CMS Unveils New Webpage Resource for NGHP Section 111 CMPs

The Centers for Medicare and Medicaid Services (CMS) has released two new NGHP Section 111 civil money penalties (CMPs) resources: CMS's NGHP Civil Money Penalties webpage and CMS's CMPs workflow.

To a large extent, CMS's new CMPs webpage ("webpage") reiterates information CMS has previously released either in its final rule, FAQ resource, or its January 18, 2024, NGHP webinar. In addition, this new resource does contain some new information (and in some instances, different information) as more fully addressed below. Overall, Section 111 NGHP RREs ("RREs") may wish to review these new Section 111 resources as part of their Section 111 CMPs compliance readiness.

The authors provide a general outline of the information contained in CMS's new resources as follows:

Summary

A very high level (and non-exhaustive) outline of key points discussed by CMS in its new webpage resource include:

• CMS restates that RREs can be penalized for untimely TPOC and/or ORM reporting as defined under its final rule. CMS also confirms that its CMPs process is prospective based on the final rule's October 11, 2024 "applicability date" as discussed more fully below.
• CMS reiterates that it will use a randomized audit process to select 250 records per quarter to review for potential CMPs purposes. This 250 figure will be proportionate to the number of GHP and NGHP records received that quarter. In addition, this process will include what CMS refers to as "non-Section 111 records." Of note, CMS now indicates that its randomized audit process will begin January 2026 (previously CMS stated this process would start in April 2026).
• CMS restates that CMPs will be levied using a three "tier" structure with increasing CMP amounts based on the length of time the RRE's required Section 111 report(s) are late.
• CMS will send CMPs correspondence to the RRE's Authorized Representative with a copy to the Account Manager. CMS reminds RREs that they should make sure their Profile Report has current contact information and that failure to ensure all contact information is accurate is not an acceptable defense against a CMP.
• CMS provides additional information on how its "informal" and "formal" notice process will operate, including important information regarding the RRE's ability to submit "mitigating evidence" and appeal rights.
• CMS outlines how it will provide notice to RREs that CMPs payment is due (to include payment instructions).

The below provides more detailed information regarding each of these (and other) points as follows:

Non-compliance

Section 111 "record"

Regarding non-compliance for CMPs purposes, CMS's webpage states that "a 'record' is defined as any individual occurrence of a Total Payment Obligation to Claimant (TPOC) or Ongoing Responsibility for Medicals (ORM) for a Medicare beneficiary that must be submitted via the Section 111 reporting process."^[1] Further, CMS notes that "if a particular case has both an ORM and a TPOC component, this will constitute two records."^[2] On this point, it is noted that while CMS refers to each required TPOC or ORM report as an individual "record", there are occasions where a report of TPOC and ORM may technically be included within a single Section 111 Claim Input File coverage record submission. With that in mind, from the authors' view, what CMS seems to be referring to here is the fact that the agency would view TPOC and ORM reports as separate and distinct reporting obligations for which an untimely report of either or both could separately constitute the assessment of a CMP, rather than an actual reference to separate and distinct coverage records being submitted within an RRE's Claim Input File submission. In this respect, CMS, as noted above, indicates that, "if a particular case has both an ORM and a TPOC component, this will constitute two records."^[3] Further, as part of CMS's Section 111 CMPs FAQ, CMS states that "[a]s a reminder, CMS considers ORM and TPOCs to be separate reporting obligations, and CMS will evaluate the timeliness of the ORM and TPOC reporting separately for the purposes of determining compliance."^[4]

Timeliness

CMS's new webpage reminds RREs that they can be penalized for untimely TPOC and/or ORM reporting. Under CMS's final rule, a CMP may be assessed if an 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 ongoing payment responsibility for medical care has been assumed by the entity."^[5]As part of its new webpage, CMS reminds RREs that "records are required to be submitted in a timely manner" and that "[c]ompliance with reporting obligations is defined by the rule as the successful submission and acceptance of the report of NGHP coverage, acceptance of ORM, or TPOC."^[6] Furthermore, CMS emphasizes that, "it is ultimately the RRE's responsibility, and not the reporting agent's responsibility, to ensure that Section 111 records are submitted to CMS in a timely manner, if such a service is being used."^[7]

