On October 17th, the Centers for Medicare and Medicaid Services (CMS) held its second non-group health plan (NGHP) Section 111 civil money penalties (CMPs) webinar. As part of this hour long event, CMS discussed several different CMPs related items pertaining to NGHP Responsible Reporting Entities (RREs) in supplement to the information it provided on its January 18, 2024 webinar, and its recently released CMPs webpage and CMPs workflow resources.
The authors attended CMS’s October 17th webinar and provide this general, non-exhaustive, outline of key points discussed by CMS as follows:
Important Date Reminders
CMS started the session by reminding the attendees of the CMPs October 11, 2024 “applicability date” which CMS stated is the start of the “compliance clock” for CMPs purposes. In this regard, CMS noted that reportable MSP occurrences on or after this date are in scope for potential CMPs. CMS also reiterated that October 11, 2025 is the CMPs enforcement date in terms of when CMS may actually impose CMPs for untimely TPOC and/or ORM reports. As an additional resource, see the authors’ recent CMPs October Key date article. CMS also reiterated that the CMPs process makes no additional changes to pre-existing Section 111 reporting requirements, RRE’s designated reporting periods, or RRE’s assigned EDI representatives.
Timeliness of Reporting
As far as determining the timeliness of a report is concerned, CMS reiterated its prior guidance indicating that an RRE has 365 days (1 year) in which to submit a required report as follows:
Regarding TPOC reports, timeliness will be calculated by comparing the date CMS received the RRE’s successful file submission with the TPOC Date or, in the event that a Funding Delayed Beyond TPOC Start Date is also submitted, the Funding Delayed Beyond TPOC Start Date will be utilized to calculate timeliness as opposed to the TPOC Date.
Regarding ORM reports, timeliness will be determined by comparing the date CMS received the RRE’s successful file submission with the date ORM was assumed by the RRE. However, as CMS does not collect the date of ORM assumption via the Section 111 reporting process, CMS will make initial calculations regarding timeliness of an ORM report by using the CMS Date of Incident as the date of ORM assumption. That being said, throughout the presentation, CMS repeatedly indicated that, in situations where ORM was not assumed immediately as of the CMS Date of Incident, RREs should be careful to maintain appropriate documentation and provide that documentation as mitigating evidence during the 30-day informal notice period prior to the point that a CMP is officially assessed. In such a scenario, if appropriate mitigating evidence is provided by the RRE, CMS may refrain from assessing a CMP.
CMS also reiterated that, in the event that the associated Medicare beneficiary did not become entitled to Medicare until after the CMS Date of Incident, that CMS would use the later of the CMS Date of Incident or the beneficiary’s date of entitlement in determining the timeliness of the report. Finally, CMS was careful to make clear that records rejected due to errors would not be considered to be timely reports. A coverage record must be accepted by CMS in order for the report to be deemed successful and timely. In the event that an error is received, CMS explained that the RRE would be expected to determine the cause of the error and successfully submit a corrected record within 365 days (1 year) of the MSP occurrence.
CMPs are prospective
As CMS had indicated previously, via both published and verbal guidance, CMS again reiterated that CMPs will be only be assessed on a prospective basis.[1] As CMS had first clarified during their initial January 18, 2024 CMPs webinar, and as they had subsequently documented via the publication of their new dedicated NGHP Civil Money Penalties web page in September of 2024, only TPOC reports where the TPOC Date (or the Funding Delayed Beyond TPOC Start Date if applicable) is October 11, 2024 or later and/or ORM reports where the ORM coverage effective date is October 11, 2024 or later will be in scope for potential assessment of penalties.[2] However, while CMS was careful to highlight the prospective nature of the CMPs, the agency also made it clear that this does not eliminate an RRE’s responsibility to report coverage scenarios which predated October 11, 2024.[3] In this respect, as they have stated in the past, CMS made note that there are other legal avenues via which the agency could pursue RREs for failure to appropriately report these prior coverage scenarios.[4]
Penalty amounts/application
CMS reiterated that it plans to impose CMPs using three penalty “tiers” whereby an RRE will face increasing penalty amounts based on the length of time they are late, with the applicable penalty amounts subject to annual inflation updates.
