Section 111 penalties FAQs and how Verisk can help

By Mark Popolizio, J.D., Jeremy Farquhar

August 28, 2025 / 19 min read

The Centers for Medicare and Medicaid Services (CMS’s) Section 111 civil money penalties (CMPs) take a big step forward to becoming reality this October. Specifically, as of October 11, 2025, late TPOC and ORM reports as defined under CMS’s regulations are in scope for potential CMPs assessment. From there, RREs may start to receive actual CMPs notices in January 2026 per CMS’s randomized CMPs audit process. With RREs facing penalties of up to $1,474 per day, per claim, now is a great time to reassess your overall CMPs readiness.

colleagues-chatting-around-table

Toward that goal, the below Section 111 “FAQs” addresses several key areas of likely interest as follows:

1. When can CMS penalize RREs?

CMS can penalize RREs for untimely TPOC and ORM reporting.^[1]

Specifically, under CMS’s final rule, CMS may impose CMPs if an RRE, “[f]ails to report any beneficiary record within 1 year from the date of the settlement, judgment, award, or other payment [TPOC], or the effective date where ongoing payment responsibility for medical care [ORM] has been assumed by the entity.”^[2]

CMS reminds RREs that Section 111 “records are required to be submitted in a timely manner” and that “[c]ompliance with reporting obligations is defined by the rule as the successful submission and acceptance of the report of NGHP coverage, acceptance of ORM, or TPOC.”^[3]

Per CMS’s CMPs webpage, “a ‘record’ is defined as any individual occurrence of a TPOC or ORM for a Medicare beneficiary that must be submitted via the Section 111 reporting process.”^[4] CMS notes that “if a particular case has both an ORM and a TPOC component, this will constitute two records.”^[5]On this point, while CMS refers to each required TPOC or ORM report as an individual “record,” there are occasions where a report of TPOC and ORM may technically be included within a single Section 111 Claim Input File coverage record submission.

On this point, from the authors’ view, what CMS seems to be referring to here is the fact that the agency would view TPOC and ORM reports as separate and distinct reporting obligations for which an untimely report of either, or both, could separately constitute the assessment of a CMP, rather than an actual reference to separate and distinct coverage records being submitted within an RRE’s Claim Input File submission. In this respect, CMS, as noted above, indicates that, “if a particular case has both an ORM and a TPOC component, this will constitute two records.”^[6]Further, as part of CMS’s Section 111 CMPs FAQ, CMS states that “[a]s a reminder, CMS considers ORM and TPOCs to be separate reporting obligations, and CMS will evaluate the timeliness of the ORM and TPOC reporting separately for the purposes of determining compliance.”^[7]

2. How will CMS measure “timely” TPOC and ORM reporting?

CMS will measure the timeliness of a TPOC and ORM report for CMPs purposes as follows:

TPOC

CMS will compare the date CMS received the RRE’s successful file submission with the TPOC Date or, if the 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.

As a refresher, CMS defines the TPOC date as “the date the payment obligation was established. This is the date the obligation is signed if there is a written agreement, unless court approval is required. If court approval is required, it is the later of the date the obligation is signed or the date of court approval. If there is no written agreement, it is the date the payment (or first payment if there will be multiple payments) is issued.”^[8]If the TPOC date is greater than 1 year prior to the file submission date, then the TPOC report in question may be subject to CMPs due to the RRE’s failure to report in a timely fashion.^[9]

Regarding the Funding Delayed Beyond TPOC Start Date, CMS notes that this is only required to be reported in scenarios when full distribution/disbursement of funds from the TPOC are delayed more than 30 days subsequent to the TPOC Date.^[10] In such a scenario, the Funding Delayed Beyond TPOC Start Date should represent the date as of which the TPOC has or will be fully funded.^[11]

If an RRE reports both a TPOC date and a Funding Delayed Beyond TPOC Start Date, CMS will utilize the Funding Delayed Beyond TPOC Start Date, as opposed to the TPOC Date, to assess the timeliness of the report. In this event, if the Funding Delayed Beyond TPOC Start Date is found to be more than 1 year prior to the RRE’s file submission date, then the TPOC report in question may be subject to CMPs.^[12]

ORM

CMS will compare the date CMS received the RRE’s successful file submission with the date ORM was assumed by the RRE and, if the Date of Incident is found to be more than one year prior to the date of the initial successful report, the RRE would be considered non-compliant and potentially subject to a penalty.^[13]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. On this point, CMS notes that in situations where ORM was not assumed immediately as of the CMS Date of Incident, RREs should maintain appropriate documentation and provide that documentation as mitigating evidence during the 30-day informal notice period.^[14]CMS has also noted that if the associated Medicare beneficiary did not become entitled to Medicare until after the CMS Date of Incident, then 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.^[15]

