A Final Rule on Medicare Secondary Payer and Civil Monetary Penalties up to $1000 per day/per claim is Just 1 Year Away: Is Your Claims Organization Prepared?


On February 18, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a Notice of Proposed Rulemaking (NPRM) regarding scenarios in which Civil Monetary Penalties (CMPs) for noncompliance with MMSEA Section 111 reporting could be issued against Non-Group Health Plans (“NGHPs” to include workers’ compensation, general liability, and no-fault payers/plans, including self-insurance). The comment period closed in April of 2020, and comments submitted in response to the Proposed Rule are currently being reviewed by CMS.

The Office of Management and Budget (OMB) website indicates that the rule will be finalized by February 18, 2023, as MMA sec. 902 requires Medicare to publish final rules within 3 years of a proposed or interim final rule. The Final Rule will likely not become effective until at least 30 days after it is published in the Federal Register. The link to the NPRM can be found here. Thus, one can speculate that we are about one (1) year out from a Final Rule on CMPs, and once the Final Rule is published, CMS may/will begin penalizing noncompliant workers’ compensation, general liability, and no-fault Responsible Reporting Entities (RREs).

The description of the proposed Final Rule now states the following, which is insightful into the areas of Section 111 compliance that CMS will seemingly focus on when determining whether to issue a CMP against an RRE:

This final rule specifies how and when CMS must calculate and impose civil monetary penalties (CMPs) when group health plan (GHP) and non-group health plan (NGHP) responsible reporting entities (RREs) fail to meet their Medicare Secondary Payer obligations in any or more of the following ways: when RREs fail to register and report as required by MSP reporting requirements; when RREs report as required, but report in a manner that exceeds error tolerances established by the Secretary of the Department of Health & Human Services (the Secretary); when RREs contradict the information the RREs have reported when CMS attempts to recover its payments from those RREs. This rule also establishes CMP amounts and circumstances under which CMPS would and would not be imposed.”

Thus, clearly, areas of focus for CMS on penalizing insurers are those entities that have failed to register and report, where the RRE is exceeding error tolerances/not correcting errors, and where the Section 111 reporting contradicts what the RRE might argue on a Medicare conditional payment appeal as far as responsibility for payment.

Also, we know from the Proposed Rule that CMS is looking to see that to the extent an RRE is unable to obtain an injured individual’s Social Security Number (SSN), that the documentation of those “good faith efforts” to obtain the SSN is highly critical to defend against CMPs. In its Proposed Rule, CMS proposed that the RRE must make at least 3 attempts, both by phone and email/mail, to obtain the SSN so that the RRE can properly report. This is a high standard for CMS to set, thus RREs should be prepared if this standard remains in the Final published Rule. This certainly impacts liability payers more than workers’ compensation payers, which more readily have access to an injured individual’s SSN.

Although the Proposed Rule has stated that any CMPs issued would be prospective in nature, the Final Rule will be the final say as to whether CMS intends to apply CMPs to RREs on a retroactive basis. Further, as CMS has proposed having a 5- year statute of limitations in which to issue a CMP against an RRE, the time is NOW for RREs to ensure that its current and historical reporting of claims follow MMSEA Section 111 obligations.

Please contact me with questions on the MMSEA Section 111 CMP Proposed Rule, and for Best Practices to become prepared for the Final Rule on CMPs at heather@sandersoncomp.com.

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