, determining eligibility status, checking claim status, and filing appeals. Some changes will be technical (eg, modifying IT systems to incorporate MBIs), while others will be administrative (eg, adopting new patient-intake forms). Helpfully, CMS has specified the anticipated MBI format — it will be 11 characters in length and made up of numbers and uppercase letters. When designing and implementing changes, providers should be mindful that, like the SSNs they replace, MBIs will be considered Personally Identifiable Information and, therefore, confidential. Critically, providers should ensure that they implement whatever changes they need to make with sufficient lead-time to enable thorough testing to minimize the risk of disruption once the transition begins.

Thomas A. Gustafson, PhD, senior policy advisor at Arnold & Porter LLP, can be reached at

Alexander R. Cohen, JD, an associate at Arnold & Porter LLP, can be reached at

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