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Through an integrated medical, pharmacy, claims and legal approach, we deliver insights to help navigate the ever‑changing Medicare Secondary Payer landscape.

CMS updates regarding civil money penalties and TPOC

December 1, 2023 · Medicare Insights Team

CMS FAQ on Civil Money Penalties

On November 2, CMS provided additional information regarding Civil Monetary Penalties (CMP) through a Frequently Asked Questions (FAQ) document. This FAQ clarified a number of questions sent to CMS regarding the recent rule published on October 11, 2023. To summarize some of the points in the FAQ:

The rule does not change existing Section 111 reporting requirements.
The rule is applicable as of October 11, 2024.
The earliest a CMP may be imposed is October 2025.
There will be no “look back” period and all penalties will be prospective in nature.
A record must be accepted by CMS (and not rejected due to error) to be considered as successfully reported before it is due.
Auditing is random and spread proportionally amongst group health plans (GHP) and non-group health plans (NGHP). CMS will audit 250 claims per quarter.
RREs that have additional questions can email Sec111CMP@cms.hhs.gov.

Click here for more information on the CMP rule and analysis.

CMS Announces Additional Section 111 Reporting Fields for TPOC

On November 13, CMS hosted a webinar to announce additional Section 111 changes specific to the Total Payment Obligation to the Claimant (TPOC) field. These changes will add requirements for RREs to include amounts allocated for future medical treatments in settlements. Currently, the TPOC amount should include all components to a settlement, including lump sum payment to the claimant, MSA funds allocated, liens being resolved, attorney fees, and other payments. The change will include several fields to clarify what, if anything, was set aside for future medical treatments.

When will this new Section 111 requirement go into effect?

To be determined. CMS intentionally provided an early announcement so that RREs can prepare and provide feedback. The estimated timeline includes:

Updated file layout and error codes provided in early 2024
Testing available in Fall 2024
Implementation in January 2025

The above milestones are estimations and are subject to change.

What data will be reported in the new Section 111 fields?

Some fields are required, and other fields are optional:

Required:

MSA Amount. The total MSA amount is required for workers’ compensation claims where TPOC is reported. Note that $0 is a valid entry.
MSA Period. The period of coverage in years is required if the MSA amount is greater than $0.
Lump sum/annuity indicator. This is required if the amount is greater than 0.
Initial Deposit. This is required if the MSA is structured.
Anniversary. This is also required if the MSA is structured. The RRE should include the annual deposit amount.

Optional Fields

Professional Administrator EIN. Tax ID of professional administrator if one exists.
Case Control Number. ID from case previously established with CMS.

While these additional fields are optional, they will help CMS identify approved MSAs associated with Section 111 reporting.

Do I need to report information associated with both MSAs approved by CMS and MSAs not submitted to CMS?

Yes, if money is set aside for future medical expenses in the settlement, you must report that information to CMS whether or not a Workers' Compensation Medical Set Aside (WCMSA) was submitted. Again, this only applies to workers’ compensation settlements. This includes WCMSAs, evidence based MSAs, non-submit MSAs or any other type of future medical allocation. Notification of the WCMSA will be sent to the beneficiary by CMS explaining the process for attestation and exhaustion.

Is there a requirement that I obtain a MSA with my settlement now?

No. The WCMSA submission process for CMS approval remains voluntary. The parties are also not required to obtain a MSA that falls outside the CMS process.

Will the MSA reporting requirement be retroactive in nature?

CMS has not yet decided when the MSA reporting requirement will take effect or what its lookback period will be.

This new reporting requirement for MSAs may correlate with CMS requiring information relating to coordinating post-settlement benefits when a WCMSA is involved. It also appears that this required reporting will give CMS additional insight into settlements that lack a clear picture as to what the parties may have done to account for future medical expenses with regard to settlements that close out future medicals. The best way to minimize risk associated with CMS and Medicare relating to settlements continues to be the WCMSA process that includes submission to CMS for approval. Choosing not to pursue a CMS approved WCMSA may lead to increased CMS scrutiny of settlements once the new reporting requirement is implemented.

Optum can help with your Medicare Set-Aside and Section 111 Reporting needs

As a long-time, trusted MSA provider and Section 111 reporting agent, Optum is eager to provide future medical allocation services or help with your Section 111 reporting needs. Our MSA specialists will help you receive the lowest defensible MSA allocation. Our Section 111 experts have years of experience and can help you address issues regarding civil money penalties. Contact us for more information on how we can help you meet your Section 111, MSA or other Medicare Secondary Payer compliance needs.

For additional information, please contact Michael Flower, Optum MSP Compliance Counsel, at michael.flower@optum.com (p) 813-627-2406.