The Centers for Medicare and Medicaid Services (CMS) has released its “Adjustment of Civil Monetary Penalties for Inflation and the Annual Civil Monetary Penalties Inflation for 2021” as published in the Federal Register, Vol. 86, No. 217, 62928-62943 (November 15, 2021). Through this release, CMS makes inflation adjustments to the maximum civil money penalties (CMP) amounts for numerous Medicare related CMP provisions, including the maximum CMP penalty amount for Section 111 reporting pertaining to non-group health plans (NGHP).
CMS states its release is a “final rule [that] finalizes the provisions of the September 6, 2016 interim final rule that adjusts for inflation the maximum [CMP] amounts for all agencies within the Department of Health and Human Services (HHS) and updates certain agency specific regulations.” In addition, CMS notes, in part, that this final rule “also updates our required annual inflation-related increases to the CMP amounts in our regulations, under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.” The effective date of these updates is November 15, 2021.
How does CMS’s inflation adjustments impact Section 111’s CMP amount?
As noted, Section 111’s civil money penalties provision is just one of many Medicare related areas impacted by CMS’s new CMP inflation adjustments. Under the Section 111 reporting law, NGHP Responsible Reporting Entities (RREs) “may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant” (author’s emphasis). Per CMS’s new update, the maximum Section 111 CMP penalty amount is now being adjusted (increased) for inflation to $1,247 (up from 2020’s inflation adjusted figure of $1,232).
What is the status of CMS’s Section 111 CMP proposals?
While CMS’s new rule adjusts the maximum Section 111 CMP amount that CMS can levy, it is important to keep in mind that CMS has not yet released its actual “final” Section 111 CMP provisions. As a refresher, CMS released its Section 111 CMP proposals back in February 2020 and opened a public comment period which closed on April 20, 2020. Since then (and currently), the industry has been waiting for CMS to publish its final rule formally establishing the Section 111 CMP provisions.
As of now, CMS has not provided any specific date regarding when its final CMP provisions will be released and go live. In August 2020 the Office of Information and Regulatory Affairs (OIRA) released a notice indicating that CMS expects to complete and release its final rule within the standard three-year period for release, which in this instance would be sometime on or before February 2023. However, CMS notes that it does not intend on delaying the release of its final regulations for three years if it is able to publish it sooner.
For an overview of CMS’s Section 111 CMP proposals, please see our article CMS’s Section 111 penalty proposals – current status and FAQs.
Getting ready for Section 111 CMPs – how we can help!
With CMS’s final Section 111 CMP rules drawing closer, now is the time to make sure your reporting practices are compliant to avoid potential CMP fines - -and we can help.
Our Section 111 Audit service can help you evaluate the current state of your reporting program. This service examines key points of Section 111 reporting to assess your current compliance practices, including: evaluating your query data processes; determining reportable events; obtaining required reporting data; submitting quarterly reports; and evaluating quarterly report responses.
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Please do not hesitate to contact the author if you have any questions regarding this update or any other issues related to Section 111 reporting.
 Section 111 reporting refers to Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) (P.L. 110-173). Section 111’s provisions apply to both group health plans (GHP) and non-group health plans (NGHP) (i.e. workers’ compensation, liability, self-insurance, and no-fault insurance). This article focuses on Section 111 reporting in the NGHP context as codified at 42 § U.S.C. 1395y(b)(8). The party responsible for reporting under Section 111 is referred to as the Responsible Reporting Entity (RRE). In general, RREs are insurers and self-insurers, but could involve other entities such as self-insurance pools or assigned claims funds depending on the facts. See generally, CMS’s Section 111 NGHP User Guide, Chapter III (Version 6.5, October 4, 2021), Chapter 6. However, claimants and their lawyers are not RREs and do not have reporting responsibilities under Section 111. Id. Under Section 111 reporting, RREs are required to report a claim or settlement to CMS if the claimant is a Medicare beneficiary and the case meets a Section 111 reporting trigger. There are two reporting triggers: total payment obligation to the claimant (TPOC) and on-going responsibility for medicals (ORM). Very generally, CMS states that the TPOC reporting trigger refers to the dollar amount of a settlement, judgment, award, or other payment, in addition to or apart from ORM. See, CMS’s Section 111 NGHP User Guide, Chapter III (Version 6.5, October 4, 2021), Chapter 6, section 6.4. Currently, TPOCs greater than $750 are reportable regarding physical trauma-based claims. See, Id. Chapter 6, sections 6.4.1 through 188.8.131.52. This threshold does not apply to non-trauma liability reporting for alleged ingestion, implantation, or exposure claims and CMS indicates that “any settlement, regardless of amount, should be reported for these types of cases.” Id. On the other hand, ORM, in general, involves situations where the RRE has made a determination to assume responsibility to pay, on an on-going basis, the claimant’s medicals associated with the claim. See, CMS’s Section 111 NGHP User Guide, Chapter III (Version 6.5, October 4, 2021), Chapter 6, section 6.3. As part of its ORM definition, CMS explains that “[i]f an RRE has assumed ORM, the RRE is reimbursing a provider, or the injured party, for specific medical procedures, treatment, services, or devices (doctor’s visit, surgery, ambulance transport, etc.). These medicals are often being paid by the RRE as they are submitted by a provider or injured party.” Id. To learn more about Section 111 reporting, see the author’s recent article Revisiting Medicare’s Section 111 Reporting Law: How It Works and Impacts WC Claims
 Federal Register, Vol. 86, No. 217, at 62928 (November 15, 2021).
 Id. In addition, CMS states that the “The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (section 701 of Pub. L. 114-74) (the “2015 Act”) amended the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, 104 Stat. 890 (1990)), which is intended to improve the effectives of [CMPs] and to maintain the deterrent effect of such penalties, requires agencies to adjust the civil monetary penalties for inflation annually.” Federal Register, Vol. 86, No. 217, at 62928 (November 15, 2021).
 Federal Register, Vol. 86, No. 217, at 62928 (November 15, 2021). It is noted that CMS’s adjusted CMP amounts “apply to penalties assessed on or after November 15, 2021, if the violation occurred on or after November 2, 2015.” Id.
 The Responsible Reporting Entity (RRE) is the party required to report under the Section 111 law. As discussed in n.1, RREs, in general, are insurers and self-insurers, but could involve other entities such as self-insurance pools or assigned claims funds depending on the facts. See generally, CMS’s Section 111 NGHP User Guide, Chapter III (Version 6.5, October 4, 2021), Chapter 6. However, claimants and their lawyers are not RREs and do not have reporting responsibilities under Section 111. Id.
 42 U.S.C. § 1395y(b)(8)(E)(i). This statutory section in full states 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.
To effectuate this provision, CMS is tasked with "specifying practices for which sanctions will and will not be imposed under subparagraph (E), including not imposing sanctions for good faith efforts to identify a beneficiary pursuant to this paragraph under an applicable entity responsible for reporting information.” 42 U.S.C. § 1395y(b)(8)(I).
 Federal Register, Vol. 86, No. 217, at 62940 (November 15, 2021).
 This figure is based on 2019 data.