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Moving Closer to Civil Money Penalties for Section 111 Mandatory Insurer Reporting

February 13, 2020 · Lavonya Chapman Esq RN CMSP

An unpublished version of the long-waited Section 111 mandatory insurer reporting (MIR) Civil Money Penalties (CMP) has been released and is expected to be published in the Federal Register on 02/18/2020. See link: Applicable non-group health plans (NGHP) include liability (including self-insurance), no-fault insurance and workers’ compensation laws or plans. Required registration began in 2010 for each NGHP responsible reporting entity (RRE).

There are three major areas identified under which the proposed rule will assess CMP amounts:

  • When RREs fail to register and report
  • When RREs report but their errors exceed set tolerances
  • When RREs report data that is inconsistent with information that has already been communicated to CMS

There is considerable review of background information concerning the history since Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) was passed.

The proposed regulations address specific criteria as to when CMPs will be imposed and specific criteria for when the CMPs will not be imposed. The penalty will be measured regardless of whether the RRE makes the error or whether the error is made by their Section 111 reporting agent. The proposed rules state that CMPs will be levied and are separate and unrelated to other Medicare Secondary Payer reimbursement obligations. Examples include not shifting the burden to Medicare to pay for related future medical expenses and failure to reimburse Medicare for what has been paid conditioned upon reimbursement, known as Medicare conditional payments.

A penalty adjustment and table is proposed pursuant to 45 CRF 102.3 that will identify circumstances in which RREs would be subject to CMPs for violations. Following publication of the final rule, CMS will enhance the monitoring of recovery disputes and appeals that contradict reported data already communicated to CMS, plus monitor data error rates.

When RREs fail to register and report
A non group health plan (NGHP) may be subject to CMPs up to $1,000 per day per claim for noncompliance. The proposed rules provide the following situations in which CMPs would be imposed:

  • If an RRE fails to report any NGHP beneficiary beyond one (1) year of settlement, judgment, award, or other payment, otherwise known as the total payment obligation to the claimant (TPOC) date. The penalty would be calculated daily based upon the number of individual beneficiaries’ records submitted late for each calendar day of noncompliance up to a maximum penalty of $365,000 per individual per year.

When RREs report but their errors exceed set tolerances
When NGHP RRE Section 111 reporting exceeds the error tolerance(s) threshold established by the Health and Human Services (HHS) Secretary in four out of eight consecutive reporting periods, a proposed initial and maximum error tolerance threshold would be 20%. This would represent errors that prevent greater than or equal to 20% of the beneficiary records from being processed.

It appears that input is invited as to exactly how this should equitably be done and reference is made to the specific errors that prevent a file or individual beneficiary from processing. Under the proposed rules, an RRE will be considered to be out of compliance for the entire reporting period (quarter) when the RRE exceeds the error threshold tolerance.

A tiered approach is proposed to impose CMPs for a NGHP RRE exceeding error thresholds occurring in the fourth above-tolerance submission reporting period. The first level of this penalty would be one quarter or 25% of the maximum penalty per individual record per calendar day of non-compliance. Maximum penalty is currently defined as $1,000, adjusted annually after the required date of submission, which is the last calendar day of the RRE’s prescribed reporting period, and also based upon the number of beneficiaries whose records exceed the error tolerance threshold established by the HHS Secretary. This is described as $250 per calendar day over the 90 calendar days of non-compliance for the full quarterly reporting period per individual beneficiary record.

If the NGHP RRE fails to comply again in the next reporting period, the amount of the penalty would increase by 50% of the maximum penalty. This is described as $500 per calendar day over the 90 calendar days of non-compliance for the entire quarterly reporting period per individual record. The RRE penalty continues to increase for further noncompliance to 75%. Various examples are added in the proposed rules to clarify how CMPs for exceeding error thresholds will be assessed.

When RREs report data that is inconsistent with information that has already been communicated to CMS
There is also discussion regarding when a NGHP’s responses to CMS recovery efforts are inconsistent or contradictory with the Section 111 data fields required for reporting. Such as, an RRE who reports acceptance of ongoing responsibility for medicals (ORM) and fails to terminate ORM at the appropriate time. The CMP would be calculated based on the number of calendar days the RRE failed to properly report ORM termination. For a NGHP RRE, the CMP would be up to $1,000 per calendar day of noncompliance for each individual ― a maximum annual penalty of $365,000 for each individual where reporting did not occur. CMS acknowledges that they do not yet have the systems in place at this time to monitor when entities contradict their reported data.

Circumstances where no Civil Money Penalties will be imposed
Where all applicable conditions are met, circumstances in which no CMP will be imposed include:

  • If a NGHP RRE beneficiary record is submitted within the required timeframe, not to exceed one (1) year after the TPOC date.
  • If a NGHP RRE complies with TPOC reporting threshold exclusions pursuant to the MMSEA Section 111 User Guide, which are subject to change annually.
  • If a NGHP RRE does not exceed the error tolerance thresholds in any of the four out of eight consecutive quarterly reporting periods.
  • If the NGHP RRE was unable to obtain necessary information for reporting and the NGHP made a good faith effort to obtain them and can document the following:
  • They communicated the need to the individual and claimant’s attorney and requested it at least twice by mail and at least once by phone or email.
  • The NGHP certifies that it has not received a response in writing with the Medicare Beneficiary Identifier or Social Security number.
  • The NGHP RRE records documents said efforts and reasons for failure to collect required information.
  • The NGHP must keep the good faith efforts to comply for five years and be able to produce them as mitigating evidence should CMS contemplate imposing CMPs.

Prospective CMP Assessment
Comments are solicited from industry stakeholders in response to imposing and not imposing CMPs as proposed above. Fortunately, once CMPs become effective, CMS will not look back in time for Section 111 non-compliance and there is a proposed five (5) year statute of limitations for CMP payment demands. An administrative appeals process will be available once the RRE receives a formal notice of non-compliance. The RRE will have 60 days to appeal or request a hearing.

Next Steps

  • NGHP RREs have time to provide input during the comments period and need to make their voices heard.
  • New liability, no-fault insurance and workers’ compensation laws or plans that are defined as RREs and self-insured entities need to register and report now if they have not done so.
  • NGHPs and RREs must have a process for showing proof of “good faith” efforts to report.
  • NGHP RREs need to scrub data errors received in their Section 111 reporting and make immediate corrections. Pay close attention to:
  • when ORM is accepted
  • when ORM terminates rather than turning ORM to “No=N”
  • inadvertent ORM reporting on liability claims
  • denied or erroneous injuries/illness reported as ICD codes
  • reporting TPOC promptly upon settlement, judgment, arbitration award
  • Best practices for conditional payment disputes and appeals should always be preceded by a review of what has already been communicated to CMS whether by Medicare Set Aside (MSA) submission, Section 111 reporting, or Benefits Coordination & Recovery Center (BCRC) verifications via fax or phone to be sure the claim data is consistent with the RRE claim and legal files.

Optum Settlement Solutions is a Section 111 reporting agent and offers full service solutions to Medicare Secondary Payer claim concerns including MSAs and Medicare conditional payment disputes and appeals. Optum will continue to monitor further developments and provide additional guidance to the industry. Stay tuned and reach out to Lavonya Chapman, Esq, RN, CMSP at if you have further questions.

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