In this regard, CMS restated the same inflation adjusted rates per tier it showed as part of its January webinar as follows: Tier 1: $357 for each calendar day of noncompliance, where the record was reported 1 year or more, but less than 2 years after, the required reporting date. Tier 2: $714 for each calendar day of noncompliance, where the record was reported 2 years or more, but less than 3 years after, the required reporting date. Tier 3: $1,428 for each calendar day of noncompliance, where the record was reported 3 years or more after the required reporting date.
However, of note, the authors’ research reflects that the max daily CMPs rate was recently adjusted for inflation (again) in August 2024 which CMS, for reasons unknown, did not reference on the webinar (and is not referenced as part of CMS’s new webpage). More specifically, as outlined in the authors’ recent article, the maximum daily CMPs amount was recently adjusted for inflation to $1,474 (up from $1,428), which increases the penalties per CMS’s CMPs tiers.[5]
Thus, the following are the updated CMPs penalty amounts applying CMS’s CMPs calculation methodology per the inflation adjustment noted in the Federal Register (August 8, 2024) update: Tier 1: $368.50 for each calendar day of noncompliance, where the record was reported 1 year or more, but less than 2 years after, the required reporting date. Tier 2: $737 for each calendar day of noncompliance, where the record was reported 2 years or more, but less than 3 years after, the required reporting date. Tier 3: $1,474 for each calendar day of noncompliance, where the record was reported 3 years or more after the required reporting date. In addition, this new inflation adjustment would increase the total maximum penalty amount to $538,010. Again, the above would be the new rates per the August inflation adjustment assuming CMS maintains the calculation method it has been using. We will continue to monitor any new information CMS may release related to the new inflation adjustment noted in the Federal Register (August 8, 2024) going forward.
Clarifying the CMPs audit process
CMS also spent some time providing clarification regarding its planned randomized audit process. Here, as with many of the other topics being discussed, CMS reiterated its prior guidance.
Specifically, CMS began by highlighting the fact that their first audit would encompass records received during the 4th quarter of 2025 where 10/11/25 would be the earliest date as of which a report could be assessed a penalty. Additionally, CMS reiterated that its audit process would involve a random review of 250 newly accepted records per calendar quarter (1,000 per year) and that this would encompass all Section 111 reporting, both GHP and NGHP. The volume of records reviewed for GHP versus NGHP will be directly proportionate to the volume of coverage records received via each process throughout the calendar quarter in question. It may also be worth noting that, during the Q&A segment of the call, an attendee questioned CMS as to what it would expect the average proportionate volume of GHP vs NGHP records reviewed to be, but CMS declined to provide any estimates in this respect as it indicated that volumes may fluctuate and could be difficult to precisely predict in advance.
Finally, CMS explained how the records randomly selected for review may include both those created directly through the Section 111 process as well as non-Section 111 records created based on information received via other sources which may include things such as self-reports from the beneficiary or their representative. CMS further explained that, in the event that the agency is not able to match a non-Section 111 record to a record reported via the Section 111 process that this may be identified as a potential failure to report for which the assessment of a CMP may be warranted.
Updating RRE contact information
CMS reminded the audience that it is the RRE’s responsibility to ensure that all contact information is up to date. In this regard, CMS advised that the RRE should contact its assigned EDI representative if it needs to update its Account Representative or any other associated contact information. CMS stated that RREs will be held accountable in the event that any CMPs correspondence is missed due to inaccurate or outdated contact information. Of note, CMS stressed that reporting agents will not receive CMP correspondence.
CMS also stated that CMPs correspondence will be mailed to the RRE’s Account Representative on record with a copy mailed to the Account Manager. In regard to the above, while CMS did not really discuss its notice and appeal process during its October 17th webinar, CMS previously indicated on its January 18, 2024 webinar that it will use e-mail to send its “informal” CMPs notices and there was no mention of email notifications made during this most recent session. In this respect, CMS did not specifically distinguish between “informal” and “formal” notifications during the October 17th webinar and all notification references seemed to be in relation to physical mailings. With that in mind, one might reasonably assume that all references made during this most recent session were in relation to “formal” notification of CMPs as opposed to the initial “informal” notice which CMS has previously indicated will occur prior to “formal” assessment of a CMP. However, it will be interesting to see if CMS provide any additional clarification in this respect moving forward. Further, as part of its new webpage, CMS states it will send its “Notice of Final Determination” via certified mail.[6] While CMS did not make specific reference to notifications being sent via certified mail during the October 17th webinar, the authors’ assumption would be that, per the information contained in CMS’ new CMPs webpage, delivery of the “Notice of Final Determination” could still be expected to be sent via certified mail.