3. If a Section 111 coverage record is submitted timely, but is rejected with errors, could CMS still assess a CMP?

Yes. As part of its October 17, 2024 webinar, CMS emphasized that records rejected due to errors will not be considered as successful timely reports for CMPs purposes.^[16] On this point, CMS stressed that a coverage record must be accepted by CMS for the report to be deemed successful and timely.^[17] If 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.^[18]

4. If an RRE manually reports a coverage record within the 1 year timely filing window, but does not file a Section 111 report, could CMS still assess a CMP?

Yes. CMS has stated that a manual self-report does not count as a timely successful report protecting an RRE against CMPs.^[19] CMS states 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.^[20]

5. Will CMS impose CMPs based on untimely submission of ORM termination dates?

No. While submitting ORM termination dates in a timely fashion is important due to its potential significant impacts on coordination of benefits and conditional payment recovery processes, and CMS will return a “warning flag” on an RRE’s Claim Response File if an ORM termination date is submitted more than 135 days subsequent to the ORM termination date, CMS’s final rule notes that there are no penalties directly associated with untimely ORM termination date reporting.^[21]On this point, the final rule states that CMPs will only be assessed in relation to an untimely initial successful report of ORM or TPOC.^[22]CMS reiterated this guidance as part of its October 17, 2024 CMPs webinar.^[23]

6. What is CMS’s “good faith” compliance safe harbor criteria?

CMS has established a CMPs “good faith” compliance safe harbor in situations where the RRE is unable to obtain the Big 5 data points [claimant’s SSN or Medicare ID (MBI or HICN) along with first name, last name, date of birth and gender] to help determine potential Section 111 reporting obligations.

42 CFR 402.1(c)(ii)

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).

Further, under the regulation 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).^[24]Further, 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.

CMS’s October 17, 2024 webinar

CMS discussed its “good faith” compliance safe harbor at its October 17, 2024 webinar. As part of this webinar, CMS stated that a minimum of two (2) attempts must be mailed or e-mailed to the claimant and his or her attorney (at least one must be via physical mailing while the other may be a physical mail or email), while the third attempt can be made via other means (phone call, mail, e-mail, text message, etc.) Further, CMS clarified that the “order” of the RREs attempts does not matter, only that two attempts were made in writing (at least one via physical mail and another either via physical mail or email) and a third by other or similar means. During the webinar, CMS also stated that three letters would satisfy the above requirements. In addition, CMS stated that it did not have specific rules regarding the timing of the RRE’s three attempts 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 noted that 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.

7. What are the current Section 111 CMPs monetary amounts?

According to the most recently published Federal Register, the current inflation adjusted maximum daily CMPs amount is $1,474 for each day of noncompliance with respect to each claimant.^[25]The current maximum daily CMPs amount of $1,474 was announced in August 2024 in the Federal Register (August 8, 2024).^[26]This figure replaced the prior maximum daily amount of $1,428, released in October 2023.^[27]

Applying the inflation adjusted maximum daily CMPs amount of $1,474 utilizing CMS’s “tiered” CMPs calculation approach,^[28] the current CMPs rates are as follows:

Tier 1: $368.50 for each calendar day of non-compliance where the record is reported 1 year or more, but less than 2 years after, the required date.
Tier 2: $737 for each calendar day of non-compliance where the record is reported 2 years or more, but less than 3 years after, the required reporting date.
Tier 3: $1,474 (max rate) for each calendar day of non-compliance where the record is reported 3 years or more after the required reporting date.
The current total maximum penalty amount for any single instance of noncompliance is $538,010, applying the adjusted inflation rate contained in the Federal Register (August 8, 2024).

Of note, to the author’s knowledge, to date CMS has not referenced the inflation adjustments to Section 111 CMPs issued in the Federal Register (August 8, 2024) update as part of its recent webinars and CMPs webpage, basing its CMPs calculations, instead, on the prior max daily penalty amount of $1,428. Thus, the CMPs amounts noted by CMS are slightly lower than the figures noted above.^[29]Going forward, it is important to keep in mind that Section 111 CMPs amounts are subject to annual adjustments.^[30]

8. Will CMS apply its CMPs regulations prospectively?

Yes. CMS has stated that it will apply its CMPs regulations prospectively.^[31] Specifically, CMS has stated that only coverage record submissions with coverage effective dates [ORM] or TPOC dates of October 11, 2024, or later, are in scope for penalties and, as such, the agency will not seek to assess penalties for submissions where the coverage effective dates [ORM] or TPOC dates occurred prior to October 11, 2024.^[32]On this point, CMS’s CMPs webpage states: “CMPs will only be issued by CMS on a prospective basis, and there will be no instances of retroactive enforcement related to noncompliant reporting.”^[33]

