HR Tip: CMS publishes final rule on civil monetary penalties for Section 111 reporting

The Centers for Medicare and Medicaid Services (CMS) published the final rule outlining how civil monetary penalties (CMP) will be calculated and imposed when Responsible Reporting Entities (RRE) fail to meet their Medicare Secondary Payer (MSP) Section 111 reporting obligations. While the proposed rule included three issues that could result in penalties - untimely reporting, reporting Ongoing Responsibility for Medicals (ORM) and later reporting contradictory diagnosis codes, and exceeding error tolerance thresholds, the sole reason for penalties under the final rule is untimely reporting.

Another change is that CMS will not monitor all RRE submissions as contemplated in the proposed rule. Instead, CMS will use a randomized quarterly audit process to identify noncompliance. The agency anticipates it would be possible to audit a total of 1,000 records per calendar year across all RRE submissions, divided evenly among each calendar quarter (250 individual beneficiary records per quarter). CMS will evaluate a proportionate number of Group Health Plan (GHP) and Non-Group Health Plan (NGHP) records based on the pro-rata count of recently added records.

For GHPs, timeliness is defined as reporting to CMS within one year of the date GHP coverage became effective. For NGHPs, timeliness is defined as reporting to CMS within one year of the date a settlement, judgment, award, or other payment determination was made (or the funding of a settlement, judgment, award, or other payment, if delayed), or the date when an entity's Ongoing Responsibility for Medicals (ORM) became effective.

CMS does not have statutory authority to adjust the penalties imposed on GHPs. Therefore, the penalties for GHPs and NGHPs will be calculated differently:

• GHPs will be fined $1,000 per day (adjusted annually for inflation) for any record that is more than one year (365 calendar days) late.
• NGHPs' penalty approach is tiered based on the number of years the record is late. The daily penalties are as follows: $250 for each calendar day more than one year but less than two years after the required reporting date; $500 for each calendar day more than two years but less than three years after the required reporting date; and $1,000 for each calendar day three years or more after the required reporting date. The total penalty for any one instance of noncompliance will be no greater than $365,000

There are several safe harbor provisions related to documented good faith efforts, technical or system issues outside the RRE's control, recent policy or procedural changes, and compliance with reporting thresholds or a reporting exclusion.The rule's effective date is December 11, 2023, but is only applicable one year after publication (October 10, 2024). "RREs are expected to be compliant with their Section 111 Mandatory Insurer Reporting requirements no later than October 10, 2024, or they may be eligible for a CMP." An appeals process is outlined in the regulation.