Civil Money Penalties (CMPs) Now Live; CMS Hosts Informational Webinar
Written by: Neha Pellegrino, Esq., MSPA
Yesterday, the Centers for Medicare & Medicaid Services (CMS) hosted a webinar regarding Civil Money Penalties (CMP) and Mandatory Reporting. CMS’ Final Rule for imposing CMPs against non-compliant Responsible Reporting Entities (RREs) became applicable on October 11, 2024, meaning that RREs who fail to timely report Total Payment Obligation to the Claimant (TPOC) and acceptance of Ongoing Responsibility for Medicals (ORM) for instances occurring on or after October 11, 2024 will be subject to CMP exposure.
Earlier this month, CMS announced that a new Section 111 Non-Group Health Plan (NGHP) Civil Money Penalties (CMP) webpage is now live and available. This weblink on CMS.gov dedicated to CMPs covers the expansive CMP process for NGHP Section 111 Reporting including how to identify non-compliance, calculating penalty amounts, and methods of communication, and will continue to be updated as needed.
Below are a few takeaways to highlight from yesterday’s very important webinar:
1. CMS reiterated that CMPs would be prospective in nature. Thus, only reportable occurrences on or after October 11, 2024 are eligible for CMS audit and start the “compliance clock.”
For example, a beneficiary settles a liability case on 2/5/2024 and the RRE reports the TPOC on 3/5/2025. Here, the RRE was late with its reporting but is not eligible for a CMP related to the claim. This is because only reportable events occurring after 10/11/2024 will be ripe for audit and potential CMPs.
2. CMS confirmed that the initial audit process will occur on October 11, 2025 and will be pulled from a random sample of 250 records per quarter across the “entire universe” of a quarter’s records, not exclusively per RRE. These records would include both Section 111 and non-Section 111 submissions. This means that, if a Responsible Reporting Entity (RRE) fails to report a Section 111 record, but CMS becomes aware of the claim/settlement due to a beneficiary’s attorney’s self-report to Medicare, Medicare would then become aware of the noncompliance resulting in possible CMPs to the RRE.
3. In addressing how CMS’ CMP correspondence (e.g., Informal Notice – Intention to Impose a Civil Money Penalty, Notice of Final Determination to Impose a Civil Money Penalty, etc.) will be received, CMS was clear in stating that this correspondence will be sent to the RRE’s Authorized Representative (AR) and Account Manager (AM), not the Recovery Agent.
An RRE’s AR is required to be an employee within the RRE’s organization, and it is typically an individual at the executive level. An RRE’s AM may be an employee of the RRE’s organization, but it may also be a third-party agent. Thus, depending on the RRE’s AR and AM designations, it is possible for an RRE’s CMP correspondence to never be directly received by the RRE’s actual Section 111 reporting agent (the AR or AM would need to forward the correspondence to the recovery agent). Unless RRE ARs and AMs wish to be responsible for forwarding along CMP correspondence to the recovery agent (in addition to their existing company duties / workload), RREs should consider designating their AM as their third-party recovery agent (e.g., Sanderson Firm).
4. Lastly, CMS emphasized the safe harbors available to RREs regarding acquiring beneficiary information. The requirements under 42 CFR Sec. 402.1(c)(22) allow three (3) attempts, for which CMS indicates that the order of how these attempts are made is not relevant. Thus, no CMPs will be issued in instances where the RRE has exhausted all avenues to acquire the information.
It is important to note that while this allows RREs flexibility in their communication methods, CMS maintains that RREs are required to clearly document their efforts and retain accurate records reflecting each communication attempt made with the beneficiary in order for the safe harbor to be achieved.
Sanderson Firm Commentary
Yesterday’s webinar by CMS assisted in explaining many remaining questions from CMS’ previous webinars regarding Civil Money Penalties now that CMPs can be assessed on any claims/settlements that occur after October 11, 2024. As always, we appreciate that CMS continues to provide valuable details surrounding CMPs and the Mandatory Reporting process as we found this webinar insightful.
If you or your organization have questions surrounding Section 111 reporting requirements or are interested in our Section 111 Reporting Solution (SandersonComply), please contact us. Our SandersonComply solution provides unmatched data oversight and error validation, allowing our RRE clients to remain confident in compliance and avoid CMPs. Now is the time to ensure that reporting practices are in optimal condition as CMPs begin to be issued in 2025.