Application/Scope

On its January 18^th webinar, CMS announced that it will apply CMPs prospectively. Specifically, CMS stated that only coverage record submissions with coverage effective dates or TPOC dates of October 11, 2024 or later would be in scope for penalties and, as such, the agency would not seek to assess penalties for submissions where the coverage effective dates or TPOC dates occurred prior to October 11, 2024.^[8] Similarly, on its new webpage, CMS reiterates its intention to apply CMPs prospectively stating as follows: "CMPs will only be issued by CMS on a prospective basis, and there will be no instances of retroactive enforcement related to noncompliant reporting."^[9]

As noted by CMS in its final rule (and restated on its new webpage) its CMPs regulations "are applicable as of October 11, 2024, and will be enforced as of October 11, 2025."^[10]On this point, CMS reiterates on its new webpage that "[t]he date the 365-day 'compliance clock' begins to run, or is applicable, is October 11, 2024. Applicable means every reportable MSP occurrence that occurs on or after October 11, 2024, is eligible for review of compliance."^[11] On a technical note, the verbiage contained on CMS's new webpage stated immediately above reads slightly differently from how CMS verbally phrased the prospective application of its CMPs rule on its January 18^th webinar (as stated above) in that on the webpage CMS references "everyreportable MSP occurrence that occurs on or after October 11, 2024" as being in scope for review, as opposed to stating every record with a TPOC date or coverage effective date October 11, 2024 or later, which CMS has previously noted is the actual basis for CMPs. (Authors' emphasis). However, notwithstanding CMS's use of this phrase, in another area on the webpage CMS indicates that "CMPs will be issued on a prospective basis for new coverage records" which correlates with its previous guidance.^[12]

From another angle, while CMS reaffirms that its CMPs rules are prospective, CMS reminds RREs that they still have a statutory requirement to make sure their reporting on older claims records is accurate and RREs could still face other potential recourses, including potential False Claims Act suits or administrative recovery. In this regard, CMS states: "A note of caution: While CMPs will be issued on a prospective basis for new coverage records, accurate reporting overall is still statutorily required, in addition to being an important tool the Medicare program uses to ensure proper payment of claims. RREs who fail to meet their full reporting obligations may face other recovery actions including, but not limited to, False Claims Act suits or administrative recovery efforts."^[13]

Audit Process

CMS reiterates that it will, on a quarterly basis, randomly select 250 records for review "across the entire universe of accepted new Section 111 records received during the specific review period, as well as records Medicare received from non-Section 111 sources such as providers or beneficiaries."^[14]CMS also reiterates that records selected for review in correlation will be proportionate to the volume of coverage records accepted in connection with the GHP and NGHP reporting process for the quarter in question.^[15]Additionally, CMS further defines a "non-Section 111 record," which the agency may include within its quarterly review, as "a TPOC and/or ORM record that has been reported via other coordination of benefits and data collection methods."^[16]Of note, CMS previously noted that its randomized audit process would start in April 2026.^[17]However, CMS's new webpage indicates that this process is being pushed up and will now begin in January 2026.^[18]

Penalty amounts - tiered approach

CMPs calculation

CMS reminds RREs that it plans to impose CMPs using three penalty "tiers" whereby an RRE will face increasing penalty amounts based on the length of time they are late, with the applicable penalty amounts subject to annual inflation updates.^[19]CMS calculates the "tiers" as follows: Tier 1 - 25% of the max daily CMPs rate; Tier 2 - 50% of the max daily CMPs rate; and Tier 3 - 100% of the max daily CMPs rate.^[20] As part of this source, CMS shows a chart breaking down the tiers using the original "base" CMPs amounts based off the statutory daily max figure of $1,000 (which has since been adjusted for inflation). On this latter note, at the end of this section CMS states updated tier rates based off an inflation adjusted daily max rate of $1,428 as reflected in the next section below.

In addition, CMS states in the final rule that "the total penalty for any one instance of noncompliance by an RRE for a given record identified by CMS will be no greater than $365,000 (as adjusted annually under 45 CFR part 102)."^[21]

CMPs amounts

In terms of actual amounts, CMS in its new webpage restates the inflation adjusted tiered penalty amounts it announced on its January 18, 2024, webinar which were based on an inflation adjusted daily maximum rate of $1,428.

Accordingly, the following are CMPs penalty amounts as outlined by CMS on its January 18, 2024, webinar which are based off an inflation adjusted max daily rate of $1,428:

• Tier 1: $357 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.
• Tier 2: $714 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.
• Tier 3: $1,428 for each calendar day of noncompliance, where the record was reported 3 years or more after the required reporting date.

