By Bridget Smith, Sr. Vice President, National Accounts and Settlement Consulting, IMPAXX
As we take the first steps into 2024, I am reminded of a quote I came across by Hillary DePIano, a playwright and non-fiction author: “We all get the exact same 365 days. The only difference is what we do with them.” This usually rings true but, in 2024, we get an extra day. So, what did the Centers for Medicare and Medicaid Services (CMS) do in the 365 days of 2023 to change the landscape of Medicare compliance and what can we look forward to in the 366 days of 2024? In this two-part series, we explore how the release of the final rule on Section 111 Civil Money Penalties was the highpoint of Medicare compliance in 2023, other highlights from 2023, what may be in store for 2024, and what you can do now to prepare.
Section 111 Civil Money Penalties (CMPs)
Since the inception of Section 111 Mandatory Insurer Reporting requirements, Responsible Reporting Entities (RREs) have been on edge about the potential for CMPs if reporting was done improperly (or not at all). With the threat of penalties of $1,000 per day per claim, or more, this fear was not misplaced. At last, after many fits and starts, CMS issued a final rule on CMPs in October 2023.
Before we delve into the rule and its implications, some brief background on reporting is in order. CMS created the reporting requirement so they would be able to collect data to determine if medical expenses were paid by CMS that were really the responsibility of the insurer (liability, workers’ compensation, no-fault) or self-insured entity to pay. This allowed CMS to seek reimbursement for conditional payments from these entities (Responsible Reporting Entities or RREs) or from the claimant directly.
Simply, RREs report when they are responsible for medical on a claim (Ongoing Responsibility for Medical or ORM), when their responsibility ends (ORM Termination) and when the medical portion of the case has settled or there is a final judgement (Total Payment Obligation to Claimant or TPOC).
There are two parts to the reporting process. First, the technical piece, which requires the RRE to have a platform to transfer the data to CMS for review in a format that CMS will accept. Second, is the people part of the process, which involves data being sent to CMS including ORM, ORM Termination, TPOC, diagnosis codes accepted and denied, claimant data, RRE information, etc. and must contain correct information as well.
The proposed rule for CMPs focused on both the people and technical parts of reporting and included penalties for excessive reporting errors, failing to timely report TPOC, and reporting contradictory information. But in the final rule, CMS paired this down significantly, focusing mainly on timely reporting. However, both parts of reporting are still at play in the final rule. Specifically, the final rule provides that CMS may impose a penalty when the RRE:
“[f]ails to report any beneficiary record within 1 year from the date of the settlement, judgment, award, or other payment, or the effective date where on-going payment responsibility for medical care has been assumed by the entity.”
Timeliness is determined by comparing the date the record is submitted and accepted by CMS against the date CMS should have received the record. The date CMS should receive the record is determined by the effective date of coverage (ORM assumption) or the date of settlement (TPOC or TPOC funding date if the TPOC is delayed) plus one year (365 days).
Although, at first blush, it may appear that timeliness is the only factor in determining compliance, it is worth noting that CMS also must accept the data reported. As such, even though CMS did not specifically include excessive errors as part of the new rule, they made it clear that reporting alone is not the determining factor in assessing whether penalties are warranted. So, if reporting errors prevent CMS from reviewing the data, penalties can be assessed if these errors are not resolved within the one-year period.
CMS will use a tiered approach to calculate penalties as follows:
- $250, as adjusted annually under 45 CFR part 102, 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
- $500, as adjusted annually under 45 CFR part 102, 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
- $1,000, as adjusted annually under 45 CFR part 102, for each calendar day of noncompliance, where the record was reported 3 years or more after the required reporting date
How will CMS determine if TPOC and ORM are reported in a timely manner? They will conduct an audit to determine timeliness. CMS will audit a maximum of 1,000 cases per year, or 250 per quarter, which includes Group Health Plan (GHP) and Non-Group Health Plan (NGHP) claims1. This does not mean that every RRE will have 1,000 claims audited per year. Instead, 1,000 claims as a whole, divided based on volume between GHP and NGHP plans will be audited. CMS will provide pre-notice of a potential penalty situation affording RREs an opportunity to explain and potentially correct reporting issues. There is also a formal appeals process.
In sum, the final rule is a welcome change to the initial proposal made by CMS and provides RREs with the opportunity to get their ducks in a row prior to October 2024, when the clock starts on determining timeliness of ORM and TPOC reporting. So how do you get your ducks in a row? Don’t miss part two of this series where we will review the steps you can take towards compliance, share missteps to avoid, and examine other important Section 111 Reporting developments from 2023 that will impact you in 2024.
About Bridget Smith, JD, MSCC, CMSP
Bridget has over 20 years of experience as a former practicing attorney and partner focusing on workers’ compensation, general liability, and Medicare compliance law. She collaborates with customers to develop Medicare compliance programs and procedures and to successfully navigate Medicare Secondary Payer issues. Bridget is a co-chair of the podcast committee for the MSP Network and is part of the MARC Coalition serving on the Allocation/MSA work group. She is also an industry thought leader and author who presents regularly at conferences nationwide. Bridget has a Bachelor of Arts degree from Gannon University and Master of Arts and Juris Doctor degrees from Duquesne University.
From Section 111 Reporting, Medicare-Set Asides, Cost Projections, and Structured Settlements to MSA Administration, Lien Resolution, and Settlement Consulting, IMPAXX offers a comprehensive suite of innovative products and services to help you effectively navigate the constantly changing Medicare Secondary Payer (MSP) landscape. IMPAXX is one of the nation's largest Medicare Set-Aside solution providers, and our dedicated and knowledgeable team of professionals use their decades of experience, extensive industry knowledge, and sophisticated understanding of Medicare Secondary Payer requirements, to create solutions tailored to your unique needs.
1 This article focuses on reporting requirements for NGHPs which includes liability insurers, workers’ compensation insurers, self-insurers, and no-fault insurers.