While Medicare Section 111 Reporting Civil Money Penalties May Not Occur Until Late 2025, Exposure Remains for Unreported Historical Claims/Settlements

By: Heather Schwartz Sanderson, Esq.

We recently authored several blogs on the Centers for Medicare & Medicaid Services (CMS) issuing their Final Rule on Civil Money Penalties (CMPs) regarding noncompliance for noncompliant Medicare Section 111 Reporting. You can find the links to those blogs here, here, and here. A common question has come to us at Sanderson Firm which we thought would be helpful to address in this article.

As indicated in our blogs and in the Final Rule, CMS will not seek to impose CMPs on reportable events that occur on or before October 11, 2024; thus, as indicated by the Final Rule, any CMPs will not be imposed on historical claims or settlements (Ongoing Responsibility for Medical/ORM or Total Payment Obligation to Claimant/TPOCs).

In contemplation of this Final Rule, a common question that we are encountering at Sanderson Firm is if a Responsible Reporting Entity (RRE or the entity with reporting responsibility) now would need to go back and clean up historical claims if the RRE suspects that it may not have reported ORM or TPOC on certain claims occurring prior to October 11, 2024. While CMS will not impose CMPs for historical unreported claims, exposure remains if the RRE does not correct its historical reporting.

Let’s dig into this concept further and understand the purpose and intent behind Section 111 reporting and why it was enacted. CMS implemented Section 111 Reporting in 2010 and utilizes reporting of ORM and TPOC via Section 111 not only to coordinate a Medicare beneficiary’s benefits properly and to pay secondary where a primary payer is available but also to recoup Medicare conditional payment liens that have occurred.

Under Section 205 of the Strengthening Medicare and Repaying Taxpayers Act of 2012 (SMART Act), which was subsequently codified in the MSP statute as 42 U.S.C. § 1395y(b)(2)(B)(iii),  CMS has 3 years from its receipt of the reporting of the TPOC and/or ORM Termination via Section 111 to recover conditional payments. While some courts have broadly interpreted the private cause of action’s (42 U.S.C. §1395(y)(b)(3)(A)) statute of limitations to be 4 years (e.g., MSPA Claims 1, LLC v. Tower Hill Prime Insurance Co., 2022 WL 3223801 (11th Cir. August 10, 2022)), the federal government’s statute of limitations remains a clear 3 years (e.g., U.S. v. Stricker, Lexis 15204 (11th Cir. July 26, 2013)).

However, if the TPOC/settlement is never reported to CMS, then statute of limitations for Medicare’s recovery of conditional payments is never triggered, leaving the RRE with open exposure for conditional payments once CMS learns of the claim/settlement. CMS does have other means to learn of open workers’ compensation, general liability, or no-fault claims such as through the beneficiary attorney self-reports to CMS, accident databases, and from medical providers who may report that the beneficiary’s injuries occurred via an insurance claim. Once CMS opens up a recovery case for conditional payments, the RRE may receive conditional payment liens on claims that may have been settled numerous years ago with reserves closed, which is never ideal and truly a headache. Further, it can be extremely costly for the RRE as double-damages are a risk.

Both traditional Medicare (Medicare Parts A & B) and Medicare Advantage Plan (Medicare Part C) conditional payments are both a major potential issue in not reporting historical ORM and TPOC on older claims due to the potential for Medicare Advantage Plan (MAPs) filing actions for an MSP double damages private cause of action against primary payers for failure to reimburse conditional payments. MAPs, and particularly MSP Recovery LLC as an assignee of MAPs, have been well known for suing primary payers for double damages for failure to reimburse conditional payments even without affording the primary plan the opportunity to pay first before being hit for an action for double damages under the MSP. Once a settlement has been reached, Medicare/MAPs have a right to file a double damages cause of action 60 days after the settlement if they are not reimbursed (42 CFR § 411.24(h)).

Further, the Medicare beneficiary may encounter coordination of benefits issues (benefits denials) for treatment on injuries that are no longer subject to be paid by the primary payer. The primary payer may receive a multitude of calls from an upset beneficiary that their injuries were not reported properly and for being denied care/payment by Medicare.

All the above is reason enough to consider why an RRE should strongly consider ensuring ORM and TPOC is properly reported on historical claims even though CMPs may not be imposed if an RRE does not do so. Cleaning up historical data is highly recommended.

We are currently working with numerous RREs on data clean up, oversight of historical Section 111 data, and ensuring that our RRE clients do not have this future conditional payment exposure and to trigger Medicare’s statute of limitations on conditional payment recovery.

Our Section 111 Reporting solutions are unmatched in the industry as we provide error-free reporting to CMS and oversight on data, and we additionally offer Section 111 audit services to get RREs on the right track with their reporting in advance of CMPs coming in late 2024 and 2025. Through our auditing service, we have been able to identify reporting trends for clients that they did not even know existed.

For questions, please contact me at Heather@sandersoncomp.com. To learn more about Sanderson Firm’s MSP/Section 111 Reporting and audit services, please visit our website at www.sandersoncomp.com.