Are All Arrows Pointing Towards Imminent Civil Monetary Penalties for Medicare Section 111 Reporting?

by Brendon Desouza Esq. and Kayla Pigeon, Esq.

Earlier this year, the Centers for Medicare & Medicaid Services (CMS) extended the timeline for publishing its Final Rule regarding Civil Monetary Penalties (CMPs) until February 2024. CMS noted that the extended timeline was necessitated by “exceptional circumstances,” and that CMS would be “preparing additional data analysis and predictive modeling to better understand the economic impact of the proposed rule.” In the last few months, there have been key developments that indicate this Final Rule may become effective even sooner than anticipated and that the “additional data analysis” has been completed. Once CMS releases the Final Rule, CMS can start issuing CMPs against non-compliant Responsible Reporting Entities (RREs) within 60 days of the Effective Date of the Final Rule.

This blog will discuss several developments that clearly indicate that CMS is gearing up to begin imposing CMPs.

The industry has experienced a significant increase in Ongoing Responsibility Development Letters

Over the past several months primary insurance payers have seen a significant increase in Ongoing Responsibility Developments letters. These letters are sent by the Benefits Coordination and Recovery Center (BCRC) when they have received conflicting information from a beneficiary, leading the BCRC to believe that Ongoing Responsibility for Medical (ORM) has been incorrectly left open. These letters are triggered as part of the benefits coordination process when Medicare believes there is a Primary Payer involved and refuses prompt payment of a Medicare beneficiary’s claim.

Sanderson Firm Commentary

The significant rise in these letters may indicate that the BCRC is using benefits coordination to further the monitoring of Section 111 data accuracy as it prepares to implement CMPs. The influx of these letters is significant enough that the only conclusions can be that either the number of resources involved in the benefits coordination process has risen or the level of review each claim receives has been heightened. By implementing heightened benefits coordination, the BCRC can engage in prospecting potential Section 111 errors and further estimate potential CMPs that could be levied as part of this process.

Primary payers are receiving auditing requests from the BCRC

Some primary payer RREs have started to see auditing requests from the BCRC regarding specific Section 111 Reporting instances. These requests have focused on instances where a report has been flagged as late and have been accompanied by a request from the BCRC to explain why the report was late.

Sanderson Firm Commentary

Given that the proposed rule includes specific guidance regarding failure to report a Total Payment Obligation to Claimant (TPOC) within one year of the reportable settlement, judgment, award, or other payment, it comes as no surprise that the late flags would be used as part of any potential CMP process. The fact that the BCRC has completed some selective review of late filings in these audits shows that likely this data is being used to spot-check late filings and determine the anticipated percentage of late filings that will fall both outside of the 1 year grace period but also out of the “good faith exception” in the proposed rule that would allow a primary payer to avoid penalties by showing “good faith efforts ” to obtain the required Section 111 Reporting information.

OIRA Concludes Section 111 CMP Rulemaking is not “Economically Significant”

Most noteworthy is that as of late last week, the Office of Information and Regulatory Affairs (OIRA), concluded that the Section 111 civil monetary proposed rulemaking is not economically significant. This conclusion matches CMS’ original economic impact statement and assessment published in the February 2020 rulemaking.

OIRA determined—ostensibly based upon CMS’ additional data analysis and predictive modeling—that CMS is not expected to collect $100 million or more in civil monetary penalties within any given calendar year.[1] Interestingly, even though it is OIRA’s policy to meet with interested parties regarding rules under review, it does not appear that any recent meetings were requested or conducted based on OIRA’s meeting log.

Sanderson Firm Commentary

Primary insurance payers may be pleased to learn that CMS is not anticipated to impose $100 million or more in civil monetary penalties against non-compliant primary payers. However, keep in mind, neither CMS nor OIRA have published any background data showing how this determination was made or how close to $100 million CMS expects to land. It remains unknown whether primary payers should reasonably expect $100,000 in penalties or $100 million in penalties.

Therefore, we highly recommend that primary payers become (and continue to remain) Section 111 compliant as we approach February 2024. With the aforementioned recent Section 111-related movement (i.e., OIRA economic impact determination and recent BCRC trends), we are anticipating that a Final Rule may be released much sooner than anticipated.

Now is the time for primary insurance payers to ensure compliance with Section 111 requirements to avoid CMPs of up to $1,000 per day, per claim. Sanderson Firm's Section 111 reporting solution combines cutting-edge technology with MSP expert oversight to ensure precise, prompt, and complete Medicare (CMS) reporting. Our proprietary data validation logic detects CMS errors before reporting, allowing for advanced error correction, and reducing the risk of penalties due to late or inaccurate reporting. Our expert oversight adds the essential human touch to a technology-driven process. This ensures clear, thorough, and consistent communication, identifies opportunities to enhance data integrity, and provides continuous education on Section 111 compliance best practices and industry updates.

Furthermore, our Section 111 Audit solution represents a thorough examination of Section 111 data, claims system data, industry best practices, and conditional payment exposure. This process is meticulously designed to unearth errors, soft edits, and any potential deficiencies within existing Section 111 reporting programs. We then craft a tailored, intricate plan to address and rectify any issues that come to light during this comprehensive review.

 If your organization has any questions about the OIRA determination, BCRC trends, or any other Section 111 compliance inquiries or is interested in our Section 111 Reporting or Section 111 Audit Services, please contact us.

[1] Regulatory actions may only be deemed as “economically significant” if they:

·        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;

·        Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

·        Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

·        Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive order.