With Civil Money Penalties Here, Thought About a Mandatory Insurer Reporting Audit?

Rafael Gonzalez, Esq.

With mandatory insurer reporting (MIR) civil money penalty (CMP) applicable as of October 11, 2024, and enforcement in October 2025, employers, corporate defendants, insurers, carriers, and third-party administrators in liability, no-fault, and workers compensation claims have begun to wonder whether their current MIR processes and systems are adequate, accurate, timely, and ultimately penalty proof. This article aims to educate such entities in the use of MIR Audits as a mechanism to grade, evaluate, test, and conclude whether your current MIR process and system is in fact compliant or non-compliant, and therefore open to potential liability for civil money penalties.

Mandatory Insurer Reporting

Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Section 111) added mandatory reporting requirements with respect to Medicare beneficiaries who have coverage under and receive settlements, judgments, awards or other payment from liability insurance (including self-insurance), no-fault insurance, or workers’ compensation, collectively referred to as Non-Group Health Plans (NGHP).

The provisions found at 42 U.S.C. 1395y(b)(8) added not only reporting responsibilities, but also included penalties for noncompliance for responsible reporting entities (RRE), defined as “an applicable plan (i) liability insurance (including self-insurance), (ii) no fault insurance, and (iii) workers' compensation laws or plans."

The purpose of Section 111 reporting is to enable CMS to pay appropriately for Medicare-covered items and services furnished to Medicare beneficiaries. Section 111 NGHP reporting of applicable liability insurance (including self-insurance), no-fault insurance, and workers’ compensation claim information helps CMS determine when other insurance coverage is primary to Medicare.

Reporting is accomplished by either the submission of an electronic file of liability, no-fault, and workers’ compensation claim information, where the injured party is a Medicare beneficiary, or by direct data entry of this claim information into a secure web portal. Upon receipt of this information, CMS checks whether the injured party associated with the claim report is a Medicare beneficiary, and determines if the other insurance is primary to Medicare. CMS then uses this information in the Medicare claims payment process and, if Medicare paid first when it should not have, uses it to seek repayment from the primary insurer or the Medicare beneficiary.

Civil Money Penalties

Pursuant to 42 USC 1395y(b)(8), compliance with Section 111 mandatory insurer reporting has been required since the MMSEA was adopted in 2007. Non-compliance for an applicable plan that fails to comply with such requirements is a civil money penalty (CMP) of $1,000 for each day of noncompliance with respect to each claimant. With statutory authority but no regulatory provisions to provide details, for many years RREs grew accustomed to reporting untimely and erroneous data without any consequences.

After multiple attempts and several years in the making, the Centers for Medicare and Medicaid Services (CMS) published regulations regarding CMPs in the Federal Register on October 11, 2023. The regulations have been incorporated into the Code of Federal Regulations at 42 CFR Part 402 and 45 CFR Part 102, specifically at 42 CFR Sections 402.1, and 402.105, and 45 CFR Section 102.3. These regulations are applicable as of October 11, 2024, and will be enforced as of October 11, 2025.

Compliance and Non-Compliance

For the purposes of compliance with mandatory insurer reporting obligations, 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. If a particular case has both an ORM and a TPOC component, this will constitute two records.?

Records are required to be submitted in a timely manner. An 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” in “Field 78.”.

The 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. Compliance 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.??

NGHP RREs are eligible to receive a CMP up to $1,000 (as adjusted), per instance of noncompliance, for each calendar day a record is late with a maximum penalty of $365,000. CMS has the statutory authority under 45 CFR §?102?to adjust NGHP penalty amounts.

Civil Money Penalty Amounts

If, in its review, CMS identifies any record where a NGHP RRE has failed to meet the timeliness requirements, that RRE is subject to a CMP (as adjusted for inflation) for each calendar day that record?is considered to be?out of compliance pursuant to the following chart of penalty amounts:??

?Late Record Timeframe? Penalty Amount per Day per NGHP Record?

> 1 year but < 2 years? $250?

> 2 years but < 3 years? $500?

> 3 years? $1,000?

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” in “Field 78

As required by law, the $250, $500, and $1,000 daily CMP amounts will be adjusted annually to account for inflation. Based upon the latest publication of the adjustment notice in the Federal Register, the 2024 inflation-adjusted rates are $357, $714, and $1,428, respectively.?