As noted by CMS in its final rule (and restated on its CMPs webpage) the CMPs regulations “are applicable as of October 11, 2024, and will be enforced as of October 11, 2025.”^[34] On this point, CMS notes on its CMPs webpage that “[t]he date the 365-day ‘compliance clock’ begins to run, or is applicable, is October 11, 2024. Applicable means every reportable MSP occurrence that occurs on or after October 11, 2024, is eligible for review of compliance.”^[35]

From another angle, while CMS notes that its CMPs regulations are prospective, the agency has reminded RREs that they still have a statutory requirement to make sure their reporting on older claims records is accurate and RREs could still face other potential recourses, including potential False Claims Act suits or administrative recovery. 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.”^[36]

9. How many records will CMS review? How will CMS’s “audit process” work?

CMS will, on a quarterly basis, randomly select 250 records for review “across the entire universe of accepted new Section 111 records received during the specific review period, as well as records Medicare received from non-Section 111 sources such as providers or beneficiaries.”^[37]The records selected for review will be proportionate to the volume of coverage records accepted in connection with the both GHP and NGHP reporting processes for the quarter in question.^[38]Regarding “non-Section 111 records,” CMS noted that this may include “a TPOC and/or ORM record that has been reported via other coordination of benefits and data collection methods.”^[39]

CMS’s randomized audit process starts in January 2026, which, accordingly, is when RREs may start to receive actual CMPs notices.^[40]As part of CMS’s CMPs webpage, CMS gives examples of how it would levy CMPs amounts based on an RRE’s Section 111 reports, as well as a situation where non-compliance was identified via “non-Section 111” records. These examples are outlined by CMS in its webpage resource, a link to which is contained in the endnote to this sentence.^[41]On its October 17, 2024 webinar, CMS noted that their first audit would encompass records received during the 4^th quarter of 2025 where October 11, 2025 would be the earliest date as of which a report could be assessed a penalty.^[42]

10. How will CMS communicate with RREs?

Per CMS’s CMPs webpage, CMS “will communicate with the RRE only when a potential instance of non-compliance is identified.”^[43]CMS notes that “[t]he RRE’s Authorized Representative will receive all CMP correspondence, with a copy issued to the Account Manager.”^[44] While not stated on its CMPs webpage, CMS previously indicated on its January 18, 2024 webinar that it will use e-mail to send its “informal” CMPs notices and certified mail to send its “formal” CMPs notices. Further, as outlined below, CMS states it will send its “Notice of Final Determination” via certified mail.^[45]CMS directs RREs to its CMPs Workflow document “[f]or a visual representation of the CMP process and when RREs can anticipate receiving letters.”^[46]

11. Is it important for RREs to have an up-to-date Profile Report?

Yes. CMS has stated that RREs “must ensure that their Profile Report recertification has been completed and all contact information is current to ensure that your organization does not miss any CMP-related correspondence. Failure to ensure all contact information is accurate is not an acceptable defense against a CMP.”^[47] CMS has advised that the RRE should contact its assigned EDI representative if it needs to update its Account Representative or any other associated contact information.^[48]CMS has stated that RREs will be held accountable if any CMP correspondence is missed due to inaccurate or outdated contact information.^[49]

12. Will CMS provide RREs with "advance notice" prior to formally assessing a CMP?

Yes. Under CMS’s final rule, CMS will first give RREs “informal” notice of potential CMPs, and RREs will have 30 days to submit mitigating evidence as more fully discussed in FAQ 13 below. ^[50] CMS will then provide (the RRE) with “formal” notice if the agency ultimately determines that it will levy CMPs against the RRE. Regarding CMS’s “informal notice,” CMS, as part of its CMPs webpage, explains that its “first letter (notice) is issued when a noncompliant record [is] identified on CMS’s quarterly audit.”^[51]Further, CMS notes that when it issues an informal notice, “[a] CMP is not being assessed at this point [but] rather, the RRE’s noncompliant record is identified along with the associated information so that an RRE may investigate the record.”^[52]

13. Can RREs submit “mitigating evidence” as part of the informal notice process?

Yes. RREs can submit “mitigating evidence” as part of the informal notice process, but it will be important that this evidence is submitted timely. CMS explains that this “is the opportunity for RREs to explain why a CMP should not be imposed” and that RREs will be allowed to “submit mitigating information, in an attempt to explain or defend technical or administrative issues resulting in the noncompliance.”^[53]