However, of note, the authors' research reflects that the max daily CMPs rate was recently adjusted for inflation (again) in August 2024 which is not referenced as part of CMS's new webpage.

More specifically, as outlined in the authors' recent article, the maximum daily CMPs amount was recently adjusted for inflation to $1,474 (up from $1,428). See, Annual Civil Monetary Penalties Inflation Adjustment, 89 Fed. Reg. 64815 (August 8, 2024)(amending 45 C.F.R. § 102.3). To date, CMS has not released updated information regarding CMPs based on this recent inflation adjustment.

Thus, the following are the updated CMPs penalty amounts applying CMS's CMPs calculation methodology per the inflation adjustment noted in the Federal Register (August 8, 2024) update:

• Tier 1: $368.50 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.
• Tier 2: $737 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.
• Tier 3: $1,474 for each calendar day of noncompliance, where the record was reported 3 years or more after the required reporting date.

In addition, this new inflation adjustment would increase the total maximum penalty amount to $538,010. Again, the above would be the new rates per the August inflation adjustment assuming CMS maintains the calculation method it has been using. We will continue to monitor any new information CMS may release related to the new inflation adjustment going forward.

CMPs examples

As part of its new webpage, CMS gives examples of how it would levy CMPs amounts based on an RRE's Section 111 reports, as well as a situation where non-compliance was identified via "non-Section 111" records. These examples are restated, in full, for the reader in the endnote to this sentence.^[22]

CMS/RRE communication

CMS's new webpage provides updated information regarding how it plans to communicate with RREs as part of the CMPs process. In this regard, CMS notes that it "will communicate with the RRE only when a potential instance of non-compliance is identified."^[23] Further, CMS clarifies that "[t]he RRE's Authorized Representative will receive all CMP correspondence, with a copy issued to the Account Manager."^[24] While not stated on its new webpage, CMS previously indicated on its January 18, 2024 webinar that it will use e-mail to send it is "informal" CMPs notices. Further, as outlined below, CMS states it will send its "Notice of Final Determination" via certified mail.^[25] CMS directs RREs to its CMPs Workflow document "[f]or a visual representation of the CMP process and when RREs can anticipate receiving letters."^[26]

Importantly, CMS also reminds RREs that they "must ensure the Profile Report recertification has been completed and all contact information is current to ensure that your organization does not miss any CMP-related correspondence. Failure to ensure all contact information is accurate is not an acceptable defense against a CMP." (CMS emphasis)."^[27]

"Informal" CMPs notice and mitigating evidence

Under CMS's final rule, CMS will give RREs notice of potential CMPs, and RREs will have a right to appeal CMS penalties.^[28]In general, as part of this process, CMS will first give RREs "informal" notice that it may impose a CMP and will give the RRE an opportunity to submit mitigating evidence as more fully discussed below in this section.^[29]CMS will then provide with "formal" notice if the agency ultimately determines that it will levy CMPs against the RRE.^[30]

Regarding CMS's "informal notice," CMS, as part of its new webpage, explains that its "first letter (notice) is issued when a noncompliant record [is] identified on CMS's quarterly audit."^[31] Further, CMS notes that when it issues an informal notice, "[a] CMP is not being assessed at this point [but] rather, the RRE's noncompliant record is identified along with the associated information so that an RRE may investigate the record."^[32]

As noted, RREs will have the opportunity to submit "mitigating evidence" as part of the informal notice process. CMS explains that this "is the opportunity for RREs to explain why a CMP should not be imposed" and that "[t]he process to submit mitigating information, in an attempt to explain or defend technical or administrative issues resulting in the noncompliance is outlined in this letter."^[33]

Notably, CMS provides additional information regarding the RREs ability to submit mitigating evidence (including certain limitations) on its new webpage as follows:

