In a significant Medicare Secondary Payer (MSP) compliance development, the Office of Information and Regulatory Affairs (OIRA) website indicates that CMS’s long-awaited Section 111 civil money penalties (CMPs) “final rule” and their “Future Medicals” proposals have been completed and are now pending OIRA review for release. If cleared for release, this means that CMS’s Section 111 CMP “final rule” and its “future medicals” proposals could potentially be released in the coming weeks. 
The following provides an overview of these two important updates:
Section 111 civil money penalties (CMPs) “final rule” is one step closer to release
Per above, CMS’s “final” Section 111 CMP rule has been completed and is pending OIRA regulatory review for release which could happen within the coming weeks. As the industry braces for CMS’s Section 111 CMPs final rule, the following background refresher may be helpful:
In February 2020, CMS released its Section 111 CMPs proposals for non-group health plans (NGHP), as well as group health plans (GHP), as contained in 85 Fed. Reg. 8793, No. 32 (February 18, 2020) as part of a notice of proposed rulemaking (NPRM). For purposes of this article, the proposed CMPs are discussed only concerning NGHP reporting.
In general, CMS’s proposals are aimed at implementing the Section 111 penalty provision, which allows CMS to impose CMPs against NGHP RREs of “up to $1,000 for each day of noncompliance with respect to each claimant.” Of note, Section 111’s “up to $1,000” penalty amount will be adjusted annually for inflation under 45 CFR part 102. Section 111’s current maximum penalty amount as adjusted for inflation is $1,247. As part of its NPRM, CMS outlines proposed situations when it could impose a CMP, along with specific instances when it would not impose a CMP. See our prior article for an overview of CMS’s specific penalty proposals, and proposed good faith compliance safe harbors, as contained in its NPRM. As part of CMS’s proposals, the agency opened a public comment period to allow for feedback on its proposals which subsequently closed on April 20, 2020.
In August 2020, the OIRA released a notice indicating, in part, 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, as noted above, the OIRA website now indicates that CMS has completed its “final rule” and it is now pending OIRA review for official release.
If cleared for release by the OIRA, CMS’s final Section 111 CMPs regulations could potentially be issued within the coming weeks. Once CMS’s “final rule” is issued, these provisions will be added to the already existing Codes of Federal Regulations sections governing CMPs in general as contained at 42 C.F.R. Part 402 (Civil Money Penalties, Assessments, and Exclusions) and 42 C.F.R. 102 (Adjustment of Civil Money Penalties for Inflation).
Proposed “Future Medicals” rules have been finalized for release – are LMSAs around the corner?
On a different front, as noted above, the OIRA’s website indicates that CMS’s “future medicals” notice of proposed rulemaking (NPRM) has been completed and is pending OIRA review for release. Unlike Section 111 CMPs where CMS is poised to release their “final rule” as discussed in the preceding section, the agency is just at the beginning stages of rulemaking regarding “future medicals.”
By way of background, over the past several years CMS has projected several different NPRM release dates. For example, two projected NPRM release dates were projected in 2019, before CMS pushed the projected release to February 2020, August 2020, March 2021, October 2021, and most recently February 2022.
It is widely anticipated that the forthcoming NPRM proposals will concentrate on future medical obligations for liability claims (i.e. LMSAs). However, the Fall 2021 notice, similar to other prior notices, also references no-fault and workers’ compensation. Thus, we will need to see if CMS’s actual proposals, once released, focus only on liability claims, or whether they will also include proposals related to workers’ compensation and no-fault claims. The full text of the OIRA’s new Fall 2021 notice states as follows: “This proposed rule would clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items services related to liability insurance (including self-insurance), no-fault insurance, and worker’s compensation settlements, judgments, awards, or other payments. This proposed rule would also remove obsolete regulations.”
Of note, the OIRA’s Fall 2021 notice eliminated the following verbiage which was contained in its Spring 2021 notice: “Specifically, this rule would clarify that an individual or Medicare beneficiary must satisfy Medicare’s interest with respect to future medical items and services related to such settlements, judgments, awards, or other payments.” It is unknown whether the elimination of this verbiage will ultimately have any type of significance.
It is also noted that CMS’s future medicals proposals have been classified as “economically significant.” This means that the “OIRA [has determined] that they are likely to have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.” Further, for all "economically significant" regulations, "the Executive Order directs agencies to provide (among other things) a more detailed assessment of the likely benefits and costs of the regulatory action, including a quantification of those effects, as well as a similar analysis of potentially effective and reasonably feasible alternatives."
For a more in-depth discussion regarding the LMSA issue please see our updated Liability Medicare Set-Asides – Bracing for the storm article.
What happens next?