?Mandatory Insurer Reporting Audits

?An MIR Audit should focus on three major factors:

1.?Ongoing responsibility for medical (ORM), which refers to the RRE’s responsibility to pay, on an ongoing basis, for the injured party’s (the Medicare beneficiary) medical care associated with a claim. Typically, ORM only applies to no-fault and workers compensation claims.

2.?Total payment obligation to claimant (TPOC), which refers to the dollar amount of a settlement, judgment, award, or other payment in addition to or apart from ORM. A TPOC generally reflects a “one-time” payment intended to resolve or partially resolve a claim. It is the dollar amount of the total payment obligation to, or on behalf of, the injured party in connection with the settlement, judgment, award, or other payment.

3.?The purpose of reporting of ORM and TPOC is so that CMS has better visibility regarding its right to reimbursement and recovery of conditional payments. Therefore, no MIR Audit should be complete without providing a review, analysis, breakdown, observations, conclusions, and recommendations regarding all conditional payment requests, disputes, demands, appeals, and recovery pending at both CMS recovery contractors.

Ongoing Responsibility for Medical

1.?ORM Acceptance

In the thousands of files we have audited, one of the most notable mistakes we have seen and continue to see is the inaccurate reporting of ORM acceptance.

The reference to ongoing, is not related to ongoing reporting or repeated reporting of claims under section 111, but rather to the RRE’s responsibility to pay, on an ongoing basis, for the injured party’s medical care and treatment associated with the claim. The trigger for reporting ORM is the RRE’s determination, whether voluntarily, or as a result of litigation, or upon being ordered by a court, to assume ongoing responsibility for medical by the RRE.

An RRE may assume ORM when the RRE learns that the beneficiary has received or is receiving medical treatment related to the claimed injury or illness sustained. Required reporting of ORM by the RRE does not necessarily require the RRE to have made payment for Medicare covered items or services. Nor does a provider or supplier necessarily have to have submitted a claim for such items or services to the RRE for the RRE to assume ORM.

In most cases, the effective date for ORM is the date of injury (regardless of when the beneficiary receives the first medical treatment). For purposes of compliance, ORM should be as of the date when the RRE has made a decision to accept the claim and become responsible for medical care and treatment related to the claimed injury or illness sustained.

Even when ORM payments are aggregated and paid to a provider or injured party in a single lump sum payment, this aggregation does not constitute a TPOC. For example, in a no-fault situation, such as an automobile personal injury protection, or med pay insurance, the RRE may reimburse the provider of these medical services or the injure party via one payment. Such a payment reflects ORM, not a TPOC settlement, judgment, award, or other payment.

2.?ORM Medical Codes

Reporting ORM is not a guarantee by the RRE that ongoing medical care and treatment will be paid indefinitely or through a particular date. It is simply a report reflecting the responsibility currently assumed by the RRE. As a result, it is critical to report ORM alongside information regarding the cause and nature of the illness, the injury or incident associated with the claim, and the ICD diagnosis code that explains in great detail the specific medical impairment associated with the claim.

The ICD-9 and ICD-10 codes reported starting in “Field 18” must provide sufficient information for Medicare to identify the medical care and treatment related to the underlying injury, incident, or illness reported by the RRE. This continues to be one of the most common errors in mandatory reporting, as RRE’s continue to report medical codes unrelated to the claim or the treatment related to the injuries associated with the claim.

3.?ORM Termination

But perhaps the most common mistake our audits have found in reporting ORM is the lack of and erroneous nature of ORM Termination.

When ORM ends, the RRE should report the date that ORM terminated. The RRE should not amend its acceptance from a Y to an N. The RRE should not delete the record. Instead, the RRE should report the date that ORM is terminated either because medical evidence indicates no further medical care related to the claim is necessary, a judicial officer has indicated the claim is no longer compensable or the claimant no longer needs medical care associated with the claim, the injured individual has passed away, or the medical care associated with the claim has been settled.

An ORM termination date should not be reported if ORM is subject to reopen or otherwise subject to additional request for payment. ORM termination date should only be submitted if there is no practical likelihood of associated future medical treatment either because no claims have ever been paid, no claims have been paid within five years of the date of service for any such claim, no claims were paid for medical implantation or prosthetic device, and the total amount paid for all medical claims related to the case do not exceed $25,000.