• Mitigating evidence (timelines/limits) - As part of its new webpage, CMS reiterates that "[m]itigating evidence must be submitted to CMS within 30 days of receipt of the Informal Notice."^[34]Importantly, CMS advises RREs that "[e]xtensions to the RRE's required 30-day response time will not be granted." (Authors' emphasis).^[35]However, CMS notes that "[i]f an RRE believes that there were circumstances beyond its control that prevented it from reporting on time, responding to the informal notice can help reduce the amount of a CMP or even avoid a CMP altogether. CMS reviews all reasonable evidence submitted timely by the RRE."^[36]Further, CMS advises that RREs will have only one "submission opportunity" to submit mitigation evidence, stating that while CMS "may request clarification on, or further explanation of, an RRE's submitted evidence … this step of the process only affords the RRE one (1) submission opportunity."^[37]
• Mitigating evidence (evaluation/decision) - CMS states that "[e]ach decision regarding the mitigating evidence submitted only pertains to that specific record referenced in the Informal Notice."^[38]CMS states further that if "the submitted evidence was sufficient and supports the RRE's defense against CMS' finding of noncompliance," then "[n]o additional action is required by the RRE."^[39]Conversely, if CMS finds that "the submitted evidence was insufficient or the RRE's submission of mitigating evidence was not submitted within the required timeframe, CMS' original finding of noncompliance will be upheld and a Proposed Determination to impose a CMP will be issued."^[40]

"Formal" CMPs notice and appeal rights

Moving to the "formal notice" part of CMS's process, CMS states that it will issue a "notice of proposed determination" if (a) "there is no response to the informal notice" or (b) "the RRE has not provided sufficient mitigating evidence."^[41]CMS notes that this "letter (notice), sent via Certified Mail, [will provide] the RRE with the CMP amount that CMS intends to impose, and how to further appeal."^[42]

CMS notes that RREs will have appeals rights and describes this process and related timelines as follows on its new webpage:

• Hearing Request - CMS states that "RREs are afforded the right to request a hearing as set forth under 42 CFR § 405 and in accordance with 42 CFR Part 1005 and must do so within 60 calendar days of receipt of the Notice of Proposed Determination."^[43]
• Administrative Law Judge (ALJ) - CMS notes that "[t]he process to request a hearing with an Administrative Law Judge (ALJ) is outlined in this letter and must be completed within the required timeframes, must be filed electronically with the Departmental Appeals Board (DAB), Civil Remedies Division, using the DAB E-File System available at https://dab.efile.hhs.gov, and must be completed within the required timeframes."^[44]
• Departmental Appeals Board(DAB) - Following the ALJ level, CMS states that "[t]he RRE may appeal the ALJ's initial decision to the DAB's Appellate Division (the 'Board') within 30 calendar days of the ALJ decision. Appeals to the Board must also be submitted through DAB E-File. The Board's decision becomes binding 60 calendar days following service of the Board's decision, absent petition for judicial review. The RRE will be precluded from appealing a final determination to impose a CMP, pursuant to 42 CFR § 402.9(c), if the hearing is not requested within the required timeframe."^[45]

Imposing CMPs - final determination

Regarding when CMS will levy a CMPS against an RRE, CMS states that a "Notice of Final Determination" will be issued if the RRE (a) "does not request a hearing or appeal, (b) elects to terminate the appeals process, or (c) otherwise exhausts all available administrative appeal rights and the CMP is upheld."^[46]CMS notes that "[t]his letter (notice), sent via Certified Mail, confirms that the imposition of the RRE's CMP is final."^[47]Further, CMS explains that "[i]nstructions on how the RRE should remit payment, and its due date, [will be] included in the Notice of Final Determination."^[48]

CMS's new CMPs Workflow Document

In addition to its new website discussed above, CMS has also released a new CMPs Workflow Document which provides a visualize overview of its CMPs process.

Questions?

Please feel to contact a representative or the authors if you have any questions. Also, please see our Verisk's Section 111 CMPs resources for additional CMPs resources, including our recent CMS's CMPs final rule is "applicable" October 11, 2024 article and information on ourSection 111 reporting tool MSP Navigator.

[1]CMS's NGHP Civil Money Penalties Webpage, Section: Non-Compliance.

[2] Id.

[3] Id.

[4]CMS's FAQ (November 2, 2023).

[5] See, Fed. Reg. Vol. 88, No. 195, at 70372 (October 11, 2023).

[6]CMS's NGHP Civil Money Penalties Webpage, Section: Non-Compliance. On this point, CMS notes that "[a]n RRE is considered to be in compliance with the timeliness requirement if a record is reported within 1 year (365 days) of the latter of either the Settlement Date reported in "Field 80" or the Funding Delayed Beyond TPOC Date reported in "Field 82" AND the MSP Effective Date and ORM are selected as 'Y.' Id.

[7]CMS's NGHP Civil Money Penalties Webpage, Section: Non-Compliance.