As noted, the OIRA is currently reviewing CMS’s Section 111 CMPs “final rule” and the agency’s proposed “future medicals” proposals. Once the Section 111 CMPs final rule is cleared for release, it would likely not become effective for 30 to 60 days after being published in the Federal Register. Once the “future medicals” proposals are cleared for release, CMS will very likely then open-up a public comment period where the industry can submit their comments, questions, etc. to help them formulate the eventual “final rule” per the standard rulemaking process. Both of these situations assume that the OIRA approves CMS’s proposals for release as submitted to them. However, it is noted that as part of this process the OIRA could decide to send back the proposals to CMS for reconsideration or questions in certain situations.
Verisk is at the ready
We are closely monitoring OIRA’s review of CMS’s Section 111 final rule and proposed future medicals proposals and will provide further updates as warranted. Our policy and services teams are prepared to work with our customers regarding the impact CMS’s forthcoming releases will have on claims and compliance practices. In the interim, please do not hesitate to contact the author if you have any questions.
The Office of Information and Regulatory Affairs is a Federal office that Congress established in the 1980 Paperwork Reduction Act (44 U.S.C Chapter 35). OIRA is part of the Office of Management and Budget (OMB), which is an agency within the Executive Office of the President. In addition to reviewing government collections of information from the public under the Paperwork Reduction Act, OIRA reviews draft proposed and final regulations under Executive Order 12866 and develops and oversees the implementation of government-wide policies in the areas of information policy, privacy, and statistical policy. OIRA also oversees agency implementation of the Information Quality Act, including the peer review practices of agencies.
The OIRA review process under Executive Order 12866 seeks to ensure that agencies, to the extent permitted by law, comply with the regulatory principles stated in the Executive Order and that the President's policies and priorities are reflected in agency rules. Such review also helps to promote adequate interagency review of draft proposed and final regulatory actions, so that such actions are coordinated with other agencies to avoid inconsistent, incompatible, or duplicative policies. OIRA review helps to ensure that agencies carefully consider the consequences of rules (including both benefits and costs) before they proceed.
OIRA has about 50 full-time professionals who work with agency professionals on specific issues and regulations. All OIRA professionals possess graduate level degrees and have historically come from backgrounds in economics, law, policy analysis, statistics, and information technology. With the growth of science-based regulation and information-quality issues, several staff also have expertise in public health, toxicology, epidemiology, engineering, and other technical fields.
 The OIRA’s website, under the FAQ section indicates that “[t]he period for OIRA review is limited by Executive Order 12866 to 90 days. There is no minimum period for review. Under the Executive Order, the review period may be extended indefinitely by the head of the rulemaking agency; alternatively, the OMB Director may extend the review period on a one-time basis for no more than 30 days.”
 CMS’s right to impose CMPs stems from 42 U.S.C. § 1395y(b)(8)(E)(i) which 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. (Emphasis Added)
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). It is from these provisions upon which CMS’s CMP proposals are based.
 85 Fed. Reg., No. 32, 8797, (Feb. 18, 2020).
 85 Fed. Reg., No. 32, 8793-8803 (Feb. 18, 2020)
 OIRA’s Spring 2021 notice: https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202104&RIN=0938-AT85
 See OIRA’s FAQ page https://www.reginfo.gov/public/jsp/Utilities/faq.myjsp
 A Guide to the Rulemaking Process, see section entitled “When do final rules go into effect?“ This section states: When an agency publishes a final rule, generally the rule is effective no less than thirty days after the date of publication in the Federal Register. If the agency wants to make the rule effective sooner, it must cite “good cause” (persuasive reasons) as to why this is in the public interest. Significant rules (defined by Executive Order 12866) and major rules (defined by the Small Business Regulatory Enforcement Fairness Act) are required to have a 60 day delayed effective date. While a detailed analysis into the criteria of what constitutes a “significant” or “major” rule is outside the scope of this analysis, it is noted CMS has taken the position that the impact of its Section 111 CMP proposals does not meet the “significant rule” criteria under EO 12866 or the definition of a “major rule” under the CRA. 85 Fed. Reg., No. 32, 8800-8801 (Feb. 18, 2020).
 A Guide to the Rulemaking Process, see section entitled What is the purpose of the proposed rule? Which states: The proposed rule, or Notice of Proposed Rulemaking (NPRM), is the official document that announces and explains the agency’s plan to address a problem or accomplish a goal. All proposed rules must be published in the Federal Register to notify the public and to give them an opportunity to submit comments. The proposed rule and the public comments received on it form the basis of the final rule.
 On this point, the OIRA website, in FAQ section, states that “[d]uring the course of OIRA's review of a draft regulation, the Administrator may decide to send a letter to the agency that returns the rule for reconsideration. Such a return may occur if the rule is not compatible with the law, if the quality of the agency's analysis is inadequate if the regulation is not justified by the analysis, if the rule is not consistent with the regulatory principles stated in Executive Order 12866 or with the President's policies and priorities, or if the rule unnecessarily conflicts with other Executive Branch agency regulations or efforts. Such a return does not necessarily imply that either OIRA or OMB is opposed to the draft rule. The return letter merely explains why OIRA believes that the rulemaking would benefit from further consideration and review by the agency.”