CMS provides important details, including timelines, on its CMPs webpage, which is outlined, in general, as follows:

Timelines/Limits - CMS states that “[m]itigating evidence must be submitted to CMS within 30 days of receipt of the Informal Notice.”^[54] Importantly, CMS advises RREs that “[e]xtensions to the RRE’s required 30-day response time will not be granted.” (Authors’ emphasis).^[55] However, CMS notes that “[i]f an RRE believes that there were circumstances beyond its control that prevented it from reporting on time, responding to the informal notice can help reduce the amount of a CMP or even avoid a CMP altogether. CMS reviews all reasonable evidence submitted timely by the RRE.”^[56]Further, CMS advises that RREs will have only one “submission opportunity” to submit mitigation evidence, stating that CMS “may request clarification on, or further explanation of, an RRE’s submitted evidence but this step of the process only affords the RRE one (1) submission opportunity.”^[57]
Evaluation/Decision – CMS states that “[e]ach decision regarding the mitigating evidence submitted only pertains to that specific record referenced in the Informal Notice.”^[58]CMS states further that if “the submitted evidence was sufficient and supports the RRE’s defense against CMS’ finding of noncompliance,” then “[n]o additional action is required by the RRE.”^[59]Conversely, if CMS finds that “the submitted evidence was insufficient or the RRE’s submission of mitigating evidence was not submitted within the required timeframe, CMS’ original finding of noncompliance will be upheld and a Proposed Determination to impose a CMP will be issued.”^[60]

14. Will CMS provide RREs with “formal” notice before levying penalties?

Yes. After providing informal notice, CMS will then provide “formal” notice (a “Notice of Proposed Determination”) to an REE if (a) “there is no response to the informal notice” or (b) “the RRE has not provided sufficient mitigating evidence.”^[61] Per CMS, this “letter (notice), sent via Certified Mail, [will provide] the RRE with the CMP amount that CMS intends to impose, and how to further appeal.”^[62]

15. Can RREs “appeal” CMPs?

Yes. RREs have appeal rights which CMS describes on its CMPs webpage, in general, as follows:

Hearing Request - CMS states that “RREs are afforded the right to request a hearing as set forth under 42 CFR § 405 and in accordance with 42 CFR Part 1005 and must do so within 60 calendar days of receipt of the Notice of Proposed Determination.”^[63]
Administrative Law Judge (ALJ) - CMS notes that “[t]he process to request a hearing with an Administrative Law Judge (ALJ) is outlined in this letter and must be completed within the required timeframes, must be filed electronically with the Departmental Appeals Board (DAB), Civil Remedies Division, using the DAB E-File System available at https://dab.efile.hhs.gov, and must be completed within the required timeframes.”^[64]
Departmental Appeals Board (DAB) - Following the ALJ level, CMS states that “[t]he RRE may appeal the ALJ’s initial decision to the DAB’s Appellate Division (the ‘Board’) within 30 calendar days of the ALJ decision. Appeals to the Board must also be submitted through DAB E-File. The Board’s decision becomes binding 60 calendar days following service of the Board’s decision, absent petition for judicial review. The RRE will be precluded from appealing a final determination to impose a CMP, pursuant to 42 CFR § 402.9(c), if the hearing is not requested within the required timeframe.”^[65]

16. How will CMS notify RREs that CMPs payment is due?

CMS states that it will issue a “Notice of Final Determination” if the RRE (a) “does not request a hearing or appeal, (b) elects to terminate the appeals process, or (c) otherwise exhausts all available administrative appeal rights and the CMP is upheld.”^[66]CMS notes that “[t]his letter (notice), sent via Certified Mail, confirms that the imposition of the RRE’s CMP is final.”^[67]Further, CMS explains that “[i]nstructions on how the RRE should remit payment, and its due date, [will be] included in the Notice of Final Determination.”^[68]

How Verisk Can Help

See our Medicare Compliance and Reporting Solutions page to learn more about how Verisk’s state-of-the-art Section 111 MSP Navigator tool can help you improve your Section 111 reporting practices and how we can assist in helping you build holistic MSP compliance solutions.

Be sure to sign up for our Section 111 CMPs webinar on 9/16/25! As part of this session, we will discuss the key CMPs points and what you need to know to stay compliant and avoid fines!

Questions?

Please feel free to contact the authors if you have any questions regarding the above or general Section 111 reporting issues.