Good Faith Safe Harbor
CMS discussed its Section 111 CMPs “good faith” compliance safe harbor in greater detail than it did as part of its January webinar. As general refresher, this safe harbor pertains to situations where an RRE is unable to obtain the Big 5 data points (claimant’s first name, last name, date of birth, gender, and social security number, Medicare beneficiary identifier, or health insurance claim number) to help determine potential Section 111 reporting obligations.
CMS’s “good faith” safe harbor is outlined at 42 CFR 402.1(c)(ii). Very generally, under this regulation section, the RRE must make at least three attempts to obtain this information from “the individual and his or her attorney, or other representative, if applicable, or both” as follows: “(i) Once in writing (including electronic mail); (ii) Then at least once more by mail; and (iii) At least once more by phone or other means of contact in the absence of a response to the mailings.” 42 CFR 402.1(c)(ii)(A)(2)(i-iii). Under the final rule, the RRE may cease requesting this information if they “receive a written response from the individual or their attorney or representative that clearly and unambiguously declines or refuses to provide any portion of the information specified herein …”42 CFR 402.1(c)(ii)(A)(3).[7] Further, as part of the safe harbor, the RRE must “document[] its efforts to obtain the MBI or SSN (or the last 5 digits of the SSN). This documentation, including any written rejection correspondence, must be retained for a minimum of 5 years.” 42 CFR 402.1(c)(ii)(A)(3). The full text of CMS’s “good faith” compliance safe harbor can be viewed here.
Regarding the above criteria, CMS stated that a minimum of two (2) attempts must be mailed or e-mailed to the claimant and his or her attorney, while the third attempt can be made via phone call, mail, or e-mail. Further, CMS clarified that the “order” of the RREs attempts does not matter, only that two attempts were made via mail or e-mail and a third by other or similar means. In response to a question during the Q&A segment, CMS stated that three letters would satisfy the above requirements. Also, during the Q&A segment, a participant asked if CMS had any specific rules regarding the spacing/timing of the RRE’s three attempts. In response, CMS indicated that it did not have specific rules but indicated that the attempts should be “reasonable” in terms of spacing/timing. As an example, CMS stated it would view sending three letters on the same day to be inappropriate. CMS also stated that in order to qualify for the safe harbor, the RRE must request the necessary data points from both the claimant and his or her lawyer or representative as stated in the regulation. In addition, CMS reiterated that the RRE must maintain accurate records reflecting each communication attempt made.
Additional CMS resources
CMS noted that information regarding its Section 111 CMPs are available under the existing Mandatory Insurer Reporting page of CMS.gov. CMS noted that the letters and appeals process described on its website will be discussed in more detail at a future webinar. In addition, CMS referenced its recently posted CMS’s NGHP Civil Money Penalties webpage and CMS’s CMPs workflow as additional resources.
Further Topics of Discussion
As per standard course, upon completion of the agency’s prepared presentation, CMS subsequently fielded questions from webinar attendees. The following are selected items discussed which the authors found to be most notable:
- Delayed notification of claim by claimant: Scenarios in which there may be a significant delay before a claimant initially notifies an RRE of a claim or scenarios in which a claim may initially be denied but subsequently determined to be compensable and accepted at a later date. In situations like these, CMS acknowledged that an RRE’s Section 111 report may appear to them as being delayed because a determination to assume ORM was not made until significantly later than the reported CMS Date of Incident. In responding to multiple questions of this nature, CMS stressed the importance of the RRE taking advantage of the 30-day informal notice window during which the RRE can submit mitigating evidence to present, in this scenario, evidence documenting the actual date that ORM was assumed. CMS stressed that, if valid mitigating evidence is provided in this situation, that it would refrain from assessing a CMP.
