Fact Sheets Feb 14, 2020

CMS proposes methods to calculate civil monetary penalties for group, non-group plans

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Policy
Quality

CMS proposes methods to calculate civil monetary penalties for group, non-group plans

The Centers for Medicare & Medicaid Services (CMS) has proposed methods to calculate and impose civil money penalties (CMPs) when a group health plan (GHP) or a non‑group health plan (NGHP) entity fails to comply with Medicare Secondary Payer (MSP) reporting requirements.  The proposed rule defines circumstances when a CMP may or may not be imposed, and updates all related regulatory text.

Under provisions of this proposed rule, CMS will continue its efforts to safeguard patients and taxpayers by reducing their risk of inappropriate claims, minimizing healthcare benefit denials and protecting federal funding with clear guidance and better coordination. This proposed rule will ensure that the appropriate insurers are compliant with their reporting requirements and primary payment responsibilities for healthcare services covered by their healthcare coverage programs.  A 60-day public comment period seeks feedback on the proposals.

Statutory Requirements

  • Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (commonly referred to as “Section 111 reporting”) added mandatory reporting requirements for GHP and NGHP entities by adding Section 1862(b)(7) and (b)(8) of the Social Security Act (“the Act”). 
  • Section 1862(b)(7) and (b)(8) of the Act also specify civil money penalties for entities that fail to comply with these reporting requirements, of $1,000 per day per individual for GHPs and up to $1,000 per day per claimant for NGHP entities.
  • The Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012,” (also called “the SMART Act”) amended the existing enforcement provisions to state that an NGHP failing to comply with reporting requirements may be subject to a CMP of up to $1,000 for each day of noncompliance for each claimant. GHPs with reporting obligations remain subject to mandatory CMPs of $1,000 per day of noncompliance per individual.  CMS’ proposed CMPs would be levied in addition to any MSP reimbursement obligations.

Background

Medicare Secondary Payer (MSP) is the term generally used when the Medicare program does not have primary payment responsibility (that is, when another entity has the responsibility for paying for medical care before Medicare).  These entities with primary payment responsibility include GHPs and NGHP entities, such as liability insurers (including self-insured entities), no-fault insurers, and workers’ compensation arrangements.

For people with Medicare with additional healthcare GHP or NGHP benefits, their related MSP claims and their processing are primarily seamless. Only in instances where the GHP or NGHP insurers have not accurately reported covered patient or benefit information (that is, when they are non-compliant with their Section 111 reporting obligations) that a beneficiary could encounter healthcare claims issues. 

Specific enforcement provisions for these penalties are included in Section 111 for insurer non-compliance with reporting requirements. All GHP arrangements and NGHP insurers must report information about people enrolled in Medicare who also have additional coverage provided by that GHP or NGHP on a quarterly basis. The required reporting of this information assists CMS in identifying situations where another party should make payment primary to Medicare for medical care.  When Medicare is able to identify these situations prior to payment, mistakes in the payment process can be avoided.  In situations after healthcare claim payments have been made, Medicare has the right to recover those payments from the primary payer.

Through the required Section 111 reporting, CMS expects to receive coverage information that is timely and accurately from the GHP and NGHP insurers.  The agency and its contractors process related claims with the expectation that the GHP or NGHP insurer is making the primary payment. For example, CMS would deny claims if our records indicate a beneficiary also has GHP coverage.  In the event that a Medicare beneficiary receives a healthcare claim that is believed to be inappropriate or holds an outstanding balance, they can contact 1-800 MEDICARE as a first recourse to receive guidance regarding what happened and what they can do.  If patient data or healthcare coverage information is incorrect, CMS works with the beneficiary to resolve the issue with our Benefits Coordination & Recovery Center (BCRC) call center. 

In the December 11, 2013 Federal Register, CMS published an Advance Notice of Proposed Rulemaking (ANPRM) that solicited public input on options to address and clarify when to impose CMPs. These public comments were used the agency’s development of this proposed rule.

Policy Proposals

GHPs and NGHP entities are required to report information to CMS about coverage they are providing to individuals enrolled in Medicare so that the agency can accurately identify situations where Medicare is not the primary payer for medical care.  CMS proposes the following CMPs for GHP and NGHP entities that do not meet their reporting obligations in the following situations:

Failure to report

  • Should a GHP fail to perform the required Section 111 reporting within one year of the coverage effective date, it would be subject to a CMP of $1,000 for each day of noncompliance for each individual whose coverage information should have been reported. A maximum penalty of $365,000 per individual per year would apply.
  • Should it fail to perform the required Section 111 reporting at all within one year of the date a settlement or other payment obligation was established, an NGHP would be subject to a CMP of up to $1,000 for each day of noncompliance for each individual whose information should have been reported. A maximum penalty of $365,000 per individual per year applies. 

Inaccurate information reported and/ or maintained

  • Entities that have performed Section 111 reporting as required, but subsequently provide information that contradicts reported information in response to MSP recovery efforts, would be subject to a CMP based on the number of days that the entity failed to appropriately report updates to beneficiary records. For GHP entities, penalties would be $1,000 per day of noncompliance per individual. For NGHP entities, the penalty would be up to $1000 per day of noncompliance, for a maximum penalty of $365,000 (365 days) per individual.

Poor quality of reported data

  • CMS has proposed an error tolerance that would not exceed a 20% threshold. In the public comment period we are seeking feedback on the threshold value for entities that have submitted their Section 111 reporting and Medicare identifies data errors.  Reported information that exceeds any of the established error tolerance(s) threshold(s), and exceeds those tolerances for any four out of eight consecutive reporting periods, would be subject to a CMP with the fourth occurrence above the tolerance submission.
    • For GHP entities, the penalty would be $1,000 per day of noncompliance for each individual record for each quarterly reporting period, and is standardized to 90 days for a total of $90,000 per individual.
    • For NGHPs, penalties would be similar, but on a tiered approach with an initial $250 penalty per day of noncompliance for each individual; it increases each subsequent quarter of noncompliance by $250 per day to a maximum of $1,000 per day (it is standardized to 90 days for a total of up to $90,000 per individual per reporting period).  Penalties reduce by $250 per day for each subsequent quarter of compliance.
  • In response to feedback received on the ANPRM, CMS identified criteria for situations when the agency would not impose a CMP.  CMS proposes that CMPs would not be imposed under the following circumstances:
    • A GHP reports coverage within one year of the coverage effective date;
    • An NGHP entity reports information within one year of the date of settlement;
    • A reporting entity’s submission complies with the reporting error thresholds; or
    • If an NGHP entity is unable to obtain required reporting information from Medicare beneficiaries document their good faith efforts to obtain the information.

Supporting Information

The proposed rule can be found at https://www.federalregister.gov/documents/2020/02/18/2020-03069/medicare-program-medicare-secondary-payer-and-certain-civil-money-penalties.

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