[1] “TPOC” is the abbreviation for “total payment obligation to the claimant.” Very generally, under CMS’s TPOC reporting trigger, reporting is required upon claim resolution (or partial resolution) through a settlement, judgment, award, or other payment for cases in which the claimant is/was a Medicare beneficiary as of the TPOC date and where medicals were claimed and/or released, or the settlement, judgment, award, or other payment has the effect of releasing medicals. Under CMS’s current thresholds, physical trauma-based liability, no-fault and workers’ compensation settlements greater than $750 are required to be reported under the Section 111 reporting process. The $750 threshold does not apply to settlements involving exposure, ingestion, or implantation cases. See generally, CMS’s Section 111 NGHP User Guide (Version 7.6, July 1, 2024), Chapter III and IV, Section 6.4.4.

“ORM” is the abbreviation for “on-going responsibility for medicals.” Very generally, CMS states that “the trigger for reporting ORM is the determination to assume ORM by the RRE, which is when the RRE learns, through normal due diligence, that the beneficiary has received (or is receiving) medical treatment related to the injury or illness sustained. Required reporting of ORM by the RRE does not necessarily require the RRE to have made payment for Medicare-covered items or services when the RRE assumed ORM, nor does a provider or supplier necessarily have to have submitted a claim for such items or services to the RRE for the RRE to assume ORM. The effective date for ORM is the DOI, regardless of when the beneficiary receives the first medical treatment or when ORM is reported.” See generally, CMS’s Section 111 NGHP User Guide (Version 7.6, July 1, 2024), Chapter III Section 6.3.

[2] See, Fed. Reg. Vol. 88, No. 195, at 70372 (October 11, 2023) and 42 CFR § 402.1(22)(i).

[3] CMS’s NGHP Civil Money Penalties Webpage, Section: Non-Compliance. On this point, CMS notes that “[a]n RRE is considered to be in compliance with the timeliness requirement if a record is reported within 1 year (365 days) of the latter of either the Settlement Date reported in “Field 80” or the Funding Delayed Beyond TPOC Date reported in “Field 82” AND the MSP Effective Date and ORM are selected as ‘Y.’ Id.

[4] CMS’s NGHP Civil Money Penalties Webpage, Section: Non-Compliance.

[5] Id.

[6] Id.

[7] CMS’s FAQ (November 2, 2023).

[8] CMS’s NGHP User Guide, Chapter III, Section 6.4.

[9] Fed. Reg. Vol. 88, No. 195, at 70372 (October 11, 2023).

[10] See, CMS’s Section 111 NGHP User Guide, (Version 7.3, August 7, 2023), Chapter III, Section 6.5.1.2. Of note, within the agency’s NGHP User Guide, CMS outline “Timeliness of Reporting” and the way that the “Funding Delayed Beyond TPOC Start Date” is used to determine timeliness, in conjunction with the “TPOC Date”, as follows: “6.5.1.2 Timeliness of Reporting. NGHP TPOC settlements, judgments, awards, or other payments are reportable once the following criteria are met: • The alleged injured/harmed individual to or on whose behalf payment will be made has been identified. • The TPOC amount (the amount of the settlement, judgement, award, or other payment) for that individual has been determined. • The RRE knows when the TPOC will be funded or disbursed to the individual or their representative(s). RREs should retain documentation establishing when these criteria were or will be met. RREs should not report the TPOC until the RRE establishes when the TPOC will be funded or disbursed. In some situations, funding or disbursement of the TPOC may not occur until well after the TPOC Date. RREs may submit the date the TPOC will be funded or disbursed in the corresponding Funding Delayed Beyond TPOC Start Date field when they report the TPOC Date and TPOC Amount, but must do so if the TPOC Date and date of the funding of the TPOC are 30 days or more apart. Timeliness of MMSEA Section 111 reporting for a particular Medicare beneficiary will be based upon the latter of the TPOC Date and the Funding Delayed Beyond TPOC Start Date.” Id.

[11] See n.10 above.

[12] Fed. Reg. Vol. 88, No. 195, at 70370 and 70372 (October 11, 2023).

[13] Fed. Reg. Vol. 88, No. 195, at 70372 (October 11, 2023) and CMS’s NGHP Section 111 CMPs Webinar (January 18, 2024).

[14] CMS’s NGHP Section 111 CMPs Webinar (January 18, 2024) and CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024).

[15] CMS’s NGHP Section 111 CMPs Webinar (January 18, 2024) and CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024).

[16] CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024).

[17] CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024).

[18] CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024).

[19] CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024).

[20] CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024).

[21] Fed. Reg. Vol. 88, No. 195, at 70367 (October 11, 2023).