[8] CMS's Section 111 NGHP CMPs webinar (January 18, 2024).

[9] CMS's NGHP Civil Money Penalties Webpage, introductory paragraphs.

[10] Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70363 and (October 11, 2023) andCMS's NGHP Civil Money Penalties Webpage, introductory paragraphs.

[11]CMS's NGHP Civil Money Penalties Webpage,Section: Non-Compliance. Notably, this was not clearly outlined within CMS's final rule publication and the new webpage is the first instance of CMS officially publishing this guidance in writing.

[12]CMS's NGHP Civil Money Penalties Webpage, Section: Non-Compliance and CMS's CMS's Section 111 NGHP CMPs webinar (January 18, 2024).

[13]CMS's NGHP Civil Money Penalties Webpage,Section: Non-Compliance.

[14]CMS's NGHP Civil Money Penalties Webpage,Section: Review of Records to Identify Non-Compliance. CMS also noted this information in its final rule stating: "CMS has determined that, given the time and resources necessary to accurately and thoroughly evaluate the accuracy of any submitted record, it would be possible to audit a total of 1,000 records per calendar year across all RRE submissions, divided evenly among each calendar quarter (250 individual beneficiary records per quarter)." Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70363, 70369-70370 (October 11, 2023).

Regarding CMS's reference that it will also include "records Medicare received from non-Section 111 sources such as providers or beneficiaries," CMS first referred to the inclusion of records "outside" of the Section 111 reporting process in its FAQ document (November 2, 2023). On the point, as part of CMS's FAQ resource, CMS states: "CMS will audit a random sample of 250 records that were added on a quarterly basis from across all reported records for a total of 1,000 records to be reviewed annually. This sample will reflect a proportionate number of GHP and NGHP records and may shift each quarter as GHP and NGHP record volumes vary. When a sampled record is from a source other than Section 111 reporting, CMS will identify and review the associated Section 111 record for compliance. If the Section 111 record has not been successfully reported at the time of review, noncompliance will be determined based on the information supplied in the other record (e.g., the date of settlement)." CMS's FAQ (November 2, 2023) (Authors' emphasis).

[15]CMS's NGHP Civil Money Penalties Webpage,Section: Review of Records to Identify Non-Compliance. CMS also notes this information in its final rule stating: "CMS will evaluate a proportionate number of GHP and NGHP records based on the pro-rata count of recently added records for both types of coverage over the calendar quarter under evaluation. For example, if over the calendar quarter being evaluated, CMS received 600,000 GHP records and 400,000 NGHP records for a total of 1,000,000 recently added beneficiary records, then 60 percent of the 250 records audited for that quarter would be GHP records, and 40 percent would be NGHP records." Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70363, 70370 (October 11, 2023).

[16]CMS's NGHP Civil Money Penalties Webpage,Section: Review of Records to Identify Non-Compliance.

[17] CMS's NGHP Section 111 CMPs Webinar (January 18, 2024).

[18]CMS's NGHP Civil Money Penalties Webpage,Section: Review of Records to Identify Non-Compliance.

[19] CMS's NGHP Civil Money Penalties Webpage,Penalty Amounts.

[20] By way of background, CMS's right to impose CMPs against NGHP RREs stems from 42 U.S.C. § 1395y(b)(8)(E)(i) which states as follows: "An applicable plan that fails to comply with the [Section 111 reporting] requirements … may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant …A civil money penalty under this clause shall be in addition to any other penalties prescribed by law and in addition to any Medicare secondary payer claim under this subchapter with respect to an individual." (Emphasis Added). Of note, this statutory penalty amount is subject to annual inflation adjustments. See, 45 C.F.R. § 102.3.

CMS's final rule

As part of its final rule, CMS announced that it will use a "tiered approach" in imposing CMPs against NGHP RREs. In a nutshell, the longer an RRE is late, the more it will pay.

CMS outlined its tiered penalty structure in its final rule (using the $1,000 penalty amount referenced in 42 U.S.C. § 1395y(b)(8)(E)(i)) as follows:

"For any record selected via the random audit process described above where the NGHP RRE submitted the information more than 1 year after the date of settlement, judgment, award, or other payment (including the effective date of the assumption of ongoing payment responsibility for medical care); the daily penalty will be -

• [Tier 1] $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;
• [Tier 2] $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 2 years after, the required reporting date; or
• [Tier 3]$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.
• Additionally, the total penalty for any one instance of noncompliance by an NGHP RRE for a given record identified by CMS will be no greater than $365,000 (as adjusted annually under 45 CFR part 102)." Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70363, 70370 (October 11, 2023).

