SECTION 111 PENALTIES
In 2007, Congress enacted Medicare Secondary Payor (MSP) “Reporting” requirements, known as “Section 111” Reporting. The requirements obligate any party settling or paying a claim involving a Medicare beneficiary to report to Medicare the settlement, payment or judgment, along with other specified information related to the claim. Reporting is difficult, and an entity must be registered with Medicare as a “Responsible Reporting Entity” (or RRE) to be able to report. Although it is estimated that millions of claims are reported each year, millions more may not be.
When Congress enacted the statute, it imposed a severe strict liability penalty of $1,000 per day per claim for failure to report. MARC intervened with Congress and in 2012 the statutory penalty was modified to a sliding scale of “up to $1,000 for each day of noncompliance with respect to each claimant.” Since the enactment of the SMART Act into law in 2013, not a single penalty has been assessed by the government for late reporting. Because the government must now use a sliding scale to assess penalties, notice and comment rulemaking will be required to identify the sliding scale factors that the government will consider in order to assess penalties.
In 2013, the government took initial steps to begin the rulemaking process by issuing an “Advance Notice of Proposed Rulemaking” (ANPRM) soliciting comments on how the Agency should structure the sliding scale for penalties and otherwise create safe harbors to avoid penalties. Thirty-four comment letters were submitted from interested parties including comments from MARC, insurance trades, health plans, lawyers, beneficiary groups and others.
Seven years later, on February 18, 2020, CMS released the formal notice and comment rulemaking for Section 111 penalties.
As MARC’s comment letter indicates, the current Section 111 Penalty Proposed Rule is unduly focused on penalizing entities that are reporting, rather than those who intentionally refuse to report. Given these fundamental flaws in the proposed regulation, MARC has requested that CMS withdraw the proposed rule and issue a new proposal, explicitly incorporating the standards of 42 C.F.R. § 1003.140, or proposing analogous “sliding scale” standards for the assessment of penalties and refocusing the proposal towards those who are not reporting, rather than penalize technical and non-substantive reporting field mistakes made in good faith.
Further concerns with the Section 111 Penalty Proposed Rule include:
Proposed Rule CMS Section 111 Penalty
Proposed Rule Fact Sheet CMS Section 111 Penalty
MARC Comments to CMS MSP & Certain Civil Monetary Penalties, Referencing Federal District Court Decision
April 29, 2020
MARC Comments to CMS MSP & Certain Civil Monetary Penalties
April 20, 2020
MARC Release: MARC Urges CMS to Revise Section 111 Penalties Proposed Rule
April 21, 2020
Business Sources: Insurers could face stiff Medicare secondary payer penalties
February 26, 2020
MARC Statement Section 111 Penalties Proposed Rule
February 18, 2020
MARC Comments to CMS ANPRM on MSP and Certain Civil Monetary Penalties
February 7, 2014