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CMS pre-publishes its Section 111 civil money penalties

By Mark Popolizio, Kate Riordan  |  February 14, 2020

Special Note:

This article, released on February 14, 2020, outlined CMS’s Section 111 civils money penalty (CMP) proposals released by CMS in “pre-published” form. After this article was released, CMS issued its “official” CMP proposals in the Federal Register.

Thus, we have since prepared an updated and more detailed analysis of CMS’s proposals. Click here to review our updated and more in-depth review and breakdown of CMS’s Section 111 CMP proposals.

The Centers for Medicare and Medicaid Services (CMS) has released its long-awaited civil money penalty proposals (CMPs) regarding Section 111 reporting for non-group health plans (NGHP), (as well as group health plans (GHP)), via a pre-publication (CMS-60601-P). Formal release of these proposals in the Federal Register is expected on February 18, 2020 pursuant to the pre-publication notice. 

The following provides a general breakdown of the proposed CMPs for NGHP reporting as follows:

When CMPs would be imposed - NGHP

In general, in formulating the proposals CMS will not rely on the intent of the RRE in assessing penalties; rather, the penalties will be based on the number of times RRE fails to report or fails to report timely. CMS indicates that the CMPs will have prospective application with compliance based upon files submitted by the RRE on or after the effective date of any final rule. CMS proposes that the penalties be both for non-reporting and failing to update reports.

CMS proposes the following areas where CMPs could be imposed for NGHP plans:

  • Failure to report NGHP beneficiary record information within the required time frame (no more than one year from TPOC);
  • RREs response to CMS recovery efforts contradicts the entity’s Section 111 reporting; and
  • When certain error tolerance thresholds (to be established by the Secretary) are exceeded in any four out of eight consecutive reporting periods. The tolerance threshold level will be a maximum 20% error rate per reporting period and will be measured with a “sliding scale” of 25% - 100% penalty amount being assessed depending on how many quarters of non-compliance in a two-year period the RRE archives.

Of note, CMS indicates the “up to” $1,000.00 penalty amount is being adjusted for inflation and is currently $1,569.00 for 2020, or up to $572,685 per year.

When CMPs would NOT be imposed - NGHP

CMS also proposes certain instances when CMPs would not be imposed for NGHP reporting, including:

  • RRE complies with TPOC reporting thresholds or any reporting exceptions.
  • RRE does not exceed any error tolerance(s) in any of the four out of eight consecutive reporting periods.
  • A CMP associated with a specific policy or procedural change will not imposed for a minimum of two reporting period following the implementation of that policy or procedural change.
  • When the RRE fails to report because it was unable to obtain necessary info to report, including name, DOB, gender, MBI, SSN, or last 5 of the SSN, and entity has maintained records of its good faith effort to obtain this info by taking ALL of the following steps:
  • Communicated need for info to individual or his/her attorney at least twice by mail and at least once by phone or other means of contact (such an electronic mail in the absence of a response to mailings);
  • RRE has not received a response in writing; or has received a response in writing that the individual will not provide MBI, SSN, or last 5 of SSN;
  • RRE has documented its records to show its efforts to get the MBI, SSN, or last 5 of SSN and the reason for the failure to collect this info;
  • RRE should maintain records of these good faith efforts (such as dates and types of communications with the individual) in order to be produced as mitigating evidence should CMS contemplate CMP imposition; and
  • Records should be maintained for 5 years.

Other Items

CMS has also provided information regarding other matters related to CMPs for NGHP reporting. For example, CMS states that an informal notice process will be used to alert RREs of possible CMPs before a formal notice is provided. The agency will also allow RREs to submit mitigating circumstances as part of the CMP evaluation process. CMS also indicates that parties will be able to appeal by using the appeals process outlined in 42 CFR 402.19 and 42 CFR part 1005, which includes appeal before an Administrative Law Judge and the Departmental Appeals Board. CMS also indicates that the five-year statute of limitations will apply 28 USCA 2462) from the date when the non-compliance was identified by CMS.

Comment Period

CMS’s pre-published proposals reflect that the agency will open up its proposals for public comment. On this note, the pre-published proposals reflect that there will be a 60 day comment period from the date when the proposals are officially published in the Federal Register.  CMS’s proposals outline the parameters of the comment period, including how comments can be submitted.

The above provides a cursory overview of CMS’s current CMP proposals as they pertain to NGHP reporting. Further updates will follow as warranted following the formal publication of the proposed rule. In the interim, please contact the authors if you have any questions.

Mark Popolizio, J.D., is vice president of MSP compliance and policy at ISO Claims Partners, a Verisk business. You can contact Mark at

Kate Riordan, J.D., is director of Medicare Secondary Payer initiatives at ISO Claims Partners, a Verisk business. You can contact Kate at