  CMS's January 18, 2024 webinar

• As part of its January webinar, CMS outlined updated CMPs rates, per each tier above, based on an inflation adjusted daily maximum rate of $1,428 as follows: Tier 1: increased from $250 to $357 per day; Tier 2: increased from $500 to $714 per day; and Tier 3: increased from $1,000 to $1,428 per day. CMS's Section 111 NGHP CMPs webinar (January 18, 2024).

  Inflation Adjustment (Federal Register, August 8, 2024)

  As noted above, the maximum daily CMPs amount pertaining to NGHP Section 111 reporting was recently adjusted for inflation to $1,474. See, Annual Civil Monetary Penalties Inflation Adjustment, 89 Fed. Reg. 64815 (August 8, 2024)(amending 45 C.F.R. § 102.3). To date, CMS has not released updated information regarding CMPs based on this recent inflation adjustment. However, based on how CMS calculated CMPs in its final rule (and its January webinar), and assuming CMS follows the same calculation methodology per tier (e.g., 25% of the max rate for Tier 1; 50% of the max rate for Tier 2; and 100% of the max. rate in Tier 3), the new CMPs rates can be calculated as follows: Tier 1: $368.50 for each calendar day of non-compliance where the record is reported 1 year or more, but less than 2 years after, the required date. Tier 2: $737 for each calendar day of non-compliance where the record is reported 2 years or more, but less than 3 years after, the required reporting date. Tier 3: $1,474(max rate) for each calendar day of non-compliance where the record is reported 3 years or more after the required reporting date. The total maximum penalty amount increases to $538,010 applying the new inflation adjusted rate contained in the Federal Register (August 8, 2024). Again, assuming CMS maintains the calculation method it has been using as outlined, the above would be the new rates per the August inflation adjustment. We will continue to monitor any new information CMS may release related to the new inflation adjustment going forward.

  [21] Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70363, 70370 (October 11, 2023). CMS also reiterates this cap (to be adjusted per annual inflation updates) as part of its new webpage.

  [22]CMS's NGHP Civil Money Penalties Webpage, Section: Penalty Amounts.

  On this point, CMS outlines the following on its new webpage (with the authors adding two headers for the reader's convenience):

  Non-compliance identified through Section 111 reporting

  In this situation, CMS states, in full, as follows:

  "NGHP Section 111 records that fail to meet the timeliness requirement will be identified through the date the record was reported and accepted, being 365 days greater than the of the latter of either the Settlement Date reported in "Field 80" or the Funding Delayed Beyond TPOC Date reported in "Field 82" AND the MSP Effective Date and ORM are selected as "Y".

  • Example: An RRE's record is randomly selected for a CMS quarterly audit. The RRE reported the TPOC on May 1, 2026, but the Medicare beneficiary settled their liability case on February 5, 2025.
    • The record should have been reported no later thanFebruary 5, 2026, but was actually reported 85 days later.
    • The RRE would be subject to a CMP for the period between February 5, 2026, and May 1, 2026. A penalty amount of $250 per day of noncompliance, 85 days, would be applied. An Informal Notice identifying the noncompliant record would be issued with a potential CMP amount of $21,250 (as adjusted for inflation)."

  Non-compliance identified through "non-Section 111" records

  In this scenario, CMS states, in full, as follows:

  "Non-Section 111 records are also a factor in the determination of timely reporting. A non-Section 111 record that is reported and accepted but does not have a corresponding Section 111 record that was reported and accepted within 365 days as described above, will fail to meet the timeliness requirement.

  • Example: A Medicare beneficiary is involved in a car accident on November 1, 2024, and self-reports a TPOC on June 15, 2025. This non-Section 111 self-report record was randomly selected and as of October 1, 2026, date of the CMS audit, the RRE never reported the TPOC via Section 111.
    • The non-Section 111 record should have been reported via Section 111 no later thanJune 15, 2026.
    • The RRE would be subject to a CMP for the period of June 15, 2026, through October 1, 2026. A penalty amount of $250 per day of noncompliance, 108 days, would be applied. An Informal Notice identifying the noncompliant record would be issued with a potential CMP amount of $27,000 (as adjusted for inflation)."

