Communications / Technical Issues / Technical Issue

MMSEA Section 111 Reporting Regulations Update

Date: 08/04/2020

Given the frenetic regulatory activity associated with the pandemic in the last few months, it would be easy to overlook other potentially impactful regulations. As, such, CWCI provided initial information to our members in March about proposed Federal regulations introduced by the Centers for Medicare and Medicaid Services (CMS) for which public comments closed April 20, 2020.

The tougher rules proposed by CMS represent a revival of prior efforts to enforce reporting compliance by assessing civil monetary penalties (CMPs). These penalties were first incorporated in the original Section 111 reporting legislation at 42 U.S.C. 1395(b)(7) and (8) enacted in 2007, but the Strengthening Medicare and Repaying Taxpayers Act of 2012 (SMART Act) gave CMS discretion to regulate enforcement and penalty limits for which further required regulatory action failed to materialize – until this year.

Mandatory Medicare Secondary Payer (MSP) compliance requires three major areas of focus by the Responsible Reporting Entity (RRE) or their Reporting Agent (RA). These are:

1) “conditional payments” (reimbursement to CMS for past Medicare payments);

2) Medicare Set Asides (allocation of money by the primary payer for future treatment); and

3) reporting requirements pursuant to MMSEA (Section 111 of the Medicare Medicaid and SCHIP Extension Act of 2007)

The key components of the new reporting rules incorporate CMP penalty exposure of up to $1,000 per day per claim (limit per claim of $365,000 annually) and can be imposed if:

The RRE fails to register and/or report Medicare eligible individuals;
RREs report quarterly as required but exceed the 20% threshold of error tolerances; or
The data reported is contradicted at the time CMS attempts to recover conditional payment amounts from the RRE.

However, CMPs cannot be imposed more than five (5) years after the date of noncompliance and the statute of limitations would only commence prospectively after the regulations are enacted. It is indisputable that the Non-Group Health Plans (NGHP) reporting requirements set forth in the Mandatory Reporting User Guide (click here) are confusing and complicated. Now that CMS is serious and intends to push through this legislation, the exposure in terms of CMPs is likely to be formidable, if not punitive.

Many of the public comments submitted on the proposed regulations detailed specific concerns:

As structured, CMPs may result in hundreds of thousands of dollars in fines, whereas the method of calculation is unclear and allows for unrestricted subjectivity by CMS auditors.
The fixed schedule of CMPs are not based on the severity of or harm caused by incorrect data submission.
The proposed CMPs per claim ($1,000 per day up to $365,000 per year) already exceeds the total cost of many claims, and the proposed inflation adjustments will add significantly to the cost of those claims.
CMS currently has no ability or system capacity to discern data. For example, in a claim involving multiple body parts, one body part might settle prior to the other, though each could require ongoing medical treatment, resulting in multiple Total Payment Obligations to the Claimant (TPOCs) being reported to CMS. CMS is likely to consider the subsequent, yet unrelated TPOC a late report and impose CMPs.
There is no oversight of CMS auditor review such that if CMS delays review of data this would substantially increase the amount of the CMPs.

Notwithstanding the issues, it appears there is time before the regulations are enacted to review the various platforms and methods of reporting data to CMS for the purpose of establishing transparency and understanding of the cause of any data error messages that are returned. CMS has scheduled what may be a worthwhile NGHP Reporting seminar for Thursday, August 13 at 10:00 a.m. (PST). Additional details and registration information for this webinar are here.

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