- Penalties in relation to delayed ORM termination reports: Another attendee questioned CMS as to whether a CMP could be assessed based on a delayed submission of an ORM termination date. This question was likely prompted by the fact that CMS returns a “warning flag” (previously referred to as a “compliance flag”) on an RRE’s response file if an ORM termination date is submitted more than 135 days subsequent to the date of ORM termination.[8] CMS returns similar “warning flags” when an initial TPOC report or ORM report is submitted more than 135 days subsequent to the associated MSP occurrence. As late reporting of initial TPOC or ORM reports are in scope for penalties, one could see how an RRE might assume that the delayed submission of an ORM termination date could also be subject to penalties since a “warning flag” is also returned in those scenarios. However, CMS clarified that only the untimely initial report of a TPOC or ORM are in scope for CMPs. A delayed submission of an ORM termination date, in and of itself, will not be subject to penalties.
- Manual self-reports submitted prior to an RRE’s Section 111 submission: Another question posed to CMS was in relation to scenarios in which an RRE may manually self-report a claim in advance of their Section 111 electronic report and if that manual non-Section 111 report would qualify as successful report in terms of potential CMP assessment. Here CMS clarified that the manual self-report does not count as a timely successful report as far as protecting an RRE against CMPs would be concerned. CMS indicated that CMPs are specific to the electronic Section 111 reporting requirement and a failure to report in a timely fashion via the Section 111 process, despite a timely manual self-report, would not protect an RRE against assessment of a CMP.
- Reporting scenarios addressed directly with CMS outside of the standard Section 111 reporting process and connection to potential CMPs: On this topic an attendee questioned CMS specifically about asbestos global resolution scenarios (occasionally in connection with a process referred to by the acronym AMP) and whether a claim resolved via this process would be subject to assessment of CMPs if not reported via the Section 111 process. In these scenarios, RREs are generally instructed not to report the same claim via the Section 111 process. In response, CMS acknowledged that they may occasionally address more complicated reporting scenarios of this nature via alternate means and, when doing so, may issue an exception to the Section 111 reporting requirements. CMS confirmed that these scenarios would not be subject to CMPs but mentioned that if the associated coverage record was inadvertently selected via CMS’s randomized audit process, that the RRE should make CMS aware as soon as possible via the informal notice process in order to ensure that a CMP is not inappropriately assessed.
Questions?
Please feel to contact the authors if you have any questions. Also, please see our Verisk’s Section 111 CMPs resources for additional CMPs resources, including our recent CMS’s CMPs final rule is “applicable” October 11, 2024 article and information on our Section 111 reporting tool MSP Navigator.
[1]CMS’s Section 111 NGHP CMPs webinar (January 18, 2024) and CMS’s NGHP Civil Money Penalties Webpage, introductory paragraphs.
[3] On this point, as part of its new webpage, CMS states: “A note of caution: While CMPs will be issued on a prospective basis for new coverage records, accurate reporting overall is still statutorily required, in addition to being an important tool the Medicare program uses to ensure proper payment of claims. RREs who fail to meet their full reporting obligations may face other recovery actions including, but not limited to, False Claims Act suits or administrative recovery efforts.” CMS’s NGHP Civil Money Penalties Webpage, Section: Non-Compliance.
[4] Id.
[5] See, Annual Civil Monetary Penalties Inflation Adjustment, 89 Fed. Reg. 64815 (August 8, 2024)(amending 45 C.F.R. § 102.3).
[6]CMS’s NGHP Civil Money Penalties Webpage, Section: Notice of Final Determination to Impose a Civil Money Penalty.
[7] On this point, interestingly, while CMS referenced the fact that the regulations (as stated above) specifically indicate that a rejection by the claimant or his or her representative to provide the requested information (which could allow the RRE to cease its requirements to perform three separate outreach attempts) must be in writing, the CMS presenter discussing this item suggested at one point that if an RRE could find some alternate means to clearly document the refusal in a fashion which could be provided to CMS as mitigating evidence that they could do so. However, in the next breath CMS went on to say that they did not see how that would actually be possible. From the authors’ perspective, this was perhaps the most confusing part of CMS’s presentation and, as noted, at the end of the discussion CMS referred back to the regulatory language on this point which, as noted above, requires the rejection to be in writing.
[8] See, CMS’s Section 111 NGHP User Guide (Version 7.7, October 7, 2024) Chapter IV, Section 7.4. See also, CMS’s Section 111 NGHP User Guide (Version 7.7, October 7, 2024) Chapter V, Appendix G.