[22] Fed. Reg. Vol. 88, No. 195, at 70372 (October 11, 2023). More specifically, within its final rule publication, CMS indicates that a CMP may only be assessed in the event that an applicable plan, “Fails to report any beneficiary record within 1 year from the date of the settlement, judgment, award, or other payment, or the effective date where ongoing payment responsibility for medical care has been assumed by the entity.” Id.

[23] CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024).

[24] 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.

[25] By way of background, under the Medicare Secondary Payer (MSP) statute, Section 111 NGHP RREs are subject to CMPs, in pertinent part, “of up to $1,000 for each day of noncompliance with respect to each claimant.” (42 U.S.C. § 1395y(b)(8)(E)(i)). This statutory section states, in pertinent part, as follows: “An applicable plan that fails to comply with the [Section 111 reporting] requirements … may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant … A civil money penalty under this clause shall be in addition to any other penalties prescribed by law and in addition to any Medicare secondary payer claim under this subchapter with respect to an individual.” Id. This amount is subject to an annual inflation adjustment. See, 45 C.F.R. § 102.3. At the time CMS’s final rule was released in October 2023, the annually adjusted maximum daily CMPs amount was $1,428. Annual Civil Monetary Penalties Inflation Adjustment, 88 Fed. Reg. 69531 (October 6, 2023) (amending 45 C.F.R. Part 102). On this point, the authors note that as part of CMS’s final rule released on October 11, 2023, the agency actually referenced the maximum daily CMPs amount as $1,325 based on the agency’s reference to a June 8, 2023 update contained in the Federal Register, cited by CMS as 87 Fed. Reg. 15101. See, Medicare Program; Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70363, 70366, (October 11, 2023) (amending 42 C.F.R. Part 402 and 45 C.F.R. Part 102). However, of note, in reviewing CMS’s cite to 87 Fed. Reg, 15101, the authors note that this reflects that the $1,325 adjustment was actually made on (and became effective) March 17, 2022. Further, from the authors’ research, this amount was then amended to $1,428 on October 6, 2023 (approximately five days before CMS final rule release). See, Annual Civil Monetary Penalties Inflation Adjustment, 88 Fed. Reg. 69531 (October 6, 2023) (amending 45 C.F.R. Part 102). For reasons unknown, CMS did not include or reference this October adjustment in its final rule released on October 11, 2023, and instead referenced the maximum daily CMPs rate as $1,325 as noted above. In any event, CMS eventually referenced the $1,428 adjusted figure as noted in the Federal Register on October 6, 2023 as part of its release of a “corrected” final rule on November 27, 2023. See, Medicare Program; Medicare Secondary Payer and Certain Civil Money Penalties; Correction, 88 Fed. Reg. 82786 (November 27, 2023) Annual Civil Monetary Penalties Inflation Adjustment, 88 Fed. Reg. 69531 (October 6, 2023) (amending 45 C.F.R. Part 102). Further, as discussed later in this article, CMS ultimately used the $1,428 figure as part of its CMPs calculations announced by the agency as part of its January 18, 2024 webinar. It would now appear that CMS will need to update its calculations based on the newly released daily maximum CMPs rate.

[26] Annual Civil Monetary Penalties Inflation Adjustment, 89 Fed. Reg. 64815 (August 8, 2024)(amending 45 C.F.R. § 102.3). As part of this update, the following is stated in the Federal Register: “The Department of Health and Human Services (HHS) is updating its regulations to reflect required annual inflation-related increases to the civil monetary penalty (CMP) amounts in its statutes and regulations, under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.” Annual Civil Monetary Penalties Inflation Adjustment, 89 Fed. Reg. 64815 (August 8, 2024) (amending 45 C.F.R. § 102.3).

[27] Annual Civil Monetary Penalties Inflation Adjustment, 88 Fed. Reg. 69531 (October 6, 2023) (amending 45 C.F.R. Part 102).

[28] In general, CMS will apply CMPs against NGHP RREs using a “three-tiered" approach based on the length of time an NGHP RRE is late in successfully submitting a required TPOC and/or ORM report. See generally, Medicare Program; Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70363, 70370, (October 11, 2023) (amending 42 C.F.R. Part 402 and 45 C.F.R. Part 102) and 42 C.F.R. § 402.105 (3)(i) and (ii). In this regard, as part of its October 2023 final rule, CMS, applying the statutory “base” figure of “up to $1,000” per day, per claim, CMS calculated the “daily penalty” amount per each tier as follows: Under Tier 1, $250 (or 25% of the base max $1,000 figure) for each calendar day of non-compliance where the record is reported 1 year or more, but less than 2 years after, the required date. Id. at 70370. Under Tier 2, $500 (or 50% of the base max rate) for each calendar day of non-compliance where the record is reported 2 years or more, but less than 3 years after, the required reporting date. Id. Finally, under Tier 3, $1,000 (100% of statutory base max rate) for each calendar day of non-compliance where the record is reported 3 years or more after the required reporting date. In addition, as part of the final rule, CMS noted that the maximum penalty for any one instance of noncompliance would be no greater than $365,000. Id.

