To Avoid CMS Penalty Exposure Time Is of the Essence

By Shawn Deane, Jeremy Farquhar  |  May 31, 2019

The timely reporting of ORM (Ongoing Responsibility for Medicals) and TPOC (Total Payment Obligation to Claimant) data to the Centers for Medicare and Medicaid Services (CMS) is of key importance to insurers, especially now that enforcement of noncompliance penalties is on the horizon. CMS will certainly be monitoring this; so, to avoid potential penalties, RREs (Responsible Reporting Entities) should make every effort to ensure that their data is reported to CMS in a timely fashion. 

Late reporting triggers compliance flags

The current CMS process contains a mechanism that evaluates the timing of both TPOC submissions and ORM terminations. If either is determined to have been reported late, a compliance flag will be returned to the RRE’s Claim Response File. A compliance flag value of “01” indicates a late TPOC submission, while a compliance flag of “03” indicates the late submission of an ORM termination date[i]. To be considered timely, CMS must receive a TPOC report within 135 days of the TPOC date. Similarly, for timely reporting of an ORM termination date, CMS must receive that date within 135 days of ORM termination. CMS will calculate the 135-day window by comparing the actual receipt date of the Claim Input File with the TPOC or ORM termination dates. 

Flag on the play? A penalty won’t always follow

While timely reporting is crucial, it’s worth noting that the receipt of a compliance flag is not a surefire indication that a penalty is forthcoming. CMS’s compliance flags are best considered a warning that an RRE may be considered noncompliant. While receipt of a compliance flag should certainly be taken seriously, it’s also important to understand that the logic that generates these flags is unsophisticated at present. 

There are situations in which a compliance flag may be generated despite the fact that the RRE actually reported the data in a timely manner. This may occur in situations when an RRE either re-reports a claim or submits an update transaction for a previously reported claim, with TPOC or ORM termination, on time. Unfortunately, the CMS system currently does not check for prior timely receipt of a TPOC or ORM termination in such a scenario; the system will simply look at the TPOC or ORM termination date within the record being submitted and compare that date with the file receipt date. If the TPOC or ORM termination date is greater than 135 days prior to file receipt, the compliance flag will automatically triggeri

Audit trails will serve RREs when flags go amiss

CMS is aware that compliance flags may be generated in error; fortunately, they do have an audit trail of the RRE’s past submissions. Upon manual review, CMS can determine if a report was initially received on time. That being the case, if an RRE is certain that the claim was previously reported on time but they received a compliance flag in one of the aforementioned scenarios, the RRE can safely disregard the subsequently generated flag. 

As outlined in the user guide excerpt below, one thing for which CMS does not currently generate a compliance flag is the late submission of an initial ORM report. 

The establishment or assumption of ongoing responsibility for medicals can take place at various times during a claim review. The actual date of when the RRE assumed ORM is not collected as part of the claim report. RREs will not receive a compliance flag regarding possible late submission of a ‘Y’ value for the ORM Indicator (Field 78 on the Claim Input File Detail Record). However, CMS does reserve the right to audit an RRE and/or their agent(s) with respect to this issue (or any other Section 111 reporting issue). The RRE must have a record of when ongoing responsibility for medicals on a reported claim was assumed and was then terminated, and when such ongoing responsibility for medicals was reported to the BCRC under Section 111, in order to establish timely reporting.

(Section 111 User Guide, Chapter IV: Technical Information, ch. 7.4.)

Whether TPOC or ORM, on-time reporting is your best bet

With that in mind, a good rule of thumb is to apply the same basic guidelines for timely reporting of ORM as those used for TPOC and ORM termination reporting. While a late report will not generate a compliance flag, in the event of a CMS audit, documentation reflecting the assumption of ORM within 135 days prior to the initial Section 111 report will likely ensure that an RRE’s report of ORM is considered timely.

For questions about TPOC and ORM reporting and the new CMS penalties on the horizon, please contact us at ISO Claims Partners.

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[i] https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Mandatory-Insurer-Reporting-For-Non-Group-Health-Plans/NGHP-User-Guide/NGHP-User-Guide.html


Shawn Deane

Shawn Deane is vice president of Medicare / Medicaid compliance and policy at ISO Claims Partners where he concentrates on all facets of Medicare Secondary Payer (MSP) compliance. Before joining ISO Claims Partners, he practiced healthcare law and insurance defense. Shawn is on the executive committee as treasurer of the Medicare Advocacy Recovery Coalition (MARC) and was the 2017 president of the National Alliance of Medicare Set-Aside Professionals (NAMSAP). He has attained the Medicare Set-Aside Certified Consultant (MSCC), as well as the Certified Medicare Secondary Payer Professional (CMSP) certifications. Shawn is a member of the Massachusetts Bar and is licensed in both state and federal courts in Massachusetts.

Jeremy Farquhar

Jeremy Farquhar is a Senior Product Consultant for ISO Claims Partners. He provides support for all aspects of Section 111 reporting, processes, and technical guidance. Jeremy has over 17 years of Medicare/MSP related experience. Through his work on CMS’ COBC and BCRC contracts, he served as the technical lead for the Section 111 process from its inception in 2009 through 2018. Jeremy was responsible for oversight of the COBC/BCRC EDI team, served as the first point of escalation for all Section 111 related issues and was a regular presenter on CMS’ Section 111 town hall teleconferences.