Of course, ORM termination is appropriate where the insurer’s responsibility for ORM has been appropriately terminated under applicable state law, where the insurer’s responsibility for ORM has been exhausted/terminated per the terms of the applicable insurance contract, or where the beneficiary’s treating physician has indicated no additional medical care and treatment associated with the claimed injuries will be required.

Total Payment Obligation to Claimant

Although not as prevalent as ORM reporting errors, throughout our audits, we do see a volume of cases with TPOC reporting errors, including TPOC amounts, dates, and thresholds.

1.?TPOC Amount

Perhaps the most common error we see in TPOC reporting is with the amount. The TPOC amount refers to the dollar amount of a settlement, judgment, award, or other payment. The computation of the TPOC amount includes, but is not limited to, all Medicare covered medical expenses related to the claim, non-Medicare covered medical expenses related to the claim, all lost wages, property damages, attorneys fees, set aside amounts, payout totals for annuities, settlement advances, lien payments, and amounts forgiven by the insurer/carrier.

2. TPOC Date

The second most common error we see in TPOC reporting is with the TPOC date. The TPOC date is not necessarily the payment date or check issue date. The TPOC date is the date the payment obligation was established. This is the date the obligation is signed if there is a written agreement. If court approval is required, it is the date the obligation is signed, or the date of court approval. If there is no written agreement, then it is the date the payment is issued.

3. TPOC Thresholds

Despite the numerous announcements made regarding TPOC reporting thresholds, this continues to be a source of reporting errors for many payers around the country. RREs are required to report all no-fault insurance TPOCs with dates of October 1, 2010, and subsequent. As of January 1, 2024, CMS has continued its $750 threshold for no fault insurance TPOC amounts. Therefore, any no-fault settlement with a Medicare beneficiary over $750, must be reported.

RRE’s are required to report all liability insurance TPOCs with dates of October 1, 2011, and subsequent. As of January 1, 2024, the threshold for physical trauma-based liability insurance settlements continues to be $750. This threshold does not apply to non-trauma liability cases (ingestion, implantation, or exposure). In such claims, any settlement, regardless of amount, must be reported.

RREs are required to report all workers compensation TPOCs with dates of October 1, 2010, and subsequent. CMS has maintained a $750 threshold as of January 1, 2024, for worker’s compensation settlements where the worker’s compensation entity does not otherwise have ongoing responsibility for medicals.

Conditional Payments Recovery

As already indicated, the purpose of Section 111 reporting is to enable CMS to make an appropriate decision on whether to pay for Medicare-covered items and services furnished to Medicare beneficiaries. Section 111 NGHP reporting of applicable liability insurance (including self-insurance), no-fault insurance, and workers’ compensation claim information helps CMS determine when other insurance coverage is primary to Medicare. So, our MIR Audits also provide detailed information as to the status of any identified conditional payment, whether with the Commercial Repayment Center (CRC) or the Benefits Coordination Recovery Center (BCRC).

Conclusion

With MIR civil money penalty applicable as of October 11, 2004, and enforcement in October 2025, employers, corporate defendants, insurers, carriers, and third-party administrators in liability, no-fault, and workers compensation claims have begun to wonder whether their current MIR processes and systems are adequate, accurate, timely, and ultimately penalty proof.

MIR Audits are a great mechanism to grade, evaluate, test, and conclude whether your current MIR process and system is in fact compliant or non-compliant, and therefore open to potential liability for civil money penalties. MIR Audits should review ORM acceptance, ICD codes, ORM termination, TPOC date, TPOC amount, TPOC threshold, and Conditional Payment demand, appeal, and recovery.

About Rafael Gonzalez, Esq.

Rafael is a partner in Cattie & Gonzalez. He has over 40 years of experience in the legal and insurance industries. His national practice is focused on secondary payer law and compliance in liability, no-fault, and work comp claims and litigated cases. He is active on all major social media platforms, and regularly blogs, speaks, and podcasts on workers compensation, social security, medicare, and medicaid.

To learn more about our firm, our services, including our MIR Audits, please visit us at www.cattielaw.com, email us at [email protected], or call us at 844.546.3500. In addition, you may follow us on LinkedIn, Twitter, and YouTube.

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