[29] As noted, CMS in its January 18, 2024 and October 17, 2024 webinars, and as part of its CMPs webpage, has been using an inflation adjusted daily maximum CMPs ate of $1,428 which announced in October 2023. Annual Civil Monetary Penalties Inflation Adjustment, 88 Fed. Reg. 69531 (October 6, 2023) (amending 45 C.F.R. Part 102). Using this figure, CMS’s “tiered” penalty application is 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. CMS’s NGHP Section 111 CMPs Webinar (January 18, 2024), CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024), and CMS’s NGHP Civil Money Penalties Webpage, Section: Penalty Amounts.

[30] See n. 25.

[31] CMS’s Section 111 NGHP CMPs webinar (January 18, 2024) and CMS’s NGHP Civil Money Penalties Webpage, introductory paragraphs.

[32] CMS’s Section 111 NGHP CMPs webinar (January 18, 2024) and CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024).

[33] CMS’s NGHP Civil Money Penalties Webpage, introductory paragraphs.

[34] Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70363 and (October 11, 2023) and CMS’s NGHP Civil Money Penalties Webpage, introductory paragraphs.

[35] CMS’s NGHP Civil Money Penalties Webpage, Section: Non-Compliance. Notably, this was not clearly outlined within CMS’s final rule publication and the new webpage is the first instance of CMS officially publishing this guidance in writing. On a technical note, the verbiage contained on CMS’s CMPs webpage stated immediately above reads slightly differently from how CMS verbally phrased the prospective application of its CMPs rule on its January 18^th webinar (as stated above) in that on the webpage CMS references “every reportable MSP occurrence that occurs on or after October 11, 2024” as being in scope for review, as opposed to stating every record with a TPOC date or coverage effective date October 11, 2024 or later, which CMS has previously noted is the actual basis for CMPs. (Authors’ emphasis). However, notwithstanding CMS’s use of this phrase, in another area on the webpage CMS indicates that “CMPs will be issued on a prospective basis for new coverage records” which correlates with its previous guidance. CMS’s NGHP Civil Money Penalties Webpage, Section: Non-Compliance and CMS’s Section 111 NGHP CMPs webinar (January 18, 2024).

[36] CMS’s NGHP Civil Money Penalties Webpage, Section: Non-Compliance. See also, CMS’s NGHP Section 111 CMPs Webinar (October 17 2024).

[37] CMS’s NGHP Civil Money Penalties Webpage, Section: Review of Records to Identify Non-Compliance. CMS also noted this information in its final rule stating: “CMS has determined that, given the time and resources necessary to accurately and thoroughly evaluate the accuracy of any submitted record, 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).” Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70363, 70369-70370 (October 11, 2023). See also, CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024).

Regarding CMS’s reference that it will also include “records Medicare received from non-Section 111 sources such as providers or beneficiaries,” CMS first referred to the inclusion of records “outside” of the Section 111 reporting process in its FAQ document (November 2, 2023). On the point, as part of CMS’s FAQ resource, CMS states: “CMS will audit a random sample of 250 records that were added on a quarterly basis from across all reported records for a total of 1,000 records to be reviewed annually. This sample will reflect a proportionate number of GHP and NGHP records and may shift each quarter as GHP and NGHP record volumes vary. When a sampled record is from a source other than Section 111 reporting, CMS will identify and review the associated Section 111 record for compliance. If the Section 111 record has not been successfully reported at the time of review, noncompliance will be determined based on the information supplied in the other record (e.g., the date of settlement).” CMS’s FAQ (November 2, 2023) (Authors’ emphasis). See also, CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024).

[38] CMS’s NGHP Civil Money Penalties Webpage, Section: Review of Records to Identify Non-Compliance. CMS also notes this information in its final rule stating: “CMS will evaluate a proportionate number of GHP and NGHP records based on the pro-rata count of recently added records for both types of coverage over the calendar quarter under evaluation. For example, if over the calendar quarter being evaluated, CMS received 600,000 GHP records and 400,000 NGHP records for a total of 1,000,000 recently added beneficiary records, then 60 percent of the 250 records audited for that quarter would be GHP records, and 40 percent would be NGHP records.” Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70363, 70370 (October 11, 2023).