  Both examples above cited ,in full, are from CMS's NGHP Civil Money Penalties Webpage, Section: Penalty Amounts.

  [23] CMS's NGHP Civil Money Penalties Webpage,Section: Letters.

  [24]CMS's NGHP Civil Money Penalties Webpage,Section: Letters. On this point, as part of its January 18, 2024 webinar, CMS advised that it would send its informal written pre-notice of a potential CMP via e-mail to the RRE's Authorized Representative with a "cc" copy sent to the RRE's Account Manager. However, at that time, CMS did not mention to whom it would send the formal notice, although, as speculated by the authors in their prior articles, it would seem logical that this notice would also go to the RRE's Authorized Representatives, with a copy to the Account Manager, using the physical addresses maintained in the RRE's Section 111 profile report. The information now posted by CMS on its webpage as noted above now confirms that "[t]he RRE's Authorized Representative will receive all CMP correspondence, with a copy issued to the Account Manager." CMS's NGHP Civil Money Penalties Webpage.

  [25]CMS's NGHP Civil Money Penalties Webpage,Section: Notice of Final Determination to Impose a Civil Money Penalty.

  [26]CMS's NGHP Civil Money Penalties Webpage,Section: Letters.

  [27] CMS's NGHP Civil Money Penalties Webpage,Section: Letters.

  [28] Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70363, 70367 (October 11, 2023). In this regard, CMS notes as follows in the final rule: "We intend to communicate with the entity informally before issuing formal notice regarding a CMP. The informal (that is, prior to formal enforcement actions) written ''pre- notice'' process will allow the RRE the opportunity to present mitigating evidence for CMS review prior to the imposition of a CMP. The RRE will have 30 calendar days to respond with mitigating information before the issuance of a formal written notice in accordance with 42 CFR 402.7. Common to all such instances where informal notice will be given is the intention to give the RRE an opportunity to clarify, mitigate, or explain any errors that were the result of a technical issue or due to an error or system issue caused by CMS or its contractors. It would be impractical and counter to the spirit of the informal notice process to regulate or enumerate all circumstances in which mitigating information could be provided or what that information should convey. As such, any mitigating factors or circumstances are welcomed, and a dialogue is encouraged in an attempt to find solutions that are short of imposing a CMP. We believe it is in the best interests of all RREs to leave the informal notice process open to any reasonable submission of mitigating factors so that we are free to entertain all such documentation without strict limits on what is, or is not, acceptable. Once we determine that a CMP will be imposed (after the informal notice period) we will provide formal notice to the entity in writing in accordance with 42 CFR 402.7, which will contain information on the event that has triggered the proposed imposition of a CMP, the amount of the proposed CMP, and next steps for the entity, including a right to a hearing in accordance with 42 CFR 402.19 and part 1005." Medicare Secondary Payer and Certain Civil Money Penalties, 88 Fed. Reg. 70363, 70367 (October 11, 2023).

  CMS further states in the final rule that: "We note that CMPs imposed in accordance with this final rule will be subject to the formal appeals process as prescribed by 42 CFR 402.19 and set forth under 42 CFR part 1005. In broad terms, parties subject to CMPs will receive formal written notice at the time penalty is proposed. The recipient will have the right to request a hearing with an Administrative Law Judge (ALJ) within 60 calendar days of receipt. Any party may appeal the initial decision of the ALJ to the Departmental Appeals Board (DAB) within 30 calendar days. The DAB's decision becomes binding 60 calendar days following service of the DAB's decision, absent petition for judicial review." Id.

  [29] See n. 28 above.

  [30]See n. 28 above.

  [31]CMS's NGHP Civil Money Penalties Webpage,Section: Informal Notice- Intention to Impose a Civil Money Penalty.

  [32] Id.

  [33] Id.

  [34]CMS's NGHP Civil Money Penalties Webpage,Section:Decision Regarding Mitigating Evidence Submission.

  [35]Id.

  [36] Id.

  [37] Id.

  [38] Id.

  [39] Id.

  [40] Id.

  [41]CMS's NGHP Civil Money Penalties Webpage,Section: Notice of Proposed Determination to Impose a Civil Money Penalty.

  [42] Id.

  [43] Id.

  [44] Id.

  [45] Id.

  [46]CMS's NGHP Civil Money Penalties Webpage,Section: Notice of Final Determination to Impose a Civil Money Penalty.

  [47] Id.

  [48] Id.

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