[39] CMS’s NGHP Civil Money Penalties Webpage, Section: Review of Records to Identify Non-Compliance.

[40] CMS’s NGHP Civil Money Penalties Webpage, Section: Review of Records to Identify Non-Compliance.

[41] CMS’s NGHP Civil Money Penalties Webpage, Section: Penalty Amounts.

[42] CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024).

[43] CMS’s NGHP Civil Money Penalties Webpage, Section: Letters.

[44] CMS’s NGHP Civil Money Penalties Webpage, Section: Letters. On this point, as part of its January 18, 2024 webinar, CMS advised that it would send its informal written pre-notice of a potential CMP via e-mail to the RRE’s Authorized Representative with a “cc” copy sent to the RRE’s Account Manager. However, at that time, CMS did not mention to whom it would send the formal notice, although, as speculated by the authors in their prior articles, it would seem logical that this notice would also go to the RRE’s Authorized Representative, with a copy to the Account Manager, using the physical addresses maintained in the RRE's Section 111 profile report. The information now posted by CMS on its webpage as noted above now confirms that “[t]he RRE’s Authorized Representative will receive all CMP correspondence, with a copy issued to the Account Manager.” CMS’s NGHP Civil Money Penalties Webpage.

[45] CMS’s NGHP Civil Money Penalties Webpage, Section: Notice of Final Determination to Impose a Civil Money Penalty.

[46] CMS’s NGHP Civil Money Penalties Webpage, Section: Letters.

[47] CMS’s NGHP Civil Money Penalties Webpage, Section: Letters.

[48] CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024).

[49] CMS’s NGHP Section 111 CMPs Webinar (October 17, 2024).

[50] Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70363, 70367 (October 11, 2023). In this regard, CMS notes as follows in the final rule: “We intend to communicate with the entity informally before issuing formal notice regarding a CMP. The informal (that is, prior to formal enforcement actions) written ‘‘pre- notice’’ process will allow the RRE the opportunity to present mitigating evidence for CMS review prior to the imposition of a CMP. The RRE will have 30 calendar days to respond with mitigating information before the issuance of a formal written notice in accordance with 42 CFR 402.7. Common to all such instances where informal notice will be given is the intention to give the RRE an opportunity to clarify, mitigate, or explain any errors that were the result of a technical issue or due to an error or system issue caused by CMS or its contractors. It would be impractical and counter to the spirit of the informal notice process to regulate or enumerate all circumstances in which mitigating information could be provided or what that information should convey. As such, any mitigating factors or circumstances are welcomed, and a dialogue is encouraged in an attempt to find solutions that are short of imposing a CMP. We believe it is in the best interests of all RREs to leave the informal notice process open to any reasonable submission of mitigating factors so that we are free to entertain all such documentation without strict limits on what is, or is not, acceptable. Once we determine that a CMP will be imposed (after the informal notice period) we will provide formal notice to the entity in writing in accordance with 42 CFR 402.7, which will contain information on the event that has triggered the proposed imposition of a CMP, the amount of the proposed CMP, and next steps for the entity, including a right to a hearing in accordance with 42 CFR 402.19 and part 1005.” Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70363, 70367 (October 11, 2023).

CMS further states in the final rule that: “We note that CMPs imposed in accordance with this final rule will be subject to the formal appeals process as prescribed by 42 CFR 402.19 and set forth under 42 CFR part 1005. In broad terms, parties subject to CMPs will receive formal written notice at the time penalty is proposed. The recipient will have the right to request a hearing with an Administrative Law Judge (ALJ) within 60 calendar days of receipt. Any party may appeal the initial decision of the ALJ to the Departmental Appeals Board (DAB) within 30 calendar days. The DAB’s decision becomes binding 60 calendar days following service of the DAB’s decision, absent petition for judicial review.” Id.

[51] CMS’s NGHP Civil Money Penalties Webpage, Section: Informal Notice- Intention to Impose a Civil Money Penalty.

[52] Id.

[53] Id.

[54] CMS’s NGHP Civil Money Penalties Webpage, Section: Decision Regarding Mitigating Evidence Submission.

[55] Id.

[56] Id.

[57] Id

[58] Id.

[59] Id.

[60] Id.

[61] CMS’s NGHP Civil Money Penalties Webpage, Section: Notice of Proposed Determination to Impose a Civil Money Penalty.

[62] Id.

[63] Id.

[64] Id.

[65] Id.

[66] CMS’s NGHP Civil Money Penalties Webpage, Section: Notice of Final Determination to Impose a Civil Money Penalty.

[67] Id.

[68] Id.